I’ve seen a few Mobile Home Parks for sale lately that:
Are good sized (75 - 200 lots)
Are in great cities/metros
Have very low occupancy, e.g. 10 - 20%
Financially break-even monthly, if you bought it with all cash
Sellers want $1M - $2M
The proforma is stunning (these MHPs should be worth $5 - $8M if fully revitalized), yet the day 1 financials are terrible where you’re losing ~$5K monthly after considering a seller financed mortgage payment (no bank would dare finance these deals.) So it would probably take 2 - 3 years and a ton of time & money just to break even monthly. But in the end, profits could be $25K / month.
From what you say sounds good, I’ll buy them with you.
But there are very likely some local govt issues with the park/ socioeconomic tenant-drug issues etc. The detective work initially is to identify the problem and then determine if it can be solved.
Hit me up and I’ll see if I can help identify the problems.
I would do extensive due diligence to determine why the vacancy rate is so high. The park likely has a bad reputation, low demand, or some other “problem.” If that problem can be resolved, then I will pursue the deal.
I would not want negative cash flow on day one. If you do that, you are paying the Sellers for work you must do. I would offer 6 months of no payments, then 2-year I/O payments, with a very low down payment.
Post some test ads to gauge the demand for the park. You should also speak to the local MH dealers to find out why the park is empty and if they are willing to help fill it, etc.
Also, verify with the local enforcement agency that you can install homes. You can, most likely, but they may give you too much pushback to make it worthwhile. You don’t want to spend $200K suing the local Zoning/Building department to get permits to install homes.
You have to weigh the time, effort, and financial obligations of a turnaround park against the opportunity cost of buying an already up-and-running park.
You may make a few million dollars, but what is your time worth? If you work 40 hours a week for the next two to three years, there may be other opportunities where you will make a few dollars less, but the time commitment is also less. It’s all about dollar per hour.
I prefer to make $600/hour working 10 hours a week rather than $300/hour working 40 hours weekly.
$600 x 10hours x 52weeks = $312K
$300 x 40hours x 52weeks = $624K