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I have a tired landlord lead on a 12 space mhp.There are 8 park owned MHs , 1 owner owned lot rent, 1 MH being used for storage and two vacant lots. Annual rents are 48,000/yr. Seller states the expenses are $7,200/yr but he does all the maintenance. The park is on one septic system and one well. The park provides the utilities. The age of the park owned MHs is from 1974 to 1995. Asking price is $285,000 and it has been on the market almost 6 months.
I’ve never dealt much with MHs. What kind of things should I be aware of or ask about? What kind of CAP rate should I be looking to get?
Carl Mullin 352-446-8559 [email protected]Carl, it looks like lots more than just the landlord is “tired.” Most modern MHPs prohibit a MH from coming onto their property if older than 20 years, which ALL of these are, and some of them being twice that. There’s probably a reason why, out of 12 spaces, 3 are not being rented out, including the one used for storage of whatever, instead of using a cheap storage shed to free up that third space for rent. Is that storage MH simply too old or broken down to be liveable, so it became the cheap storage shed that prevents a newer liveable MH from being used to bring in rent from that space?
Is this an economically depressed area? How stable are the employment income sources for the residents in those 8 slots? Does the well water have a contamination problem (as many do across the country)? How long has it been since that water quality was tested? Is the septic tank system on its last legs?
Has the owner been unable to keep up with the maintenance demands of ancient “everything”?
Would this MHP be a better operation if ALL those ancient and obsolete MHs were sold off, the MHP was spruced up, and owners with much newer MHs were invited to rent those 12 spaces? Or would poor economics in that area doom such a plan?
Where was this “deal” listed for those last six months? On Loopnet (where commercial deals go to die), etc? There’s no shortage of MHP investors across the country hungry for actual productive MHP deals, so since this one has been sitting dead in the water, there must be some reason(s) for its problem.
And what would you want to bring to the table? An ability to market (ie., using an HBS to sell the property, once the existing listing has expired)? Or a newbie’s enthusiasm with zero experience to be the replacement owner/operator? No disrespect intended whatsoever.
Many more unanswered questions than answers.
–Dee
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Don and Dee:
My plans would be first to sell the existing park homes to the current tenants with owner financing. I think the key to this deal lies in getting out from under the maintenance that an older MH brings with it. Long term I would want to just rent the dirt and have all the homes non-park owned. Then it would be a matter of maintaining the well and septic. The water is tested quarterly today and the septic is pumped and inspected bi-annually.
Don I like your idea of getting the tax returns. He may lie to me but think a little harder before lying to the IRS.
Dee as far as where this deal has been listed it is in the Marion County listings. Marion County has its own stand alone MLS system with no reciprocity with the adjacent and much larger Mid-Florida MLS system. This is not an economically depressed area. It is south of Ocala. The entire county is not that wealthy as this is primarily thoroughbred horse country. So there are a lot of farm jobs and small manufacturing jobs and a large FedEx distribution center. The wealth in the county is concentrated in the horse farm owners. ( One of the world famous trainers resides in Marion – Todd Pletcher, who always has one or two horses running in the Triple Crown events.) The owner has operated this park for 40 years and would like to retire.
As for myself I have been investing actively for the last three years. I have flipped 14 houses. I have done everything from paint and carpet to full blown gut jobs. I have also wholesaled three other deals. I have used lease options, owner finance, and cash. So I’m not exactly an excited newbie. As I said I’ve never dealt with mobiles before so I am looking for some good guidance on this possible deal..
Carl, since the economics of that area are a bit better than I feared, let me suggest another possibility to explore. Is it possible that this property has a higher and better use than as a MHP? What kind of construction, if any, is going on in that area? Is there a possibility that you could possibly sell the property for a better and quicker return to a local or regional developer, or to some kind of business interested in a local location, for some entirely different purpose?–Dee
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