1st Mobile Home Park deal for review - Posted by John Bulik
Posted by John Bulik on May 11, 1999 at 21:40:51:
A 1.5 hour drive from our home is a 26 unit MH Park for sale. Purchase price is $425k. They will do owner carry with $100k down and balance amortized over 20 years at 9% with a balloon in 2 years.
The local Gov has given the park 7 years to replace 20 of the units with ones built after 1977. Replacement cost will average $3,500 per unit, inclusive.That works out to be $10,500 annually.
Maintenance, materials, trash, water, taxes and all other misc costs come in at just under $5k / month.
The payment on the owner carry will be $2,924 / month.
The monthly rental income is $10,220. We anticipate being able to raise the rental income by $3,000 annually mostly due to the higher rents generated by the newer units and partly by raising the below market rents gradually. There are no leases and most are lower income tenants that work the local fields and meat packing plants.
As this is our first look at a an entire park I will plead ignorance. I have done enough real estate deals to know that the numbers don’t jive for a worthwhile investment. Unless,… there is something I am missing.
For $100k investment, I generally expect a much better return.
The numbers are good and realistic. I am left feeling inclined to negotiate heavily or just walk away.
All feedback is appreciated.