Posted by DougO(NM) on May 11, 1999 at 22:25:46:
John
Is that price and cash flow based on lot rent or rental of the homes ? Are you buying the dirt and all of the homes ? Just the dirt ? Those terms aren’t very good for only 26 units. In fact, they suck. The owner needs a dose of reality !
Doug
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.
John Bulik
Re: 1st Mobile Home Park deal for review - Posted by Steve Heller
Posted by Steve Heller on May 12, 1999 at 21:07:22:
John,
If you decide to proceed with this, I would line up some financing when the balloon expires. I would not go into the deal unless you were sure you could get outside financing after the 2 year period.
Steve Heller
Re: 1st Mobile Home Park deal for review - Posted by T. Mykel
Posted by T. Mykel on May 12, 1999 at 08:01:31:
I’m not sure about property values in your area, but even if this price included ground and 26 units, your still paying in excess of $16,000/unit which is high. Considering the age of some of the units and the potential cash flow, I’d negotiate seriously or walk.
Toney Mykel