How much should I offer on this MHP? ideas wnted - Posted by Bryan
Posted by Bryan on November 12, 2000 at 12:25:57:
My experience is in single family home rentals and not MHPs. I am looking for ideas from experienced investors that could give me actual realistic numbers and constructive feedback. I have already offered $245,000 with $30,000 down and owner financing $215,000 @10% with a 10 year balloon. The owner was O.K. with this offer. However, I discovered an ordinance after the offer was made which voided the contract. I told the realtor I would make a new offer - this is where I would like to have help. I have good reasons to not rely on any numbers that the owner has provided to me - the MHP seems totally mismanaged. But, I do know the that MHs of this type rent for $80-$90 a week and mobile home parks in this area stay full - there are many factories in the area. I have also talked with a few MHP owners and they all say that finding tenants is NO PROBLEM whatsoever.
Description of park:
- 22 MH spaces, 21 MHs, 3 MHs vacant and vandalized.
- MHs are all placed on 4.35 acres
- MHs age: all are '80-85 models 14x70’s
- No ammenities
- 2 gravel roads (ordinance states that owner will pave
350 feet of gravel road in 3 years)
- Many tenants have been residents for a long time and are
"settled in". Some have put up fences and outbuildings.
- Owner has been paying electric bill and the water bill
for all the tenants even though they all have seperate
- most homes are livable but I think all need improvement.
Here are some numbers I worked out: (see anything wrong? see anything right?)
total pmt (including opportunity cost on my $30,000)= pmt to owner+ taxes and ins. = approx. $2400/mo.
18 MHs @ $90/wk x 4.4 wks = 7,128
–minus 10% vacancy 713
total rents recv’d/mo. $6,415
income after debt expense = $4,053/mo.
In 6 mos. after improvements (vacant MHs rehabed)
22MH x $90 x 4.4 wks = $8,712
— minus 10% vacancy $871
total new payment:
Pmt (owner+taxes+ins.+ opp. cost) $2,362
- rehab costs ($20,email@example.com%)pmt $ 183
income after debt expense: $5,296/mo.
Maintenance expense :
$800 per year per MH 22x800 divided by 12 = $1,466
(this $800 is my figure, a MHP handyman told me he thinks this figure is too high - but I’d rather be pessimistic)
my income per month after debt expense and maintenance - $5,296
$3,830 per month (this does not take into account mgt. fee)
(I’m happy with this number - it’s more $$ than I’m used to making)
I have on order Ray’s course for MHP and will read it - in the meantime - if any experienced investor could help me with these numbers - it would be greatly appreciated. I will also be getting the help of a lawyer. Also, I expect and the owner expects a lower offer than $245,000 - but what should that number be? - a number that is fair for both parties. I’ve also talked with the town planner and am aware of ordinances (pending or otherwise)
Thank You in advance for your time
Bryan (foothills of NC)