MH Park Auction - Posted by FoMan (TN)

Posted by Andrea on April 30, 2000 at 10:55:17:

You might also want to post this on the commercial RE list… but be patient, they’re all away at Terry and Ed’s lenders weekend, so the answer may take a day or two.


MH Park Auction - Posted by FoMan (TN)

Posted by FoMan (TN) on April 29, 2000 at 20:50:28:

I need help fast! I attended an auction today for a MH park in Tennessee. I thought the park would sell for 5-600K (because thats what the auctioneer said he thought when I talked to him on the phone two weeks ago).

I looked at this park and it is a classic Lonnie Deal park! Park has 30 pads, 23 pay $200 per month. Seven of the homes are owned by the park and rented for $125 per week. Park has concrete driveway but gravel parking lots. Spots have new water meters and new electric meters. Park owner still pays water bill, around $500 per month. Taxes are $1,100 per year.

The requirements of the auction was you had to put 10% down today. Had to put another 20% down upon closing which had to be completed by May 15th. There is a bank which guarenteed financing @ 12%, amortized over 15 years, ballon in 5 years.

I had run the numbers and at 12%, gross income at $8K, net at $4500, the NPV at 15 years was $325K. The bidding was opened at $300,000 by a bidder. THAT WAS IT. Then the auctioneer got all bent out of shape and put his own bid in at $325K. The original bidder went to $350K, and the auctioneer went to $375K. He said he was going to personally buy it unless it went over $400K. HE BOUGHT IT!

I know the guy somewhat and don’t think it was right the way this was handled but he said it was legal and ethical. (Neither here nor there)

My question…Like I said, I know the guy…I can buy it from him for $400,000 and still get the same financing from the bank. I can borrow the $120,000 needed by putting some stock I own up as collateral and make interest only payments indefinitly.

Running the NPV with nothing down, its worth $402K @13.5%.

Is this a good deal? It looks like a cash cow!

on my turf - Posted by Gator

Posted by Gator on May 01, 2000 at 09:48:33:

I think I know the park, Steam Plant Road? I guessed the 7 MH values at 25k. That leaves 375k for the park. Debt service of 4500 plus 500 water deducted from a 6k (30 X $200) gross on the park leaves only a thousand for other expenses and profit. Looks to me like the profit is in renting the mobile homes and thats not a business I want to get into. I talked to the auctioneer also and he said 400-700k was what he expected. That was good enough to convince me to stay home and work on my rehab. Maybe there’s something I’m not seeing, I’m certainly no expert. If you’re interested there’s park for sale near Clarksville…

Best Wishes,


Re: MH Park Auction - Posted by Ernest Tew

Posted by Ernest Tew on May 01, 2000 at 05:42:00:

You may want to suggest to the auctioneer that he call you if he decides to sell for less than $400,000. Otherwise, my suggestion is to let him keep the park.

With only 30 lots and rent at $200 per month, it may not be worth $400,000–unless there is other potential not mentioned in your comments.

We purchased an 80 space park in south Florida for $375,000. Lot rent was $250. However, half the spaces were vacant and it is on a land lease with 67 years remaining (long enough for us). If we add $220,000 for the land value (based on 10% rent), we have an effective cost of $595,000 or $7,437.50 per space. Granted, we could have paid more. But, it shows there are a few good deals out there. Its just hard to find them. They important thing to look for is a motivated seller.

You should take into account who will manage the park. Is it close enough you could keep an eye on it? Weekly rentals can be a real pain. They can become more of a job than an investment.

Re: MH Park Auction - Posted by lonnie

Posted by lonnie on April 30, 2000 at 16:47:44:

Post this on Ray’s site, he’s the park expert. Also, Doug Ottersberg has a couple of good articles on parks. Check them out.

Good luuck,