MHP expenses believable or understated? - Posted by srb (Tx)

Posted by jp in pc on March 20, 2006 at 18:50:14:

I’ve always been told that expenses on a MHP on average are around 40%. We bought a park last year and so far I have not seen anything that would make me think that percentage is too far off. In fact, ours is going to be somewhat higher than that until we get it submetered for the water. It’s currently costing us about 25k a year in water bills.

Just my cent and 1/2.


MHP expenses believable or understated? - Posted by srb (Tx)

Posted by srb (Tx) on March 20, 2006 at 13:31:24:

The numbers are for a 20 lot park in a small town with lot rents of $180 each, where tenants pay water, electric and gas.

Owner claims that total expenses are $6000 per year (1k for taxes, 1k for insurance, 2k for trash and 2k for management (free lot rent)). There are no rentals and there are nearly 10 empty acres included that can be developed. The lots are on septic though (each lot has its own tank).

That means expenses are 14% of gross income without accounting for vacancy, collection loss, deferred maintenance etc. Do the numbers sound ok?

What should I look for? How much would you pay for this park?



Re: MHP expenses believable or understated? - Posted by Chris Reuman (Maine)

Posted by Chris Reuman (Maine) on March 21, 2006 at 11:25:26:

The insurance seems correct, the property tax low (2k-3k), the trash high (1k-2k), and the management high (half lot rent to full lot rent). There are many other expenses not included: vacancy, legal, advertising, septic pumping, park maintenance, water line repairs, etc…

Best investing, Chris