The small size of 7 units limits your upside because you dont have additional lots to fill. I would get a current rent roll from owners and personally call for expenses (water, RE taxes, insurance, trash, etc). You need to closely look at the fixed expenses. The biggest ones are water/sewer, any utility bills you pay such as outside lighting, trash, real estate taxes, insurance, 5 to 10% vacancy factor (even if your 100% full now), management fee for yourself.
Everyone thinks they can cut expenses to the bone, but you really can’t. Here is some stuff I have had to pay for over the years- culvert replacement, connector pipe underground broke, junking a unit costs about 1200, new skirting, electric update, relevel a unit, new windows, etc.
A once a month visit is sufficient unless you have a turnaround situation or a lot of work that needs to be done.
With a 29,400 annual income… i would say 150k is a good ballpark for the top price you can pay. You got to have a positive cashflow in order to justify the risk of buying. I knew of a big investor that really liked Indiana - he owned quite a few larger parks in northern indiana and still does. Some of his real estate tax bills TRIPLED in one year due to reassessment, 12k to 40k is a huge hit. I would check that out for sure.
I’m actually looking for another park also- havent bought any property in 3 years and I am getting the itch to buy. Have you seen anything promising in indiana or are you running across overpriced junk like me? I saw an interesting deal thru Rich Correll- he had a 20 lot park in Sullivan, IN that sold for under 100k. Thats exactly the type of deal I am looking for because right now there is a huge glut of cheap, newer units in my area. You can update an older park by moving in newer units and getting rid of the 1960s and 1970’s homes. Obviously this takes a lot of money, but if you buy the park cheap its a very good strategy
I’m looking for eveyone’s view on a MHP as an investment for an absentee landlord. What precautions should I take? What risks are there that differ from an apartment building?
Auto pilots are for airplanes not real estate busineses.
I feel that a MHP is more like a business than a passive real estate investment.
Unless you are a large corp. specializing in MHP management or plan (and can afford) to get one, I wouldn’t consider this as a passive investment that can be managed effectively by long distance.
Just my 2 cents worth. Remember you get what you pay for.
Its guaranteed though. If you don’t like it, just return it for a full refund.
Eddie,
I ran across this post on absentee owners.
I am looking at a small 7 lot park. The owners live on the property with the 6 rental homes. They are well kept,but old. One late 60’s,one early 70’s,two 84’s and two 1996 models all are two bed and one one bedroom.
I live 35 miles from the property, seeing your post of your weekly visits to your parks made me start thinking. In my consideration of this propery I was planning a weekly trip. Now I wonder if that is enough? They want $200K for the property gross income is $29,400 only expenses I have is insurance and taxes.
I am having to make a lot of projections for cost.
I am using a 50% of income as a cost factor.
What is the most you would pay? I am working up three options to present.
Thanks for your input inadvance,
Les (IN)