need help asap whith mhp purchase


#1

hi everyone. i live in a small mobile park in the country. only 9 trailers in whole park. i own only one facing overlooking rest of park. paid 5000 including oversized shed and loft. covered deck. anyway landlord has rented to some undesireables (on disability, bout 26yrs old 6 kids evey one of his relatives moving into other empty mobiles renting and destroying) u now the story. anyway out of 9 i own mine my parents live next door been here 46yrs own theres, and my older brother owns his hes been here 35yrs. the park is getting out off hand with noise complaines and straight disrespect. together me and my family pay 750 a month lot rent(250 a piece).
so earlier this week the landlord calls and wants to know if me and my family are intrested in buying the park. he wants to play the bank. on the tax assesment it says he paid 105,600 in 2007 . but its currently assesed at 167500. he’s saying thats what its assed at but that doesnt include the buisness part of the park renting them out. he’s tell’n me that he wants 310000. with 10000 down. does this sound right. dont they include the buisness part in the assesment? i defenatly dont want to over pay by 100000. other than the mobiles we own there are 6 others for full rent i think at 425 mth but half of them are in pretty bad shap and the tenants will fall behind far enough to almost get evicted then come up with the money somehow and get to stay to do all over again. seeing that i live here im sure if i take over it will get worse , we dont get along. my payments would be around 2200 a mth and profit if everyone pays will be around 1500-1700. i hate to take over and be the old LL middle man watchin him make more than me but the money sounds good if ya can gettem to pay. what do you guys think any advice, suggestions anything???


#2

Mobile home parks are not my area of expertise, but I have a couple of thoughts.

One is that the tax assessment is irrelevant. You might consider getting an appraisal on the property.

Second, as far as the current owner stating that the tax assessment doesn’t account for the business portion of the property…I see no value on the business portion of the property if the current tenants do not pay consistently. The sale price must account for that.

Also, I’m not sure what the current owner means when he says he wants to “play the bank”. Does he owe more than the property is worth, and he’s looking for a short sale?

Hopefully someone with MHP experience will add on here.

–Natalie


#3

I am a park owner and am familiar with valuing parks.
As a quick calculation of value multiply the number of occupied lots by the average lot rent and then multiply by 70.

Your park:

9(lots) X $250 (lot rent) X 70 = $157,500

That would be the rough value of the park assuming rent is paid and this does not include the income from renting the trailers.

If the rented trailers came with the deal that would possibly add $30,000 or less to the value of the property but in my opinion based on their age and condition they are a liability not and asset and something that you do not want to own. The maintenance costs on them would outstrip their income.
The lot rents are the only thing of any value in this community.

Personally based on your description of the park it is not worth investing in unless you intended on cleaning out all the bad tenants and assuming you could get it for closer to $100,000 which you won’t.

If I were your family I would sell your homes and move as the future of the park does not look good.