Posted by Ryan (NC) on January 21, 2007 at 14:39:15:
nt
seeking advice from experienced MH park owners - Posted by Shannon
Posted by Shannon on January 21, 2007 at 07:58:14:
I am a rookie so bear with me…
Looking at at small, rural MH park with 5 MH dating from 1960-1980. All 5 trailers are currently rented.
Trailers are on 5 acres in SC…beautiful property out in the country but still very close to growing area/development. BTW, the listing agent said I cannot add anymore trailers to the property but I need to check with local zoning laws.
Asking price is 225K. Septic system in place(little nervous about that) and monthly gross rents are 2650. I put the numbers into a pro forma form and looks like I would get decent positive cash flow.
What are concerns that I should be evaluating closely and asking listing agent for? Rent rolls, operating expenses, records of maintenance of septic, etc? Should I ask to see the inside of every trailer before making an offer?
Finally, is 225K a good price or should I offer lower? Anyone with input, I appreciate your thoughts and input.
Re: seeking advice from experienced MH park owners - Posted by Daphne Lowe
Posted by Daphne Lowe on January 24, 2007 at 10:19:56:
This may be a good deal as a land play if your exit strategy is to hold it until the pressure of redevelopment knocks at your door. IF you have to money to bring it into county compliance, and IF you would be ok with the property just breaking even during your holding period, and IF the property is reasonably priced (slightly above raw land value), and IF you have no better (less speculative, higher yield) use for your funds, THEN perhaps it is worth your time. Otherwise, keep looking.
Daphne
Re: seeking advice from experienced MH park owners - Posted by Shannon
Posted by Shannon on January 23, 2007 at 09:07:41:
Thank for any and all input. I called DHEC regarding the septic system in place and they told me there is only 1 system in place for 1 MH on their records. They told me that before closing on this property, each trailer(5) will need to have its own system. Does this sound correct? Advice?
Re: seeking advice from experienced MH park owners - Posted by Gary
Posted by Gary on January 23, 2007 at 24:07:57:
You should ask the listing agent to call you when he and the seller come back to earth. Do your research on bare land sales,value of infrastucture with depreciation,and real values of the mobile homes and you will have your highest price that you can pay.
As listed if one tenant doesn’t pay( and that will happen immediately because you are new and they will test you)you will own a property with a negative cash flow. Then you will get a good case of buyer’s remorse and wish you hadn’t done this deal. Gary
Re: seeking advice from experienced MH park owners - Posted by Anne_ND
Posted by Anne_ND on January 21, 2007 at 12:26:32:
Shannon,
One big thing to be aware of is that this is probably NOT zoned as a MHP. It’s grandfathered in because there were 5 trailers in place when the zoning was done. It’s quite likely that if/when one or more of the MHs burns or disintegrates, you will not be able to replace it with a new MH.
Is land in this area worth $45K/acre? If not, forget about it. They are selling cashflow with a finite lifespan.
good luck,
Anne
Read this… - Posted by Dr. B.(OH)
Posted by Dr. B.(OH) on January 21, 2007 at 11:23:43:
its, responses and all other archived info on MHP evaluation.
http://www.creonline.com/mobilehomes/wwwboard4/messages/32041.html
Steve
Re: seeking advice - Posted by Anne_ND
Posted by Anne_ND on January 23, 2007 at 11:04:50:
Yes. They have the last word on the requirements, and this seems like a common one (one septic per MH). The fact that they do not have 5 septics on record means the seller either had the work done by unlicenced people (and it’s substandard), or more likely, they are just out of line with county/state requirements.
I suggest you walk from this deal, but if you move forward, the fact that they are so out of compliance would be a great negotiating tool.
Currently I’m negotiating with a seller of a park whose water system is out of compliance with the state. The water system problem is significant, and has caused them to agree to a price about $250K less than what they were asking, so these issues do have good leverage. Often a seller is just in “solve this problem for me” mode when they have compliance issues.
good luck,
Anne