Offering Price For A Mobile Home Park
I'm an investor who mainly buys properties in need of alot or repairs. I ran across a deal for a mobile home park. This park has 23 older mobile homes with 2 new ones. Owner currently collects between $3,000-$3,300 per week for the entire park. All lots are rent only. The park is fairly run down. This property is located in North Georgia. Can anyone give me any suggestions on the value of this potential deal?
Hi,
You have not given much details to tell you whether its worth buying or not
so a few questions to help us know better
1. whats the asking price for the park?
2. do you have the financials for the past 3 years?this will give an idea on how the park has functioned and also how its expected to.
3. have you examined the rent rolls?how have they shown their income.do they present a reasonable vacany rate?
4. what about the expenses?what percentage is it to the gross income(this is is really important as fudged numbers can really put it to higher operating income than what it is now
5. Are all the mobile homes owned by the park or by the tenants and the park just makes it money off the lot/site rent?
6. how does the lot rent compare on an average to the other similar sized parks in the area. is there scope for increasing the lot rent?
7. whats the profile of the tenants(mobile home owners) living www.there.if they have been there long then there is a stable lot rent coming in and you can just renew the lease with no worries. if there are deadbeats in the lot then you need to weed them out.
whatever income you arrive at after expenses(operating income) remember to factor in your debt service too(unless you go there with cash.
a couple of more which i just thought of
any code violations?
examine the lease agreements with the tenants. look at the rules and regulations of the park. look at any mold disclosure documents they might have. check on the utilities bill,property taxes and stuff. is it city water or well?
other than this do your usual due diligence on the property which you might be aware of since you say you are an investor
i hope this gives you a fairly good idea to what to look for
Great questions! Sounds like you are exactly who I'm looking for.
Asking price:$400k-$450k
Nearly all of the older mobile homes have been rehabbed. There are actually 7 new mobile homes. 4 are under going renovation. Vacancy rate is about 12% according to the onsite manager. Repairs have been somewhat low since the mobile homes have been rehabbed. All homes are owned by the park. Park seems to attract a number of long term tenants. Some have been there for years. The rent seems to be right on target for the area. I don't think it can be increased. No more homes can be added. Lot is about 2.5 acreas. The park is smaller than area parks. This park is also located in the city limits of a small town. NOI is around $65,000. The owner is looking for $20k down and will finance the rest.
Thanks again for your help!
This seems like a good deal.
But first thingsNegotiate down the price. I would probably start at 350000. Iam sure you can have the price at 370-375 if you drive home a hard bargain..
some of the pointers for reducing the price can be you say the homes are all old and worth only 500 apiece(well you are buying the cash flow) but hey its worth giving a shout out.
second is the park having paved roads inside or dirt tract?if its dirt track. you can point that and try and reduce. So try and knock down the price,
Now lets get the facts straight
owner offering financing with 20k down. i would again try to reduce the down payment to 10k. what is the rate of financing?after factoring in the debt service whats your take home?
next i would offer to buy the park at the beginning of the month so that i get the rent which might cover about 35-40% of the down payment
I would also wait for the 4 units to be fully rehabbed so that there is no out of pocket costs from me
whats your exit strategy? parks are very difficult to sell immediately if you choose to. Are you prepared to hold the park worst case scenario for a couple of years if required and enjoy your cash flow?do you eventually plan to re-fi and take out your first? audited financials for atleast a year will help a lot.
[ Edited by Samw on Date 06/16/2004 ]
RJENKINS --
Regarding the appropriate time to close escrow is usually shortly after the seller has collected the rent. That way the rent prorations will be in your favor and the CREDIT on the rents will help offset any money that you are required to come up with.
Sounds like that park you are interested in collected weekly rather than monthly. If rents are collected once a month usually from the first to the fifth ... then close escrow a few days after the 5th. Then in escrow you will be credited the money for the remaining 25 days.
Cheryl Lopez