Advice Needed On Purchase Of Small MH Park
My partner and I are considering purchasing a a small 4 unit mobile home park on 10 cleared acres 10 to 15 min away from our residence. In this area you cannot put more than 4 mobiles on land without jumping through a lot of hoops I am told. We are in upstate NY.
We have no experience in mobiles and currently own 4 two families as well as our current residence.
As recently as a month ago, the mobiles were bringing in $1475 monthly. The tenants were asked to leave because the well was on adjacent land where seller is currently residing. He is selling both properties because he recently had a stroke. They will be moving to Fla. Park will need a new well which should cost $2-3,000. I've spoken with a well person and water shouldnt be an issue on this lot.
The taxes are about $2,000 per year. There will be significant snow removal costs in this area also.
We were able to look at 2 of the MH. One was completely remodeled in 2003 and in like new condition. It could rent for 450-500 or perhaps we could sell it? The other not so great with some mold and rotting floors. We have low expectations for the other two. One was still being lived in, the other the owners seemed "embarassed" to show saying the tenant just moved out and it was "trashed". The park is over 30 years old MH's are 25-30 yrs old. Park is being sold as is. We may replace 2 or 3 of the MH's
The asking price is 50K. We can pay cash if we have to. I am having trouble convincing partner this is a good deal. He is thinking 35K. I want to make a decent offer beacause there is currently an offer on the table and I think sellers may take better of two. They seem really motivated. Should we have an inspection done. We have already walked the property looking for any signs of junk or chemical dumping.
How do you determine value? Is it by income or potential income? Is it by actual value of mobiles and land? Is it by comps? Or a combination of the three? is it possible to get "burnt" on this? is so how?
We wonder is we should stick to mult-family homes. In this area one can pick up a nice 2 or 4 family for 45-65k and 75-100k respectively. Taxes are significantly higher though $2500-4500.
TIA for any advice for us newbies!
CJ
I have done some deals recently in upstate NY and I was surprised at first when it comes the property taxes. Really hurts the cash flow on what otherwise would be a good cash flow area.
Back to the MHP...
You are dealing in a completely different market and pretty much is it easier to see that the structures depreciate while the land could appreciate.
If you want to do such deal you will need to lean more about MH's and how to buy low and sell high through offering terms. Then the park might be a gold mine.
You really do not want maintenance so if you can lease the pads while selling on the homes then you have a bit of a home run situation (if the numbers add up).
MHP's are sometimes regulated in special ways. As you seem to fall under a limit (4 units or less) see what rules apply or do not apply.
I expect there will be others who can offer some good advice. As to if this is a good deal for you and your partner. The learning curve is bigger then if you stuck to what you already know. If there are some bumps along the way and your partner was dragged into the deal then you might be damaging the relationship. Compare the numbers to the other multi's you have done or can do to see if the possible extra profits are worth the relationship hassle.
If you do want to take this further then more ideas would be possible if we get more specific about the numbers and the ages of the MH, etc.
John
[addsig]
MHP as ativereinvestor said are a whole different game. the mh's never go up and I do not know what part of up state you are in but I'm in vermont Burlington area and it seems like there are a lot of for closures in up state N.Y. and I have not seen much in groth except for Plastberge. I think if it was me I only buy if there is a positive cash flow at time of sale. I look for properties that can have little done and large increese in value. If you do dicied that you want to go a head with this it could be expensive thrying to get everything up to a livable condition. but If there is a market I go with it and turn this place into a very small retierment community. I that event I could probly help you in picking up some nener mh cheep. Good luck and remember its all about cashflow. 8-) nullvalosity of money is what make you rich so take it out of park , cashon cash
Don't know about the water regs where you're at, but at my family's park when we were on well water we had to treat it and have it tested every month. I had to get a license to do it. A bad sample would get you into trouble. Not sure that it's worth the hassle. Plus maintennance on old mh's are constant. 25 to 30 year old home is basically worthless here. Most parks won't accept anything over 8 years old. if you want to do something else with the property later on, then you have abandoned homes to deal with. I'd rather own a older home than rent the lot. Then I can control what happens with that home. We have lots of trailers abandoned and worthless on our lots.