Mobile Home Parks
So I realize that mobile homes don't seem to be that good of a way to make money. (Or so it seems from my previous responses on my other posts) I guess my next question would be would it be smart to get into buying or creating a mobile home park. It seems that renting out the land would be easy, low maintenance and not much to manage. Has anyone built their own mobile home park? Has anyone got into buying mobile home parks? Advantages, disadvantages? Your thoughts... Are they a good investment?
[addsig]
I have two points.
1.) Who told you that mobile homes are not lucrative? Normally, you can buy them for a song. A little cleaning and some minor repairs and they're ready to go. ESPECIALLY if you can sell them land contract/lease option.
2.) I haven't owned a park, but I have an uncle who did. He made a killing. Bought it for 100K in 1983, made good money for 20 years and sold it for 3.2 mil just last month.
You can make good money with mobiles. There's just not as big of a payday on each one. You have to do more volume than RE.
See if you can get affiliated with a finance company like GreenTree or CIT. (You may need an auto dealers' license.) They do loans on mobiles. If you buy the homes cheap and have financing lined up, viola.
A friend of mine and I are considering starting a mobile park on a piece of land near his home. (We're just tossing it around right now.) Let me know how you progress. I'd love to hear.
Good luck
Ronnie
Thanks for the advice. The other advice I received from another investor just wasn' t that inspiring. I guess both could be true. Maybe you just need to know what you are getting into. I guess we need more opinions to really round out my ideas. Keep me informed about your mobile home park. I'm very interested in creating one. I have a good amount of extra cash flow and would love to use it to create some good cash flow.
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Dale DeMott
[ Edited by ddemott on Date 09/09/2003 ]
I didn't get a chance to post when you got all those answers. I totally disagree with the answers you got, although they are the mainstream view. Yes, they depreciate like cars. I am a car dealer, sell 200-300 cars per year and I can share with you how to create "forced appreciation). The fact that they depreciate makes other investors run and hide, which means far less competition. It also makes banks run away which means that they are harder to get financed which makes them depreciate faster (Yeah). With nobody to buy them and nobody to finance them, it's a dead issue, right? Wrong! How about this scenario. Mr X has an older MH that he is desparately trying to sell because he is paying $200.00 mo lot rent. In fact, even though the NADA guide says that it is worth $10,000.00 retail, he has to sell it and is willing to sell for $3500.00 In the midwest, south atlantic region, and other areas, I am sure, this happens every day. Mr savvy investor buys it for $3500.00 cash. Mr Buyer comes along and needs affordable housing and says I'll pay you $8000.00 for it. I have $2000.00 down but the bank says no. Why? because they know that they can't get 8k out of it if the buyer defaults. You say OK I'll take your 2k down and finance the balance at 200.00 per month for x months (you've just created cashflow) You now have 1500 invested, and a 200.00 monthly cashflow. Now wait a minute Mr Negative says! They are all white trash and will never pay! OK, now they have made 2 payments and walk. You now only have 1500 invested and buyer number 2 says I have 3000 down and will pay 9k or 1k under NADA retail. Calculate the cash on cash ROI on that one (hint; it's infinite).
Yep, there's gold in them tin cans on wheels. Is it that simple? Heck no, life ain't simple. But what's the risk vs a $34,000.00 stick built rental unit?
Good Luck,
Shawn(OH)
Hmm.. Good things to think about. The turn over would be a lot of work every time someone failed to complete their deal. If you were willing to keep on reselling the property every time someone defaulted, I guess it would work out.
[addsig]
Hi, just wanted to add my 2 cents on trailer parks, I have owned one, though the experience was not a pleasant one. Renting the lots is the best way to go. I owned trailers as well, they deteriorate very quickly, especially if you get bad tenants, and let's face it, renters are usually pretty hard on other peoples property. It doesn't take long to turn those tin cans into real dumps. I had one tenant who had to be evicted for nonpayment.....they totally demolished the inside of the trailer before I finally got them out. Sure you can sue them for damages, but you don't get much more than a piece of paper. They don't own much or they wouldn't be renting your trailer. Also, it's pretty hard to fix them up if you have to replace ceilings and walls, floors, The normal house building rules don't apply. At any rate, you couldn't give me another trailer park if the trailers were mine. People are just to darn hard on them, and they are just to complicated to fix up.
MSNHobby...
Since you did own a mobile home park, how might I go about finding one for sale. OR how might I get started in creating one? Are there regulations or channels I need to go through. Did you buy it out right or did you create it? Very curious.
[addsig]
OK. I have lived in a trailer park and have actually owned a trailer. Actually, it was one of the happier times I remember. I had good neighbors.
There were 2 differences between my experience and most peoples'.
1. I lived in a park that had very strict regulations about clutter, cats, dogs. Anything that could be an eyesore was covered.
2. There were no rentals. Everyone in the park owned his/her own trailer. Some bought theirs on land contract from the park, but they were theirs.
Therefore, everyone took pride in their homes and took very good care of them. The main problem there was with people who did their own repairs; not people who did damage.
I guess it all depends on what kind of person is running the show.
I'm a part-time truck driver and I can tell when I go to a business to make a pick-up or a delivery what kind of person the boss is. If he's a jerk, the employees are jerks. If he's good, the employees are good.
Same thing with owning a park. If you make it known what you expect and that you will inspect the premises then I think you'll be OK. That is how my uncle ran his park. (His is not the same one I lived in.)
Just my $.02.
Oh, and I also used to sell mobile homes.
I just recently purchased a run down mobile home park. It has twelve pads and 9 mobile homes owned by the park that were being rented. However, most of the mobile homes are not repairable so we plan to scrap them. We want to turn the park into a owner occupied park. So, we have rehabed one of the mobile homes and agreed to sell it to the renter on a land contract. (By the way when we bought the park the mobile homes were given to us) FREE
We only have a mortgage on the land. Three other mobile homes in the park can be fixed up and sold. So, we have just located a father and son who want to move into the park and purchase as is two of the mobile homes. We are going to sell the on a land contract to them, they have to fix them up according to our specifications. They agreed. Our lot rent is $100. per month pluse 10. for city water. So, we paid less than $20,000. for the 3 acre park and have sold three of the rental units. The lot rent and the payments on the mobile homes will more than pay the mortgage on the park and we still have 9 other lots we are preparing to rent out.. By the way, the first thing we did after buying the park is establish a set of rules each person must agree to go by if they live in our park.
Im a Newbie, and this is my first post. Hi everyone. I am considering planning my first Mobiler Home Park and could use a little advice and POSITIVE support. The land is 3.5 acres. It has a home in one corner valued at 160K. The 3 acres are 15K. I have to buy the 2800ft2 house with it. The land is flat with good utility taps. It is Kitty Corner from the best grade school in town. The traffic count is decent, although I cant be specific. I had an engineer lok at the land,I can easily fit 24 48xapprox 110 foot lots with a nice road and park. 2 Br apts in the area go for $500+ repo 3-4 yr old 16x80 trailers go for about 11-15K. I have been told the cost of park development is about 8K per stall. Is this accurate? My math suggests the park wold be very profitable at 600.00/mo./trailer. The lot, trailers and improvements would pay off in less than 5 yrs. Any thought about this? I put a dummy ad in the paper for a trailer in my non existant park and got 6 decent leads in two days. i figured 10 trailers would pay my PITI. the remaining would accelerate my debt payoff. How excited are lenders to give me money? The house would only leasse for 900/mo. might have commercial potential. Lastly if this park is populated by 24 3 to 4 year old trailers, is full and the average rent is 180k per year, what could i get reasonably when selling it? :[ Edited by jackpot on Date 10/01/2003 ]
Ok granted some homes in a park are dumps and can not be repaired, There are several that can be bought really cheap and repaired. I used to rehab these bad boys (not really hard but you can run into some problems). With panneling, new floors in some areas, outside siding, and a few doors you have quite a little investment. You can also buy some at auctions that mobile homes parks have. I have seen them sell for as little as $500.00.
$500.00 + $2,500 in repairs =nice little pay day when sold.
Like they said in the posts above, There is money to be made in them tin cans on wheels.
Happy Hunting
Curt
Up north here in Wisconsin mobile homes aren't very popular. I hear down south they tend to be more popular. Is that true?
[addsig]
I am not so sure about the South,(Alabama, Mississippi) but the South West they are( Texas, Arizona). I am planning on attending a few sales/auctions to grab some and rehab and sale.
CURT
MH parks are very popular in the NE, especially NH where housing is at a premium.
Most parks are owner-occupied and it can be extremely lucrative.
I am a Commercial Mortgage Broker and I just attended a 2day seminar on Financing for Mobile Homes and Mobile Home Parks. (Hosted by a very large commercial lender that is nationwide.) I can tell you that you CAN get financing for a Mobile Home Park, (1) if you have some cash or equity to put into the deal, and (2) if your planned developement makes sound economic sense. There are lenders out there who would love to make loans on these mobile home parks. The owner-occupied park is a cash cow that just keeps producing month after month without much work on the part of the owner. As mentioned in earlier posts, there must be strict rules and guidelines for the owners and they must know that the property will be inspected frequently, but this will usually give the owner a no hassle investment that is very easy to manage.