Pricing A Mobile Home Park?
I keep hearing wonderful things regarding mobile homes with either owning parks or buying used homes and reselling them.
Since I have little knowledge regarding mobile homes. What is the going rate for rental on a mobile home site?
I saw something for sale that has 22 efficiency units, 42 mobile home sites that they say are occupied, 3 mobile homes all on 6.5 acres. They want 3.2 million.
That sounds astronomical to me but I don't know how to work the numbers. Obviously I would need to see financials but just based on what I wrote, does anyone have any feedback???
Thanks,
Betsy
A great tool on this website will help you analyze properties. You can get to it directly at:
http://www.thecreativeinvestor.com/modules.php?name=Tools&op=ProForma
Anything 5 units and above is considered commercial in the eyes of lender. Financing is different for commercial properties. You typically have to put 20% down. You may be able to do with less, if you can get seller to hold a second. If you can get by with 5%-10% down, you will be lucky.
64,
Thanks for the response. I'm aware of the things that make something a commercial rather than a residential loan. Since I hear people talking about how great a mobile home park is to own I was wondering what kinds of numbers to anticpate.
Thanks,
Betsy
Intrinsically, a MHP has no value, at least to me. The land is hard to convert to something else and the homes depreciate, at least in my area. That said, I bought a 22 unit park on about 1 1/2 acres with the newest trailer being older than me (I'm 38). I wouldn't give you a thousand bucks apiece for any of them. But, I paid $285,000.00 for the whole kit and kaboodle for the package. Why? It's a function of cash flow. When I did the numbers, and combined it with the financing, there was no question that the investment would pay immediate dividends. I used none of my own cash, and it makes me money now, as well as in ten years when it's paid for. This really ain't rocket science. You take your resources to see if they will pay the bills and leave you a little or a lot left over.
Good Luck,
Shawn(OH)