Would You Consider This Deal?
20 lot mobile home park for sale.
asking: $125000/ seller will carry mortgage w/ 8% interest only, balloon in 3 years.
only 5 lots are rented @ $135/mth, other 15 are vacant
owner has not given park much attention and now has "other interests"
other area parks have lot rents from $200-$265
expenses are $11,021 a year (tax, ins, util, maint, management, garbage)
tenants pay own water/sewer.
price per pad $6250.
any thoughts on this???
I have not bought a mobile home park yet, but I have researched it. Are the 15 vacant lots without homes on them or are they vacant mobiles.. It makes a big difference. That being said, in my part of North Carolina average pad costs 14,000 dollars. What is the average where you are? I would take this deal in a second because of the tremendous upside potential, but it may be significantly different where you are. BTW, I think MHP questions are supposed to go on the commerial side. Good luck.
Woops, I guess it is on the commercial side. sorry.
Well its either the deal of the century or its a total dog.
It takes really major bad management to keep any project (MHP, apartment building, office building or anything else) 75% vacant at 1/2 of market rents.
Unless you are willing to assume incompetence on a scale rare in the real world I would look around for a reason that this thing is vacant other than bad management. That the seller is willing to finance is a good sign since it means he thinks the major problem is his own incompetence and he should know better than anybody.
If you conclude that its just incompetence then go for it.
what are the potential redevelopment uses of the land.
There may be another play here than MHP.
Since the seller is willing to carry, see if he also will forego P&I payments until you reach a certain occupancy level (say, 75%). Otherwise, that will be one more expense sucking money from you while you try to make the thing work.
NY-Rick,With what you are telling us about the property you will have an approximately $300.00 a month negative cash flow + the payment. Before making a commitment come up with an exit strategy.
Sure, the more you finance the more your negative cash flow will be.