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Posted by Gillett on June 02, 2005 at 17:46:52:

Hello all,

I suppose I'm posting in hopes of finding out if I'm way off on this one. I have been looking at a Mobile Home Park for sale but I'm starting to think it's a bear trap.

The park is about 3 decades old and so are all the homes in it. They have been used as rentals and are really just trash that the current owner hasn't paid to have hauled off. The realtor kept talking like someone could rehab them but that isn't really feasable. More details about the park:

-There are three homes that are not owned by the park and there are 22 lots total in the park. Those three owners pay $170.00 lot rent but here's the catch....one is FSBO, one is owned by the park owners son and the other is owned by the park owners sister.
-Somehow, they have managed to get three other renters in there but those homes can't be much better than all the others.
-Zoning commission says the homes I move in will have to be 4 years of age or newer but lot sizes and so forth will be grandfathered. Several lots are also smaller sizes than todays singlewides so they will have to be new yet small homes. Furthermore, all the electric service will have to be moved underground since now it's up in the air on poles.

The park is in a place that will support it nicely if it's fixed up and it has city water and sewer so that's nice but the water is not individually metered and I don't believe people there pay for it (park eats that cost currently, trash pickup too!). The owner is asking 195K and will owner finance but wants a substantial down. I have a bad feeling that I will be hemorraging money for a couple of years getting this park fixed up with new homes and electric but I am sure it will be a cash cow once that is done. On the one hand, I would love to invest and the price is less than the median cost of a SFH in Dallas. On the other hand, if I pay that big down I won't have the money for improvements.

I'm torn. I think I should make an offer with a small down (say 10 - 15K) but pay close to the full price on good terms and if they aren't as motivated as I think I can walk away. It's been on the market for going on 9 months and I think the owner doesn't want to recognize that it needs as much as it does.

Gillett

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Posted by Greg(PA) on June 03, 2005 at 13:05:51:

I am no MHP expert, but if you think the place can be good eventually, and you have the energy to tackle it:
*deduct from the purchase price the cost to put the electric underground (since that's required to meet code)--get a quote
*Talk with the zoning people about reconfiguring the park to maybe get 16-18 modern-sized lots instead of 22 tiny ones. Assuming they're supportive, get a quote. This should increase the value of the place.
*offer the guy the low-down bid, but offer another big chunk in 3-5 years (when you should be getting some cash flowing in).

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Posted by Gillett (TX) on June 03, 2005 at 13:21:21:

Thank you so much for your response Greg.

I have thought about reconfiguring the park. There might be a couple of lots that aren't so deep that I can put together and stick a doublewide on and I can replicate that 3 or 4 times. I believe I would sell the homes Lonnie style and keep the lot rent going indefinately.

That last idea is why I love this board so much! I didn't think about splitting up the down into seperate payments. Many thanks for the ideas. I'm reading Ray @lcorn's fine book on MHP's now and it is both thrilling and scary! Due diligence, Baby!

Gillett