1. The parks are usually in a less than favorable part of town. Therefore the landis cheap and you will be spreading that cost over numerous mobile homes.2. Provided you purchased the right mobile home park, there will be vacanciesfor you to bring in extra mobile homes. (Yes, that's right….you want at least 20%of the park vacant so that you have a huge upside!) You're healthy, sharp and fullof energy so you'll improve the quality of the park, raise rents and maximize your rent roll. By the way, this will immediately increase the value of your mobile homepark through the cap rate valuation.
Example
30 Space Park, $300 a month Rent Roll (50% Vacant) = $45,000 yearly rent$45,000 - 15,000 (33% of rent goes towards Operating Expenses) = $30,000$30,000 (N.O.I.) / 9.0 % (cap rate) =
$333,333 (Your Purchase Price)The Upside:
30 Space Park, 100% Occupancy, $320 a month rent roll = $115,200 yearly rent$115,200 - $34,560 (30% park operating expenses) = $80,640$80,640 (N.O.I.) / 9.0% (cap rate) =
$896,000 (at 100% occupancy)
Over $500,000 profit!
3. If cash flow is low you can add additional revenue by putting in a coin operatedlaundry mats, vending machines, lawn service, day care service, self storage,etc.4. You can purchase mobile homes at a 40%-50% discount and resell them onterms (either with a lease option or note). Home ownership is the Americandream so when you advertise "Own your own home, $2000 down, low monthlypayments - Bad credit OK, call Boca Vista Mobile Home Park" your phone willring off the hook, trust me. From there you take their down payment and havethem sign your lease option paperwork that details the term of their loan with you.So why sell them one of your mobile homes….isn't that an asset to the park youask? Yes, but:A. You now collect the lot rent. Pure profit with no additional expense.B. Now you have someone in your park that has pride of ownership andwill most likely take better care of the mobile home than a renter.
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