Online Calculator | Buy Mobile Home – What Will You Tell Your Grandchildren If You Miss This Opportunity?

Buy Mobile Home – What Will You Tell Your Grandchildren If You Miss This Opportunity?

You only need one mobile home park. That’s all you need to create a sizable asset and a consistent source of income. That’s assuming you buy it and operate it correctly. There has not been a better time to buy mobile home in the last decade. Due to problems in the commercial real estate lending market, prices for parks have plummeted over the last six months. Desperate sellers are dumping their parks at prices far less than construction cost. Just look at the prices on the site. Notice how many sellers have written on their price “must sell”, “desperate”, and “all reasonable offers accepted”. And they are also advertising “seller financing available”. It is, without question, a buyer’s market.

It wasn’t always that way. Just twelve months ago, people would complain that there were no good deals out there. For sure, there weren’t many. Sellers were trying to get 6% to 7% cap rates. And many were including in their numbers rent raises and increased occupancy that didn’t even exist. Going through the list of mobile home parks for sale on the site was truly depressing. Where were the good deals?

Well, they’re here now.

So how can one mobile home park change you and your family’s life? Here’s the economics based on a 30 space park that you buy for $270,000 from an anxious seller. Let’s assume that the park has 24 lots, is 80% occupied, receives $150 per month for each lot, and the expense ratio is 30%. Then that gives you the following net income: [ 24 x $150 x .7 x 12] = $30,240. Based on a sales price of $270,000, that’s an 11% cap rate.

Let’s say you can increase the lot rent by $10 per month each year, so that in year five the rent is $200 per month net of utilities. That’s pretty plausible, right? Let’s also assume that you are able to fill just 3 more lots over that five year period, through aggressive marketing and thinking outside the box. That’s not much, right? Well, let’s look at the net income now: [27 x $200 x .7 x 12] = $45,360. Based on your purchase price, that’s a cap rate of 17%. Pretty good, huh?

So what can you do with that cap rate of 17%. Well, you could sell the park at a 10% cap, and put $183,600 in your pocket before tax. Or you could hold the park until the mortgage is paid off and put $45,360 in your pocket annually (assuming you never rent another lot or raise the rent another dollar, ever). And don’t forget that you only put $54,000 [20% of purchase price] down on the park. That’s a 300% return on your investment within 5 years, on pretty conservative assumptions. Try and make that kind of return on any other form of real estate, especially now.

So there’s a road map for you to improve the lives of you, your kids, and your grandchildren. The opportunity is right now.

About Dave Reynolds

Dave Reynolds is regarded as one of the leading Manufactured Housing Industry experts. He has purchased over 50 mobile home communities, 100′s of mobile homes, and has helped thousands of investors buy mobile home parks. Mr. Reynolds has also authored and co-authored some very informative books on investing in Mobile Home and RV parks.

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