Pine Crest, a diamond in the rough - Mobile Home As Investment Property
This deal was found off market through a broker. Owners of Pine Crest, the first heirs to the property, were retiring and looking to sell the property. Since the park was built in the 1960s, it had been owned by the family. We bought this property for just under an 8% cap rate. It has 82 spaces, about 20 were vacant, lot rents were below market rate, and all residents owned their homes.
The Pine Crest lot rents when we acquired them were over $100 below market rate, and we have since raised the rents in manageable chunks and will be at fair market rent in spring of 2022. Our initial capex was substantial because of road repair, demo homes, esthetic upgrades, tree work, water meters, and other miscellaneous items. We sub-metered the water and billed the usage back to the residents, saving nearly $70,00 per year. We also fixed leaks and have slashed community water usage by about 70%! The remaining 20 or so vacant lots are being filled with new and used homes.
The Value Created:
With low interest rates and huge demand for affordable housing, the market has been in our favor. We have been able to increase fair market value by over 240% in under two years based on current cap rates and our increased operating income. To accomplish this, we raised rents, billed back utilities, filled vacant lots, stabilized the tenant base, resolved deferred maintenance issues, and allocated Capital Improvement Budgets. As this project continues, more value is being unlocked for both owners and residents.