Podcast Episode #4: How to Retire as a MHP Owner

 

 

If you’re a seasoned mobile home park (MHP) owner, you will eventually reach the moment when retirement starts to look good. You may be wearing down, but struggle with the idea of giving up a regular source of income. You may also worry that market conditions aren’t right for selling your park. How do you know when the time’s right?

 

Check in with the market

Market conditions greatly impact whether or not to sell a park. One of the most predictable metrics in valuing a park is the Cap Rate. They’re determined by taking the park’s net operating income (NOI) and dividing it by the price of the park. The result is an estimated rate of annula return for a prospective purchaser. 

Keeping this number in mind also means analyzing the volume of the market. Is the risk of waiting for a lower cap rate worth getting stuck in a market where there’s too much MHP competition? Is it ultimately more profitable to sell my park now and know it will sell faster? Can I wait a little longer and see how things go? All these questions are important to ask and consider the answers to as a park owner.

 

Think through the process

You also need to think through the selling process, what it consists of and what you’ll need to contribute to make things run smoothly. 

  • Get your books and all your records in order for a potential buyer to review. Nothing puts a buyer off quicker than the inability to get through your records.
  • Raise your revenue if possible to demonstrate a higher profitability for your park, especially If rents are below market and you can raise them a bit without putting out tenants. Make sure what you’re charging for utilities is actually what you’re paying as well.
  • Verify with the municipality that everything is in order. The last thing you want is a surprise when a potential buyer gets an inspection. Talk to planning and zoning and verify that records are correct and that your property is still legally allowed to exist.

 

Remember to have patience

The best approach is to have a plan toward retirement far enough out to watch the market and make a smart decision on timing. Having a five year plan not only gives you time to evaluate your park and make any repairs or updates to create a more appealing property, but it allows you to gauge the market appropriately and not make a rash decision.

Learn more about how to make an educated decision about retiring as a MHP owner with Glenn Esterson, Jason Sirotin and special guest Charles DeHart on the MHP Expert Podcast.

Podcast Transcript

Jason Sirotin: Welcome to the Mobile Home Expert podcast. I’m Jason Sirotin with Glenn Esterson, and today, we have a special guest, Charles DeHart. Charles, how you doing?

Charles DeHart: Doing well.

Jason Sirotin: Glenn,-

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