This Satsuma, AL mobile home park called Steel Creek MHP consists of 28 total mobile home lots and one cottage home. Satsuma is part of the Mobile, AL metropolitan area.
Out of the 28 mobile home lots, and cottage home, there are 22 total tenants. There are 11 tenant owned homes with an average lot rent of $261.90. 9 rented park owned homes with an average rent of $355.56 above the $261.90 lot rent. 1 rent to own tenant who has 3 years left on his term and is paying $275 for lot rent, and another $625 for the RTO payment. There is also 6 vacant pads and 1 vacant park owned home. The current occupancy for the park is 75.86%. This deal still has upside left in it by filling the vacant home and infilling the 6 vacant lots.
Steel Creek is serviced by public water and sewer that is sub-metered and billed back to tenants. There is also a $20 bill back for trash and mowing. Electric and other utilities are billed directly to tenants.
The park is priced competitively at $720,000. The pricing represents a cap rate of 8.05% using lot rent income and bill back income (excluding home rent income) on normalized actuals using a 40.9% expense ratio. Using a gross cap rate (including POH income) we are at a 10.2% cap rate. We are asking investors to submit cash offers at or above $720,000. This park may or may not qualify for conventional bank financing from a local bank, and seller financing may also be an option. Under the assumption that this is eligible for bank financing we have modeled a 75% LTV, with a 5% interest rate and a 25 year am. With this assumption we are seeing a 22.3% cash on cash return in year one and a 28.4% total return.
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