Let’s try to put Mobile Homes into perspective: Individual homes on leased land are about as illiquid as condos, however when it comes to short-term cash-flow rental yields, there's absolutely no comparison with any other form of residential property. Even among non-residential real estate possibilities, I think that only mini-storage units and city parking lots are even in their ball park.

Let's talk yield on individual lots/homes: While existing individual Mobile Home lots in some cities can cost $75,000 and more, an individual bare-bones 1 acre lot in a rural setting without any amenities can be developed for about $10,000 - $15,000 depending upon whether or not there is existing road access.

We find out we aren't trees
Early in our investment career, my wife Ana (then girlfriend) and I bought the now infamous book Deals on Wheels by my good friend Lonnie Scruggs. After a frustrating period of time working our local market area (which at the time was Los Angeles), and only putting one deal together, I told Ana it seemed the community owners and mangers treat these properties like their own private playgrounds, and they weren't letting us play!

In Part 1, we talked about some of the things that make manufactured home communities ideal investments and the different types of communities we're liable to run into. In Part 2, we discussed how community values are determined using the income valuation approach, how the NOI, (Net Operating Income) is arrived at, and the basic premise behind the Cap (capitalization) Rates.

In this article, let's use some of the knowledge we've gleaned and look at how we might approach the valuation of a potential acquisition. In keeping with the title of this article, let's look at the type of community many of us are likely to encounter when we first start out, the Turnaround Challenge.