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Offering #763070 | 1
2 Park MHC Portfolio3 Stars • 150 - 200 Sites • All Ages Minot - Bismark, North Dakota RegionOffering #763070
Offering #763070 | 2
Non-Endorsement & Disclaimer This information has been secured from sources we believe to be reliable, but we make no representations or warranties,
expressed or implied, as to the accuracy of the information. References to square footage
or age are approximate. Buyer must verify the information and bears all risk for any
inaccuracies. The information, calculations and data presented in this report are believed
to be accurate but are not guaranteed. The information contained in this report shall not
be considered as a substitution for legal, accounting or other professional advice.
Please seek proper legal and tax advice as appropriate before making investments.
Brian McDonaldPlease Contact:
Regional DirectorRocky Mountains & Great Plains
(720) 636 - [email protected]
Listed in Conjunction with Signal Realtors:
Jeff StremickAssociate Broker/Co-Owner
Offering #763070 | 3
• Very absentee owner resulted in below market occupancy (had not visited park in 2 years)
• Rents $40-$50 below market due to no rent increases in the last 4-5 years
• Properties located in major MSA’s outside of Bakken economic footprint
• Double digit cash-on-cash returns in year 2
Property Highlights
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The subject offering is a two park MHC portfolio with over 171 manufactured housing spaces and is in two of the largest and most stable markets in North Dakota. Additionally, both properties are outside of the economic reach of the Bakken oil fields. Both communities were constructed in the 1960’s and are on municipal water, and the smaller of the two communities is connected to a lagoon while the other is connected to municipal sewer. The smaller community features off-street parking and larger lots, of which 75% can accomodate double-wides (DW’s). The larger community features an office with an apartment attached and a large, heated workshop. Both parks have single family rental homes on site. The office/apartment building had a new roof installed in 2017and some of the roads were repaved in 2016.
The value-add opportunity lies in the fact that the owner has been absent in managing these communities and until recently, had not been to the communities in two years. The rents have not been raised in 4-5 years and are currently $40-$50 below market. Furthermore, the occupancy has fallen below the market occupancy of 85%-90%. With focused leasing efforts, the income could be increased substantially through both rent increases and leasing up spaces. In addition, through effective management, a new buyer could decrease the expense ratios which have averaged over 50% across both parks for the past several years. Both communities are in metros where almost all of the top employers are in the education, healthcare and government sectors which provides a stable job base for residents. Both markets have less than 3% unemployment, average home prices over $200,000 and median household incomes of more than $60,000.
Property Discussion
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Property Overview
Property Type MHC
Number of Units 150 - 200
Price Per Unit $17,150 - $22,850
Income Per Unit $3,350 - $4,450
Expenses Per Unit ($1,800 - $2,400)
Physical Occupancy 77%
Floodzone (Community 1) No
Floodzone (Community 2) No
Road Type (Community 1) Gravel
Road Type (Community 2) Paved - Asphalt
Acreage Community 1 30 - 40 Acres
Acreage Community 2 10 - 20 Acres
Community 1 - AmenitiesLaundry Facilities Off-Street Parking
Community 1 - FeaturesAdjacent to Softball Complex Interchangeable MH/RV LotsNewly Renovated 3BR/2BA House with 2 Car Garage
Community 1 - UtilitiesUtility/Service Provider Water & Sewer
PipeMeter Paid By
Water Municipal Mostly PVC Yes TenantSewer Lagoon Mostly PVC None CommunityTrash Dumpster N/A N/A Community
Community 2 - AmenitiesOn-Site Office Heated Workshop
Community 2 - FeaturesDuplex 2-Story House Office with Small Apartment
Community 2 - UtilitiesUtility/Service Provider Water & Sewer
PipeMeter Paid By
Water Municipal Mostly PVC Yes TenantSewer Municipal Mostly PVC Yes TenantTrash Curbside N/A N/A Tenant
Purchase Overview
Purchase Price $3,750,000Community 1 $1,885,000
Community 2 $1,865,000
Inventory Acquisition $325,000
Down Payment $1,025,000
Mortgage $2,400,000
Property Overview
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Package Assumptions
Rent Increases - Community 1 Year 1: $20 / Year 2-5: $15
Rent Increases - Community 2 Year 1-2: $25 / Year 3-5: $10
Lease Up - Both Year 1-2: 3 Homes / Year 3-4: 4 Homes
Lease Up Expense - Both 20% of Lease Up Rental Income
Other Income Growth Rate 3% Per Year
Expense Growth Rate 2% Per Year
Exit Capitalization Rate 9.00%
Financing Bank
Loan Term (Years) 5 Years
Ammortization Per. (Years) 25 Years
Capital Stack/Loan Information
Amount % of Asking Price % of Community Price Interest Rate Term Amort. Payment (Monthly)
Total Investment $1,025,000 28% 30%
Financed & Rental Homes $325,000 8.5%
Down Payment $1,050,000 27% 30%
Loan Amount $2,475,000 64.5% 70% 5.50% 10 25 $14,740
Financial Measurements
Year 1 Year 3 Year 5
Effective Gross Income 665,169 801,728 911,724
Less: Operating Expenses (363,350) (400,407) (432,401)
Net Operating Income 301,819 401,321 479,323
Less: Annual Debt Service (176,857) (176,857) (176,857)
CASH FLOW Before Taxes 124,962 224,464 302,465
Debt Coverage Ratio 1.71 2.27 2.71
Loan to Value Ratio 70.2% 50.5% 40.2%
Capitalization Rate Based on Cost 8.81% 11.72% 13.99%
Capitalization Rate Based on Resale Price 9.00% 9.00% 9.00%
Gross Rent Yearly Multiplier 4.31 5.06 5.71
Physical Vacancy 23.4% 14.0% 9.4%
Economic Vacancy 25.8% 16.1% 9.3%
Operating Expenses Ratio 54.6% 49.9% 47.4%
Cash on Cash Return - Before Taxes 12.2% 21.9% 29.5%
Internal Rate of Return (IRR) - Before Taxes -0.1% 39.6% 37.5%
Transaction Overview
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Annual Property Operating DataYear 1 % of Rev Year 2 % of Rev Year 3 % of Rev Year 4 % of Rev Year 5 % of Rev
INCOMERental Income 794,589 119.46% 840,849 114.02% 882,069 110.02% 907,629 104.83% 933,189 102.35%Other Income 88,461 13.30% 91,115 12.36% 93,848 11.71% 96,664 11.16% 99,564 10.92%
YALE'S ADDITIONSRent Increase 34,020 5.11% 30,540 4.14% 18,480 2.31% 18,480 2.13% 18,480 2.03%Lease Up 10,728 1.61% 49,800 6.75% 92,880 11.58% 135,660 15.67% 160,200 17.57%Less: Vacancy (199,200) -29.95% (211,440) -28.67% (222,120) -27.71% (229,200) -26.47% (236,280) -25.92%Less: Premium (63,429) -9.54% (63,429) -8.60% (63,429) -7.91% (63,429) -7.33% (63,429) -6.96%
EFFECTIVE GROSS INCOME 665,169 100.00% 737,435 100.00% 801,728 100.00% 865,804 100.00% 911,724 100.00%EXPENSES
Advertising 3,000 0.45% 3,060 0.41% 3,121 0.39% 3,184 0.37% 3,247 0.36%Automobile 400 0.06% 408 0.06% 416 0.05% 424 0.05% 433 0.05%Bank Service Charges 600 0.09% 612 0.08% 624 0.08% 637 0.07% 649 0.07%Casual Labor 27,720 4.17% 28,274 3.83% 28,840 3.60% 29,417 3.40% 30,005 3.29%Gas & Oil 1,500 0.23% 1,530 0.21% 1,561 0.19% 1,592 0.18% 1,624 0.18%Insurance - General 8,550 1.29% 8,721 1.18% 8,895 1.11% 9,073 1.05% 9,255 1.02%Auto Insurance 894 0.13% 912 0.12% 930 0.12% 949 0.11% 968 0.11%Licenses & Permits 2,400 0.36% 2,448 0.33% 2,497 0.31% 2,547 0.29% 2,598 0.28%Postage and Delivery 50 0.01% 51 0.01% 52 0.01% 53 0.01% 54 0.01%Office Expense 1,100 0.17% 1,122 0.15% 1,144 0.14% 1,167 0.13% 1,191 0.13%Professional Fees 5,000 0.75% 5,100 0.69% 5,202 0.65% 5,306 0.61% 5,412 0.59%Bookkeeping Fees 3,000 0.45% 3,060 0.41% 3,121 0.39% 3,184 0.37% 3,247 0.36%Equipment Repairs 2,000 0.30% 2,040 0.28% 2,081 0.26% 2,122 0.25% 2,165 0.24%Repairs & Maintenance 34,645 5.21% 35,337 4.79% 36,044 4.50% 36,765 4.25% 37,500 4.11%Small Tools and Equipment 1,500 0.23% 1,530 0.21% 1,561 0.19% 1,592 0.18% 1,624 0.18%Shop Supplies 2,500 0.38% 2,550 0.35% 2,601 0.32% 2,653 0.31% 2,706 0.30%Taxes 26,111 3.93% 26,633 3.61% 27,166 3.39% 27,709 3.20% 28,263 3.10%Telephone Expense 150 0.02% 153 0.02% 156 0.02% 159 0.02% 162 0.02%Travel Expense 1,000 0.15% 1,020 0.14% 1,040 0.13% 1,061 0.12% 1,082 0.12%Utilities 175,103 26.32% 178,605 24.22% 182,177 22.72% 185,820 21.46% 189,537 20.79%Wages 28,800 4.33% 29,376 3.98% 29,964 3.74% 30,563 3.53% 31,174 3.42%Fines & Penalties 26 0.00% 26 0.00% 27 0.00% 27 0.00% 28 0.00%Reserves for Replacement 8,550 1.29% 8,721 1.18% 8,895 1.11% 9,073 1.05% 9,255 1.02%Lease Up Expense 2,146 0.32% 9,960 1.35% 18,576 2.32% 27,132 3.13% 32,040 3.51%Management Fee 26,607 4.00% 29,497 4.00% 32,069 4.00% 34,632 4.00% 36,469 4.00%RE Tax Reassessment Liability 0.00% 1,614 0.22% 1,647 0.21% 1,680 0.19% 1,713 0.19%Total Expenses 363,350 54.63% 382,361 51.85% 400,407 49.94% 418,521 48.34% 432,401 47.43%Net Operating Income 301,819 45.37% 355,074 48.15% 401,321 50.06% 447,283 51.66% 479,323 52.57%Less: Annual Debt Service (176,857) -26.59% (176,857) -23.98% (176,857) -22.06% (176,857) -20.43% (176,857) -19.40%CASH FLOW Before Taxes 124,962 18.79% 178,217 24.17% 224,464 28.00% 270,425 31.23% 302,465 33.18%
Offering #763070 | 8
Cash Flow AnalysisYear 1 Year 2 Year 3 Year 4 Year 5
RENTAL ACTIVITY ANALYSIS Rental Income 794,589 840,849 882,069 907,629 933,189 Other Income 88,461 91,115 93,848 96,664 99,564
YALE'S ADDITIONSRental Increase 34,020 30,540 18,480 18,480 18,480 Lease Up 10,728 49,800 92,880 135,660 160,200 Less: Vacancy (199,200) (211,440) (222,120) (229,200) (236,280)Less: Premium (63,429) (63,429) (63,429) (63,429) (63,429)Effective Gross Income 665,169 737,435 801,728 865,804 911,724 Less: Operating Expenses (363,350) (382,361) (400,407) (418,521) (432,401)Net Operating Income 301,819 355,074 401,321 447,283 479,323 Less: Annual Debt Service (176,857) (176,857) (176,857) (176,857) (176,857)Net Cash Flow 124,962 178,217 224,464 270,425 302,465
PROPERTY RESALE ANALYSISProjected Sales Price 3,353,547 3,945,264 4,459,127 4,969,807 5,325,806 Less: Selling Expenses (100,606) (118,358) (133,774) (149,094) (159,774)Adjusted Projected Sales Price 3,252,941 3,826,906 4,325,353 4,820,713 5,166,032 Less: Mortgage Balance Payoff (2,353,995) (2,305,394) (2,254,052) (2,199,814) (2,142,517)SALE PROCEEDS Before Taxes 898,946 1,521,512 2,071,301 2,620,898 3,023,516
CASH POSITIONCash Generated in Current Year 124,962 178,217 224,464 270,425 302,465 Cash Generated in Previous Years 124,962 303,179 527,643 798,068 Cash Generated from Property Sale 898,946 1,521,512 2,071,301 2,620,898 3,023,516 Original Initial Investment (1,025,000) (1,025,000) (1,025,000) (1,025,000) (1,025,000)Total Potential CASH Generated (1,092) 799,691 1,573,944 2,393,967 3,099,049
FINANCIAL MEASUREMENTSDebt Coverage Ratio 1.71 2.01 2.27 2.53 2.71Loan to Value Ratio 70.2% 58.4% 50.5% 44.3% 40.2%Capitalization Rate Based on Cost 8.81% 10.37% 11.72% 13.06% 13.99%Capitalization Rate Based on Resale Price 9.00% 9.00% 9.00% 9.00% 9.00%Gross Rent Yearly Multiplier 4.31 4.69 5.06 5.48 5.71Physical Vacancy Rate 23.4% 18.7% 14.0% 9.4% 9.4%Economic Vacancy Rate 25.8% 21.0% 16.1% 11.6% 9.3%Operating Expenses Ratio 54.6% 51.9% 49.9% 48.3% 47.4%Cash on Cash Return - Before Taxes 12.2% 17.4% 21.9% 26.4% 29.5%Internal Rate of Return (IRR) - Before Taxes -0.1% 35.0% 39.6% 39.6% 37.5%
Offering #763070 | 9
Property Photos - Community 1
Offering #763070 | 10
Property Photos - Community 2
James CookHead of Brokerage
Operations386.623.4623
Chris San JoseHead of Lending
Operations850.443.4580
Harrison BellRegional Director
Mid-Atlantic985.373.3472
Ryan LorenzenRegional Director
Western U.S.310.871.4977
Justin CookRegional DirectorSoutheastern U.S.
Dana SmithRegional Director
Southwest303.323.5649
Brian McDonaldRegional Director
Rocky Mountains & Great Plains720.636.6551
250+ Communities Over $2 Billion in Production
45,000+ Sites
ATLANTA | CHICAGO | DALLAS | DENVER | LOS ANGELES | MIAMI | WASHINGTON D.C.
PHONE 1-877-889-9810 EMAIL [email protected] FAX 941.827.7977
Our policy requires that we obtain this Non-Disclosure Agreement (the “Agreement”) before disclosing certain information about certain real estate that may be available for sale or investment. This information must be kept confidential. In consideration of Yale Realty Advisors (“Yale”) and Brian McDonald (or any party designated by Brian McDonald) (the “Broker”) providing the information on such real estate which may be available for purchase or for sale (the “Potential Transaction”), I understand and agree:
1. (a) That any confidential or proprietary information (the “Confidential Information”) of the potential selling party (the “Seller”) provided is sensitive and confidential, and that its disclosure to others may be damaging to the Seller. I agree that upon the earlier of: (i) two (2) years from the date of this Agreement and (ii) the request of Broker, Yale or Seller, any Confidential Information furnished to me shall be either returned or destroyed, and I shall certify to such destruction.
(b) Not to disclose, for a period of two (2) years from the date I sign this Agreement, any Confidential Information regarding the Potential Transaction to any other person who has not also signed this Agreement or a joinder thereto, except to the extent necessary to secure the advice and recommendations of my employees, officers, directors, members, managers, advisors, attorneys, accounts or financing sources (collectively, the “Representatives”) regarding the Potential Transaction. “Confidential Information,” as used in this Agreement, shall include the fact that the Potential Transaction is for sale or open to offers, and any other data provided. My Representatives shall abide by the terms of this Agreement, and I agree to be liable for any breach of the provisions of this Agreement by any of my Representatives.
(c) Not to contact the Seller or its Representatives, suppliers or customers except through the Broker. I shall present all correspondence, inquiries, offers to purchase and negotiations relating to the Potential Transaction directly to the Broker, and all such negotiations shall be conducted exclusively through the Broker. At such a time as a LOI or PSA is reached regarding the Potential Transaction, I agree to copy the Broker on all communication and negotiations related to the Potential Transaction.
2. That all information regarding the Potential Transaction is provided by the Seller or other sources and is not verified by the Broker or Yale. The Broker and Yale have done their best to ensure the accuracy of said information, but the Broker and Yale make no, representation or warranty, express or implied, as to the accuracy of such information. I agree that the Broker and Yale are not responsible for the accuracy of any other information I receive, and I agree to indemnify and hold the Broker, Yale, and each of their Representatives harmless from any claims or damages which may occur by reason of the inaccuracy or incompleteness of any information provided to me with respect to any Potential Transaction.
I acknowledge that I have received an exact copy of this Agreement and that I have read this Agreement carefully and fully understand it.
Regarding Property: Offering #763070
Signature Date
Printed Name
Sign, date, and send back to Brian McDonald, Fax: (941) 827-7977, Phone: (720) 636-6551 Email: [email protected]
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Non-Disclosure Agreement
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