Mobile Home Park Excel Model
Vintage Capital’s 24-lot Tacoma mobile-home park doubled its value to $3 M in five years—returning all investor capital through a refinance and projecting a >20 % IRR and >2.2× equity multiple—prompting the launch of a diversified MHP fund and rare co-investment slots in oversubscribed parks near Austin and Charleston.
We are proud to announce another successful investment.
And we’d like to give you a mobile home park investment model that lays out the moving parts – read on for further details.
Vintage’s principals invested in a 24-lot mobile home park 20 minutes from downtown Tacoma, WA with our operating partner five years ago for $1.6MM.
The park was full at purchase and the ~5% cap rate probably looked high to most prospective investors, but rents were significantly under market and there was opportunity to add a couple of more lots.
Since then net operating income increased substantially (via the addition of new homes and reasonable rent increases), which enabled consistent 8%+ cash-on-cash distributions.
The debt was recently refinanced based on a valuation of $3MM, enabling a full return of investors’ capital.
We see continued upside moving forward and so will keep holding, but if we were to sell at the appraised value, this would represent a net IRR to our investors of >20% and a >2.2x multiple on invested capital over the five-year life of the deal.
This deal is a prime example of why we love this asset class (stable and growing cash flow, which is ideal for long-term holds with periodic refinances), and why focusing on higher-quality markets and partners is so critical.
Attached is a simple model that illustrates the dynamics of this deal:
It’s designed for back of the envelope underwriting vs precision. Hopefully it’s helpful for those of you who like to analyze various scenarios on your own.
