Preview:
After years of fighting rising rents, a group of mostly Oaxacan farmworkers in Fresno County have done the seemingly impossible: purchased their mobile home park from its corporate landlord.
The group officially closed escrow on the park Thursday.
Previously called Shady Lakes Mobile Home Park, it will now be known as Nuevo Lago Mobile Home Park. The park will be run by a board of directors, made up of residents. Each household will have a small ownership interest in the park, which will be operated as a limited equity housing co-op. They’ll be able to make decisions about how much rent to charge, park finances and operating rules.
Our thoughts on this story:
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OK so let me get this straight. The non-profits paid $7.6 million for 60 lots, which equates to around $130,000 per lot. And the lot rent is being raised, as a result, to $500 per month from around $400 per month. So now let’s go where the journalist that wrote this never went: the actual financial impact. Current interest rates on a mobile home park like this is around 6%, so the interest alone on this deal is around $456,000 per year. At a $500 per month lot rent, using a more than generous expense ratio of 30%, and with 60 lots total the projected NOI is 60 x $500 x 12 x .7 = $252,000. That’s right, the total projected net income s only enough to cover 50% of the interest on the loan. This deal was probably structured on a short-term loan that the non-profit cobbled together. It will ultimately come due and, with these numbers, this deal will never clear the trees. There’s no way this deal could have been put together at $7.6 million in the private sector, which is probably exactly why the seller was probably more than happy to unload it on the residents. And it also means the rent will have to be around $1,000 per month for this park to continue in operation once the subsidies end.