SUNRISE MOBILE HOME PARK
Modesto, CA

PURCHASE DATE:  December 2014

Sunrise Mobile Home Park, by far, has been our most challenging value add renovation. The performa on this park was a 21% annualized return over a 54-month hold period (duration due to a significant prepay on the loan). We are moving forward with renovations to the park and mobile homes and are on target to deliver our returns despite the following setbacks:

  • Significant delinquencies in inherited tenant base has led to a 50% re-tenanting of the park due to California’s highly protective tenant laws. This transition process has taken approximately 20 months to complete.
  • One leak in a gas line led to PG&E requiring replacement of 1/3rd of the gas piping in the park
  • Four mobile homes were destroyed by fire

On a positive note, monthly gross rents have been increased from $45,000 to $51,000 since acquisition, and the rent per unit has been increased 11% over the past 12 months. We will be leasing an additional 15 mobile homes as their renovations are completed over the next 3 – 4 months. The resident profile has been upgraded significantly by integrating an improved tenant screening approval process as well. Multiple valuable lessons learned through the management of this property are being utilized in the underwriting processes for all potential acquisitions. At stabilization the gross income will have increased by approximately 33%.

PURCHASE DATE:  December 2014

Sunrise Mobile Home Park, by far, has been our most challenging value add renovation. The performa on this park was a 21% annualized return over a 54-month hold period (duration due to a significant prepay on the loan). We are moving forward with renovations to the park and mobile homes and are on target to deliver our returns despite the following setbacks:

  • Significant delinquencies in inherited tenant base has led to a 50% re-tenanting of the park due to California’s highly protective tenant laws. This transition process has taken approximately 20 months to complete.
  • One leak in a gas line led to PG&E requiring replacement of 1/3rd of the gas piping in the park
  • Four mobile homes were destroyed by fire

On a positive note, monthly gross rents have been increased from $45,000 to $51,000 since acquisition, and the rent per unit has been increased 11% over the past 12 months. We will be leasing an additional 15 mobile homes as their renovations are completed over the next 3 – 4 months. The resident profile has been upgraded significantly by integrating an improved tenant screening approval process as well. Multiple valuable lessons learned through the management of this property are being utilized in the underwriting processes for all potential acquisitions. At stabilization the gross income will have increased by approximately 33%.