In June 2018, the Keel Team and investment partners purchased a 61 lot mobile home park outside of Memphis, TN.  Through improvement initiatives such as: filling vacant pads, bringing in new homes, removing run down homes, converting utility payment from park paid to tenant paid, modest lot rent increases, and others, we were able to improve the park operations, increase NOI, and achieve a significant value increase.  The financial results of these efforts are summarized below:  

 

Original acquisition price: $1,600,000 (June 14, 2018)

 

Equity: $361,250 initial cash investment from partners

Additional $60,000 capital call at month 13 of ownership

 

Debt: Recourse debt for both general partners

 

10% Preferred Distributions Paid Monthly, Starting in Month 2:

 

• July 2018: $3,010.42

• August 2018: $3,010.42

• September 2018: $3,010.42

• October 2018: $3,010.42

• November 2018: $3,010.42

• December 2018: $3,010.42

• January 2019: $3,010.42

• February 2019: $3,010.42

• March 2019: $3,010.42

• April 2019: $3,010.42

• May 2019: $3,010.42

• June 2019: $3,010.42

• July 2019: $3,010.42 (Additional $60,000 capital call, no preferred interest paid on this as both partners put in 50%)

• August 2019: $3,010.42

• September 2019: $3,010.42

• October 2019: $3,010.42

• November 2019: $3,010.42 

• December 2019: $3,010.42

• January 2020: $3,010.42

• February 2020: $3,010.42

• March 2020: $3,010.42

• April 2020: $3,010.42

 

Total Preferred Distributions Paid to Investors: $66,229.24

 

Cash Out Refinancing Event

April 24, 2020

 

Investors received $845,564.76 from the refinancing event.

 

The new debt is non-recourse. Fannie Mae, 3 years of interest only, 30 year amortization, 3.73% interest rate, 10 year term, 75% loan to value. 

 

Summary:

 

$66,229.24 Preferred Distributions

$845,564.76 Cash out Refinancing Distribution

$911,794.00 Total Distributions

($421,250) Equity Investment ($361,250 + $60,000)

$490,544 Total Return on Capital

 

Timeframe:

22 months = 1.83 years

 

ROI:

63.52% annualized cash on cash ROI 

 

​Future potential ROI opportunities:

• Infinite returns since all of the original equity investment has been returned, yet we still own the MHP

• Forced savings of approximately $443,750 due to the equity remaining in the property after the April 2020 refinancing event

• Additional potential equity appreciation as the MHP continues to increase in value