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DESERT HOT SPRINGS IS BACK!  EXPANSION POTENTIAL IN A STRENGTHENING MARKET

The mobile home park for sale in the city of Desert Hot Springs, CA, Riverside County sold on January 12, 2005 for $1,400,000.  Vince Reynolds and Norman Sangalang of MHRV Advisors represented the Buyer and Seller in this transaction.

The park consists of 49 mobile home spaces and 4 apartment units (53 total units).  Space and plans exist to add another 18 spaces.  The property is situated on 9.18 acres and is serviced by city water and a septic system. Most spaces will accommodate doublewides homes. Amenities at the mobile home park include a large swimming pool, wading pool and natural hot springs spa, poolside restrooms and a laundry facility. The park is subject to the County of Riverside rent control allowing for 100% of the annual CPI increases.

Upside potential is possible by developing additional spaces. Average rents are currently at $267 which is subject to the County of Riverside Rent Control allowing for 100% of the annual CPI increases.   The Riverside CPI index averaged a 2.8% increase over the past five years ($7 to $8 increase per year).

The buyer obtained mobile home park financing of $1,050,000.

Vince Reynolds commented, “Desert Hot Springs has really turned around in the last few years.  Market vacancy might have reached the 20% level as recently as 2001.  Overpricing in the Palm Springs (Coachella Valley) has brought families into what was once an area populated by snowbirds. Just about any park with vacancies in the last few years is full.  Some 55+ parks are changing to family, thus creating tenant moves from one 55+ park to another.  Everyone is benefiting from the booming population growth.”

Norman Sangalang added, “The buyer, a mobile home dealer and park owner, has begun removing older homes and moving in new manufactured homes.  He is also working on the development of 18 spaces that were planned and permitted at during the original construction.  Once built filling these spaces should come quite easy, given current market conditions.  These spaces will also be exempt from Rent Control” 

Reynolds continued, “The buyer was anxious to begin work on the upgrades and expansion.  He did not want to wait for 90 – 100 days while we obtained loan approval and the eventual close of escrow so we formulated a management agreement allowing him to take over all operations of the property within twenty days of executing a contract.  The seller was happy as he was able to focus on his other properties and the buyer was happy because he could begin work on the park immediately – not from the sidelines.”

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