Tilghman MHP
Federalsburg, MD | Off-Market Acquisition | Dec 2020
Overview
Tilghman MHP is an all ages, affordable community with 57 spaces along Maryland’s Eastern Shore. The community was acquired from a long-time, legacy owner who kept lot rents at $265 for years, despite the fact that market rents hover near $400.
About the Project
The property was acquired through a pocket listing with a local broker that we have done business with on multiple occasions. We’d been in contact with the owners for years, and they informed us of their intent to list the asset for sale and retire. So we nagged (politely) the broker in advance of the asset being listed to ensure we would be the preferred buyer.
The Challenge
A quiet neighborhood with multiple cul-de-sacs, Tilghman MHP has good bones. But the asset was in the family for decades, and the owners had become tired. When Sunrise took over the property, the park had inferior on-site management, below market rents and poor collections. The owner had developed relationships with residents and had been rather lackadaisical in property management.
The Plan:
Sunrise negotiated a $1.5mm purchase price and will begin the turnaround by replacing on-site management, demolishing unsalvageable abandoned homes, renovating salvageable park-owned-homes, and power washing units. Once aesthetics improve, Sunrise will set about recapturing the loss-to-lease and bring lot rents to just beneath the market rate.
The Outlook
According to the purchase appraisal, the prospective value upon stabilization for this asset is $2.07mm. That pencils out to a 38% increase in property value within the first two years. Our buy, improve, refinance, and hold strategy in Tilghman MHP will generate cash flow & build legacy wealth for all of the investors in Fund 3.