Debt Free Dr

To help other dentists obtain financial independence within 5-7 years by investing in passive real estate investments.

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DebtFreeDr

In February 2023, my business partner and I at Perdido Capital bought a mobile home park for $4.2 million.

One year later, it was worth $8.4 million.

Here’s the part that makes most people’s jaw drop: on day one, we evicted 200 people from the property. Yes, 200 people in a single afternoon. This place had drugs, violence, gang activity, and tenants who hadn’t paid rent in six months. Everyone who heard about it told us we were insane.

But we saw something nobody else did.

In this post, I’m going to walk you through exactly how we transformed a failing, class F mobile home park into a cash-flowing machine generating over $700,000 in net operating income.

The decisions we made in the first 90 days changed everything, and I’m going to share the real numbers behind every step.

Rather watch instead? Check out the video:

What We Bought and Why Everyone Else Passed

This mobile home park is located in South Louisiana, positioned between three of the largest metropolitan areas in the state. My business partner already owned several parks in that area and knew the market inside and out. His primary broker brought us the opportunity.

What the Seller Was Offering

    
• 149 permitted lots
    
• 140 existing lots, 120 of which were occupied
    
• 55 park-owned homes that the seller rented out himself
    
• A large metal building on the property
    
• Additional land with potential for future expansion
    
• Asking price: $4.2 million

Breaking that down, we were looking at roughly $30,000 per pad in a market where lot rent was already exceeding $400 a month. On paper, it looked like a reasonable deal. But here’s where it got interesting.

What Due Diligence Actually Revealed

We agreed to the asking price immediately, then began an extensive due diligence process. What we found was both terrifying and exciting at the same time.

The park had been losing money for three consecutive years. Despite its prime location, the previous owner had been managing it like it was on the brink of closure. This was a class F facility. The absolute worst.

Of the 55 park-owned homes, 30 were completely vacant. The other 25 housed tenants who were, to put it generously, extremely difficult to manage. The existing rent roll was about $44,000 a month, and collections never exceeded 85%. Some tenants hadn’t paid rent in over six months.

Most investors had already walked away from this deal. Several had looked at it and passed. But we saw the gap between what this property was and what it could become.

The Creative Deal Structure That Started Everything

Because of those park-owned homes, we faced a choice. We don’t rent out park-owned homes. We sell them. So we gave the seller an ultimatum before we even closed.

Either we withdraw our offer entirely, or he could rehab the worst of those homes using our construction crew supervisor before closing. He agreed.

Over the next two months, before we owned a single square foot of the property, the seller spent his own money rehabbing 25 of the park-owned homes.

We got the seller to fix his own property before we bought it. That’s the kind of creative deal structuring that makes or breaks investments like this one.

What We Found Below Market During Due Diligence

This property was leaving money on the table at every level. We knew it was going to be a heavy lift, but we had a plan.

Testing the Market Before We Closed

Before we even closed on the property, we tested demand. We put five of the rent-to-own homes up for sale on Facebook. All five sold within one week.

That told us everything we needed to know. There was a massive demand for affordable housing in that market. We developed a waiting list of buyers who had already passed background checks, had $5,000 ready as a down payment, and were willing to pay an average of $900 a month.

We hadn’t even bought the park yet, and we already had a line of qualified buyers waiting.

Day One: The Decision That Changed Everything

We signed the papers that morning. That same afternoon, we evicted 200 people from the property.

This wasn’t just about being tough. It was strategic. Those evictions eliminated collection issues, drug activity, violence, gang-related activity, and the kind of chaos that was destroying the property’s value.

We’re talking music so loud it would vibrate homes at all hours of the night, constant police calls, and an environment where good tenants were afraid to let their kids play outside.

What We Implemented in the First Week

    
• Put every remaining tenant on payment software via a mobile app
    
• Removed all dumpsters from the property to prevent outside dumping
    
• Transferred maintenance responsibilities, like lawn mowing, to tenants
    
• Began the process of selling all vacant and park-owned homes

The First 90 Days: Real Numbers

The transformation accelerated fast once we had control of the property.

Remember, the park started with a $44,000 monthly rent roll. By day 90, we had pushed it to $65,000 a month. We also collected $300,000 in option payments from home sales.

Rather than pocketing that money, we immediately reinvested it to buy and rehab more homes to fill the remaining vacant lots.

This is the flywheel effect in action. The property’s own cash flow was funding its transformation.

The Numbers at 12 Months

By January 2024, eleven months after we purchased the park, the transformation looked like this.

Rent Roll Progression

How We Got From $4.2M to $8.4M in Value

The math behind the valuation double is straightforward once you understand how commercial real estate is valued.

We bought this property as an 8 cap investment based on day one numbers. After our cleanup of tenants and expenses, the park now operates at a 17 cap. Net operating income is currently about $700,000 per year with an expense ratio under 30%, which is exceptional for this asset class.

Take that $700,000 NOI, divide by the $4.2 million purchase price, multiply by 100, and you get 17%. That’s the cap rate.

Here’s the flip side: if we wanted to sell this property today at an 8 cap, which is how we originally bought it, a buyer would pay $8.75 million. That’s how you double your money by improving operations, not by waiting for the market to go up.

We’re not selling, though. The story gets better.

The Tax Advantages Nobody Talks About

After stabilizing the property, we commissioned a cost segregation study. That study yielded over $1 million in bonus depreciation we could take in year one.

Think about what that means. We’re generating $700,000 in net operating income, but on paper, we’re showing a significant loss due to depreciation. That’s essentially tax-free cash flow. The income hits your bank account but gets sheltered from taxes through the depreciation deduction.

We also made a strategic move most investors would miss. We sold the metal building on the property for $150,000. That sale removed $18,000 in yearly real estate taxes from the park’s books. We also negotiated an additional $8,000 a year in tax reduction based on how the parish calculates property value.

That’s $26,000 in annual expense reduction from one transaction.

Our current return on investment, not counting depreciation benefits or the upcoming refinance, is over 30%.

The Cash-Out Refinance 

When we bought the park, interest rates were over 8%. Rates have since come down to the mid-6% range.

We’re planning a cash-out refinance this year. At the current valuation of $8.4 million, that refinance should allow us to repay all of our initial capital contributions while maintaining our current returns.

Let that sink in. We’ll have zero of our own money in the deal, yet we’ll continue collecting over $700,000 in annual net operating income. You won’t find that kind of return structure in the stock market.

Where the Property Stands Today

What started as a class F disaster is now a sought-after community.

    
• Current rent roll: over $80,000 a month
    
• Only 3 empty lots remaining in the entire park
    
• Market lot rent now at $485 a month
    
• Other parks in the area range from $435 to $500 a month
    
• Property has moved from class F to class D and is on track for class B after road paving

Upcoming Projects

We’re planning to pave all the roads within the next 12 months, which should elevate the park to class B status. The proceeds from selling the office building will cover the entire paving cost.

We’re also considering submetering water, adding shut-off valves to water mains, and connecting utilities to the last undeveloped lot. All of these projects will be funded by tenant billbacks for water and sewer.

Not a dollar out of our pocket.

What This Deal Teaches Us About Mobile Home Park Investing

Let me be direct about something. This was a massive lift. There were numerous components that had to align in a very short window. This isn’t something most operators could or should attempt without the right team, experience, and systems in place.

But here’s what I want you to take away.

The biggest opportunities in real estate often look the scariest on the surface. Everyone else saw a disaster. We saw a diamond in the rough. The gap between perception and reality is where the best deals live.

Mobile home parks are one of the most undervalued asset classes in real estate right now. The demand for affordable housing is only increasing. These properties can generate incredible returns when managed correctly, and the tax advantages are genuinely extraordinary.

Speed matters more than most investors realize. The first 90 days set the trajectory for everything that followed. If we had moved slowly or been tentative about the difficult decisions, this transformation wouldn’t have worked.

The tax advantages of real estate are a genuine wealth-building superpower. The depreciation benefits on this deal alone make it far superior to most stock market alternatives when you account for the after-tax return.

The Bottom Line

We bought a failing mobile home park that everyone else passed on, evicted 200 people on day one, and doubled its value in 12 months through disciplined operations, creative deal structuring, and aggressive but strategic management.

The property now generates over $700,000 in annual NOI, delivers a 30%+ return on investment, and will soon have zero of our own capital in the deal after refinancing.

This is what mobile home park investing looks like when it’s done right.

If you want to learn more about how we’re growing our portfolio and how doctors and high-income professionals can invest passively alongside us in deals like this one, join the Passive Investors Circle.

Disclaimer: This is not financial or investment advice. Past performance is not a guarantee of future results. Consult your financial advisor before making any investment decisions.