market studies

[Dee McCurry]

I live in a city in Texas. In checking with several sources most people fill a new mobile home park would do well and is needed. I am putting a group together and will be using HUD financing. My question is, What method do the experts use in doing a market and feasability study use in determining for sure there really is a need.

Thanks for any suggestions

[David Farmington]

A good way to tell is how full all the other parks are in the town!

[Chrissy]

This is a relatively large undertaking. You should survey demographic and economic trends for the past five years, and the next 5 projected years. Look at current occupancy/vacancy ratios in other manufactured home communities, and apartments. Look at the median price of new housing as compared to the total price of a manufactured home in a community setting. verify the economic indicators for future employment - both by type (varied is good) and pay scale. Look at the acceptance of the general area for our product, and the availability of money to finance the homes. A comprehensive market survey should include all types of housing within your market area, and a complete listing of amenities. Discuss with local officials any needed zoning changes, permitting, and construction needs. find out about signage and the laws for installation. Look into the construction and development costs, availability of utilities, etc.

i do feasibility and marketing studies - they are generally very in-depth, but the final result is either a recommendation in favor of along with a business plan (including a 5 year projected pro-forma income statement) or a recommendation to you not to pursue it with all the reasons why it appears not to be a good investment.

if you would like to discuss my fees, please feel free to call me. I am on the road, but will call you back as soon as possible.

If you would rather have a go at it yourself, this should get you started.

[fishfisher, acm]

Keep in mind that a good market study should not only give you the go or no go information but should also seve as the appraisal document for a lender. Therefore this report should provide the information that a construction and take-out lender would need to make the lending decission. Lenders would need a feasibility study that conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) and HUD has it's own appraisal standards. For lending purposes the feasibility study needs to be done by a State Certified General Real Estate Appraiser with experience not only in feasibility analysis but also in the analysis of Manufactured Home Communities. For HUD loans a HUD approved appraiser may be needed. The compleded document may be well over one hundred pages long and cost many thousands of dollars.

Only hire a professional that has had demonstrated success with feasibility studies for the lender you want to utilize. A feasibility study that says that your project is feasible but is not accepted by the lender is of no use to you unless you can build with cash. A contract for a study should also provide for an immediate work stoppage once it becomes clear that the project is not feasible. This will save you money.

I recently heard of a new community in Nevada that had a feasibility study done, a loan approved, constuction nearly completed and then there was no telephone or electrical service available for immediate connection! Good Luck.

p.s. It would be great if this site had spell check for all of us sooo challenged! Chrissy, keep it going, it is good to read your material, wherever I find it.