MHP Under Contract, Need Help with Due Diligence?

Question

Does anyone have a mobile home park under contract and would like some assistance completing the due diligence?   I published an article last week with a MHP due diligence checklist and I'm looking for an active deal we can profile as a case-study in upcoming blog posts.  Let me know if you are interested!

Aman S. · Answer

@John Vashon Where can I read your article on MHP due diligence?

John Vashon · Answer

John, thanks for the post and let me know if I can help with the analysis.

John Vashon · Answer

Jim, did we ever connect to discuss that park in Iowa?  I don't recall receiving and email from you.  Sorry for the delay in responding so let me know if I can help.  BTW. I'm from Omaha!

John Princinsky · Answer

Now that I've read into things more, perhaps I'm at more of the deal analysis stage, since its not under contract... Can you tell I'm green? Lol

John Princinsky · Answer

Hey John,

I came across a potentially good MHP deal but I do not have it under contract as it is going up for auction. Not sure if it's of any help since its not under contract, but I would be very thankful to have some help with the due diligence needed before putting in an offer if you are still looking for a case study.

John Vashon · Answer

Personally, I would call the banks, confirm they are interested and ask what they'd like to see to start the conversation.   You are buying a nearly full park and the plan is "business as usual" with no major operating changes.  I'd give them only what they need at each step in the process (vs. a b-plan which might create more questions and work than necessary.)  I've never done a business plan to purchase a park but my experiences might be atypical and/or this is an accepted practice in your part of the country.  Either way, full speed ahead, ASAP!

John Vashon · Answer

Jim, great, love to help!  Please send the details to me and I'll review over the weekend.

Bryan, look forward to helping on your deal as well!

Bryan H. · Answer

Thanks John. There are a few small community banks around that I know lend on MHPs. I just wanted to get my plan together before O approached them. 1st impressions and all.

As far as a killer deal, I know its not the best deal, but it is fair for both of us. He isn't motivated to 'give' it away, he just has other interests now. I think it would be a good/fair deal for both of us. He isn't currently marketing it anywhere (that i know of), so I'm not too worried someone else will swoop in. He knows I've never considered a MHP before and that I needed some time to think it over.

Are there any other changes/additions that you would recommend to my plan before I contact a lender?

Thanks again for your assistance.

John Vashon · Answer

I'm sure your experience level will be just fine with the lender.  They like to lend to conscience people who understand what it takes to manage a rental property and that's you!  This doc is good enough to start talking with the local banks.  Find one who has done small MHP deals in the past.  Is there someone who specializes in MHP sales in your area?  If so, I'd ask them which lenders or loan brokers are active in MHP loans.  Sometimes it's a regional (vs. local) lender that you'll want to engage so asking these folks can save you a lot of dialing.  I like that you are working to get a preapproval before rushing into a contract.  At the same time, if this is a "killer deal," don't wait too long or someone else might win the prize!

Bryan H. · Answer

John Vashon I guess right now I'm putting this together to see if a bank will even consider the deal. Similar to a pre-approval on a SFH loan. I've never done a commercial deal, so I'm not sure if it works like that. I figured during the due diligence period the actual P&L would be looked at, but maybe I'm wrong.

Another thing you mentioned is experience. Well I don't have any mobile home park experience. But I do have 10 years of commercial real estate project management. I've managed $500k budgets, contract negotiations, etc. And the seller & I would form a mentor partnership. We are both members of the local REIA, so I "know" him more than just a stranger that is selling the property. Does any of this matter to a bank?