help about buying a mobile home park.

[Crystal Hall]

Hi. I'm talking with a guy about a mobile home park he is selling. It's a 32 lot. 15 lots are rented. He said They all own their mobile homes. Rent is currently $150/ month.Selling for 188,000 and give me a land contract offer.  I am a new investor. I checked liens at court house and there is a state tax lien for 10,000 from November and a judgement lien for $2800 from April 2011. She said thats what she sees without really digging. Owner said there were no liens but the mortgage which he plans on paying but hasn't given information about. I will try to add land contract offer.

[Paul Stout]

IMO @Crystal Hall you are paying full retail price for a turn around park.  Why are over 50% of the lots vacant?  What is the nearest MSA and how far is that MSA?  This park is a turn around park and should be trading at a 12-15 cap minimum depending on other variables.  Is the waste water treatment a bill from a municipality or private?  If this is private utilities I would walk away or offer closer to half the asking price with a 15 year zero interest loan with no balloon.  Don't let sellers make you buy future profits.  You have to work and pay to get them so why should they get anything for them?  I am also concerned that you will have a hard time filling the vacant lots.  You should never pay more for a mobile home than the lot is worth.  Your lots are worth about $15,000.  You  will have to find homes for $10,000-$12,000 after repair price depending on what break down, moving, and set up fees cost in your area.  That will not be easy and you will probably not be able to obtain financing for it.  It will be all but impossible to find a bank willing to finance a park with under 80%-90% occupancy.  The owner has no choice but to finance or sell for cash.  If he is asking you for a balloon payment under maybe 10 years he may be hoping that you fill some of the spaces and clean the place up and he can take it back after a couple of years since no bank will finance it.  There is much more to be said about this deal but I can only type so much on my phone.