New to Real Estate · Snohomish, WA · Member since 2019 · 20 posts · 12 votes
Hello!
I ran into an owner who said they would sell for around $900k. I have no idea the income on the property (yet) but there are 7 mobile homes on the 1.4 acres. What do I do?! This could be a great opportunity for me. What are the first steps? How do I structure seller financing on a mobile home park?
Unless you're smack dab in a major metro or in CA, $900k for 7 homes on land sounds very steep. Keep in mind this isn't really an MHP and won't be considered one by banks - it's just too small. This is important when thinking about exit strategy. Do you plan to sell the park one day? Will you also seller finance it? How about just refinancing to pay off the seller? How will you do that?
Getting income info asap is important because likely they arrived at that number by lumping home and lot rent together. So, NOI might appear high enough to justify the price, but that's not the proper way to analyze MHP. Run your numbers based on lot rent alone and add a separate value for homes, but only if they're newer and in good condition.
Just because someone is willing to seller finance does not automatically mean a great opportunity for you. Don't let this distract you from the numbers and the deal itself!
And please, feel free to reach out anytime if you have other questions or just want to chat!
Real Estate Consultant · Norfolk, VA · Member since 2017 · 345 posts · 201 votes
4y
@Keegan Uderitz In addition to what Scott said, find out how much are the current expenses, how many are vacancies, who owns the homes, who pays utilities, any room for expansion, and verify the zoning (and find out any restrictions). Find out the seller finance terms how much, what rate, for how long, and any balloon payment options.
Unless you're smack dab in a major metro or in CA, $900k for 7 homes on land sounds very steep. Keep in mind this isn't really an MHP and won't be considered one by banks - it's just too small. This is important when thinking about exit strategy. Do you plan to sell the park one day? Will you also seller finance it? How about just refinancing to pay off the seller? How will you do that?
Getting income info asap is important because likely they arrived at that number by lumping home and lot rent together. So, NOI might appear high enough to justify the price, but that's not the proper way to analyze MHP. Run your numbers based on lot rent alone and add a separate value for homes, but only if they're newer and in good condition.
Just because someone is willing to seller finance does not automatically mean a great opportunity for you. Don't let this distract you from the numbers and the deal itself!
And please, feel free to reach out anytime if you have other questions or just want to chat!
why do you think this is an opportunity without knowing the numbers? Real question.
I think its an opportunity for a major retailer to ground lease the parcel. That is the reason I called on the property in the first place, I work with a QSR franchisee who wants to be in the market. To your point, the numbers could be garbage and I could be upside down from day one. I guess I got excited because the only real way I will get more valuable properties is if the seller finances them.
@Keegan Uderitz In addition to what Scott said, find out how much are the current expenses, how many are vacancies, who owns the homes, who pays utilities, any room for expansion, and verify the zoning (and find out any restrictions). Find out the seller finance terms how much, what rate, for how long, and any balloon payment options.