100 Lot Park, would you do it?

[Abraham Anderson]

I've been back and forth with mom & pop (off market) for about a month. This deal has a lot of moving parts, I’ll try to keep it simple:

100 lots, lot rent $250 (substantially under market) city water/sewer 100% occupied paved roads owner is willing to finance 100% of it at $5K/month for 20 years BUT, they want $3M purchase price. Right now park is realistically worth $2.1M before any improvements

Another major issue is, currently the entire park is land-leased to another guy (75 years old) who owns 70 (!) of the homes. I also talked with him and he wants to work out a deal where I manage the entire park for him for 15% of the gross income ($469K last year), and convert all the park owned to tenant owned homes (he wants to do this).

The $5k/month with the actual land owners (also 75 years old) wouldn’t start until the current land-lease is up, so my expenses for the next 7 years would be zero, I’d essentially be managing & improving the park that I’ll eventually own. If I went for this deal, my plan would be:

Get it under contract with actual land owner, air-tight where he nor his heirs can back out of the deal Then get a deal worked out with the current lessee to manage his park for 10-15% Convert all homes to rent-to-own (rent credit, etc) Gradually raise rents to market

The fruits of my labor won’t come into effect for 7 years, but then I’ll be cashflowing like a beast for the next 20 years since $5K/month won’t even be 1/3rd of what actual bank financing would cost. After raising rents to market (within 1-2 years) the park would be valued at over $3M. In 20 years it should be no problem refinancing at a bank.

[Mike G.]

@Abraham Anderson so basically one old guy has another old guy who is a Lonnie dealer inside his park and owns 70/100 mobile homes in the park. I would do some due diligence on those two old guys. That would worry me, they may be honest good ol' boys or they may not be. They have obviously been doing business together for a long time for one guy to own 70 homes inside his park. I would ask alot of questions about why this park is set up this way. That is a strange set up.