Rental agreement yes or no?

Question

Purchasing a mobile home park with units also and currently have no lease agreement with tenants. What are the benefits and downsides of state specific lease agreements

Jonathan Cooksey · Answer

The property is in West Tennessee

Rachel H. · Answer

@Jonathan Cooksey If the tenants are not used to leases and/or rules and regulations of the park, it will be a training exercise. Be prepared for any resistance. Though, it's best to put things in writing especially when it comes to paying lot rents and following the rules of the park. Good luck!

Ben Guttman · Answer

@Jonathan Cooksey. What state?

Ben Guttman · Answer

@Jonathan Cooksey. What state?

Scott Schaar · Answer

@Jonathan Cooksey I was in the same situation . When doing diligence I found out the owner had no leases on any of the lots . Me being from the SFH world I was kind of worried . I was wrong about that . It’s actually a huge advantage when taking over . If the park is below market rent this simplifies things . You’ll need to find out what your state refs are . You can take rents up almost immediately with no recourse. Along with the non-renewal ability on current residents . If you have some that won’t clean up the yards or you want out for other reasons . You can simply tell them you are not renewing their lease for the following month . Instead of having to wait until the end of a lease or whatever other stipulation. As long as you put out Park Rules from the get go . Those are stipulation you’ll have to follow .

Now that being said . Once you’ve stabilised the park, then start having leases signed . It took me about 6 months to clean up and regulate . You really have no idea the type of resident the old owner was allowing in . You might find out the first month, some aren’t paying exactly like the rent roll said . To me it’s a huge advantage .

Good Luck

Kelly DeWinter · Answer

Depending on the state

Lease agreements state the terms of the lease.'If you purchase from Seller without leases, and the Tenants  have a lease or "find" a lease, you may be liable for Deposits ,repairs,inability to raise ground rent etc.

Most states a mobile home in not a house but registered with the state with a VIN number. Your seller may or may not own them.  Check your state DMV for each unit.

Check with county to ensure the park has only the number of units it is licenced to have. Some older parks fudge on the number of units parked.

Have septic inspected and water inspected and tested to ensure you don't have any hidden problems that could cause you 100's of thousands to correct.

In Maryland verbal or handshake agreements can be legally binding, have a real estate attny review any Sale Documents

Verify 3-5 years  of income and expenses.

If you are buying the park as a business entity have an accountant verify the books, Ensure Seller gives you copies of State and Federal Filed Taxes

Check for current Insurance and Have insurance company list any claims in last 3 years

Check with courts to ensure there are no outstanding civil lawsuits filed against Seller ,company or Park

Verify Verify Verify

Brian G. · Answer

@Jonathan Cooksey

Benefits: you protect yourself legally

Downsides: can't think of any other than the chore of getting them signed