Mobile Home Park Deal Analysis....Please

[Marty M.]

I am in negotiations with a guy who owns a 4 lot mobile home park. He has had no vacancy in the past six month and averages about 3 weeks of vacancy per year. His costs are $800 per year in property tax and $40 per month for water. He owns the mobil homes. He has owned this park for 15 years. He is going through a prolonged illness that doesn't look good. He wants to unload some responsabilities. He owns the property out right and it cashflows $1400 per month.
He wants to sell it to me for
A) $65,000 clear or
B) $55,000 with $10,000 owner finance

Now, I have absolutely no idea where I would get that money, but I'm hoping someone on here can point me in the direction of the right questions and things to think about. If I bought it, I think I would Lonnie deal the homes.

[Ben Reese]

Here are some questions to consider.

City water?
City Sewer or septic or pond?
Age of homes?
What do these rent for?
What are comparable area lot rents (not lot/home package)
Who pays the water and sewer
What are the maintenance costs on what are likely old trailers
What's the insurance, city permits etc costs?
Are back taxes up to date?
Does he have title to the trailers..( you'll need that to sell them )

It will be tough to get a loan on the mobiles. The best you may do is get a bank to loan against the value of the lot rents. So if you buy this, consider taking title to the homes in a separate entity and have that entity pay rent to another entity that owns the lots. That way the bank may at least finance the entity that owns/leases the lots as it will not be able to lend against those old homes. . It's still going to be tough because this is such a small deal ...and it would be best if the owner would carry....