Short Sale Mobile Home Park V.S. Buying several houses cash Gary, Indiana

15 Replies

My business partner and I have a Mobile Home Park under contract in Tuscon, Arizona.

The bank is completely done with the property they want nothing to do with it.  We had it under contract at $300,000 with about $40k down.   Now they are saying they only want cash, they basically want it off of their books. 

We are now entertaining the idea of starting out in buying some single family homes in Gary, Indiana as John and his fathers close friend has been buying a ton of homes out there and cash flowing each one of them about $700/mo.

My question:   Should we focus on getting this mobile home park or another larger mobile home park first,  or should we buy several of high cash flowing properties and then turn around and then take out a portfolio loan on those to go get the Mobile Home Park of our dreams?

We both have credit scores at or above 700, both have pretty good paying careers $40k+ per year and have between $20,000 to $30,000 capital available right now to start with if needed, we are just a little unsure of where to start.

Thank you in advance I am so greatful for any advise or any wisdom from the real estate investing community!! :-)

For a mobile home park managing from states away doesn't make sense. If it is for 300k then it couldn't be too large of a complex.

If this land was sitting slap dab in the middle of commercial development all around it then that might be promising.

If the trailers are rented or have home owners and they just lease the land will make a difference. If utilities are offloaded onto tenant or the landlord pays matters as well. Lot's more things to deal with for mobile homes then renting a single house.

Look up John Fedro on here for mobile homes info.

  

@Kyle Craig single family homes are easier to grasp the operation and management of if you are just starting out. A mobile home park might be more lucrative but you really need to know what you are doing before you buy one because they are a different animal. I'd recommend going to Mobile Home University before you buy a park or at a minimum buy their home study course.

I don't think I would buy anything in Gary, IN - it's the armpit of the Mid-West and very depressed.

Look at Indianapolis [my favorite] or Kansas City instead - IMHO

As mentioned above, it sounds like a smaller park and managing it from afar would be a challenge.

Since the bank is sick of it - maybe go back with a cash offer of $175k to see what they say?  Clean it up and then flip to another local buyer at that point...just a thought.

Originally posted by Bruce M.:

@Kyle Craig single family homes are easier to grasp the operation and management of if you are just starting out. A mobile home park might be more lucrative but you really need to know what you are doing before you buy one because they are a different animal. I'd recommend going to Mobile Home University before you buy a park or at a minimum buy their home study course.

 Thank you @Bruce May ! :)

We did buy the study course for mobile home university.    I forgot to mention in my question that I live about 4.5 hours  from Tucson and John lives about 1 hour from the potential property as well. If  that makes any difference.

Originally posted by @Joe Fairless :

@Kyle Craigwhat is your #1 goal with the transaction? 

Our # 1 goal is to buy a mobile home park for Cash flow. And to make the park 100% tenant owned right now the park is about 3/4 tenant owned.

@Kyle Craig   Just to emphasize what @Shawn Holsapple said so you know if you already didn't is Gary, IN is/was the murder Capitol of the U.S.   Maybe that is why the bank is sick of it.  If your purpose is to invest in a blighted area to make it a better place then I salute you.  

317-801-2266

I will suggest you have not done any real diligence into  mobile home parks of any size.

I know of one in Arizona, 100% full and stays full. Owner will carry and all owner occupied units. Lot rent only and  virtually no maintenance.

Park in Northern California.    100% full and stays full. Owner will carry/ Lot rents only.

Both good locations, can be operated from distance,  you have enough money to buy either one of them, they cash flow nicely.  One grosses appx 50 and one appx 60.

No real down side/ No delayed maintenance, renters pay all utilities

If you are not experienced then suggest you  keep looking for a park that needs little help to learn on and then look to a turn around, as such, at a later time.      If the bank does not want it then that is definitely a real opportunity as to buying something very cheaply.   If you want to practice then go see the bank and ask them what it takes to buy it. You might be surprised how cheap and how convenient they will make it. ( go solve their problem for them)

For information!   Most banks do not want to loan on mobile parks in any condition in any parts of the US unless they are plus a million and preferably 2 million plus with good credentials.

@Kyle Craig

I'll chime in here since I'm familiar with both.

I have gone through the MHU material, and am very familiar with Gary, IN (had a stint with a Gary address as a child).

To me it's a simple answer. The long term capital expenditures from GI homes outweigh the short term cash flow received from the SFRs.

The government in Gary literally could not give away homes in Gary as of ~20 months ago. Numerous homes were given away for $1.

http://money.cnn.com/2013/08/20/real_estate/dollar-homes/index.html

You will obviously have solid positive cash flow on those homes in the short term, but the area is D-class, and when the tenant moves out you will almost assuredly have significant damage that needs to be repaired.

A well run MHP (no POH's) imho would cause far less brain damage over the long haul.

Just my .02

Originally posted by NA Jayy:

I will suggest you have not done any real diligence into  mobile home parks of any size.

I know of one in Arizona, 100% full and stays full. Owner will carry and all owner occupied units. Lot rent only and  virtually no maintenance.

Thank you SOOOO MUCH JAYY JAYY!!!  I would love to connect with you!?  How can I get a hold of you?  We are going to walk the property that we have under contract this weekend but would also love to discuss the property you are talking about in Arizona with the option of seller carry?  

Thank you again.  :-)

NA Jayy

Very interested in the MH parks you are talking about especially if they are in Northern AZ

I hope we can get in contact

E- [email protected]

Both are listed on the mobilhomeparkstore site and loopnet

Hi @Kyle Craig

I would agree with what Shawn and some of the other members said about Gary, IN. I invest in NW Indiana. I have my office in Hammond, IN and I know some investors who are doing really well in Gary, IN but they are very hands on and some of them live in the area. It will be very, very difficult for an out of state investor to do well in a place like Gary, IN.

The return will look fantastic on paper, but those numbers will be your absolutely best case scenario and the worst case scenario (more probable than best case) will absolutely drain your finances.

If there is anything I can help you with about the area, please feel free to contact me.

Sharad

If u feel comfortable with the park and it makes sense I'd go with the park I don't own any yet but I know @Jim Johnson acquired his 1st mobile home park over 1000 miles away from him ,and @jeffersonlilly is a guy u should talk to as well,I'd go to a mobile home boot camp first though ,owning a mobile home park can make u very cash rich or leave u dirt poor

Well I can weight in a couple of ways. I own property pretty close to Gary Indiana and I have looked at parks there. I have even looked at parks that are mostly full, and cash flow well- bottom line- you could not give me a park there. All of the economic data screams no. All of it- there i not one rising element to grab. 

As for operating parks out of your area- that i all I do. I know Jefferson Lily and and I am sure he also operates all of his MHP holdings away from where he lives. If you buy a park that is pretty easy- not many vacancy's and public utilities-  stick to tenant owned homes- they are pretty easy to operate from afar. Well- pretty easy for me. 

The bootcamps and educational materials help- I think the if you really want to short circuit the process find someone you can partner with and let them operate the park. You watch and learn. Ask to meet at the property for onsite visits and ask all communication be transparent, for instance I do not use email but only a forum. Now you can watch, learn and really figure out if you want to own and operate, or just be an owner. Both have a great return. You can also find someone set up to mentor you. 

FYI- I set up my partnership and operational agreements so I an be bought out. That way if after a year, the silent partner wants to take the reins and fly the ship- they can knock me out of the left seat. The price is not set, but the process is. 

Financing MHP's. Smaller parks are financed by smaller, local banks. In this case it might be tough depending on the cash flow and cap rate. I always add in a page that shows my track record in operations and ownership of MHP's. That might be another reason to partner with someone, you get their 'wake'. So I do not have issues with financing, but if you were really green, and taking on something that was not turn key, a bank might think twice. 

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