All Forum Posts by: Derek Robinson

1. What should I check buying MHP, taking into account that 100% homes are park owned?

I like to stay away from parks that have private wells and septic tanks.  City water and sewer is they way to go, especially if you are new to MHP investing.  If it's city water, it is ideal that the units are separately metered.  You'd be surprised in how much more water people will use if it's free to them. 

If homes are park owned, I'd want to make sure the current owners have titles.  When I buy a park, my longterm plan is to sell off all park owned homes.  If you don't have titles, this can be a big challenge.  This is another can of worms, but ideally you don't want to own the homes yourself, you just want to own the dirt under them.  Fixing trailers, especially old ones, can get pricey, as they are built cheaply.

A further can of worms, if you go the route of selling off the homes, they have little value (around $1,500 to $2,500) unless you are willing to owner finance them.  You can sell them for $10,000 or more if you are willing to carry the note.  Lonnie Scruggs was the king of this.  Google his name and order his book "Deals on Wheels"

I know that all homes are built before 1976. They have been remodeled. Do these homes worth anything?

See above.  In this income bracket, you'll have a hard time finding anyone to come up with much cash to purchase these homes, but if you are willing to owner finance them, you can sell them for quite a bit.  Lower income tenants care more about they monthly payment and less about purchase price.  I'm not saying to take advantage by any means.  Owner financing trailers gives them the opportunity of home ownership that they wouldn't have otherwise.  Plus, owners will tend to take better care of the park and their home.  Win Win.

Is it important to know materials the pipes are made of?

I've never run into a problem.  If it's an old park and their haven't' been any issues, then I wouldn't worry.

What else should I know?

I think owning a MHP from a distance will be challenging, especially if it's your first and you own all the trailers.

2. What kind of specialists should be hired? Is experienced MH inspector the only one person who can prevent me from making mistakes? Should I hire anyone else, e.g. RE agent?

Depending on the size of the park, you might need an onsite manager. If it's small enough, you can find a property manager that will handle it for you. I wouldn't get a real estate agent if it's not listed on the MLS, it's much easier in most cases to talk with the owner directly. If it is listed, get your own agent to represent you and your interests. You might have a hard time finding an agent with MHP experience though

I own three parks, buying more.  I've talked with a lot of investors in the space and done a ton of research.  I'm happy to help any way I can :-)

I've got a house under contract, I'm the seller.  Buyers offered full price, $1,000 due diligence and $10k earnest money.  It is supposed to close Monday, the 31st.  We just found out Wednesday that their lender didn't realize it was an investment property, they thought the buyers would be living there.  They don't lend on investment properties, so their loan is dead.  They are qualified buyers, own other rentals, and where putting down around $100,000 on the $375,000 price.

It is a multifamily (one large house and two small cabins).  While we were in negotiations, I was in process of placing tenants in the house and cabin.  They strongly wanted me to leave them vacant, which I did for their benefit.

Now that they are wanting a 30 day extension to start over with a new lender, I'm asking for a slightly higher asking price to compensate for my lost rents over the past two months, the extra mortgage payment I'm having to make, and a few hundred for utility payments.  This number totals $7,740.

Now they are looking for ways to back out of the contract.  I'm not quite sure that they want to back out, but I guess they are worried about IF something happens, they don't want to lose their 10k earnest money.  The latest was they went to the county to see if permits were pulled for some work done to the house.  Apparently they think if all work ever done to the house was not permitted, that would constitute a breech of contract.  The house is 100 years old, so obviously over the years there have been additions and work done that was never permitted.  If you look at the county's GIS page, it shows the layout/floor plan of every unit on the property just as it is, complete with square footage, number of bathrooms/bedrooms, etc.  The county did tax reassessments 3 years ago and grandfathered everything in.

I've got a great realtor and their firm is one of the largest in the area.  The broker is pretty certain that lack of permits would not constitute a breech of contract, especially since the county's records match up to the property's condition.  It's not like the county says it's a 1 bedroom, 400sqft and it's actually 5 bedroom 3,000sqft.  I had it appraised to get refinanced not long ago and the current buyers had it appraised.  Both appraisals came back clean with no issues with the county.

Thoughts?  Anyone had a similar situation?

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I'm looking into the short term rental market in Durham, NC and am wondering if anyone is doing the same thing?  I grew up 30 mins from downtown Durham.  I have family in the area still and would like to balance having a place of our own to stay while putting my money into an asset with possible monthly cash flow.

It's hard to research vacancy rates on airbnb because you can't really be sure if someone's listed house is actually rented or if they are blocking out dates for their own use.

Thanks!

I have several parks in North and South Carolina.  I would agree with @Greg H. 's statement, unless the land alone is worth 135k, I would walk away.  My reasoning:

-There are other deals out there way better than this one, you just have to dig a little to find them.  Unless the land is valuable alone, I'm paying between 9k and 15k per lot/trailer in the Carolinas, and that is usually with city water and sewer.  One park I own has 8 lots, city water and sewer, and I paid 100K.  Only two vacant lots that I needed to fill.  And it's zoned as a MHP, so I can bring in and take out trailers as much as I want.  I've got a contract on another outside of Charlotte, 5 lots with park owned trailers (older) with city water and 3 septic tanks.  I'm paying 62k.

It's a scary thing to pay a premium for a small park that has a well and septic.  Again, unless the land has value, I wouldn't pay more than in the 60's, regaurdless of cashflow.

So you don't have the money to make the 13k purchase?  Again, I don't know your market, but an investor would probably purchase at a lower price point than that since the sellers seem some what desperate to move out and they don't have any other offers.  I don't know that there is enough meat on the bone for an investor to come in and give you a profit and themselves.  Most people are buying deals like this for $5k or less and selling for 20k or more.

Risk of owner financing isn't as high as you'd think if you screen well and have fair terms.  Most people will take more pride in something they are purchasing.  Plus, if you structure the terms well, making their lot rent payment and payment on the trailer should be at or below what they could rent something for.  They will be less likely to default if their other option is to pay more in rent.

Sounds like you should pass on this deal if you don't want to get involved with owner financing it to an end user.

I  don't know your market...I'm assuming at 13k that it's in a park and the lot is rented?  Have you considered owner financing the trailer to an end user?  Most people that would want to live in a single/doubewide in a park can't afford to pay cash and banks won't finance them.  You could be the bank, sell it for more than you paid without doing any work, plus make money on the interest.  Most of these buyers do not care about the asking price but more about the monthly payment.

You'll want to draw up at least a simple contract, or search google for a SC real estate land contract.  The local real estate commission should have one available.

Yes, I would get an attorney to handle the closing.  They will do the title search and recording, probably for around $250.  You'll want them to search for liens, judgements, and easements on the property.  You'd hate to purchase a piece of land just to find that there is a large debt on it that you just inherited!  Josh Henderson with

http://www.hbvlaw.com/

 is great!  I've used him on three that I've closed and one that he found a bunch of issues with and talked me into backing out.

@Rachel H. Funny you should comment on this post.  Just an hour ago I found your website while doing some research on Frank Wolfe and his 10/20 system.  Small world.

@John Arendsen , North and South Carolina mainly, maybe into TN and Virginia.  Thanks for the referral!