All Forum Posts by: Ryan Groene

check out kurt kelleys company, they are insurance agents, but are some of the best in the industry.

no not a deal killer at all. You will have to patch and jet lines occasionally. But there are parks out there still surviving and thriving on clay tile. So I think your good with only a 20 year life of those lines so far

If you think it’s a deal killer...please send the deal my way and we can take a look at whether we can take it down. 

it could be a waste water treatment plant. Or a sewage lagoon. 

this has a red flag nightmare written all over it.... those numbers are the sellers....and are not how these things are run...

This is not investment advice...but please do more research about private utilities before you purchase this. 

Your going to run closer to 60-70%expense ratio to run this.  Unless the seller is the legal operator on both the well and sewage. It’s going to cost you way more to run. 

You will literally be shoveling sewage to run a treatment plant. And you will be adding chemicals to the well and doing the testing to run it and fill out the paperwork that the state requires. Same goes for sewage. 

Keep on driving past the park and don't look back.....

because of the cost of private utilities, your better off buying a 13 unit apartment building, 13 single family homes, or something else.

MHP's this small will not hardly make any money.  The only ways i would do this deal was to get this deal with no money down and financed for eternity.  or if the city will pay for connection to city water/sewer and will bill it directly

that is the only way this deal makes sense from a risk/reward prospective.  once those utilities go bad, your not going to be able to sustain the capital expenditure to replace each of the well's or the waste Water treatment system.  what type of waster water treatment system are you looking at???  septic, lagoon, waste water treatment plant...or combination of 2 or 3  of them.

Private utilities are a headache and cost way more per lot to operate than city water/sewer...that is why it normally doesn't make sense financially to buy a private utility park below 50 units or if you have one of the utilities on city.

depends on your own personal business model and investment philosphy.  But the draw of the industry is tenant owned homes are better business model and more profitable dollar for dollar over the long run with less management oversight

just a simple purchase and sale agreement determined by your state your in will work fine.  its like selling a used car, 

make sure you now how many homes you can sell before you need a dealer license 

wrap around mortgage, but check w/ lawyer about specifics.  or see if the loan is assumable

what is lot rent, what is the utilities....private or city water/sewer.  big difference on somehting this small.

how many rentals, what are lot sizes, age of homes, are you willing to self manage...because that is what your probably getting into to.

who pays for water/sewer.  This is going to run more closer to 50% expense ratio if you pay for the water/sewer.  if you self manage you may be able to keep expenses trim at around 30%, if water/sewer is direct billed, i wouldn't pay more than 130k due to market, how small it is, and lower lot rent. and that is based on 50% expense ratio w/ 10 cap applied with more conservative expense ratio to build in a little bit of room for error.

Fees standards to do quick evaluations. Read thru the links that  @John Jacobus  posted. The book that was mentioned is good resource. 

Cap rate is based on the net operating income of the property. Like @Omar Khan suggested, finding quality deals is a little harder right now in the cycle. 

Quick evaluations are as follows, lot rent x number of occupied lots x 30 or 40% expense ratio(depends on who pays utilities) x 12(to annualized)=net operating income (NOIthen you apply an appropriate cap rate. Industry standard is 9-11%. divide the NOI by your cap rate. Do it in decimal form(I.e. 10% is .10).

These rules only apply for parks that aren’t in California or Florida, below 25 spaces and/or that have lot rent below 175 dollars. 

Keep in mind every park is different, what your financing source is is important, what kind of capital your bringing to the deal, timeline of investment, and what overall exit plan of the park is for you as an investor based on your goals.