All Forum Posts by: Mike G.

@Jay Hinrichs thank you for the insights, Im looking back east as a matter of fact. As far as resources to find older used homes to fill a park, any suggestions are welcome as to who sells those. I know some used dealers here in Las Vegas that have them but they are too "new" not to mention pricey for my tastes. 

Appfolio looks good and once i have a park i could see employing that to collect rents. I would like to attempt a turn around park but I have to build up to that level. if i can get a few smaller parks that a good revenue generators and then use them as leverage to graduate up to a larger park that would be most advantageous. 

@William Noel

thanks for the insight and inspiration. Glad to see that formula has and is working for you William. I am starting on my first park now and that formula makes sense to me. Ill have to check out appfolio, i had not previously heard of that company or product. Overall, thank you for sharing your nuggets of wisdom, very good info here. 

Id be interested to see the numbers on the park you have for sale and discuss that with you. 

@Kristin Faircloth 

***DISCLAIMER*** I am by no means an expert however my first hand experience with this stems from when i was a Lonnie Dealer in other peoples parks taking back notes and seller financing. I know you said its in your own park. However, I learned the hard way and thus i feel it is my obligation to share knowledge and insight where i deem necessary. I am NOT saying that what your looking to do cant be done, but it is a slippery slope with many moving parts that after educating yourself about, you may decide not to proceed. So with that intro out of the way here are a few questions for you as well as some resources to give you a intro briefing on this topic. 

Also the fact that it is your park could make the circumstance different. There are a few experts that come to mind in here that post on these forums that would know in greater detail about your situation. 

what state are you trying to do this in?

Are you familiar with the Dodd-Frank "Safe Act"

In many states there are strict predatory lending laws in place to prevent seller financing to "low income individuals". I would highly suggest that you do some research on this before you . . . 

Put a contract together that could get you in trouble. 

Act as  LO ( loan originator) without being property licensed to do so. 

Some states they couple a manufactured home dealer's license with a Loan origination license which can be (depending on the state requirements) a long and expensive process. 

Dodd-Frank

Predatory Lending

I hope you find this helpful in making your decision to do seller financing. . . . 

@Michael Tucker  you could call other parks in the area and ask the sellers if they have any homes that they want gone that you could purchase for cheap and renovate versus buying new homes and having a flooring line with curtailments that you have to make and pay on time regardless of if you have that particular lot filled with a paying tenant or not. 

just a thought

@Cam Jimmy excellent fix on the rehab. Looks really great.

@Janice V.

sounds like a drama filled situation with a lot of moving parts. Every deal carries an element of risk along with it. What is your risk tolerance? what is your tolerance for sanity? Tough call but i believe you made the right decision here. 

@Autumn Rankin 

So I just got off the phone with the owner. He lives 4 hours away, the manager he had got put in prison and had handed the job off to someone else without the owners knowledge. The new guy stole all the rent and the tenants trashed the homes that were there. The city told him to shut it down or they will fine him since it was in such disrepair.

- City official also said same story. City guy said the town is growing like crazy and the park is needed. also said the water lines need replacing and if I purchased the material they would put them in and submeter. New hobby lobby & Chick fil a just went it.

- Seller just said he would take $34,000 less than advertised. He owes $185,000 to his brother for his loan for it. Just wants out from under it

Are the vacant and beat up homes still on the property? Are they repairable? How much will it cost to remove and junk the homes if they are not repairable? How much will it cost to fill the park with used homes from the 1980s and 1990s ? Have you thought about who sells those homes and how to reach them? 

the water lines need replacing from where? the street into the park ( your or owners expense) or at the street connection (city expense)

Does this one city official speak for all the city for that area saying that they want the park there, I mean that is great but is this guy the head chairman of zoning and planning? Just cover all your bases on this, thats all. 

As @Rachel H. said a vacant park is a huge challenge on many fronts. Do your homework really well on this.....

@Autumn Rankin why is this park completely vacant?

what other details did the city official tell you? 

did you hit the seller up with a series of questions as to why the current state of this park is the way it is? 

@George Skidis all excellent points and questions to be brought up. 

Worst case scenario, this seller is capping the income from the POHs with the lot rents and he may not be deducting the expenses associated with maintaining the POHs from the P&L which would alter the financials and give you a distorted NOI and thus a grossly inaccurate cap rate.

$525,000 Sale Price

-----------> 12% Cap Rate

-----------------------------------------

525,000 x .12 = $63,000  

The NOI may or may not be too far exaggerated or off, can he support this claim with documentation and rent rolls for prior 3 years?

My intuition tells me that the forensic accounting in the expenses will uncover the real truth about this park and it may turn out to be a 6 or 7 cap after you dive into the POH and expenses deeper.