All Forum Posts by: Jim Johnson

we get hundreds of payments every month via mail, and sometimes things get sideways and the mail is late. We operate on a postmark rule, where we call the payment good if it was postmarked one day prior to the due date, unless the due date was a weekend or holiday, and then it is postmarked the following business day.

So- our payment is due the 5th, which is maybe a Monday. We would then allow for the following- The tenant mailed on the 3rd, late in the evening- the mail does not run on Sunday- so it was processed on Monday. So if the postmark is prior to Monday (the 5th in this example) we call the payment on time. I can not hold a tenant liable for the actions, or inactions of the post office.

One thought on certified mail- sometimes the line at the post office to be serviced is... well- LONG. Very long. Think- Christmas. If you are lucky and have lots of properties, for instance we get checks almost every time we visit the post office- you can look forward to standing in line- every visit.

So prior to imposing a new rule or requirement- know the mail arrives, the post man prints a slip, puts it into your mailbox telling you of mail waiting for you at the post office, and now you get to wait in line for the mail he could have delivered when he delivered the notice...

This would fall under the disguised mortgagee rule. You can not give the home away, or sell it for something nominal- like $100. Though you might be ok under the safe act- you would not be ok with the IRS. Under the IRS rules, you would need to account for 'implied' interest under this structure.

The industry that has 'lease options' nailed is the automobile industry. They lease you the car for several years, and then they sell it to you at a price that matches the value of the car- less 3-5 years of wear and tear. If you have just flipped a home and it is worth- say $10,000. The renter pays $250 per month over 4 years, with all the wear and tear is the home now worth say- $3,000... That is a reasonable argument. If the renter has make 4 years of payments, maybe you would just give the renter a personal loan, say $2500 at 7%... maybe they make payments of just over $250 per month so the loan is paid off in 10 months. Also- maybe you do not use a security agreement, but rather just a promissory note, so no security interest in the personal loan...

I know- in the auto example there is a security agreement... but if you want to lease option- and not worry about the safe act- the outline above I think solves the issues... run it past your attorney and accountant- for I am not a lawer or CPA...

The issues might not be in the current park. The larger issue is what to do if the home must be moved. Older homes might be pulled out, but in many cases they can not be reset anywhere except farm land. So the value is lower because your locked into leaving the home where it is- forever.

I do not use forms other then the ones I have had produced, so I can not answer that question. Sorry.

A septic system is 2 parts, tank and then evaporation lines.

The lines should be easy to spot- green grass, softer soil, slight depressions in the soil, new ones have vents on the end of each line. The local county health department should have a blueprint of the layout. The tanks all have at least one inspection hole, it might be a concrete lid with lift out rings. If the inspection lids are not marked, we use conduit rings, pack dirt around them so the daylight, you can search for the tank with a probe rod. It will be between the home and the field. Could be on the side of the house, if just depends on how the park was laid out. These systems are best checked out by someone that has pumped the systems in the past. Ask for the name of the service they have used.

As for expenses- without know what they are I have no clue. Many owners expense repairs, capital improvements etc that are not broken out for tracking. If you have line items, you can email them directly to me and I will look at them for you, or you can post them up if you choose.

Probe rod- we use a old pitchfork with only one tooth so we can drive the tooth into the ground. The tank should be within a foot of the surface- though it might be deeper! Check under the homes for the direction of the main sewer line- and hopefully that is the direction of the tank...

also- if a broker recommended I do a LOI and not a contract, well... it would not be pretty...

Well- I have my own contract- it is complicated but I had it written just for me, not cheap to come by. If I give money it is held by a title company, the earnest money is released by single signer, me. I pick the title company, one that has closed mobile home parks and is nationwide. My DD period ends 30 days after they get me the documents I request, and I have 30 - 60 days to request those. The closing is 30 days after the DD period ends. My money does not go hard until about 15 days prior to closing, after the bank has finished the loan approval, until then, it is single signer released. I present my own contracts even if there is an agent involved, that way the seller knows what they are signing, and they know I understand my stuff. An selling agent for me is just a path to the property, from that point they can sit on the sidelines and await their check.

I strongly recommend you use a contract and not a LOI. As an owner, I just ignore letters of intent. If someone is serious, in my oppinion, they write a contract and a check.

If you can get a the last 2 years of income and expenses, and the balance sheet you can create a very good snapshot on the parks value. You do not need tax returns... business owners stuff all sorts of junk in the business- I once was looking at a park back east where the owner was paying for his helicopter fuel as an travel expense. With that data, you can also add in reasonable and customary expenses, which all good appraisers will do. from there you will have a real, though modified net, then apply your cap and you will know if your good to go or not.

Yes- expenses on smaller parks- even with the tenants paying all of the utilities are higher- probably 40% IF it is a space rent only park.

It seems, your renting the homes- and that is where you finding the extra 100 per month-is this correct?

last- 7% from the gross should cover an average amount you think you will collect but do not over they year.