All Forum Posts by: Jim Johnson

Rent to Own is considered a disguised mortgage. The two most popular directions park owners have gone are 'rent credits' and 'lease options'. There are some IRS challenges with a rent to won program, because they will see the contract as one that should charge interest. So in your books you will have to account for that. 

In a rent to own, you make payments through he home 'asset' (TV, Washer / Dryer etc) being paid off. 

In a lease / option (like a car lease) you make a payment to enter the lease, you then lease the asset, and make a significant payment at the end to purchase the asset. That payment must be close towhat the asset is worth at the end of the lease term. 

Another option to fill parks with new homes is by using Clayton homes. They have a program where homes move into your park and Clayton provides financing for the buyer. 

I have also heard through a source that Legacy Homes is working on a program that will work like that of Clayton.  

Empty lots cost you money, so they really value at zero and add to your maintenance. Vacant land needs to be winterized, mowed, weeded etc...

For valuing- look up a program called an APOD. You will find them in spreadsheets. They can be very complicated, so just know you really need to plug the number in right for the right results. It should give you the first year cash on cash return, and also 'milestone' points at 2 years, 5 years, 10 years etc. It will also let you play with 1031 or straight sale profits, internal rates of return etc...  

A  lagoon is a big evaporation pond. Sometimes they have sprinkler system that spray the water into the air or on plastic lining the banks of the pond. They also use fountains to increase the evaporation rate and aerate the water. So really what happens here is everything flows into the pond after going through a 'pump and grind' system. Sort of like a garbage disposal. The heavy solids settle to the bottom of the pond and everything else evaporates. At some point they fill and the bottoms need to be reclaimed or a new lagoon needs to be dug. The problem is- what do you do with the sewage while your reclaiming the bottom of the pond? You can use a tanker and haul everything to a treatment plant... you get the idea. Sometimes they fail. I looked at a park for someone a few years back in Nebraska and the pond was ejecting directly into a stream. Can you as- Hello EPA. 

So maybe the park can be linked to a sewer system, you would need to do some research to figure that out. 

I would also check with the state agency that regulates the pond and see how much longer before the permit needs to be renewed. I would also want to know, if the pond needed to be replaced what the state says your options are. Some states are not allowing them to be put back in. Then your looking at connecting to a public system, a large sand filtration system, or a packing plant. All of those options are probably '6 figure' issues... 100,000 - ? 

Ha! that is something I posted about on another forum... you might be reading me in both places ehe.... I KNOW the people that made that call are reading the other forum... which is why I posted that comment there... Robo calls are not my thing, not my style... but if your going to do it- follow the laws. 

You can not figure in the note because you need to know the debt service numbers. How much did you put down, what interest rate did you get, what CAP rate did you buy at. What is the term of the note.

If you take the space rent- (this does not work if the home is rented)

so space rent divided by .6 you will be close. 

A few things will change that number. 

If the park pays w/s/t that number might be higher.

If the w/s/t is charged back that number might be lower (.65 or .7)

If there are very high taxes the number might be closer to .55 or .5

Net is prior to debt service for this example... 

So CAP rates in boom areas tend to suck, which is another problem in that segment of the market. For me- boom areas are like going 'all in' in poker. You have a good hand so you stand up. If the cards fall right you do well, maybe very well. If not- well- your off the main table and playing in the back rooms...

@ ari

Curtis,

you would probably own it with an LLC here in the states at least. A manager runs 10 - 15 per space, plus comped space rent, maybe a house and some utilities. If there is a lot to do, maybe more. Depends ont he size of the park that that figure should get you close.

I would attend the Dallas and Indiana meetups if they happened when I was in town. I am in Dallas and Indiana every 6 weeks....