All Forum Posts by: Nathan W.

I see you always posting these long winded diatribes, but are you able to point to specific instances of a mobile home park operator being prosecuted for said infractions? Or do your journals and articles not bother to look at that data?

 Do I understand you correctly that all the tenants left the park, and you are now starting from scratch? Or were you able to step in and fix the issue within the 60 days so that no tenants had to leave? I am very confused at why this would be a "small issue" unless I am just completely out to lunch, which I hope I am.

The MHU boot camp would be a very good crash course for you I believe--you may be in over your head and not even realize it.

 Only a 30% expense ratio for the lot rent portion on this small of a park on private utilities? My understanding is that number would easily be closer to 40% based on the private utilities alone.  Probably a bit more since you lose the economies of scale with it being so small for things such as management, travel, maintenance, etc.  Thoughts?

You asked earlier about why the expenses would leave you with little to no profit.  I think that poster was taking your comment about "expenses for having it in the park are $480" to mean that the lot rent is $480.  That means you have to pay $480/month just to park it there, before doing any maintenance on the thing, advertising for tenants, maintenance on the thing, paying a manager, maintenance on the thing, paying taxes, maintenance on the thing, etc. (yes there is a LOT of maintenance renting out mobile homes).  Your expected $520/month "profit" didn't seem to account for anything except subtracting lot rent.  

Your expected rental rate also does seem very very high.  According to bestplaces.net, the rental rate for a 2 bedroom home or apartment averages $946/month.  Do you think someone is going to pay more than that to live in your trailer in a trailer park? Maybe, but I wouldn't hold my breath,

I've talked to seller at length and he seems to be a good business man with proper records. THe park is in its own LLC with own bank account with 2-3 years of bank and tax statements available from it. I think I am good here. I appreciate your advice!

 Jay, thanks so much for weighing in.  I was hoping you might see this and offer your advice.  I really appreciate it.  I just didn't know if 15 days was enough time since I've never done this before.  I'l take your word for it that it is.

Do I need a Phase 1 report and can those usually be accomplished in 15 days? Or is this something I can ask the seller to provide? I think I'm fine without an appraisal but what about a survey to make sure there are no encroachments?  These nuances between buying houses and buying commercial real estate are what I've so far had the hardest time wrapping my head around.  

I've submitted an LOI for an MHP a few hours away from where I live in a great city, with high incomes, housing values, and retail stores. Seller's ad said willing to carry 50% for 2 years. Asking $100k, I offered $105k with favorable seller carry terms. 11 unit park with 3 abandoned homes and the rest tenant owned. City utilities, submetered. Lot rent is $260/month. Total gross as it stands is 8 x 260 x 12 = $25k. Applying a 35% expense ratio puts this at $16k NOI for a 15.5% cap rate.

I'm very excited with this as my first MHP investment, but here is the rub.

The seller, who seems like a nice guy, responded back to my LOI e-mail asking for a $1k nonrefundable deposit upon, 15 day due diligence, and a 30 day close.

These short timelines scare me much more than the possibility of losing my deposit, especially since I mentioned my due diligence would include an environmental report in the LOI.

Is this a standard request in the MHP industry from private sellers? It doesn't seem to me, but maybe he is just opening that up for negotiations.  If so, what would be a reasonable counter? I do need an environmental report, right?!  Without banks, is it reasonable to get due diligence done in 15 days and close in 30?

I appreciate your advice.

@Justin Denham Are you sure the owner is going to accept an 80% note in what I am going to presume is junior position to the banks loan?  

I don't have a lot of experience other than just reading here and on some of the podcasts, but I am very surprised that you are getting a deal that includes bank financing for 0% out of pocket for yourself.  Kudos if so!  

Would you mind offering up your tips on getting a bank to loan you with no skin in the game?

I don't have much to add except that it seems like you have a good handle on the financials and due diligence.  You also seem to be on top of all the work that needs to be performed, having all your trades and help lined up before you close.  These are the types of things that I think will lead to success, regardless of the actual deal at hand.  I wish you the best of luck and I hope you stop back in at some point and let us know how it is working out for you.

Thanks @Jacqueline Gardiner.  This, and other posts like it, are what I was referring to when I posed my question to @Jeffrey H.  There is also the matter of actually advertising for a SPECIFIC property, if you do not currently have an interest in it, as this has been explained and construed by some as acting as a broker without a license.  But as Jeffrey explained above, if you do it in the manner that he mentioned as a non-descript generic ad without a specific mobile home community listed, it would probably pass muster.  

Good discussion all and thanks. I  ended up not pursuing it but think I learned a bit about the process.  Ready to learn more for the next time around.