1031 exchange into park?


#1

It’s discouraging to me to read stories here of people spending months or years looking for the right deal, since if I want to buy I’ve got less than 2 months to identify a park. I’ve got a land sale closing in two weeks and will have a bit over a $1,000,000 to invest via a 1031 exchange.

I’m considering a mobile home park, partly because of tax advantages (because of extreme capital gain on the property I’m selling I will have little tax basis and so the advantage of depreciation won’t be available to me) and partly because of the upside available from turning around a poorly performing park.

I’m in Northern California and don’t wish to relocate, but I am willing to spend several weeks a month at a park to manage the turn around. That means I’m most interested in Oregon, California and Nevada. I’m not interested in flying back and forth to Texas several times a month if I can help it.

If I was successful in achieving a turn around I would expect to sell the park 2 to 4 years down the road and purchase a larger park.

So finally the questions - is it realistic to think I can find a park given the 1031 exchange time constraints I’m working under? Or should I just put my money into a nice safe low cap rate apartment building? Maybe I should be willing to consider any city served by a single flight on Southwestern out of Sacramento?

Thanks,

Eliot


#2

Eliot, I may have just the thing - I’m looking at a turnaround that may be able to be had for just over the 1m mark - asking 1.5, but was previously accepted at 1.3, buyer backed out. Now septic all new, broker says they may take 1.2 . . . we should talk - going to MHM V?

By most people’s numbers here, this park is a bit high - but for

this area, it is a potential deal: 44 sp, @ 335/mo rent. DD needs to determine upgradeability, i.e., spaces may be too small to get bigger newer units, but that is in progress . . .


#3

Eliot,

You don’t say whether or not you’d be willing to partner on a turn-around park. But if so, there will be several folks at the MHM5 who are looking for a money partner, and already have a park identified or even under contract.

I hope to see you there,

Anne


#4

Steve and Ann, thanks for your comments. I will be at MHM5 - just signed up this morning - and will be ready to talk about possible deals. Anne, I’m not really interested in being a money partner. I would rather be more hands-on. Might be interested in partnering with someone who is willing to do a true partnership though, where we both contribute money and labor to making a park work. If there is someone with park experience looking to get into a bigger park in the California-Oregon-Nevada area who can bring their share of financing to the table I’d be willing to talk.

Funny how things work though - within an hour of my original post I identified a possibility that I am checking out - supposed to get a full financial statement today. It looks like it has possibilities but it has a substantial RV overnight stay component, with the associated convenience store and propane fill-up that goes along with an RV business. Complications - since a MHP, RV overnight operation and convenience store seem to be 3 different operations. Steep learning curve ahead…

Eliot