I’m considering making an offer on a park that has solid numbers, upside potential and appears to be in very good shape. The big hair on it is that the rent roll shows an outside company own about half the trailers. At least the hair feels big to me right now. I asked the seller about it, and he said that the company pays lot rent and then rents out the trailers to tenants of their own. Apparently the outside company has their own onsite person for management/maintenance of those trailers. Obviously, the thought of the outside company moving all its trailers out is a bit disconcerting, though I realize it would take a pretty penny to do so. (We’re talking 18 trailers.) But what else do I need to be thinking about in considering if this risk is acceptable (for any price)?
You likely need to walk. You do not want one company or person owning 50% of the homes. He will be able to exert control over you. There is too much risk there.
I had a similar deal last month that I walked because the owner wanted to keep his rental homes.
I wouldn’t walk just yet. What are the lease terms on those existing 18 homes? Can you negotiate/extend their lease, giving yourself some protection on the deal? Talk to that company and get a feel for them. If they have 18 homes and are month to month or their lease expires next year, then yeah i’d probably walk. But if you can get them to sign a new longterm lease agreement that solidifies that income stream, then maybe it’s doable.