Company Structure for Parks


#1

So I jumped into MHP with both feet and bought 4 parks a couple of months ago. 2 parks have no park owned homes. 2 have mostly park owned homes.

The ones with park owned homes have tremendous cash flow. The biggest pain was that banks HATED parks with Park owned homes and the terms we got were less than desired.

My number one goal is to reduce my tax exposure.

Currently the park and the homes are under the same company umbrella. Is it better to set up 2 different companies? One for the park and one for the homes? I can “rent” space to the “owner of the homes” company. The home company has both income (rental) and expenses (space rental). This KINDA gets around the question are there park owned homes… I’m not sure that is technically or legally correct.

I know this may be a complicated questions for this forum.

Learning as I go along.

Thanks,

Jorel


#2

Karl,

Thanks for any help…

What kind of tax are you asking about - property tax, income tax, sales tax?

Yup… Mainly Income Taxes… Sales tax was cheap because we “valued” the homes at nearly nothin… DMV fought us on this but in the end we only put a $1000.00 value on each home (most are 80’s vintage anyways).

What state are you in? Incorp in California, parks in AL and LA

Did you actually get the titles to the MH’s when you purchased the parks?

Yup… Free and Clear

Did you pay sales tax on the titles to the homes? Yes

Are they in the old sellers name or your entities name? Ours

What value on the HUD sheet did you put on the MH’s v. the land? No value on homes…

Are you a licensed broker/dealer for Mh’s? No

Has the Bank put liens on the titles? No

Has the bank filed UCC’s with the State? No

Did you negotiate release clauses with the Bank? N/A

If not, will the Bank allow you to sell to another closely held entity subject to your original loan without calling the DOS clause? N/A

What kind of entity owns all the parks and MH’s? LLC

Are you planning on keeping the park and homes as rentals or are you planning on selling the homes to the tenants on terms and simply leasing them the land?

Still trying to decide. Love the cash flow from rental. Don’t think the flow would be as well if we put them on contract… and if we keep the parks long term the cash flow will decrease as the notes are paid off. Hate maintaining the rentals. I think we will put homes at the parks that currently don’t have any park homes and sell them on contract. They are much nicer parks than the two with Park owned homes.

Thanks again for any insight…

Jorel

Learning as I go along.