I’m trying to compile a list of attributes or circumstances that make a park that “pencils out” numbers-wise and passes the physical inspections into a deal that you’d still walk away from. I’m talking about crime or drug problems, being too rural, a bad reputation, etc. I’ve heard some of you say you’d never do a turnaround project again, and I’d like to know which elements of the deal make say “Never again.”
I’m looking at two parks owned by an elderly man who will owner finance. They have 58 rental homes between them, and some are weekly rentals. I’m really only interested in a L/O at this point in time. There’s a lot of deferred maintenance on some of the homes and 18 are vacant, but only a couple empty lots. It’s owned free and clear, so the reality is that a deal that “works” can be structured if he’s willing to be reasonable about his monthly payment.
With a lease/option my intention is to create good cash flow immediately. Any future increase in value would be great, but it’s not why I’d undertake this project. Like Greg Meade, I may not ever care to exercise the option, but I will maintain the place and do improvements while it’s under my control.
The person who found this park can oversee the repairs and maintenance and has very good contacts in the community, so that hurdle isn’t there. My contribution is analyzing the deal and managing the rentals/notes, filling vacancies …administrative stuff. And I’ve already got the processes and personnel in place to handle the additional rental management workload without too much effort.
My suspicion is that this is only the beginning of the flood of deals we’re going to see, and I’d hate to jump too early and commit my time and effort here and miss out on much easier money.