I wrote about my friend that had a park in trouble 20% occ, bad area of town, deteriorating units etc. I bought the park from him. We got lots of advice and Frank gave me a laundry list of things to do. I’ve fired the old manager hired a new one (he’s doing great so far), enacted the no pay no stay rule, figured out how to get the sherriff to evict quickly and evicted 3 tenants and got 4 more to pay up. I leased up some units, we’re now at 36% occ and I have another 20 units ready for rent asap. So far though I’m renting which isn’t what we want. A unique angle on this park is it was part of a big sub division of 300 lots, the land is all divided up and has separate parcel numbers. When I tell tenants that I want to sell them the trailer and rent the dirt they say “hell no, I want the land as well”.
I have a very low basis and like the idea of getting rid of the liability of these trailers and lots by selling them with the land. But is selling land and trailer the best option? I can’t continue to rent trailer and land for all the reasons you’ve stated, currently rents are between $275 and $400/month. If I sell the land and trailer I can probably get around $13,000/lot, but nobody has any cash there so we’re looking at payments between $225 to $275/month, 7 years at 19% interest, with an initial down of $300. The exit strategy would be either keep the cash flow or to sell the notes, I don’t know what value the notes would bring. I’m certain the new buyers will trash them and abandon them in this scenario.
I’d prefer to sell the trailer and keep the land. I could lower lot rents to $190 to $225/month and sell the trailers for $200-$500 but so far the tenants don’t want this option. It seems the value would be higher in this scenario, the monthly cash flow would be lower but would be extended until sold. However I will undoubtedly have trailers trashed and I’ll need to repair them to minimum standards to get them occupied again.
I need to market immediately and need advice on how to proceed to maximize cash flow and to create the biggest property value for sale. I’ll also need advice on contracts to use.