With a split ownership, this is what we do:
We ask the investor to bring 1/3 of the funds to the table (+ capital for expansion) for 1/3 of equity in the deal. We create a new entity for each new MHP asset (and subsequently, a new bank account).
The new partner has now 1/3 of the shares in the entity; thus 1/3 partner and 1/3 owner. This new entity purchases the mobile home park.
We will typically bring in 70% with financing to the closing table, which is personally guaranteed by myself and my business partner.
We manage the parks and all properties so this partner is ‘silent’ (aka. they are not involved in the daily operational activities).
They get 1/3 of collected rents (although, during stabilization phase (aka. after we have bought the property), we ask all partners to leave the monthly returns into the company so they can be reinvested into the property-thus increasing occupancy and value).
In 2-3 years time, once the property has been stabilized and has increased it’s value, we refinance the property. This is where it gets interesting.
The original 1/3 investor gets their initial capital back and all partners split the remaining $$ from refi (if applicable) - tax free.
From there, our equity partner has gotten back most (if not all) of their initial investment capital back (and some…), extra money from refi (if applicable) and they continue getting 1/3 of profits for life.
If we sell, this partner gets 1/3 of the selling price, as they are 1/3 partners for life.
Our partners are ‘silent’; however, they do have access to the bank account and have access to a property specific Dropbox that includes everything property related.
We can share P&L’s and other documents if they request it or they can simply follow the progression of stabilization and management of the property on Dropbox-live.
All our MHP are professionally managed by a professional management company; they hire an on-site manager to help them with the day to day operations.
We are very transparent with our partners.
On another note, if the potential partner brings in 100% of the purchase price (and capital for expansion), we split 50-50%. Same outlay; we create a new entity and become equal partners.
Everything is very clean.
We only buy double digit caps. In fact, we haven’t bought anything under a 15 cap AS-IS, so our partners are most happy with their returns they are getting. We are great at negotiating off-market deal and have a great team around us.
We purchase mostly in the northern mid-west; Michigan, Ohio, Illinois, Indiana, Montana; we are not married to any specific area.
It’s a true win-win.
If you’d like information, feel free to reach out: firstname.lastname@example.org