My group is under contract to purchase a nice 20 lot MHP in Alabama. Every home on the lot is park-owned. Our primary aim is to own land-lease MHPs, so our thought is to send residents a letter as soon as we take over offering to sell them the homes (all cash or seller finance/payment program) and then just have them on a land-lease.
Homes are early 2000s, shingle roofs, seem to be in nice condition (we are visiting the property this weekend to verify). The park itself seems to be a very desirable one in the area.
Has anyone else tried this strategy before? We don’t anticipate having all 20 homes sold instantly, but we do expect at least a few bites initially, which will cut down on our maintenance and management expenses.
We’ve done this with 5 of our parks now (in each case they were about 50/50 POH/TOH). We’ve seen that about 1/3 of our renters (that we want to keep) take us up on the offer to sell. Another 1/3 or so will do it but only after X, Y, Z is fixed in their home. The last 1/3 just has no interest in owning so we have chosen to let that attrition happen naturally and then sell the home to someone new after they move out in the next 6-18 months.
A lot just depends on the market you are in, the condition of the homes, and the types of tenants in the park. Lately we’ve started using PEP Lending for POH financing and it’s worked great so far, but not sure if they are in AL at the moment.
This is excellent, thanks. PEP Lending looks like exactly what we’re looking for, but it doesn’t seem like they’re in Alabama. Any idea how to find a similar company in Alabama? How did you come across PEP?
Quick question for you. Do you run into any issues with Dodd Frank or needing a license to sell more than a few homes in your state? We are slightly confused by this issue.
@rmpratt, could you please tell us more about home PEP Lending works? Do you have to contact them before you bring homes into your park? Can they finance POH that are already in your park? How much do they finance? Do they require a dealers license? thanks.
PEP will finance existing POH you inherit from the park purchase. They allow “the market” to determine amount financed - i.e. whatever you can convince your tenants to pay for a given home - just be a little careful on this one since you will be on the hook for payments if the home comes back to you. The minimum loan is around $7K I think. No dealer license required. We’ve been really happy working with these guys so far.