I have an offer on a park that has 51 slots but only 19 occupied. Rents are $25 below market, ran a test ad and got 12 calls within first two days. Price 175k with seller finance with 25% down non recourse. Other parks within 10-15 miles have few vacancies, less that 10. Well wter and treatment plant which is being updated and will get DEP approval prior to closing. What do you think.?
As you well know the private utilities are an issue. It would be good to know the lot rents and asking price for the park, but as I see it, the big gain in this deal would be in filling lots. Knowing lot rents would be helpful in calculating the value of each lot you fill. Will the market support new homes? I guess not – sounds rural; do you have deep enough pockets to buy used homes and move them in?
Lot rents are 200 month with no pass through for utilities except tenants pay electric and gas. Other parks are renting for $225-240 per month. The seller has kind of let things go because he is 92 years old and has not even visited the park in over ten years now. He had a manager that had monthly water testing of three wells and never an issue and the treatment plant is being brought up to DEP standards with an inspection set for just after Thanksgiving and the certification will be good then for another five years. There are 19 tenants there and most of them have been there for more than ten years now. Only one home that looks to be dated, and others in decent shape. Was asking 250k but agreed to take 175 with owner financing with 25% down, 5% interest, 15 year payout, five year balloon.
I don’t like being a naysayer, but it looks to be in your best interests to run from this one. With well water at a WWTP, you need to have large scale with decent rents and an amazing price/terms to even consider it. I’m sure you’re aware of the possible costs that can suddenly arise if your WWTP fails. It would be the death of the park (perhaps unless you somehow got the lots filled up). There would be no financial reason to replace it. Plus, if you ever want to sell (and even possibly refinance) you’ll have a hard time finding takers.
The only way i would consider this one is if I got it for $175k, 10-15% down seller carry with no recourse and a 10+ year term. Then I’d try like crazy to entice people to move their homes in (don’t pay a bunch to move them in or risk the CASH program in this case). Basically, if you end up buying this you’d have to be prepared for the very realistic scenario that the park dies under your ownership.
Again, sorry to rain on your parade but i just felt compelled to put in my 2 cents. Good luck!
That’s why I’m looking for advice from someone that has been in the trenches because this will be my first park. I also have an option on another park that has 68, spaces 55 filled, four POH, city water, but again a septic with drain fields instead of the WWTP. Only 10 acres are being used with 50 acres open so if the drain field were to need replaced or extended it wouldn’t be a problem.
I have this park under contract as of last night and am just starting due diligence. These are all newer homes with most having lap siding and peaked roofs. Rents are at 220 but last increase was only 20 back in 2010. Current market rents in other parks are 295-308. Separate metered water, electric and natural gas. Average tenant has been there for more than 8 years. Parks within 10-20 mile radius are filled except for 3-4 spots in each. This park has a history of 80-85 % occupancy over past ten years and a 90% collection rate. All tenants on month to month lease, all homes skirted and needs only minor landscaping. Large lots with many able to accommodate doubles if desired.
Two downside, with first is that the drive is paved and needs patched or top coated. The seller had estimate this past spring for chip seal coating but decided to sell instead. Secondly there is no seller finance so have contract based on 650k purchase price with 25% down 5.5% max rate 20 year financing.
That second deal sounds exponentially better to me. It will fund itself moreso than the other park, and septic is predictable usually (septic won’t shut down your park) compared to a WWTP. And you don’t have to infill as many lots. I think a bank would like what they see assuming the diligence confirms your statements.
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I was about to run through the math on filling up park 1, but park 2 is so much better, it is not worth wasting time on park 1.
I actually have both under contact and was thinking of buying both of them. They are about 80 miles apart o would be able to check out both whenever I was in the area. Both of them have onsite managers.
Agree with the other opinions. That second deal sounds so much better, if i were you I’d focus on that and pretend the first one doesn’t exist. They’re not really geographically close enough to get economies of scale (except for your travel costs). Use the capital you would’ve spent on the first deal to get the second deal at 100% occupancy and you’ll be sitting pretty. That sounds like an awesome opportunity.
This park with wwtp sounds like a deal that came on the market in May. Pennsylvania, listed exactly as you say but list price was $175k in May with owner carry being offered. I passed on it. Cost of operations will eat you alive on this park. Three wells and package plant would be a challenge with 50 occupied pads but at 19 occupied it will bleed you dry.
I would try to limit the drama on your first park to one of the three: vacancies, well water, wwtp not all three.
If you need help on private utilities feel free to reach out to me as my main business is operating drinking water and waste water systems
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Looked at my files when I looked at park in may. I have a few items that may be of use regarding wwtp and permit. Feel free to reach out to me if we are talking about the same park.
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Sounds like the same park but the broker told me it was listed for 250. Any info you can provide would be greatly appreciated.
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Email me your contact info and I will send you over the wwtp permit and some other info
Info@merrillwater.com
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I would be interested in that one if you are open to wholesaling it to me.
Tapan
Make me an offer. No advantage to me to “wholesale” to you. I am sure you heard wiifm? What’s in it for me.
Guess you weren’t really interested!