I am new to MHP investing. I’ve located (probably far, far too early in my search) what appears to be a viable MH Park candidate. The asking price is $1.5 million and the owner is willing to carry $900K in secondary financing. $100K down and new first position financing req’d @ $500K
Upon receiving the offering package, the claim is being made that ALL the homes in the park are rent-to-own deals owned by the current occupants. Frankly, I find that hard to believe but that’s not the crux of my question, nor do I have a pile of examples against which I would compare.
My question is, and please excuse me if this is a silly question, if the loans on some/part/most of those MHs are being held by the current park owners…then why would not those park owners wish to keep holding those notes? After all, the owner is willing to carry $900K in financing. Those notes were created at numbers well above the values of the homes and probably much higher interest rates than what a current buyer would offer in a park purchase. They are apparently no more than 5 years old, so they have good time to run.
If I buy the MH park and thereby become the buyer of those notes or their implied values… am I not becoming the one who buys the 1973 and 1986 MH for $39000 at 11% interest?
Concurrently, if I am buying the park but NOT and buying these homes by buying their notes, then my purchase price is considerably reduced, no?
Personally, I would love to be the holder of these kinds of notes. Maybe that is in contrast to how most MH Park owners do things, but why would I not want to own an asset upon which I made a lot of money (sold the MH and created the note bearing such a large interest rate?
And finally, if there are 35 homes (let’s say) and ten of them are owner-financed by the current park owner (the rest by banks) and were sold for $35K and have been paid down to $30K (just using gross estimate numbers) and the current owner sells me the park but keeps ownership of those homes… then on ten homes that I did not have to buy, would not my purchase price be reduced by 10 * $30K = $300K. What’s not to like about that?
Many thanks for this terrific forum; finding it only a few days ago and bingeing the topics and newsletters is already proving to be a super resource