Opportunity to buy 10 rentals or maybe whole park

mobile home university
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Met with an out-of-town park owner who is burnt out on managing his 10 rentals (park is 32 units + 4 park model units. He has 2 vacant park model units). PM offered to sell 10 rentals to me and threw out a price of 75K (I know without looking at the units that is more than I’d pay, but I’m sure he’s negotiable).

Lot rent is 210 (though I’d try to negotiate that), and includes water and trash. He is actively seeking to meter his water and said he’s apply the funds raised from selling his portfolio towards the meters. He is getting $425-$450 for rents, but believes (and I agree) rents could be raised.

He also mentioned he was interested in my possibly managing the park. It’s my understanding that one has to be a licensed property manager to manage someone else’s real estate in NC. Is this true for parks, or is there a way to get around this? Managing seemed attractive to me because I’d have my own little LD fifedom & it’s not far from my house.

If anyone has any thoughts on this, please do share. I am a green landlord but learn quickly. PM just wants to get his lot rent & doesn’t have to worry about anything. We did not discuss payment, but I’d assume 10% gross rents would be fair.

I know what some of you are thinking…just buy the freakin’ park. In our conversation, the park manager mentioned that he wished someone would come along and buy the thing from him for 2 million. He said he has a large mortgage on the park. It is prime real estate. Developers are buying land all around him, and the park is well-situated. On the other hand, he seems motivated. He co-owns park with 2 brothers & does all the work. He lives in FL & park is in NC. He is aware the land is valuable. Still, there might be a creative way to buy this thing that’s reasonable for me?

Positives of buying rentals.:

12 minute drive from my house

Manager doesn’t care if I rent, lease/option, or sell homes

Park has great location relative to town & shopping (ez to rent)

All units have tenants

Manager claims he has a waiting list of renters (seems plausible).

Negatives:

All 2 bedroom units, plus 2 @ 1 bedroom.

At least 4 units have existing underperforming tenants on mo-to-mo leases.

3 brothers own park, one is dying, & park could be sold soon (PM has indicated we could have a stipulation that he’d buy units back at a “fair market price” if park is sold, but that value seems arbitrary to me.

This guy has had hired managers in the past and seems pretty stressed out by having to travel up every month and manage it himself.

I am definitely looking for a park and wouldn’t mind owning this one. Or just owning 10 rentals close to my house and possibly getting some management experience sounds attractive.

Anyone have any thoughts on how I might buy the park, whether or not to buy the rentals, or whether I can (or should) manage this dude’s park.

Thanks!

Andy (NC)

Post Edited (04-02-08 04:39)

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Andy

I do not know NC law so check anything I say with the appropriate experts. You might consider subleasing the 10 units, i.e., you would rent them from the park owner & in turn you would rent them out to tenants. Of course you would need appropriate paperwork. This would solve 2 of your problems. Generally you do not need a license to manage your own property (including a lease). In addition if you had a recorded long term lease, it would remain valid in case they sold the park. So they would need to buy out your lease if they sold out or you would be able to continue in business under the new owners. I believe Dyches Boddiford uses subleases. You might check with him.

Dennis

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Wow Andy,

This looks like a perfect opportunity to lease-option the park.

If you lease the entire park, you are the controller and are not “managing for someone else.” You can play as you say. You get rid of his management headache for him and put in place a buyer for him-YOU!

If you option the park for an agreed value say $1.5M (need your due diligence here) for 7-10 yrs. You may be able to sell option to developer for boku (sp?) dollars.

email me if you want to talk further.

Steve

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Thanks for the responses! I knew there was more than one way to skin this cat, and the board would have some great ideas! I am looking at my goals and time to see if/how I want to play this one.

Ryan had the idea that I simply sell for the portfolio for the guy since I’m a Lonnie Dealer and that’s what I know. Give him $1000 good faith money, sell the homes, manage the notes, and the manager gets his lot rent plus half the monthly payment. He also suggested subleasing the units.

Something like this seems like a good way to gain trust and segway into L/Oing the whole park…

Thanks!

Andy (NC)