After 3 hours of negotiation one of our partners and us placed our 4th park under contract tonight.
17 pads (15 useable lots with voluntary repair field reserves) 10 pads have septic and utility’s installed and 7 pads are occupied. (6 park owned homes) 1 or 2 of the park owned homes will need to be pulled out and we are expecting to add 5 newer homes to the rent roll fairly quickly…
All in all the purchase price is 125k payable 85k down and the balance payable $365 month for 120 months (works out to be 40k at 1.83%) Current rents with a 43% vacancy are stated at 1460 / month (more likely $860ish) taxes, water, and insurance are running around $175 /month which should leave us positive cash flow somewhere between $320-920 per month to start.
Our immediate game plan is to pull in 5 units bringing the total to 1 owner occupied & 9 rental units at a cost of roughly 25k increasing the total rents to 4k-4.3k and expenses to around 305 per month leaving a net cash flow of around 4k before repairs and vacancy. Actual net should be roughly 3k or so and we’ll then refi part of our partners money back out of the park and decide wether we are going to build out the remaining 5 pads or resale the park after capitol gain issues have been taken care of.
By simply fixing what is broken we expect the park to increase in value to around 275-312k and will have less than 150k in the property netting us roughly 125k-162k in equity and a pretty decent cash flow. If we decide to build out the remaining pads, value will be in the 375-425k range and our total investment will be around 200k and actual net cash flow after vacancy & expenses should be around 4k per month.
I can’t say yet if this property will make it through due diligence and escrow to formally close or not but if it wasn’t for attending events and talking to people in the know like Lonnie, Scott, Tony, ,Karl, and many others I would not have even been able to consider making an offer on a property like this… worse yet I’d likely still be working a dead end JOB!
It all started with a single Lonnie deal, a little spark of hope, and a small dose of action… Have a great weekend folks! =)
PS: for those of you who have to know “how did you find it?”, there was a rent sign in the yard and I called and asked if they’d consider selling…