Park with CESSPOOLs, upgrade?


#1

No offer yet; I just spoke to a seller over the phone today.He is an old man and wants to get rid of the park. He called me from one of my nice (paper) marketing letters sent out last week, sweet!

I am more concern on 3 cesspools that he claims has been working great ; simply put in some chemical every week or so. This 50 space park also has a pool which I don’t like due to liability and insurance.

Have anyone had any experience upgrading cesspools to city sewer, how much cost(it depends on area), time, hassle to tenants in small park ; can you do it overtime? I might ask the seller later about upgrading to see if he can pay for it or discount and give me a reserve to upgrade or something?

I will stop by his park on Friday and do some more quick pre-dd on site to see if it is a possibility.

Here is some details

7 cap (at 140K NOI - come out around 2mil asking price?) He didn’t name the price yet just the cap.

140K+= gross from his tax return

3 cesspools, no city sewer

1 sw pool

pay $1000/mo to manager with free rent?

park is paid off

tenants pay for their own gas, electric, water

city water

park pay garbage

net about 140K/year or more, no expense data yet say 40%

no park owned home

has a house, $800/mo rent

all sw, 2 dw (1 dw for manager)

current rent $360, will raise to 380 in Dec., not including a home rental amount at $800/mo

100% occupancy with waiting list, ready to evict one tenant

Post Edited (10-24-07 19:04)


#2

Based on the info you provided, I have only one question. How are you going to make money on this park?

Daphne


#3

Hi Daphne,

It might be interesting if I can get it at a huge discount(turn it into 10 cap), or 100% finance at low interest at discounted price, or l/o with good cash flow for 2-3 years?

My main concern is how to approach him and ask for the cesspool upgrade to city sewer whether he pays for it or reduces an asking price. I will find out the estimate of the upgrade in the mean time.

Again this might not turn out to be a good deal due to high cap/price and cesspool - take it as a learning at least.

Any other advise?

Thanks


#4

Well it was again, since I have been also seeing many different parks around, eye opener.

  1. very old resident own homes and trailers aging maybe 25-40 years who know?

  2. cats laying around, good things dogs are tied within fenced lots. Yes each lot has low wired fences.

  3. park need major clean up to make it attractive. It seems the owner and manager are not really care about the look except collecting rents.

  4. lots of home need skirts and paint. Each home seems to have unique style and models but very old…

  5. 2 one-way roads in the center of the park with bumps

  6. park is about 1.5-2 acres approx, dirt parking running down both sides of the park. Can park about 40 cars total on the sides, and about 8-10 parks in the front. Each lot is too small to park car or move new homes in.

  7. I cannot locate 3 cesspools probably somewhere in the back underground…love to see what they look like :slight_smile:

  8. has a good size laundry building with some empty room,but the actual laundry room is small and has 3 washers, 3 dryers…a few $$ extra profit center…

  9. no landscape, some grass on lot, mostly dirt, some lot has cement pad and cement yard

  10. pool is dirty with garbage laying on the side…Man I would fire the manager!

  11. It has a small decent 1-story house 2b/2b? in the front.

  12. I spoke to one young tn and he said park is very quite especially at night, gas is propane, the rent covers water/electric/garbage which is different from what the seller told me tn pay everything except garbage.

My plan if I get it cheap.

  1. clean up the place, put up new sign with PHONE number to call. Existing sign is small and unattractive with no phone # listed.

  2. put in new park rules that will require skirting, no stray cats or dogs, might charge extra for pet(10 for cat 15 for dog?)

  3. have gardeners plant some flowers for the sign and entrance and around the park. Some color flowers will bright up the park and give it a very nice and happy feel to visitors and residents.

  4. upgrade from cesspools to city sewer…big costly item so maybe as the seller to do it

  5. bring in some new homes/replace some very old one. However the park is pretty full from what I have seen at 100% perhaps. With small lots so close together moving new homes will be very challenging. So modernizing the park with new homes might not be easy b/c most homes are very old, all resident owned. City probably wants you to bring new bigger homes(I will have to check) which might not fit the lots?

anyway I will have to think about it and call the seller back with these concern to see what he will say. Because of cesspool issue and limited upside, I might not go for it.

Another park is a 10 space (very old trailers mostly), 1 story house(2b/1b) appeared to be unoccupied)

–very small lot 1/4 acre

  • no dedicated park, park off-street

  • sub meter for electric and water

  • rent 325, seller asking around 550K…yuk…

  • hispanic tenants with hardly anyone speak English except Jose who talked to me while trying to fix his mail box with 2 amigos…nice guys though…he though I am the (new) owner and might want to kick residents out to clean the place. …lol

  • very old trailers

Again I don’t see much upside and putting in new homes will not fit the lots.

Love to hear more comments. Thank you


#5

I think you got my point. So far you’ve found parks for sale, but you haven’t found any deals. Keep looking.

Daphne


#6

We bought our M.H.park around 6 years ago, located in the township not in the city. The park has it’s own septic system ,but has city water. Before purchasing the park I spoke to the city water dep. and engineers concerning the procedure if we ever had to hook up to city sewer? Their reply was that will never happen because the park is in the township not the city. Well guess what? The E.P.A. has just informed us that we will need to hook up to city sewer because our system drains into the storm drain (always has). I’ve gotten verbal estimates of around $75k to 150k. We will need a lift station and the nearest dump station for the city is three blocks away. This is a small ,older park and houses mostly elderly and low income familys. We do not make enough income to endure that type of cost. I’ve spoken to the county Commissioners, Urban Development and a few other organizations to help with some type of assistance. No one so far has any suggestions of what can be done, so I thought some of you might have some suggestions. I would appreciate any input you might have Thank you


#7

Can you refi the park or talk to a bank and get line of credit…my guess?

Since you have an old small park, do you have some upside besides raising the rents. The reason is that I have come across small park with older homes, small lots, almost 100% full, and don’t see any potential unless seller is very motivated. What are your experience and satisfaction level owning a small park?


#8

If I could find a low intrest loan for around 4 or 5% for septic and the park that would work because that would not raise the payment much. I’ve looked around and can’t seem to find that. What I did find was a loan for the septic only at 4% for 10 yrs but there again that is a payment we can’t endure. Between increases in taxes and insurance on older mobile homes ,plus vacancy and repair that doesn’t leave much for profit! Iwish I had known about this site before we bought our park.,at least then we would have known what questions to ask. One good thing is that there are several residences that have been there for several years , and probably will be for years to come. The problem is with older homes their pretty maxed out on rents,and you can’t just move them out and put new in because the lot is too small. We own most of the homes so that means we have to repair them every time they mess them up.