What is the protocol for doing your POH inspections before closing? I put in an offer on a 14 space park that has all POH’s and of course I will try to sell them off as fast as possible to only collect the lot rent.
This park is on the other other side of the U.S.so I planned on flying over there towards the very end of my due diligence period. Maybe it’s a smarter idea to fly over there before doing the Phase 1 if the deal even makes it that far?
Anyhow, what method are you guys using to actually inspect these homes when people are living in them?
Question–how do you justify the cost of flying presently and in the future for a 14 space park??? We just flew to do DD on a park and with 112 spaces (we questioned the economics for this size) and we knew we needed at least a 10 plus cap which the records showed it had but the neighborhood was not to our liken and we cancelled. The owner came back and lowed the price and we indicated we can change his decent park but we could not change the neighborhood. We are at the point we want the realtors to video tape the parks showing all streets and homes so we can have a better understanding what we are putting under contract.
Would suggest the seller have a video of all his homes plus that’s a good idea for a homeowner to do before renting to show condition before and after if at a later date you need to go to court. When you buy a car you get t drive it–if buying homes you need to completely check out the homes and if seller is unwilling to arrange such–walk away and needs to be done at the front end of DD since that area may be the fault area.
I totally understand and great question. For me, I’m extremely efficient at making things happen over the phone. I know that my trips to the park will be very nominal so if a plane trip plus hotel winds up costing me around $500 for a day or two and I’ve only got to make 2 trips at the most each year, then that’s ok with me since my investing technique is to buy and hold rather than flip. I know the trips will be fewer as the years go by if I’ve done everything correctly. If the cost of plane and lodging eat up all of my profits for a park then I’m in trouble, just my opinion.
I agree. That’s a good idea and you’re right, if the seller starts acting shady in response to me wanting to inspect the homes then that’s a sure sign that something is up.
I’d strongly advise against pursuing this park. Do you own and maintain the roads? Is the infrastructure more than a few years old and are any utilities private? Does the park get billed for tenants water usage? Does the state/area have relatively high property taxes? Are there many trees in the park? Are lot rents anything other than very, very high? A ‘yes’ answer to any of those is a basically a deal killer. And that was just a small sampling of vital questions.
A 14 space park without a larger park nearby can only “work” in the absolute best case scenario, and at the top of the list is location. An hour or two drive? Sure. A five hour flight? And in a park that has 100% POHs? No. Way.
Yep everything checks out really good so far and Frank approved it per deal evaluation, it’s the only reason I tied it up. I’m just trying to figure out the best way to inspect the park owned homes.
The seller needs to give notice to the tenants with the amount of lead time specified in the leases. If it’s not specified, or there are no leases, then you need to follow the state’s landlord/tenant handbook on how much notice you should give before an inspection of the home.
Assuming you really want a 14 space park that far away, then you’ll want to probably compress all of your on-site diligence into one visit. On something that small, I would think 2-3 days is plenty of time if you schedule everything properly before hand. After you get the on-site stuff is done, then you’ll schedule the phase 1 and survey.
That makes sense Charles. If the DD pans out then this will be my first MHP purchase. I didn’t “want” a 14 home park but I only had $30k to play with and couldn’t find any other deals where the NOI would support a seller financed note on a park with 30 or more homes and in a good metro.