Reluctant seller! But it is begging for new owner


#1

Looking at a local park. I have invested in single family and some commercial for almost 20 years in my hometown, and am trying to buy this park. I have contacted the current owners a couple of times over the last 2 years about selling.

Here is the story:
55 lots, 8 totally vacant. A couple in really poor shape and may be vacant.
Lot rent: $195,
City water / sewer (not sure who pays, but would sub-meter right away)
Garbage is city billed.
Property taxes $22,000 year
County / city have a tax value of $382,000.
Park has a bad reputation, with it being the place the cops bust people for drugs or other crime. But remember this is a small midwest town, were not talking ghetto type property either.
Stable midwest city of 16,000.
High rents, low vacancies in the local rental market.
Single-family homes rent for $800 - $1200
Average home price is $180,000, new homes run $300,000 +
Used singles wides in other parks sell for $35-$50,000 when listed.
Competing parks lot rent is $250 - $300 plus utilities

Here is the park that is EXTREMELY frustrating.

The couple who own it, he died about 6 months ago unexpectedly. I had a local RE agent who knows her contact her to inquire about selling. She isn’t sure she wants to sell as it is her income. I tell her I would do a contract sale on the property for 10-15 years to provide her with income (she’s in her mid 60’s). She likes the idea of payments vs a lump sum.

BUT here is the kicker, now she has had a heart attack. There is NO WAY she can run this place, and has no systems in place to run it. It was mainly her husbands baby.

While she has at least been willing to talk (a good sign), she is just not seeing the train coming down the tracks at her. The park will deterioate without someone going in a cleaning the place up. She is dragging her feet, and is slow to provide any details.

I don’t want to pay too much for the property as there this is a rehab type of park, but I want it because it is right in my community, I know the market like the back of my hand, and there is great upside by booting the trouble makers, and bringing in new units with the CASH program.

So what is the secret sauce to get someone like this to move forward? I would like to buy now before it gets any worse.


#2

The secret sauce is - there is no secret sauce. Just as in dating beautiful women - always have many options on the table so you don’t desire any one of them too much. Then you’ll always make good deals. Always be hinting for parks. Get a CRM database to track deal flow and have multiple streams incoming. Stay in touch periodically but don’t bug her. If the time is right it will happen.

Your post smacks of something in dating psychology theory called “oneitis” - it manifests itself on dating discussion forums as “I really like this ONE girl. Give me the secret to making her like me guys!” The answer is always brutal and fast - we can’t guarantee one woman. Practice talking to many and when the right one comes along for you’ll be ready.


#3

If you can swing the finance, why not offer her an annuity? That way her income never runs out?

Are you planning to hold or flip the park? You might have options you haven’t considered.


#4

Be patient, everything operates on her terms, and there’s not really much you can do to rush the process.

and

Don’t come in with a price too high. If you come in at top dollar, and then she takes a year to sell and the park has deteriorated, she won’t be happy when you have to then lower the price.


#5

Thank you for the feedback guys.

This is my first park thus I REALLY want it to be local so I can be hands on.

This would be a long term hold not a flip.


#6

If she is 65 or older, or in bad health, beware of Financial elder abuse laws, that pay triple damages for taking advantage of her. There is no time limitations. A relative can go after you legally 10+ years from now. She needs to be declared mentally and physically fit by her Doctor to make the decision to sell and best to go through an attorney on everything to protect yourself from future destruction.
Mobile home parks can make good money, but can also be a big PITA. If in an area the freezes, individual water meters can freeze and break if not deep enough in the ground. Trailer parks attract trailer trash that know how to work the system and can live for free in your park for months with free legal advise on how to do so.
If it is on septic, make sure you have it checked out, this can be a big headache and expense if not in decent working condition.
I bought my park in 1978 and although it is paid off and making $$, the $$ I have in it would have been worth at least 5 times as much IF I had used it to by single family houses.
Best of luck: bob


#7

“Park has a bad reputation, with it being the place the cops bust people for drugs or other crime. But remember this is a small midwest town, were not talking ghetto type property either.”

What you described in your first sentence meets all the criteria of a ghetto, my man. Be prepared to deal with this when/if you purchase.


#8

Just a note: you say the taxes are presently $22,000 or nearly $400 per site. Likely will raise at sale and maybe 3 months for taxes!! Mr. tpguy comments needs to be deeply considered. I once bought a decent park I though we could upgrade–needed to really move out over half of the people to accomplish–word of advise when buying properties WOULD YOUR FAMILY BE COMFORTABLE LIVING THERE!!! NEVER be in a hurry buying a park–especially the first one–it might be your last one!!!


#9

I understand what you are saying. I am VERY familiar with the property, while it is not a grade A property, it is not ghetto.

I am prepared to deal with it. I know going in I am going to give about 20% of the residents the boot in the first year or two. I will also work over the first few years to update the park with newer homes with the CASH program.


#10

Carl,
Thank you for the feedback. I would actually live in the park with my family (if I had to), There are a few bad apples that need to go right away (due to criminal history), and some over time (due to poor conditions of their homes).

I am planning to buy the park for a fair price (on the lower end of what it is worth).

But all of this is in vain until she wants to sell.


#14

These negotiations typically work better when you can offer the seller something that might be of value to them. You started off well countering “It’s my main source of income” with “have you thought about seller financing?” That’s an easy one. However, there should be a ton of other things that are important to her that you’ve learned over these last two years.

I would concentrate on what you know is important to her and make suggestions based on those things. You have to custom fit your negotiation to the seller’s top deal points so to speak. No one on here can tell you specifically what those are but it’s already likely that the seller has told you in round about ways over the course of multiple conversations.

In my last negotiation with a seller I set the deposit amount on a MLO to coincide with the average price of a stick built home. The seller’s daughter managed the park and after the sale, her mom was planning to move her to FL and buy her a house. So, I told her that the typical MLO deposit was 10% which is $X but since she was planning to buy her daughter a house I knew she’d need $Y to get that done after paying taxes, which amounted to roughly 18%. This was during the initial presentation of the lease option. Among a few other things, this is likely what ultimately sold her on the MLO. Again, you need to be able to predict what the most important items are for a seller based on what you know and custom fit your offer to give them a few key wins. She also wanted income but had a small mortgage so the MLO was a better fit to keep our outlay where I wanted it and give her what she wanted.


#15

This was a great subject, I’m in the process of studying up to buy my first MHP also. Some of the things I know I’m gonna run into; I know I can’t afford to fall in love with any park and that the numbers don’t lie, so if I can’t get it then I have to move on. Thanks again :slight_smile: