80% Occupancy

One thing that was unclear to me was whether in purchasing a park we must have a plan to get to 80% occupancy?   I know Frank talked about banks will want to see this for a new buyer to come in and purchase…should we be only looking at parks where we want to spend the $ to get to 80% occupancy?  Or is there another exit strategy (besides carrying the paper) that works as well?ThanksJohn

It is certainly easier to arrange bank financing to acquire parks at 80%+ occupancy, but in my experience, this is not a ‘must.’  My first deal was only 66% occupied; I actually had two competing offers from small, local banks.  Our most recent deal was 65% occupied, and we still got it financed by Clayton Bank (medium-sized nation-wide lender), plus they gave us a $500,000 line of credit to purchase 20+ mobile homes for infill.  (We’ll develop that property to 100% physical occupancy, we don’t stop at 80%.  We make money all the way along and don’t see any reason to stop at 80%.)Getting the additional capital to infill a park can be tricky, but if you can do it, you can really improve a property and drive it ‘into the end zone’ by getting it 80%+ occupied.  You’ll open it up to a whole new world of buyers/banks if you have a ‘finished product’ to sell.  Of course, the best money to be made is in taking a diamond in the rough and polishing it.We, are generally buy-and-hold investors, and don’t worry much about exit strategy.  Our new investment fund gives us the flexibility to hold properties for 10 years, and if you are buying the right kind of asset and managing it properly, the exit opportunities will present themseves.Your mileage may vary,-Jefferson-