A couple questions on a park I have under contract.
Bank I’m talking to financed park for current owner 15 years ago. Park not as we’ll run now. Bank says they don’t need an independent appraisel.
They will do an in house one. Do I need an independent appraisel? I do plan to fight assesments values soon.
What is best time of month to close? What are key issues to manage when picking closing date?
Appreciate any thoughts
You do not need an independent appraisal. Appraisals are not a reflection of true value, and have little value except to satisfy the lender.Close at the middle of the month, That way the seller is to collect the rent and pro-rate to you, and then you have 14 days to educate the tenants on how to pay the rent for the next month.
Two separate issues here. First, if you can get away with financing your loan without an appraisal, why wouldn’t you? If you know the numbers work, why pay someone to confirm what you already know?
The tax and assessment issue is another story. There are different ways to fight the assessment and having an appraisal done is one way. In your case, just show the assessor the sales contract and that you are paying less than the assessed value.
I’m sure Frank has seen some terrible appraisals over the years. Nearly every park owner I talk to says the same thing. No doubt there is a huge lack of competency in my business.
The world record worst appraisal was in Denton, Texas, in which the appraiser valued the park at the value of farmland plus depreciated pipes and streets. He literally calculated how much the water and sewer pipes cost at the Home Depot, then how many feet there were in the park, and then did the same on the asphalt. He then determined how old they were vs. their useful life, and depreciated them down. The final value for a 50 space park with $380 per month lot rent (seeking a note of $1 million) came out as under $100,000 using this method (farmland is only worth around $5,000 per acre in Denton, with 7 acres in the park). Fortunately, the banker thought it was hilarious, and sent me a copy just for laughs, prior to firing that appraiser and hiring a second one, that came in at a value of $1.2 million. But had I not had such a smart banker, can you imagine the damage that the appraiser could have done by not being competent?
Yeah, that is pretty bad. Back in the days when I was a hard money lender, I got an appraisal, with the loan request, on a house that described it as being in good condition and put a valuation on it reflecting that fact, but a little on the high side to what I would expect for a move-in-ready home in the neighborhood. When I went to inspect it, I found it had no doors or windows. I went inside where all the interior wall had been removed and the studs were chard black from fire and about half of the roof was completely gone from the fire. By all indication it had been in that condition for a long time. It was not a fixer-upper, but a tear-it-downer.I passed on the deal.