Best way to bring in newer units, Equity or Investor Partner or Sell Assets

mobile home university
1

I have a 72 lot park I acquired in Kansas - dirt roads… right on highway though, good schools, near new state owned casino and major employers. I get calls every week from prospective new tenants wanting to buy or rent - but I don’t have any inventory to sell to them. Currently I am limited on cash until I either sell some of my other personally owned single family rental homes to raise some cash or I sell a part of the park.

In my position - what do you think would be the best way to raise capital to begin buying and infilling the park? It’s above breakeven from expenses with the mortgage payments - but it can do a lot better. I have 35 or so lots occupied at $275 with fairly low cost ratios at this park - 20-25%

The numbers and location seem favorable - I just need capital or some relationship to sell more homes and help fill up the park more.

I have talked with a few of the regional dealers - but they of course own their own parks and don’t like dealing with the competitors in the area. I see a lot of homes up for sale by owners upside down, in foreclosure with greentree or at parks that are closing down - mom and pops that dont want to run them anymore or give in to city pressures to rezone or otherwise are mismanaged… There is no need to buy junk homes - there are plenty for sale that are livable and clean.

Just looking for some ideas where I don’t have to give away the entire park or sell off my other homes if I can help it. I certainly don’t mind selling my rental houses to raise the cash - it just takes time. I am estimating that at a minimum I will need $50k to begin purchases. I beleive I can get 3-5 units in here for this and that will increase income enough to reinvest the downpayments and rent/sales contracts payments toward more units - the goal being 54 to 60 units. At 60 units the park is raking in the cash on lot rents alone - the 10-15% return on average on the resale homes is extra icing on the cake to go back to investors.

I’m open for ideas at this point.

2

My plan would be to pull equity out of your other rental properties by remortgaging.
Mortgage rates are at rock bottom now and in my opinion equity sitting in real estate is doing next to nothing in building your personal wealth. It’s dead money so get it out there working for you.
Borrowing at 3% and loaning at 10% + should be a no brainer.

3

GoZippy,

Instead of mortgaging your existing properties, sell options.

  • No tax liability until the option is exercised
  • NO PAYMENTS!! = much better cash flow
  • No qualifying with institutional lenders
  • You maintain title and can sell or 1031 exchange out
  • You can buy the option back if you choose to keep the existing SFH’s

If this of interest, please contact me off line.

4

A guy I know owns several very large turn around parks and he uses private lenders to fill his parks. He places additional liens against his park to secure their positions and pays them a fair return on short-term loans. He then brings in new tenants and does a rent credit program to fill the homes. Let say you borrow $100k and can bring in 10 homes. The value of your park will increase $330k based on your $275/mo lot rent.

If you offered your borrower an 8% return your payment would be $2,027.64 for a five (5) year loan and if you collected $550.00/mo (lot rent & rent credit) for each new home you would have a positive monthly cash flow of $3,472.36 after you paid your investor. This is also enough to cover your expenses on those new homes if you are still responsible for them, but I would get the new tenants to take care of their own homes from the moment they move in. This is a great strategy to offer to people with self directed IRA’s and 401k’s. Best of luck.