Buying first Park, need help

mobile home university
#1

I am new to the park buying world. I am looking at buying a park from a friend that I think I am getting a good deal on. It has 32 Lots and they are and have been full at all times. The lot rent is $140 per. I will pay $900 yr in Insurance and $1150 yr in taxes. All lots pay their own water, elec…etc. The purchase price is $400,000. Does this seem like a good deal?

I need to know where to start, do I need a survey, any approvals by state or county. Park has been open since 1994. What all should I do or have done prior to buying it?

Lastly, about a year ago the land to the north began pushing the water between two trailers and down to the draining running along the street. Well, the water gets bad during rain and it takes weeks for it to dry out while it continues to look like it is a running faucet. Is there any true concerns I need to look at, where do I start with having it looked at to make sure it is not going to cause me problems? Any and all help is really appreciated. Thanks

#2

Mike, I own 2 parks in Tucson and in both deals we used local realtors who only sell parks and can hire the right people to check these concerns for little money. If you have the property appraised it will run about 2000-4000 dollars to get the value. Insurance sounds a little low. One of me parks that has 60 spaces with structures runs about 7500 per year(15 park owned mobiles). Sounds like a good deal but still get local professionals to help you.

#3

RickyD,

Thanks for the reply, the cost for Insurance I placed was for the park only with no trailers. I pay about $450 yr on each trailer I own at the park. Which is only one at this park in question. I am trying to avoid any realtors to save cost. Is their a certain company of type of company that will come out my my behalf to inspect? I hope I am doing the right thing here!!!

#4

Hi RickyD,

I was wondering how you found the local realtors who sell mobile home parks in your area. This seems to be a specialized field. I am having difficulty finding team members to help me in the purchase of a mobile home park. Any insight you have would help. Thanks!

-Rachel

#5

Rachel

If you are looking for a park in the Tucson area I have a great realtor to refer. Pete Peterson 520-297-7383 or cell 520 405-0086. Pete also owns his parks so he really knows the local Tucson/So. Arizona market.

Ricky DiPiero

#6

Mike, does this deal work for you from a financial perspective?

GI = 54k

NI = 38k (using a 30% OER)

That’s ~ 9.5 cap (no financing)

What’s your debt service? With 20% down, 7% apr, 20 yr amort, DS = 30k, so cash flow = 8k and COCR = 10%.

Is that an adequate return?

The stormwater drainage issue can be addressed, its just a matter of how much money it will cost. You may want to get an estimate and deduct the cost of fixing it from your purchase price.

The list of things to investigate during due diligence is too extensive to type here. There are books and boot camps that cover the subject. If you are not up to speed, hire professional expertise (see the post about Rolf’s butt). Several folks on and off this forum, offer their services for a fee. Their price is much cheaper than a mistake may be (ask Corey how much he paid to learn this lesson). Another alternative is to just wing it on a hope and a prayer. That can work. How lucky do you feel?

Daphne