We’ve had experience with three turn-arounds recently. All three were very different but they all seemed to have some common elements. The first element was that we went through quite a few evictions within the first three/four months. However, we’ve been able to work through these quickly by getting the units back on-line fast and using aggressive marketing to get an actual qualified resident in them. You need capital and demand to accomplish this obviously. Second element is that we seem to have a few small surprises that require us to spend money we hadn’t necessarily anticipated on spending. This is usually just due to the growing pains of correcting broken systems. Third element involves travel. You’ll be at the park frequently overseeing the implementation of processes, renovations, large ticket repairs to roads or infrastructure, etc.
Most parks like what you describe need to be seller financed. Since this should be on the table in deals like this, we usually ask for three to four months of deferred payments on the note so we have breathing room while we figure the park out and churn the bad eggs out of the tenant base. We also attempt to have the seller start implementing some of our processes once our earnest money goes hard. i.e. file evictions on every late payer, stop accepting cash, etc. On one of our deals, we took over the actual management of the park three weeks before closing because the seller was having health issues and his daughter was completely dropping the ball on managing the park.
From a budgeting standpoint, assume that the first few months will take up some of your time and the park will cash flow very little (if at all). However, in every turn-around there is a moment where you can almost see the ship hit the heading it’s supposed to be on. For our last one, we went through 14 evictions in the first three months. In month four (this month) our collections were 96% before the 6th and 98% overall. Couple that with the expenses stabilizing where they should be and you have the first glimmer of a completed turn-around. The first week of this month was clearly the moment when we knew our ship was on the right heading.