I have been in on and off negotiations of a park for over a year. The owner of the park is in his 80’s and has selling out on his mind. He has a son that he would like to pass the park onto, however his son is lazy and has lived off of the old man for many years. Of course the son wants it, but the old man is concerned that the park will just go downhill and fail shortly after son takes it over. In a recent conversation with the old man, I presented him with an offer to buy the entire park. The dad (old man) said he would love to sell the park to me as I have proven I can run a park (I own a smaller park in the next town down the road) he sees the energy and motivation that I have and he really likes that. He called me after he reviewed my offer, did not mention anything at all about the price I offered, he just said “I really wanna find a way to give the park to my son, but need to see that he can/will operate the park as it currently is, and not drain it to nothing” as he fears. I told him I respect that, and will let things be. That was several monthes ago.I was at the park on friday buying parts for one of my POHs, the son helped me and we got into conversation about his dad. Son says, I think dads gonna hang on till he dies, he’s never gonna sell the park. I don’t really believe this, I think dad wants to sell but doesn’t trust his son.I wanna present dad with a new offer…I’d like to offer to buy 33% of the park, (more if I can) I’d ask dad to try to get his son to buy a small share, say 10-20% of the park,(to make dad happy that son has a part in ownership) and then have dad keep the remaining controlling interest. (Dad has told me previously that he enjoys working the park and visiting with the tenants) I would propose that dad stays on and runs the park at least for the time being. my question to you is…how would I finance a deal like this when I would only be buying a potion of the park??? If I can get my foot in the door this way that would be great. My next move would be trying to buy dads remaining interest in the next year or 2, and then when Son gets himself in a pinch, buy out his share. Any ideas on how to structure this? And how to finance it??
if the park you’re looking at is substantially larger than yours, perhaps the father would take yours on trade for the son to run after he is gone.
I’d structure the deal such that you have some option to purchase the rest of the park - or at least most of it so you could control it. If son wants to actually pony-up some capital and buy into the deal at the same price you are paying, perhaps that is OK. But you should control it. Son is not a trustworthy partner.As for structuring, you should place title into a land trust, have the beneficial interest holder be a new LLC that you set up, and you and Dad both own your respective shares of it. A bank would lend on that (probably with personal recourse to you). Otherwise you may have to just pay all-cash for your share. This is the sort of deal you are definitely going to need an attorney to advise you on. You just can’t let yourself get into a situation where you buy-in, and then Dad sells/wills the property (or most of it) to Son, and Son then is the majority shareholder and scrapes all the cash off the top, leaving you with nothing. My 2 cents worth,-jl-
I like where Jefferson is going.And I would add the following:Buy ALL of the park (to get control) at very soft terms. Low down, low interest payments, etc.The father knows the son better than anyone so don’t allow him any ownership rights, either now or in the future. It would end up in front of a judge.