I just want to say it's a pleasure to be part of this great forum.
I am a young driven real estate entrepreneur who wants to eventually own a park of my own. I currently have read through three different courses (including Frank and Dave’s) and listened to many CD’s on the subject of mobile homes and mobile home parks. In order to get the money to eventually have my own park, I want to start by flipping some parks. I want to get a park under contract, and then sell the contract. I am good at negotiating and feel I can get good terms and a good price.
Is the "Purchase and Sales Agreement" and the "Assignment of Real Estate Contract" all I really need to do this? Do you have any suggestions for what a buyer of a MHP contract really wants in a contract? I know 60 days due dilligence is good, but should I try to shoot for 90 days so that the potential buyer of the contract has more time? Does the contrat need to say "and or assigns" by my name or is it assignable? Any hints, tips or pointers would be greatly appreciated.
Congrats on your enthusiasm and continued learning. There is lots of great diverse experience from members on this board. Couple thoughts.
Flipping Parks
Yes,the purchase contract and assignment of contract should be the only documents you will need. There may be some states that have slightly different requirements so I will leave others to chime in.
You will need to add the “…and/or assigns” into the contract as purchaser. This is very common for commercial real estate and should not scare a buyer. You can put your name and/or assigns. Just tell them that ultimately this will need to be purchased by an entity to be formed at a later time prior to close. They should understand.
What do other park buyers want? The best thing I can say is to start chatting with other active buyers to see what they are looking for. Every buyer has different criteria from location to size, etc. If you know who the real buyers are and what they want you’ll better be armed during contract negotiations.
In general more time and ‘outs’ will be preferred. The end buyer needs time for DD as well as financing if required. You want to make sure that if the person you are flipping to backs out that you are left with enough ‘outs’ to back away yourself. One option is to add clauses to allow contract extensions for whatever reason.
It is hard to say how much time another buyer wants. Some seasoned investors can do DD in a week or less. Others may require more time. Make sure that your contract with the buyer has a clause that the contrast start date begins after ALL required due diligence documents are received and approved by you. This way you can hand over the entire package quickly to the potential end buyer. You do not want to keep going back and forth. This causes stress, time and reduces the odds of a successful transaction.
Wholesaling
First, I love parks. However if your goal is to attain quick capital for down payments then I may suggest you also consider wholesaling other types of real estate like SFR or even apartments. The reason I say this is that wholesaling is a game that requires liquidity of product and buyers/investors. Parks are great for cash flow and longer terms hold. However, one of the weaknesses of MHP investment is limited product and fewer buyers - ie far less liquid than other RE. Dont stop looking at parks but I would recommend you look at expanding your wholesaling to other products.
Thank you for the response. I appreciate the insight and recommendations. I suppose that wholesaling residential RE might be a better way to build up capital to buy a park in the near future, since I want to eventually own my own park.
I would love to hear any insight, tips or recommendations from other members a swell.