My question(s) are really two-fold. 1) I have just started to read through Dave and Frank’s material but haven’t yet bought the program. (that will happen shortly I’m sure!) It sounds like you personally stay away from purchasing MHP’s in the Southeast for various reasons. I’m in Florida and don’t want to purchase my first out of state if at all possible, but when successful people tell me they wouldn’t do “X”, then I’m skeptical of doing the same!
Second issue is that I’m in the beginning stages of looking at several parks in Florida, none of them with Park-owned homes. When running the early numbers (at full price) the CFBT are all positive, albeit the range is $350/month - $1700/month. Expense numbers are sketchy at best and I’m guessing on a loan rate at this point of 5.5% with 25% down. I have a goal of owning 3-5 parks before the end of next year but the only realistic way to do that seems to be the combination of a loan and using private money. What can I reasonably expect to have to pay private lenders? How do you typically structure this type of deal? Is it usually a debt deal that just pays a decent rate of return monthly or annually or are they equity deals based on a sale or re-finance in 3-5 years?
Example of a MHP for sale on your site: 11 units and 1 Duplex. Lot rent is $215/month. The ask price is $270,000. If I use the formula of 11x215x70 I get $165,550 but still have to value the duplex. Is that just a comp valuation of other duplexes in the area? If I use a 35% expense ratio I get a monthly NOI of $1537. Let’s assume I get $350/month on the duplex so we’re at $1887/month NOI. Even at a full offer and a 5.5% note it would generate about $800/month but then the Private Lenders have to be paid.
I hate to sound so simplistic, but is this a decent deal (upside on the lot rent to $250 I believe) even with Private Money? What are your expectations of cash flow on a small property like this? It seems that if I can get this price knocked down 10%-15% it would be a pretty good first park.