Hi Frank, Dave, and others… Iâ€™ve been notified of a park owner here locally that may be interested in selling. But, I need to act quick to at least make an offer if Iâ€™m going to do this. There are three other parks in the immediate vicinity, all located just off the same paved road. The other three parks have a much nicer appearance, with paved roads, better landscaping, newer mobile homes, etc. The owner of a couple of these other parks has let it be known on more than one occasion that he is interested in purchasing this park. Apparently, the other day the manager was told to inform the other park owner to make an offer on the park. I told the manager to hold off for a few days and let me see about making an offer first. Iâ€™m hoping to get some good advice from some of you guys. I purchased some manuals and audio by Frank and Dave about five or six years ago, and I read one of the manuals through and listened to a good bit of audio, but I havenâ€™t done much since to be honest. I hate to make this such a long story, but Iâ€™ve found out a decent amount of information already.
The reason that I know about the opportunity is because an old friend of mine from high school manages the place and told me about it. I would not want to purchase the park and get rid of him, even though that may be what happens if someone else purchases the park.
Here is some of the info that I know:
The park is very close to where I live, but the park owner lives on the other side of the country in California, and very rarely visits. This particular park is full of almost all Mexican residents (my friend speaks fluent Spanish by the way). There arenâ€™t very many newer homes in the park.
Plat number 1 is about 19 acres total, but a good bit of the back half of it is in a flood zone. So, there are
36 total park spaces in what I estimate to be approximately an 8 acre area or so. All of the spaces are occupied and there are zero park-owned homes. There is also a single family home at the back of the park which takes up about 1 acre of this plat. This is where the manager lives rent free. I would guess the house is worth maybe $80,000 or so as it sits.
Plat number 2 is about 15 acres and a good bit of the back half of it is in a flood zone as well. There have never been any homes on this plat. I estimate that there may be 7 acres here that could accommodate mobile homes on this plat if it is zoned for them. Currently, the grass on the 7 acres or so is just a maintenance expense that must be mowed or bushhogged three times a year or so.
The water is not sub-metered. There is more about the water situation that I will mention later. The mobile homes are on septic tanks. There are only 34 total septic tanks, because in two locations, there are two homes attached to one tank. There may be some doubt as to whether all of the tanks perk properly. The roads are dirt, gravel. The park doesnâ€™t own any equipment.
Here are some of the other numbers that I know about:
$200 month per lot (36 lots), includes lot rent, water, and garbage pick up (No other revenues)
$375 per month for garbage dumpster that is emptied 3 times per week
$126 per month for 3 or 4 street lights
$175 every 3 months or so to have the streets scraped/dragged $300 per month average for maintenance help (Repairing plumbing leaks, Cutting tree limbs, Grass cutting, other) $600 or so per year to cut grass on vacant plat $2,370 per year property tax total for both plats and single family house $800 per month is what the manager told me he gets. He also gets free rent in the single family house. Iâ€™m not sure if he pays for the water or power bill at the house.
I realize there will be other expenses that I havenâ€™t calculated. Such as general liability insurance, telephone, office supplies, accounting, fees/licenses, etc.
Apparently this park hasnâ€™t turned a decent profit for a while, and has probably been losing money recently. The main reason for this recently is the county water bill. Apparently, the water bills have been SKY HIGH recently. With bills of $2,800, over $3,000, and close to $4,000 recently. According to the manager, while they did have a slight rate increase a while back, the water bills used to be much lower. Obviously, sub-metering the water would have to help with this, but I canâ€™t help but think there must be a leak or leaks somewhere. Maybe some of you guys have an idea of how much sub-metering this park might cost. Also, I donâ€™t know how much $ we would be talking about to replace water pipe if that needed to be done.
Now, the park used to pay about $325 to have the septic tanks emptied whenever they needed it. But, this past year, the manager told me they turned that responsibility over to the tenants. However, I donâ€™t think they have verified whether any of the tenants are indeed paying for this on their own.
The manager told me that the mortgage payment is just shy of $3,250 per month, which is being paid to the previous owner. I visited the courthouse today to find out that the previous park owner provided a seller-financed mortgage of $350,000 to the current owner about 11.5 years ago. So, it would seem that the owner shouldnâ€™t owe a whole lot of $ on this park. This would allow me to make seller-financing a part of an offer, if I decide to make an offer. Also, I obviously know that the current park owner paid at least $350K for the park, if not more.
Anyway, I realize thatâ€™s a lot for a first post. Thereâ€™s even more to this story, but for now thatâ€™s probably enough. Perhaps some of you could let me know what you think of this scenario so far and how I should proceed from this point. They would like an offer quickly. Maybe what type of contingencies I should have in my offer, or if you guys would even make an offer. Any advice would be greatly appreciated.