Hey all - - - remember me?

mobile home university
1

Waaay back in the MOM days; I remember Rick, Jefferson just starting out, Frank & Dave before they took MHU, and Erik, I think.

Switched my main focus from Lonnie Deals to MH-on-land rentals, always on the eyeball for a park that fits my criteria. Not that I’m picky . . … Took 12 years, but this might be a starter:

25 spaces, rents at the high end, park pays water and garbage, recently repaired/upgraded septic system. Preliminary due diligence on expenses shows this park with 90K NOI, owner did not mention a price yet, but did say last appraisal was at 1.2m . . . by my pencil nub thats a 7.5 cap.

Utils could be split out, sewer is a block away . . . there are ways to do a little sumpin’ sumpin’ to squeeze a little more juice.

Not looking at this as a turnaround flip project; its not. Ive done LDs in this park for years, and i know it well. Formal DD should be quick & easy. Currently mismanaged, just needs some cosmetic work done on units, tenants, and grounds. Easy peasy for someone who knows the business as I’d like to think I do.

I see this as a good starter, get my sea legs, so to speak, and it will cash flow enough to let my wife quit her job. I like it as a cash flow vehicle.

No money here. Owner may be willing to do all or partial owner financing, I’d like an 8 to 10 cap, as a vet Im told I may qualify for a Patriot Express loan for up to 500K, local credit union carry the rest. Or owner finance for a year, then refi @ CU.

Thoughts? An out-of-state 12 cap turnaround is not in the cards for me at this time.

2

Steve -

Welcome back to the insanity. (:P)

I’d still like to see you get a double-digit cap rate park. Unless there was very attractive and fully-amortizing financing on the property at a 7.5% cap, you don’t want to get half way into this thing, owe the seller a balloon payment, have an appraisal come in at a 10% cap, have no bank want to finance it, and you be underwater. So I guess it all comes down to the seller financing. Oh, and what expense control, rent bumpin’ and other improvements you can make.

My 2 cents worth,

-jl-

3

I agree with Jefferson. That deal does not sound compelling to me at all. But I’ve not seen it, and you have. So there must be something about it that turns you on. We would stay away from a deal like that for the reasons that Jefferson already presented. However, at the end of the day, you have to make the final decision because it’s your money at stake, not mine.

4

I haven’t seen any parks sell at that low of a cap rate. Best case scenario for a stabilized occupancy park with market rents is usually 9.00% or higher. Poorly managed parks with vacancies are double digits. But that is just in my market in the upper Midwest maybe it varies elsewhere…Or maybe we just have brain freeze from the 25 below zero temps this winter :frowning:

“Price is what you pay, value is what you get”

5

My next step is to try to find out what they need. They bought 12 years ago for 500,000. So their loan then would have been 350-400K, balance now should be around 113K, figuring 15 yr amort @ 7% . . . just guessing on that.

If the price is right, it may work. But I agree that 1.2 is too skinny - esp. since I have to finance a helluva lot more than they did = $60K annually in mort payments, or more.

6

Hey Steve Glad your doing well This is Briton (IN).

I am so greatfull that people like yourself contributed to the old CRE forums. Sometimes I like to read the archives and see how much I’ve learned since I was 19 and thrown into this biz. I often wonder how some of the people are doing. Doc, Sailer, Ryan NC, Tony, Michael KC, Jeff MI. Heck Lonnie has passed, Its crazy how times change.

I am closing on my 5th park next month. That will bring me to 104 lots, 1 rental house, and 56 storage unit rentals. I turned 30 last year.

I wish the best for you and yours,

Briton