Should I change anything up in my due diligence or outlook in general if my investing goal is really just to own parks for their constant annual income vs owning them to flip a few years down the road? I’m looking for longterm and somewhat steady income streams here. I’ve never been a big fan of “flipping” properties or short term investing so should I be going into this MHP investment world with a different mindset?
If you are holding longer term, then you have access to two tools that don’t often work well for “flippers”
Conduit debt. These are 10-year notes with a fixed rate, but have an extreme penalty for pre-payment called “defeasance”.
Filling vacant lots with homes via the CASH program of other. Typically, the best way to work these programs is to hold the property long enough for the home to be paid off – that way there’s no debate on how much the park buyer should pay for the home or having to step into the loan guarantee.
Otherwise, everything is the same on due diligence and park operations whether the planned hold time is 1 year or 20 years.
I would caution you, however, that even if your plan is hold a property for the long term, always listen to every offer and give it proper consideration. Never tell someone “this park is not for sale” as that’s a great way to miss out on a good opportunity to sell at a fantastic price. Your park should always be for sale at the right price, no matter how long you plan on keeping it. If it sells ahead of schedule, take the profits and go buy another park (maybe even larger).
Thanks Frank and will do!