I trying to get into my first MHP and I need a realtor knowledgeable in MHParks to represent me and write an offer. It’s in Tennessee.
I also would like to know what crucial questions to ask of the seller to make sure I 'm gettin into something good.
What’s supposed to be in the contract?
I need all the help I can get!! thanks!!
Vy,
Undoubtedly, the most important clause in the contract is the “due diligence” clause. Make sure you have at least 30 days to conduct due diligence and if you find something that is a deal killer that you can simply send a letter to the seller and lose nothing.
Steve Case
Howdy VY: I would have to agree with Steve Case 100%. I just spent yet another week away from home looking for a “Good Deal” Well, the 45 W/ POSSIBILITY of 60 spaces,which was the main reason I traveled, turned out to be a legally max of 32 spaces. And I did not get this info from the listing agent ,or the buyers rep who I thought was on my side as well. I only found this out by going to the actual planning /zoning dept. within the parks boundries. Only then did I find out over the past 3 yrs. trailors have been required to be moved from this park!!! Why? Well in this county the new regulations will not accept grandfathered spaces. Since the majority of parks in this particular region are rental trailors the powers in charge have come down on the park owners and are forcing 35’ front yards,25’ side yards and 12’ from any rear fences. If I would have in fact believed what the listing broker offered, or even what my buyers rep had said ,I would have purchased a park where the minute I tried to place a repo needing renovation for a new home owner,The permit to hook-up to city water and sewer would have never been issued. The 45 w/ possibility of 60, never existed. This 4 ac. space even though on city water and sewer and all the other aspects of location and everything else,can only be legally 32. So not only did the Victoria Tx. deal turn sour,couple mo. ago,now the last two have had legal issues I would have never found out from seller (even though they may be required to fill out disclosure statements) or listing agent,or buyers rep. You have to do your own leg work or end up buying something for twice the price it’s worth based on how many max spaces you could ever have any way. I am still looking daily for other opportunities and more importantly for agents I can trust,so far That’s been the hardest part. When I get back on the plane and come back home I know this is still listed as 35 w/ possibility of 60 on Loop Net. Where is the regulation in this industry. I have looked at 7 so far and refused every one once I got the actual numbers not Pro-Forma. Hasn’t stopped me from looking Though. I do want to find the right one for me. I have found plenty of the larger ones that have potential, but I know I do not have resourses to buy 20k+ new trailors (knowing you have to buy min. of 3 at a time) I have 200K in R.E. purchase $ and currently only limited to 70K budget to purchase repo’s or new homes with,so I am centering on 45-60 space projects which may be 40-50% occupied.There is alot of expenses involved with looking in regions of the country where these parks are located. Here in Oregon it’s difficult to do lonnie deals for under 50K so have not looked in that direction in this region.I would rather put that amount of money into R.E. purchase not a trailor which in my opinion is not woth that kind of money. If you really want to find a park with potential it takes time and patience. Thats my point of view. I’m still looking…Good Luck…Sincerely…John R Herring…(541)267-3160
John - I’m also frustrated by the amount of time I’ve spent on potential leads for parks that went nowhere. (so forgive me if I sound negative - this is therapeutic for me). Here are the four rules I have learned to follow so far.
First - When looking to purchase a mobile home park, don’t waste too much time with Loopnet. I believe that Loopnet is for the most part a barren wasteland with few good deals to be had. I believe it contains a vast number of sellers just fishing to see what kind of offers they will get for their property. I believe you have to contact owners directly, drive the parks and be creative and persistent in finding the good for sale properties (as the gurus here on the site have stated).
Second - people have no trouble with lying about what they are trying to sell you. In general I think many business people operate with a what is legal and what is illegal mentality rather than a ethical vs unethical approach.
Third - Sellers are not dummies. They know what they have and expect to be paid what their property is worth. They have managed rental property for years and are not about to let some inexperienced punk come in and take advantage of them by buying their property cheap.
Fourth - Every property I visit, every owner I talk to and every county department I contact teaches me something. I am trying to stay positive and try to believe that every dead end is actually a point along the learning curve that is an essential part of becoming a successful investor.
Everyone sharing info on buying a park and avoiding mistakes is fantastic. If not for you I would have already bought a park and lost alot of money by not realizing that graffiti, drugs and unleashed dogs and trash everywhere in a park means potentially 8 years of work and hundreds of thousands of dollars to turn things around - THANKS!!!
charles
I can add my name to the list of wasted trips (3) now since July Figure airfare, rental car, motorhome fuel @6 miles to the gallon, about 9 days of my time and have yet to find a park that was what the broker or owner said that it was. The biggest thing I’m finding is that they claim X amount of occupied pads but when you get there the number is less and there is alot of non paying tenants. They are counting the # of homes times the monthly lot rent times 12 and thats what they are using for a annual gross. Make sure you check that out very closely. The pad sizes are always misrepresented too Why can’t they measure a lot correctly, Hum maybe because it would lower the value of the park. Could we put together a list of the parks we have inspected some how, That would save alot of us alot of time and money, Just a thought
Still looking, Terry
Hi Terry,
Terry I think what we have to realize in this biz is that one man’s (women’s) junk is another man’s(women’s) treasure.A park we may perceive as a dog may be just what the next person is looking for.It really is frustrating though,but we have to keep looking ,it is in our blood.All of us just by visiting these forums want to better ourselves in this biz.I think your idea of posting a “dog pound” for lack of a better term, may be a good concept. Good luck hunting!
Bruce J.
Hi Vy,
I’m going through the same thing myself right now. For me, I’m going the “buying a business” route, and using an attorney to do this deal.
The realtor will push the “real estate” in the deal, and my attorney is stressing the “business” side of this. ( I trust my attorney. All he deals with is real estate and business purchases.)
Unless your “realtor” is well versed in the buying and selling of a business, you’re going to have a rough row to hoe. Just because thier license “allows” them to sell businesses as well as real estate, that doesn’t make them "knowledgable in the proper procedures. (Been there, done that, got the T-shirt.)
While this MAY be my first foray into the MHP business, it’s not my first in the business world. (30 years of being self employed.)
DO NOT buy thier “corporation”. That’s the biggest landmine people step on in buying a new business. There MAY be a “tax bomb”, litigation, or any number of bugaboo’s preparing to spring on the current owner.
Yes, people MAY spring the " track record" angle on you when buying a business ( For ease of obtaining money, credit, etc.). But you’re buying a business people NEED, not something that may be highly leveraged in sales to create income. This is a MHP, not a manufacturing or distribution business. "ASSET PURCHASE ONLY.
If you haven’t “already”, I would suggest buying one of the excellent references by either Steve Case, or Ray Alcorn. (No. I get no “affiliate” payment for recommending them. THEY have been there, done that, and got the T-shirt ALSO.)
Good luck, and good hunting.
Sincerely,
Marc Ferrell
London, Ontario Canada
Is it practical as a first important thing to call planning/zoning department regarding a park before taking a trip there? You can simply find out if you can put new homes there or not, or existing violations.
It also think it’s great for us to have a list of parks including inspection findings for all of us to share and watch out for deal killers like in John’s case.
Taking about deal killers, what are other deal killers besides too small lot size, poor sewer/septic/infrastructure, cannot get permit?
James
Chino Hills, CA