How do we go about inspecting park owned homes during the due diligence period or do we? I want to make sure all homes meet habitability standards. Do we ask for repairs and reinspect at walk-thru?? What if the utilities have been turned off… we can’t inspect the furnace, electricity, or water pipes. Thanks
That’s a good question. I recently had to inspect ~30 homes and decided to give the tenants 24 hours notice and make the on-site manager unlock them for me with what ended up being more like 16 hours notice. I only went inside empty ones or ones where people were home but let me and the on-site manager in (even if they had not received notice). I did not test anything (would I make a decision about the park on a single incident of hardware failure?) but examined the general “feel” for the homes, looked in every bedroom, determined whether the homes were habitable and tried to judge whether the tenants in them could be expected to (a) stay paying rent past closing; and (b) take care of the home between now and closing. Since people were home I told them I was doing an inspection with the permission of management and asked whether there was anything the matter with this home or do you need any repairs done? For the empty ones, I wanted to verify that what the on-site manager had told me seemed to be true.In any case, I did not have time to go into any house, so I skipped all homes that were rented but no-one was home to give permission to enter (and answer that question). I had mentally prepared a “per-home” average price I was comfortable with, and my inspections did not do anything to deter me from thinking that average would be met (the homes would not be a dealbreaker).---------------------------------------------I also had a “park performance” metric which the park ultimately failed and I cancelled the deal. Not enough demand at the price point needed to make money on new homes. I.e., rentals hard to fill at $550 when I needed them at $600 or $650. The triggering point was when I passed a “for sale by owner” home in the park for $17k (a reasonable price) that the owner was planning to moving out of the park (because he could not find a buyer). I would have bought it if I were buying the park (no-brainer), but if the tenant-in-place would rather spend $10k (or more) moving the home out than rent it out or sell it in place for a price that works, it’s bound to be a tough market.Brandon@Sandell
Kimkouz, my Husband and I own 2 MHPs and have looked at tons more.Unless you have a super stellar Seller the likelihood of getting anything repaired by the Seller in a POH is slim to none.Before making an offer analyze the POHs (exterior and interior) and come up with a current value. Use this current value in your formula to create your offer.Have the expectation (and keep money aside) that you will need to repair/renovate any POHs that come with the MHP. We wish you the very best!
From a liability perspective, one of the biggest dangers is deferred maintenance on rental homes. Weak floors, lights that flicker, light switches that click, sewage smells are all red flags. Homes don’t have to be ones you’d put your daughter and her family in, but they do need to be safe and clean at move in. On our website, www.mobileagency.com, in the “Forms” tab/section, we have a form titled “Rental Home Move In Checklist” which we recommend every Rental Home owner have completed at every move in. And if you can’t pass these simple tests, you are wide open for future litigation issues.
The other issue to keep in mind is that you really do not want to own homes if it’s really a park you want to own. Once you have a reasonably good idea on the value of the homes offer 50% or less of that value and simply let the seller know if he doesn’t like the evaluation he can keep the homes himself. When he pitches you on them being a real money maker just turn it around and tell him all the more reason he should keep them himself.