Have a good deal in the works with an owner carry. Issue is seller is pretty much working against me, does not want to give me any info on the due diligence.Longer term owner and does not want to give tax returns or bank statements. Pretty much is willing to offer current rent roll with whose there, amounts , and deposits. Thats the extent of the helpfulness . Also does not want to do title transfer for mobile homes reluctant to provide or work to update any of those docs. No leases etc.Great marketGreat dealGreat Carry termsDeal is Great but the issue is minimizing the risk on lack of info being provided by seller. As far as I can tell it seems to be more of an issue of seller maybe not quite ready to sell or things that since he is doing a carry he has more to lose. I really would like to salvage this if possible. Can stick to contract of failure to deliver requested items but I don’t want to go that route , I think this is just a difference in perception I am working with …Thanks
jb,These can turn out to be “great” or can be a nightmare. Usually the seller has not been straightforward with the IRS to begin with. My view is that if they are willing to try to cheat the government, what are the odds that they will be honest with me. However, you could find out from the tenants (if you believe them) what they are paying in rent and how long they have been there. That could give you a good idea of the lot rent expected. If the seller owns some of the homes, you will have to verify the ownership. Check with municipal authorities to find out if there have been any issues with the seller (any lawsuits by the city in the works, etc.)The good news is that he is carrying the paper, so he will not disappear after closing. To me, this kind of deal has to be a “great” deal - good is not enough. If the down payment is low enough, you can worry about transfer of title to the homes when it comes time to pay off his note.Good luck and let us know how it works out.HowardHoward
All POH but i would still say its a great deal great terms as well… any more insight for how to combat this is appreciated.
You don’t need the sellers tax returns or bank statements. We don’t get them on many deals (for example, all the REO deals we buy). They are not an essential part of due diligence. If he is carrying, they are even less important. You should be able to put together the financials without these items. They’re great to have, but you can live without them. No leases are common. Not wanting to transfer title until you pay them off is not unusual.It sounds like you’ve got a typical mom & pop seller here. That’s where the opportunity is. If they had everything perfect, you would not be able to get as good a deal in all likelihood.You can build every line item of the expense statement by getting the real costs from the water dept, etc. and the missing blanks with three bids.You can count the number of trailers and guess at which are vacant. Then multiply by the lot rent amount.Don’t let these minor issues ruin your deal.
Frank,Can you expand upon getting copies of the utility bills from the utility companies themselves? I noticed you mentioned calling the utilities direct in the due diligence manual too. But the way you worded the above post about getting the real costs seemingly suggests the seller doesn’t need to “authorize” the inquiry (because if they’re fudging numbers, obviously they’d just decline the request and you’re still without any concrete info). Thanks!
Do you have it under contract with a “due diligence provision”? That provision normally gives you the ability to access any and everything about the park. You do not typically need any permission to get the actuals on water, sewer, electric, gas, etc. from the provider. We have never been asked (out of hundreds of parks we’ve done diligence on) to get written permission or release from the seller to get access to these records from the utility companies (although it would not be hard to do, if they did).I doubt your seller is “fudging” much – it sounds like the push back is more of a privacy concern (tax returns) and poor accounting methods. Not that sellers don’t “cheat”, but nothing the guy is saying sounds too unusual.
As a SC Real Estate Agent I have looked at probably 50+ Mobile Home Park deals in the Southeast.Only 1 of the 50 Mobile Home Park deals had real ‘Financials’ to go with the Park. In the Mobile Home Park deals that I have analyzed you are lucky if you get the ‘correct’ Lot Rent, # of POHs, # of rented spaces, type of Water and type of Sewer.As a Buyer you really must do your own investigation and analysis of the Mobile Home Park. You need to contact Zoning, Water, Electricity and etc. You need to find the ‘correct’ information from the ‘correct’ sources.Now the Electricity Companies that we have contacted are very protective of their information. If you sweet talk them, they might give you a bit of information (but it will not be a lot even if you are asking broad questions…not person specific). One Electricity Company suggested that we go to the Mobile Home Park and look at each meter. This particular Electricity Company color coded their meters (ie…Red - Not Paid & Turned Off). By counting active meters you can get a ‘read’ on the Mobile Homes with Electricity and hopefully ‘Paying Tenants’. However, just because they have Electricity, it does not mean that they are actually paying Lot Rent.In late February my Husband and I closed on a Mobile Home Park that had been in an Estate for many years. Prior to being in an Estate the Father (Pop), who had created the Park, had allowed the Tenants to live there for free. Thus, just because someone is living in a Mobile Home in the Mobile Home Park, it does not necessarily mean that they are used to paying.For the MHP that we purchased during the Due Diligence Period we received a Rent Roll (which was partially correct) and that was about all. During the Due Diligence Phase we asked for a lot of information (Tax Returns, Bank Statements, Water Bills, Electricity Bills) and received none of these items.As a Buyer you have to decide on your own if your MHP is a good deal and then confirm your decision with lots of Due Diligence.If you accept that the Seller is not going to provide you with any information and that you are agreeable to this, you need to get a Ratified Contract with lots of ‘Outs’ (specifically Due Diligence Period, Zoning Verification, Water & Sewer Verification) and then YOU need to go investigate during the Due Diligence Period.I agree with Frank that “I doubt your Seller is ‘fudging’ much”.From the Sellers that I have encountered they were just ‘Mom & Pops’ who made a living from the MHP, but who did not necessarily have the Business Skills needed to provide all the information.If you feel that your MHP is a good deal, please do not walk away from it. Put it under Contract with Due Diligence and go forward.We wish you the very best!
Thanks all for the responses, i t was already under contract. This particular one has a few extra nails so making sure to watch the steps. Frank you are the man, thanks for all you do in assisting on these issues.