Is this a good choice, considering the fees. There are some large parks in the state of Michigan and Illonis. The bidding starts low and goes up from there. I believe a lot of people are leaving Michigan because of the detroit area. Advice.
Detroit is bad, but most of the rest of Michigan is relatively stable. Always look at bestplaces.net to do your due diligence on vacancy rates and average home prices to insure you are purchasing in a reasonably economically-stable metro. (Of course, buy F&D’s MHP books to learn all about all the due diligence you need to do.)
The biggest problem with Michigan may not be the actual economics, but the financing (or lack thereof). A lot of banks are turned off by anything in Michigan. But if you can arrange long-term (10 years+) financing for a stable property outside Detroit at a reasonable cap rate, you should be fine.
My 2 cents worth,
-jl-
Here’ a typical call to a bank:
Question from the banker: “where is this park located at?”
Answer from you: “M…” (banker is still on the phone)
"I..." (banker is hoping you're about to say Minnesota)
"C..." (banker hangs up)
This is extremely unfair as Michigan is a GREAT state. Western Michigan is economically vibrant. People only seem to focus on Detroit, and that would be like throwing out Chicago because of East St. Louis. Some day, Michigan will be back on top – but until then, you need to know the banking difficulty that you may run into. It’s not fair, but it’s out there.
I did some high level DD on those Auction.com deals last week. Some are attractive, although it really depends on what the seller is looking to get out of them. I believe most, if not all, were outside the immediate Detroit MSA.
I’ve bought some notes on Auction, and you’ve got to watch out for the fees. Make sure to comb through the PSA line by line to catch any fine print regarding minimum fees, along with due diligence reimbursement, and be sure to ask about any variable closing fees up front. I got hit with an escrow fee that was about 5x normal on my first deal with them.
Additionally, the bidding is essentially rigged. The seller can initiate bids at will. I’ve seen assets get bid up through the roof, only to be called by the seller/broker hours later to see if I was still interested because the others “bailed.,” which I found odd since there was a $10k bid deposit. Later, I learned that it was in fact the seller trying to create an artificial bidding war.
Keep us posted if you continue to pursue these assets.