In a perfect world, you’d have the enough money in the bank to cover all the bills in the first month assuming you received no revenue, and enough to handle some larger repair & maintenance items (like a broken water line for $1,000). And you’d have a complete reserves budget to handle the replacement of everything in the park over its remaining useful life. But life is not perfect. While some investors have the liquidity to handle the whole year if nobody paid, or to re-build the entire park if a earthquake blew it to pieces, that is not the norm. Good investors substitute brain power for money in the bank, and that’s how they make their first park happen.
Do great due diligence, don’t buy a park that has private water or sewer, or master-metered gas or electric, or that is lacking a correct permit. Don’t buy a park in a declining market, or that’s in a hurricane zone. Don’t buy a park with more than couple RVs in it, and one that has one individual owning more than 5% of the homes. Run a test ad and have it pull a ton of calls. Make sure the deal is winner and that the worst risk you run is having to call roto-rooter.
I would bet on the guy that has bought the “right” park and done great due diligence but has little in the bank over the rich guy who has bought a total loser, done no due diligence, and has a million in the bank. Remember Clint Murchison, who used to own the Dallas Cowboys? He thought it was fun buying real estate sight unseen and with no diligence, and he lost everything. How much money would he have needed in the bank to weather his problems? Evidently, over $100 million was not enough. Most of the REO parks we see are the result of bad buying, not having enough money to handle repairs that pop up.