Please I need help
I am going back and fwd with park owner in my neighborhood in east cost. Finally price came down from 950k to 850k and now final contract for 650k cash. After 1 year negotiations.
23 site rent coming 144k yearly. One park own apartment.
Owner Contingency of close in 30 days.
My contingency is to get phase 1 done and due diligence period of 30 days.
I have sign contract with 65k deposit.
I called building department in town to find out about this property.
What inspector told me out of 23 home only one have CO. All other home don’t have and I have to inspect each and every home. And park have some other issue they all need to be fixed before closing take place.
My question
Is this Park owner responsibility to take CO for each mobile home?
Before he sell this park he has to provide all permit for each mobile home in park and CO for each mobile home?
I am first time buyer.
Is any other thing I should check?
Thanks
Both of those can’t be accomplished. It has to be one or the other. You can’t have 30 days of diligence and then close on day 30, just can’t happen.
Sounds like you have some very serious problems here. If the homes are there illegally there’s no way you can buy this park unless that’s taken care of
Your rental income is nowhere near what you think. Based on that math each home / lot rents for $522 a month.
Based on a very rough math calculation where I assume the lot rent is about $200 a month, you are paying about twice what the park is worth, plus the value of the homes.
I am figuring this based on the VERY limited info you gave.
What is the LOT rent, not home rent?
Size of metro area?
utilities?
Total rent for 23 space is 144 k year. Yearly income 144k
Each site rented approximately for $525 a month.
1 park own
22 tennent own their home.
Tax 9k yearly
Water bill 8k yearly.
Utility tennent pays
After all his expense he nets around 112k yearly.
I am conserd about not having Certificate of occupancy on those mobile homes from town.
Who is responsible for getting Certificate of occupancy?
And can I close on this park without Certificate of occupancy?
Jay, just my opinion but I’d pass and go to the bootcamp next month. Get the home study course for now.
if nothing else you need to do some serious diligence on this deal. There’s the potential for something to be way off here. What is the 2 bed apt rent in the area? Median home cost? Etc…
The expenses are much higher than the seller is telling you – the net income will not exceed about $100,000 best case, based on normal industry ratios. You have to get a Certificate of Zoning from the city that declares the park to be zoned for ___ number of lots and everything is 100% legal currently – which is not the case without the COs apparently. You need to figure all this out in due diligence until you are the expert on this property.
What is the median SF cost and apartment rent? Have you run a test ad? What are the water and sewer lines made of? There’s 101 issues to resolve. Our 30 Days of Diligence guide tells you what you need to check out. Before you risk $650,000, I’d definitely use that guide at a minimum. You can find it here on the site.
Benjamin Franklin said that “diligence is the mother of good luck”. That’s been our experience, too.
One thing that also jumped out was that you put up a $65,000 deposit when you signed the contract. I’m really hoping that this is not your earnest money deposit. If it is, you need to reconsider the size of your deposit for future parks. I would try to keep this number below $5,000 if possible. It’s rare for a seller to try to keep your deposit if you back out, but the size of this deposit determines which court you’ll fight them in. Ideally, you want to have this fight in small claims court.