Hi everyone, this is my first post on the forum. I attended the January bootcamp and have been looking for a park since.
I have an accepted offer on a park at 9.5% cap. It’s got 32 spaces, 28 occupied with tenant owned homes. 2 POHs that are empty. All city utilities.
The seller has the following comments regarding the contract, I was wondering what everyone’s thoughts are:
He has a ESA I that he would like us to use to speed up due diligence. He says it’s very straightforward, no hazardous materials on the property or close by
Park of park is on 100 yr flood plain by not lots are on the flood plain. Would that be of concern?
Thank you everyone!
You have GOT to get a new Phase I that’s in your name. If it’s not in your name, then you’re not covered. I would never trust any environmental information that a seller gives you – they guy could have a nuclear landfill on the property and still tell you “it sure looks clean”.
The flood plain you described is a deal “hurter” but not a deal “killer”. It may causes you some issues on lending and future exit, but as long as no lots are within the boundary, you should be fine operationally. That being said, remember that FEMA updates these maps periodically, and it might consume some lots on the next version. But if the numbers are good – if you have room for upside – you can probably maneuver your way around this.
Everything else sounds good (occupancy, no POHs, city utilities). I would not lose the deal over these two issues.
Thanks Frank for the quick reponse!
The reason Frank says the phase I has to be in your name is that it has to be for you to qualify for the “innocent landowners defense”. If you don’t qualify for that, you are liable for any issues, no matter how large.
The ILD established by SABRA says that if you did your proper due diligence you are not liable for anything, the Superfund will kick in.
Thank you @Coach62. What is ILD and SABRA?
ILD is just the innocent landowner defense. SARA, I had to look it up because I couldn’t remember exactly what the acronym was. SABRA was a typo, it’s SARA. it was late and I was tired. Must have been hungry too because Sabra is a brand of Hummis lol.
I took a class on phase 1, I’ll be performing them soon. There are well over a dozen of those acronyms, almost all of them are either court decisions or laws written by congress.
For a better understanding, read it here and you’ll see what I’m talking about. The whole textbook is full of junk like this lol. https://www.env.nm.gov/gwb/NMED-GWQB-InnocentLandownerDefense.htm
The whole first chapter is like this, then you have to remember all that crap long enough to pass the test, then you’ll never really use it again.
I just had a thought. Take the sellers Phase I, call the company that did it, they might give a discount on a new one since they’re already familiar with the park and have already done the historical research.
That is a great idea except the seller isn’t returning the contract.
We agreed on terms, etc. I thought it was a done deal and now they’re not returning my emails and they’re not sending back the contract. Very frustrating and not the first time this has happened to me.
They might have been playing you to work on someone else’s offer. Happens a lot!