My wife and I purchased our first park about 6 months ago. It is an 81 space, nice, 5 year old park in a somewhat depressed area of Michigan. The area has strong demand for rentals, but not many people would now qualify for purchases, and have very limited down payments. Our biggest problem is collecting lot rents in a timely manner, but we are working diligently with the courts to tighten up on this.
I have a situation which I’m not sure I should be happy about or run away from.
The previous owner owns 19 single and double wide rentals, all relatively new (1998 and newer), and has guaranteed the $300 lot rent on them as long as they are in the park, regardless of whether his tenant pays rent or not. He is getting tired of the management issues with these homes, and wants to sell to us. He will finance, but only for 4-5 years, and insists on a personal guarantee from us. He also is threatening to move the units out as they become vacant, if we don’t purchase them. So:
What is the best way to structure the deal both financing wise, and tax wise. Should I get title on them immediately? How could I offer financing on them to a potential buyer or rent-to-owner if my financing is due in 4-5 years? What if I can’t sell them and they remain rentals? Do I even want to get into the rental business?
Could I buy some of them outright through my IRA if they sit on the park that I own? Would that be a prohibited transaction?
If the typical rents are $250/300 month for the homes, what ballpark price should I expect to pay for them?