After a couple weeks of waiting for the sellers attorney to review the contract I finally have a signed copy! Every day I was worried that someone else would bring him a better offer. I think I have very good deal here. Now to dig in and do the diligence. This will be my first time doing it on my own since my first park I had an experienced partner helping. Would it be appropriate to post the details of the park here to get your feedback or is that not a god idea while it’s under contract?
Just don’t post anything to do with the address or even state that it’s in, and you should be fine. If you want to alter the exact number of lots (but keep the proportions the same) that would be a good idea, too.
Here are some details.
85% of lots have trailers
60% of trailers have tenants 40% need some rehab. Need to check onsite but I estimate 2-4K per rehab.
Mix of trailers from 70’s-late 90’s
All Park owned trailers. Has been that way for a long time. Just their biz model.
$495-$595 rent on trailers
Market lot rent $300. “nice” parks are $370
City water/sewer. Not submetered, yet.
Metro population over 5 Million
Posted test ad. Got 10 calls in less than 6 hours.
Surrounding parks are full. Several told me they have no empty lots.
Paid roughly $17K per paying lot. About $10K per lot if divided by lot that has a trailer.
My plan is to sell trailers to current tenants for cheap and focus on the lot rent. Move away from rentals ASAP. Hopefully collect a good amount as down payment to help offset my downpayment. Rehab vacant trailers and bring in new tenants. I’d like to be aggressive and rehab 2 homes per month. As quickly as I can get new tenants in.
Tyler -
Your valuation sounds reasonable. Your test ad seems to validate you are in a strong economy. But please take a look at:
•Bestplaces.net – town, population growth, ‘Housing’ tab for housing vacancy
•Rentometer - 2BR apt. s/b about price of 3BR MH
•Zillow - do not want to see $30k site-built homes
•Google Maps + street view – ‘drive’ the park
(hats off to Frank and Dave for this due diligence list)
So it seems your key due diligence will be on the water and sewer. If it is City water and City sewer, you are golden. If well and septic or sewage lagoon, that’ll be where to focus your due diligence. You generally want to stay away from lagoon (although we own one), and be sure to have a plumber inspect septic. What is the age of the park? The pipes? Roads?
To your continued success,
-jl-
Based on those basic numbers, it sounds like a winner to me – but a complete due diligence review may show up some concerns. Follow your “30 Days of Diligence” manual – it’s the same one we use.
Jefferson,
Zillow shows a house on one side valued at over 300K and on the other side 180K. Across the street all over 100K. So that seems OK.
29% increase in population since 2000. Very good.
Avg rent for 2 br apt is $825
Frank, I’ve been using the 30 days of diligence manual. I had my assistant put it all in Wunderlist for me so I can keep track of it all. So far so good.
The more I dig into this the more I think it is a real winner. Thanks all for the advice.
Tyler,
Great job and it does sound like a winner - send me an email with the city/state and I would be happy to let you know if I have any insight there but it sounds great from what you have posted!
Dave
Thanks Dave. Email sent.