I just finished the home study course. It was probably the most realistic and informative real estate course I have ever taken. Very honest without all the hype.
I read in their where Frank/Dave (can’t remember which) bought into partial ownership of a park with I believe it was $10,000. While I am ready to jump into park ownership mentally, financially, not yet there.
Are any of you seasoned owners open to such an arrangement of having a silent investor with a minimal investment such as the one above for a silent partnership deal? Now of course, In the example, above, they received 25% ownership but brought expertise to the table. I am not looking for that, but a reasonable percentage and the hopes of seeing that return as quickly as possible to then move forward with that gain and into the park business as an owner.
Financially, I have, or rather my finance and I have 10K to invest. That will not get us into a decent park, I have looked. We would rather take that 10K and invest with a park owner and see much better returns on the investment than having it sit somewhere collecting dust basically.
Any advice/help for our situation would be greatly appreciated.
If you have $10,000, then just sit on it and work on finding, and negotiating, great mobile home park deals. If you can find a great deal (city water/city sewer, no master-metered electrical or gas, metro population of 50,000+, decent sized lots, and a going-in cap rate of 10%+) then you can sell that deal on an assignment – to us or somebody else. We pay 5% to 10% of the face value of the deal, upon closing. We recently did that on a roughly $2 million deal and paid our $100,000. Do that one or two times and you can buy a park with the assignment fee.
Another option would be to find a “sweat equity” turn-around on a Master Lease with Option to Purchase. You’d have to find the right deal. You’d need one that has aesthetic problems, no expensive structural. You’d tie it up under master-lease, and then fix it using your own labor and intelligence, and then re-sell it or refinance it.
This industry has something to offer almost any different scenario.
And that $10,000 deal that you reference was my first park, Glenhaven, that I bought for $400,000 with $10,000 down,and the seller carried the paper.The problem with those deals (as with Glenhaven) is that you often have to put down significant sums to turn them around. So be careful that you don’t get caught short with a deal like that.
Thank you for the response Frank. I cannot believe I completely forgot about assignment of contracts as much as Dave talked about it in the course! I am on the hunt now and you have revitalized my drive to find that perfect deal!
Frank,
How does the earnest money work when you assign a contract? Do you lose that initial depposit even though you may make that up with the assignment fee?