Turning a park around

As I’ve posted before, I’m hunting for a park. I’m looking for a 100+ lot park w/at least 30% vacancy to have a nice upside.

The question I have is in the numbers. As I am finalizing my business plan and working on the projections, I need to see if I am using realistic numbers. I am conservative by nature, so please keep that in mind.

Let’s say I have a park with 40 vacancies. That means that I would have to lease/option those 40 homes to have a full park. I am plugging into my spreadsheet that I will sell 10 homes the first year, w/15 homes each year after. Is this number realistically conservative (how do you like that term!)?

Or should I go lower or higher? I know that it will depend heavily on the market, but lets just assume that I am going to only buy a park in a promising area with solid demographics and pop. density, etc. etc. etc.

On the purchase side, I’m plugging in $12K for purchase of a 14’ 3x2, move and setup. Is that too little? Can I even find 10 to 15 homes a year?

Here’s where I always get caught scratching my head. To fill the vacancies, I’ll need from $120K to $180K a year to buy the homes. I’ve got enough to cover the down payment plus a couple years, but beyond that I’d be scraping by. Besides investors, are there any banks loaning money or buying notes so that I can still make a profit on the homes AND fill vacancies (I know…I want to have my cake and eat it too)?

Sorry for the length. I am just a detail oriented kind of guy and need to make sure that my numbers add up. With these projections listed above I’m showing that I wouldn’t be in the black until the 3 yr.

Thanks for any input.

Rick G

I am a partner in a 149 space turn around park in Burlington NC ( great demographics). The park didnt have 30% vacancy when I bought it. It had 30% occupancy. In other words over 100 spaces to fill.

  1. It is hard to speculate with you on your good demographic area, but I will try.

  2. In our first year we sold 20 homes. Our cost $280K

  3. Can you find 10-15 homes per year? That is part of your due diligence. Contact dealers and get all the repo lists from Greentree and Vanderbilt to figure it out. It is getting tougher in my area. I recently ran out of homes.

  4. In regards to your available $$. I hope you have a lot of $$ or you can set up a credit line to help with your purchase of repo homes to sell. My park will require $1.5mil+/- to get to stabalized occupancy( 80-85%).

  5. Cake and eat it too-- yes there are banks that will loan you money or give you a credit line to fill your park. Make it part of your original loan. I have all the above with Clayton Bank and Trust- 1st trust deed- receivables line and a inventory line. I cannot express how important it is to have money available to fill your park. I find newbies and lots of old timers who don,t get this part of the business plan. They are crippled and cant go forward, because of lack of dollars.

  6. I would never buy a park unless it is in the BLACK from day one.

  7. Turn Around Parks are a tough business. I would never work for free

  8. I can go on and on, because I live turn around park everyday and could not be happier, $$$$$$

Hope This Helps Good Luck

Hello Rick,

Thanks for the input. I enjoyed meeting you and your partner at MHM (you were sitting in the row in front of me). It was nice to see that you could be from Cal. and have a profitable park out of state.

I was thinking about a credit line, but still unsure how that will go work. I only have about $700K liquid and that’s it. Will they give me a credit line on the future earnings? or are they still going to want some collateral for that line?

Also, what sort of terms can they give?

I also don’t intend to invest unless it’s in the black, but a 9 caper should be doing that (I’m still going to negotiate it down to a 11 or 12 if I can). Where my numbers kept getting screwy is when I would re-invest every penny back into buying homes. With 120-180K for the cost of the homes you can see how there was nothing left after the debt service.

So the credit line will make all the difference.

You are in the bay area right? Not, So. Cal.? I’m up there quite often on business and would enjoy taking you out to lunch and picking your brain if you are available.

Thanks again for the input and I’ll await your feedback.

Rick G



I forgot to answer one of your questions on the side e-mail. The maximum term on my credit line is structured to the same amortization as the notes I sell to the line. The interest rate has a maximum and all my notes are written at a higher rate than the max credit line rate. The increased value of the park is the collateral for the line. It is simple. The most important thing is the demographics and the economy of the area where you buy. I would hate to buy a park that couldnt be turned around if you get my drift.

Thanks Rick. I appreciate your input.

I’d like to pose another question. From what I understand, banks only loan on the dirt lot rent, not on park rentals. Is that correct? Does that also apply to a refinance?

A park I’m interested in has about 30% park rentals and is capping at 10 with current revenues (that includes the rental income). I will obviously try to negotiate that out of the price as much as I can, but it would appear that my equity wouldn’t catch up to the price I paid for 4-5 years if that is the case.

Any comments from those that have refinanced?



I know I will be meeting with you Monday, but I can help you iron a couple of wringles out of the park you are interested in.

  1. You may know this but just in case = park owned home rental income is never used in a cap rate purchase analysis.

  2. You will need to place a wholesale value on the park owned homes discounting for any major repairs. The bank may lend you money on the wholesale value. Mine does

  3. Then try to convert the park owned rental homes to rent to own contracts or sales contracts and sell them to a receivables line and get your money back to repeat the process and fill your park up.

  4. Yes most banks that I have ever talked to will only lend on space rent. There might be exceptions

  5. The refinance will also be based on space rent and how good you are at amplifying the value of the park by cleaning up the management. Park owned homes will always be trouble unless you create notes.