Wanted to pass on a park that I just had under contract but has a private sewer issue beyond my experience level and wanted to make it known to the forum and those much more capable than I of handling it.
Let me give you the nuts and bolts of the park and deal as efficiently as I can:
Park is located in Warrensburg MO. (pop 19K), 60 minutes south east of Kansas City
Park is located approx. 4 miles outside the center of town
47 Spaces (useable)
5 Vacant Lots
35 Park Owned Homes / 21 Vacant / 1 Newer Dblewide on a full basement used by Mgr
13 Occupied Rentals - December 2010
7 Owner Occupied
20 Total occupied spaces - December 2010
24 total acres
Public Water - 2 Master Meters
Private 3 Pond Lagoon System for Sewer
$200.00 Current Lot Rent includes water, swr and trash
Listed for $600K on Loopnet - Under contract for $150K
Seller is 90 years old and purchased the park 4 years ago (don’t know why) and owns it free and clear. Initially made offer to owner carry but her comment was she might not live long enough to see the money. Makes sense. Needs cash to support her life for the next number of years.
Park and lagoon was in bad shape when she bought (no environmental or much of any other inspection completed for that matter) prior to purchase. Since that time her health has deteriated and she has returned to Ca. to live with her son - a lawyer. She has been reprimanded and written up by the DNR (Dept. of Natural Resources) for the condition of the lagoon several times over the last few years and has only responded lately (mostly due to lack of capital and motivation) to the maintenance issues so her file was sent to the enforcement division. I was able to communicate with DNR and expedite the process to obtain a settlement agreement (acceptance of which was a condition of the contract) between the DNR and Seller. Lagoon system does have a valid operating permit but will be “clouded” when it transfers to the new owner until work is complete to the satisfaction of DNR. Some terms of the agreement (penalties and timelines) can be negotiated with the new buyer.
A purchase condition of the park was that the Buyer (me) would be responsible for the upgrades and maintenance of the system based on a) a initial estimate of between $25K and $30K for the engineering and work and b) review and acceptance of the agreement. Upon review of the agreement with DNR is when the decision was made that I am under qualified for the scope of the work required. The seller is not capable financially to fix the problems prior to sale although she would consider a short term loan against the park (Hard $$$ opportunity) to do the repairs then pay back out of proceeds. Park rents in the city of Warrensburg are as high as $306 (inc water, swr and trash). Majority of the park owed homes would require more work than their value but Warrensburg does offer a number of larger communities to draw from plus KC is only 60 minutes away.
I have attached the DNR agreement for anyone to preview and would provide December Rent Roll with Renatl income and a basic Due Diligence spreadsheet upon request. Unfortunately seller historical records are almost nonexistent up to the point when her son got involved recently with the marketing of the park. There are two managers, one full time who lives in the park and does maintenance and a part time gal who does the paperwork and resident “relations”. Both were interviewed when I inspected the park and although they are capable and make a good team but only one would be necessary. The maintenance man who has an excellent working knowledge of the park and residents. Just add a good management system and stir.
The park is now out of contract (48 hours or so) and the seller is motivated but the lagoon issue will scare most buyers away except those with knowledge, resources and expertise to work through this major issue.
Thank you for allowing to share the transaction on the forum.