Posted by EZ (CA) on November 07, 2000 at 12:41:58:
Ray,
I have more info on that park. Yesterday, I drove out and took a look around. The park is in a ok neighborhood. 4 of the 5 spaces are vacant. All of the other homes are very run down. The 2/1 bed house is on ok shape, the 1/1 bed house is a scraper.
Gross rents are 5 trailers x 175 + 375 2/1 house=1250/month
taxes 1% purchase price + 125/year state fee
need to tear down 1/1 house, replace 5 new mobile homes
Found Hot Park…Should I buy? - Posted by EZ (CA)
Posted by EZ (CA) on November 05, 2000 at 12:06:16:
I found a small 10 space park with two houses in a small out of the way town in California. Here are the numbers.
Price 149K, 10 spaces all older single wides, city sewer and water, three empty spaces-owner says he is old and sick and unable to take care of place.
10 spaces rent at 175 to 200/month
house #1 rents at 375
house #2 rents at 250
double wide for owner could rent at 300
total gross income without vacancy is 2800/mo
expences are only insurance and taxes plus maintenance on houses.
THe place cash flows well! What should I look out for? I’ve never bought a park before, what kind of financinig can I expect to get?
Thanks
EZ
Re: Found Hot Park…Should I buy? - Posted by ray@lcorn
Posted by ray@lcorn on November 05, 2000 at 22:20:51:
EZ,
I’d slow down a bit here… these deals are not as rare as you might think, and there’s good reason.
First, you’re determining cash flow based on potential numbers. Use the actual income for valuation purposes or you’ll be paying the seller for the work you will be doing.
Second, you need to know the actual expenses. Get the owners operating numbers either from his records or his tax return.
Third, do your homework. That means taking the time to ask a lot of questions about every aspect of the property. Evaluate the utility systems, check for leaks or failures. Check the zoning, make sure the property is in compliance and can continue to be operated. Make sure the homes can be replaced without improvements to the property.
Check out the houses likewise.
Financing will have to come from one or both of two sources… the seller and a local bank. If you need to use bank funds, be prepared to answer all the above questions and more. If the seller doesn’t need to cash out, then alternative may be a lease option. Ernest Tew has materials available here that cover that method.
Remember that a seller will always know the property better than the buyer, so be careful to ask open ended questions and wait for the answers.
Once you have the numbers and the facts regarding the condition of the property and the zoning, post what you found and we can help you size up the deal.
ray