Help evaluate MHC for purchase - Posted by John

Posted by Steve-WA on September 16, 2003 at 18:57:39:

I did not mean to imply that you should give the ask, and not negotiate. Doc is right, of course, but then . . . he’s doc!

    • senses a certain someone’s ego inflating from afar (as if!) - -

Help evaluate MHC for purchase - Posted by John

Posted by John on September 16, 2003 at 13:13:24:

I am looking at an old MHC with 19 single wide trailers, paying $100/month lot rent. There are no park owned homes. Of these 19 trailers 4 or 5 are on a community water meter and water is included in the rent (ouch), the remainder of tenants pay their own utility expenses. There are seven (7) additional sites already developed and can take trailers up to 16’ x 80’. There is additional land already approved for development of seven (7) more sites that can accommodate doublewide trailers. Total potential sites =33.

This is county water and septic system
Asking price is $180,000. Taxes now are 300/year likely to be $900 with present selling price.

Appreciate your constructive comments.

In my limited experience - Posted by Philip

Posted by Philip on September 16, 2003 at 19:22:58:

I am new. I did do much due diligence on a 33 space park. Ray Alcorn’s material is tremendous.
Have you bought a park before?

I would reccomend, if no one else has yet, to get all your income and expense statements documented.
Talk to park residents.
Get income figures from his tax statements.

The park I was looking at got less attractive as the research went.

Now, if you can get some good owner financing, and the infrastructure is ok it sounds like a deal.
I knew the person I was dealing with and he didnt’ mind waiting 2 months for me to do my research.

You better get this one tied up until you can find out what the details are like.

These guys can tell you how.

There are no dumb questions… - Posted by Dr. Craig Whisler CA NV

Posted by Dr. Craig Whisler CA NV on September 16, 2003 at 15:18:51:

…only dumb mistakes.

I almost always offer about 1/3 to 1/2 less than the asking price to start and negotiate from there. I would start at about $120k, and ask for seller financing. You seem to only have a retail price deal, at the present time. Most sellers ask a little more than they expect to get with the thought that they can reduce the price during negotiation if need be. I’d be surprised if you couldn’t get it for $140K cash or $160k + if seller financed with small down.

Be careful about tieing it up now. Wait until you are done negotiating the price and terms. Once you get it tied up at a certain price you will find it hard or impossible to negotiate the price downward later.

Tying the deal up with a contract is just like doing it with an option. All the terms must be included therin, especially, the seller financing, if any.

Once you have it negotiated into the best deal you can get, if it makes sense, THEN, tie it up quickly.

Try to give yourself as long an escrow period as possible such as 3-6 months, and at least one escape clause, such as, subject to the appproval of your partner.

Why not make a call to some of the mobile home park specialists such as Ray Alcorn and Ernest Tew. I bet an hour talking to either one of them will save you $20k or more, one way or another.

There are no dumb questions only dumb mistakes.

Regards, doc

tie it up - Posted by Steve-WA

Posted by Steve-WA on September 16, 2003 at 14:09:08:

Refer to the due diligence article by Ray Alcorn on this website.

Get it under contract, and then do some research.

Have you a plan for financing? Is owner financing all or part a possibility?

There are MANY things that need to be asked for a good valuation of that MHC. Many of these are in the article. Also check the archives here.

180K sounds good - tie it up and find out if it is.