Posted by Ernest Tew on June 16, 2000 at 08:54:42:
When buying a park, there are numerous things that should be taken into account–too many to cover in this forum. Price and terms were not mentioned but are, of course, some of the most important considerations.
If you would like to give me a call at (352) 475-1800 I will be happy to discuss it with you in detail. We have developed, bought, managed and sold several parks over the years.
Like some advice on a small park - Posted by Jenny
Posted by Jenny on June 15, 2000 at 20:59:19:
I am looking at buying a small park in Colorado. There are 16 spaces, with 4 park owned units. Rents are just under $200/each for the lots and $1600 for the 4 homes. The cap rate is about 12% and the owner is willing to carry back a note. Please—any advice would be greatly appreciated, like any thing I should be aware of or pitfalls. I have owned brick and mortar rentals before, so I can work with tenants, but I am worried that I am overlooking something.
Thanks Guys!!!
Re: Like some advice on a small park - Posted by ray@lcorn
Posted by ray@lcorn on June 16, 2000 at 18:05:16:
Jenny,
You should be sure to read the articles called “Turning Trailer Courts Into Communities” by Doug Ottersberg in the Money-Making Ideas section of this site. Doug wrote a 4 part series of articles that is an excellent guide to the general process of evaluating a park. He operates a park in New Mexico and knows what he is talking about.
For specific information about how to go about doing the due diligence for real estate purchases, read my article titled “Analyzing Commercial Real Estate: Due Diligence” posted in the How-To Articles section of this site. The url is http://www.creonline.com/articles/art-148.html
I think you will find that between the two you will have a pretty good feel for how your deal stacks up. From the little information you posted I can’t really tell if it is a great deal or average deal. Be sure to get the real operating numbers before performing any valuations. Without real numbers you do not have the necessary information to establish value.
One important stop to make before proceeding any further is your local planning office. Find out if the park has the necessary permits and licenses, and whether you will be permitted to replace homes if necessary. This is a critical piece of information to have, and do not rely on anyone’s word other than the person in the planning/zoning office.
Assuming the permits are in place, then you set about verifying everything that is possible to verify, especially the income and expenses, as is detailed in the articles mentioned. On the expense side, please let me emphasize the utility bills. Check with the local suppliers of water, sewer and electric for a monthly breakdown of the utility bills for at least two years. Look for leaks reflected by high water bills, spikes in usage, and for the average trends running through the park. This can tell you a lot about the operation.
If you decide to get serious about investing in parks, you may want to look into purchasing some of the materials available here by Ernest Tew and myself. Look in the section of the site for Mobile Home Books and Courses at http://www.creonline.com/mobilehomes/books&courses.html
Hope this gives you some guidance, and welcome to our world!
ray alcorn