MH PARK FINANCE GURUS Please analyze this deal - Posted by charles (delaware)

Posted by Harvey Carroll, Jr. on April 14, 1999 at 24:22:10:

Think of that. Let’s say you wish to get out of this deal down the road if you were in a crunch what could you sell them for quickly. This approach get you in the deal cautiously.
In rental property I usually figure aobut 35% of the income to go toward operations cost.
Keep in mind there is a big difference between “Potential Gross Income and Effective Gross Income”…
Also, there must be some type of problem, because the rentals are vacant. Analyse the low income occupants financials and you will most likely realize that 400 is pretty high for them to pay. And if they are going to pay that then they want better quality… May want to consider selling off the MH and building duplexes on the site and increase the overall value of the area. Sort of a subdivision analysis… I just don’t know with the information you are giving. Would have to see a photo and know more about the area…

MH PARK FINANCE GURUS Please analyze this deal - Posted by charles (delaware)

Posted by charles (delaware) on April 09, 1999 at 15:47:57:

$325,000 cash for 16 lots plus 7 rental units in the form of duplexes and SF. All on 4 acres. Total units 23.

Total current income is $31,000/ year.

Potential income of $75,000/ year(this is achievable as I know the local market).

Appraised in 1998 for $450,000.

Currently, park is being upgraded. City water with meters was just added. New community septic system with new lines just added. Road is partially paved. Part gravel. 10 MH lots are now leased with new or newer homes. 6 MH lots plus 2 duplexes are vacant.

MH Lot rents are now $225 (at market) and the duplex units should rent easily at $400 per month.

Property needs some additional paving and landscaping to make it shine. the rental units also could use facelifts.

Assuming perfect credit and adequate income, what types of financing are available? Terms and down payment required? Can I finance any park improvements perhaps making disbursements for upgrades thru escrow?

Thanks for any comment.

MH Park is centrally located in a growing area with HIGH demand for rentals.

Re: MH PARK FINANCE GURUS Please analyze this deal - Posted by DougO(NM)

Posted by DougO(NM) on April 09, 1999 at 16:14:02:

Charles: These hybrid properties are always very subjective as to value. The first thing do do is figure out what the 16 MH spaces are worth based on cash flow, then establish a value for the duplexes and SFH then add them all together. You didn’t mention any expenses for this deal, so it’s kinda hard to analyze anything. As for lenders, you are most likely looking at a local bank, S&L or other local lender as about the only options. Expect a 20-30% down payment and probably a rate of prime + 2 or so. It’s tough to find good financing on small deals like this. Another thought would be to run an add for a local private investor, and create a 1st mortgage at 8-9% fixed for 50% of the value, you put down whatever you can get away with and make the seller carry a 2nd for the rest.