Posted by rachel on November 21, 2008 at 22:05:35:
Hi Steve, I saw your post here. How goes the mobile home biz in
Australia? I am doing Lonnie deals here in the U.S., but Australia and New
Zealand are two places I’m looking into. Thanks for your help!
MHP deal. Is this good enough? - Posted by Steve from Australia
Posted by Steve from Australia on March 01, 2001 at 24:17:15:
I’ve put an offer in on a country park with 40 lots and large 3 b/room manager’s home. It was a cross fertilised version of lease/with an option to buy agreements from Ernest Tew’s and Lonnie Scrugg’s books that I have researched. It goes like this: Park grosses $70,000/year nets $40,000 with 25 lots filled on average 15 empty. Owner want’s $380,000 cash and not willing to note any money. I offered leasing for $25,000/year for 5 years total $125,000 with an option to buy anytime within the 5 year period for $300,000. I’m planning on taking the full 5 years to buy then sell to someone else. I also have put in an option to buy adjoining 12 acres for $75000 (room for expansion later). I hope to make a lot of improvements to park and fill the empty 15 spaces using the Lonnie Scruggs technique. I’d appreciate feedback as it’s my first large deal and I need a bit of confidence building to see if I have it right. Thank you for your replies in advance.
Re: MHP deal. Is this good enough? - Posted by Ernest Tew
Posted by Ernest Tew on March 01, 2001 at 08:33:24:
Steve, it sounds like you are on the right track. There are, however, a lot of things to consider.
If the net operating income is $40,000 per year with the 15 vacancies, you may have a good price. If, however, it is based on full occupancy, the property may be overpriced.
If you can convince the owner to enter into a net lease with an option to buy, it could be attractive for both parties. Properly structured, the gain you create by upgrading and filling the vacancies could be completely tax-free if the option ends up being in a Roth IRA account.
Give me a call at (352) 475-1280 if you would like to discuss how we do it.
Re: MHP deal. Is this good enough? - Posted by Steve
Posted by Steve on March 01, 2001 at 17:03:42:
Thanks for your comments. Looking at 2 years of financials 1999, the owner netted $41,000. Year 2000, the owner netted $24,000. Going through the expenses for year 2000, the owner hired in cleaners (9hours/week)for the ablution block and maintenance people (3hours/week)to do the gardens etc as she is tired and wants to relax a little. That was the difference.I’m hoping to get a part time manager in. (retired couple or a tradesman and his wife)who as part of there package gets the lovely 3 br house. ($5000 also spent in house improvements year 2000). Yes I will be using my superannuation (Roth IRA in USA)to purchase the park in 5 years time. I’ve looked into the legal side as a superannuation in Australia can not own a business but it can own real estate. There fore I create an entity or Company to lease the park of my superannuation fund that owns the property. I can email you my Offer direct as it is on Microsoft Word. If you like Contact me via my Email geanie@eis.net.au Thank you very much for your response. Steve