Posted by Bill K. - FL on January 22, 2000 at 16:17:33:
Well if I was you I would call Earnest Tew and get his input/help. If you don’t have his number I will give it to you. Don’t take this the wrong way, but based on your previous comments concerning this deal, I don’t feel you have enough experience to do this on your own. This could turn out to be a good deal for you. Remember, half a loaf is better than no loaf at all.
Mobile Home Park - Posted by Ron Thompson
Posted by Ron Thompson on January 20, 2000 at 01:53:20:
As per my previous posts, the seller is stuck on price. Now I realize that price is only one facet of a deal, and other parts can be manipulated to my favor. For instance, the owner financing can be had for 6 or 6.5 percent.
Can great financing make up for too high a price? Seems to me if the total of paments is acceptable then it is a deal worth doing.
Thoughts, anyone?
Ron Thompson
Re: Mobile Home Park - Posted by Mark (SDCA)
Posted by Mark (SDCA) on January 20, 2000 at 11:28:20:
Yes… to a certain degree. If I can’t get acceeptable price OR terms, I won’t do the deal. However, the great financing will increase the cash flow, increase the cap rate and get your money out of the deal sooner. So it may make up for a higher price. What is the cap with the owner financing?? How long will your money be in the property??
Mark
Re: Mobile Home Park - Posted by Nancy Cason
Posted by Nancy Cason on January 20, 2000 at 09:12:49:
If the interest rate is low and the payment period is longer so that you can have a confortable cash flow that is also good.
Be sure to cover all expenses and then add a vacancy factor and a padding for extra expenses. Then see if there is an after tax profit monthly?
If that figure is worth your time and effort. Go for it.
HAVE FUN
Nancy
Re: Mobile Home Park - Posted by Ron Thompson
Posted by Ron Thompson on January 21, 2000 at 09:23:40:
I’m not totally sure.
If I can work it out, I will sell some of the park owned homes for the down payment, putting none of my money in to start.
How do you figure cap rate with no money down?
Re: Mobile Home Park - Posted by Mark (SDCA)
Posted by Mark (SDCA) on January 21, 2000 at 11:31:56:
The cap doesn’t have anything to do with down payment. It is Annual NOI (Net Operating Income) / Purchase Price.
Mark
Re: Mobile Home Park - Posted by Bill K. - FL
Posted by Bill K. - FL on January 21, 2000 at 12:27:08:
Mark is right. However in practice you use a cap rate to determine the value. Value = NOI/Cap rate. The tricky part is coming up with a suitable cap rate. For that you can look at sales of other parks in similar condition and size and if you can figure the NOI on those and know the sold price you can figure the cap rate. My question to Ron is how can you sell the mobile homes before you own them to give you a down payment? I doubt the seller would go for that. Maybe you could lease option the park if you don’t have much money or look for a partner. I would suggest you contact Earnest Tew and see what he could do. I know he will consider a park of that size.
Re: Mobile Home Park - Posted by Ron Thompson
Posted by Ron Thompson on January 22, 2000 at 24:33:27:
In the owner’s initial offer to sell, he said he will release the homes upon receiving the down payment. I was going for a simultanious close on that idea, although I would rather borrow the money using the homes as collateral. That way I would have more profit potential from the start.