Posted by Laure on April 25, 2000 at 03:43:33:
I would assume it is condemned. I would go straight to the inspections department at the city. I’ll bet there is more than 100k in costs if this guy is walking. You will also have a reputation to change around. That can be a tough one unless you really dump some money into lot improvement and people can drive by and see a huge change.
Laure :0)
Need help from MHP Pros on offer for Vacant Mobile Home Park? - Posted by Earl
Posted by Earl on April 24, 2000 at 15:51:06:
I am inquiring about vacant a 139 space Mobile Home Park on about 14 acres, that needs about $100K for wastewater repairs per agent and to meter each home separately. The park is about 3.5 hours away from me and the owner is willing to owner finance per the agent for $175,000, w/ $75K down, 8.5%, $1240/mo. for 10 yrs. The vacant park has electricity, wastewater (city sewer), and water. Projected lot rents for MHP area ~$100/mo.
The agent said the park was operational, but the previous owners went out of business, and the current investor bought property, but he doesn’t want to do the turnaround on park now. The park was listed for $350K last year, but no one was interested at that price.
Any suggestions would be appreciated on any proposed offers?
Thanks,
Earl
Re: Need help from MHP Pros on offer for Vacant Mobile Home Park? - Posted by Earl
Posted by Earl on April 25, 2000 at 14:09:38:
Thanks, for the comments folks. I think I really need to read Ray’s book on MHP investing. I think the park is too far away for me deal with at this point, since I am only a part-time investor with a full-time job.
Thanks,
Earl
Re: Need help from MHP Pros on offer for Vacant Mobile Home Park? - Posted by ray@lcorn
Posted by ray@lcorn on April 24, 2000 at 22:24:38:
Earl,
Depending on one’s tolerance level for pain there is a deal here for somebody. But before you’ll know whether its a deal for YOU, you need some more info.
I would want to know everything I could about the local market before I could even start to project what the park may be worth in its present condition. Things I would want to know would be:
Population trend for the past ten years. (rising=good, falling=bad)
Number of building permits by housing type over the last five to seven years. (many localities track mobile homes seperately. Be careful though… they may not distinguish how many go to parks and how many go to private land.)
Number of parks in the market, number of spaces, number of vacancies, rent amount, general character, amenities included (water, sewer, trash, clubhouse, special things, etc.) (I define a market as roughly about a one half hour drive time from the subject property, or from the nearest trade center.)
Zoning: I would want to know not only how the subject property is zoned, but how hard it is to get land rezoned for a new park. While I’m finding that out at the local planning department, I would also get a copy of the zoning ordinance, subdivision ordinance, and the comprehensive plan. But that’s just me… I like to know what governement has in mind for property I might own, and those are the documents that tell you that. And if I can find somebody talkative in the department I might be able to work into the conversation a question about any proposed parks for the area. Planning folks are always some of the first to know. (They will also know how common it is, and how easy, to put mobile homes on private land… that can be your biggest competition)
I would talk to at least three mobile home dealers in the market and find out how business is. The most fun way to do this is to be a customer thinking about moving to the area and look at some homes. Most MH salesman will talk as long as you will listen. Just ask a few leading questions. (How’s business… get many folks wanting land? Where do most people park homes around here? Got any paper to sell?.. oops, different deal!) Ask what he knows about the subject park… dealers always know the inside scoop on what’s wrong with a deal like this. Guarantee the dealers have been approached about buying it. Why didn’t they?
Something else I always do is buy a local paper and eat lunch in a local diner type restaurant. Find the best local independent (non-chain) steakhouse type of place for dinner. The kind with the Kiwanis and Rotary emblems on the front door.
In the paper, I like to see if there are more help wanted ads or cars for sale. That can tell you if a local economy is coming or going, literally. In the restaurants, I like to flirt with the waitress and ask about notable things about the town. New roads, new plant, plant closings, biggest employer, etc. Small talk, but well directed. (I do this with the planners, too, except the flirting part. Don’t wanna crank up the harassment motors) This is just a country way of feeling out a town. By the time I get through asking questions, talking to planners and waitresses and convenience store clerks, and riding around counting mobile home spaces, I know I will have a pretty good idea of what makes the place tick and why. I’ve always looked at market research like a field trip, and that there would be a quiz when I got back to school. That makes me pay attention. And there is always the chance I might find a good golf course… I keep my clubs in the trunk just in case I go by a course and it has a sign that says PLAY ME!.. but I digress.
Once you have a feel for the market you can figure out what it will take to make a deal like the one you are looking at work. And you can also get a pretty good feel for whether or not you want to tackle it. I’ve passed on a lot more deals than I’ve bought because of what I found in one of my field trips. I like to think those were successes too. I always learn something I didn’t know, and sometimes its even useful. It’s always good practice. And I’ve found some great golf courses in places I would never do a deal in, so nothing is a total loss…
Let us know what the market is like, and then we can help you figure out if this deal has legs.
Preliminary issues with the property are the density (it’s tight at 10 per acre, you may lose some spaces when you start putting late model homes in), and getting an actual bid on the sewer repairs. Submetering on this size park should run less than $300 per space.
The key question is how much and how long the negative cash flow will go on. The key information from your research will tell you what a realistic absorption rate will be for the park. Those two factors will determine what price and terms you may be able to live with. Then its up to the seller.
ray
Re: Need help from MHP Pros on offer for Vacant Mobile Home Park? - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on April 24, 2000 at 21:43:43:
Earl,
I am not sure what state you are in, but in my state I would want to confirm in writing that the park has not been condemed either by the state or the local health department. There may be a long list of required improvements that are needed before the park can reopen. Read and hear lots of permits, and inspections needed; not to mention money. Never mind what the agent says, the agent may not be fully informed…ED