Ray Alcorn’s book “Deal Maker’s Guide to MHP’s” is very helpful as well.
Based on what you told us, the price seems very high to me. When you study the above material and do your “due diligence” you’ll find out why she’s so motivated.
Posted by Marty from MO on September 10, 2003 at 10:04:26:
After purchasing Lonnies books I was looking though the newspaper looking for Lonnie deals and found a park for sale they want $350,000 it sits on 9.3 acres appx. 4 acres developed, a total 23 trailer spots lot rent is $90 per mth, 5 just lot rent 16 they own the mobile 1 the owner lives in also 3 house 1 of those is rented the other 2 are cabin size that need torn down and mobiles put in, there is a 30x56 metal storage building also on land, there stated expenses are water/sewer $450.mth, trash $88 mth, mowing $300 mth, security lights $17 mth, taxes $1,100 yr, insurance $1,600 yr, total income right now is $4700, the owner will carry 75,000 on a second
The reason there selling so she says is that she has sevral rental houses she owns also she is moving about an hour away because of her husband work and she does not want to hire a park manager kind of weak reason I think
I have been sitting on this about 5 mths now it seem the seller is very motivated anyway it seems to good to be true what are some snake’s that could pop up from the wood pile so to speak and bite me in the ----- you know where!!
Also was wondering what type of financing was out there for this type of investment and so on
Re: careful! need help with 1st park - Posted by Phil Pelletier
Posted by Phil Pelletier on September 12, 2003 at 01:16:52:
With most of the income from the actual mobile homes and not the ground rent, that place is a house of cards waiting to tumble. When you value a MHP based on the ground rent, that ability to produce ground rent is almost uneffected by age. In fact, the park can actually appreciate due to raised rents, improvments to make the place more livable, etc. THAT is solid equity long term. THAT is what people are expecting when they buy a MHP. However, with most of the income dependent on the tin, the tin is a depreciating asset that will someday blow away, or worse yet need to be HAULED away. Where will that place be in 25 years? If the income is based on the home payment, those will be dust, in many cases. If the income (and thus, much of the park’s equity) is based on renting the space, the park will hold its value. You decide where you want to put your money long term, tin or dirt? Its OK to get a 30 year loan due in 10 on dirt, but try getting out of a 30 year loan due in 10 on tin. You may find that the income has vanished (as the homes fall apart), and you are stuck holding cheap dirt ($90/month?) with no tin to sell it for you to make up your equity.