Posted by Dan - GA on September 08, 2003 at 14:56:15:
When was it hooked up to City Water and Sewer? My park is hooked up also, and I’ve done 2 expensive sewer line repairs and am looking at replacing the 25+ year old 3/4" galvanized (and constantly leaking) water lines with new water lines.
Does that 20% return include management expense? Are you willing to pay for management or work for free to maintain that return?
Does it include old MHs or is it a dirt rent only park? Will the cash flow from the old mobiles last forever? Have you separated the very low replacement value of the homes from the asking price? Without those homes and dirt rent only what is the parks return? If it has homes, does the park show repair expense? Do these homes magically repair themselves, or do they not breakdown?
Do the balance sheets show any A/R? Does everyone pay ontime every month? Did they write off any bad debt on the tax return? Where did that come from?
Do they have vacancies? Why does the Gross Income = 100% occupancy?
Ask to see tax returns as well as financial statements. Is the income on the TR the same as on the FS? Why did it mysteriously go down from one form to another?
If you choose to put an offer in, give yourself at least 30 days to do your due dillegence, and the 30 days should not start until ALL REQUESTED DOCUMENTS have been supplied. Turn over every nook and cranny constantly asking why does this look so good. If at the end of the day it still looks good, go ahead with the purchase.
In the long run, a park can be a very good thing, but there are many areas that will suprise you after you own the park.