Structuring Offer on Park - Posted by Chris

Real Estate Investing Raw Land
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Posted by Greg Meade on September 14, 2007 at 19:45:42:

would work well for you. I would expect your fixed costs (property taxes, home insurance, maintenance, vacancy, well testing, umbrella policy, etc) will be over 50% with only a few homes and a few lots cranking out rent.
The real money will come about as you infill empty spaces. Depending where the Park is located, this could be a huge, good dealfor you.
This business model (small parks) very closely resembles Tony and Scott’s operation in NC. (Ryan’s also).

Something I would do if I were you is go to Asheville, NC to Tony and Scott’s Bootcamp next Summer. These guys do such a good job answering these types of questions…I went in August and I will go again…full of info. Steve WA has anevent next month in Seattle also.

Another idea is a L/O with maybe 1K as Option Consideration (down)and low monthly lease amounts (payments).

One thing that can not be overstressed is to have a real plan to fill that Park after purchase. Sounds like you need 14 homes. S/w used 14X70’s cost 12-14K delivered and set in my area. Without funding for these homes in place, you have just created a J-O-B!

Good Luck,

Greg

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Structuring Offer on Park - Posted by Chris

Posted by Chris on September 13, 2007 at 22:27:04:

I was searching the MLS earlier today and found an interesting listing:

List price: $89,500 DOM-64

4 acre mobile home park approved for 20 spaces; 9 septics, 1 well; 2 homes in good condition each renting for $325/mo; 3 lots leased for $125, one leased for $100.

The property is about 5 miles from the interstate and in a high-appreciating county. Raw land typically goes for 6500/acre, but I have no idea the effect of mh zoning, septics, etc. have on land value.

From an income standpoint, it makes $1125/mo. gross income.
I am not experienced enough in MHPs to determine the expenses, so I’ve determined it would be safe to say I can only use half the gross income for Principle and Interest, or ~$550/mo. I have private money available at 15% interest.

Given that I’ve come up with 3 “offers:”

I) $39,788.52 All Cash. Given 15 years@15%= $550/mo.

II) $99,000 No down owner financing. 15 years@0%= $550/mo.

III) $61,635.80 Mixed financing: $20,000 down given 10 year amortization@15%= $318.69/mo. Owner to carry 41,635.80 for 15 years@0%= $231.31/mo. (both payments total 550/mo).

Now I know this may not seem like realistic, like who is going to lend at 0% or who is going to sell their property below 50% list? I know these are low-ball offers to say the least, but it is what I CAN afford to pay.

If acquired, the property obviously has upside potential, but I will only buy it if it is self-sufficient with none of my own money in the deal.

By the numbers I gave you, it is obvious that it is not a “Deal” yet unless the owner is willing to carry financing at a very low interest rate. I have not contacted the listing agent yet. I would like some professional advice first.

I would appreciate some imput on those of you that have experience. I have done one lonnie deal and own 4 stick-built rentals. I understand the profitability of mobiles and would like to take my investing to the next step.