Posted by Tony-VA/NC on July 11, 2003 at 10:47:19:
You mention that the park is in rough shape. What funds do you intend to tap to turn the park around?
If you use your $15k on the downpayment, where will the rehab and reserve money come from?
If the park is cashflowing now, will it cash flow under the new debt load and after expenses and profit to you?
The old adage of “Find a deal and the money will follow” is typically quite true. The reason being is that if you have the above type questions solved and the deal still makes money, lenders will help.
Analyzing this investment is what will determine the type of lenders, if any, that will be interested in such a deal. You have to start there.
Found a small park for sale in rough shape, but it still cashflows. Owner has taken a new job that requires he travel quite a bit so wife says sell. Problem is I don’t have enough cash for the down. Price is $299K with $75K down to pay off existing loan on property. Owner will take back the balance at 8% 30 yr.
The deal is through a broker and I pitched him paying $235K with $10K down and they take back the rest at 7% for 30 yrs. He said the down is important to the owner to feel secure in selling and to pay off the note. I think he would take less for total price, but he needs the $75K cash up front.
I only have about $15K cash to use. Can it be done?
Just convinced a guy in my office to maybe fund this deal. He has listened and learned about my preachings of Lonnie deals. He has the cash and I have the knowledge base. We are talking about a 50/50 deal and it is all upside at this point for both of us.
Still some legwork to do, but my point is that people are out there, buy you gotta let it be known what you want and what you are trying to do.
Deal still cashflows with the above debt structure. From memory it cashflows about $26K net with debt and about $40K net if you raise rents $20. Those were based on putting 20% or $60K down. If you put 25% down or the $75K the owner will carry the balance.
No, haven’t figured out where reserves would come from yet! A little unclear on what to do with it at this point. It has dirt roads adn old trailers and alot of them are rentals which are 95% occupied year round.
Wondering 2 things. Should I pave the streets to make park look better? I say only if I can recoup the expense in added rent rolls or sales value.
And should I get the rental units out and sell Lonnie style? If I do that then I am getting rid of a continous cashflow(rentals) in place of a short term finance deal. But I have read that rentals are the bottom of the barrel.