Your thoughts on MHP for sale - Posted by Dave (WI)

Posted by Steve-WA on September 05, 2009 at 13:48:29:

More importantly, are the spaces that hold the antiques currently sized large enough to hold 14x60’s or bigger? That could be a deal breaker - with small lots, you may be forced to consolidate, reducing the number of spaces, or convert to RV or park model spaces. While park models are really attractive, they’re pretty small, and are desirable to a very narrow market.

Small lots could be a motivator for a lease option - you should contact Greg Meade, as he has done this, and has offered mentoring and guidance.

Your thoughts on MHP for sale - Posted by Dave (WI)

Posted by Dave (WI) on September 04, 2009 at 09:25:22:

I am in southern WI and one of the parks that I work in has come up for sale. I have met the owners and they would like to see my wife and I buy their park and are willing to do some creative financing to help us out. They have it listed with a broker for 1.3M but listed us as protected prospects because we met with them before they put it up for sale. Our price would be 1.2M. They want 300K down and would finance the rest at 5.5% amortized over 30 years with an option to review the rate at 5 yrs and 10 yrs, capping any increase at 2%. The park specifics from the 2008 P/L statement they sent me are as follows:

54 lots - 3 vacant

  1. 2 bedroom house for the park manager
    Lot rent - $257.00 - this is $25.00 - $70.00 less than the 4 other parks in town.
    Water - paid by park - total cost for 2008 = $15,000.00. I would sub-meter this and bill back the tenants in the future.
    Utilities - $1164.00
    Telephone - $2665.00
    Office Supplies - $850.00
    Maint/repair expense- $5,500.00
    Insurance - $4300.00
    Property tax - $13,200.00
    Mobile Home tax - $3275.00 - this is recouped in the lot rent

There is a part-time on site manager who does maintenance, mowing and snow plowing. They live in the house at no charge and the park owner issues them a 1099 at the end of the year equivelant to the rent charges ($6,600.00 last year). Any extra work (tore down an abandoned home last year) are shown as a bonus under office suplies. The operating expense ratio is 28% according to the P/L statement.
The owners first told us this was for sale 6 weeks ago but I didn’t seriously consider it because of the sale price. Now we are getting to the last 2 weeks of our “protected period” and things have taken a turn. We have spoke an couple times in the interim and they have been very flexible with the financing and have really pushed that they will get creative with the financing, second mortgage on our house, etc. Now I’m frantically searching for ways to come up with the down payment, I’m about $200,00 short and am interested in your thoughts. The numbers I come up with have this valued a little high but if others out there think this is a good possibility I will keep working on it. If not, I would be interested in why you think not and what it would take to make this a good deal. Email or phone calls are welcome - cell phone 608-931-4593.

Re: Your thoughts on MHP for sale - Posted by Anne_nd

Posted by Anne_nd on September 07, 2009 at 14:05:26:


You need to do your due diligence about things like code compliance because a sale can activate some issues if you’re not grandfathered in by the city or county- things like size of homes, distance between homes, age of new homes, etc. I once looked at a park where the city would enforce new codes on any new buyers, reducing the allowable number of homes from 55 to 26- effectively removing 10’ all around the perimeter that had to be used to plant trees to form a visual screen. The city would not grandfather the park in, but the park manager/owner had no way of knowing this because it didn’t apply to him.

If the sellers are truly motivated, they should sell you this park with only $100K down- there’s little upside, so their price is pretty high. The only thing to remember is that you could be in a tight spot if a different new owner comes in and makes life hard for you.

good luck,


A few questions - Posted by Dr. B. (OH)

Posted by Dr. B. (OH) on September 04, 2009 at 22:29:26:

Hi Dave,

Glad to see you are out there working the deals. I have some questions regarding this park:

What is the age of the park?
When was/were the sewer/septic systems installed?
Does septic/sewer meet current code?
What is the cost of maintaining the septic/sewer?
Are there any upcoming major maintenance/repairs required?
What kinds of roads and their condition?
No line item was shown for trash pickup.
What about tree maintenance? The maint man or subbed out?
What age mix are the homes in the park? How many are park owned? What ages are those?
How is the economy in the surrounding area?
Can he do a lease option, allowing you more time to get some $$ together. Don’t forget to record it, if so.


Re: A few questions - Posted by Dave (WI)

Posted by Dave (WI) on September 04, 2009 at 23:26:10:

-Owners are selling because they want to retire. They have been in the motel/MHP business for 30+ years.
-Park is approximately 40 years old.
-I don’t have all the details on the sewer, but it is all city water/sewer and I would imagine was installed when the park was built.
-I haven’t checked into the codes but I know the old park manager and he hasn’t mentioned any code issues, and he would have.
-Septic/Sewer maintenance looks like it would be in the maint/repair expense ($2700 of the $5500).
-The sellers haven’t mentioned anything, nor have my two Lonnie customers in this park said anything to me about problems they are having.
-Roads are in good condition, no potholes to speak of.
-Trash pickup is provided by the city at no additional expense to the park or tenants.
-Tree maint. has been a combination of both.
-Homes range from mid-60’s to 80’s. None are park owned.
-Economy is hurting, we just had a GM plant closed 8 months ago. Unemployment is up but seems to have leveled off.
-I haven’t addressed a lease option and, to be honest, I’m not very familar with the process. The pressing issue the seller wanted to take advantage of was getting the property sold in the 60 days to avoid having to pay the commission. If it takes some time to get the financing together we would have to add the commission in as a cost of the sale. Not the end of the world by any means. I’m planning on attending the MOM in Ft. Wayne and may still be working on this then.

Re: A few questions - Posted by Kevin Long

Posted by Kevin Long on September 07, 2009 at 18:55:31:

Dave, I am a MHP owner in AL but also a Realtor. I would not rule out you being able to get around paying the commission until you ask the broker. I’m pretty confident that my broker would typically not require the commission to be paid as long as you have some sort of agreement within the 60 days (lease option or sale). However, I only deal in residential sales, not commercial. Ultimately the Broker would make the call, and of course, the agreement between the seller and Broker.

Re: A few questions - Posted by Sherm

Posted by Sherm on September 04, 2009 at 23:48:45:

Based upon the info you have supplied, one thing really sticks out to me. How will you keep this park producing income in the years to come? Sounds to me like the park is chocked full of “antique” trailers. One way or another most will eventually become your problem. They will have to be replaced with newer, more modern trailers. Can you handle this expense?

Re: A few questions - Posted by Dave (WI)

Posted by Dave (WI) on September 05, 2009 at 24:55:27:

I think this is an expense I could cover, or I could work with a couple other Lonnie dealers in the area to see what we could come up with. Good point and one I hadn’t thought of.