I think I found a deal on a MHP...need input...

[Ryan Doyle]

I'm currently in the initial phases of talking with the owner, but here is what I know so far:

• Rents are about half of market...owner is aware of this.  He hasn't raised rents in over 10 years as he prefers to keep the park at 100% occ.
• There is room to more than double the size of the park.
• Owner is willing to finance!!
• The town in which the park is located is very small, only about 12k people.  However, 20 mins down the road is a much larger town with about 200k people.  In between these two is a military base.
• The park's current NOI is around $60k...or so I'm told - don't have new numbers to verify that yet.
• About 2 dozen park owned homes.
• Most residents have been there over a decade, some 2.

What I don't know yet:

• How easy it would be to raise rents closer to market rent...and how long it would take.
• Need to run a test ad in both the small town and in the large city to see what kind of response I get.
• The actual terms that the seller is looking for...for example...I have seen or been told about 5 different prices for the park...steadily decreasing.
• Have done no DD yet.

Based on just that...gut feelings?  I'm getting excited, but trying to temper it with the fact that there are still question marks.

[Edward Hamill]

Few issues that are pit falls for small parks in Florida:

Review the lease and then review it again!!!!  AND confirm that all homes (a point many miss is that leases are specific to home site and NOT the home owner) have the same lease or you could get burned badly!  In Florida (only know Florida rules) you will find caps in the lease and verbiage about going to market rent only on certain occasions.  This could mean you buy today but cant raise rents to market for 10 years!  I would get a good lawyer (Jody Gable at Lutz Bobo,etc is among the best in FL and covers whole state) and have them do an initial review. (Tell her you want the Ed Hamill discount).

Confirm with the city or county that the community is not plotted.  There was a time when you had to provide a plot plan to the city/county.  Owners did this and then went ahead and did whatever they wanted anyway.  Now, when you go to replace a home you get hung up in permitting and are required to replot the whole park (last time I consulted on one of these, it cost the owner 100s of thousands because he didn't listen to me in coconut creek!)

Finally, check with the FMHA to see if the park is a member and/or if they are aware of anything about the park.  They are a great team (FMHA dot org)  *Disclosure - I used to be a board member, so I am biased.

I have probably been in the park you are looking at.  Feel free to shoot me a message.