Many new tenants from 2016 and 2017

[Gulliver R.]

I'm under contract with a park that has mostly new tenants renting park-owned homes with the Option to buy in 10 year time span (10 moved in 2016 and 12 in 2017 which are on 1-year leases), 8 are long time tenants, 6 are vacant homes, and no vacant lots (36 total lots).  The test ad results came in good indicating a demand for affordable housing in this area. So filling vacancies will not be too much problem. 

There's a lot going for this park: City water city sewer, Upside in billing back w/s, raising rents, filling vacancies, and lowering expenses. I know there's a lot more that comes into play on deciding to move forward on a park or not. But my question is: would you walk on this deal because a lot of the tenants being from 2016 and 2017?

Thanks!

[Account Closed]

Frank Rolfe uses the metric of 50% of homes you get back.  This is just a guide and probably varies based on market , anything they may have thrown in on the front end screening.  Something to consider for what you may ( or may not ) expect.

This is just one piece of the puzzle.  It doesn't make sense to walk a deal because of one component.  The question itself is irrelevant but understanding the variables that come with the scenario - i.e. being able to turn homes - maintenance and manager .

Typically most what i see are tenants on MTM leases, i don't like an auto renew lease. If the tenants are going to skip they are going to skip and likelihood of collecting anything will be zilch. 

Cert/notarized value should not provide you false sense of security . Even if its legit, doesn't matter if you have normal vacancy. 

Have you tried to run an ad to see if you can sell a home for cash in the market ( with the purchaser knowing it will stay in the park) . That may give you some insight into recognizing the viability of the strategy. There is a good chance the tenants you have as renters right now are going to be your cash buyer ( owner) . 

Were there down payments received or anything like that ? Not looking from the legal aspect but to see if any of these people have more skin in the game than just a  renter...