Mobile Home Park Seller has Zero records...Now What?!

[Ryan McLeaird]

Quick background.  I'm a San Antonio investor that primarily wholesales but will mix in a number of fix/flips throughout the year.  I received a call from a seller that saw one of our marketing pieces the other day and he wants to sell his 11 unit mobile home park here in town.  I got some of the details and at a high level it appears to be a pretty great deal.  Great price, produces solid income, low expenses, but also has value add opportunities that could make this a really really great deal in the near future.  

I set up a time for him to come into my office and ask him to bring rent rolls and expenses, basically a P&L, lease agreements, really any and all documentation he has for the property.  He shows up with a manilla folder with nothing inside.  He pretty much just wrote a grid on the inside of the folder and this was his "spreadsheet" for keeping track of who paid what rent by month.  And this was only for 2019.  

I asked him "Is that it?" To which he replied, "Yeah".  He essentially has no records at all.  He manages the property himself, does a lot of the maintenance himself, and knocks on doors to collect rents each month.  He inherited the property from his parents years ago.  He came up with the sale price by using his tax appraisal and "adding in a little bit". 

This week my plan is to get affidavits from him and all the tenants stating what kind of lease they are on and how much they are paying.  Also, get the seller to sign off on something stating how much he pays for maintenance, water, electric, and any other expenses he incurs.  

I've not ever bought a mobile home park so I'm exploring all of my options regarding financing, whether or not to hold it, wholesale it, or buy it and flip it eventually.  I don't know that banks would lend on it right now without records and I need to find out how long I would need to own it before they would.  I'm going to discuss seller financing options with him this week and I've also been reading up on Master Lease Options. 

Anyway, more questions than answers right now so any insights on dealing with a situation like this would be helpful.  I have it under contract to purchase right now and I'm 5 days in on a 60 day close.