Looking at a Nearly Empty Park

[Robert Wiltshire]

BPers,

Looking at a 44 unit park with about 40 park owned homes and 4 empty lots.  Currently has 10 tenants that the owner keeps to cover the expenses.  He owns it outright and removed all but those 10 tenants when he paid it off, because he liked them and they were no trouble for him as an owner/manager.  According to him, he was waiting to see if it would get acquired and redeveloped by a large retailer (Walmart, food lion, etc...)  

There is a 56 unit park next door in similar condition that is full and rents 2/2s for $525.  The park I'm looking at rents his for $450, again because he likes the people and he doesn't need the money.  I have no doubt that given it's location in town I'll be able to fill it quickly, but I had some questions to advise my underwriting.

When I start renting or rent to owning the current POHs, can I set the ratio of lot rent however I'd like?

Lot Rent/ Home Rent $225/225; $300/$150; $350/$100 etc

Or is there an industry standard that I need to follow for underwriting?

Thanks in advance!

[Frank Rolfe]

Here's another thought. What if you approached this deal as a Master Lease with Option. If you got in there and filled those homes with good tenants it would yield a higher price to the seller and make getting a lender much easier. To do a Master Lease with Option on this park would require you to do a careful inventory of the vacant homes and the total cost to bring them back into service. You can't put a lot of money into homes in a park you may never own, so you'd have to basically bootstrap it on the easy ones first and then remodel the others out of new cash flow.

Just an idea.