Turing around a family owned RV/Mobile Home Park

[John Paul Schreiner]

My grandfather has owned a small mobile home park since the 50’s. It is failing along with his health. He has 13 metered pads with 8 currently being rented at $300 per month. He also has enough undeveloped land on the property to add 10-15 more pads. I recently game across a property management company that is willing to come in and help get the park back in order. Something my mother doesn’t have the skill set to do. 

I think there is an opportunity for me to come in and turn the property around make it a cash flow generating investment while helping my family out at the same time. I am looking for some creative input on how to make this happen. Originally I was planning on continuing to operate the park as a MHP but the management couple thinks it would perform better as a RV Park. Doing this would mean I wouldn’t have to apply for a zoning change (long story).

Here is my plan:

- Purchase the property from my grandfather for $225,000 and workout a seller finance payment plan. 
- Collect current rents, clean up the place. 
- Invest some of my own money and find some financing to add pad spots. Maybe 5 to start with. Assuming $10-15,000 per spot  - Setup some RV storage while renovating
-Increase lot rents to $400
- When my grandfather passes (maybe in a couple years?) or when I have improved the property enough, get a loan financed through the bank to hopefully get back most of the investment money. I will need to do this to pay out the inheritance money to his daughters on the original purchase price of $225,000. I might be able to continue seller financing through his daughters.

There are a lot of ways to work this out and also several details not included to keep this brief. 

I am trying to figure out how to structure this so that we can beat avoid a large tax burden. I don’t want my grandfather to have to pay capital gains tax and I don’t want his daughters to have to pay taxes on their “inheritance” money. I’m not sure that’s possible. 

Also, any thoughts on the general investment would be appreciated. Thoughts on mobile home park vs. long term RV park?