All Forum Posts by: Amos Smith

Just want to clarify how you got there, to get to $12K you divided 1.2M by 100 lots (of which 60 has homes on them and producing rent, 40 lots are vacant).  That means I can value the 40 vacant pads the same as those 60 income producing lots?

Seller seems to think the vacant pads are worth very little, and of the 1.2M paid, most of that goes towards the income producing pads (with homes on them)...because the "CAP rate could not apply to vacant lots".

Does anyone with appraisal experience can shed some light on this?

I'm in the process of acquiring a 100 space park, the park has 60% occupancy. Purely based on the park income, the NOI @7.5 cap show a valuation of $1.0M, because of the land, POH and pads for expansion I offered $1.2M for it. My plan is to fill the 40 vacant pads to get to 100% occupancy, at which point the park should worth $4M. So that comes out to be $40K per home in the end.

But during the DD, I've found instead of 40 vacant pads, only 35 vacant pads are usable, so there is a loss of 5 spaces for me.

What is a FAIR way (to both sides) of reducing the purchase price to account for the missing 5 vacant pads? Because of the missing pads, instead of getting to $4M, I could only get to $3.8M at the end of the project (loss of $200K). I don't want to ask for an unreasonable reduction because I might loose the deal, but I also don't want to be short changed.

Love to hear what y'all think.

@yonan weiss  Thanks very much for your response, sounds like this is in your wheel house.  What is the rough cost of doing one of these allocation study?  Also what types of stuff in a MHP will require a longer than 15 yr depreciation?

Hi,

I recently bought a new mobile home park, my CPA tells me that the non-land portion (road, pipes, water plant, good will) should be depreciated over 28 year.  My CPA has never done tax on MHP before.

I did a search on the web, and many places say that it can be 15 years, but no specifics.  I see there are many smart CPA-types in this forum, can anyone provide me with something specific to tell my CPA that 15 years is OK?

Thanks all!

We are looking for advice on being the "stalking horse bidder" (first timer) on a mobile park that is being foreclosed.  Does anyone have experience with this, and what should be the general strategy?  Some issues we are pondering:  How much to set the initial bid?  Specific terms to ask for in the purchase agreement.  How much for the breakup fee...etc.

Any advice is appreciated!

A quick update on this...

By only going after the owed lot payments (not the owed RTO payments), we were able to proceed as a simple eviction and not get tangled in an expensive RTO contract litigation (lawyer gets most of the money).

By letting go of the RTO payments, we avoided the bigger legal fees, and was able to get rid of the deadbeat tenants.

Chris, we really appreciate your feedback! We actually have the title of the homes currently and the RTO contract clearly spells out that the tenant won't get the titles until the end of the term.

We are just trying to get them out of the park without spending too much on legal fee.  Once they are out, we are not concerned about the title ownership.

We just bought a park in PA which had 20 RTO homes with several tenants that haven't paid for about a year. When we took them through the eviction process, the judge ruled that this is a RTO contractual issue (ownership % which is not an unpaid rent issue) and outside of his jurisdiction. So we are suppose to hire a lawyer to go through a length legal process to kick these delinquent RTO tenants out.

Does anyone have any experience with this? Because each RTO tenant also have a "lot rent contract" with us, can we evict them just on "lot rent owed" and ignore the back RTO payments?

Thanks!