All Forum Posts by: Matt Boettinger

You can assume that if there aren't many expenses that there is deferred maintenance.  Make the assumption that house repairs will be your biggest expense.  You should ask what the repairs were on the house.  Make sure you ask about the age of the roof, water heater, HVAC, and other big ticket items.

Some other expenses that the owner may be leaving off are:

• Electricity - with parks there is public lighting that the park pays.  This park is small so it may not have public lighting
• Lawn care -  Who mows the grass? Also if there are trees near the homes the park will need to pay for tree trimming every few years.
• Snow plowing - This can be very expense and is usually a park expense.
• Management - Are you going to manage the park?
• Licenses/permits - Ask the owner if they pay anything yearly to operate as a park
• Trash - Does the park pay or do the tenants pay?
• House Rehab reserve - I would assume that you will be spending some money everytime the renter leaves and you need to bring in a new tenant. I'm not an SFR guy so I don't know how to calculate this. Someone else can chime in though.

You also may want to ask how long the renter has been in the house and how long the MH owners have been there.  This will help you calculate vacancy.  Assume 2 months lost on the house everytime it is turned over.

Regarding differing expense ratios....I really don't change the expense ratio on POH vs TOH.  I just make the assumption that 100% of home income is going into rehabbing the vacant unit.  100% of home income should go into maintenance reserves.

Hope this helps.  Feel free to ask follow-up questions.

I agree the expenses look low, especially if the park is paying the water for the mobile homes.  Ask for itemized expenses.  Once you get them post them up here.  Make sure he includes taxes and liability insurance.

Also since it comes with a home you will want to check to see how old the roof, water heater, HVAC, etc. are.  You will need to reserve money for replacing those.  You should also factor in vacancy on the home.

The only thing I would add here is that if you are going to raise rents and keep the park 'junky' the residents won't stay.  If you clean up the park, fix up the junky homes, fix up and rent out the empty homes, and get rid of the bad elements, people will be willing to pay more.  If you raise rents and keep the park in the same junky state you should expect lots of turnover.

Hi Shannon.  I agree with Rachel on what you need.  How many of the non-park owned homes are occupied?  (any abandoned?)  How many total paying tenant owned homes?  

Are the park owned homes rented?  are they livable or will they require rehab.  if they are empty you will most likely spend somewhere between 1-3k for rehab.  Work this into your price.

Get information on the utilities.  Are they public or private?  If private you will need to find out what shape they are in during DD.

Is there an onsite manager or is the current owner managing the property?  If you buy you need to know if you will manage or have someone else manage.  This will/should affect your offer price.

If you buy you should expect your property taxes to go up compared to what the current owner pays.  You can usually get on the county or city website to calculate that.  

Feel free to PM me if you want to discuss any of this.

I agree with Charlie.  You need to have this agreement in writing before you close.  A good attorney will layout several different situations (e.g.:  Lawsuit, death of a partner, etc.) that you haven't even thought of and will show you how it will affect the legal entity.

Good luck.

(USCA Grad)

Who will manage it?  you don't mention any management expense.   You also didn't mention Property Taxes and insurance as expenses.  Did they give you a P&L with the expenses?

Welcome to BP.

I'm in.  See you next week.

I attended.  I was able to buy a park and tryingto buying more.  I am skeptical of most gurus but this was worth every penny for me.  I have had a few conversations with Frank in the months after the boot camp.  He was able to give me valuable information during those conversations when I was pursuing parks.

I plan to be there.  Thanks for the invitation.