All Forum Posts by: Charles Williams

hey @Account Closed

That's great news, congrats! We've been underwriting like crazy the past several months and really close on a couple, but haven't taken down that first park yet. It's been very frustrating but keep charging ahead.  We do find it amazing how much some of these owners think their parks are worth...and actually one owner did get their park under contract with a big group that paid almost twice what we (and others he told us) offered...

@Matt Rothwell

@Eric F.

You may want to caution your "stupid" comments as folks have deep seated beliefs in how they want things to be on both sides. There's plenty of stupidity to go around on ALL sides. 

There's a reason many folks are fleeing other states and moving here & the southeast in general (plus Tx).  Unfortunately a side effect is many seem to bring their politics with them which eventually turns the area into something similar to what they fled behind.  Jobs and a great lifestyle are created by governing bodies/tax codes/weather/business climate/educated workforce...many variables.  Where are the businesses gonna leave to? Texas? Check out the population & jobs trends. However a great thing about this country is state boundaries are freely open to come & go as you wish.

@Patrick H. s post got deleted? 

@Muthu B.

Based on your #s, it looks like you're only going to be receiving $600.00 per month before paying any expenses. It'll be very expensive ($10-20k per lot) to bring in additional homes for the vacant lots, and there just isn't enough size to make an efficient profitable operation, especially from across country. I'd definitely pass.

Personally I'm looking for at least 25-30 lots to allow enough income to pay overhead expenses/management.  Just not enough cash coming in the smaller parks to do so.

@Account Closed

Hey thanks for the inputs. As you're very aware, the CAP here is low. My initial thoughts are this wouldn't be so much as an immediate cash flow play, but a more opportunistic means to capture an asset in a very strong market with favorable financing in place and lots of land. Ill definitely keep working with him on terms. I need to sit him down with the crayons and show how little is left after he's paid. Of course the national brokers are lined up swearing he can sell it for $1.8M...lol

I'll chat with you offline soon.

@Jeffrey H.

Thank you for the comments.  The homes are relatively newer 90s/00s.  City water isn't directly in front of the park but close.  Sewer isnt an option yet.  I absolutely agree with your statement regarding better understanding the private utilities.  The owner has been using a contract service provider that tests/treats the water every month and has many years of favorable service.  The water requires minor treatment, but things can certainly change with our wonderful public office folks.

Great tips on the septic inspections & pumping, I'll implement that if we close.  Ideally I would stay away at this price point, but the location makes it very tempting to pursue.

@Celeste Fackrell

Thank you for the great detailed info.  It validates how Ive been thinking about it, except the well & septic aspect.  I'm trying to better get my hands around the monthly expense portion as I'm seeing the monthly operating costs being minimal for these items as there's no ongoing "charges" for use other than electricity for the water pump and repairs if/when needed.  Would it be fair to allocate these items as capital expenditures?  I understand sooner or later a septic will blow or a well may need to be redrilled, but thats like saving for a roof or HVAC repair on a rental house, correct?

@Chris Martin

@Chris MartinI did not CAP the rental home income, as that would value the trailers themselves much higher than theyre worth. ($650/mo total rent minus $250 implied lot rent =$400/mo trailer rent minus 50% expenses values the trailer at $24,000 per year @10CAP.) I prefer to value the park lots themselves and stack the individual home values on top.

This is indeed in WC, last turned in early 2000s. It will be inside the outer loop when complete.

I’ve been actively marketing and underwriting mobile home parks in NC for the past 6 months and have found a few viable opportunities. I’d like to run this one by the group to get feedback from experienced operators. I’d also like to offer joint venture partnership for anyone interested in joining me on the deal as I think there is some strong opportunity here.

The Mobile Home Park is in a Raleigh NC suburb (not a “MSA” zone 50 miles away, town is directly adjacent to Raleigh within the beltway). The county and central part of the state are booming, with many folks inbound for jobs, climate, etc. The area constantly finds itself on the top annual lists for best places to live.

The park is owned by a “good ‘ol boy” that lives close by, turns out we grew up in same rural county and share some other interests so it was a good connection. He paid cash for it 15 years ago from another land transaction, is now 70 and wants to pass along to someone else so he can enjoy the rest of his life. He’s worked on/in the property daily since owned and knows everyone there, even has a few family members living there. Mainly collects monthly rent payments in cash, and rents are substantially under market (at least $50, possibly $75-90). It also sits on 40 acres +/-.

Its 40 full lots with 8 park owned homes. Each lot has its own septic tanks. Well water from a 300’ well, has monthly checkups done via contract. Supposedly never had a problem w water. Lot rents are $250/mo. Actual expenses are very low as he does a lot of work himself or via tenants in trade. I’m aware these will go up if I buy as I’d prefer to run it as a business w onsite manager, repairman, etc.

At 10 CAP, current park valuation is ~$850k @ 30% expenses + 8 POHs @ $10k ea, total value is $900ish. Once rents are raised to market, its prob $1.1M ish.

He's asking $1.2 Cash or will carry for $1.3M w/ $300k down, 10 yr balloon w/ $5k monthly payments. At an 8 CAP, we're a lot closer to asking price. On a long term play, there's also pretty decent potential for commercial redevelopment over the next 5-10 years as the county is rapidly developing all over. It should certainly be able to carry itself in the meantime.

Am I valuing this correctly? Do typical expenses on septic/well substantially exceed 30%? I appreciate any feedback on this one.

Gave,

DOS or "due on sale" is an option the bank has to call the loan due if the house is sold or ownership (deed) transferred to another entity, such as a subject-to sale or possibly to a LLC you create for rental purposes. Should be no issues at all if you keep the loan in your name and you make it a rental, unless there's some thing weird in your mortgage. Most owner occupant loans require you to live in the house as your primary residence for a year or so, but afterwards you're free to do as you'd like. It looks like this is a second home, so that shouldn't be a concern.

There are tax implications tied to how/what you can write off but it sounds like you're about to discuss with your cpa.  Once a full rental, you can capture expenses, loan interest, insurance, maintenance, etc.

Hi @Account Closed,

 Welcome to BP! I'm just down the road in Apex.  Lots of growth happening all around the area, should be plenty to choose from, but can definitely be overwhelming with all the various options.  Feel free to reach out if you'd like to get together for a chat.