All Forum Posts by: Dan V.

Local banks or credit unions. Our first park was financed by a credit union located in the same city where the park at. 

@Chris Keil Thanks. Good luck and keep us posted on the commercial loan. How did you learn to structure the seller financing options or master lease option? Did you take a class or do you have any resources you can share? 

@Tanya M. Tucker MHP investing is a lucrative business if you do it right. I was not really into mobile home investing due to the same reason as most people thought (negatively) about mobile home park, but after buying our first park, I was really surprised by the potential of this space. I agree with Paul Moore, check out Frank Rolfe's mobile home university, I've been listening to his podcasts and I just realize how ignorant I am when it comes to MHP. After listening to him, I am more proud owner of MHP and gave more confidence on this niche. In fact, we are in the process of buying our second and just sent an offer to potentially our third park, and actively looking for more. The challenge you might be facing is financing especially with smaller parks (under $500k), very few local banks offer financing for them, and if they do, they want you to have experience or at least prove that you know what you're doing. Good luck!

@Frank Rolfe First of all, thank you for sharing your knowleger here and in your podcast, I've been listening to them in the past couple of weeks and learning a lot. 

I am using the same formula you provided when analyzing or making an offer on MHP, but instead of using lot rent, I use the actual NOI to come up with the as-is valuation. Then I make projections based on the assumption that POH with existing tenants will be kept as POH and all vacant POH will be sold. The park we are currently under contract has a market lot rent of $500 and POH are rented between $850-$1000. I'm thinking $400-$500 additional revenue for maybe $200-$300 expenses as POH will give me an extra $200 cash/unit if kept as POH. With this type of park, would you still analyze the park based on lot rent only? Will you still convert all homes to TOH in this case? If you will still convert to TOH, how do you come up with the price of the home?

@Gene Nelson I agree with Chris, for smaller park, local banks & CU are your best bet. The one that funded our first park was a credit union based in the same city where the park is located. Once you gain experience and start dealing with larger portfolios, more banks will be willing to fund it.

@Chris Keil Does your broker lend in VA? What is the minimum loan amount that they will entertain? Also, do they have specific requirements (occupancy rate, location, minimum price, etc) on the park they will fund? With regards to your seller financing what terms (downpayment, interest rate, balloon payment, etc) do you usually offer?

@Dan Turkel You will need accounting software that can track transactions by property. We've been using Quickbooks so that's what I recommend, either the QBO Plus (with Class feature) or the QB Desktop. As far as the PM transactions, you will need to set up the PM as a bank account and treat it as such when bookkeeping. Request monthly owner statements from your PM then enter each line item to the PM "bank account". Then reconcile the PM statements every month to make sure all transactions were captured. 

 Thank you and I completely agree. I responded to all denial emails/phone calls by thanking them for their time and told them that I will be reaching out to them again soon for my next deal. And sure I did and they were excited to hear from me in just a couple of months! Most of them already have our records so they did not have to pull our credit again and we were able to move faster. 

Investment Info:

Mobile home buy & hold investment in Newport News.

Purchase price: $350,000
Cash invested: $100,000

33-lot mobile home park, with 30 mobile homes and a single-family house.

What made you interested in investing in this type of deal?

Great cashflow.

How did you find this deal and how did you negotiate it?

This was brought to me by a wholesaler. He found the deal thru an agent but was struggling to obtain a loan so he offered 50/50 partnership to help with the financing. The term initially involved partial seller-financing but the seller decided not to finance anything. We offered the full asking price but made sure that we have enough time to do our due diligence and secure financing.

How did you finance this deal?

Commercial loan from local credit union funded 70% of the purchase price and my partner and I contributed cash on the 30%.

How did you add value to the deal?

The park is 50% occupied when we bought it and most of the vacant units need major rehab. We sold all vacant ones to investors and collecting lot rents on them. We set up new park rules and leasing guidelines and slowly cleaning up and improving the park condition.

What was the outcome?

We are on track with our projections. In just 3 months, we were able to get it rented at 95% by selling all vacant homes to mobile home investors and collect lot rent only.

Lessons learned? Challenges?

Finding bank/lender to fund mobile home park is a bit of a challenge. I even prepared a business plan for it, including 1st year proforma P&L and 10-year projections. I reached out to all types of lenders that I know and ask for referrals from various investor groups but despite showing some really good numbers, we were denied by most of them. Luckily, one local credit union took a chance on us and funded the deal. We are also self-managing the property, it is stressful but a good way to learn.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, we worked with commercial agent and local credit union.

Investment Info:

Industrial buy & hold investment in Virginia Beach.

Purchase price: $180,000
Cash invested: $20,000

It's a 3000+ square feet 2-level commercial flex space condo unit located in an industrial zone. The space has an office and warehouse/storage on both floors. Needs cosmetic updates only and will be rented at triple net lease.

What made you interested in investing in this type of deal?

Flex space (office with warehouse) is a hot market right now and the property is located in a desirable industrial area.

How did you find this deal and how did you negotiate it?

Thru a commercial agent. This property was listed in regular MLS so we got lucky to found it first and made offer quickly. We offered the full asking price for it.

How did you finance this deal?

Commercial loan from a local credit union for the 80% and business savings for the 20%. The bank we got the loan from was the same bank who denied us for the purchase of mobile home park.

How did you add value to the deal?

The property is in good shape, needs a few updates to get the desired market rental rate.

What was the outcome?

We budgeted $20K to upgrade kitchen, baths, flooring, lighting and paint. One of the contractors we brought in to give the estimate was interested in leasing it, so we made a deal to lease it to them, we pay $10K upfront and $10k as rent credit for 6 months. We will charge them market rental rate at triple net lease.

Lessons learned? Challenges?

Keep your eyes open! My main focus when I started investing was on residential properties but when the opportunity was presented to me, I taught myself how to underwrite commercial property, research the market and run the numbers. Build a relationship! I sent loan applications to the same lenders/banks who denied us for the previous deal we had, and most of them are willing to fund our deal this time. We got better rates and terms by doing so!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, we worked with a commercial property agent, an investor-friendly credit union and, of course closing attorney.

We bought a 33-lot mobile home park about 3 months ago and my partner told me about the Virginia Manufactured Home Lot Rental Act as of July 1, 2021. All mobile homes in our park are included in the purchase of which about 50% were rented while the others are vacant and require major rehab. We sold most of the vacant ones to other investors and charge them lot rent. My question is, does the VMHLRA only applies to the "lot only" tenants or does it apply to park-owned home tenants as well? Appreciate any clarification from Virginia park owners familiar on the new law.