All Forum Posts by: Dave Rav

Hey group!  I wanted to ask if anyone has done a subject-to on a mobile home?  Please tell me about your experience.

Though I have experience in other areas of RE, this would be my first sub-to deal.   A tenant in our MHP is looking to sell, and we're putting a deal together.  Trying to keep it as simple as possible, but cover the important stuff.  The list of docs I have include:

PSA

Memorandum of Agreement

Affidavit of Liens

Due on Sale Disclosure

Auth to Release Info

Gen Warranty Deed (as the bank holds the title at the moment

Good stuff.  Always nice when you can save on materials.  I've had several wins that way; nice as it offsets those losses that are bound to happen with repair expenses!

So, how big is this park (acreage, and # pads)?

It will be bank-dependent.  I will echo some other folks sentiment, getting max financing through traditional banks will be a challenge.  Another challenge you'll find with commercial lender is this loan amount.  You'll find that many won't spend the time to consider your $375k loan.  Many have a soft cutoff of $750k, or more commonly $1M.  They dont always tell you this, but you'll find out once you start conversations.

I went through this about 3 months ago, and so many banks passed me up.  Two big strikes against me were 1) loaning on an MHP - many dont.  2)  small loan amount.

Like you, I was in a similar scenario with bank loan + sellerr financing.  Most banks complained about "skin in the game" and required me to have at least 15% down.  Honestly, several wanted 20% to come from me.  They bauked at the seller financing the full DP. 

Lastly, I'll say your OpEx looks low with an expense ratio of 25%.  Banks who know this business will say your numbers are off.  I'd present it to them at 35-40%, especially with all the POHs.  (POHs will increase your expenses - for sure).

Best!

-Dave

Hey Cole.  Thanks for checking out one of my older posts.  Yes, went with the carpet tiles.  Not sure they were worth its a few tended to peel up.  The floor prep has to be 100%, plus if you apply but then need to pull up and move one or two, the adhesive becomes less durable.  The problem can be solved by having some adhesive or bonding glue on hand, it just makes for more fuss. Otherwise, yes the fabric and construction of this as a floor covering is decent.  We owned that particular unit for 18 months are, and save for replacing a few tiles in sections, it seems to work out.

Take home - I'm just not sure if it's better than just going with a basic carpet selection.

@Greg Kasmer thank you Greg.  I do find myself shopping quotes frequently.

-Dave

Hello.  I'm an MHP investor out of SC.  I will PM you.

Hey group!  Wanted to ask about personal umbrella insurance coverage.  My policy is coming up for renewal and it's looking like I need to make a change.

Agents or anyone with ideas for direct coverage, please respond to this post!

I'm located in SC.

#umbrella #insurance

@Roger D Jones thank you for the additional commentary.  I've been on both sides of the scenario (majority POHs, majority TOHs) and I've noticed a difference in management demands.

That said, there is MUCH to be said for gaining experience and learning to "rig it right," so it operates with better ease.  It's just that those first few years, newer buyers dont have this down.  

Further, I do agree with your statements on the intricacies of partnerships.  

@Avery Robertson great post.  I too will be in the same boat here soon.  The only difference is goal of my prospective park is for it to be in my home state.   I just feel much more comfortable with it being proximal enough to make a quick trip, say once a quarter as needed.

Caution with the statement: "acquiring a park is hard, management is easy." 

The only way management is burden is eased is in scenario of all-TOH parks.  Generally speaking though, this asset class can be argued to be one other most management-intensive. 

At any rate, Avery I'm curious to see what you come up with and the forum's input.  Feel free to send me a private message as well.

@Rachel H. thank you for the comment.  In our jurisdiction, the state DMV is in charge of titling MHs.  I did go there and spoke with a manager.  He claimed the only way to place a lien on another person's MH title is to have the owner accompany me to the DMV and we both would sign a specific form, in other to place the lien.

I promptly informed him that, in cases of collections and back rents, nobody would willingly allow another person to cloud the title of their mobile home!  He was very nice, and even did some research on the topic.  But later came back and said they knew of no other way to do it.  I'm thinking I would have to possibly engage an attorney.

At any rate, thankfully the issue was resolved a few days later.  The tenant paid the back rents (accompanied with massive late fees).  As you know though, we always wonder if it will happen again.