All Forum Posts by: David Denzy

Additionally, if you receive debt on the property from a bank, will selling a single family home (included as collateral on mortgage) trigger a "due-at-sale clause"? 

I know that Frank & Dave suggest selling ancillary assets when you are in the mobile home park business. My question is- what if the park contains ancillary structures that are mixed in with the mobile homes and can't easily be parceled off? 

1) Do you need to parcel off these homes in order to sell them?

2) If you absolutely cannot parcel off these homes and are okay with operating them as rentals, how do you value these structures in conjunction with the rest of the mobile home park?

3) Is there a quick and dirty value that i can attach to these rentals? 

My scenario:

- 3 single family rental homes (cabins) renting for $500/month

- hard to account for expenses attached to these homes because seller has not separated expenses in financials 

Okay, thank you so much for helping me out. I'm trying to give you upvotes whenever possible to return the favor, haha. 

Follow up question: what are your sources for "for sale ads"? Facebook? MHVillage? 

 And how do you do that? I know quite a bit about the market for Mobile Home Parks, but i know little about the market for mobile homes themselves. Has anyone had a good/accurate experience using NADA? 

Thank you for the responses! 

What is clear to me so far:

1) It is important to know the value of the POH/RTO, regardless of the terms of the RTO agreement

2) Once you know the value of the POH/RTO, do not pay more for the RTO contract than the home is worth.

- Example: If the home is worth $15,000 but the seller sold it for $10,000 on an RTO contract, don't pay more than $10,000 for it because if the RTO resident completes the RTO, then you've lost $5,000.

Would it be effective to underwrite the notes on RTOs completely separately and add that value to the value of the real estate? Any suggestions on how people are currently underwriting to include RTO income?

"Because the market is so competitive"... I'm talking about the market to acquire MHPs. In order to make an attractive offer, we don't have the luxury of rule of thumbs all the time. 
 

Thank you! You've added to a couple of my questions now so I appreciate it! 

 Okay, follow up question:

Because the market is so competitive, is there a spectrum of value/discount that you'd place on these notes depending on the deposit amount? For example- I think that there's a higher chance of someone paying their note if they put down 80% of the purchase price in cash vs. someone who only puts down 20%. The person who puts down 80% has much more equity to walk away from than the person who only put down 20%. 

Hello,

I'm curious how investors value/underwrite parks where there is a component of RTO? For example: Let's assume there is a Mobile Home Park for sale with 10 homes in the park, site rent $200 (all utilities billed direct to resident). 9 homes are straight resident owned with 1 home on RTO contract. Let's assume that the RTO just began and they have all 24 months left in their payment schedule.

RTO Contract:

- Deposit: $3,000

- PMT = $500/month

- Term = 24 Months

Park Financials:

- Income = ($200 * 10 * 12) = $24,000

- Expenses = ($24,000 * 0.25) = $6,000

- NOI = $18,000

- Cap rate = 10%

- Total Value = $180,000

If you are buying this park between the time that the RTO paid their deposit and the time that they make their first PMT (resident has 24 months left in term w/ remaining balance of $12,000), how do you adjust the total value/purchase price for the RTO contract? Would this be a dollar for dollar increase to purchase price? (E.g. $180,000 + $3,000 deposit + $12,000 remaining balance = $195,000)

Thank you, Jack. I'll let you know what i find out