All Forum Posts by: Ryan Doyle

3 good places to start...

Loopnet.com

Mobilehomeparkstore.com

mhvillage.com

Thanks for the replies...

Not sure how well I can answer some of these questions, but let's see.

• There are currently 96 platted pads (have not confirmed yet)...the front half has actual pads and utilities...the back half is treed land.
• 26 are filled with park owned homes...6 more are tenant owned....16 vacant lots.
• Currently at 100% occ...or so I've been told.  Rent roll is 5 years old.
• Owner is only charging $100 lot rent.  And POH rents are less than 1/2 of market rent.
  • Another park in the area's lot rent is over $250.
• Using all income (lot rents and POH) the Cap rate is at 19!
• Using Frank and Dave's Sky High formula...the park is a little over valued at $300k..but that's because of the extremely low lot rents.  Raising those just $35 puts this park right in line with that number, and there is still room to raise rent.
• Park is in GA, so I haven't seen it yet...but am planning a trip up soon.
• Homes are likely older...park was built in 70's
• Separately metered utilities, but each home has it's own septic.
• Checked the Flood map, doesn't look like an issue.

Even doing OF, I plan on doing full DD...or mostly anyway.  Most of the possible issues brought up sound like cautionary tales in general...and issues that should be mostly flushed out during DD.

As the numbers run as is...this park will make money.  With a little bit of DD and paperwork...raising rents, converting POH to tenant owned...I think this park could make even more and be less management intensive very easily.

I'm currently in the initial phases of talking with the owner, but here is what I know so far:

• Rents are about half of market...owner is aware of this.  He hasn't raised rents in over 10 years as he prefers to keep the park at 100% occ.
• There is room to more than double the size of the park.
• Owner is willing to finance!!
• The town in which the park is located is very small, only about 12k people.  However, 20 mins down the road is a much larger town with about 200k people.  In between these two is a military base.
• The park's current NOI is around $60k...or so I'm told - don't have new numbers to verify that yet.
• About 2 dozen park owned homes.
• Most residents have been there over a decade, some 2.

What I don't know yet:

• How easy it would be to raise rents closer to market rent...and how long it would take.
• Need to run a test ad in both the small town and in the large city to see what kind of response I get.
• The actual terms that the seller is looking for...for example...I have seen or been told about 5 different prices for the park...steadily decreasing.
• Have done no DD yet.

Based on just that...gut feelings?  I'm getting excited, but trying to temper it with the fact that there are still question marks.

Assuming you are looking in Hillsborough County  www.hcpafl.org  - Search the address and the owner info should be listed.

I have a MHP under contract, and have been having issues getting information from the seller. But I finally heard earlier this week that the units have been attached to the property...and therefore don't have individual titles.

I plan on selling the units to the tenants, so I need the units to have titles. How big of a pain is it to sever the unit from the real estate?

I've heard of a single unit on land being attached to the land...but not a whole park???

Your 'life event' concerns are very valid. I received a letter in January that the CPA we have been using is having health issues and will not be practicing this year at least, maybe longer.

@Jim Johnson

Question...yes debt service is figured into cashflow, but not NOI. Correct me if I'm wrong, but the CAP rate is driven by NOI. If my debt service is higher because I'm paying the seller a larger interest rate, that doesn't effect the NOI or CAP.

It might give me some leverage in negotiating simply because I can show that I can't cashflow anything at the higher sales price.

I do like the pay off after the refi to a lower rate though...and offering a higher rate to the seller makes the offer more attractive.

@Matt B.

The agent has told me that the current loan is assumable and the rate is 7%...not sure about the rest of the terms though. The asking price is around $400k, but my initial valuation places it closer to $260k. The seller is including rental income from the homes...I'm only including lot rent, plus a small amount per home as all of them are park owned.

@Ned Carey - Is it "normal" to send multiple LOIs with different terms? Or should I send one and then negotiate off of that one?

@John Vashon - I've been dealing with her agent.

I know she recently went through a divorce and her husband was the one that ran the park. Exactly how she plans to use the money...I don't know, I doubt she has told her agent that either...he has told me however, that she is motivated to sell, and owner financing is on the table.

I'm thinking her motivation is partly to just be rid of the MHP and the responsibilities...beyond that, I haven't asked too many personal questions. I didn't want to cross a line. Should I ask the agent some of these things? Is it ok, if I ask the agent if he can have the seller call me so I can find out more about her intentions.

Here is the setup...I have my eye on 2 parks in the same general area. I think both are over valued based on their asking price...but what park isn't?

I would like to make 3 offers as LOIs, to soften the blow of the much lower price I have to offer.

1. Offer for cash, very low. (I get a new loan.)
2. Offer to assume existing loan, low down payment & owner financing of the rest at 8% rate...a little higher than offer 1.
3. Offer to assume existing loan, slightly higher down payment & owner financing of the rest at 5% rate...a little higher than offer 2.

Or should I just send a contract with their current asking price until I get some solid numbers to work with and then negotiate the price and terms after we are under contract?

What sort of rates are people getting/using for owner financing...I'm not even sure what to ask for.

This will be my first deal...

It may depend on your son's strengths as well. If he is big into numbers and math, a technical analysis system may work best for him. He'll learn to watch the indicators (MACD, Stochastics, RSI...and a number of others) and be focused on the stock's price and how it changes.

Fundamental analysis focuses more on the company, where it's headed, who heads it...basically everything else but the numbers.

Options are their own world, IMO, the best way to learn options trading is to have him signup on TDAmeritrade, then sign up on TastyTrade.com and watch the "Where Do I Start?" series.

Good luck to him.