All Forum Posts by: Howard Abell

You will need to know what the HOA fees are and you should also ask for the Condominium Declaration plus the minutes of the board meetings for the past year. This will give you the rules, regulations, financial conditions of the HOA and size of any reserves that the HOA has on hand. These are important to know because it can affect your fees or require a capital payment if they are in need of doing a large project.

Banks are familiar with condos but some are a bit uncomfortable with funding them. You should shop this with a few of your local banks.

This type of property is called flex space, or light industrial or light warehouse depending on who is naming and where it is located. Good luck in your search.

It seems to me that there are different meanings to the phrase "motivated seller and you need to define what you are looking for. Sellers can be motivated to sell for various reasons including, health, retirement, financial or estate planning, distressed property situation and many other reasons. I suspect what most people mean by motivated seller is will the seller sell at a big enough discount to perceived value to interest the buyer. Of course there is also another way to motivate a seller and that is to offer full value for the property. The only way to "turn" an owner into a seller of any kind is to talk to them to discover what the motivations might be.  

Good hunting.

@Rasean Lowe Welcome Damiano. I own a park in Lillington NC just 25 miles north of Fayetteville. We have mostly tenant owned homes but I do have a few park owned homes that are rented to tenants. I also have a couple of investors who bought homes just to rent them . The economics happen to be good in our park so that is the first element that I would suggest you think about when looking for a home. What the lot rent is plus what the market for rentals will bear in your area. Once you determine that the next issue is that manufactured (mobile) homes can be fragile and need to start out in good shape or if not in good shape you need to commit to putting them in good shape as it is an investment that  will keep on giving if you take care of the maintenance issues as they occur. It's not easy but can be worth the effort. You are welcome to reach out to me if you have any questions, etc.

Good Luck,

This is a personal issue depending on how risk averse and what the abilities of the buyer are to maintain the park.  Personally I would need to buy it under $250K. Seller financing would be a small plus. For me, under a 12 cap would not work.

Howard

This is a 100 percent park owned home park and does not deserve a cap rate under 10% and that's being generous. My calculator gives me an NOI of 28,700 with an expense ratio of over 50%. These are quick calculations but not far off. The septic could be a major issue and needs to be inspected before taking any action. I would say this park is over priced.

@Paul Stout Congrats on the Indiana License.  

I think the first thing you should think about is not paying for any empty space. You should pay on the actual rent collections minus the expenses. It looks like on that basis NOI is 55,000. I know this sounds extreme but you need to start there and then determine how you will fill the rest of the space and how long it will take you. So paying on pro forma dollars outright would be a mistake since you have to do the work the owner has not done. You might ask the owner if he will do any seller financing if possible on this deal.

@Account Closed I would say "silly cap rate" was a cap rate that was less that 2 or 3 basis points above the cost of money for that investor. A REIT whose cost of money was 2% can buy a 4-5 cap rate and make money. An investor who is paying 5% for money would start out behind the proverbial eight ball.

@Mark Hamblin Mark, as being new to commercial RE I would start with cash flowing property without a lot of rehab or other work to be done until you get more experience in attracting tenants.

Good luck.

Yes, the short answer is to google Letter of Intent for real estate. Use one of those as a base format. Include a paragraph that states the letter is a non binding offer to buy. Most formats include this type of paragraph.

Good luck