All Forum Posts by: Jon Dorsey

I have a few empty lots in my MHP and was looking to temporarily fill with RVs until I can bring in MHs.

Is there anything I need to do to the pads, power box, etc. to make it ready to receive a RV or is a RV easily able to hook up to what’s already there for the MH?

lot rent * 9 paying lots * 60 = park value 

Add in shell value of the homes, ~$5000 per * 8 homes = ~$40k

Cash for keys or evict and then go through abandonment procedures. 

You’ll need to figure out how much in back taxes they owe and factor it into offer. (Cost of home - taxes- back rent due - moving fees - rehab costs). 

As @Tyson Cross said RTO = POH.

One work around is to keep the homes separate from the parks purchase. Two ways that I see but seek counsel. 

1) setup two LLCs. One buys just the park and the other the titles. This way the bank only sees the park piece. 

2) purchase contract on just the property and a master leases for the homes. Once again keeps the bank just seeing the park. Then you can buy the homes later if you wanted. 

Are you buying the RTO notes in this purchase?

Talk with local banks in that city and state. If you're not taking over the title and RTO contracts to the 13 homes there's a better chance of getting a loan.

Lastly you could pool your money with friends, family, or colleagues that want to make a modest return. Setup a note and pay them back. 

As stated throughout, keep your underwriting/budgeting very conservative. You’ll probably find that the homes need a little TLC. Make a rotation to pump the septics so you’re being proactive instead of reactive and it’ll help spread out the costs. If you only have one pump on the well look into putting in a backup pump or drilling a second well. 

Based on your stated $188k gross income with 27 (2 vacant) POHs that comes out to $580/mo. Speculating you could set lot rent between $450-$500. 

Rough Valuation:

MHP FMV: 450x27x60=$729k

POH Value: 29x5k=$145K

Total:$874k

This puts you in the ballpark and being close by will be needed. Write out your game plan and stick to it. Continue to educate yourself and don’t be afraid to ask for help. Get a good team in place (manager, maintenance man, handyman, private W/S techs, etc). Let us know how it goes. 

Make sure you budget in a higher capital reserve to cover the private W/S when they fail down the road. The good news is that it sounds like they’ve been updated recently. 

Whats lot rent in the area vs POH rent?

What business model are you going with: renting out POHs or trying to convert to all TOGs?

Do you have a maintenance man?

Are these seasonal renters (snowbirds) or long term renters? 

You mentioned the numbers are off. What are you showing for park vs homes inc/exp. You’re probably looking at a total expense ratio of 55-65% on this property: private water/sewer, POHs, smaller park. 

@Ashish Acharya if I go the %basis way then would I need to get the county to reassess the property to change their apportionment?

So if I’m stuck with a total basis of $300k then I either take the Tax Appraisal’s numbers and only have ~$50k of deprciable assets or get an appraisal and apply percentages based off that. 

The only caveat I see is for down the line where it’d be more advantageous to keep the higher land value (Tax Appraisal) for when I go to sell to minimize capital gains. 

Either enjoy depreciation now and pay more capital gains later (or 1031); or have reduced write offs now with less gains upon selling. 

Thanks for the help.