All Forum Posts by: John Garcia

40-50% LTV is way to high. I would think about looking at different lending options. We find deals at 25% ltv or lower weekly. That bank seems way too conservative.

Lots of questions.  The deal analysis similar to normal.  P and L plus mortgage costs.  That said we were playing for appreciation which worked well but we also had capital to offset any short term losses.  The math remains the same by and large for the banks.  I am not an underwriter but in my experience if you put the right amount of capital into the deal with projected returns supporting the underwriting the deal works out.  I know a lot of folks talk about underwriting but in my experience your banker, if a good one, makes the deal happen.  We have 250 doors and over $15M in assets.  Four syndications and well over $30M in deal flow over our time in real estate.  Find a great banker.  Buy at the right price with a solid debt structure in good markets and things generally work out.  Good luck!

Also, rates aren’t that bad right now so strike while you can!  

Very rarely does the "math" work out in terms of building a new park.  Sadly the costs of permitting, digging, infrastructure, etc. are in excess of buying a "used" park.  I have only seen this work when the owner of the park also does all of the work and has a "crew" which is apart of their broader enterprise.  This way you are not incurring external labor costs which are typically half of all the work which will be done.  Good luck!  JG

Hey Jared.  The per lot price is very low which while on the front end may seem like a great deal, but over time you may realize after putting in a lot of cash for capital improvements and what not it might have been better to go with a more developed/ready to rent asset.  As a first time MHP buyer you may think about finding something a bit more stable as this might give you a better feel for what it really means to run a MHP.

Also, all of Brendan's comments are spot on.  Particularly when it comes to demand.  Is there a Walmart or other major employer nearby?  Are there strong employment opportunities in addition or instead of a Walmart?

If you do go through with the deal getting financing for a first park with the numbers noted above may be quite difficult if not impossible.  Maybe talk to seller about seller financing with little down given how poorly the park is performing.  Also think about a hold back on the downpayment potentially.

As for diligence:

1.  Do the empty pads have water, sewer, electrical?  If not infrastructure improvements are expensive.  Also older sewer hookups can develop sediment and have other problems.  I would have a plumber scope them and all the sewer lines.

2.  How old are the water lines and what are the lines made of?  If copper and older than 30 years you could have major water issues?  If well you should also get all tests to see if water is safe.

3.  Are the existing pads gravel or concrete?  What kind of condition are they in?

4.  Also find out where the other mobiles went?  Normally lot rent mobiles are very sticky.  Strange that many mobiles left the park.

Lots more of course but this will get you started.  One last thing, if owner lets you talk to tenants usually you can find out what the real problems are in the park.  Most renters are VERY willing to share issues.  Good luck!  JG

I invested through the "storm" of 2008-2012 and a few thoughts:

1.  Bring more capital to the deal to drive down the debt ratio.  Helps decrease mortgage costs and managed downside appreciation/depreciation risk.

2.  If seller carry an option try to create a deal with a long fixed rate even at a higher interest rate but lower then where one thinks rates are going.  We are doing a MHP deal right now with 20 year fixed term at 6% with a higher downpayment to mitigate the longer term interest rate hike risk.

3.  Think about purchasing for long term in markets with lower volatility even if returns are close to break even.  We have some assets that are syndicated that while don't provide a ton of revenue it gives us the ability to pay down the mortgage and then refi at the right time to increase our revenues quickly while keeping the asset in the portfolio.  

4.  Choose a sector of the market that others are not playing in and also make a lot of connections to find off market deals.  After doing this for close to a decade we have chosen a few niches within multi-family where we don't have to compete with big money and also after doing this for a while we get a lot of off market deals.

Hope this helps.  Best, John

We use Hemlane to manage 250 units.  Not perfect but does what we need and inexpensive.  

That's a good idea!  I always go there to look at parks, but had forgotten they had homes too.  Thanks

Hey everyone.  I am looking for 10+ pre-owned mobiles in the Northeast. Maine specifically, anyone have any advice on how to find them and or hire someone to find them.  Open to thoughts/suggestions.  Best, John

Sure Justin.  Feel free to PM me.  Thanks, John