All Forum Posts by: Marshall M.

Thanks for all of your responses!! I've decided to move on, finish out this current mailing list and make some tweaks for the next one in terms of equity %, location, etc. 

Sent out 50 hand written notes to out of state owners with properties in northern Virginia with high equity and have gotten two calls so far. It'd be great to hear what you would do next: 

The first guy wanted full market value of the property which is close to 750k for a 2BD/2BA right next to the Pentagon), there's no mortgage on the property and he's in no rush to sell. The second guy wanted over 100k over market value for a 3BD/2.5BA in Fairfax that was rented for $100/month below market and while there is a small mortgage on the property, he's also in no rush to sell. 

I don't see why I should be offering premiums to these people for their homes. I'm thinking of walking as opposed to lowballing them. What would you do? 

Also, any thoughts on how to improve my lists so that the buyers are more motivated? 

@Sina S. I'm working on a few deals in northern VA, what sort of properties are you looking for? Any particular part of Fairfax County?

Hey @Kyle Bethune, I second what @Jeffrey H. said. When you buy a community with a high level of park owned homes, you suddenly find yourself in the apartment business, which is quite different from the MH business. 

One other thing to consider is the length of time the tenants have been at the property. At the asking price of $365,000, you're looking at a 9.5% cap rate, which is insanely low for such a small park. Some sellers just try to fill up their properties at any cost (usually with unqualified tenants), right before a sale in order to "increase the value" of the property. 

Regarding the septic systems, they shouldn't scare you away but always have them inspected thoroughly and try to run an analysis on what it might cost to tie in to the public systems if there is a zoning change or something goes wrong (e.g. usually greater than $100,000). 

Here are some last thoughts for you: 

Negotiate the price. You make money when you buy the property, so don't over pay for it. Only count income from existing units and consider what the income is if you sell the units and only rent the land (usually less) and apply the cap rate to that. Apply a really high cap rate of at least 15 - 25% so you don't lose your shirt. Ask brokers nearby for input. 

hey @Account Closed sounds interesting - what sort of legal trouble are we talking about? 

hey Kyle, the RV resorts are typically seasonal businesses that have sites with RV hookups where people can park their RVs. Some of them also have small manufactured homes or cabins that are rented out as well. RV resorts usually have tenants on annual, monthly, weekly and even daily leases. 

From what I've seen, Arizona RV resorts tend to experience their slowest months around August probably due to the heat. The best months will be in January and February. Think like a tourist to understand the seasonality of it a little better. Another huge factor is that the big sponsors in Arizona sell RV seasonal passes and memberships through partnerships with RV dealership networks. Doing this really requires a lot of scale on your end. 

@Account Closed - great advice! thanks for sharing.

@Rick Fagan - Septic tanks and private utilities are so common at MHPs that I'm surprised your investors aren't comfortable with the possibility (unless those tanks are steel in which case they're probably rusted out...). 

The 19 pad park sounds like it might be a good deal assuming its in decent condition. That park actually personifies the biggest challenge I've seen, which is trying to find a balance between having enough pads, getting the right price and acquiring one in a good enough location. From the deals I've seen, tertiary markets can work surprisingly well with mobile parks. You probably just need to put together a small one pager showing what the deal is with the basics of the property and the surrounding area for your investor.  

From the window shopping and research I've done, the best deals seem to be the fresh ones on Loopnet, whereas the worst (or at least the sketchiest) are usually the ones on craigslist. MHBay has a decent selection but when I try to get in touch with sellers they never respond. I've mostly just been looking on the east coast to get a sense of what's going on in nearby markets. 

So let's hear it - how'd you find your best, average and worst mobile home park deals?