All Forum Posts by: Matt B.

At 40% vacancy, you have 36 occupied lots in a D area, of which a portion are rv's, as suggested earlier, for $825k. Even if the price was half of that, you will have a very management intensive park. Your biggest expenses will be prozac and rolaids for yourself, plan on spending about 50% of the gross.

Personally, I think there are better deals out there that would have much less headache. Much success either way.

The whole maintenance issue is another paradigm shift we need to be taking in our investing strategies. We have, for years, been proponents of seller financing on homes for the specific reason of passing the maintenance issue to the tenant. I agree with the need to now be providing maintenance on the homes you have, if you are going to a straight rental. Residential real estate is not commercial and judges do frown on passing the buck to tenants, such as in a nnn lease. Is it ideal, no. But it is what it is, just build your rent high enough to cover repairs.

As for the state exemptions. we have properties in multiple states, and trying to figure out state specific Safe Act law, in addition to Federal law, has been problematic to say the least. Kind of makes you miss the "good ole days" days when your biggest concern was whether the each states dealer laws applied to you.

@Siye Baker

Chances are you won't get to see their current contract with the lender, until after you agree to terms. You just need to state in your offer that the assumption is subject to such and such terms for you to assume it. I am not a fan of putting assumptions into an offer, unless the seller has already stated that there is an assumable loan at terms that make sense.

@Jim Johnson

If I am reading you right, you are using the higher debt service and cap rate to drive the purchase price down?

I agree if you have a hot park in a hot market you may want to use a purchase contract, but for most parks we would rather use a LOI and have our attorney write up the actual contract later. At the very least, especially if this is your first deal, have your attorney review the contract you intend to use. The couple hundred you save, using a generic contract, will be lost very quickly on the one item you overlooked. Don't ask me how I know.

We have a lease that specifies terms and conditions of the rental agreement and we have a separate set of community rules (we have apartments and mhp's and they are both different) that address what is expected of the tenant in regards to daily living. I can get you a copy if you pm me and let me know what kind of property you have.

Our agreements are shorter than some out there, but we do a 20 minute orientation when they move in and explain the whole thing line by line.

You may want to check with your local REIA or the NJAA to see what they use in case NJ has something state specific or if your court system happens to be tenant friendly.

I would see what the park would allow you to do. With Dodd-Frank, you will be seeing more parks allowing investors to do things they wouldn't have allowed just a couple years ago. I will say though, most of us are getting out of the seller finance business.

In our parks, we used to allow investors to seller finance, but not rent them. Now we are cultivating relationships with responsible investors that would like to do rentals, just so we don't have to own the homes.

As for value, I don't know your area, but $2,000 would be plenty for it.

I would ask as much as you can. If they have an agent representing them, though, you may be hard pressed to get answers about their motivation.

As for the LOI, don't give them more than two choices for your offer. It just seems to confuse people. Give them the one cash offer and the one with financing.

I am not sure I would offer to assume the existing loan unless you know what the terms are on it. It may be better to write your LOI with the seller providing the entire note and then offering to assume the loan once you agree to general terms.

I would strive for a rate around 5-6% amortized over 20-25 years with at least a 10 year balloon. If the loan is over $1mil (I am assuming it's not) I would look for 4-5%. Figure out the payments for it and see if it will provide the cashflow you are looking for.

Much success.

Now would be a great time to 1031 into something else. If you are willing to take the jump up, and with $500,000 to put down, you could easily transition into a $2mil property just about anywhere in the Midwest or Midsouth. That should get you about 100 units or if you want to try the manufactured housing community route, you could probably pick up 200 spaces. Save your other liquid funds for reserves.

There are an abundance of properties with conduit loans coming due now, with owners looking to get out from under them. Much success.

As a park owner, and in light of Dodd Frank, I think you will start to see more communities willing to work with investors. If we wanted to rent out homes we would own apartments instead of parks. The thing is, most of us just want to rent the dirt, not the homes. Thus to continue to fill lots and be profitable we are having to adapt and are becoming investor friendly.

So to voice a different opinion, I would suggest finding a park owner to work with. For a couple thousand bucks, investing in a mobile home rental would be an inexpensive way to start and learn this business. And if you make any mistakes, which you will, better now than on a million dollar investment later.

Much success.

Ken, Any thoughts on how best to use this? I am sure you have some.

Sorry I missed your Louisville workshop. I was registered to attend and ended up under the weather.

Even for a contact sheet, it depends who your target customer is, as to whether they will use it. We have several apartment and mobile home communities where the tenants still live off the grid. They do not use the internet or computers. Yet, they are very good tenants.

We are as guilty as everyone about wanting to automate everything, but sometimes there is nothing better than a pen and piece of paper.

Or as my kids would say "back in dad's day they used to take applications on a stone tablet with a chisel."