All Forum Posts by: Padric Lynch

Would you rather take a 10k finders fee, or go through with a rental that would cash flow $1,200 a month, after sinking 25k into repairs and updates?

Hey @Jalon Hogan. I know @Sebastian Kressley is up in Greenville doing some interesting buy and holds. A group here in Jacksonville, NC meets monthly. Our meeting is this Thursday. If you are interested shoot me a message.

Thank you @Frank Rolfe. This helps a lot.

You are actually one of the reasons why I started looking for my first park. Your podcast is excellent. This park is in North Carolina, so I'll be seeing what the state's MHA has to say about the situation. 

Situation:

Currently drawing up a contract for a mobile home park. There are 10 vacant homes that the owner does not have title to. We were encouraged by a broker to include the descriptions and VINs in the contract, and we would need them to request duplicate titles from the state. I went to the park and checked all of the vacant home's interiors (master bedroom closet, electric panel, kitchen cabinets, under sink) and exteriors (on the tongue and in the vicinity of). I was not able to find any VINs. This may be due to how old the homes are. Can I procure duplicate titles without the VINs? and is it absolutely necessary to have the VINs in the contract? 

While going negotiating for a MHP, I have requested that the Seller convey's all un-occupied park owned homes with a title. This was the only term that was met with resistance. He explained that he has done rent-to-own on homes that did not have a title, and that I could do the same thing. He would apply for the title near the end of the rent-to-own agreement, then put the home in the tenant's name. Does this sound fishy? Is my request warranted? My intuition says yes. Also, in the case that I do have to apply for the lost titles, what does that process look like and how long does it take?

Investors of Eastern North Carolina,

I will be holding a networking meet up in Jacksonville, NC. For details click here! I wanted to know from the community, what topics are you interested in hearing about? What type of speakers would bring you the most value? All suggestions are appreciated!

Nice @Sarah Lyon! Are you going to pull money out w/ a Heloc or loan to leverage into other properties?

@Daniel N Garcia The RV parks in this area typically do not allow sub-leasing of the lots (aka charging rent). Please let me know if you find one that does! You had mention that you were "thinking of RV parks and/or Mobile Home Parks, but I obviously can't purchase one of those to start." I wouldn't deter yourself from pursuing a park, as most parks are bought with some type of creative financing. If you bring some knowledge (self-education) and drive to the table, who knows.. that retired Marine who owns a park free and clear might just give you a shot with owner financing. 

BP!

I have been dedicating my time, energy, and resources to understand and find mobile home parks for sale in Craven, Carteret, and Onslow County areas in North Carolina. I found a park in Newport, NC that may have potential. I just walked the property with the owner and received the surface level information for the park. The park will definitely be a turnaround, value-add project. This is making it challenging for me to formulate an offer or to realize that this will be a money pit / time suck! This is what I currently know:

The Park

Location: Between two military bases and close to the beach.

-31 spots

-16 septic tanks (two spots to each tank)

-Lot rent $200

-5 Tenant owned homes (TOH)

-1 Park owned home (POH)

-About 3 vacant homes able to be renovated

-About 4 destroyed homes that need to be removed

-18 vacant spots

Income (monthly)

-$1,200, not including the POH rent, only lot rent.

Expenses (monthly)

-Trash $400

-Environmental inspections for homes moving in $40

-Street Lights $240

-Capex $40 (Roads, Well pump replacement)

(Still formulating what other monthly expenses there will be i.e insurance, management)

-Total: $720

Other Details

-On well water

-Individually metered for electric

-No property management

-About (1/3) of the park in a flood zone

-Flood zone spots require a FEMA foundation (2k-4k to build)

-Owner owns free and clear, seller finance is a possibility

I have been thinking about offering the following options to the owner:

1. $100,000.00 Cash/Bank Financed.

2. $118,250.00 Purchase Price, $10,000.00 Down Payment, 180 Month Term, $601.00 Monthly Payments, 6 Month delay in payments (In order to create cashflow).

3. $136,600.00 Purchase Price, $5,000.00 Down Payment, 240 Month Term, $548.00 Monthly Payments, 5 Month delay in payments.

4. $167,000.00 Purchase Price, $0.00 Down Payment, 360 Month Term, $464.00 Monthly Payments, 4 Month delay in payments.

The Downside

The moment I add in the seller finance debt service, the deal is negative cash flow by $100-300 each month. That is why I would have to delay the initial payments while I would be moving homes into the park. The price looks like it will have to slide to the left. I’m just debating whether the upside potential is worth the dig to get out of the red initially.

The Potential

I see myself filling up the park with a diversified mix of old to new homes, "renting to own" each, and raising the lot rent to market ($250). Endstate would be 31 TOH paying lot rent. That would be $93,000 in gross revenue. My incomplete/proforma for expenses has me guessing at about +/- $20,000. $73,000 NOI. At an 8% Cap the 100% paying/occupied property could be valued at $584,000.

Am I being too optimistic here?! Please, insights, opinions, words or caution are welcome. Rip into it! Thanks!

-Paddy

@Don Taylor Happy to share. Thanks for the feedback!

@Bill Plymouth Thanks Bill!

@Sebastian Kressley Thanks brother! Trying to get a meetup going here soon! I'll let you know when.

@Jay Dang If you are talking about rents in your particular market, you can look up rent comparables on the MLS or Zillow. Better way is to talk with local property managers and real estate agents. If they are good, they will have useful information about the rental market and what changes are happening.