All Forum Posts by: Sonia Spangenberg

Thanks Rich.  I definitely will be doing all the inspections and already have a price of $650 for inspections and engineering plans from one contractor.   I am still waiting for a call back from the county health dept. environmental guy. I did finally get my records from the Co. health dept on the property and noted that the license to operate the well and septic was revoked in 2015 due to repeated failures to update after a court case.  No response since from the owner in county records.  I am operating on the assumption that I will be starting from scratch as far as well and septic go until I get the inspection done and report from the engineer.  Once I get a chance to talk with the county health / environmental department, I will form my decision on making an offer, and if so, what it will be.  I am pretty sure I will be offering less than what the raw land would be because it will require so much clean up, and even if it is grandfathered for lots, the lots cannot be used as such until well and septic are upgraded.  Cost would be like starting from scratch plus clean up.  There is a good chance they won't accept the offer at first, but I can wait.  I don't have to have this deal.  

Rich, thanks for sharing.  Yes this park is a rural setting.  That's one of the things I liked about it. Still reasonably close to major commuter route though.  Lots of green space.  Thanks for the suggestion to check into increasing the # of lots.  I know that the 40 yr history of the previous owner's failure to update the septic system may have factored into them being told they could not increase the number of lots.  I will check into that.  That alone could make the numbers work better.  For the septic, do you tend to do individual septic tanks for each MH or do you do a community system?  What factors do you look at for that decision?   What are Pro's and Con's?  With larger lots that kinda sounds more doable.  I'm sure that may vary per local jurisdictions or maybe even per engineer.  If that can work for me that will really save because it sounds cheaper than a community system.  That option was not discussed when I spoke with the contractors.  Another good question for me to ask.  In talking with the neighbors it sounded like the well issue was mostly the pump so I may do okay with that cost.  Will not find out until I get further down the road on this opportunity.  If I can truly keep my infrastructure costs closer to $300K rather than $500K I can make this work.  My costs are higher in my location than yours but you have given me some food for thought on ways to reduce costs and increase income.  Thanks for your suggestions.

This question brings up my question about a 10-11 acre property I am evaluating, that is already grandfathered for 25 lots, (verified) however the previous owners have let it fall into total disrepair.  I have 40+ yrs records on this property from Co. Health Dept.  (I noted in Health Dept letters that the county had a moratorium on new lots when owner at the time wanted to do a subsequent expansion, so the 25 lot opportunity sounds exciting). The well and septic systems were never updated when an earlier expansion was granted, and are totally dysfunctional and non-conforming.  I pulled the county health dept. records to verify, especially as what I saw didn't match with the partial documents that the RE agent was giving, and what he was telling me. (Spoke with two neighbors of the park about the history and spotty performance of the well and septic systems)  Agent said it had all been fixed.  Don't know if he is dumb, new or been lied to.  License to operate the well and septic systems has been revoked per the county records I pulled (2015).  It is predominantly  a few squatters, two illegal renters, and about 10 to 12 empty overgrown ancient trailers.  It will cost quite a bit to clean up (haul out old trailers (3K to 6K per trailer) + some additional legal consultation costs I imagine) then redo systems.

I have spoken with two contractors about building costs for new septic systems and well update.  (over the phone estimates $250K to $500K and 3 to 6 months, depending on actual status).  $650 to evaluate and get engineer plan.  I asked the seller to consider this absorbing this cost before I made an offer.  Still waiting to hear back.  Not expecting a positive response. ; - ) .  I think they are waiting for a stupid buyer.  I plan to consider a low ball offer then just wait to see what happens.  Want to do more research first thought.  

I would have to update pads and elect. hook-ups to code as well.  Not sure about pricing on those items. My next task!  

I anticipate it would take about two years to get it fully cash flowing.  Up front costs are big and most likely prohibitive. Would of course have to do seller finance with delayed payment start (? 1yr to 18 mos?) and interest only payments, then balloon payment, at up to five years, once I can get it performing for a full two years so I can refinance.  I have to get it at below land costs, almost nothing, to make the numbers work so far.  Not sure what the sellers' expectations are at this point because I have only spoken with the RE agent.  (see previous comment on him)  I know they only paid $50K for park but I am suspecting they are children of previous owner.  I doubt they have a mortgage.  This differs from a brand new park in that there are so many clean up costs.  Seller would most likely have to pay someone to take this deal and make it work. This is not a good first park deal for sure.  

I most likely won't do it but still want to practice running the numbers. For this type of project I would need a JV partner with experience to better evaluate, but it may not be worth anyone's time. We would consider selling or renting out our home and stabilize and manage park on site for a few years. To learn and save money. I have some SF rental experience under my belt so this sounds doable to me. I am looking at it as a start from the ground up opportunity so I am very interested in what someone who did develop a park had to deal with.  The only redeeming quality is the grandfathered zoning for 25 lots.   Still working on evaluating though.

I also would love suggestions on how to properly comp for current value of this property (land value - clean up/legal costs?) and how to figure out potential ARV for MHP's. I was told to find a commercial RE agent. I need this nailed down before I could even begin to figure out if there is a possible deal. I did google parks for sale in the state and found similar sized towns with similar # of lots and acreage. They weren't as close to the larger metro as I am though. Then would I need to purchase new homes then resell to renters? I've talked to a manufacturer in the state about a bulk discount, but with so many up front costs, not sure how to finance that. Will plan to go down and meet him. I don't know if it would be quicker to get a fully rented park by buying new MF homes, or would the time it takes to find used homes, refurbish and resell/rent take too long since there is no cash flow. How do you weigh that out? I'm pretty sure new homes in the whole park would elevate the lot rents and help overcome the stigma of the slumlord park history. I think there may be some hope but need to be more sure about ARV and up front costs. I'm sure there is more to it than that though. This is in a reasonable commute range for a major metro area. I am aware of the growth trend in MHP's. I have a tentative appt. to meet with an near by MHP manager to pick her brain.

I have also looked at potential USDA Rural Development loan/grant funding for Water and Waste disposal .  That may help this deal over the hump if it could qualify.  Looks like it might.  But that may create a time delay factor.  Anyone have experience with that?

Obviously my head is spinning.  Comments?  Any good book recommendations?  Any suggestions?  Thanks 

Apologizing for writing a book here : - 0

For those like myself with smaller Portfolio's, I recommend taking a look at Hemlane.  I will most likely go with it as my properties are about 3 1/2 hrs away and it has a property mgmt component that is very reasonable. You can track you expenses and income in it.   Very reasonable with several service level options.  I am giving it a try as there is a 30 day free trial period to see how it works for me.  I used a free software consultant service to find it.  http://www.softwareadvice.com/property/  I am also starting with Quicken Rental Property software as it does Personal, Business and Rental Property books (but not property mgmt).  I like having it all on one dashboard.  The learning curve seems to be a bit easier than Quickbooks which my husband has for his business.  I tried to learn it but found it too complex.  Quicken seems more intuitive as I set it up, so far.  I did a lot of comparison shopping, watching YouTube videos etc before narrowing it down to the above choices. So I don't have longer term experience with these software options but I am pleased with them so far.  

So Jake Scott, what kind of orientation and training did you get to learn to use the software?  

Well explained example Charlie MacPherson, and great solution suggestion at the end.  However, can Agents even take the $75 ethically though?  What would a broker's point of view be on that?

Anyone with experience with ResMan? or Hemlane?  So far Rentec is high on my list but I am waiting to talk to some others.  

We have used a greige color "Poplar Gray" SW7071 by Sherman Williams with Extra White SW 7006 trim and cabinets.

Pro

Jeff Filali

"Real estate is just like any other business venture, 20% of the people who start in the business are making 80% of the money, and the other 80% will dabble for a while, many never doing a single deal, and most will eventually move on to another business they'll fail at as well. That's just life."

Jeff, I just finished the 80/20 book.  Love your wise big picture analysis of the post question.