Posted by Rednek on January 23, 2008 at 05:35:14:
Rednekxx never claimed to be able to spill well, my spill checker musta been sleeping… Sides spilling got nothin doing with bein able to sell them there little tin cans an making a good note and my folks are amazed at my schoolin and spillin abilities. =p
Best Wishes,
Ryan Needler
1st park purchase…Help requested by all! - Posted by Todd(AZ)
Posted by Todd(AZ) on January 22, 2008 at 16:02:05:
Will try to keep as brief as possible. Looking for general info vs. specifics at this time. Long story short, I have finally found a “mini” park I’m thinking of purchasing. Reasons for my interest in this park are:
Some negatives do exist here however.
Units are not mobiles, but larger travel trailers with tip outs. Skirted and nice but older and somewhat small for living year after year. Suitable for singles or couple only, MAYBE one child. 2 of the 3 are rented. I plan to Lonnie them or rent to own to current renters if I purchase the park. My lonnie deals have all been larger mobile’s purchased by families with children so I’m venturing into a market I’m not as familiar with.
It will take most of my entire home equity line of $100,000 to purchase ($15K from savings, $85K on the heloc).
The park will cash flow, but barely, about $60 a month according to my calculations thus far. Not much room for improvements and income. It pretty much is what it is. Bigger units won’t fit, and no extra land.
Here is my dilema. Lonnie deals are scarce here and parks expensive. I’ve not come across such a small park like this before…all others have more units and more expensive. I’m doing this on my own in addition to my full time career. The bottom line is the park will cash flow with some effort put forth. The property itself is sound. Any advice on using $15k savings and $85K on a heloc to obtain this property and start my mhp investment portfolio or is this too thin a deal? I seriously am concerned that most other parks around here are somewhat out of my comfort and financial reach and I may never move to the next level without getting this first park under my belt. Is a deal that breaks even or cash flows a little considered a good deal considering the $15K and heloc?
I know I’ve left a lot out but I need some fresh eyes, more experienced eyes to see this picture. Some might say why work so hard for $60 a month while others will grab all the property they can if it cash flows. Any/all insight is greatly appreciated. Thanks for reading. Todd(AZ)
Re: 1st park purchase…Help requested by all! - Posted by RobertB(CO)
Posted by RobertB(CO) on February 09, 2008 at 13:59:33:
Are these Travel Trailers hooked up to city water and sewer? If so, would the county or city let you put in some single wide Mobile Home’s if the lot is large enough? Can you afford the $3-5K to get a Mobile Home moved and set up if you do not do the set up yourself? Even with one MH on one of the lots you could charge much more to rent the MH since it would have a min of 900+ sf of living space vs the 400 or so in a Travel Trailer.
Re: 1st park purchase…Help requested by all! - Posted by Lil-joe
Posted by Lil-joe on February 02, 2008 at 14:52:58:
I wouldnt go into this blindisided and be out of the park and oyur residence also.I would find some other source of financing if its a good deal.
Re: 1st park purchase…Help requested by all! - Posted by Keith (OH)
Posted by Keith (OH) on January 23, 2008 at 18:10:57:
Todd,
This not a deal as you present it, but if the seller could carry some financing and keep you out of your reserves this could take on a new light. This doesn’t sound like a highly desirable property for other investors so he may have no choice but to consider your offer/s.
Re: 1st park purchase…Help requested by all! - Posted by Gary
Posted by Gary on January 23, 2008 at 17:17:49:
Make the owner an offer that he will refuse. He might take your second offer if he has MOTIVATION to sell. Never tie up all your cash. I never put up more than 10% unless I pay all cash. Find a small bank that will do an 80% loan,allowing the seller to leave 10% in for say 5 years and you bringing the other 10%. You have no competition for this property. No investor would tie up any cash for the priviledge of maybe netting $60 a month. If this is truly an investment property and not a land speculation where the land is increasing in value very quickly then you have a seller just putting a challenge price on it hoping a fool that can be parted with his money comes along. Don’t be that fool. If price is this seller’s goal offer him a no money down land cotract with a low interest rate. Then you have your cash for future deals, an excellant ROI as you have none invested other than repairs,control of the property,you will get future appreciation,no equity build up as you may owe more than it’s worth till years from now,and an excellent tax write off as you depreciate the infrastucture. Get the titles to those trailers though so you can sell,LD,or scrap them if you desire. Gary
Re: 1st park purchase…Help requested by all! - Posted by Sailor
Posted by Sailor on January 23, 2008 at 15:45:56:
Not all of this post is relevant, Todd, because you have already been to Boot Camp:
http://www.creonline.com/commercial-real-estate/wwwboard5/messages/987.html
However, in your area, the concept of a “virtual” park could be a solution to your quest. I am adding to my small park by buying nearby individual L/H deals, which have turned out to be more profitable. They are all on the same street, which makes the geography just as easy. In addition, I can use them as land banks.
Gotta run now, but maybe we could Chat tonight & explore other possibilities–
Tye
Re: 1st park purchase…Help requested by all! - Posted by Don-NY
Posted by Don-NY on January 23, 2008 at 07:09:27:
Well the first thing that comes to mind and has not been mentioned by anyone so far is. You have to separate the land income from the home income. How much value are you placing on the income from 3 old travel trailers? 250-300 each a month? So at a 10 cap you would be valuing those old travel trailers at $30,000-$36,000!! each. Plus if one becomes unlivable can you replace it?
Re: 1st park purchase…Help requested by all! - Posted by Anne_ND
Posted by Anne_ND on January 23, 2008 at 06:22:04:
Hey Todd,
I agree with the others that this deal is dangerously thin. One big repair or a month or two of vacancy and your annual profit is gone.
Just wanted to point out something: Lonnie deals and small park deals sometimes just can’t be done where you are. Everyone likes to make fun of the newbie saying “it can’t be done where I live”, but the truth is that it’s much easier to do small parks and Lonnie deals in the southeast than anywhere else. And CA and the southwest tend to be a tough market.
If you have limited time and but funds that you want to invest, you might want to look into other markets, and the possibility of partnering with someone who is looking for either just money, or a partner with money and a management responsibilities (for instance, bookkeeping and other paperwork can be done from a distance). Doing the latter could give you the experience and confidence to do bigger deals on your own next time one appears.
Unless your deal here is a fabulous land-play (not that hard to imagine in AZ), I’d run from it. From painful personal experience I can tell you that being a motivated buyer can cost you a lot, a LOT, of money.
Plan to come to a few events this year to network with others who are doing the same thing, and maybe get your feet wet with someone you meet in person and trust.
good luck,
Anne
Re: 1st park purchase…Help requested by all! - Posted by Karl (TN)
Posted by Karl (TN) on January 23, 2008 at 01:10:42:
Hey Todd,
I’ve been where you are. The one thing I’ve learned is that you can’t force a deal. Just Like Brett Favre can’t force a pass without increased risk potential. I don’t know who said it but “A good deal negotiated poorly is better than a poor deal negotiated well”.
Be patient, your day will come. Stock pile your cash. The deals are out there. Maybe not in MHPs right now. Look for a niche. When you find it ride it and be looking for another wave to jump on when that one runs out.
A word about risk. I love real estate. But some deals one person would take and another would not. They are both intellegent investors, but at different places in Life (experience, net worth, family situation, etc.). Ask yourself if this deal goes south are you belly up. An investor in a different position may see the same benefits of ownership as you do, but the worst case scenario won’t wipe him out. So how much risk can you afford?
I have done very few Lonnie deals, I wish I knew about them 20 years ago. My NW would be double today and I ain’t doing bad. So, Keep hunting Lonnies or find another niche or both.
As for MHP, I look for deals that I can add value too that the present owner hasn’t realized or doesn’t care. And remember you make money when you buy, you get paid when you sell. (I like Lonnies 10-10-10 rule). \
At the risk of being long winded, never trust a sellers proforma. It’s always cooked somewhere. So figure cash flows based on worst case scenario’s. You can also use proformas to find ways to cut existing costs and add value (eg- negotiate garbage service rates, seperate water meters, increase rents by adding carports or just because they are due, add spaces, etc. just think outside the box)
Good Luck to you. One day people will bring deals to you because they have an immediate need that you and your cash can fill.
Re: 1st park purchase…Help requested by all! - Posted by Michael(KCMO)
Posted by Michael(KCMO) on January 22, 2008 at 19:18:12:
I wouldn’t expend that much resources (time, energy & capital) for that little return. Is there more to it?
“I may never move to the next level without getting this first park under my belt.”
You might consider that if you stretch your comfort zone to the next level but do a BAD deal then you may not stick it out and REALLY succeed.
Don’t be a motivated buyer. Do good deals.
To Your Success,
Michael(KCMO)
Re: 1st park purchase…Help requested by all! - Posted by Ryan (NC)
Posted by Ryan (NC) on January 22, 2008 at 18:54:47:
Todd,
I must agreed that there are better deals out there, even if you have to get outside you direct area there have to be better deals… Park ownership is a dream to most and I feel that it varies from area to area weather it makes since.
From talking to many friends from across the US I’ve found that the niche in each market is just slightly different, most general rules will apply but each area has it’s own most profitable area. Find this in your area and exploit the living hell outa it for as long as you can!
Best wishes,
Ryan Needler
Re: 1st park purchase…Help requested by all! - Posted by Dr B. (OH)
Posted by Dr B. (OH) on January 22, 2008 at 18:43:56:
Hey Todd,
I get your dilemma. I suspect, you could get a larger park in somewhere USA for $500k with your $100K down and owner financed $400K. I’m sure it would cash flow more than $60/mo.
“I may never move to the next level without getting this first park under my belt.” I fear you may not be able to move to the next level IF YOU DO buy this park. Because pickings are slim in your area, you have become a motivated buyer.
Is there an alternative, more profitable use for this property, e.g sell to apt. developer as multifamily, if zoned for it? Convenience store, storage units?
Something more sensible will come up, keep your eyes and ears open.
Happy trail(er)s,
Steve
Re: 1st park purchase…Help requested by all! - Posted by Steve-WA
Posted by Steve-WA on January 22, 2008 at 17:11:34:
what’s the upside?
Will it sell for more? Will it (can you say “speculate”) appreciate in value? I, like Stephen in TX, see no great advantage. If real property is your goal, then perhaps medium-distance ownership? Something you can drive to and from on a weekend.
You’re putting a lot of your own eggs in a pretty flimsy basket - will the owner finance any/all? That cashflow will disappear faster than someone hooking up a travel trailer toa truck(OH YEAH! THAT could happen!) if there are any problems/repairs that come up.
I say pass.
Re: 1st park purchase…Help requested by all! - Posted by Stephen in TX
Posted by Stephen in TX on January 22, 2008 at 16:39:46:
It looks like a weak deal to me. If you invest $100,000 and receive $720 per year income that’s less than 1% ROI. Your $15,000 in a CD at 5% will give you $750 per year with no effort.
good luck
rednekx caint spill - Posted by Steve-WA
Posted by Steve-WA on January 22, 2008 at 19:07:39:
". . . weather it makes since . . .
geez, bud - don’t trust your spell checker!!
;-)3