Anyone buy an old run down park and rehab it? - Posted by Dee-Texas

Real Estate Investing Single-Family Homes
#1

Posted by ray@lcorn on November 14, 2000 at 09:07:22:

Dee,

Multiple offers work to uncover motivation. If the owner wants cash, wants out, and wants both fast, then a multiple offer of say $18T with terms coupled with a cash offer of $13T may be the wake up call she needs to move off the asking price. Whether she would care about an explanation of the current negative cash flow is a function of her motivation. If she isn’t motivated, knows the value of the dirt, and is willing to wait, then your offers won’t be accepted. In that case, start raising the cash offer in increments of $500. To tell you the truth, if it is a deal at $15T, it’s probably still a deal at $16T, or $17T…

Like an auctioneer friend of mine says when bidding stalls… how do you know?.. how do you know that it’s worth 15 and not 16? Answer? You don’t. This is a property you’re buying on the “come”. It’s not valued on its income, but rather on the cost of replacement. From the info you have shared, it seems that it would cost more to build this park than to buy it. But be careful you don’t put yourself in a bind… the negative cash flow will have to be funded, so put some time into thinking about how much negative it will be and for how long. Plan your work, and work your plan.

ray

#2

Anyone buy an old run down park and rehab it? - Posted by Dee-Texas

Posted by Dee-Texas on November 10, 2000 at 21:17:12:

Hello All,
I’ve posted a little about this park before.
This is a 24 space park, spaces are 42x90 approx. It’s a beautiful park with lots of pecan trees with a creek nearby. It doesn’t flood-checked today. It has a cellar and two water wells. The woman that owns it lives out of state. She doesn’t advertise or even see the place. She doesn’t want this any longer. A caretaker looks after the RV spaces for her and sends the money in. I know the guy, he’s one of the hard-working, honest ones. So she’s getting all of her money. The electrical boxes need some updating. You could do that one at a time as you need them. Sewer and water is good. She gets $100.00 per space that includes sewer and water.
Get this only 6 spaces are rented. There’s another park in town and it’s full, they rent their’s for $300.00 per month with ALL utilites included. I asked the caretaker why this one isn’t full and he said that no one knows about it unless they have lived in this town for a long time. It’s sort of hidden on a quite street.
I figured with this park being paid for and the lot rent, water, sewer, taxes and insurance that it doesn’t even break even NOW.
The town is small 5,000 but it has 3-4 industries. I could Lonnie mobiles and then make money on the dirt…
When I find a good deal on a mobile and it has to be moved, I don’t have anywhere to move it…this would solve that problem. BUT…am I buying an alligator?
She wants 20K
I think yes but then I get second thoughts.
BTW if I do this, I’ll need someone to send me some park rules to get started.
Help!
Dee-Texas

#3

Re: Anyone buy an old run down park and rehab it? - Posted by Claire

Posted by Claire on November 23, 2000 at 02:43:56:

Dee,
I read your recent post of 11/22 about “2 city lots w/ mobiles” where you mentioned “BTW the mobile home park that I have been working on is a no go…Woman isn’t as motivated as SHE thought. Still hanging on to her price…” If this MHP is really such a good deal, even @ $20,000 (as one posted reply suggested; ie. $1,000/space is great), perhaps we could collaborate? I live in NW Harris county outside Houston, south of Tomball. Please respond. Thanks.
Claire

#4

Re: Anyone buy an old run down park and rehab it? - Posted by ray@lcorn

Posted by ray@lcorn on November 13, 2000 at 12:02:42:

Dee,

From what you’ve described I see nothing but upside in this deal. I would hope you couold get some owner financing to acquire the park, and would try to provide for a subordination agreement for a future loan that may be necessary to rehab the place.

At less than $1T per space, the dirt has to be worth that, to say nothing of the wells, septic and whatever kind of improvements are there.

Rules are easy. See if you can get the deal on contract and we can get you some rules by email.

ray

#5

Re: Anyone buy an old run down park and rehab it? - Posted by SteveC_GA

Posted by SteveC_GA on November 12, 2000 at 22:18:53:

Hi Dee,

I just purchased a run down MH park with about 69 spaces. It sounds like the type of park you are looking at. This park has a lot of potential and should be turning in some good numbers once we get it cleaned up and running properly. I was able to purchase this park at a deep discount, which is the main reason I took this project on since I have a full time job already. Be ready to spend some money up front in capital improvements and possibly MH repairs. Also, you must have a capable and reliable manager to make it work, at least I do.

I’ve been taking several photos and once things slow down, I plan on adding a section to my website at:
www.4RentToOwn.com showing the evolution of this MH park. It’s definitely a different ballgame than the SFR market. If I remember right, when we met in ATL last year, you were primarily involved in SFR’s.

One things I might add is that Ernest Tew helped me acquire this park, you should run the numbers of your deal with him to make sure you aren’t missing anything.

I’d be happy to help, just let me know.

Good luck,

Shooter

#6

Re: Anyone buy an old run down park and rehab it? - Posted by Dee-Texas

Posted by Dee-Texas on November 14, 2000 at 07:46:20:

She said she won’t hold any of the note, just wants out.

I’ve been talking to her for about a month now. Getting information and checking things out. She’s been offered $10K (her asking price is $20K) but she didn’t take the offer.
I think that her key is the handyman…she doesn’t know that he’s thinking about quitting, and I don’t want to tell her, since that might muddy the deal. I was thinking of offering $13K and pay $15K, quick close
what do ya’ll think of a muliple offer?
I don’t want to get shot down in the very begining.
Thanks Ray and Steve for your help.
Now new questions.
Dee-Texas