Thanks, The update on the sheet I got at the auction shows only a $10 increase on the park I choose. I do wonder why they did that? Raise the rent that is. I wondered if they did it because they didnt intend to accept the bid, but who knows. As for the maintenance crews, well we have already talked with the only guy at this park, and he says as long as his rent continues to be free he wants to stay. I did hear that the manager plans to relocate with ARC, so that is an issue, but upon ARC acceptance to our bid, we plan to try to work with her to begin understanding her position. I wonder if they will leave computers and such?
Also, prior to ARC purchasing this park, the maintenance guy ran the place alone. (And he does an excellent job) I’m kind of glad the manager is leaving, she gets top pay AND free housing. A brand new double wide that could be producing income! thanks again for the heads up!
OK Hideaway sold @6.65%=$656,264, Martins sold @ 9.35=$1,627,012, nichols sold @ 8.95% =$262,073, Pine Terrace @8%=$173,289., Scenic View @ 6%= $744,666., Shady Grove @ 7.75%= $1,093,487., Blandon @4.75%=$797,579. Morgantown @8%=$569,842., Tuckerton @11.4%=$1,171,369., Wernersville @5.25%=$334,015., Only the first 15 properties sold absolute (an undate they posted 12/10) Blandon was the 3rd parcel sold and Wernersville was the 4th, so the rest are subject to approval. The last cap rate I think was 17.5% so I would think ARC would accept them all.
Does anyone have any information on any ARC parks in south Florida. I am interested in knowing if Sunshine city was sold in Plantation, FL? Thanks for the help.
Jeff, #18 Arbor Lake sold @12.75% ($471,440), #20 Terrace Heights @ 10% ($6,164,678.) and #19 Sun Terrace I’m not sure, I got it as the 37th parcel to sell between 11.5% and 12.1% but I didnt record the exact amount. On 12/10/05 we got the update something to the affect that a newly installed senior manager had grave concerns of the outcome so they decided to sell only 15 at absolute, in order to be fair, they decided that the 15 parcels after the 15 absolute, if ARC choses not to accept the high bid, they are going to pay each bidder on those 15, $15,000.00. yah $15,000.00 to each of the 2nd 15. I bet they’ll accept since the cap rate was 8.75 for the 16th parcel and 10.6% for the 30th. Hope this helps!
Amy
I got Pine Haven NY, which is the one I really wanted. Its close to home for us, and as a ARC sub contractor, we are familar with the park. We paid 12.9% cap which was 690,000. We still have to await approval but Im assuming they will accept. (I hope). The park we do most business in didnt end up in auction (thank God) and Im hoping, since they made what 100s of millions, that they will decide to go full board with development next year. I bought bidder packets for #s 32, 33, 34, 49, 50, 56 as well as #35 Pine Haven, hoping if the NY ones went, we could get something, and luckily we got the one we most wanted. I actually thought the cap rates wouldn’t go so low, the first went for 2.75%(#7 at $32,680,435.) Our buiness is in transporting, set up and lot preporation, so we hope to cut the expenses and raise the NOI, and of course to fill the park. We have played with real estate some and have a decent portfolio, but this is a major step for us, and hopefully a retirement option for the future. (We are only in our mid 30’s) We have always lived on the edge, where most people wouldnt have taken the chances we have, but I guess thats were we find our excitment. Im still in shock we got it, but glad the chaos of anticipation is over. Everyone told us if it was meant to be, it’d happen, but when we arrived at the airport and found our flight was cancelled, and no other flights were available, instead of crying, we laughed. We proceeded to the car rental and drove the 11 hr overnight trip. We got about 3 hrs sleep, and hey, it worked out!
Amy
Posted by Tony Colella on December 16, 2005 at 16:39:28:
Amy, can you shed some light on this for me. Bear in mind that this is not a comment on any particular deal, just a concern.
I have no dealings with ARC parks but from what I have read, I noticed the following.
ARC buys a park and often pays retail or even higher. They bump up lot rents (in some cases way, way above market rate), and then find themselves in a position where vacancies begin to kill them, perhaps the reason for selling so many parks.
Now here in lies my question. If the CAP rates at the auction are provided by ARC at their higher than market rent rate, these numbers would be extremely skewed.
As most park buyers learn, most sellers tend to overstate the income, understate the expenses and lower the CAP rate to get a higher price.
How realistic are the CAP rates and stated income/expense figures? What kind of due diligence have you and others conducted? It seems as though you have some hands on experience with this park so this may not be as much of a concern for you but I have to wonder about those who are simply getting caught up in auction fever and taking numbers at face value.
GOOD FOR YOU !! Living on the edge can be fun and it is never boring !! I’m glad you got the one you wanted, I chickened out after finding out that there were 23 buried heating oil tanks on the one I most wanted. We’ll keep looking… thanks again
Tony,
Good questions. Im not so sure how helpful I can be, but each park came with all rent rolls and their list of expenses. Rent rolls, I assumed to be real, but as for expenses, I hope each buyer looked well into it.Ex.Inoticed many supplied salaries very very low. I believe this is because in some cases they devoted one manager to several parks. Abuyer of one park could not expect to pay only “$263.00” monthly to manage a park, no matter how small, unless they intend to maintain it themselves, hope to put in little hours for almost no pay. My intention was to buy the park I was familiar with, but I did have concerns that if I purchased a park out of town I would do it with the expectation that my expenses would be greater, therefore my NOI less. From some of the statements I heard at the auction, I agree that some buyers(or potential buyers) know little of the info. (I actually heard someone say “those books they are selling over there, could you buy them prior to today?”)and another who didnt realize a bidder packet must be purchased for each parcel they wished to bid on. I understand many of the people there may have just wanted to see how the auction went about, but I fealt some of the comments I heard lead me to believe some participants may not have researched much. Scary thought at the numbers these properties were selling at. I knew little about cap rates and some helpful person on this forum said "the suggested opening bids are low and irrelivant. I agree. I think the cap rates they stated were just to factor the earnest monies down you had to have. I hope most did much research, but I bet some did take it at face value, and again, a very scary thought. Our sub contractors have a theory on ARC that we live by, if it costs more and takes longer, that will be the ARC way. I believe that mismanagement is a major factor in the losses ARC has faced. It was obvious that the auction was the only reasonable way to end there 4th quarter, and give shareholders a light to the end of there tunnels. I think ARC tries hard, and there standards are high (perhaps too high) but I do see the rent raises and such could cause some major losses if they continue to raise rents without providing major incentives to remain in the communities. I always say ARC never ceases to amaze me. I had thought maybe it was never there intention to actually sell the 71 communities, but rather to just sell the 30 (which then got changed to 15) communities. Because so few were absolute, if a person or corp. really wanted a park, they would go super low to be in the first 15. Also, at $100 a packet, they prob made a fortune on the books alone. O.K. not a ton, but thats a lot of cash just from the books alone. (or maybe that money went to Sheldon Good I dont know) Sheldon Good got rich off this auction. Imagine 6.5%? It was a brillant idea.Did you hear that they changed the absolute down to 15, 5 days prior to the auction? And they decided to give $15,000. if they dont accept the 2nd group of 15 parcels to be sold? That insain,or brilliant? Or just another way to put the thought in your head that you must buy quickly at low cap rates? I hope every investor makes out well on the whole experience, and that they did there homework. I didnt really notice any big corps that bought mulitple properties, so hopefully lots of little guys got in. Im always for the little guy. I myself am curious to see what steps they take from here. Sorry to ramble! All in all, maybe the rent increases will hurt them but I believe they intend to make the parks better (adding clubhouses pools etc,) but unless they actually do make the major improvements who knows? I imagine they were desperate, and thats the reason they sold.
Posted by osupsycho (OK) on December 16, 2005 at 18:46:29:
Amy,
I also meant to tell you that you will need to be careful and act quickly when you take over your park (assuming they accept your bid) because ARC is raising the lot rents by $50 a month between the auction and the closings in all of the auction parks around here. This is causing some real problems with some of the people in the parks and I would not be surprised to see some move quickly. On top of that they are pulling out all maintenance crews and equipment so I doubt any problems will be dealt with.