Details on My Park Deal - Posted by PeteH(NYS) – notice not (NYC)
Posted by PeteH(NYS) – notice not (NYC) on July 06, 2000 at 23:22:46:
First off, thanks to my friends who have responded with kind words. If I had as many friends up here in the boonies as I do online, everything would be much easier. (Thank you David, Jack, Drew, and especially Ray.)
So. Found a listing on LoopNet that looked interesting; called the broker; broker faxed half an inch of listings well on either side of my criteria (~half a mil, +/- 50 homesites with room to expand). Drove upstate to see this one, which was significantly more charming than other parks I’ve seen. Faxed the broker an offer that valued the existing 47 sites at about a 13% cap, with him financing the bulk at 7%, and which included a two-yr option for the other 80 (!) acres at $1250 per. We went back and forth for a few faxes, and then he laid out his terms: basically, he wanted to finance the whole thing at 8% (so he could avoid cap gains taxes), provided somebody come in with enough of a down to cover his remaining mortgage (~$80K) and his broker’s fee (7%). Here’s how the numbers looked:
47 spaces @ $225, 12 vacancies
Op expenses ~$38K
80 raw acres including ~45 acres of woodlots w/lots of harvestable hardwood
Owner willing to carry $500K
What we ended up at:
$687K purchase price
$562K owner carry @ 8%, 20yrs, 15-yr balloon – and he gave me one year of interest-only payments
Best feature: minimum $100K worth of hardwood currently harvestable; my assumption is $120K, which means I essentially get my down payment back in October. (I could take the trees down now, but I’m going to wait for leaves to fall and one swampy area to dry up.)
Goal: fill 12 vacancies by Labor Day. I’ve already got three spaces sold, two of which may end up buying homes from me. (The hassle being qualifying for floor financing from Conseco so I can get actual homes onto those lots in order to better market them. First alternate strategy is to locate repos newer than 8 years for $5K-$8K apiece and sell them on terms. Second alternate is to make friends with the local dealers who don’t own spaces and get kickbacks for the new homes they sell that I invite into my park.)
Once all my vacancies are filled, I should end up netting about $2900-$3100 per month after I pay my manager to take care of all the tenant problems/issues/questions I’m already weary of (and it’s only been six days). Next summer I’m looking to double the size of the park. Preposterously optimistic? I’d have thought so, but shortly before closing I received the news that an 82-pad park six miles away is scheduled to close next year. Even if I take just 30 of those families (they’re not all blue-ribbon credit risks), I should easily be able to fill 40 spaces of a 48-space expansion. Once I’ve got 95 spaces filled, with a 2% occupancy (this is by far the most appealing park in the county) and 28% expenses, I should end up netting roughly $11K per month. And that’s why I decided to buy a mobile home park.
Much thanks to Ray, Terry, Ed G., Doug O. and all the folks here who have been so generous with their advice and attention for helping encourage me to follow a plan that, somebody up there willing, will prevent me ever having to work for an hourly wage again. Which isn’t to say that changing the oil on the Wheel Horse tractor and mowing 40 waist-high acres is any picnic.