Finance or Sell? - Posted by Jim Billings

Posted by Tony-VA on December 28, 2002 at 06:26:15:

Your exit strategy depends upon what your trying to accomplish. All that you mentioned are legit, but what are you trying to do?

  1. Create Cash
  • Rent the land and homes and be a long term landlord
  • Sell only the homes and rent the dirt and be a long term, low maintenance, lower cashflow landlord
  1. Create Equity (Net Worth and Cash)
  • Keep the park as is, fix it up, get the lot rents up. Hold the park for at least 12 months then get a new appraisel at the new income value.
  • Sell the entire package at one time and reap the reward.
  • Or continue to rent until you desire to sell the whole package.

The common feeling here is to put little value on the homes themselves or to at least value them separately. I don’t agree with the former any longer but can agree with the latter.

Those homes are creating a cashflow that is real and can be marketed in your sale. The cashflow from the homes does take more effort than simply renting the dirt so you may want to value that income less than the rental income from the dirt.

Smaller parks such as this will not support a full time park manager so you will be aquiring a job. How much of a job depends upon your exit.

By cleaning up the property and getting rents up to market, you can often create a large amount of equity in one year. Cashing out on this may very well be a handsome reward for the ‘job’ you had to do for 12 months.

Some of your exits strategies may be limited by the structure of your financing and the price you paid for the properties.

Best Wishes,


Finance or Sell? - Posted by Jim Billings

Posted by Jim Billings on December 27, 2002 at 22:31:01:

In escrow to purchase 25 legal lots 25x150 w/13 older mobile homes in Niland CA. Currently have 10 tenants rent at $300 month. Sell to tenants and carry back financing or sell the entire project?