Mobile Home Lot Development - Posted by Rick OK

import · October 26, 1999, 3:02pm

Posted by Eric C on October 27, 1999 at 24:11:27:

Hey Ray -

I’ll tell you what I was doing in NM. I was picking up a check – a very nice check. Or as Terry might say, I was “moving some assets around”.

In 1992, this part of the country was in deep trouble and all kinds of assets were selling cheap. I was able to get a deal on a 350+ unit apartment complex that appraised at 5.8million for 2mil cash. The complex also had a 300 person waiting list – can you see where the rents might be a tad low?

Anyway, I went to a small pension group for the 2mil and we settled on a ten year (or less) deal at 12% interest only. Then I sold a contract to manage the apartments to a management company (I kept that money).

One more thing, the pension plan and I agreed to split any increase in value of the property at future sale 50-50 (over their 2mil). Why did I do that? One simple phrase, “no personal liability”.

If I screwed up, they got the property with built in management at a great discount. On the other hand, if I performed, they got a great return (very safe) and the prospect of an even greater payday down the road.

That property closed a week ago for 8.4mil. I am a very happy guy – still chubby, but very happy. The pension group is also happy – almost unbearably happy.

So,to sum it up for those following along at home: it was a nothing down deal (always popular here), no management headaches (I really like that), no personal liability (my favorite) and participation in any future appreciation (at least as well as L/Os).

Oh, by the way – the pension group sheltered their gains in the pension plan (no tax) and I took mine in a 1031 exchange (no tax).

Yours,

Eric C

PS - I’m still anxious about that book!

import · October 26, 1999, 3:02pm

Mobile Home Lot Development - Posted by Rick OK

Posted by Rick OK on October 26, 1999 at 15:02:03:

First of all, I would like to express my appreciation for the follow-ups that I received on my previous post. Being new at investing, I am still researching various avenues that might allow me to remain in my small town atmosphere, and yet still let me build my asset column. At this time I would like to request any feedback on mobile home lot development in small towns. Has anyone had the opportunity to buy 2-10 small lots and develop them for older (10-20 yr. old) mobiles for possible Lonnie deals. I do realize that moving mobiles can be quite expensive, but could the long term effect of actually owning these developed lots offset this cost. These lots can be purchased for around $500-$750 each. I would apprciate any comments relating to items that must be present in order for these lots to be considered developed. Zoning is not an issue in this town, and city water and sewer are available. Any comments would be appreciated.

Thank you,

Rick OK

import · October 26, 1999, 11:08pm

Re: Mobile Home Lot Development - Posted by Eric C

Posted by Eric C on October 26, 1999 at 23:08:03:

Hi Rick -

I can’t begin to tell you how many of these small lot combinations/mobile home parks I’ve passed up over the years. Now, I know better.

Your situation is very similar to my own. In much of my area, there are few, if any restrictions against development of any kind. Utilities are cheap and easily available.

I recently attended the MH workshop in Charlotte and was greatly impressed by all three presenters. In particular, I went to hear Ray Alcorn on the subject of park development. Although, I didn’t hear as much on the subject as I would have liked, Ray was gracious enough to answer many questions in between sessions.

To be fair, development isn’t a subject that can be covered in a day’s presentation and I am anxiously awaiting Ray’s book. Hear that, Ray?

Anyway, to get back to your question, I’ve purchased property in both large and small cities. But I do have a slight bias toward smaller communities because of the lack of red tape.

Recently, I purchased a small apartment complex (8unit) from a local bank for cash. After some cosmetic and mechanical (air conditioners) fixes, I haven’t had to put another dime into the project. It’s providing me with excellent cash flow and I’ve already had offers to purchase the building at a substantial profit.

At the same time I bought the apartment building, I turned the bank down on a 25 unit MH park. The park was in reasonable shape, with city utilities, and it came with a 3/2 stick built (brick) house. Total price – $ 40K. And the bank would have financed the entire package at a great interest rate and amortizations. After Charlotte, you can believe I’m kicking myself.

My exit strategy is a little complex, but I’m working on it. The basic idea (even with the apartment building) was to acquire assets that could be flipped to an individual’s pension plan. The asset would have to be attractive, but not so large (in price) that it was unreasonable. I’ve done this in the past and it’s worked well for me. The MH parks, properly presented should do even better.

Good luck,

Eric C

PS - I’ve also found that the small towns often have large (Ok, large for them) groups of lots (and other properties) that have been condemned for back taxes. Not all delinquent properties (at least in Texas) go to tax sale. Not all properties that do make it to the sale get purchased. I’ve bought land in the past for as little as $1. (not very good land, but I can tell you that I did more than double my money!) Seriously, check it out.

import · October 26, 1999, 11:46pm

Monopoly ain’t just a board game… - Posted by ray@lcorn

Posted by ray@lcorn on October 26, 1999 at 23:46:04:

Hey Eric!

Good to see you back. I hope NM went well. Don’t know what you were up to but will bet money you made money! Folks, this guy walks the walk.

But, even the pros miss sometimes…

… as in you TURNED DOWN 25 spaces for $40T??? WITH financing??? Can you say BRAIN FADE??? That is $1600 per space, without the house. I can’t put in the utilities for that. That is as good a ticket to the wish-I-had club as I have heard in a while. No wonder you paid such close attention in Charlotte.

Coming down the home stretch on the book, thanks for asking, but you’re gonna be disappointed because there is nothing on development. I found that as in Charlotte, the subject really has to be a separate discussion. Email me your telephone number and maybe we can cover some things you need.

Keep those posts comin’… I love to learn too!

ray

import · October 27, 1999, 10:23pm

See Ray… - Posted by David Alexander

Posted by David Alexander on October 27, 1999 at 22:23:40:

Splitting a 50/50 back end doesnt have to be such a bad idea.

YOW! If my deal only goes 25% that well I’m more than happy.

David Alexander

P.S. I should have my package completed Monday, getting closer cant wait to get this deal done.