Posted by Tina H. on June 12, 2005 at 01:56:03:
We did locate the owner. She said she was letting it go back. This lady had an auction before she took off. Leaving damage to our property and a hell of a mess that has had to be cleaned up several times because items were left outside and the neighborhood dogs keep getting into it and strowing it among the property. It has now acquired another months rent and is starting to be a burden.
Mobile Home Park Evaluation/Help - Posted by Gray
Posted by Gray on January 05, 2005 at 10:11:05:
We have the opportunity to purchase a run down mobile home park on 9 acres( about 75% useable) that is a foreclosure. There are 35 developed spaces with city water/sewer(included in rent) and power(tenant resp). There is significant undeveloped space. The park is in the city limits of a southeastern mill town of approximately 30,000. There are several other run down parks within 3-5 miles of this park. The park is in the end of a lower middle class residential neighborhood consisting of trailers on owned lots and stick built houses(about 50/50). 25 lots are rented month to month for $175/Mo with 22 being current on the rent. There are 5 long term tenants that have been in the park over 10 years. The park is trashy. Some of the trailers look like antiques and most all of the trailers are in a state of disrepair and are visually unappealing. There are non-operable vehicles and also some abandoned trailers that are burned or vandalized. The police advise they are called to the park almost daily. The infrastructure of the park is poor. The roads appear to have been asphalt at one time but now are full of pot holes. The water lines are leaking or the tenants are selling water. The water bills have been running over $3000 month for some time. The park currently has a negative cash flow because of the water situation. We can purchase the park for approximately $2500 per developed space. This also is around the FMV for the raw land. We can obtain 80% financing. We would like some thoughts on trying to rehab this park. We would anticipate re-doing the water lines and installing seperate meters. We would like to eliminate most of the current tenants and replace them with tenants who have newer trailers. We also would have to re-do the roads, add landscaping, and make other visually appealing improvements. Is this a viable rehab project or would we be better off to develop something like this from scratch? Any creative options for what we have described? Thanks for your help!
Re: Mobile Home Park Evaluation/Help - Posted by Mike Johnson
Posted by Mike Johnson on January 08, 2005 at 05:47:48:
We purchased a run down park and have had success. The seller is at a disadvantage because he/she knows their park is in poor condition. This makes it easy to push for more owner financing and a lower price. Especially when you have an expert or two give you an estimate on repairing the water leaks and price to put in meters.
Once you buy, take care of the water leaks and install meters and then start charging tenants for their own water/sewer. This will reduce usage by half immediately and tenants will report leaks that are your responsibility, allowing you to fix them, saving YOU money.
The park we bought paid for tenant’s water and immediately making the change to meters and charging tenants for their water saved us over $1,000 per month, FOREVER.
Nothing you do will create more return than that.
Then identify a tenant (or recruit a new one) to be park manager in exchange for free rent and an hourly wage for fix-it duties made after an agreed upon number of hours are exceeded. This gets you out of showings, collections, domestic disputes and dealing with repairmen. Quality of life makes this expense worth it!
This manager will also keep the tenants behavior in line so you can identify drug and crime problems and get rid of them. Let the police know your plans to evict any drug/crime problems and they’ll appreciate and help you.
Create a new lease that has park rules with drug and crime clauses that cause eviction. Add a catch-all clause that “eviction can occur if you prevent any other tenant from full enjoyment of the park environment.”
Then start plowing some of the positive cash into some visible improvements like filling the potholes, painting park-owned structures and hauling off trash and burned/abondoned homes.
Then issue “appearance standards” to current tenants and give them a reasonable time to reach them, and maybe create a program where you will subsidize the paint, mulch, plants, etc. Your efforts on the park appearance show the tenants you are serious and are doing your part.
Then add “Lonnie Deals” with a portion of the positive cash flow. Make sure you develop park rules and appearance standards for the new tenants. This will increase revenues, fill lot vacancies and give you a core group of tenants who have the standards you’re trying to cultivate.
Other tips: close the deal on the fifth of the month to get maximum pro-rated rents and the security deposits. If owner financing is provided, try to get your first payment delayed 3, 6 or 12 months to increase initial cash flow for repairs. Justify it by the fact the owner is a getting a large check from your primary lender at closing, and you need the money to get the repairs (especially the water) made quickly.
Get the seller to pay for a survey and at least half the appraisal.
Finally, in your new lease, add a late fee of $25 at five days late and $3 PER DAY (if your state allows) for each day late after that. This greatly reduces lates.
The upside of your deal sounds tremendous.
P.S. New paint makes old trailers look amazingly better and is pretty inexpensive when you use $8-$10 an hour labor.
Re: Mobile Home Park Evaluation/Help - Posted by Chris Reuman
Posted by Chris Reuman on January 07, 2005 at 24:47:11:
Without knowing more details, I like the numbers and the upside potential. You want to check out the demographics and the competition. If that checks out, I would buy the park. First, go and talk to each of the residents that have a nice home and a nice yard. Then go to all the residents and ask them some general questions about the park. Of course they are angels and everyone else is bad. You need to build a team of allies in the park. If you find one or two people that are normal and really take care of their place, make them assistant park managers. Maybe take $50-100 off their rent. Unless you are going to live in the park, these people will be invaluable. Identify the problems and get them out of the park. Of course fix the water problem and install individual meters. Then move in some Lonnie deals and stack up the notes.
Lastly, make sure you have the money to do the upfront repairs. I would stage the repairs in phase, as cashflow increases. Fix water, cheaply patch road, get deadbeats out, bring in Lonnie deals, then you can replace asphalt and landscaping.
Best investing, Chris
Re: Mobile Home Park Evaluation/Help - Posted by Nathan
Posted by Nathan on January 05, 2005 at 13:32:09:
Wow, I wish I could find a park in my neighborhood for $ 2,500 a space. You would have to do your homework, find out from the city if it is OK to develope the rest, and if they are behind you they have probes to find your water leaks for you. Why are there so many run down parks in that area?? What is the average rental house in that area?? What is the average income there? Why are the police called often, is there some old trouble maker in there or are there drug dealers or meth labs there?? Ask the long time tennants what they would like to see or their ideas. Fix the water leaks first. The first thing you gotta do is take a servey and find out why so many run down parks, there could be a good reason. Thats .2 cents It could work if you are willing also.
Re: Mobile Home Park Evaluation/Help - Posted by Tina L. Horton
Posted by Tina L. Horton on June 03, 2005 at 16:16:29:
We own a small mobile home park. We recently had a renter move out, But she abondoned her mobile home. Can we claim it as our own and rent it out? What steps do we have to take?
Re: Mobile Home Park Evaluation/Help - Posted by Mike Johnson
Posted by Mike Johnson on June 03, 2005 at 21:59:40:
I haven’t had to deal with this but you can certainly post a lien on the past due lot rent that is accruing.
Can you get a hold of the owner? If so, you can offer to trade the past due rent for the title to the abandoned trailer. If the soft approach doesn’t work, you can have a lawyer send a collection letter that threatens legal action. THEN make the offer to the owner to avoid this by trading the trailer. If you CAN’T contact the owner, then I’d suggest getting advice from a lawyer that specializes in trailer parks. No matter what the condition of the trailer, if you can gain ownership, you gain a permanent income stream either by rent or by sale and carrying the note. And now you have a new clause to add to your lease in case this happens to you again. Good luck.
MJ