My story so far... (long) - Posted by J (NC)

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by Dr. B. (OH) on February 23, 2009 at 18:35:39:

J,
There may be someone on this board who is willing to buy this park (if it is for sale). What area of NC are you in? Maybe someone here can “put their eyes on it” to give you some options.

Steve

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My story so far… (long) - Posted by J (NC)

Posted by J (NC) on February 22, 2009 at 16:43:50:

I’m just starting out at this. I tried it a few years ago, but was so tentative and scared that I didn’t do much more than spend hours driving through parks. Now I’m at it again, and I’m doing a lot better.

Anyway, there was an ad in the Sunday paper last Sunday and this Sunday offering, “38 homes in a park, $2900 each. Move or stay.” I didn’t call last week for some unknown reason, but decided to this week. I talk to the guy who said that he would sell me all of them, or as many as I wanted. I would love to buy them all, but I don’t have anywhere near that kind of money, nor do I think I could line up 38 qualified buyers that quickly.

I drove to see him today. This guy doesn’t own the park, he owns the trailers. But due to his failing health (grossly obese, in a wheelchair) he is trying to sell them. He had been renting the trailers, and so most of them have tenants in them, which I told him I wasn’t interested in. I have NO desire to be a landlord, especially 45 minutes from home. I asked which ones were empty, that I’d like to check those out. He gave me the list and sent me out into the park to check them out.

I drove to the newest one, a 1995 New Moon, 2 Br, 2 Ba. Empty. I couldn’t get into to look around, so I walked around it for a while and then started peering into windows. Finally, I was checking something on the porch when a neighbor came out.

I greeted him and told him that I’d been talking to Mr. (let’s call him Johnson) Johnson about buying some of the homes. He said, “Shoot, Mr. Johnson ain’t in any position to be talking about selling these homes. He’s so far behind on his lot rent that he’s about to get 43 trailers evicted!”

Red flags.

I start talking to the guy about what’s happening. He told me that the guy I needed to talk to was (let’s call him BJ) BJ, and that he knew what was going on with the whole thing. Then he told me that his mother, who lives one street over, had BJ’s telephone number. So I go with this guy to his mother’s trailer to get BJ’s number. In the process we talk about the condition of the park, which isn’t all that great. While there, they offer to sell me his mother’s trailer for $8500. I forgot to give them my card. D’oh!

So I went back to see Mr. Johnson and said that a neighbor had told me that there was some kind of lien on the titles, so if I purchased one, would I be able to get the title straight out? He assured me that the titles were fine, that if I bought one I would get it straight out. He even showed me where he had all the titles for them. He told me that he was still shopping around interested parties, but that he would know something else by March 1st. I gave him my card, told him I’d love to buy one, and went on my way.

What he didn’t know was that I had BJ’s telephone number, and my first step after leaving was to call BJ. BJ said that he didn’t know anything about the titles, whether they were clear or not, but that he believed that they were clear. Other than that, he told me he couldn’t say more, but he could put me in touch with Mr. Johnson’s attorney. Then we talked a little more and he told me that the issue was back lot-rent, and that if I bought the home, it would be a question of whether or not the home could stay there. According to BJ, he is in “serious trouble” over the issue of back lot-rent. By the way, I gather that BJ is the PM, and the owner lives in Seattle.

So I don’t know what to do next. If Mr. Johnson doesn’t come up with 3 months back lot-rent on 43 trailers by March the first, (that’s $35,000) I think the PM is going to do something.

So the questions as I see them with my very limited experience, are:

  1. What will the PM do if he doesn’t come up with the money, which I think is doubtful? The owner isn’t living in the trailers, so does he evict the tenants?
  2. If I could buy this one home (I can only swing one, I swear) is there a way that it could be singled out and the money go towards ITS back-rent, so that it could be kept there?
  3. If I offer to pay the back-rent to the PM, I know that I’d have to get a better deal on the trailer than the owner is most likely willing to give. That would add $825 to the price of the home if it’s 3 months late.
  4. There were a LOT of homes for sale in the park. I am hesitant to buy given a) the impending problems with the rent, b) concern that any price I could give to buyers would be grossly over the other trailers in the park.

I think my plan of action is to wait until Mr. Johnson calls me, if he does. If, after the 1st, I haven’t heard anything, I think I’m going to call BJ and ask him what happened. If they had to evict, I’ll put an offer on what’s available now. What do you all think?

Thanks,
J Lewis

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Re: My story so far… (long) - Posted by joe–ga

Posted by joe–ga on March 16, 2009 at 10:54:01:

I would wait this deal out till the p.m. took them all in for back rents… then buy them off the p.,m/

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Re: My story so far… (long) - Posted by babacar

Posted by babacar on February 27, 2009 at 04:52:36:

Hi J,
This is a great opportunity for you to learn the business, but not necessarily do the whole deal.Ask as many questions as you can think of to the PM and Mr Johnson.Target one or two MH that are empty and do not require a lot of work and look Mr Johnson in the eyes and offer him to relieve him of his headeaches by taking over those homes in return for paying the back lot rent. His options are very limited at this time. On the other hand ask the PM for a discount on the back lot rent if you can catch up for those homes.
Let him know you will fix the homes, find a qualified buyer who will take care of the lot rent.
Like Greg said, the way you profit is by being the problem solver.I believe you can do it even with very little experience. Just don’t bite more than you can chew.
If you decide to pass, still monitor the situation and learn from it.
Babacar
404-379-7188

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Update, sort of… - Posted by J (NC)

Posted by J (NC) on February 23, 2009 at 07:47:28:

Thank you, everyone, for your help and advice. Iâ??ll try to answer your questions as best I can, on the understanding that I am very new at this. Further, the park in question is in an area that is geographically not too far from my usual â??rangeâ?? but in terms of cost of living is quite a bit lower.

Ok, to the questions/comments.

  1. What percentage of the park is empty now?
    Of the 43 that this guy owns (out of 63 in the park), he gave me a list and there were 7 or 8 that were empty. Of course, if the PM evicts all those tenants, then thereâ??ll be a LOT more empty. I donâ??t know that heâ??d do that, but I can foresee that as a possibility. Of the ones that he didnâ??t own, I saw a lot of â??Rent to ownâ?? signs out front.
  2. What could I realistically sell each home for?
    Well, its hard for me to say based on my inexperience. However, Iâ??ve read DOW enough to know that there is plenty of cosmetic work to be done on these. The skirting would need to be replaced on many of them, paint would do a lot, there are some roof problems. The homes themselves range from 1970 to 1995, from 2 br, 1 ba all the way to 4 br, 1.5 ba. Iâ??d say that as is, they could probably be sold for $5000 to $7000. But again, itâ??s hard for me to know.

As for the importance of March 1st, I think thatâ??s when lot rent is due. At that point, then I think the PM will proceed with whatever it is heâ??s going to do.

The PM is doing all of the work on this one for the owner, who lives in Seattle, WA. I think any deal that could be made would be through the PM. I donâ??t have anywhere near the money to put in an offer for the park, nor for more than 2 or 3 trailers at most, and Iâ??d be straining it at that point.

So if waiting for the trailer owner to call is a bad idea, Iâ??m trying to figure out what my next move should be. I think Iâ??m going to call BJ (the park manager) back and ask him the following questions.

  1. What happens to the tenants if trailer owner doesnâ??t come up with back lot-rent by the 1st of March?
  2. What happens to the trailers themselves if trailer owner doesnâ??t come up with back lot-rent by 1st of March?
  3. Is there a way that I can buy them from he the PM?

I think this deal is a little too big for me. And a little too complex given that I donâ??t know much about this business at all, other than what Iâ??ve read in a book. I think Iâ??d be happiest if I could get one and flip it on terms. The idea of 43 all my responsibility is daunting, especially given my other responsibilities (I have a full-time job, a wife in law school, and a 3 year old child. I canâ??t be running off to a trailer park an hour from my home to deal with this too often.) But I think I will call the PM and ask him my questions.

Thoughts? And once again, I really appreciate everyoneâ??s help!
J (NC)

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It sounds like the owner… - Posted by Greg Meade

Posted by Greg Meade on February 23, 2009 at 05:16:14:

is not a very good money manager.

This is a prime time to ask the Owner the question,“Is this Park for sale with some owner’s terms?”.

Or ask for an Option on ALL homes for 2-3K and sell them one at a time with titles released as units are sold. This will require park owner to get on board and a freeze on new lot rent. Perhaps 1/2 of money from sales would go to park Owner to satisfy back rent due.

Your idea to wait for a call is probably not a good one. No one will do this for you…you will need to take action and put this together. Principals have had months to resolve this and haven’t. You will be paid by solving THEIR problems…could be a very good deal for you.

Greg

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Hmmmm - Posted by Dr. B (OH)

Posted by Dr. B (OH) on February 23, 2009 at 04:11:19:

J
This could be a good find or a bust or both. Because BJ “couldn’t say more” and to talk “with Mr. Johnson’s attorney”, it sounds like the park is looking forward to evicting Mr. J’s trailers and ending up owning them, themselves. Court date must be March first. Try and make it there yourself to watch.

Try and butter up to the park so you can get one or more of those homes.

Steve

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Re: My story so far… (long) - Posted by rise2it (VA)

Posted by rise2it (VA) on February 22, 2009 at 22:23:51:

Very, very interesting - IF you can work out the pitfalls.

Let’s start at the end, which involves two questions:

(1) What percentage is the park is empty now?
(2) What could you realistically sell each homes for?

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Re: Update, sort of… - Posted by rise2it (VA)

Posted by rise2it (VA) on February 24, 2009 at 24:03:58:

J, I agree that sounds as if even trying to do one or two deals there could you tons of problems you may want to pass on for now, until you get more experience.

Nevertheless, doing a little investigative work at this point (and following what finally does happen between these parties) is going to be a great opportunity for you to learn.

In the meantime, you can search for some ‘easier’ deals…trust me, nothing wrong with ‘easy’.