Posted by james(CA) on September 09, 2007 at 01:32:58:
Hi Jacque,
Can you share all steps involved with master lease option on a park? Besides you and owners, do you need witness, notary person, and where to close the deal-attorney or escrow office?
Ernest said to put option in ROTH IRA, could you or some elaborate this - is it for a buyer or a seller?
Thanks
James
Need help structuring first Mobile home park deal - Posted by Roy (AL)
Posted by Roy (AL) on February 17, 2002 at 15:38:05:
I have recently come across a 12 lot mobile home park. Every lot is occupied. There have been problems in the past with the tenants skipping months pay and causing some disturbances. The lot rent is 85 a month which seems incredibly low to me. The mobile homes in this park are owned by the tenants and are in horrible condition for the most part. The park’s asking price is $32,000. However the seller is motivated he is selling it to pay off his new mobile home I do not have all the details as of yet. He just wants to get out from under this trailer park since he is not making much money and it has become nothing but a hassle to him. I am thinking about possibly offering a lease option for the amount of his mobile home payment. I am also aware that the rents would have to be raised quite a bit in order to justify market rates. I have no experience with mobile home parks and am still in the learning phase. I am asking for help either structuring this deal or tips on what to look out for when checking this place out. Any tips that anyone could give on this deal. This deal looks like a possibility to me but there are a few things about the tenants that concerns me as far as rent payments. Also I do not have any information on expenses as of yet. And I know there is a lot more things I need to find out before I can actually come up with a game plan. Also if anyone has any forms that may be useful for this deal please do not hesitate to email them to me. Also I failed to mention this is on 5 acres of land. The road is deteriorating and it is generally run down.
Roy
Re: Master Lease – with option to buy - Posted by Ernest Tew
Posted by Ernest Tew on February 19, 2002 at 07:40:17:
Ordinarilly, the “master lease” or “net lease” is the best approach when acquiring rental property. This is especially true when acquiring rental property that has a lot of upside potential.
However, of equal importance, you should get an option to buy when leasing. Ideally, the option should be held in a Roth IRA. That way, all the capital gains can be completely tax-free, providing a few simple rules are followed.
If you or other readers would like to have some excellent Net Lease and Option forms, or learn more about Roth IRAs, send me an e-mail.
Need help structuring first Mobile home park deal - Posted by Jacque - WA
Posted by Jacque - WA on February 18, 2002 at 11:20:41:
Hi Roy,
You need to find out what the numbers are (income & expense sheets) in order to run the figures on this park.
I agree that $85 dollars does seem incredibly low, however, I hear from a friend that you can still purchase homes for $5000 in Alabama (as told to me with a southern d-r-a-w-l)…Have you checked into other parks in the area to see what they are charging - this may be the norm in your area or it may be way under market (a good thing for you).
A Master Lease on the park is a great idea - I just had one accepted under a Master Lease myself and will certainly try that method again as it requires so very little to purchase the park initially while saving your cash for capital expenditures and park turn around.
Roy, if you want to send me the numbers I would be happy to help you out in analyzing the deal. Also, if you need a partner, let me know…I know someone in Alabama who is always doing joint venture partnerships with folks in businesses.
Jacque - WA
Re: l/o - Posted by james(CA)
Posted by james(CA) on October 19, 2007 at 23:05:03:
How did you convienced a seller to take lease option? Can you share specific approaches, leading questions, what to ask and not to ask? Thanks
first Mobile home park deal - Posted by Ben
Posted by Ben on February 19, 2002 at 06:22:26:
Hi Jacque,
Where can I learn more on the master lease? Thanks in advance.
Ben Spofford
Re: first Mobile home park deal - Posted by Jacque - Wa
Posted by Jacque - Wa on February 19, 2002 at 12:36:27:
Hi Ben,
My Master Lease with Option to Purchase is a combination of materials from Ernest Tew, Commercial brokers, my own specific items that I wished to include with the blessing of my attorney.
Ernest Tew, above, has offered to provide you some information…you can take his “as-is” or simply add and delete appropriate Addendums for your own state and/or wishes.
The other method to purchase parks is utilizing “Subject To” with some seller financing thrown in for the difference remaining. I had some successs with this - this past weekend. If you do this there are several things you will want to make certain are addressed within the contracts.
Right of assignment of contracts.
First Right of refusal to purchase the note if Seller should decide to sell.
Liquidated damages agreement
Release of liability on assignment.
Non-Recourse for loan.
Seller?s warranty of any undisclosed liens.
Here?s one that I took out of Conti?s book ? Three for One deduction of money owed for you payment on any undisclosed liens ? ??.at Borrower?s discretion pay these liens and have this money count as money received by the Note Holder. For every one dollar ($1 dollar US) paid by the Borrower to cover any such liens, borrower shall receive a three-dollar ($3 U.S.) credit towards any money owed to the Note Holder under this agreement. Love that statement!
Sellers carry of contract and how specifically the interest payments are going to be addressed (i.e. interest only payments, quarterly payments, annual payments, etc.)
Balloon clauses, if any.
Proceeds from any insurance claims should be turned over to you ? can be used to take off from the down payment.
Legal costs clause ? I have each pay their own attorney?s fees and I noticed in some others materials they do the same.
Also make sure that the Seller?s note does not include:
Late payment penalties ? or at least a small or minimum amount in case you get into trouble.
No Due on Sale clause ? this will make the note more valuable to you?in essence you can assign ?owner financing? to the new buyer, if you wish.
Good Luck to you,
Jacque - WA