Posted by Tyler Conlin on January 10, 2009 at 22:20:17:
Wise comments. Thanks. I have read many times that parks will pay 2-3k to have a home moved in but it never crossed my mind with this deal.
Risk vs Reward - Posted by Tyler Conlin
Posted by Tyler Conlin on January 10, 2009 at 10:07:01:
Here’s a deal I recently came across. There is a small park about 200 mi away that has a new owner. The previous owner let it get very run down. The new owner is a RE agent who just happened onto the deal. I don’t think she knows much about mobiles. The park was half filled, or half empty, depending on your point of view. The new owner wants to fill the park back up and flip it. It is in a small town, pop 8k, that recently had a HUGE oil BOOM and is bringing in the money. They are renting RV lots for $500, much more than the big cities here. The smallest apartments are renting for $1000k a month, and fill within 24 hours. Most of the oil workers live there during the week and are home in the weekends.
So the new park owner responded to one of my Lonnie ads and wants me to put 4 homes in her park. She is buying them from me with my financing. I’m not selling to the occupants.
She already has the park listed for sale and I’m sure it’s for at least double what she paid 4 months ago.
So I would be selling 4 homes to one person and would have to move them all. That seems like a big risk. However with the owners intention to just flip the park I should be able to get a high monthly payment. Probably 600-800. I donâ??t think the owner is interested in cash flow just getting homes in so it can be resold. She is renting the other homes in the park for 1k. So she can easily pay me 800 and still have a little extra.
She has already told me she would pay 15k per home. It doesnâ??t matter the year or anything. I can probably get them moved and set up for 5-6k each. That is a pretty good markup. I should be able to recoup my costs pretty quick. And when the park sells they would all be paid off.
I see my costs at 20-25k and return of 50k+. I could use my 25k profit towards buying my own park someday. However it could be risky to sell 4 homes to the same person. I have thought of having the park put up as collateral until the homes are paid.
Those of you more experienced please give me your suggestions.
Re: Risk vs Reward - Posted by Dr B(OH)
Posted by Dr B(OH) on January 10, 2009 at 18:43:39:
Tyler,
It’s tough to be a newbie (to parks)and come across what you think might be a deal. Ask me how I know. Good idea to post on here. I would follow Briton’s advice and learn as much as possible from the archives. The responses you receive from this post (no matter how many) will not be enough to give you confidence in this field.
If you really want to buy a park Tony and Scott’s or Cory and Steve’s MHP bootcamps are essential.
Where there is a BOOM there follows a KA-BOOM. The question is when. Could be 6 mos. could be 40yrs. I would proceed with some caution. Your idea of requesting equity is certainly reasonable. If she’s not looking for cash flow and getting $1000/mo/home, don’t ask for $600-800! Keep YOUR risk low, ask for $5-10K down to cover many of your expenses and get $1000/mo so they are paid off quickly. Some parks are paying $2-3000 for anyone to move a home in.
Once you get a number of these done, if you like it, as Tony says “rinse and repeat.”
Steve