Hello everyone, I am a new investor looking at a trailer park (28 units) owner asking 350,000 net 80000 a year What would be a good way to structure this to keep my out of pocket to a minimum. Sorry I dont have any more info as far as the owners needs but maybe some of you could give me a starting point to work with and I will talk to the owner monday when he is back in town. I feel akward calling myself an investor as I have not made one deal yet.But I giver heck reading this forum stuff.Mybe I can get over the hump soon and put together something to boost my wallet and my investor wantabe inner man. What would you do if you were me, oh wait thats crazy, If you were me then Id be you. Then I would use youre money. Oh – sorry just got carried away there ;D
I wish I could help you, but I’m a wantabe also. ;D
I did enjoy your post, and hope someone on this forum will give you some help.
I did find this link to a forum with some mobile home info. It might have some help.
http://www.mastermindforum.com/phorum/list.php?f=14
Regards.
Mark,
I am in study stage at this point. You might want to buy some good book/course like from Ray Alcorn “Dealmaker’s Guide to Mobile Home Parks” http://www.real-estate-online.com/commercial-real-estate/wwwboard5/index.html.
I guess you need to do some due deligence and must understand the area, market(up or down), risk/effort, physical condition, zoning, city code, competition, people there, fair value of the MHP in order to make a good offer.
MPH investment is not buying a SFH or duplex which is pretty straight forward.
Where is the park located?
I am in CA and parks here are expensive but I am trying to find and start making offer, or go out to TX, AZ to look for ones that don’t need me being there, by hiring PM company. It’s still a lot of work and research at this poing.
Thanks to The big trend and cainvestor for the links,the are of help. And the park is near houston tx
You are welcome. I really hope things work out for you. Please post back, please, and let us know how things turn out. Thanks.
Regards.
Hi,
I just joined this site a couple of days ago and I just read your thread.
I went through a lot of hassle in trying to find a Lender for a MHP for a client.
It is very hard to get a MHP financed. I literally looked for months and months!
But I finally found one! And a good one that accepts 20% down instead of the usual 25-35% (10% down on other multi-family properties).
Cordially,
Joyce :multiflash:
Mark7,
More info.
Before you structure the deal, you need to find out the park actual rent roll(1-3 years if you can), expenses (repair, utilities, administrative, tax) excluding debt services. DON’T TRUST seller’s numbers as they were often inflated. You must do the due deligence to find out the current value of the park based on actual figures not Pro Forma. You can use this formula.
VALUE = NET OPERATING INCOME*CAP RATE (10% for example)
For example:
NOI = 50,000
park value = 50,000*10=500,000
See some definitions below.
Gross Rent = Yearly gross rental income from all units
Gross Income = Gross Rent - vacancy factor + other income (for example, laundry)
Net Operating Income (NOI) = Gross Income - all expenses EXCEPT DEBT SERVICE!
Cap Rate = NOI/Sales Price
Cash Flow = NOI - debt service
PGI = the annual gross scheduled rent at the time of sale
EGI = Effectice Gross Income… PGI minus vacancy and collection losses
GRM = Gross Rent Multiplier… the ratio between the sale price or value of a property and its gross rental income. To estimate the value of income property, multiply the GRM times the potential gross income (PGI)
Gross Income
- Expenses
= NOI - Debt Service
= Cash Flow (take-home money)
As far as structure a deal after your due deligence( have 30 days) or at least review some actual number, you can put down 5-10%, seller finance 15-20% with low/no interest, if repair needed(ask for repair allowance), negotiate to start making payments after 3-6 months while you make necessary repair/improvement. You can also ask for master lease option so your initial investment is greatly reduced while you are improving the park and then you can buy it in 1-2 years.
If homes are rental, you should consider selling them to tenants with low down, and owner finance to mininize tenant managment time&cost.