An Issue Relating To The Park Approval Process
I'm about the purchase a really run down DWMH in a nice family park. My purchase price is going to be $1,500, but it needs alot of work (though the floor boards, ceiling, air, appliances are in good condition). Should be able to invest about $6,000 and flip in 30-60 days for $12,000 or so.
Here's what now concerns me. The park manager has already shown an interest in the unit, though he was expecting to take the unit over if/when the current owners skipped without selling the unit. I'm now working through the possibilites of what can go wrong from here (this is my first deal). I'm wondering if the park management/owner can conspire to turn down my new buyers based on perceived credit issues with them. Wondering if:
1. I should get a clear understanding of the approval criteria from management ahead of the purchase or;
2. Peform a prescreening process of my own of all applicants prior to their screening from park management. That way, I'll know if they pass mustard...hence management will be less inclinded to play games.
The concern stems this. I puchase the unit, rehab it, and park management turns down my applicants over the course of say three months forcing me to pay pad rental and ultimately forcing me to sell at a discount. Hmmmm. The ghosts are coming from everywhere. Any thoughts from rehaber's and their experiences with park managment?
Many thanks to all.
I surely don't know your answer but I hope someone has some insight. I'm really sitting on the fence about purchasing a mobile home for my daughter but I absolutely hate the idea that you've got no control whatsoever over the lot. In our case, the lady who owns the park is 70+ years old. It's privately owned and one of - if not the - cheapest lot rents in the county. I'm concerned when something happens to her that whoever buys the place might make all sorts changes that I don't like.
Frank,
Go in and talk to the manager. Get to know them be honest about what you want to do. i.e. help the park get good paying clients.
The answer to your concern is NO! the manager cannot conspire to turn down you buyers... If he does then he runs the risk breaking your states fair housing/tenent laws.
Your concern about him sweeping the deal out from under you is real. However, the manager can make or break you. Go in and talk to him, learn what he wants/looks for. you do not have to tell him you are new to this or that you are looking at that specific home. Ask 1st if they allow investers, what there process is/ expectations are etc. If the manager is unreasonable then no deal is worth it in that park.
Expect to be on the hook for the lot rent while marketing etc.
Jeff
Jeff:
Many thanks for that reply. I did in fact speak with the park manager, who also flips units in his park. He was thinking about flipping this one, but I negotiated a deal already (subject to various things that would allow me out of the agreement with the seller if things went south).
Turns out, the manager is a pretty nice guy. I was firm with him on the phone and he was nice as can be. He actually gave me the price of what it should sell for after a bit of sprucing up. YOUR RIGHT, it pays to speak with park managment ahead of making the deal. Find out the credit criteria and the park's attitude to outside investors. They like that you may be providing financing too!
Here's the skinny on the deal:
Purchasing a DWMH for $2K. Yes it needs alot of work, but plan to replace the carpet, paint the outside, do some skirting, and clean the hell out of it. Probably spend $2,500. The manager mentioned a price of $12-15K. Sounds absurd to me, but it is a great floor plan. Looking for a quick flip.
Wish me luck and cover me, I'm goin in!
FYI, a MHP owner did this in WA State a couple of years back, and systematically excluded all the buyer prospects for a seller's MH.
That frustrated seller sued the MHP owner, Huang, and eventually won a Judgment against him for about $80,000. Etheridge vs. Huang as I recall, a WA Supreme Court decision you can probably locate and print from the internet.
The key evidence in the trial was that MHP's acceptance of other buyers with lesser credit scores while rejecting the MH seller's prospects with good scores.
So if this does happen, you would have recourse to the courts and a good chance of getting the same result the WA plaintiffs obtained.
But I would defnitely go talk to the MHP owner/manager and see if you can't make peace with him/her...and remind him/her that you're going to be bringing them a great new tenant for their space, so it's to their benefit to play ball.
And I would get the credit report yourself, so you KNOW what it is and don't have to trust the MHP Mgr.
Although your buyer will have to pay for two credit reports this way, it's the ONLY way you'll know...as even with the prospect's authorization, the MHP mgr cannot legally share the credit report with you..
Why does $13.5 to $15 sound so absurd? You do realize you probally will not be able to sell this MH at $5000 if you expect a cash deal. Offering financing is the key.
Have you priced DWMH in your area of similar age and final condition? That is wat will set your market price. See what is out there then target a price just below average as you want to sell quickly and not hold the property.
If you offer financing try to set the monthly lot rent and finance payment around what your local appartment cost would be. Do not expect a $500 payment with lot rent on top of that. Remember if they could afford that much in housing they probally would not be looking at a MH.
Hang in there you can do it.
Jeff
John:
Many thanks for your input. Eldrige vs Huang? That's pretty good recall I'd say. Wrote that little gem down (since I don't have your memory) and will give it to my attorney if need be, though it's been clear sailing so far thanks to the board the DOW.
As for the deal, it got a little better today. I found a realtor who works for (Top Value Homes) that lives and works the community. She was floored by my purchase. She told be handymans are going for $8-10k as is if you can find them. Then it got a little better. Seems she has a private lender that will finance the mobile, and take me out completely...no recourse to me! I can now sell at retail, pay Top Value a commission and step completely away after referbing.
Waiting for the shoe to drop!
Many thanks to all.
Frank,
Why pay Tip Top any commission? Do you have a local re-estate investment club? Ask there or look in your local paper. All the MH ads with "Will Finance" in them are MH investors. Call them, tell them what you are doing. You will probally find 1 of three situations....
1) quick flip in an "as is" condition to another investor.
2) Someone who will buy it after you fix it up to re-sell
3) Someone who will provide the financing to a buyer you get either from your own paper ad, or just a sign in the window or someone that they have waiting for a home already.
In all three you get your $$$ and are out if that is what you want.
Unless you are really in an isolated part of the country, there will be MH investors who will be glad that they did not have to pound the pavement or fix the thing up.
Most expierenced investers I've met are pretty nice people.