Mobil Home Contract

Comments(9)

• 
  JohnMerchant4th October, 2004

  Yes, Lonnie's book, Deals on Wheels has some good forms that are sold with it.
  
  About as good, and as cheap a source for MH sales forms as I know.

• 
  davehays28th September, 2004

  Another way to structure this, depending on the underlying liens, is to get the seller to accept a 20% DP, and then create TWO owner financed liens, a first and a second, where they would construct say a 50% first and 30% second.
  
  The first they woudl sell at closing to a note buyer for cash proceeds (typically a buyer will pay 75-85% of face give or take), and then they retain the 30% second to maturity, giving them cash up front, and a monthly cash flow.
  
  There are capital gains tax benefits by spreading out the sale over installments, as well as benefits to you so you don't have to come up with so much down, and benefits to the note buyer so they are not too far invested into a commercial property that historically has a small pool of buyers and successful operators, and where default on these kinds of notes happens more often that people will admit.
  
  Hope this helps, I think it is a triple win solution. Best, Dave

• 
  shady28th September, 2004

  dfund,
  
  thanks for your insight, any idea what the FMV should be for this property? Is the .09 rule of thumb acceptable? Is there another way to figure it?

• 
  shady28th September, 2004

  dave hays
  Thanks for you advice. I will work on your sugestions. Do you think the selling price is too high for 15 units based on the noi? The financing doesn't really worry me as long as the value is there and numbers make sense. The town has it valued at 195k but that value is several years old.

• 
  fenrir28th September, 2004

  Hi Shady
  
  MHP's are valued based on cap rates. They should be certainly north of 8% after all (!) expenses are factored in.
  In your msg, I am not sure if you accounted for missing collections (around 5%).
  
  Cap rates lower than 8% are only acceptable if the MHP is in the path of growth and appreciation bound to happen, eg. close to the beach in Fl.
  
  If you need an idea on valuations, check out .. Plenty of real life examples there.
  Google it since I can't post an URL here.

• 
  fenrir28th September, 2004

  Hi Shady
  
  MHP's are valued based on cap rates. They should be certainly north of 8% after all (!) expenses are factored in.
  In your msg, I am not sure if you accounted for missing collections (around 5%).
  
  Cap rates lower than 8% are only acceptable if the MHP is in the path of growth and appreciation bound to happen, eg. close to the beach in Fl.
  
  If you need an idea on valuations, check out.. Plenty of real life examples there.
  Google it since I can't post an URL here.

• 
  rickpozos12th October, 2004

  This deal does not seem to work. Am I missing something? 9% cap rate and 5% vacancy and the value is 311k and you are paying 350k. How is this a deal again????
  
  I would think that you would want to buy at a price where there is an 11% cap rate factoring in 7-10% vacancy and then still paying a little below that amount. If vacancy is a little less, BAM, you made some money. I would also have some owner financing in the deal even at a higher than 9 cap and 5 vacancy rate.
  
  Also, you want to pay ALL CASH?? What about OPM, not your HE.
  
  Rick
  [ Edited by rickpozos on Date 10/12/2004 ]

• 
  herbk12th October, 2004

  Shady, My .02 This little MH Park sounds good to me. It will make more money over the years and put your kids thru college. Eventually you will own all the homes and by buying them as the people move on or placing your own homes on the site if they move them out (which they never do) you will collect more rents. This is a great starter. Ask the pros like Jimmy Napier, Lonnie Scruggs or Jack Miller for REAL advice. Good Luck, HerbK WPB,FL
  
  
  PS I have 50 MH Parks within a 25 mile radius of my house(and I've got water on one side).

• 
  active_re_investor13th October, 2004

  Herb,
  
  I can not tell if you own a park or not.
  
  I agree with the idea that there are ways to get good deals from sellers who do not want to actively market their units when they move on.
  
  Paying what seems to be full price (or more then full price) for the park so you can get first call on the units does not appear to be that great of an idea. You are more or less paying for an option in the expectations that you can pick up the units on the cheap. Do the averages really work out that well so that time really in on your side (when it comes to buying cheap as the PM)?
  
  John
  [addsig]