Multifamily/Mobile Home Park Conversion To Condos!
I am a home mortgage consultant by trade, and am in the process of putting together the following deal. I want to say upfront that I am not advertising anything, and I am only trying to gain perspective on this.
An investor with a couple of partners just bought a 48 unit property, 2 and 3 bedroom apartments.
He came to us to set up a conversion from apartments into a condominium association, and sell each unit piece by piece with deed release.
I know all of the details of the financing side of it, but what I wanted to know is the first hand experience of anyone who has done it before. Last thing I want to is to approach my customer with questions on how he conducts his business - as you can imagine, this is a high ticket customer.
Has anyone done this before? From what I can see, the biggest hassle are the legal documents, which are needed to get a project approval, so that financing can be obtained, but why don't people do this more often?
Logically, condo conversions would be more and more common as time progresses, since investors will want to cash out, and property values are going higher and higher.
The same applies to a manufactured home park. Why not transfer the park into a mobile home condo association, andsell it off piece by piece? As you know, its very hard to finance a mobile home in a park, where land is not a part of the package. But if its financed as a manufactured home CONDO, rules change.
Would this be the way to go? If you have a first hand experience with this, please let me now your perspective in this. I am extremely fascinated by the possibilities, and possible return on investment.
Thanks in advance.
Vasiliy
the biggest hastle is getting the project approved and permits pulled (at least in CA). That and the cost to bring things up to code and dealing w/ parking.
I take it you have done one of these before?
I can handle the project approval with no problems, but what about the part about brining it up to code? Are you referring to older units that are not meeting the county specs?
I can see how parking could be an issue, I am thinking carports would probably be a possible solution that is cost effective.
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On 2004-07-06 01:50, cjmazur wrote:
the biggest hastle is getting the project approved and permits pulled (at least in CA). That and the cost to bring things up to code and dealing w/ parking.
VASILIY --
1) Are you talking about taking an existing MOBILE HOME PARK that only the park owner has title to the land and convert to "CONDOS" which the mobile homes are then sold individually to new owners which would have title to their individual park space and mobile home?
2) Your mix use of mobile homes and condos conversion just stands out as confusing.
3) Related to just mobile home parks. Some parks are owned by the park residents. Some parks have been converted from park owner to residents owning the park. Maybe this is what you want to took into.
4) Buying a park, legally evidenting park tenants, pull out mobiles to make land ready to build condos, and re-zoning the property would be too expensive. There is vacant land zoned for condos ready to do that.
Cheryl Lopez
Quote:
On 2004-07-06 11:56, cheryllopez wrote:
VASILIY --
1) Are you talking about taking an existing MOBILE HOME PARK that only the park owner has title to the land and convert to "CONDOS" which the mobile homes are then sold individually to new owners which would have title to their individual park space and mobile home?
That is correct. A condo association is formed, and mobile homes are sold individually to new owners holding title both to the home and to the land the home is on.
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2) Your mix use of mobile homes and condos conversion just stands out as confusing.
Sorry for the confusion. There are two concepts I was referring to, and you are correct to note that both are different. The first one is a conversion from an apartment complex to a condominium, with the purpose of selling off piece by piece.
The second is conversion of mobile home parks where one individual owns it into a condo association, with the intent to sell off each mobile to the individual that lives there.
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3) Related to just mobile home parks. Some parks are owned by the park residents. Some parks have been converted from park owner to residents owning the park. Maybe this is what you want to took into.
Right, that is what I am referring to - situations where sellers of the park wanting to maximize their profits and selling off.
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4) Buying a park, legally evidenting park tenants, pull out mobiles to make land ready to build condos, and re-zoning the property would be too expensive. There is vacant land zoned for condos ready to do that.
You are correct - it would be too expensive, and wouldn't make sense.
It sounds really weird, but for financing purposes, it it very hard to finance a manufactured home conventionally, especially with the all of the guideline changes that took place earlier this year.
If the mobile home is classified as a condo, which is done with legal documentation, then financing options become available.
Additionally, if a project is approved with a lending institution, then there are no presale requirements to be met - as you know condos usually require a presale requirement.
Just my .02 cents.
Vasiliy
HI VASILIY --
Thank you for your detailed response !!
I will print out and read in fully later this evening.
I know you live in WA ... but here in California it is not referred to an "condos" for the park conversion. Does WA refer to the conversion as "condos"?
I believe here in California it is referred to as coop. I should know the exact word but I do know it is not referred to as "condos".
I onced lived in a park that we tried to convert and for a while the park owner was agreeable ... but later sold it the regular way. I now list & sell parks. In fact, on Thursday I will be closing on a small park in Creston, WA (land zoned for park).
On Wednesday morning I will call the state office HCD and ask the code enforcement office that the California proper word is that you want to do.
Cheryl Lopez
I know of some MHPs in WA that have been condoed, and the individual units sold to the residents.
I did some research on this a while back and talked to a couple of the managers of the Condo Associations, and in the process accumulated a lot of the paper work needed to do one of these.
Forming a new condo association is not cheap so I hope your MHP owners have some money to spend.
John Merchant
(253) 228-2277
I investigated the conversion of 2 apts. but they time you bought the apt, carried they debt, evicted everyone, did the conversion, etc.
There wasn't much lef at the end. With the premium on land here, I was looking at subteran. parking. Part out side a gate for visitors, and part behind for added security.
It is true that it is not cheap, but yes, it does look like my client got the resources for it. Legal fees, including drafting the condo bylaws, and surveys, plus upgrading the units if necessary seem to be the main cost.
As far as evicting clients goes - there is a large percentage of them that actually stay and buy the place they have been living in, especially if you can show them that the difference in monthly payment is not that great.
Vasiliy
VASILIY --
Have you also considered buying the land that is zoned for a mobile home park and build it yourway?
Cheryl Lopez
Cheryl,
I have considered many possibilities, but keep running into a hard wall with capital. So instead, am assisting current owners with their projects now, doing their financing, that is, and soaking in as much knowledge as I possibly can. In the long term - everything is possible.
Vasiliy
Quote:
On 2004-07-07 02:13, cheryllopez wrote:
VASILIY --
Have you also considered buying the land that is zoned for a mobile home park and build it yourway?
Cheryl Lopez
Then you wonder, is it worth 1% viaa hml or where are the sources of capital I haven't though of yet.
In this area, a couple 600-800/mo rent v. a payment north 1000 is a bigger deal