Kangaroo Kronicles 20 – How to Buy a Park

By

Stu Silver / “Uncle Zally”

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Hop aboard the Mobile Home Wealth train.

This is the fourth and final blog in this series about managing a Mobile Home Park a long distance from your home.

As promised, we are going to discuss:

1-   How you can find the right park to fit your situation

2-   How to finance it

3-   How to get help so you can learn how to do it safely, with as little risk and time as possible

How to Find the Right Park

This part is easy, even from a long distance away. Why? Because almost every mobile home park for sale is listed on the Internet. At any one time, there will be about 5,000 of them.

Is that enough for you, 5,000 parks listed for sale?

Where are they? Here is a partial list:

1-   Loopnet.com

2-   MobileHomeParkStore.com

3-   MobileHomeParkExchange.com

4-   Various brokers websites that specialize in mobile home parks

Loopnet is free for a limited subset of searches, or costs about $100/month for the full package. Mobile Home Park Store is free for buyers, as is the Mobile Home Park Exchange.

There are at least ten real estate brokers’ websites that specialize in mobile home parks, and since almost all of them list their parks on the first three websites listed above, there is no need to complicate the issue now.

If you are a long distance investor, and you have been reading the previous three blogs, you know you should be restricting yourself to turn-key parks, i.e. ones that don’t need fix up and have a competent manager. You should also be buying parks that are land lease, i.e. the residents own and maintain their mobile homes, and you just lease them the land. You will go down the list of parks for sale that are turn-key and land-lease in the areas you prefer, in the price ranges you can afford, and choose the ones with a cap rate that is reasonable. Cap rate is just a fancy term for rate of return.

What is a reasonable cap rate? 8 – 12%.

Your challenge will be to find the parks with the most correct information. It can be very rewarding for a seller, or a broker, to overstate income and understate expenses, thus creating an artificially high cap rate.

How will you know if the information is correct?

A good starting point is when the stated expenses are at least 30% of the gross income. You will then have to get the park under contract to fully check it out. Once you get it under contract, due diligence begins.

Due Diligence

I do not recommend spending a lot of time doing your due dilly until you get a park under contract. After all, do you want to spend 10 – 40 hours of your valuable time researching a park, only to find out someone else put it under contract while you were studying it? I don’t think so. By now you should have read the “Due Dilly 4 Step” at least 3 times to understand what you need to do to protect yourself. Remember, the first rule of investing is to protect yourself at all times.

Can you hire someone to do your due dilly? Yes, and I am in touch with a few people who will do a competent job for you. However, I don’t recommend hiring out your due dilly in the beginning. I recommend you spend the week or two on-site it will take to do most due dilly’s. It’s your money, and you should make sure a seller and/or broker is being honest, or trying to pick your pocket by committing fraud. While you are on-site, you can visit with the manager and get to know him or her.

Financing

It is commonly believed that bank financing is not available right now for mobile home parks.

That is NOT true. It is just extremely hard to find it.

I have two banks that I use personally that will finance mobile home parks in Florida. Please don’t ask me for their names, because I have a high position of trust with them, and I won’t give out their names unless I have the same high position of trust with an investor. I want to make sure both sides will be around for a good long time, and if there is one thing this last business cycle has taught, it’s that people you can trust survive, and frauds get found out and go broke.

It is very common now to ask for seller financing. In fact, in my thirty years of investing, this is the easiest time I have ever encountered to obtain owner financing. Why? Because the banks are so difficult to work with, most motivated sellers of mobile home parks will offer owner financing right at the start.

Can you still purchase with low, or no, money down? Yes, but the best deals usually go to investors who can put down a reasonable amount.

How to Get Help Buying a Park

Funny you should ask.

Quite a few investors who have purchased my books and Mobile Home Wealth systems have asked for live training. Let’s face it, reading a book is one thing, and being taken by the hand and shown by an expert in another.

Unfortunately, I haven’t had the time to do live trainings since we bought three more parks, a motel, and a warehouse in the last year. We have gotten those properties under good strong management, and cash flowing nicely, so I will be ready to do one live training in November of this year.

It is called the S.A.M. Camp, which stands for Special Advanced Mentoring. It is all about BUYING mobile home parks, as well as commercial property like warehouses, office buildings, apartments, stores, motels, etc.

 

The purpose is to come out of the camp with as many contracts as possible on good deals for mobile home parks and/or commercial property.

In order to get into the camp, a prerequisite is having read both of my books and listened to both Wealth Systems. This is a 4 day Mastermind session to get property bought, and you don’t want to spend your time and money covering basics. You want to go home with the trophy – getting a good deal.

S.A.M. will be conducted the week before Thanksgiving, on Wednesday, Thursday, Friday, and Sunday, November 16, 17, 18, and 20, 2011.

There will be a limited number of individuals, and couples, allowed because the goal is to create a position of high trust with well-trained investors, and we can only do that with a small group of colleagues, NOT a room full of strangers.

If you are interested, email me and we will discuss it.

Until then …

Cheers!

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