Moble Home Park --- Help me/others learn to evaluate good deals

[linhardt]

I am trying to learn about Mobile Homes and Mobile Home Parks as potential investments.

I thought that a discussion about the following Mobile Home park could help me as well as others learn on how good investors evaluate these types of deals.

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=15268573&RecentlyViewed=true&ItemIndex=5&PgCxtDir=Down

So based on the above link how would you evaluate it to see if it is a potential deal? What are the (good) in this deal? What are the (bad) in this deal? What should we look for? And if is or could be a deal what scenarios would to attempt to acquire this deal?

[Debbie]

Linhardt,

To give you a quick helping hand, I moved this thread to the appropriate thread called "Alternative Housing" for easier access/search.

[linhardt]

Ok, thanks debbie. I was not sure where to put it.

[Jim Johnson]

I am trying to learn about Mobile Homes and Mobile Home Parks as potential investments.

I thought that a discussion about the following Mobile Home park could help me as well as others learn on how good investors evaluate these types of deals.

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=15268573&RecentlyViewed=true&ItemIndex=5&PgCxtDir=Down

So based on the above link how would you evaluate it to see if it is a potential deal? What are the (good) in this deal? What are the (bad) in this deal? What should we look for? And if is or could be a deal what scenarios would to attempt to acquire this deal?

There is not enough information to evaluate this park completely. The idea of doing this is great... but we probably need to create a fictional park to do this right. If you want to create this 'test park' feel free... I will ask questions and evaluate the park based on your answers. I would recommend we put all of the parks data on one page that continues to be updated so it is easy to find. Or... if you want I will post up the fictional park and you can evaluate it, I will be happy to come in and tweak your evaluations.

[Debbie]

There is not enough information to evaluate this park completely. The idea of doing this is great... but we probably need to create a fictional park to do this right. If you want to create this 'test park' feel free... I will ask questions and evaluate the park based on your answers. I would recommend we put all of the parks data on one page that continues to be updated so it is easy to find. Or... if you want I will post up the fictional park and you can evaluate it, I will be happy to come in and tweak your evaluations.

Go for it Jim!

I promise not to figure it out to pieces like I did before. :SM126:

[Ryan M]

I am a newbie here folks, have enjoyed dropping in and reading the post for a long while and finally decided it was time to join the gang!

This post caught my eye, as I am looking to purchase a MHP. I am curious as to how much information Jim likes when evaluating a park. The more information the better (obviously), but with the information available can't one determine whether or not this park is even worth a second look?

-Rookie in training-

[Jim Johnson]

I am a newbie here folks, have enjoyed dropping in and reading the post for a long while and finally decided it was time to join the gang!

This post caught my eye, as I am looking to purchase a MHP. I am curious as to how much information Jim likes when evaluating a park. The more information the better (obviously), but with the information available can't one determine whether or not this park is even worth a second look?

-Rookie in training-

Is there too much information... not really. Here is the deal. As a buyer it is your duty to ask lots of questions and hopefully receive honest answers. I recently put a offer on a park in a neighboring state to mine. I based my offer on the information the agent advertised. I sent my 'laundry list' of documentation requests once I was under contract... the agent said in 40+ years of doing business he had never seen a list so complete. It just so happens the seller was inflating his income by about 10% and 'forgiving' his expenses another 10%. Funny how when you look at tax returns and review the income and expense accounts you can find little mistakes. He quit doing little things like paying for insurance because he was selling the park... and fired the maintenance people the make the payroll look good.

Needless to say I requested a price reduction and they did not go to my mark. I walked and the seller re-listed with another agent... who posted the same numbers... now for the best part. I contacted the agent and faxed him my package... the agent did nothing and to this day still lists the property with the same inflated income and phony expense numbers.

Parks are a 'buyer beware' game and if your going to play you best get the other teams play book.

This is my general request list... depending on the park and location there is more added...

Mobile Home Park Property Evaluation and Due Diligence Checklist

General Information

Property Name______________________________________________ ____________
Address __________________________________________________ ______________
City __________________________ County ___________________ State __________
Telephone # _________________ Manager __________________Year Built _______

Financial Information

Annual Operating Statements (3 Years)
Monthly Operating Statements
Tax Returns (3 years) (Schedule E?)
Budget Forecast
Existing Loan Documents
Bank Statements (1 year) (Optional)
Security Deposit Account Statement
Utility Deposits

Operating Information

Exam of all Lease/Rental Agreement types (originals at closing)
Rent Roll: (Current and past 3 years)
Start/end date, rate, deposit, payment history per tenant
Concessionary Rents
Lease Expiration Report
Utility Bills (two years, showing usage and cost)
Water, Sewer, Gas, Electric, CATV, Ethernet, Phone
Property Tax Tickets (3 Years)
Service Contracts (trash, exterminating, maintenance)
Advertising Contracts
Payroll Register (employment contracts)
Operating manuals (phone, computer, utility/fire system, etc.)
Insurance: Policy (premium disclosure)
Insurance: Claim History (past 3 years)
Insurance: Carrier Risk Assessment
Management Contract
Commission Agreements
Miscellaneous Agreements (Vending, Laundry, Pay Phone, etc.)
Capital Improvements and Maintenance History (3 years)
Marketing Association Agreements
Yellow Pages Listing Contract
Credit Bureau Contract
Tenant File Examination: Application, Lease or Rules signed, Security Deposit, credit report, payment history, complaint history
(delivery at closing)
Pet Policy
Legal and Physical Information
Item Date Received
Deed
Title Policy
Last Sale Price
Tax Assessment: Land/ Building
Survey
Architectural/Engineering Plans
Site Plan
Inventory of Personal Property
Tools/ Supplies Inventory
Business License
Zoning Certification
Zoning Ordinance
Litigation History
Tenant Estoppels (at closing)

Third Party Information

Aerial Photos
Appraisal(s)
Environmental Surveys or reports
Engineering Report
Building/Utility Inspection Report (Certificate of Occupancy)
Building Code Compliance
LUST Survey (environmental hazards, USTs)


Market Information

Market Rental/Occupancy Survey
Existing Competitive Supply Surveys
Future Competitive Supply
Pictures
Feasibility Study
Area Map
Apartment Association
Apartment Guide Listing
Copies of All Advertising, Brochures, Floor Plans
Demographic Report: Housing, Income, Employment
Three radii: 1 mile, 3 miles, 5 miles
Traffic Study and/or Road Improvement Plans
Neighborhood Survey: shopping, schools, employers
Crime Report

[SPIVALAW]

Jim
Great information!

thank you
howard

[Ryan M]

Great information Jim! You'll never find all of that advertised on loopnet, lol.

Please explain the following docs: Marketing Association Agreements, Deed &
Title Policy (you request copies of theirs?), Copies of All Advertising - Brochures - Floor Plans (for the local apartments?).

So, when you see a MHP that may interest you, do you request preliminary info such as rent rolls, income/expense docs, what utility services (tenants pays?), city water/sewer? You state that once the park is under contract you send your list, so it would seem logical that there is some prelim. info you are using to decide if you should put it under contract.

Thanks for the great laundry list Jim!

[Debbie]

Is there too much information... not really. Here is the deal. As a buyer it is your duty to ask lots of questions and hopefully receive honest answers. I recently put a offer on a park in a neighboring state to mine. I based my offer on the information the agent advertised. I sent my 'laundry list' of documentation requests once I was under contract... the agent said in 40+ years of doing business he had never seen a list so complete. It just so happens the seller was inflating his income by about 10% and 'forgiving' his expenses another 10%. Funny how when you look at tax returns and review the income and expense accounts you can find little mistakes. He quit doing little things like paying for insurance because he was selling the park... and fired the maintenance people the make the payroll look good.

Needless to say I requested a price reduction and they did not go to my mark. I walked and the seller re-listed with another agent... who posted the same numbers... now for the best part. I contacted the agent and faxed him my package... the agent did nothing and to this day still lists the property with the same inflated income and phony expense numbers.

Parks are a 'buyer beware' game and if your going to play you best get the other teams play book.

This is my general request list... depending on the park and location there is more added...

Mobile Home Park Property Evaluation and Due Diligence Checklist

General Information

Property Name______________________________________________ ____________
Address __________________________________________________ ______________
City __________________________ County ___________________ State __________
Telephone # _________________ Manager __________________Year Built _______

Financial Information

Annual Operating Statements (3 Years)
Monthly Operating Statements
Tax Returns (3 years) (Schedule E?)
Budget Forecast
Existing Loan Documents
Bank Statements (1 year) (Optional)
Security Deposit Account Statement
Utility Deposits

Operating Information

Exam of all Lease/Rental Agreement types (originals at closing)
Rent Roll: (Current and past 3 years)
Start/end date, rate, deposit, payment history per tenant
Concessionary Rents
Lease Expiration Report
Utility Bills (two years, showing usage and cost)
Water, Sewer, Gas, Electric, CATV, Ethernet, Phone
Property Tax Tickets (3 Years)
Service Contracts (trash, exterminating, maintenance)
Advertising Contracts
Payroll Register (employment contracts)
Operating manuals (phone, computer, utility/fire system, etc.)
Insurance: Policy (premium disclosure)
Insurance: Claim History (past 3 years)
Insurance: Carrier Risk Assessment
Management Contract
Commission Agreements
Miscellaneous Agreements (Vending, Laundry, Pay Phone, etc.)
Capital Improvements and Maintenance History (3 years)
Marketing Association Agreements
Yellow Pages Listing Contract
Credit Bureau Contract
Tenant File Examination: Application, Lease or Rules signed, Security Deposit, credit report, payment history, complaint history
(delivery at closing)
Pet Policy
Legal and Physical Information
Item Date Received
Deed
Title Policy
Last Sale Price
Tax Assessment: Land/ Building
Survey
Architectural/Engineering Plans
Site Plan
Inventory of Personal Property
Tools/ Supplies Inventory
Business License
Zoning Certification
Zoning Ordinance
Litigation History
Tenant Estoppels (at closing)

Third Party Information

Aerial Photos
Appraisal(s)
Environmental Surveys or reports
Engineering Report
Building/Utility Inspection Report (Certificate of Occupancy)
Building Code Compliance
LUST Survey (environmental hazards, USTs)


Market Information

Market Rental/Occupancy Survey
Existing Competitive Supply Surveys
Future Competitive Supply
Pictures
Feasibility Study
Area Map
Apartment Association
Apartment Guide Listing
Copies of All Advertising, Brochures, Floor Plans
Demographic Report: Housing, Income, Employment
Three radii: 1 mile, 3 miles, 5 miles
Traffic Study and/or Road Improvement Plans
Neighborhood Survey: shopping, schools, employers
Crime Report



COOL! :SM009:

Worth repeating myself----I wanna be like Jim when I financially 'grow up'!

[linhardt]

Thanks Jim that is some good info.