Table of Content
You want to be sure you are buying what you think you are buying. Are some of your mobile homes over the property line. Are there fences or sheds over the property lines. With a new owner, the adjoining land owners may use this time to enforce some of these issues. Check the legal description with the survey and with your contract and warranty deed. With electric service, you will want to check whether the electric is above ground or below ground.
However, I must note that it didn’t feel right to ask the residents to pay an additional $50 or so to cover their water bill. Instead I lowered the lot rent from $300 to $255 when I transferred the water bill responsibility to the residents. The seller and park manager investigated my concerns and were able to locate and fix the water leaks. One good thing is that all the leaks were easy fixes.
Financial Bridge Substructure
This can happen from fire, tornado, hurricane, etc. Invest in real estate and never run out of money! Buy, Rehab, Rent, Refinance, Repeat is the five-part BRRRR real estate investing strategy that makes financial freedom more attainable than ever. In this book, author and investor David Greene shares the exact systems he used to scale his real estate business from buying two houses per year to buying two houses per month using BRRRR. But more importantly you are looking for those problems that you may not be able to fix or that will be very expensive to fix. These types of issues usually deal with the size of the lots, reputation, problems in local market, flood plains, drainage problems, bad configuration of lots, water, sewer, electric, and gas line problems.
In some states, especially those where licenses are required, the state does an annual inspection and produces a report with notices of any violations. It is good to see these violations and be sure that they have been corrected. When doing your due diligence, there are some things that you just cannot change, and the risk will be too high to proceed with these deals. Other fixes may simply prove to be too costly.
The Truth About Mobile Home Park Due Diligence
Two of them were leaky toilets and one of them was under a home, but above ground. Mobile Home for Sale AdI advertised the home as a rent to own deal and was getting enough interest. I sold this mobile home, owner financed, two weeks before closing on the park. The buyer’s total payment was $600 per month without utilities.
This time period is usually between 30 and 60 days. In conducting your due diligence you are looking to identify anything that poses a potential issue and that you are able to change or fix. These usually deal with the cleanliness of the park (junk & trash piled up), mismanagement, lack of rule enforcement, collections, expenses that can be reduced. Thirty days of diligence is an industry standard, but there is no rule that the due diligence period must be exactly thirty days. Of course, the longer the diligence period, the better it will be for you, the buyer.
Other Due Diligence Items
They usually know about most of the parks and can give you information on the parks reputation, whether they have in the past and will in the future refer the park to potential residents, etc. You might also find out if they have trade-ins or other reasonably priced homes for sale. With the actual sewer lines themselves, the biggest problem tends to come from the old clay tile and thin-walled plastic pipes installed many years ago. These types of sewer lines can collapse and develop clogs because of the intrusion of tree roots. You may be able to have a camera check out the pipes and you could have them professionally blown out with high-speed water jets as periodic maintenance. You will find in the due diligence process that there is no perfect park.
Talk to contractors that have done work at the park and find out what work has been done and what remains to be done. Mobile Home Park Due Diligence – MHThe park also has a newer building that has a small laundromat and bathrooms for RV residents. Everything about this building was in good shape and clean. Other expenses included the utility connections, some underbelly insulation, skirting, cleaning, etc. During transport several shingles in the roof detached and flew away.
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Don't ever just take a purchase contract you find on the internet or receive from the seller or seller's broker and sign it without first having your attorney review it. Many of these mobile home parks do not work as expected - their owners do... And they spend hours and hours spinning their wheels... Doing the WRONG things, for the WRONG reasons. With the internet, you can do a tremendous amount of due diligence from the convenience and comfort of your home or office.
Often, after assembling all of the data, you will still be unsure as to whether or not you want to proceed. This manual only helps you to collect that data. The decision to go forward is one that you will have to make on your own.
Our favorite is30 Days Of Mobile Home Park Due Diligencewhich is a guide that tells you what you need to verify each day for 30 days . Below is a video from Steve Edel speaking at the 2018 TMHA Conference on how to perform mobile home park due diligence. As mentioned earlier, one of the benefits of owning a mobile home park is renting out the land, rather than the homes.
On google map's "street view" application, you can even see the park from the street, just like you were there driving it. You take apart all of the parts of a mobile home park, and you verify the condition and cost to each one. If you have not done this before, you definitely need a resource to point out all the components so you don't miss one.
Visit the planning department to see if there are any new parks that are going to be built as well as the location of any vacant land zoned for mobile home parks development. Good school districts are often a great place to own parks. Many times these districts are in wealthy areas of the city and less affluent people are often looking for affordable housing in these areas to allow their children to be in these good school districts. Whether the park is on city water or wells, you need to check out the distribution systems. Find out what the lines are made of, whether there are signs of water leaks and whether the water pressure is adequate to all sections of the park. One of the most important items that you will need to have is a good purchase contract that has been reviewed by your attorney.
Sixty days is far superior to thirty if you can get it. And, of course, you can't get it unless you ask for it. Most people ask for thirty days because they are afraid that sixty days will scare the seller off, and less than thirty is way too short. That being said, I have done fourteen days of diligence on deals that I really wanted but that had a difficult seller.
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