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We respect both of you, your knowledge, wisdom, and your success. Without your help we would have been lost and probably lost money. Frank and I have definitely done this many times.
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.
One thought on “Real Estate Investing Due Diligence Checklist: Mobile Home Park”
In addition, I spoke with people at the chamber of commerce, city hall, police station, the current park manager, etc. After you have the park under contract and usually after you have the owner's permission it is definitely a good idea to interview some of the current park residents. They are usually full of information when it comes to finding out how the park is actually operating. You will often hear about water problems, sewer problems, and any other common problems by talking to the residents. In most cases, buying a park in a 100 year or 500 year flood zone will not come back to bite you.
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.
Inspecting the Park
In conducting your due diligence you may call on experts in surveying, accounting, marketing, financing, plumbing, electrical, and legal. A final note on electric is to check whether the electric is billed directly to the residents, which is preferable, or whether the park is on one master meter and submeters the electric to the residents. In conducting your due diligence, you may call on experts in surveying, accounting, marketing, financing, plumbing, electrical and legal fields. Since the failure of any one step of due diligence might result in your decision not to buy the park, we have organized the order of steps in such a manner as to minimize expense and effort.
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.
We can perform offsite, onsite, or end-to-end diligence service!
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.
When I mentioned this idea to the seller, he was 100% in favor. And he went out of his way to help me execute the plan. In fact, I didn’t have to make another trip to the park at all. I was able to do everything remotely, which was a huge test of my overall plan. I could see in advance how it would work to remotely add more homes to the park. An additional benefit to pursuing this idea was that I would be testing every phase of the process of adding homes.
One important thing to understand about mobile home park investing is that sometimes lot rent includes some utilities (i.e. water and sewer). Other times, lot rent does not include any utilities. Find out if the park is required to be licensed and if so that it has the required license.
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.
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.
If you are responsible for the gas meters and lines then you may want to have the system pressure tested as a small gas leak can cause your service to be shut down until it is located and repaired. It is also a good idea to have this done on a routine basis to avoid potential problems. Review any park inspection reports conducted by the State Board of Health or other City/County inspectors.
When looking at a park make sure you check into anything that does not seem right. Are there easements that don't make sense, are there oil wells on the property, etc. You can review bills from the utility companies from the same month over a couple years to locate any major problems/leaks. Local Real Estate Brokers can also provide a wealth of information on the area and market and real estate outlooks. This website is dedicated to sharing practical financial knowledge.
In this park lot rent was $300 per month, but it included water, sewer and garbage. As I investigated the water bills, it became evident the current owner was spending way too much money on water. In fact, I was able to determine that there were two or three water leaks that needed immediate attention.
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