I distinctly remember the day I decided to buy my first mobile home park. I was an absolute beginner and didn’t have a hint what to do first, second or third. I wasted hours reading and reading and talking with other investors. It appeared the more I learned, the more confused I became. What I didn’t have was a straightforward and brief overview of the entire process from starting to end. If you are a beginner, you’ll save you a lot of time and money if you learn and follow this step-by-step process to purchasing your first Mobile Home Park from Long Beach Mobile Home Sales.
1) Get Market Knowledge & Prospecting.
With intentions, objectives and purchase criteria in hand, a buyer can begin the “deal flow” to learn about the market and identify any real prospects. Start your search on the Internet and visit websites like http://longbeachmobilehomesales.com/. Get a list of every mobile home park in your target area and database tool so you can add notes and quickly sort, explore and select out parks that appear to meet your buying criteria.
2) Qualify the Property
So you’ve got something that seems like a good prospect, now what is next? If you’ve not already done so, ask the seller or broker for underwriting, P&L’s and rent-roll and any other financial knowledge they’d like to provide. Go through their data and reports, so you understand how they arrived at their numbers and confirmed their calculations. Then rebuild the current P&L using the rent-roll as the basis for the income number, adding in utility reimbursements, propane, laundry, sales, storage, etc. Complete the same exercise on the expense side.
3) Due Diligence
You’ve started the due financial attention and need to continue forward and take your study to the next level. You’ll have to review copies of bank statements to confirm deposits and see copies of actual bills for taxes, utilities, insurance and other maintenance items.
By now you should be working to remove those final possibilities. Surely, the due diligence process confirmed your initial results when the property was suited. If not, before releasing exigencies, adjustments to price or other terms can be made between buyer and seller or final negotiations. You should be communicating the lender every couple of days to ensure they’ve finished the appraisal and the “first reviews” by the loan consultants have been positive. It’s not unusual for the bank to ask for some extra documents, more signatures.
It’s the day of the conclusion, and your hands must be tired from signing all those documents! There is no question about some surprises ahead and lots to learn. Take comfort in the fact that you’ve followed a disciplined approach to defining objectives, goals and purchase criteria, prospecting the market and studying, qualifying several properties, performing an exhaustive due diligence method and finally, closing on your conditions with significant attention to the final prorations, deposits and inventory.