Manufactured Homes Communities Crossville TN
What to Look for When Buying a Manufactured Housing Community
| Buying A Manufactured Housing Community? What to Look For?|
Tue 07/17/07 10:03:13 am
from the Chrissy Jackson Archives
If you want to buy an older community that is in need of repair, where do you start? What do you consider? To whom do you go to ask questions? What questions are important? What other resources do you have to consider? Recently, a woman wrote to ask me what she should do in considering the purchase of an older community “that is in much need of repair.” She said the current owners were closing the community down. Her concerns were what resources she should consult prior to entering into negotiations, and what legal ramifications there would be for the current residents. In answering that question, let’s start from the top of the potential purchase, and look at a lot of the different areas that need your attention – and demand answers before you can decide if you even want to purchase the community. In these times of uncertainty in the stock market, real estate may be a safer place to put your money for an investment, but it has to be a business decision, not an emotional one. When you look at all the options, the numbers need to crunch properly in order for you to make the investment a wise decision. Therefore, one of the biggest resources you need to investigate is the ability of the property to meet your investment demands given the financial position you are in. First, before we even get into the property valuation and general questions, let’s think about your intended returns. What percentage of return do you want to get on your investment? How much of the funds generated from your operation will you need to take either as a draw, salary, or return of investment in order to live? How much of it can be left in the community or reinvested in improvements? Obviously you know the offering price of the community. Is it a fair price? After you make the required initial investment, how much capital will you have remaining for future improvements or operational shortfalls? What is the financing structure? Is the loan large enough for a commercial mortgage? Or, will the current owner finance it for you after you make the down payment? When considering the offering price of the community, how did you determine if it is a fair price? There is a simple mathematical formula that will help you, and will also enable you to determine the appropriate selling price, determined by the rate of return you would like to see on your operation. This age-...
When considering the offering price of the community, how did you determine if it is a fair price? There is a simple mathematical formula that will help you, and will also enable you to determine the appropriate selling price, determined by the rate of return you would like to see on your operation. This age-...