Don’t complete proper due diligence prior to purchase.
Overpay based on pro-forma and POH income vs. actuals.
Buy in a market with a low and shrinking population.
Buy in a market with low median home price and under $1k two bedroom apt rental rate.
Pay retail price for the Park Owned Homes.
Don’t run a test ad to test demand prior to purchase.
Don’t visit the Mobile Home Park in person before closing.
Don’t order a phase 1 environmental study before purchase.
Don’t order an ALTA survey before purchase.
Don’t get titles to the POH’s at closing.
Don’t do a UCC filing to ensure there are no liens on the personal property before closing.
Don’t inspect the utility infrastructure before closing (water line pressure tests/ leak audit along with sewer line jetting and camera inspections).
Don’t drive the other Mobile Home Parks in the market before closing (comp parks) to evaluate the subject park’s feasible market lot rent.
Don’t call zoning department before closing to confirm it’s legally approved land use is for Mobile Home Parks.
Don’t call the local building department to learn about the infill process and Mobile Home rehab permit process before closing.
Raise rents more than $100/month on day 1 and expect zero turnover.
Pro-forma for 100% occupancy during your entire hold period.
Don’t confirm occupancy and accounts receivable balances the day before closing.
After closing don’t stay on top of management including: occupancy, collections, water/sewer bill back recapture and property condition violations.
Come in under-capitalized and try to only use cashflow to complete your value-add CapEx work.
In honor of Charlie Munger #InvertAlwaysInvert
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The information provided is for informational purposes only and should not be considered investment advice, nor a guarantee of any kind. There are no guarantees of profitability, and all investment decisions should be made based on individual research and consultation with registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations.