Mobile Home Park deal 1: cottages on the river
Park deal 2: Smyrna, FL
Park deal 3: Orangeburg, SC
Park deal 4: Small park portfolio
Staying virtuous in Mobile Home Park Deals
Podcast Transcript:
Jason Sirotin:
Hello, and welcome to the Mobile Home Expert Podcast. I’m Jason Sirotin here as always with Glenn Esterson. Glenn, how are you?
Glenn Esterson:
I’m doing fantastic. Thank you.
Yeah, I’m really excited. This episode is really going to be focused around some deals that you have going on, and I don’t want people to think that this is a sales pitch for you. I’m asking Glenn to go through these deals with me because I want to know them, and I want you to hear all the dumb questions that I’m asking or smart questions as I get more educated and talk through the deals.
Jason Sirotin:
Now, all these deals are available through Glenn, but that is not the point. The point is to learn about what questions to ask, or to learn about different parks and what the advantages and disadvantages are. So Glenn, what do we got going on? What are the hot picks for you right now?
Glenn Esterson:
Well, we got a bunch of deals right now that are pretty exciting. Some that are a little scary, but I think all of them have some aspect of a strong appeal for the right person. For somebody like you, just getting into it, some of the deals we’re running right now would probably not be the greatest fit because they’re heavy lifts and might require a bit more capital on your first deal to outlay than you might be comfortable with. That said, I think going through, for this example, maybe talking about a couple of these deals that would be a real good fit, and then one or two that maybe wouldn’t be such a great fit and discuss why they wouldn’t be-
Jason Sirotin:
That’d be great.
Glenn Esterson:
… I think that’s kind of a good way to go with this [crosstalk 00:01:55].
Jason Sirotin:
I agree. Let’s get into it. I want the good ones.
Glenn Esterson:
All right, starting with the good ones is it’s actually one that I think we talked about before is this deal I have in Pennsylvania.
Jason Sirotin:
Oh, by the resort place?
Glenn Esterson:
The cottages on the river.
Jason Sirotin:
Yes.
Glenn Esterson:
Yeah, so that one we actually just brought out yesterday. I know we previewed it a little bit a couple weeks ago, but this was finally out on the market. In one day’s time, we brought it out yesterday morning at 7:30. By the time I got back to my desk this morning by 6:00, I had seven offers on the deal. What made this deal so attractive that would have been … I don’t know that I would have recommended this for you are your first kind of deal, but something like this could have really work.
Jason Sirotin:
I was into this one. At the dinner-
Glenn Esterson:
Yeah. Yeah, you were excited about [crosstalk 00:02:55].
Jason Sirotin:
… we had with all those mobile home park owners, yeah, this is the deal that I was talking about because it was like people weren’t even there half the time. They were using it as a recreational place, right>
Glenn Esterson:
Yeah, about a third of them weren’t there all the time. About two-thirds live there pretty regularly. So it’s about 75, 78 spaces. They have it out at $3.5 million, which is about an 8% cap rate. We’ve explained to you what cap rates are, but it’s basically the NOI divided by 8% is how we get to the purchase price.
Jason Sirotin:
Now, if you’re going to explain cap rate, let’s go back over NOI. What is that acronym for?
Glenn Esterson:
So that’s for the net operating income of the park. And in this case, there’s nothing but land lease tenants there and lot renters [crosstalk 00:03:55].
Jason Sirotin:
Oo, so this is tenant-owned homes.
Glenn Esterson:
Yes, all tenant-owned homes.
Jason Sirotin:
Even sexier now to me.
Glenn Esterson:
Right. Right.
Jason Sirotin:
I’ve decided I’m a tenant-owned home guy.
Glenn Esterson:
I think you should be on your first deal. And with this one, the tenant-owned homes are actually mostly cottages. The distinction between mobile home, cottage, and single-family home is so slight. These cottages are basically put on a slab. They’re not affixed to the ground like a single-family home, but, of course, they look like a single-family home, but they’re more like a mobile home in the fact that they’re not affixed to the ground with a permanent foundation.
Glenn Esterson:
The tenants tend to live in these things for 30, 40 years, but they look like houses. Some of them are real cute, like A-frame style. Some are traditional style. Some are like, “Oh, okay. So that’s what you did style,” with all those curves and whatnots there that you built yourself. But they do last a long time, and tenants do stay there a very long time.
Glenn Esterson:
For the landowner, it’s an excellent opportunity because it is very easy to operate this park. These guys bought the park from the Carnegies back in the last 1800s, early 1900s, so it’s been in their family a very long time. And it’s right on the river, where a lot these tenants to have a boat dock with nice boats out in front of them. It’s not your typical park, and it’s across the street from a Super Target in a major retail corridor.
Glenn Esterson:
The challenge with this, why I wouldn’t have recommended it for you, but on paper, it would say, “Glenn, this is the one I want,” would be because it comes with all septic. The whole park is on septic. Each unit has its own septic, which is not the scariest thing, but it’s a thing to be concerned about.
Jason Sirotin:
But they’re in charge of it, right, or are we in charge of it?
Glenn Esterson:
They’re in charge of [inaudible 00:05:48]. Enforcing that might not be always doable because if a tenant doesn’t want to fix something and they’ve already paid the rent, and they go to the city, you might still have to go fix it. Of course, you can then evict the tenant after his payment has expired, but it can still be an aggravating thing.
Jason Sirotin:
So should you just consider if you have that situation that you’re going to be the one in charge of it?
Glenn Esterson:
Yeah, I think a new owner’s going to be.
Jason Sirotin:
Okay, gotcha.
Glenn Esterson:
I think a new owner’s going to still try and pass the buck to the tenant, but, at the end of the day, I don’t think a new owner’s going to operate it like the old owners where they just kind of put their head in the sand in case if there’s a problem and force a tenant to fix it or move out. I don’t know that that’s what a new guy would do owning this. I personally would be a bit more preemptive if I was the owner of the park.
Glenn Esterson:
On the other side of the deal, there’s a commercial building that is a significant portion of the [inaudible 00:06:47] on some level. I don’t remember offhand, but I want to say it’s five to 10% of the income. It’s a long-term tenant that has a tool and equipment rental company that’s there as well. So it’s not all-
Jason Sirotin:
Wow. Wait, wait, wait.
Glenn Esterson:
… apples to apples kind of thing.
Jason Sirotin:
So, across from the Target, there’s this tool rental place that is on the property, and you own that commercial property too?
Glenn Esterson:
Correct. Correct.
Jason Sirotin:
What kind of structure is it?
Glenn Esterson:
It’s a giant metal building, but a nice-looking metal building. But you’ve been to them before. You’ve gone into a place to maybe get you riding lawnmower repaired. It’s probably a place like that, that kind of style, metal, big building, and they rent scissors lifts and construction equipment, and they got all that kind of stuff going on. In the front yard, along the road, it’s filled with equipment for rent. Inside the building, which is a significant-sized building … And I don’t know this number offhand. I should. But if I had to guess, it looks like it’s about five or 6,000 square feet and in good shape.
Glenn Esterson:
Those, for a first-time buyer, I think now you’re navigating too many variables for me to put my good buddy Jay into. I would want to know that in 10 years, you’re going to think that I was a genius for putting you into that park.
Jason Sirotin:
Right. It still sounds-
Glenn Esterson:
… and not jerk because there’s all this extra stuff we didn’t discuss during your education process.
Jason Sirotin:
Yeah, I didn’t know that there was a commercial property on it when we first talked about it, but I don’t know if it’s just the entrepreneur in me, but I was like, “Man, that’s kind of cool.”
Glenn Esterson:
It is kind of cool.
Jason Sirotin:
Because if that tenant ever leaves, I could have a business right there. And if there’s a Super Target, what’s stopping me? If it’s a commercial space, could I knock down that building and put up a restaurant or a dry cleaner?
Glenn Esterson:
The zoning might prevent it. I couldn’t tell you what zoning would allow you to do with that other than something similar that’s already there. By similar, I mean closer to an industrial-style retail service than a restaurant. Usually, that’s a different zoning.
Jason Sirotin:
Right, but I could do a tombstone-making place probably, right, or an RV sales?
Glenn Esterson:
Yeah, that kind of thing. Exactly. Tombstones.
Jason Sirotin:
In the interest of continuing the conversation around due diligence, to me, that would be really important to know. How would I get the information of what I’m allowed to do?
Glenn Esterson:
Right. So during your due diligence, if we got that far, and we negotiated and got this thing under contract … Just so you’re aware, on this deal, almost all of those offers we got were more or less full-price offers. The ones we’re looking at are full-price in cash and closing in 45 to 60 days. So it became a very competitive offering. Again, something I wouldn’t want to put you into necessarily on your first deal because that’s how people tend to overpay and get mad at me a little bit later because we’re here making competition happen on an offering. It’s great for a seller, but buyers sometimes don’t always exactly like it.
Glenn Esterson:
If you were to win and go under contract, the due diligence would be pretty clear. You’re going to have to inspect pretty much everything. You’re going to have to get a survey, and you’re going to have to get a phase one. And you’re going to have to talk to your municipality. That’s going to be the first thing that you pretty much go do is talk to the municipality, go pull permits for everything that’s ever been done at that park. Go and pull every piece of document that you can and get comfortable with it.
Glenn Esterson:
You’ll have 30 days or so to review everything and get the survey done and get the phase one done and verify all the income streams and do all that kind of stuff. But the scary part of the due diligence is, for you, would be that it costs a lot of money.
Jason Sirotin:
Yeah, how much is that process?
Glenn Esterson:
It’s different everywhere you go, but a phase one’s typically something like 2,500, 3,500. A survey could cost you three to five grand. It might be cheaper. It might be more. Doing your septic inspections could be very expensive. One guy already dropped out of the race when he got into understanding what the septic costs were going to be for inspection because he wanted 100% complete clarity. He was going to pay a local septic guy. He got a quote from them to come and drain everybody’s septic tanks, pump them out, fill them with dyes, and flush the system so they could see where every drain field and drain line and all that stuff is.
Glenn Esterson:
And it was going to cost him about a 1,000 bucks a lot, and that’s $75,000 plus or minus for this guy’s inspection fees, which is a lot of money. It’s a straight-up lot of money because you can almost just say, “I’m just going to go into it blind. I’m going to reserve that 75,000. And because city sewer’s available, I’m going to say maybe I’ll just bank that for my connection to the city sewer,” which is also pretty expensive, usually about two, three, $4,000 a tap. And depending on how you do it, you might have to tap every unit if the city makes you, which also means you have to worry about repairing the roads.
Glenn Esterson:
And since the roads, in this case, are a little bit chewed up, you might just say, “Huh, so I have to do this connection. I have to repair the roads. I’m looking at probably $500,000 at the end of the day of what everything needs to go into this deal to bring it up to A-plus.” That, for you, I don’t think is what I would want you doing on your first deal.
Jason Sirotin:
Okay.
Glenn Esterson:
For somebody that’s got the bandwidth, this is going to be an excellent deal, and they’re going to love this deal in a few years.
Jason Sirotin:
Is there a deal on the table that you think would be a good fit for me, or is there a deal that you think would be a good one down the road that we can talk about next?
Glenn Esterson:
Yeah, yeah. So there’s actually a really good deal that I’m a big fan of. It’s a little bit challenging and a little bit scary from the financing side, but it’s in Florida. It’s a real nice deal in Florida in the Smyrna Beach area, the Daytona-
Jason Sirotin:
Oh, nice.
Glenn Esterson:
[inaudible 00:13:32]. It’s a coupon-clipper. It’s like what you look for in a deal as far as easy-going, especially if you’re more of the mom and pop kind of guy that isn’t trying to go big, and he just wants a nice thing that returns consistent money every month with very little effort because that’s how the guy’s running it now. These tenants at this park … It’s like a 50-space park. It’s all lot rent. It’s all little old ladies, grandmas and retirees and stuff like that. Everybody-
Jason Sirotin:
Nice place?
Glenn Esterson:
Yes, it’s very nice. If it was me, I’d probably throw $50,000 into it to gussy it up and put some nice landscaping in, some maybe nice fencing in, things like that.
Jason Sirotin:
And that gets you equity with the people who are there too, right? They’re excited about having you there.
Glenn Esterson:
Yeah, absolutely.
Jason Sirotin:
And that matters.
Glenn Esterson:
To see improvements done, exactly. And that does matter, because the seller that has it now, they all liked him a lot. They all paid their rent on time, but he’s very far below market rent. He hasn’t been investing back into the property, and it does show in some spots of the park. I think it’s not anywhere close to forgone or anything, so some light roadwork and some light landscaping and some signage and some fencing would really do a lot and go real far for 50,000 grand or so.
Jason Sirotin:
What I increase the lot rents?
Glenn Esterson:
You would have to, yeah. But you can do them gently here.
Jason Sirotin:
Okay.
Glenn Esterson:
So this park is $2.2 million. This guy has 50 spaces, 50 tenants. The lot rents at his park are only about $320, and he hasn’t gone up on rents in two years. And the last time he did, it was $10 or something like that. The market rents, our data, and our comps, and everything we can tell completely support $450. However, if you’re going to take some little old lady up from 320 to 450 overnight, you’re not going to have a good time. I promise you. You might be able to get away with it, but you’re not going to have a good time doing it, and it’s not what I would recommend.
Jason Sirotin:
That sounds horrible.
Glenn Esterson:
Doesn’t it, right? It sounds like [crosstalk 00:15:50].
Jason Sirotin:
Somebody living on social security, and you’re like, “You know what? $100 more a month.”
Glenn Esterson:
Yeah, and that’s real money to these guys. So the way that I’ve modeled it. I’m seeing getting you to market rent, or what would be presumably the market rent at that time in about five or six years with slow and steady increases, and you’re improving things along the way. But it’s not going to be a quick three bumps at $50, and you’re there. I’m thinking it’s more like five bumps at $30, and you’re there.
Jason Sirotin:
Right, right.
Glenn Esterson:
Something that’s a whole lot more digestible. People argue with me about the better way to do it. That’s just the way that I would probably do it.
Jason Sirotin:
That’s how I would do it too. I don’t want to hurt somebody.
Glenn Esterson:
Exactly. It’s public water, and it’s public sewer, and he’s including it on the rents, so they’re still getting value with what’s there. Even submetering would help, but, in this case, the water is fairly inexpensive, so your payback on the water meters would be a longer return than usual.
Glenn Esterson:
But the rest of the park, real nice. Good books and records. The reason we haven’t sold it yet, because this one is still available … I probably brought this guy six or seven offers at this point. The people that have gotten close or were able to get to our price, because the price was pretty firm on it-
Jason Sirotin:
It’s 2.1 or 2.2?
Glenn Esterson:
2.2, yeah.
Jason Sirotin:
Okay.
Glenn Esterson:
2.2, and he’s offering owner-financing on the deal. But he doesn’t really want to sell because it’s a pretty easy deal for him. So in order for him to be motivated to sell, it’s pricing, and it’s terms. The terms he’s offering is he wants to replace roughly about $85,000 of cash flow for himself because that’s about what it takes for him to live on and be happy, he says. So he wants debt service to be $85,000, and he wants the down payment to be about 30% down.
Glenn Esterson:
30% down for most people’s not a problem. The $85,000 a year based on the cash flow is not going to be a problem. What is going to be a problem is all of it combined. 2.2, 85,000, and 30% down really makes your cash on cash kind of bad. It kind of makes it like a 5.5, 6% yield on day one. That’s a little low, but I think for the ease of the deal and for knowing that in a couple years you’re going to feel real smart on this deal, I can see doing his terms at 2.1 or 2.2, something in that range.
Glenn Esterson:
And you getting a good deal, and him getting a good deal, and then you put some money in. And in a year, you go up 30. Now, all of a sudden, your cash flowing nicely, and then by year three, you’re cash flowing real nicely, and you’re having a high-quality park. But most investors right now are having a very hard time getting to make the equation work on all of their investment criteria.
Glenn Esterson:
A perfect number for this park is probably a 1.95 million, $2 million, something like that if you were just going to pay cash for it. Unfortunately, he wouldn’t sell it for cash.
Jason Sirotin:
Interesting.
Glenn Esterson:
He doesn’t want to take a tax hit. He wants to have the tax protection through owner-financing, and he wants to have some walk-around money. So that’s one other deal that I’m actually a big fan of. I’m surprised it hasn’t quite hit, but I understand why it hasn’t quite hit. But that’s the deal I like.
Jason Sirotin:
I might have an illogical question, but how close to the ocean is it? And then there’s a follow-up.
Glenn Esterson:
A couple miles. It’s not too far. It’s a nice spot. It’s by an airport, small airport, and it’s in a good part of town. It’s your typical, coastal Florida stuff. It’s not your junk, desperate type of areas. It’s nice. Your grandma would live there. It’s nice.
Jason Sirotin:
What happens if a hurricane hits and destroys all of the houses? What happens to me?
Glenn Esterson:
You had liability insurance, and hopefully, income insurance, income loss prevention, or whatever that insurance thing is that protects loss of income for X-amount of time. Basically, being that you don’t own anything at the park, you lose the tenants. You lose the income, and the insurance people will pay you out for X-amount of time. And you start [crosstalk 00:20:35].
Jason Sirotin:
So the tenants would have to pay, even if their houses were destroyed?
Glenn Esterson:
Yeah. Well, if their houses were destroyed and they vacated and all of that, insurance is going to clean up the mess. Then you’re going to have a barren piece of dirt. That’s not always the worst thing because sometimes that gives you new opportunities. But, at the same time, it’s going to be painful, but hurricanes happen. It’s part of living in the South or living on East Coast or living on the Gulf Coast.
Jason Sirotin:
Yeah, that’s what made me think about it. What do you do if that happens? But it’s good to know that there’s other things.
Glenn Esterson:
Yeah, hunker down.
Jason Sirotin:
All right, let’s do one more deal. Give me something nasty, something that-
Glenn Esterson:
Give you something nasty.
Jason Sirotin:
… is a really hard grind, and it’s going to be really difficult to take on, but it’s a really good deal.
Glenn Esterson:
Yeah, so we have a deal in South Carolina that’s in a town called Orangeburg, which is about 40 minutes outside of Columbia. The market there is challenged. Columbia is a pretty good market, but Orangeburg is a little challenged. It’s a poorer community. And we have a 36-unit park-owned home community for sale there.
Glenn Esterson:
Now, it’s pretty stabilized. The owner does a good job maintaining what he has. He’s an old guy that’s been working it a long time. The tenants are very stable there, but they’re all renters. And there is a lot of maintenance. What makes it really scary is that there’s just only hand-written books and records. The guy lives off of the income. They’ve got other rental incomes. Their bank accounts are all co-mingled up together, and it’s impossible to figure out what income is from what source.
Glenn Esterson:
But the park is in an opportunity zone. It is on public utilities, and we did price it with a nice high yield. We have gotten so many offers on this thing. However, everybody wants to finance this thing, and you can’t. I keep telling people that. And the guy won’t owner-finance. We even brought him an owner-finance deal for 12 months that he turned down, which was [crosstalk 00:22:52].
Jason Sirotin:
What’s the cost?
Glenn Esterson:
It’s about $800,000, give or take. It could be a good starter park for somebody who doesn’t mind working a little extra to convert the homes and do all that. If you’ve got some energy in you, it’s a good project. And there’s some good money to be made here, but the seller needs to sell for cash because he can’t finance it. He’s unwilling to finance it, and a bank can’t finance it. So that’s-
Jason Sirotin:
Did he pay cash for it? Does that matter?
Glenn Esterson:
He’s owned if forever and ever and ever.
Jason Sirotin:
So it’s long paid off.
Glenn Esterson:
Yeah, exactly. It is a very nice-looking park, other than the homes are 80s and stuff like that. But they’re in good shape. Very nice-looking park, well laid out. It’s called Mel’s Court in Orangeburg, and I like the guy.
Jason Sirotin:
Safe place?
Glenn Esterson:
I’ve seen his books. Mel’s Place. It’s his wife’s name.
Jason Sirotin:
No, no. Is it a safe place? Is it in a good area?
Glenn Esterson:
Like I said, Orangeburg’s got a lot of challenges.
Jason Sirotin:
Okay. That’s what’s you meant. I don’t get subtly, Glenn.
Glenn Esterson:
It’s not where I would want my grandma to live, but if I was a young man living in Orangeburg, there’s worse places to live. It’s not a bad community. It’s not something that I would want my children living in per se, but, at the same time, if I was in that area and that was an option, it’s a better option than a lot of the other options out there.
Jason Sirotin:
Gotcha.
Glenn Esterson:
But I wouldn’t live in Orangeburg. But this is rental money. This is income money, and from a business standpoint, you can’t dispute his occupancy. His occupancy’s very strong, and it’s a very sticky-tenant base he has for being renters. I think they would make a great park [crosstalk 00:24:47].
Jason Sirotin:
And all park-owned homes.
Glenn Esterson:
All park-owned homes.
Jason Sirotin:
What’s he charging? When you’re doing that, do you split up lot rent and home rent, or is it all kind of contained?
Glenn Esterson:
Well, we do. We do in order to sell it. We know that the market lot rent out there is about 200, 225 at the top. I’ve sold a few deals there, and we got good data there. This guy’s only getting 500 bucks, 450 bucks in rent. Whereas he should be getting about 600 bucks in rent for those homes. But he’s an old-timer. If they stay there for 10 years, he probably never raised the rent for 10 of those years. He’s that kind of guy.
Glenn Esterson:
The opportunity’s good with it, and the appetite, apparently from the buyers, are there for it, but the banks have no appetite for it. So this would be a deal I would highly advise you to not chase. But some of my other guys, it would make a perfect fit for them because it’s a good starter park if you don’t mind that kind of heavy work.
Glenn Esterson:
The conversion on this, the homes are so cheap. In my mind, you give the homes away like we talked about a week or two ago. We give the homes away to the tenant for free and say, “Hey, you get a title to a house, and you’re going to be a lot renter here. And your new lot rent’s going to be $350, $400. You’re going to sign a five-year lease with me. And I’m going to be happy about that.”
Jason Sirotin:
Right, but you own the house.
Glenn Esterson:
Give them the title. They own the house, and now I’m going to go to the bank in one year and show, “Hey, look. I got $400 lot renters at my park, and I want to refinance.” And I’m going to get cashed out completely and put money in my pocket and have a cash flowing machine afterwards. That’s the opportunity.
Jason Sirotin:
So a bank will finance it after it’s all lot rental?
Glenn Esterson:
Exactly. The bank will finance again. Once you have good books and records, and it meets all their other bells and whistles about paved roads and utility structure and park-owned homes and things like that, the bank will refinance you out of it. Usually, after one to two years, you can get refinanced out pretty easily. And that’s where a lot of people exit, or at least recapitalize again with these investments.
Jason Sirotin:
That’s smart.
Glenn Esterson:
Selling it would be a little challenging in a year or two, but if you waited three or four, it probably is fine, and everybody’s going to believe that you got real lot renters in place.
Jason Sirotin:
Yeah.
Glenn Esterson:
Trying to sell a fresh conversion in that first year is always very difficult.
Jason Sirotin:
Hey, Glenn, are these deals up on the website currently?
Glenn Esterson:
Two of those deals are up on the website currently. The Florida deal is not. No, actually, Florida is on the website too.
Jason Sirotin:
Okay, great.
Glenn Esterson:
They’re all on there, and people can go check it out on the property listings page.
Jason Sirotin:
Which is at themhpexpert.com is where those are located.
Glenn Esterson:
Correct.
Jason Sirotin:
Just click on the listings link, I believe.
Glenn Esterson:
Exactly. And you can see a bunch of other deals on there. There’s a couple real nice deals. One that I would encourage you to buy, if you want to talk about this other one, called …
Jason Sirotin:
Sure, why not?
Glenn Esterson:
It’s a small portfolio. It’s a small portfolio here, where I live, in Wilmington, North Carolina. I know this area very well. It’s an excellent town for not being an Atlanta-type of town. It’s an excellent town. There’s lots of stuff to do, large population, growing everything.
Jason Sirotin:
It’s a great place.
Glenn Esterson:
These parks, three of them, are … Jay, you’ve been to my house. Three of them are 10 minutes from where I live.
Jason Sirotin:
Oh, wow.
Glenn Esterson:
And they’re real nice. The fourth one is 20 minutes from where I live, and one of the nicer of the top-five parks in all of Wilmington. The other three are probably in the top seven of all the nice parks in Wilmington. It’s a nice little package.
Glenn Esterson:
6.25 million, and this goes against what I normally say about park-owned homes is, this is a park that has a heavy park-owned home allowance in it. But I think that’s perfect for this market. I think that the homes are very new. A lot of them are 2016-type of homes.
Jason Sirotin:
Wow.
Glenn Esterson:
There’s about 160 spaces altogether with about 100 park-owned homes, but really nice park-owned homes. You’re not going to have nearly as many challenges with newer, nicer, park-owned homes, and you’re getting them at a discount in here the way we’ve priced them. And you should be able to flip those out pretty quickly. However, you would not be able to do the gift exchange. It probably wouldn’t pencil out.
Glenn Esterson:
But this one, if you were licensed and could go sell these homes, you should be able to sell these homes between 18 and $25,000 each. We have them priced at about $15,000. So I think, on this deal-
Jason Sirotin:
A lot of upside.
Glenn Esterson:
… the [inaudible 00:29:34] makes a lot of sense. There’s a lot of upside there. And one of the parks is brand new, just built last year. And they all have-
Jason Sirotin:
Which is also rare right now, to get a new park.
Glenn Esterson:
Right. This was a complete redo. This was an ugly park. They scraped to the ground and then rebuilt everything. New infrastructure, new roads, underground utilities-
Jason Sirotin:
Holy cow.
Glenn Esterson:
… concrete driveways. It looks really nice. Again, like where I would let my mom or grandma live. His mom, in fact, lives in one of the parks.
Jason Sirotin:
Oh, wow.
Glenn Esterson:
That’s how nice these parks are. It’s 160 spaces, city water included in rent at all the parks. It’s on septic for three of the parks, city sewer for that newer park, but the septics are all in excellent shape. Out here in Wilmington, that’s just pretty normal. And overall, very clean deal, very good books and records, highly financeable, and the seller’s willing to owner-finance. He’ll do a deal with 40 or 50% down for a seven or 10-year note at reasonable interest rates and all that kind of stuff.
Glenn Esterson:
But I think a bank would also be able to finance this deal with no problem, and maybe the seller carries the homes. So this is a deal I would probably have encouraged you to look at if you can afford 6.2. You’d have to come up with about 3 million bucks plus or minus-
Jason Sirotin:
Cash.
Glenn Esterson:
… to get into the deal. Yeah, in cash.
Jason Sirotin:
How much? Because there’s four parks, the due diligence is like four times as expensive because it’s like you’ve got to do everything four times.
