When buying a mobile home park, you want to make darn sure that the facts regarding the property are exactly as the seller has portrayed. This is known in the real estate biz as performing your “due diligence.” In layman terms it means conducting the appropriate research and investigation necessary to convince yourself you are buying the reality of the property and not a fantasy.
Before buying a mobile home park, write a due diligence clause into the contract which allows you anywhere from 30 to 60 days to check things out. A seller who has a problem with that is not a seller you want to buy from. But what does due diligence include? A partial list includes the establishment of the physical, economic, demographic, and market feasibility of the purchase. In other words, does it make sense?
Ultimately what you’re trying to do is identify potential problems that might be expensive to fix or maybe even have no fix, like a federal hazardous waste dump located in a field across the fence. Other potential deal-breakers are poorly configured lots, electric, waste, or sewer lines problems, poor drainage, or maybe a bad reputation that is next to impossible to repair.
If that sounds like a heck of a lot of work for one person, you’re right. It would be. Luckily you don’t have to do it all yourself. This is where you hire experts like plumbers, electricians, surveyors, and accountants to offer their opinion in their area of expertise. At the end, you take all the opinions, add your own, and make the final decision on whether or not buying a mobile home park – THIS mobile home park – makes sense.
The due diligence clause allows you to get out of the contract if you find an issue for which repair goes beyond the scope of the original discussion. Okay, prospective mobile home park buyers. Get out there and get diligent!
The MHP Listings Team
Flickr / Jeffrey Beall