(This will be a little long, but something to think about)

I have been emailing back and forth with the owner of the 8 unit mobile home park that I am looking at.

It all started when I sent him a letter stating that I was interested in purchasing a mobile home park and wanted to know if he was interested in selling.

He returned a letter with some info regarding his park (see 8 pad MH park I posted about).

The basics of the park that he put in there were that the pads rent for $265. One trailer is under contract for $700 a month, another going under contract for $600 a month. 1 mobile is park owner and rented at a discount in trade for on site management for $450 a month with no formal agreement. 3 septics on site and 1 well.

I think I am dealing with a VERY experienced real estate investor here. He is out of the area and I don't recognize his name, which is kind of unusual where I live, because its a small town.

Anyway, I NEVER mention price first and apparently neither does this guy. I don't usually deal with savvy sellers. I know we are supposed to look for motivated sellers. In this situation, I think I am dealing with a motivated financier.

So what I am going to do is "call in the Marines".

I'm going to copy and paste my email conversation here and let you guys, (the marines) dissect it and help me formulate a response.

Here goes:

ME:

Hello Mr. And Mrs. Seller, I received your letter today. Thank you for your quick response. I have a few questions regarding the info that you sent. What is the monthly rent on the mobile that belongs with the property?

What is the monthly fee for the garbage dumpster?

Lastly, what is the monthly income on the 2 trailers that are rent to own in addition to the lot rent?

Again thank you for getting in touch with me. Hope to hear from you soon.

SELLER:

Hello Mr. NE,

Good to hear back from you. Here are the answers to your questions.

The home that is included with the property currently rents for $450/month with reason. It would rent for double that, however, the individual renting is our site manager/caretaker. We do not have any legal/binding agreements regarding this arrangement. It was a good solution for us at the time.

The mobile home on Lot 3 is under rent-to-own contract for $700/month. Lot rent is included with that payment. All lots rent for $265/month. So technically $435.00 is the amount to rent-to-own the trailer, this is a fixed amount. We have provided in the rent-to-own contracts the possibility of lot rent increases, at which time the tenants overall rent amount would increase accordingly.

The mobile home on Lot 1 is soon to be under rent-to-own contract. The completion of the paperwork has not happened yet. The tentative start date for the contract is August 1st. The current monthly rent on this mobile home is $600/month, with terms identical to the terms of the contract for Lot 3.

The yard and half container (on premises) is $75/month.

If you have any other questions please don't hesitate to ask.

Sincerely, Mr. & Mrs. Seller

(This is my follow up referencing financing in his original letter)

ME:

Hello Mr. Seller, thank you for your prompt response. I have had owners carry financing on other properties for me and I was wondering what type of financing would interest you the most regarding the mobile home park? Thank you, NE

SELLER:

NE:

You caught us on a day that we have checked email more than once.

We are open to a multitude of different options up to and including carrying the mortgage as we have sole ownership. To answer your question, it is our experience that Land Contracts hold the greatest amount of flexibility and protection for all parties that enter into that sort of agreement. There are many things to be taken into consideration, not the least of which are the rent-to-own contracts. Having said that, what terms do you have in mind that we could start a negotiation with?

Thanks, Mr. Seller

SELLER:

Hello Mr. Seller, I looked at the property on the maps at the courthouse today and it appears that 2 of the trailers at the east and west of the property lines are over onto neighboring properties. Do you know anything about that?

I know the courthouse maps aren't always accurate, but I wouldn't want to get into any sort of boundary disputes with any neighboring properties.

Also, what is your asking price for the property?

Look forward to hearing from you. Thanks, NE

(This is where it gets interesting. After reading this, I actually got excited. It's a cool response from the seller. Enjoy)

SELLER:

NE:

You are right about how things "look" on the map; however, I can neither confirm or deny whether it is what it is. Two of the trailers that are on the property now are trailers that were there when the sub-division was submitted in 1974. The trailer to the east was put on the property since we purchased and is situated closer to the driveway (Penn Lane; not shown on the map) than the unit that was there prior to our ownership. The trailer on the western boundary was there when we purchased, however it also is not in the same location as the drawing shows. We did not have a survey done when we purchased it from the son of the sub-divider who worked for the county government. (you can take that with a grain of salt.) We have not had any disputes over property lines since our purchase. Just because we haven't had any boundary disputes doesn't mean it would never happen; however, it is unlikely as the "understood" boundaries are the small creeks to the east and to the west. Don't know if that is helpful or not.

We do not have an asking price, even though we have been talking with you regarding the property; our discussion is only because you expressed interest. We are content to keep the property in order to let it build ROI. We are interested in selling only if the offer is close to what our idea of a good return on investment is. Jesus Christ spoke of a situation (Matthew 25:14-30) to describe the Kingdom of heaven, He painted a picture of stewardship that we try to follow. We had no plan of selling for a few years; but, everything (regarding possessions) has a price-tag, so make us an offer. Our flexibility is varied by the terms, meaning we would have a bottom dollar cash price which would be different from a mortgaged price. We are willing to negotiate; but, would like to know what your start point is.

Grace to you.

Mr & Mrs. Seller

So there it is. Think about it for a bit. I thought it was pretty interesting.

Dave Ramsey says whoever mentions price 1st loses. He's right.

I have been dealing with a landlord(my old landlord actually) I used to rent off of for 12 YEARS now trying to get a price out of the guy. Its a very nicely set up 8 unit. When he finally folds, I will be first in line.

I have the patience of an oyster.

When my

The story in Matthew is about taking care of your money and doubling your money and ultimately that the money isn't yours anyway, but God's. That's what I take from the versus. I didn't know the verse from memory, but once I looked it up, I had heard it many many times.

To me, that says he wants to double his money.

If that is the case, he paid $170,000 in 2005. That plus upgrades leaves $X dollars into the property. If I can factor what he may have into that with capital improvements and not routine maintenance and also factor what he may have made on the property so far, I may be able to come up with some sort of an offer.

I may be totally off base here, but it is interesting.

NE, my friend, I'd pass. I don't know if this seller is savvy, but he sure seems to be unmotivated to sell. I am not terribly religious, but I shy away from potential tenants or trailer park sellers who feel obligated to bring their religion, whatever tht is into conversation with near total strangers.

Another thought. $170,000 invested in a S and P 500 index mutual fund in Jan 2015 woud have just about doubled by 2017 (plus dividiends), so preacher trailer park dude will think he is due at least $340,000 or $42,500 per trailer. I bet you could by 8 SFHs for that amount. Houses that appreciate, not deprecate.

I'm with MR[ME] its their property they KNOW what their Happy Price is, they just want you to open the bidding.

The weasely part about "we do not know what the story with the 2 Eastern trailers are, is BS.

Religion?....in a business deal?

Someone approached me to by one of our multi's out of the blue.

I DID mentioned selling price first.

I think both parties ended u with a good deal.

Your seller has found a possible exit strategy that does NOT some along very often with a mutli let alone a MH park.

IF you make an offer, be very embarrassed. Pookie will make an offer that will make anyone blush. Woman have that knack for shopping.

I don't believe the first offer loses as much as the one who cares the most about the deal loses. The less you want a deal (either side) the more likely you will win.

NE-around here, if I am VERY patient (and I don't go looking for deals like you do, houses just come into my vision and I buy them every-so-often), anyways-I can buy a SFH for under $20,000 by the time it is ready for rental. It'll rent for $550-$600 all day long.(This IS a city with city code-and income tax, btw).

What is so attractive about this deal? $42,000 a unit will buy two or maybe 3 if I'm LUCKY here-all with city water and sewer.

Is it the owner-financing? (we do pay cash).

And, as I mentioned, septic here-they ALL have to be replaced on transfer, just about. We've gotten lucky on two we bought, but two have had to be replaced (which we did factor into the price).

I'm pretty much put off by the whole "you caught me on a day when I check my email and the whole Bible verse thing too.

The "caught me checking email more than once a day..." line is blather.

I agree with those that said the Bible verse thing bothers me a lot, along with his supposedly not knowing specific boundary details with the property.

In fact, he is saying there ARE issues because of who sold the property! "We did not have a survey done when we purchased it from the son of the sub-divider who worked for the county government (you can take that with a grain of salt.)"

How about reply to seller... When you get a finer distinction about your goals with this property and/or decide to sell let me know the price. Thanks for your time.

NE, the only way I would consider an offer on this property or any multi package of units would be, if I'm able to look at at least 2ys. of schedule E's.

Ask him to send a copy of the schedule E's ?

I would ask myself WHY I want this property and how will it fit into my longer term plans.

Only then would I strategize on how to get it.

265x8x12=25440

less 50 percent for expenses= 12720

at a 10 cap rate =127200

less money for clearing lot problems

less money to deal with septic problems (not enough of them)

offer about 70K, that's about 9K per pad and I'd probably offer less.

Tell him he can keep the money from selling the trailers on whatever deal he makes but he will be responsible for lot rent.

Tell him he's already made plenty from the rents so God has already taken care of him and he should be happy.

If any lot is empty, subtract for that too as, if it is producing nothing, it is worth nothing until YOU fix the problem and you should be paid well to fix problems.

What he paid for the place ($1 or $1000000) is irrelevant. It's only worth now what the cash flow will support after all problems are fixed.

You don't want the trailers, you want the lots and the rent from them.

I think you're right- he sounds like a slickster and trying to see if he can get a fish on the line. No motivation.

Motivated people talk money and want to sell. Slicksters try those tactics like "you name the price first". I hate those types. If you want to sell, put a number on it. If you insist I do it first, my number is $1.00

NE,

Good advice from all LL posters. He's fishing to get a naive buyer hooked. You are not him. Also, he's only seriously going to sell when he's getting, or close to premium. He's not serious, IMO, unless it's seriously good $ for him.

Thank Him for the Scriptural reminder, and that you too, after prayerful consideration and contemplation of the factors are depending on James Scriptural directive, "ye have not, because ye ask not"(4:2).

I don't think the 1st offer specifically loses, but they CAN lose if they don't hold firm to a defined, real conservative number. If swept up with the euphoric frenzy by return fueled by greed, then folks do lose. If you must, whatever the offer, low ball it. Be embarrassed, intentionally, ridiculously low ball. Know when to walk away.

Many times after I educate a possible seller, they seek another opinion and take an offer from someone they know as opposed to a strange like myself.

Case in point. A couple with 12 grown children wanted to sell the family home. A duplex illegally converted into a triplex. They were asking $365,000 without an agent. I made them an offer of $325,000, as is.

A family friend said, "You'd be crazy to list or accept an offer less than $350,000, let me be your agent an sell the property".

The family contacted me and said I can make an offer through their agent. The wouldn't listen to anything more I had to say at that point, thinking I was short changing them.

The agent listed the property and got an offer of $330,000, and they accepted. After fee's and commission that would net them $21,000 less that my offer.

But wait! After they inspection and appraisal process they buyers found out the added unit was not permitted, it hadn't been disclosed and there were many violations on record with the city.

They buyer demanded things be taken care of, or they will file suit. The sellers spent close to $100,000 making the property legal. The sale finally took place and they netted out of escrow about just a few dollars above $200,000.

Had they taken my offer, they would have been $125,000 ahead. I am a licensed contractor and could have made the property back to a duplex or made it a triplex for $25,000.

The parents and siblings were told I was pulling a fast one on them and going with their agent was the right thing to do.

I took copies of my offer and their contract, had them translated into this family's first native language and mailed copies to all children and the parents showing they were played by their agent and my offer was much superior.

It has been 12 years since this happened and only 1 out the bunch apologized to me for thinking I was going to take advantage of them.

Good luck...tying to buy something when you have to educate and chase after the sellers.....This is a good way to buy a property. I'm only been successful when the property in question has several defects that I can deal with and most will run away from.

NE, you should prepare an offer based on reliable information...that he can supply.

HERE IS THE BIGGER POINT: You are inexperienced and therefore uncomfortable in dealing with a seller who is a businessman. You need to learn to deal with all types.

If you want to take your business to the next level, then you will need to deal with people like those who you currently deal with.

Meet with this person, if it is apparent that this purchase is going nowhere; then ask him to tell you about himself, his business, how he started, and what his goals are.

If you hear of a property that you don't want, but he may be interested in - tell him about it. Likely he will reciprocate. At some point, he will decide that he won't get a better offer elsewhere and will likely sell you this MHP and offer you other properties. Additionally, he may be a lender, he may know of better vendors that you can use.

Look at this as primarily a networking occasion.

Deals are not always a zero sum game.

Good advice. My gut was to shy away as well.

Sisco, I am looking towards dealing with larger sellers in buffers properties. That's who has them.

As far as not knowing how to operate a mobile home park because I have no experience, I can't let that fact hold me back. Nobody knows how to operate their first mobile home park.

The 57 pad park is out of my league. The 8 pad is within reach (not considering the seller). I might not understand parks, but I understand wells, septics, road maintenance and tenants.

Other than that, I don't understand why it would be any more complicated than income and expenses.

You have gotten good advice here. Make an offer(s) to him with numbers that work for you and several different financing options. He does not sound motivated and likely will not sell.

I'm not super religious, but I do have my beliefs.

I enjoy negotiations too and will respond to this gentleman with a reference to Luke 14:28.

Do the sellers plan on doing a 1031 exchange or do they plan on doing a contract for sale for you?

Knowing what exit strategy they feel most comfortable with will allow you to align your needs with what suits them best.

If they are doing a contract for sale with owner financing, an unbelievably low interest rate might be worth the extra money offered in a sales price. If they doing a 1031 exchange, then lining up the transaction via an option would be a solid path to follow so you too can have this lined up for a 1031 exchange.

I find investors screw up 1031's by not knowing the replacement property before they decide to sell a place. So when one of your tenants buys your home over on main street, you already have this place to purchase in your second leg - and they can purchase a replacement for this using leg three.