What do I mean by “buy your park?” I mean that a group of mobilehome owners can buy the park where they live through their own nonprofit corporation. This is true “resident ownership.” It’s sometimes called a co-op, or a mutual benefit corporation (“MBC”). It is not ownership of the park by an “outside” company of any kind. It does not involve dividing the park into lots (“subdivision”). In today’s mortgage market, the MBC approach is the only one that works very well.
How does it work? The park’s homeowners form a mutual benefit, nonprofit corporation (“MBC”). The MBC then sells membership shares to the homeowners. Money raised by selling shares becomes the group’s equity in the park property. Each household in the park owns a share in the MBC, which is also called a “homeowner association.” The association owns the park property after the purchase.
So why might 2009 be an especially good year for your homeowner group to buy the park where you live? There are two big reasons:
(1) Mortgage Money: In the current financial market, mobilehome owners’ associations are more likely than outside real estate investors to qualify for a mortgage loan.
With all the bad news about housing and the economy, you’d think no one could get a loan to buy a mobilehome park these days. That’s not the case, however. A bright spot in the current picture is a federal government-backed loan program to help groups of mobilehome owners buy their parks. These are 40 year, fixed rate mortgage loans that are fully amortizing (no balloon payment). Up to 90% of the park purchase price can be financed. These loans are being made today. Of course, your park owner must also be willing to sell the park to your MBC, and at a fair price.
Also, the market has dried up for the mortgage loans outside investors use. This means that invest
tors will find it difficult in 2009 to get mortgage loans to buy mobilehome parks. Homeowner groups have a better chance of getting mortgage financing these days. Park owners who understand this (and who want to sell their park) will seriously consider your MBC as a buyer.
(2) Possible Changes in the Tax Law: Park owners are concerned that the new administration in Washington may change the capital gains tax law, making it less favorable to real estate investors. The concern about this possible change may induce some park owners to sell sooner rather than later.
Why bother? The park owner will never sell. Don’t be so sure. Sooner or later, many park owners do sell. Don’t let the park be “sold out from under you.” Unfortunately, this happens all the time to mobilehome owners who aren’t prepared. Your group needs to be ready if the park comes up for sale. You need to be on the park owner’s “radar” as a potential buyer.
While the park is not on the market, your job is to regularly remind your park owner (not the manager) in writing of four things: Your homeowner group (a) wants to buy the park, (b) would pay a fair price for it, (c) believes it can find financing to do it, and (d) can give the owner income tax breaks no other buyer can. Do this with a brief letter to the owner every 4 to 6 months. Contact me, I’ll send you a sample of this letter.
Writing regularly to your park owner is the best way to improve your group’s chance of owning the park. It may take some time. Don’t give up, even if your letters get no response from the owner. Be patient and persistent. Remember, “if you don’t bother to ask, the answer will always be no.”
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A Good Year continued from page 6
You don’t need to organize your whole park right away. All you need now is a few folks who think it’s a good idea to “be prepared” in case the park owner decides to sell. The time to organize the whole park comes after you get a positive response from the owner, and the resident purchase deal begins to take shape.
Learn more about how resident purchases work. A good resource for understanding how to buy your park is a free DVD by affordable housing consultant Deane Sargent. This DVD clearly explains a very complex subject. I suggest that you contact Deane, and have him send you this DVD. His contact information is on the first page of the Voice.
My Best Wishes to all of you for the New Year.
David Loop is a real estate attorney and homeowners’ association board member at resident-owned Aptos Knoll Park, near Santa Cruz. You can contact him by sending an e-mail to email@example.com, or calling 831-688-1293.