Due diligence template.xlsx

	A	B	C	D
1	Duplicate and name file [ParkName].DD.[yyyymmdd]
2	Stage	Notes	Main Goals	Instructions

3	Deal evaluation
4	Quick Evaluation		Park initial Evaluation	Attached
5			Financing?
6			What's the end game? Exit strategy?
7			Decision: keep, flip, pass
8			Select Team
9			Management Team Operating Agreement
10
11	Economy/comps		Bestplaces	less than 8% unemployment, less than 5% population decline, less than 20% vacancy, more thank 40K household income, more thank 100K SFR, more thank $500 studio rent, more thank 100K MSA
12			Get Comps on Other Mobile Home Parks	What is the market lot rent? What do other parks include in their rent? What is POH rent?
13			Get Apartment & Single Family Home Rental Comps	Use rentometer, zillow, CL, apartments.com to determine other rental options + call local agents to get some opinions about the specific location the park is in.
14			Understand the school districts	School district, school rating
15
16	Hazards		Check Floodplain	Is the park in a flood plain? NETR Online https://netronline.com/ Flood Plain Overlay for Google Earthhttps://hazards.fema.gov/femaportal/wps/portal/NFHLWMSkmzdownload * If in a flood plain, make a call to the flood plain manager. If you see environmental concerns located on the property you are buying or on a neighboring parcel, engage a Phase 1 company immediately to do some preliminary research.
17			Check for Sex Offenders/Convicts In Park	https://www.familywatchdog.us
18	Infrastructure		If Private utilities - call Health/Code Enforcement Depts & Contractors!!!!	What are the pipes made out of? Is there natural gas at the property? Aerial photo or use google earth to locate well(s) or other water source(s) locations. Look for replacement location with adequate setbacks IF NEEDED opportunity to tie up neighboring property. Does the existing well/source meet the setback standards today? Where are the municipal water/sewer lines in relation to the park? o (If not out front) Are there any plans to bring water/sewer near the park in the future? (If yes) Would I be required to connect once that happens? Are you aware of any problems with the existing on-site system in the park I have under contract? What new projects are happening in the area? Is there anyone you would recommend I talk to about this property? Chronological history of park and zoning * Focus on date constructed, significant dates concerning zoning and codes.
19			Small Lots?	Can they fit a modern home?
20	Contract
21	Off site Due Dilligence
22	Contracting & Recourses		If Private Utilities - request additional documentation! (see sheets)
23			Find Attorney that you trust (operating agreements, advice, closing, etc.)
24			Find CPA that you trust (taxes, random questions, entity structure advice)
25			Raise money	o Step 1: Call an EXPERIENCED securities attorney and tell that person that you are raising $1,000,000 for a deal and you need to do this before your closing in 4 months. Listen to his/her advice. o Step 2: Call an EXPERIENCED CPA and tell that person that you are raising $1,000,000 for a deal and you need to do this before your closing in 4 months. Listen to his/her advice. o Step 3: Write some value add material for your investor group o Step 4: Deliver on the Value Making money is basically nothing more than a business plan. Protecting it is a contingency plan. Both types of plans are necessary to start and stay in business and both should be reviewed often.
26	Documents recept
27	Title & Financing		Property Title Commitment	Get Attorney/Title company started on title commitment, depends on state
28			Banks preliminary outreach	see list of banks on G + google local banks
29	Rents & leases		Review Rent Roll	Roll (Resident Name, Lot Number/Location, Move in date, lease expiration date, rent due date, rental amount, delinquent amount, security deposit held on file)
30			History and amounts of 3 last Rent Increases	When was the last rent raise? What is the market lot rent?
31			Review current lease for homes & lots	see if lease is long term and it might prevent rent increase! How strong is the rule list? Does it list the prohibited on our insurance list?
32			Review any Notes	get is both a promissory and a bill of sale. The bill of sale will include the purchaser’s name, description and VIN# for the home, the amount paid, and usually language indicating whether or not a promissory note is attached to the transaction. The promissory note will show the amount financed, the terms, and remedies.
33			Titles/Evidence of ownership for POH incl. all VIN #'s	try and get $5,000 for ea. Home w/o title to be deposited in Escrow until all titles are received.
34	Bills		1-2 year of Bank Statements	Any expenses missing from P&L?
35			2 year of P&L
36			3 year of Water bills	Check on total water usage in the park and the billing rate of the provider. Water : norm is 6,000-8,000 gallons/ household/per month when the park pays for water & 3,000-5,000 gallons/ household/per month when the residents pay.
37			3 year of Electric Bills	How many amp at the electrical boxes? street lights $100-250/mo. + extra vacant homes. Above Ground vs. Below Ground Electric
38			3 year of Trash Bills	Should be roughly $12-$15 per lot
39			3 year of Gas Bill	get bills from utility provider
40			3 year of Landscaping/Mowing/Snow plowing	cost to mow a 50ft x 100ft lot is roughly $15. $0.10-$0.20 per linear foot. Any trees need to be cut down?
41			Road Repairs	Do roads need work?
42			General admin expense	roughly 0.5% on gross lot rent.
43			List of major capital expenditures for the last 5 years	• Description of what was done • Why the work was done • Contact information for who did the work • Price of the work
44			Wells	Follow Private Utilities Sheet. Contact Experts to get testing. How many wells, etc.
45			Sewer Systems	Follow Private Utilities Sheet. Contact Experts to get testing. Septic - How frequent are the septic systems pumped? How many homes per tank? Is there room for replacement leech fields? How many leech field have been replaced? Follow Private Utilities Sheet
46			Lift Stations	Is their a lift station on the property? Who owns it? Has it issues in the past?
47			Tap Fees	If on private utilities, what are the associated costs with the city? What would it cost to design the system? Walk me through the process to connect to the municipal system (Tap fees, permits, process, etc.)?
48			Talk with experts/contractors!!!!	Talk with Plumbers, Electricians, Paving Companies, Tree companies
49	Taxes & Insurance		3 years Tax Return for park	if no taxes - seller financing? Bank wont finance. Compare tax returns against rent rolls. Accrual or cash basis?
50			3 years of Real Estate and Personal Property tax bills	call up the tax assessor and have them tell you how the taxes are calculated. When you run your numbers out for year two and beyond, you’ll need to know whether or not the tax assessment is likely to change based on your purchase price.
51			Current insurance policy (both for park itself and rental units)	Banks will require a $1,000,000/$2,000,000 policy. Rule of thumb is $50 per lot per year and $100-$200 per year on the homes. The average repair and maintenance expense in a mobile home park will run $50-$125 per lot/per year.
52	Contracts & Certificates		Contracts for independent contractorS, on-site manager, maintenance person, etc.	roughly $15-$20 per occupied lot/ per month for on-site management. Since living in the park is a job requirement for our managers, he or she is also given free housing through the use of a lot, a park owned home, or an on-site stick built home.
53			Any other Contracts?	Utilities? Cable?
54			Names and Numbers of all contractors who have done repairs in the park over the last 3 years
55			Survey and/or drawing showing lots and utilities	identifying the locations of utility lines, lot configuration and home locations, boundary lines, etc.
56			City, County and State Permits and Licenses & Certificate(s) of Occupancy	still want to ask the city to produce a copy as well. In addition, you should have any permits, CO’s, the city code, etc. reviewed by an attorney
57			Copy of Phase I Environmental Study
58			CAP reserves	replacement reserves: $50 per unit if on municipal services, $100 per unit if on 1 private utility, $150 per lot if on 2 private utilities.
59			Interview Park Manager	Go thru Rent roll, Rules, violations, issues, etc. (confirm above data)
60	Apply for loan
61	Test Marketing		Place test ads	at least 2 call/day. If less than 2 calls - use bandit signs
62			Place bandit signs
63			Have someone do a video drive thru the park	CL or local RE agent. The video should include both sides of each road. (It’s a good idea to map the route for the person you hire and provide instructions for the angle his or her camera should be pointed) • Take pictures of the top ten nicest homes you see (If you know which homes are going to be yours, you should also have each of these photographed) • Take pictures of major issues you see: o Large potholes or worn out sections of road o Damaged Homes o Trash piles, junky yards, roaming animals, etc. o Any dangerous looking utility problems, dead or overgrown trees, etc.
64			Reach out to local park owners for a meeting during DD trip!
65	Agencies		Chamber of Commerce	What are the economic drivers of the cities? Are their new housing developments? What is the price range? Who are the largest employers? What is the population growth of the town, city, and MSA? Who are the top 10 employers, what industry are they in, and how many people are employed? Ask about the specific area where the park is located. What new projects are coming to the area? Have there been any major employers leave within the last five years? Have there been any major employers who have gone through layoffs within the last five years?
66			City Planning & Zoning	Is the park legally zoned? What is the zoning? Do they have yearly assessments? Process for bringing new homes in. Any age restrictions on new homes? What are the set-backs? (from the road, distance between homes, etc.). Get a copy of the permit. Process to start a new mobile home park. Are mobile homes allowed to be placed on vacant land within the city?
67			Call the City About New Parks	When was the last park built? When did a mhp expand spaces? Review the Tenant/Landlord Handbook Every state has its own tenant/landlord handbook and its your job as a landlord to review and comply with the laws associated with being a landlord in that state. The following is a list of big-ticket items to pay attention to: • Types of leases you are allowed to put in place • Illegal clauses that can’t be included in the lease • How notices are required to be handled • How the security deposit is supposed to be treated • The duties of a landlord in that state. How Security Deposits are to be handled. Landlord duties. Other? In addition, you need to completely understand the eviction process and non-renewal of leases policy that applies to that state.
68			Call Health Department	• What is the current status? (Licensed/Unlicensed) • What were the statuses of the last five inspections? • What major violations or issues should I be aware of in this community? • To your knowledge, is there any other agency I should speak with regarding this park?
69			Call Code Enforcements, DEP, etc.	• What is the current status? (Licensed/Unlicensed) • What were the statuses of the last five inspections? • What major violations or issues should I be aware of in this community? • To your knowledge, is there any other agency I should speak with regarding this park? Get a copy of the city’s codes regarding mobile home parks.
70			Call State Manufactured Housing Association	Becoming a member, ask for attorney, vendors referrals
71			Sunset Provisions, Special Assessments	Ask the tax department on special fees associated with MHPs
72			Contact the Police Department	What are the nature of police calls in the area? Are certain tenants causing more issues than others?
73			Contact Fire Marshall	Any unsafe fire hazards that may be present in the community. Fire Marshall’s recommendations regarding public safety will supersede your grandfathering rights.
74	Bids		Call Mobile Home Dealers	Call mobile home dealers for used home inventory, and other park information
75			Get POH bids	Get quotes and feedback on the property prior to trip!
76			Get tree company bids	Get quotes and feedback on the property prior to trip!
77			Get local Movers bids	Get them inspect empty lots
78	Legal		Review Docs w/Attorney	Title, Survey, Notes, Taxes, Security Deposits
79	On-site Due Dilligence
80	Meetings		Meet Authorities	everyone you spoke on the phone!
81			Meet residents	ask about security deposits, community culture, deferred maintenance, water pressure issues, issues at park that we aren't aware
82			Meet contractors who have done work in the parks
83			Visit other parks	 Confirm comps  Get recommendations on local contractors  Potential prospecting opportunity
84			Current Management	Do we need a new manager? If so, will someone else in the community work? Place CL before closing if need a new manager beforehand. Interview.
85	Punch list		Count & Measure Lots	How many homes occupy the park? Does the rent roll match the number of homes?
86			Inspect park owned homes and ancillary structures	* Use punch list to note repairs needed to park owned homes. * Use Insurance intake form to gather require information about the park owned homes
87			Check physical occupancy, take pics, take video.	any abandoned homes?
88			Count and measure lots
89			Deferred Maintenance	What deferred maintenance is there to be done?
90			Check underneath select 5-6 homes for tie ups and leveling.	this will show condition of the home.
91			Inspect electric meters
92			Inspect water meters (if applicable)
93			Street Lights	Who owns the poles?
94			Park Owned Home Bids
95			Put up bandit signs
96			Drive Through at Night	What does park look like? Street lights? What are tenants doing? Loud, quiet, etc.
97	3rd Party Due Dilligence
98	Operations		Take Permit to Attorney
99			Phase I Environmental Study	• Phase 1 Environmental Inspection The purpose of a Phase 1 Environmental Study is to identify potential or existing environmental contamination liabilities. In phase 3, we used NETROnline to identify sites near/on the community that were listed on the National Priority List (NPL). It’s important to realize that only a fraction of the potential or existing environmental concerns make it on this list. Phase 1 studies are essential for your peace of mind. A Phase 1 Study costs roughly $2,500-$3,000 on the average park and it is essential for any commercial real estate purchase; big or small.
100			Survey / Easements	Have attorney check versus title to avoid any errors Compare Survey to Legal Description. Obtain "as built" survey if possible!