RESIDENT OWNED PARKS, INC.
A Nonprofit Housing Corporation
Frequently Asked Questions (FAQs) About ROP
Resident Owned Parks, Inc.
7420 Greenhaven Drive, Suite 125
Sacramento, California 95831
Copyright by Resident Owned Parks, Inc.
Telephone: (916) 399-4993
Facsimile: (916) 424-2205
Question: Why should homeowners contact ROP?
Answer: Whether you are a homeowner in a large park or small, have an organized homeowner association or not, most park owners will not take you seriously if you tell them you are interested in purchasing the park. Park purchases are extremely complex transactions, and most park owners will not give serious consideration to a group of homeowners who may waste valuable time trying to do something they have never done before. This is not to suggest that there are not many qualified persons living in mobilehome parks who have legal, real estate, or financing experience. The fact remains that most park owners, do not want to deal with a committee of their residents if they have made the decision to sell their park. When homeowners and homeowner associations engage the services of nonprofit ROP and nonprofit ROP communicates directly with the park owner, the response is usually professional and positive. Many park owners will believe that if the homeowner association is serious enough about a park purchase to engage a professional and experienced organization (ROP) to represent them in the transaction, then they are serious about gaining ownership of the park.
Question: Why should park owners contact ROP?
Answer: As an IRS approved tax-exempt organization, ROP can access favorable financing available only to nonprofit organizations. If nonprofit ROP purchases the park, park owners are not required to carry back some portion of the purchase price, but they can receive valuable tax benefits if they do. Over half of the transactions completed by ROP have involved tax-exempt bond financing which can provide tax exempt interest income to selling park owners who choose to carry back some portion of the purchase price. Income that park owners currently receive from the mobilehome park is taxable income, but can be replaced by tax-free interest income if the park owner carries back some portion of tax-exempt bond financing for ROP's purchase of the mobilehome park. ROP will not overpay for a mobilehome park, but can purchase the park for its current market value as determined by a certified appraiser. Many park owners after having owned and operated a mobilehome park for years, do not want to reinvest in another multi-family project. A sale to ROP enables selling park owners to receive a long term stream of tax-exempt mortgage interest providing a rate of return seldom available from other investments.
Question: What form of park purchase is best for homeowners in our mobilehome park?
Answer: ROP firmly believes that if enough homeowners in your mobilehome park have the financial resources and ability to achieve a direct purchase of the mobilehome park, then they should do so. However, in ROP's experience it has determined that in most mobilehome parks a majority of park residents are not financially able to contribute toward the purchase of the park because of their limited income from pensions and social security. In such cases, they can still benefit from ROP's nonprofit purchase of their park because future space rent increases will be limited and rents within the park will be stabilized following the nonprofit purchase. For most homeowners, there is little benefit to dwelling on what form the park purchase should take when you have not yet determined if your park owner is willing to sell. By engaging the services of ROP and permitting ROP to handle such contact and negotiations with your park owner, if the park owner is willing to sell, then ROP can work with your homeowner association to conduct an income survey of park residents to determine if a direct purchase by residents is financially feasible. If the park owner indicates his willingness to sell, but wants to close escrow in an extremely short period of time, then a direct purchase of the park by nonprofit ROP may be required so that the park is not lost to another private investor.
Question: How long does it take to purchase the mobilehome park?
Answer: The timing of the transaction can be arbitrarily set by the park owner. If the park owner says he is willing to sell but the escrow must close in ninety days, it is possible to close in ninety days, but not if public financing, grants, and other state and local loan programs are being pursued. If your park owner allows four to seven months to close the transaction, ROP will then have sufficient time to pursue financial assistance from local government sources and to seek state low interest loans or grants which will assist in the purchase of the park. The shorter the escrow the more likely the purchase of the park will need to be financed by conventional loans.
Question: If homeowners or nonprofit ROP are able to buy the park, will our existing rents increase?
Answer: Some rent increase is usually necessary in order finance the nonprofit or resident purchase of the park. Whether your rents will increase for the park purchase cannot be determined until the park owner states his asking price and ROP has determined the available financing from banks, and other sources. By supporting a nonprofit ROP or resident purchase of the park, homeowners gain long term control of their housing costs. By gaining nonprofit control of park ownership, homeowners can gain long term security and know that they will not be priced out of their homes by repeated for profit re-sales of the mobilehome park which result in dramatically increased space rents.