Community conversions with success, less stress
By LEN BONIFIELD
Published February 3, 2007
There are at least 600 resident-owned manufactured-home communities in Florida, a number that grows as communities recognize the advantages of ownership.
Recognizing this trend, the Federation of Manufactured Home Owners of Florida in the late 1980s formed a corporation to assist and advise members on the community purchase process. FMO provided "how-to" educational materials and assisted some communities through the purchase process.
FMO dropped out of the conversion business for several years, but recently, largely because of the increased interest in community purchase, the federation has formed FMO Conversion Services Inc. The new corporation is headed by Jennifer Tobin, who worked with the FMO Storm Ready program for several years.
Community conversion is a complex real estate transaction that requires not only expertise and knowledge of the business transaction, but also an understanding of the needs of the community and of individuals - those who purchase and those who don't.
Besides FMO, a number of conversion services exist to assist a community in the purchase process. I urge communities to request proposals from several services before selecting one to help. Price is a consideration, yes, but so are experience and service before, during and after the purchase.
The road to ownership
FMO proposes a nine-step process, which starts when the community contacts FMO Conversion Services and fills out a purchase analysis form. The information is analyzed before a meeting with the community's board or acquisition committee. At that first meeting, services are explained and a determination is made whether the community is ready to move forward. If the answer is yes, a contract is prepared and signed.
Next the conversion service prepares an evaluation of the community, projecting the income and expenses and determining a fair market value and a proposed purchase price. If the community wishes to make an offer, a letter of intent is prepared and presented to the community owner.
If the owner and the community reach agreement on the terms and conditions, a formal purchase contract is drafted. If no agreement is reached, the conversion service will work with the community to establish a date to update the offer and make another presentation to the community.
It is not a bad idea to make at least one offer to purchase yearly. This notifies the owner that the residents are serious about acquiring the community and, if the opportunity for a sale arises, the owner knows whom to contact immediately. The community is prepared if the owner receives an offer from outside, which triggers a 45-day period for residents to make an offer, educate and inform residents, raise the money and sign a contract.
If a purchase agreement is signed, as soon as a sufficient number of residents agree to buy, FMO will make formal application for financing, conduct inspections of the property and perform an audit of financial records and governmental compliance.
If two-thirds of the nonshareholders consent, a new corporation will be formed. Once the purchase is complete, FMO Conversion Services will assist in the areas of legal and financial services to assure quality community management.
Send comments or questions to Len Bonifield at elb@gate.net or write him at 2914 Dollar Bonnet Lane, Lakeland, FL 33810. Please include your e-mail and mailing address. Because of the volume of mail, he can't respond to every query.
Fast Facts:
To reach FMO CSI
Contact Jennifer Tobin at 727 535-5125 or e-mail her at csi@fmo.org.