Financial diligence: can the buyer reproduce the income statement?
A buyer will usually compare the rent roll to bank deposits, general ledgers, tax returns or financial statements, utility reimbursements, delinquency records, and recent operating history. The goal is to determine whether reported revenue is recurring and collectible and whether operating expenses reflect the true cost of running the community.
- —Current rent roll with site, tenant, rent, balance, and home ownership status
- —Trailing 12-24 months of operating statements and bank support where available
- —Property taxes, insurance, payroll, management, repairs, trash, and utilities
- —Utility billing and reimbursement records
- —Delinquencies, concessions, move-ins, move-outs, and vacant-site history
- —Park-owned home income, contracts, titles, and repair history
Physical diligence should follow the utility map, not a generic checklist
A community on municipal water and municipal sewer has a different risk profile from one with private wells, septic tanks, package plants, or lagoons. Clay sewer lines call for different inspection work than modern PVC. Private roads, electrical distribution, drainage, retaining walls, and aging home inventory can each create separate capital exposure.
Good diligence is specific. A buyer should inspect the systems that can materially change operating cost, habitability, regulatory status, or capital requirements—not order every possible inspection because a checklist said so.
Legal and regulatory diligence can stop an otherwise good deal
Title, zoning, licenses, permits, utility operating authority, environmental matters, flood exposure, access rights, and recorded easements can affect whether the community can continue operating as underwritten. A transfer requirement that takes months is not a footnote if closing is scheduled in thirty days.
Sellers benefit from identifying these items before the buyer does because some issues are curable with documents, applications, assignments, or agency coordination. The difference between an unknown risk and a mapped closing item is often meaningful.
How sellers can reduce diligence friction
- —Create one current property file rather than sending conflicting versions of the rent roll and financials.
- —Label vacant sites, vacant homes, tenant-owned homes, and park-owned homes clearly.
- —Collect permits, utility records, system diagrams, inspections, and major repair invoices.
- —Resolve missing titles, unsigned leases, and obvious document gaps early where practical.
- —Disclose known material issues with enough context for the buyer to price them correctly.
- —Track every outstanding request so the same missing item does not reappear three weeks later wearing a different filename.
