The MHP Brokers Tips and Tricks Podcast Interview with Ferd Niemann

In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed lawyer Ferd Niemann about his legal focus on representing mobile home park owners.

Just like with every Tips and Tricks Closing Cocktails podcast episode, this one’s brought to you by The MHP Broker’s’ proprietary Community Price Maximizer. Use this four-step system to get the highest price possible for your mobile home park or RV community when you sell it through The MHP Broker. Guaranteed. Call up Max for details.

Here Are the Show Highlights:

• Lawyer Ferd Niemann runs the website TheMHPLawyer.com, and specializes in representing the legal interests of mobile home park community owners across the country. Up to about 80 percent of the firm’s business is within this industry. (Max, 0:22)
• Ferd began his professional career as a commercial real estate tax analyst for Jackson County in Kansas. He flipped and bought and kept homes for rental on the side. He couldn’t scale up quickly, so decided to get into apartment investing, but found it to be a competitive market out of his financial range. Instead, he started buying and selling mobile homes, which were much less expensive. He did this while attending law school at the University of Kansas. His intention was to get into tax law and real estate investment law. (Ferd, 2:07)
• Around 2018, Ferd got out of law practice and focused exclusively on building his mobile home business. He’s bought and sold parks, and currently owns 19 communities, mostly in the Midwest. Ferd has also gotten back into his law practice, with a mobile home specialty, and hosts a podcast covering the topic. (Ferd, 3:51)
• Ferd’s firm does a lot of business fighting zoning laws established by localities that seek to shut down mobile home parks with home age restrictions, park size restrictions, infill timelines, utility restrictions and other penalties. The majority of his clients have parks that are “legally non-conforming.” That means that they were legal when established, and they’ve been grandfathered in to protect against current regulations, but might fall short of current legal requirements when they change hands. Many cities use the zoning charge of abandonment to shut down mobile home park activity. The idea is that if a lot sits empty for a designated period of time, which might be as little as a month or two, it’s considered abandoned, and the park owners loses the right to rent it. (Ferd, 6:09)
• Age restrictions seem especially illogical to Ferd. He’s got a 2022 mobile home that’s falling apart and a classic 1957 model that’s in beautiful condition. The point is, a home’s age isn’t necessarily a valid indicator of the condition it’s in, and age restrictions are arbitrary and unfair. (Ferd, 7:52)
• There are several violations that can get a mobile home park shut down, including fire code violations, public health safety, welfare, and morals. But abandonment provisions are the most commonly enforced by hostile cities. (Ferd, 8:38)
• Ferd’s firm uses zoning letters to nail down what the park can and can’t do in a locale. He attempts to get the cities to sign off on the zoning letter to protect the client in future zoning battles. The city will sign off on the letter maybe 25 or 30 percent of the time. (Ferd, 10:37)
• About a third of the time, the city will agree to sign the zoning letter once revisions are added and changes made. Ferd’s firm haggles for the best case possible with revisions. (Ferd, 11:10)
• This works more effectively in smaller cities. The bigger cities have much larger law departments and are less likely to simply sign off on a zoning letter. (Ferd, 11:38)
• The challenges vary by state and region, too. As examples, Tennessee and Iowa are cooperative with zoning letters, while North Carolina tends not to be. (Ferd, 12:22)
• Ferd rarely sees “carve outs,” in which the regulations are changed for one park, but he can sometimes get communities to change the zoning code altogether. In other cases, he’s gotten communities to grant grandfather rights for parks that were in existence before the zoning code was updated. (Ferd, 14:29)
• Sometimes cities that can’t get parks shut down because the park was in existence before zoning codes were put in place will instead try to shut down individual lots that haven’t been infilled within a designated time.
• Ferd compares that kind of vacancy with a motel with a room that hasn’t been rented for some time. That doesn’t mean the entire motel or that room was abandoned. (Ferd, 17:27)
• Zoning issues related to floodplains, fire code violation, egress and ingress are also tough to fight. (Ferd, 17:27)
• While zoning issues constitute about half of Ferd’s law firm’s work load, with an average of about five to 10 cases in front of them at any one time, it’s not all they do related to the mobile home park industry. They also handle contracts, leases, closings, syndication issues and others.
• When it comes to floodplains, cities might tell a park owner that 30 or their 100 lots are in a floodplain and that while those 30 lots are grandfathered into current law, they can’t be replaced in that location if they’re even burned out, flooded or otherwise lost. That’s a tough ruling to fight. (Ferd, 21:05)
• It’s hard to move a flood map. Sometimes Ferd can get variances on a 100-year floodplain, and occasionally even a 100-year map, but FEMA and the Army Corps of Engineers tend to push back hard. (Ferd, 22:27)
• It’s hard to get floodplains changed because no one wants to take the chance of changing the map and then people drown in a major flood. (Ferd, 23:03)
• Right of first refusal provisions can be additional challenges to park owners looking to sell. In states that have such provisions, the park’s current residents can get together and try to match the sale price to take ownership. Realistically, they’re unlikely to be able to come up with the sale price, but it can slow a sale and create additional stumbling blocks. For one thing, tenants who know that a sale is proceeding might stop paying rent, knowing that the sellers won’t evict them and therefore lower the occupancy level during negotiations. Ferd is handling such a case in Colorado now. (Ferd, 25:17)
• Those who wish to contact Ferd for legal advice can drop him an email at Ferd@themhplawyer.com. (Ferd, 36;18)

Do you have legal issues related to the sale or purchase of a mobile home park? Reach out to ferdniemann@themhplawyer.com or call up Max at (678) 932-0200. You can also drop him a line at info@themhpbroker.com.

Power Quotes in This Episode:

“I can work on zoning every week, but it’s not every day.” (Ferd, 18:21)

“…nobody wants to be the person that raises their right hand and in front of the federal government says, ‘I think that this area that someone else said was not safe for habitation is now safe enough that I’m gonna modify the (flood) map’ and put people for the rest of time at risk of drowning to death when I put my career on the line for that move and so it’s really hard to get a map changed.” (Ferd, 23:03)

00:02

Hello and welcome to the Mobile Home Park Brokers Tips and Tricks. This is the podcast where we talk about mobile home park investing, because that’s what we’ve been involved in for the last decade. Let’s dive into today’s episode. Here’s your host, Maxwell Baker.

00:22 Maxwell Baker

Hey y’all welcome to another beautiful episode of the mobile home park brokers Tips and Tricks podcast. As always, this episode is brought to you by the community price Maximizer. It is our proprietary system that will guarantee you a higher price. When you exclusively list with us four step Program. Give us a call. Today I am very excited because we have a rockstar attorney that specializes in mobile home communities across the country. We have worked with Ferd indirectly and possibly directly up to us some of the agents on the team with what he does. He’s very good at doing a lot of stuff. MHP when it comes to legal stuff, so furred Welcome to the show. I was gonna give you a little background here. He owns the law firm called The MHP Lawyer.com. Which, you know, obviously I love that name, because it’s similar to ours. It’s a great way because everybody knows what he does. He’s an attorney. He’s got six attorneys that work with him that specialize in real estate transactions. They do a little bit in apartments, and they also do some auto dealer tax incentives, they do syndications but, about 75 80% of their business is in our industry. All the listeners out there that do mobile home parks, he is the man to go to Ferd, welcome to the show. Thanks for coming on, man.

01:47 Ferd Niemann

Hey, thanks, Max. Appreciate you have me, appreciate the nice intro there.

01:50 Maxwell Baker

Yeah, man. So, I’ve got some notes here that you started in 2014. You got your bachelor and masters, Rockhurst University, and then your law degree over at University of Kansas. Tell us about the journey about how you became who you are today.

02:07 Ferd Niemann

Yeah, well, thanks. Thanks again. Well, I mean, I was a commercial real estate analyst at Jackson County government here in Kansas City. So, I saw a lot of mixed use in commercial, a lot of tax incentive projects, certainly larger scale, you know, $10 million to $500 million projects. So, I was a financial analyst and I was doing single family and duplexes stuff on the side flipping some houses but do some buy and hold. I really just saw that the ROI was better for me on single family than some of these big guys, but of course, I couldn’t scale. You know, I couldn’t easily buy 100 houses. So, I started looking at apartments. Well, the problem with apartments was there’s a lot of competition and they were sophisticated, they’re well capitalized, and it made the yield go down based on what I would had to pay or couldn’t even pay perhaps. So, I looked a little bit more in MH and I got into MH, I was doing a part time for several years there. I also went to law school about 2010-11 with law school, I worked full time during law school, it took me about four years to graduate. I wanted to be a real estate development lawyer and or real estate developer and the name of the game in that space was often with tax incentives, property tax rebates and sales tax exemptions and redirection of sales tax, things like that. So, I kind of pursued both paths, got a job at a big specialty law firm that did real estate development. Then I went in-house with a real estate developer as a director of development. They’re doing mostly retail projects and somewhere along the way, I was messing around mobile home parks and ended up taking a liking to him and then doing pretty well on the first few deals.

03:51

So back around 2018, I stopped doing retail, stop practicing law and just jumped into MH and then somewhere along the line here a few years ago, got back into law, I launched my podcast and mobile popular podcast and then that quickly led to more clients than I could service. So, I started hiring other lawyers to work with me and just by virtue that and marketing, Dunmore got back involved in taxes, and he’s doing some automotive deals right now doing some apartment deals. But basically, I’m a combo of a financial analyst, a syndicator, a zoning lawyer and a real estate lawyer. Right now we own 19 communities about 1500 sites, have sold five communities along the way, as well. So mostly buy but also sell and our parks are in the Midwest. Our law firm is wherever it takes us. So, we’re kind of allover in the law firm. Depending on the subject matter. Some states we don’t have the license or skills for particular tasks, but for the most part, we can do stuff all over the place. So that’s grown.

05:02 Maxwell Baker

Yeah, man, you’ve got quite the resume and the deadly combo of skills. It’s pretty cool to meet somebody of your caliber in the industry. There’s not too many attorneys and that, you know that are in our industry. There’s a few in there, but none of them not too many of them actually buy deals. So, it’s pretty cool to meet you and have you on the show. One of the things I’ve mentioned in our audience here, is furred is really good at dealing with a lot of zoning law. A lot of just like legal issues that come up with like, some of the stuff that I’ve seen that he’s done is some of the counties out there. We’ve got a beautiful county here in Atlanta, Bartow County, who disqualifies lots after 12 months and used to put age restriction and size restrictions on mobile homes. Ferd, I’m seeing more and more as we get into other states, across the country. What are you seeing as far as the culture for mobile home parks? Is it changing for the better or for the worse, or? I know you see a lot more of the blocking and tackling than I do, because you’re I mean, it’s what you specialize in. So, kind of curious what you’re seeing right now?

06:09 Ferd Niemann

Yeah, good question. I mean, we see it all over the board probably done zoning letters, or zoning analysis in probably 150 cities at this point. So, we’ve seen maybe not everything but pretty close, I’d say more often than not, the trends are becoming less favorable. I’ve got two calls on my list this afternoon for cities that have put in some of the restrictions, you said age restriction, size restrictions, infill timelines, utility restrictions, where in general, there’s really only three types of park legal conforming, which would typically be a park that was illegal, and that only permitted at the time it was built and is still legally up to speed with the current code. So, with legal conforming, those are typically parks that are relatively new, pretty rare, or they’re in parks that are super rural, where there’s no zoning code. So, they’re technically legal and technically conforming, because there’s no code. So, I would say that’s probably, you know, 10% or less of the communities, and then 10% or less are probably illegal communities and I’d say even less than 5% we don’t see them very often and those would be parks that were built without the proper approvals, despite there being a path to approvals available. So they were, “illegal” at that time and are still today. Then the vast majority of parks are legal non-conforming, i.e., grandfathered, which means they were validly constructed in accordance with the laws at the time, which may have been no laws at the time, but they’re not in full conformity with the current laws, which typically means they don’t meet the current size and setback requirements.

07:52

So, to the specific ones you mentioned, I think the age restrictions are kind of bogus. I happen to own a 1957 Spartan that is pristine, and I own a 2022 Clayton that just got destroyed. So, now I got $15,000 renovation on it. Which one’s better? Well, it depends. Yes, but in the current condition, the old one is, so a lot of these cities will say; I’m looking at one this afternoon. It’s only seven years. So, we’re in 2023. So according to them, a 2015 mobile home or manufactured home is not suitable, and it should be taken out of the park, which makes no sense to me. What’s the difference between 2015 and 2016? It’s arbitrary.

08:37 Maxwell Baker

Yeah

08:38 Ferd Niemann

With zoning cases if it’s arbitrary or capricious, and there’s not a real rational basis that between the two so I can we generally fight those as far as infill in 12 months, most states have requirement at least six sometimes 12, where we get into fights with cities all time, we got an act of lawsuit on a deal in St. Louis market right now. This is a client deal, not not one of my deals, I can’t get too much in the weeds on it. But basically, the city there says, If a lot is vacant for six months, it’s deemed abandoned forever. Because, abandoned is a big word, because there’s really only three ways to trump your grandfather rights. One is nuisance, technical process through the state. Two is abandonment and three is public health safety, welfare, morals, i.e., the fire code, road safety, things like that. So, we are seeing more and more cities put in abandonment provisions and then the argument just becomes if you’re talking abandonment on a per lot basis or a per park basis, and I can get into the weeds more if you like but I’ll pause there instead of ramble more actually. But yeah, we see these issues a lot and they’re generally more and more hostile.

09:55 Maxwell Baker

Yeah, no, I was gonna follow up is like what parts of the country are you seeing? I was gonna pivot back to what you were saying about illegal parks.

10:03 Ferd Niemann

Well, you know, it’s hard to come up with too many trends, believe it or not, I mean, I would say about a third we got we go for what’s called a zoning letter, which is basically a zoning certificate plus zoning certificate is basically call the city and say, ‘What’s my zoning?’; They go, here’s your zoned R-4, congratulations and letters going to say, Okay, well, what’s what is an R-4, where there’s ambiguity, it’s gonna try to nail it down. Can I bring homes on every lot that is vacant, can I bring homes on every lot that is currently occupied, can I bring homes of any age of any size?

10:36 Maxwell Baker

Yeah

10:37 Ferd Niemann

With no respect for setbacks, interior, exterior, etc. So, about a third of the time, the cities will sign we give them some longer winded stump speech but, basically, by the third time they’ll sign anything. Then about 25 to 30% of time, they will not sign anything, they’ll just tell you out of the gate, we don’t sign zoning letters. The zoning letter is helpful, by the way, because you can then get an endorsement on your title policy for zoning endorsements is like an extra layer of security. In some states, it’s free to do that. In other states, it’s like 250 to 500 bucks, it’s not that expensive. So, it’s generally worthwhile.

11:09 Maxwell Baker

Interesting

11:10 Ferd Niemann

About half the time, the third tranche, the cities say, okay, we’ll sign your letter, but we want to revise it. That’s where, you know, that’s where the magic happens is trying to get a better-quality letter and negotiate with the city. So, all else being equal. The biggest cities, you know, I live in Kansas City, you know, they get a million people. They have 115 lawyers and a law department; they’re not going to just sign the first thing that I send over.

11:37 Maxwell Baker

Yeah

11:38 Ferd Niemann

So, the biggest cities are hard to get it signed. Now Kansas City is respectable enough and they have enough legal skills in the city hall that somebody will sign a letter and will negotiate it with me. Whereas some cities, they just tell you to go pound sand. The smallest cities either sign anything or they tell you to pound sand, the cities of under 10,000. The city’s at 30 to 60,000. Like we do a lot of work there. Most of them will be pretty agreeable. So, I’d say the size of cities is a bigger deal. In the mountain region in Colorado, Arizona, Utah, we’ve had a lot of cities that just say, okay, we got your request, fill out this form, pay the fee, it’s $100 and we’ll send you a zoning certificate and they just won’t play ball.

12:22

In the southeast. It generally depends on the state or the city, we’ve had a lot of success in Tennessee, Tennessee has stronger property rights from MH so is Iowa, Iowa has been pretty favorable. Missouri is generally pretty favorable apart from the one lawsuit, we got going. North Carolina, I’ve run into a couple cities that are very much in the midst of gentrification, and they hate trailer parks. So, North Carolina has been surprisingly challenging on some of those. Mississippi and Alabama haven’t had any problems. I have not done the zoning work on the north in the northeast, we want to in New York. We’re all you know, we generally don’t find too many cities that are super obstinate, but if anything, it’s going to be just you call the city, and it’s the Planning Director and the Public Works Director, the Deputy Fire Chief and the Deputy City Manager. The guy drives the snowplow, if it snows, I had a guy in Mechanicsville, Iowa, that was his resume. Some of those type people, they’ll say something along the lines of I’ve been doing this since before you were born, and I’m not gonna listen to you talk at me. So, no. So, it’s really just sometimes you roll the dice, the dice of the bureaucrat that you get.

13:37 Maxwell Baker

Yeah, no, I can totally harmonize with that. We have a county here in Atlanta, another one called Spalding County where they inserted a lot was disqualified after 12 months provision or ordinance, I should say, in their rules and regs or whatever. I mean, forgive me, I’m not an attorney, I’m just trying to sound smart (laughs) So, they put that new ordinance in there, and they wouldn’t remove it. When I was more full piss and vinegar I threatened to go to the papers, you know, saying that these guys don’t support low-income housing. That actually worked because they were like, look, we’ll carve out and they won’t, they wouldn’t remove the actual ordinance in there but, they just did a carve out. Have you seen more and more of that with your stuff is that they just leave this stuff alone and then they’re just like, look, we’ll just make a special occasion for you and that’s it?

14:29 Ferd Niemann

It’s pretty rare that I see them do a carve out I’ve actually had them change the code. One of them that I’m working on today that I referenced, I’m actually going to, I’m going to basically have to ask them to change the code because otherwise they feel like they’re discriminating. It’s one or the other. But I have had them basically make an exception for us many times where they’ll just say, okay, well, our codes valid, and we’re not going to concede, but you bring up a valid point that your park was here before this code. because it means that, you know, the underlying theory of grandfathered rights is I was in existence in use or space or size, or in location prior to the code. So you can’t just make me move. So like, basic example is, if I live in a 5000 square foot house, and I also have a motorcycle mechanic shop out of my garage, and there’s no zoning code, I’m allowed to exist. Well, later on developer rezones and there’s a new code that says there’s R-2 and R-2 says that there’s buildings, housing, residential housing in my neighborhood, but it has to be 2000 square feet or smaller. Well, I’m obviously non conforming with that code.

15:44 Maxwell Baker

Yeah

15:45 Ferd Niemann

But I’m legal now because I predated the code. So, I get to continue to operate my 5000 foot house. Typically, with the house being a “structure”, if my structure is knocked down, or burned down, even act of God or if I’m purposely do it. If I knock down more than either 51% of the size or the value, then the city could deem it abandoned and then if I want to rebuild my house, now I have to build only a 2000 square foot house.

16:09 Maxwell Baker

Yeah

16:10 Ferd Niemann

That’s going to be a size grandfather right as the size on use will be the current code says no commercial businesses. Well, my motorcycle mechanic shop is often allowed to continue its use, but only for a certain period of time off and those are those uses can typically sunset. Maybe you said they give you 10 years to move in and move out. So, a lot of that happens in the city. So, sometimes what they’ll do is they’ll say, look, we’re not going to say our codes invalid but, we will concur and it’s pretty easy to prove with aerial photography that the city was incorporated in 1970. The first code was 1975, the first code that said the word mobile home park was 1989. There’s an aerial photo that existed since 1950 and they’re like, okay, you are here. So, that’s where the the cities have tried to go on a per lot basis and say, well, that lots been vacant for 10 years, we can see from aerial photography. I just say I basically tell him, the the use is a parking lot available for rental. It was always available, it just was unsuccessful. Just like the Holiday Inn last night, if it wasn’t at full occupancy. It wasn’t like they have the room by the ice machine on the first floor, quit becoming a hotel room.

17:26 Maxwell Baker

Yeah

17:27 Ferd Niemann

It’s just that the hotel room didn’t have somebody paying to use it last night and if unless her full occupancy. Typically you’re looking at what New Year’s even Valentine’s Day or your full occupancy. Other than that, the next 10 and a half months, that room was probably empty but, no one argues that hotel room was abandoned but, for mobile home parks, they regularly tried to say it’s abandoned. Case law is generally on our side but there is some case law and our ordinances the safe city has a sunset limitation of six to 12 months that they can enforce it. So, that is a tougher one to overcome. Other tougher ones are fire safety, ingress, egress, floodplain and so on. Basically, the third prong of trumping your grandfather rights is life safety issues.

18:13 Maxwell Baker

Yeah and is it a pretty accurate statement to say that most of the work you’re doing is the zoning stuff these days?

18:21 Ferd Niemann

Oh, I don’t know. I wouldn’t say most when we do we always have at least 5 typically 10 zoning matters in front of us. But really, most of our attorneys do. Contracts, leases title review, survey review, bank docs, closings, and then we’ll do depending on the project syndications zoning, one of the guises litigator, general consulting to corporate stuff, but I’d say zoning we probably do on, we probably do zoning on like half of our transactions, but half the time the client just says we don’t want to do it or whatever reason or sometimes the bank will hire a PZR report or something that they’ll feel the satisfactory. So, they’ll do that in lieu of us doing zoning letter, but I can work on zoning every week, but it’s not every day.

19:13 Maxwell Baker

Okay. Some reason I thought that was like, more than what you guys; because I know you’re really good at it. So, that’s the reason why I made that (laughs).

19:20 Ferd Niemann

Yeah, when we do that, we probably do more than anybody, as far as you know, doing her whole time. But yeah, it’s just, it’s one component of that transaction. Just like some clients don’t order a survey. Well, they don’t have a survey, well, then they don’t need to hire us to review a survey. If they don’t have a survey, our title commitment review is greatly hampered. So, it’s a cheap legal bill, but you don’t have the luxury of legal analysis on title survey. So, some people do bank docs, you know, just each their own. Some people do syndications without following SEC regs for private placement writers I wouldn’t advise it but, it happens all the time. So, yeah, we just didn’t nudge our clients for the the bus but, it’s sort of like an identifier. Yeah, zoning can be a quagmire for a lot of deals. So, people don’t always want us to do it but, I think it’s vital. I frankly, think it’s an early phase vital step of your due diligence.

20:22 Maxwell Baker

Yeah, and you said flood like, are you just talking about kind of like, is there a difference between the federal flood maps and the state flood maps? Are they kind of in tangent?

20:33 Ferd Niemann

They’re gonna be related. I mean, there’s the FEMA oversees, but FEMA generally has states that are engaged, I bought a park in Iowa that had floodplain but, there’s a federal program within their state maps, and there was even county maps and then insurance had to be sold through a state agency couldn’t buy it even from a commercial provider. When I talked about flood from a zoning perspective is; what’s the purpose of a flood map, but part of the purposes is God’s way of telling you to where you’re not supposed to live, because water is going to be right.

21:04 Maxwell Baker

Yeah

21:05 Ferd Niemann

So is that for safety? Yeah, it’s for safety. So what’s the purpose of trumping your grandpa rights, it’s for life safety. So what a lot of cities will do, I think it’s valid, which is not convenient for my clients most time. Cities will say, Okay, you got 100 Space Park, you’ve got homes on 99 but, 30 of those are in the floodplain. If those 30 ever move out, burned down or get flooded, you can never put another home in there. It’s hard to overcome that or they’ll say, you got to raise it 10 feet off the ground and have special underpinnings and, and then it becomes aesthetically pleasing or financially infeasible. So, we see that somewhat often, I would say, maybe probably not 10% of time, but probably close to 10% of time, you’ll see floodplain and there’s a different there’s different three types of floodplain, essentially, there’s 500, year flood 100 year flood and flood away. If you see floodway, you should just plan on those mobile homes not being there forever and you’re because that means there’s an act of water source and your lenders, your sophisticated lenders are not going to like floodway in your agency lenders, for example, they will not even count the income generated on mobile home in the floodway.

22:26 Maxwell Baker

Yeah

22:27 Ferd Niemann

I’ve even seen him push back on the 100 year floodplain and even the 500, you can generally get a little leeway on the 500. It’s hard to move a flood map. You gotta get the Army Corps of Engineers involved in your FEMA. I tried to do it once. I worked on a commercial project. We did it, we did it we moved to but it was a lot much easier because we were we were moving around tons and tons of dirt. I tried to do it on the park one time, and the guys at FEMA started the conversation with if you’re thinking about it don’t if you’re still thinking about it, don’t!

23:02 Maxwell Baker

(laughs)

23:03 Ferd Niemann

We advise against it because nobody wants to nobody wants to be the person that raises their right hand and in front of the federal government says, I think that this area that someone else said was not safe for habitation is now safe enough that I’m gonna modify the map and put people for the rest of time at risk of drowning to death when I put my career on the line for that move and so it’s really hard to get a map changed.

23:27 Maxwell Baker

Yeah. Interesting. There’s a couple of other questions here. I mean, I’m naturally nerd out over law stuff, because I see it’s different. Every state is very different culturally and how they treat stuff. Did you ever deal with like conservation easements and mobile home parks or anything like that?

23:44 Ferd Niemann

Not in mobile home parks. I’ve seen a little bit back when I was doing development, but not wetlands type stuff, but I don’t think I’ve come across it in the years.

23:57 Maxwell Baker

Okay. Just curious if you ever mess with that, because I was like, might throw some ideas at you here. I’ve seen other states here with rent caps. Florida’s got some and, you know, as more and more parks; or should I say states are changing the way they allow people to raise rents. What are you seeing out there? Is it happening more in blue or red states, I would assume it would be happening a lot in blue states more because I know Virginia, they just passed a big lob tear where you have to like advertise on the internet that you’re selling your mobile home park and then there’s like a new first round refusal that they have to give to all the tenants to go out and give the park owner the ability to sell to them while it’s under contract, and they can buy out the current buyer. If they can figure out how to you know basically buy the park as a group. Have you been seeing any of that stuff are you know, just kind of the I guess long story short, there’s a lot of you know, a lot of stuff that are that’s happening for tenants out there that promote the tenants wellbeing and just kind of curious if you mess with that or not or if there’s anything you can do to help, you know, kind of kick the can or work with the tenants or, you know, just I don’t know if there’s really a question there, but…

25:17 Ferd Niemann

We see it. I’ve seen it several times. There’s generally not a lot you could do. I mean, we worked on a deal in Colorado, Colorado now has the right of first refusal provision. Now what was interesting was, it’s in that example, that was happening a couple of states when I wasn’t the lead attorney and so if I misquote, then that’s why but my recollection from Colorado, was that it was the seller’s problem. We had one in New Mexico actually, also, I believe, in the cellar. In that case, let’s say that our my client was the buyer, we were going to buy it, it was a big price to like 25 million or something. The seller never provided the ROFR notice to the residents, when we got wind of it, that this existed during our due diligence, and we got wind of it that had not been delivered. But it wasn’t really in our interest to tell them because if the tenants would have found out they could have blocked the sale or penalized the seller but, once the sale goes through, the tenants can’t like come back and force my client, the new buyer to then sell to them. Practically they weren’t going to come up with the money or get the debt or anything like that. It was designed just to be tenant friendly but, practically, but the tenants weren’t going to buy it but, then what happens in those scenarios, I think is the tenants are less likely to pay rent, because they think they realize that the seller is less likely to evict them, thereby decreasing occupancy and jeopardizing the price of the park. Then the problem is the buyer re-trades the seller in order to agree like well, okay, I’ll take 24 hours that are 25. Well, I never gave notice for 24. Now I gotta go back to the residents again. So it just elongates the deal transaction, which of course impacts financing and a number of other things.

27:01

So, in that case, I wouldn’t say well, my advice or against my advice, but in that case, we didn’t do anything and the park closed. I don’t know if the tenants ever found out that there was a ROFR provision, but if they did, the pain was only on. So, there’s that. Then, you know, there’s there’s other instances where there’s, we have one client that, you know, has done this with, you know, part of sales to residents and, you know, it’s just, it’s hard to pitch, you know, to the bank, and everybody I feel like when it’s unknown, nobody likes a ROFR provision, slowing up the deal. But so that happens, as far as rent caps. I think it’s talked about a lot more than comes into fruition, like I own parks in Illinois and it’s been on the docket for years in Iowa, where I own parks, about rent control.

27:57 Maxwell Baker

Yeah

27:58 Ferd Niemann

It hasn’t been approved, knock on wood, but it gets people all fired up and people don’t want to go invest in those states. So, pros and cons of that from a competitive standpoint. But, you know, there’s rent, there’s rent control out there different variations in Oregon or New York, it’s thrown around a lot more than it gets approved but, I think it’s bad public policy for numerous reasons. I see it out there. Sure.

28:25 Maxwell Baker

Yeah. I really liked how Pennsylvania does it when I interviewed the Manufactured Housing Director over there. They don’t do the whole state with like a big, big old paintbrush thing and this is the new law for rent control, they really carved out based off of each county’s needs. So, like it was a pretty dense County, they put rent control, but if it was out in the sticks, it’s kind of the wild wild west. I actually appreciated that a little bit more because like, you know, Florida, like it’s just the whole state like they you can’t, from what I understand, correct me if I’m wrong, it’s you can’t go up more than 10% a year. That’s obviously some areas of the state of Florida, more rural than others. So, it doesn’t make sense. It’s interesting, I just been noticing more and more. One other question I had here is, I’ve seen some some park owners forfeit the title, and then try and turn it back into personal property. Do you mess with the title stuff on the mobile homes at all? Or have you been seeing that at all? Just kind of curious what your thoughts are on that?

29:28 Ferd Niemann

I have. I’ve seen it and I’ve done it a couple times, really in probably the inverse direction. I bought a community in Kansas City Market and the office was a model home and the previous owner had forfeited the title to affix it to the real property because they never wanted to sell it and they wanted to rent it. Well, I wanted to sell the home, so I had to reverse the process to get the title issued to then be able to sell it as chattel. Most of the time, if you’re buying, there’s a home out in the country, it’s worth more as real property and it’s taxed less as real property. So, rarely do you see people, at least that I’ve come across, do you forfeit the title because, you know, around here, you can buy a used home for 35,000 but, if you buy a used home, with two acres of dirt out of the country, it’s $100,000. You know, but it’s already got its own, you know, septic and water and utilities. It’s, you know, your own little farm your own little piece of heaven out there. So. that person doesn’t have a title, they have real property, they rarely turn those back into personal property because they’re asking 100 grand, I don’t want to acres dirt, I want the home but, I can find a similar home for 30,000. So, they don’t sell to guys like me, the case where I did it on my park was because the home was already in the park. I wasn’t going to ever sell the dirt under that particular home, at least not a la carte.

31:06 Maxwell Baker

Yeah

31:07 Ferd Niemann

I see parks that are individually plated, you know

31:09 Maxwell Baker

Yeah

31:11 Ferd Niemann

80… lots, typically the landlord owns all of them, but not always, we did a RV campground in Massachusetts for a client, and he bought “the RV park” but, he only bought like 68% of the RV park but it had a HOA and bylaws that, you know, 68% was majority vote and he charged lot rent. The previous guy had built it out and everything, we just bought the operation. But you know, there was individual lots and some people paid 50 grand for their lot years ago and they got their spot by the water, but they still had to pay lot rent. That’s kind of interesting!

31:48 Maxwell Baker

Interesting. So, they bought the land and then had to pay lot rent?

31:53 Ferd Niemann

Yeah

31:54 Maxwell Baker

Just uh, what were they paying the lot rent for?

31:59 Ferd Niemann

Access to common areas and utilities, the same thing you normally pay a lot rent for? You know, I think some of them were kind of deceived by the previous owner and then I think some of them, they probably, you know, buy it for 30,000 and get 10 years free or something. But by the time my client came around, there was nobody there free, it was kind of it was almost like they just got to preserve their rights, that space and they got to vote, because they were part of HOA that how much the dues were but they really had a minority vote. You know, like I live in a residential neighborhood. You know, the developer, typically in our HOA docs on land development, the developer controls HOA, up until a certain number of lots are sold and then they’re required to hand it over to people.

32:46 Maxwell Baker

Yeah

32:47 Ferd Niemann

Like right now, at this point, my neighborhood is, you know, it’s fully developed, there are no new homes for sale. So, the original developer doesn’t own anything, and doesn’t vote for anything. So, I think this one was probably not as sophisticated of an operator to put together or certainly not as sophisticated clientele. It ended up working out fine, you know, everybody was happy, and you know, we said, I was involved from the business planning, like, and we said, hey, rents gotta go up, because we got to fix XY and Z and everyone’s like, we agree, fix it, and we’ll pay more rent.

33:26 Maxwell Baker

Yeah, interesting!

33:27 Ferd Niemann

To a certain point, people be like, Yeah, makes sense. I’ll pay an extra $200 a year for more value. But if it’s $600 more a month, then we’ll see what will happen but it could be mutiny.

33:40 Maxwell Baker

Yeah (laughs) probably get some fluffy tails coming out of the woodworks for $600 a month increase? I would assume on that situation, they’re probably pretty below market on lot rents. Because I mean, if they own the unit, I’m assuming or they own the land, I should say the lot rent they’re paying is not what market would bring. But I might be wrong. I mean, what was this? What was the scenario in that situation? Was it like market lot rents? Or was it a little below?

34:06 Ferd Niemann

I think they were I don’t remember the specifics on that. I think they were somewhat below but really, the play was just, they were like 60% full and it was in a market that should have been full all the time and the seller had been cited by the Attorney General for some shady stuff, but he had basically been selling almost like franchise rights to these lots. Somebody would be like, he’d be like, he’s a gambling addict. Because if you come in right now and give me $1,000 Cash, I will give your grandchildren who don’t exist yet. I will give your grandchildren the right to come here for the Fourth of July, every year forever.

34:44 Maxwell Baker

(laughs)

34:45 Ferd Niemann

Like okay, he sold like 1000 memberships to 80 spaces.

34:50 Maxwell Baker

Wow!

34:51 Ferd Niemann

Just the people who weren’t using them. You think like an airline that sells 100 seats for a 95 seat flight he was doing that, on the assumption that people weren’t gonna show up, and it was working, but it had created quite the mess. So anyway, it was it was a rare structure. I don’t think I’ve ever done one like that.

35:12 Maxwell Baker

Yeah, I’ve never even heard of anything like that.

35:15 Ferd Niemann

It was a Co-op. Co-ops are more formal, more common like in New York apartment buildings and stuff but this was a Co-op. It was a Massachusetts RV campground.

35:26 Maxwell Baker

Yeah, there’s a lot of Co-ops in Florida. I know Rock USA does a lot of them but, I had no idea that Co-ops could be set up in a lot of different ways.

35:35 Ferd Niemann

It’s not common. You know, growing up in Kansas City people use condominiums a lot for kind of apartments slash condos but, I had never worked on a Co-op project. Ironically, one of the lawyers here lived in one, I didn’t even realize it. So we gotta go. I’m like, Well, okay, you know, more than I do.

35:53 Maxwell Baker

That’s pretty cool. Well, Ferd, I appreciate it, man. We’re at about almost 40 minutes here talking about law stuff, which I naturally enjoy, because we see a lot of deals and I know you see probably that or more of a deal flow that we see. If anybody wants to get a hold of you, what’s the contact info? How do they get a hold of you to work on some stuff?

36:18 Ferd Niemann

Oh, they can shoot me an email ferd@themhplawyer.com or they can go to my website, themhplawfirm.com/our-attorneys/ and click ‘Contact Us’, it’ll get to me and go from there.

36:29 Maxwell Baker

Awesome! Hey y’all, thanks for listening, Ferd, we appreciate your time here and all the all the nooks and crannies on mobile home parks. As always, y’all this episode is brought to you by the community price Maximizer. It is our proprietary system that will guarantee you a higher price. When you exclusively list with us for Step Program, give us a call (678) 932-0200 If you have a hard time getting in touch with her, just call us. We’ll make the intro happy to talk to him and yourself and email and we’ll take it from there. And as always, let’s keep moving forward. Thanks for listening!