MOBILE HOME PARK FOR SALE
In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, founder and CEO of The Mobile Home Park Broker, will discuss the company’s Sellers Guide, a book he authored with valuable advice for selling mobile home communities.
As with every Tips and Tricks podcast episode, this one is 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 Max for details.
Here Are the Show Highlights:
Power Quotes in This Episode:
Failing to research a plan and exit strategy can spoil your future or leave you vulnerable to excess taxation.” (30:27)
“The more information you have, the higher the price you’re going to get.” (35:56)
“…appraisers look at your property much like buyers. They’ll examine the local lot rent and their sales comps. They’re going to look for curb appeal and for what the park’s first impressions would be due to its current appearance. (56:04)
“We do come across bad eggs (among competitive brokers) every once in a while, we label them as Scam Artists in our actual database. We all know that every industry has them. These people do things like re-trade deals for no reason right before closing, never deposit Earnest Money, make big promises with no intention of delivering. (1:01:10)
“We have the ability to ask the right questions, interpret prospective buyers’ answers, and gear the marketing of your community to a certain type of buyer.” (1:03:21)
00:00
Hello and welcome to the mobile home park broker’s 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 is your host, Maxwell Baker,
00:22 Maxwell Baker
Hey, y’all, welcome to another epic episode of The Mobile Home Park Brokers Tips and Tricks Podcast. I am your host, Maxwell Baker, yours truly, CEO at the firm. Today we’re going to be talking about your seller’s guide. So, this book is what I wrote a little while ago, for all y’all sellers, all you sellers, depending on where you’re from, as I’m going to say it, all you guys and girls out there that are sellers of mobile home communities. Today, we’re going to be going over that book. So, I’m going to be doing a little bit of a summary, but also be reading directly from the book. So, here we go. So, the introduction of this book was developed over the need, over many years that I have been in this business. It’s because there a lot of sellers out there that have taught me a lot of things on what to look out for. So, this book is really made from a lot of people, a lot of conversations, 1000s of hours of me just hammering my head through all of this knowledge. So, there’s a lot of horror stories, and there’s a lot of things that I’ve learned to basically avoid for you sellers out there, and I developed this also to get rid of those wheeler-dealer brokers that like to what we say in the brokerage industry ‘buy listings’ and what that means is, you know, they will over promise a price and then beat you down to what market levels are by just saying, lower your price, lower your price!
02:03
So, it’s a kind of sleazy, slick way to run a brokerage that a lot of our competitors do, and we won’t name them, but we don’t do that here at the firm, because it’s just bad form. It’s slimy, like we don’t do that. So, this book was here to help you all navigate all that stuff, how to choose the right broker, how to choose the right buyer, all that jazz. So, we’re gonna right now jump into chapter one.
02:35
What is your park worth? That is Chapter One.
When you don’t know how to value your mobile home park, the biggest thing that can go wrong is just missing the mark on your pricing. I’ve seen brokers, as well as sellers come to market without any clear idea of what their community is worth. They’ll either price it way too low, leaving money on the table, or way too high. So, they just get laughed at the entire way, all the way to closing, not even a closing, because they’re not getting the closing because they priced it too high, right? So, let’s lead into what makes other parks more marketable than others. So, important things that make your park more sellable include the organization and condition of your infrastructure, how your management is structured and organized, the cleanliness of your books and records, that is probably one of the more important ones, because the more data you have, the more money you got. That’s how it works. Your community’s curb appeal, obviously and then the Resident Composition. What that means is what the demographics are of your residents and you know, if you’ve got more families in there, or more day laborers, or you’ve got man camps, or you’ve got, like, the tiny home demographic, all those different profiles affect the pricing. It’s kind of teetering on some sensitive stuff for a lot of people but at the end of the day, money doesn’t look at that kind of stuff. It just looks at risk and whether or not there’s a lot of movement, because what all the investors out there are looking at is, how stable is your community? Is it a revolving door? Do the police get called every week? You know what I mean. So, it’s just whatever brings less risk brings more money. So, these are some of the leading variables and from what I’ve seen over almost, I would say almost 15 years in the business I’ve been doing this. I can’t believe it’s been that, but I’ve sold probably close to 500 communities in my lifetime been involved in, and those are the biggest variables that we see. So, moving on to well, let’s go into deep dive in some of these things.
05:00
Your books and records. So many times, people think that taking cash receipts is a great way when it comes to filing your taxes for obvious reasons. On the front end, it looks and sounds great because you got a pocket full of cash sitting under your mattress that Uncle Sam doesn’t have any idea about, which I don’t condone doing because A, it’s illegal, and B, Uncle Sam’s always going to get his nut. It doesn’t matter whether it’s every year as operating, but it is going to affect you on the back end, if you ever sell. Now, if you never sell and you just run a cash business that’s on you like I can’t tell you how to run your business. I can only tell you what’s going to bring value and if you do all cash, you can’t prove that you’ve been making that money, because banks are not going to finance cash. They need to see deposits into a bank account that you pay taxes on. So, that’s one of the biggest things that a lot of people think that doesn’t matter in this industry, but it does, like a lot of moms and pops out there, collect cash, when in reality, it doesn’t help you on the exit. It helps you while you’re operating. You can go pay cash money for everything you want but as far as selling, lenders want to see deposits and receipts. That way they can verify that you actually are collecting that money.
06:24
So, moving on to the empty lots and raw land. If you’ve got empty lots and raw land in your community, there’s a couple of things there that are variables. One, the area, like in some areas in Louisiana, you’ve got dealerships paying lot rent just to hold the lot that they have found in your community, just to hold it so they can actually bring in a tenant that they sell a brand-new home to into your park. So, a lot of times, sometimes, like I said, they’ll pay the lot rent, which is crazy. Then you’ll go into like, really, country town, middle of nowhere, USA, and to get a mobile home in there is you got to go out and buy one, bring it in, and then finance it for the consumer. So, that’s the other end of the spectrum. So, it’s all market driven, and we can determine that, when we do the analysis on your community, what kind of community you have, we do some test ads and see what the kind of demand is for the area. Typically, if lot rent is high, meaning over $400-$500 a month, it’s going to be teetering on the first scenario I gave you but if it’s like $100 or $150 to $200 lot rent, more than likely it’s going to be the latter, where you have to go find the unit then finance it for the consumer. So, in my book here I say 300 but right now it’s closer to 400 is the threshold to start seeing some real interest from consumers moving a home into your park, moving on to knowing your numbers. Let’s say you want a 50 Park, 50 space park with some raw land in which you add another; which on that raw land you could add another 50 lots. So, a total 100 lots, but only 50 built out and once it’s built out on those extra 50 lots, I have $300 here in the book, but like I said, we used $400 now in these days, but we’ll stick to the book, $300 lot rent. Once you fill up those lots, you’re looking at a pretty nice little annual income of $180,000. That is pretty good. Even if those lots cost you about $20,000 to build, you’re still going to get north of 10% return on your investment using a 35% expense ratio. So, you take that lot, which was once full, and use a 35% expense ratio. If you sell that park at an 8% CAP, you’re looking at a sales price of $1,462,500 for those occupied 50 lots. Then you would subtract the million dollars it took to build out those 50 lots, $20,000 a lot like I mentioned earlier, which leaves you with a $462,500 in value for those undeveloped lots. If you don’t know the term capitalization rate or cap rate, it’s the percentage of the results from your net income getting divided by your purchase price. So, circling back to the net, net, net of $462,500 that would be divided by 50, and that is what I would price as your broker. I have to look; I don’t have my calculator here. What is that? You stand by, I will tell you momentarily. Y’all, that’s $9,250 a lot. So, that’s what I would price your empty lot at; per empty lot. So that’s 50 lots. Keep in mind this, if and when it costs $20,000 to put a lot and be ready to move in a mobile home.
10:13
So, moving on to utilities and sewer. Now, the less risk, the better. This is pretty boilerplate. If you’ve got well and septic, you got more risk than a park that’s got city water and sewer. Its just more variables equal more risk. Fewer variables equal lower risk. So, as an investment, yeah, money follows where it can flow easily and not have a bunch of heartburn, of stuff blowing up in your face, like a Septic tank, failing, field line failing, well dried up, well getting tainted, whatever it is Sewage Treatment Plant blowing up. Money flows where it’s easiest, right? So, the higher the risk, the less rub you’re going to have with that money flow. So, keep that in mind. The book kind of goes into a little bit more details, but I just gave you the summary. That’s basically what it does items that will increase your marketability. This is the kind of knowledge I’ve obtained over a decade as a mobile home park broker. Yep, decades; been about 15 years now, beyond the risk of factor of utilities.
11:30
It’s common to hear a newbie or a first-time buyer come to me and say, Max, I’m looking for city water all I rent in a primary market like Atlanta or Nashville, 100% occupied at a 10% CAP. Y’all, I get these types of emails all the time, and I laugh every time I see them, because if it was a real 10% CAP, wouldn’t be being sold to you. It’d be made to five phone calls or less, and that deal would be gone. It doesn’t ever hit the market. Those types of deals move very quickly. So, you got to be either very nice to your broker (clears throat) I like to hear how beautiful I am. I’m messing with y’all! Or you go out and find it yourself and you negotiate a very good deal for yourself but everybody wants that type of Park. The least desirable Park will obviously be the lagoon or the sewage treatment plant or any kind of private utility. But again, it’s about risk and reward.
12:27
Another variable to consider by newbie buyers is the number of Park Owned Homes you have in your community. Typically, institutional lenders don’t like to see Park on homes, though, community banks have a different approach. Institutional lenders typically don’t like to see more than 15% to 25% Park on homes. I’ve even seen it up to 30% it changes every year, and they’re not willing to lend on communities that have more than that, because they view it too risky. The number of Park Owned Homes you’re going to have will really affect your buyer pool as well. Y’all, there’s just more buyers out there looking for lot rent deals because they don’t want to crawl under those mobile homes you got and deal with those repairs, or they don’t want to manage the contractor, who may or may not be a knucklehead, hopefully he’s not, or she’s not, but there’s just more variables, right? You got more variables. You got more risk, albeit you get more money with a Park Owned Home, but the same time, it’s kind of like, Why do I want to work more (laughs)
13:32
So, the most desirable communities moving on are the City, dedicated roads, direct build city water and sewer, everything the tenant pays. It’s about as close as you can get to a triple net deal. The privately maintained roads obviously have more risk, risk reward, right? Same thing. Dirt roads are the worst you can get but there are some city-maintained dirt roads out there y’all. I have seen them, and I have sold them, and you make a call, and they come out there with their tractor with a little scraper, and they just go through and scrape all those little bumps out and it’s done, but it’s city-maintained. It does exist.
14:17
Then you’ve also got professional management. This is a big variable as well just the management side, just because everybody’s very different on how they operate their mobile home park. So, you really need to dive in and see whether or not it can actually be operated from afar. Or do you have to live there and deal with that every day? It just depends on the system, method and processes that park owner has. IEU, the more system method and processes you have, the lower the risk means, the more money you’re going to get. So, I have this section right here that says, ‘What do municipalities allow?’ That really just depends on whether or not you can move in homes into your park. I’ve seen some crazy stuff where, if the lot has been vacant for 12 months, then they won’t let you put it in there. Another one is, if a mobile home is older than 10 years old, they ain’t gonna let you put it in there. If a mobile home has got less than 1000 square feet, they won’t let you put it in there if it’s got metal siding; I mean, there’s like, a laundry list of things, but you really need to check to see because that’s ultimately going to affect; if you can’t move a mobile home into an empty lot, that’s going to be a problem, you know, and that’s going to affect your price. So, we do have some great attorneys that we use and recommend you using to try and get a zoning letter or some sort of letter from the municipality to allow you to do that but yeah, how many Park Owned Homes do you have? We talked about that a little bit with the lender situation. But in general, the more Park Owned Homes you have, the higher the risk. Albeit, the homes are worth money y’all. I’m not going to sit here and tell you that the homes are not worth anything. You’ve got these buyers that come to us all the time and it’s like, ah, that home’s only worth 500 bucks. I’m like, please, man, I put that thing on Facebook marketplace. I can get 20 grand out or 25 or even 30. So, don’t let the buyers out there tell you dictate what the homes are. You know what that home is worth, and you start at that price of what you can sell it on Facebook, and that’s where I would price that home. Now, as far as the CAP rate stuff on the lot rent side, you literally have two businesses. You’ve got the park on home revenue, and you’ve got the lot rent revenue, and they both have their own individual expense ratio. But when we evaluate your community, we separate all that stuff, even if you don’t have two separate contracts for the lot rent and the park owned home rent, we go out, figure out what the local market lot rent is, and we determine that number, and then we price it based off of a CAP rate of that we’ve been seeing trade, and that’s how we come up with a value to help you, guys and girls to get the highest price you can on your community. It’s all about you’ve probably heard it before. The Community Price Maximizer program that we have here. It is our proprietary system that will guarantee you a higher price when you exclusively list with us. Four step program, includes all these little things I just talked about in the first chapter, and you can call us at (678) 932-0200, or email me info@themhpbroker.com.
17:42
Well, that wraps up the first chapter. I’m going to move into Chapter Two.
17:47
All right, y’all Chapter Two? Are you making these common mistakes? One of the biggest mistakes I’ve seen, the failure to use the correct expense ratio when you are evaluating your community. The only time I’ve seen anything close to 15% or 20% expense ratio has been for communities that are set up seamlessly and like that triple net example I gave you earlier, dedicated roads, i.e., public streets is what that means, dedicated city water and sewer, where the city bills the tenants directly, all lot rent and with great management in place. When I’m typically evaluating a mobile home park, the norm is to start at around 40% and I’ll typically reduce it down to 30%. Now, don’t get me wrong, there are communities out there that’ll go a little higher than 40%, but in general, that’s a good rule of thumb to where I start. There are a lot of factors out there that affect the expense ratio. Happy to walk you through that on your analysis with your community, if you want to give me a call again, (678) 932-0200 and I can walk you through all the different variables that affect your expense ratio.
19:10
So, moving on to Number 2 Mistake, the other mistake I’ve seen all the time is failing to prepare your park to be sold. Even when planning to sell a car, you shampoo your carpets in the car, you clean the wheels and put on a nice coat of wax before you show it to a potential buyer. It’s the same thing with your mobile home community or RV Park. You have to cut the grass, take care of the landscaping, fix the signage, make sure all the mobile homes have skirting. Make sure your accounting is in order, make sure your management is in order. You just got to make sure all that stuff is taken care of. You can’t just go into it half ass and thinking someone’s going to pay a premium. The only way I’ve seen that actually happen when they do pay a premium, and doesn’t matter is if you’re sitting right next to a McDonald’s and surrounded by retail, then all the operations goes out the window, because typically, the buyer on that community is going to be a developer, and he’s going to tear it down and put something that he seems is more better use of the real estate community sits on. Some of the other no nos I’ve seen for you know, the traditional communities that are going to be sold as a community, and not as a redevelopment, are potholes, debris in the road, rocks all over the place. You don’t want to be driving around the park with the investors or the bankers and feel like you’re going off roading. That is the worst thing you do, because the lenders are going to look at all the stuff face value, because they’re going to go look at it, and the buyers are also going to go look at it and first impressions are lasting. If you come in there and you’ve got it on a contract out of 7% CAP, 7.5 CAP on the low on our traditional Three Star mom and pop community, and you got a bunch of potholes and a bunch of crap everywhere. You better be ready to get re-traded. So, that’s why a broker is extremely important, because he’s going to come and look at it and determine, hey, this is what we need to do to make sure somebody doesn’t try to re-trade you, also, you’ve got to make sure the tenants don’t have a bunch of yard ornaments lying around. Nobody likes to see all that crap all over the yards. That just shows that you have zero pride in your community, and even if you don’t have the mobile homes enforce those rules and incentivize your tenants to have clean lots. I literally had to almost evict a tenant because of all the crap she had in her yard in the one of the communities that I own and she cleaned it up soon as I started sending her paperwork that had to be signed and notarized; All That Jazz like I, you know, you know you can’t, you can’t run a slumlord. You got to make it safe and clean for everybody else in the community. So, make sure that you clean your park before you put it on the market, which you know is going to in decrease the amount of variables that a buyer or seller, better yet, a buyer is going to see on your community, which ultimately means the fewer the variables you heard it before, the higher the price, the risk goes down, right? So, make sure you do that.
22:16
Mistake Number 3, management is the engine that makes this investment vehicle propel forward. I’ll say it again. Management is your engine and makes this investment vehicle propel forward. These are the people that are first in line of defense when you’re talking to your tenants. So, it’s a mistake to avoid setting expectations with your management team when you take the first move towards selling your community, they know the heartbeat of your community, so you want them to be as stable as possible when you’re selling the park, if investors detect turmoil on your team, that’s likely to scare them away or be prepared for a re-trade, don’t just pop the news on them, because you might put the buyer in a bad situation. Once the title transfers, that manager might disappear. If the owner finds it to a buyer, what do you think will happen to the operations, got to make sure they’re on board. If the new buyer is in a bind and their income drops, what do you think is going to happen to the payments if you were getting if you were the one financing the mobile home park for them. So, having management is extremely important to have stability in your community, and also it makes it easier for you to buy from, the easier you are to buy from, the higher the price you’re going to get. You know, lower risk means more money in your pocket, right? Same, same, same thing I’ve been saying entire times, pretty, pretty predictable at this point.
23:48
So, Mistake Number 4, let me tell you a little story about a park owner out of Alabama who had seen one of my mailers and newsletters. I don’t know how he actually heard about me, but he had a nice sized community. It was about 75 pads. A buyer had approached them and made an offer, and they asked us to look at it, which obviously I’ll look at any offers that you guys get and poke all the holes. I mean, hopefully you’ll hire me in the future, or if you need to hire me, you know, we’ll work at a discounted rate if you’ve already got somebody here to be an advisor, but anyways, I was happy to lend some guidance to them. A lot of mom-and-pop owners do that, they’ll just call me, but you’ve got these, like, real savvy Wall Street, highly educated people out there that come in and just, they just don’t know the culture that you may have in your community or kind of the person you are. So, it’s going to be an uphill battle when you’re negotiating with somebody that has a completely different culture than you. You know the New York negotiator is different from a West Coast negotiator and is different from the south negotiator in the Midwest, every single part of the country has a different style of negotiation, and as your broker, that’s where we add the most value for you as a seller is I am the medium that lets you sit home and just wait for the offers, and let us negotiate for you with your best interest in mind, of course, and let us go to bat for you. It doesn’t matter what kind of style negotiator we’re dealing; we deal with all types. That’s why people hire us; is we make the whole selling process a lot easier.
25:29
So going back to the story, Wall Street guy came in there, put a crazy 120-day due diligence with an endless amount of due diligence materials they needed, and was real fast talker, Wheeler-Dealer type. What they do is, a lot of times, these buyers will come in, and their goal is to wholesale the mobile home park to another investor and wholesaling gets really popular when the market is flowing. Debt’s cheap. Things are going 100 miles an hour. A lot of deal flow happening, but wholesaling kind of dries up when the market tanks. Right now, in this day and age, interest rates are very high, and there’s not too many wholesalers out there. There still a few out there, but they’re struggling because as a broker, it’s very important to control the debt. That’s why we started a debt side of the business, because it’s needed. These wholesalers don’t have the debt side. Their goal is to tie up your property, give you an unfathomable amount of request on due diligence and the due diligence does not start at 120 days. Does not start until you deliver all the materials to them. Sometimes it could take you up to 30 days to get all that. So, they literally just have your park under contract for another 150 days. Like that’s crazy y’all. You don’t need to do that. Call us. We’re here to help you. I’m here to help you. That’s what I do. I enjoy doing what I do, because I don’t like seeing Park Owners get taken advantage of, because these private-on-private sales, like, they’re great and all for some people, like, granted, you’re not gonna need a broker. I’ll be blunt and tell you you’re not gonna need a broker. If you’re mobile home park, sits right next to a McDonald’s. You get to dictate all that stuff to whatever you want. Short due diligence, all cash. Sit back. You made a great investment. You right next to retail. It’s going to be torn down and turned into something else. So, you don’t need a broker for that. If you do, I’m happy to do that for you, out of, you know, discounted fee, because it’s all about how much value we add. We add the most value when there’s a lot more variables, because we seen them all.
27:50
But going back to this story about Alabama. So, this buyer came in, he had a 25-page contract. I looked at it, and I was like, geez, 120-day due diligence. That is crazy! and then on top of that, the due diligence list was as big as the Bible and then once the due diligence was up, there was another 30 days to close. So, it was a total of 180 days. If it took you 30 days to get the due diligence for your buyer, that is crazy! They’re literally just trying to wholesale the contract to somebody else and make a buck. That’s what they’re doing. But the buyers were also offering very little to no value on the park owned homes, on that deal, or the park equipment. They were basically trying to get all of those items for free. This buyer was well dressed, talked fast, according to the community owner we were talking to the contract had a financing contingency as well so the investor could approve whether or not he liked the debt, and he had in there that the seller had to pay all the closing costs. Like, come on, it was crazy! Obviously they didn’t sign it, luckily. But, oh, I forgot also they had a contingency for an appraisal, and they were owner financing it. So, like, I don’t understand the financing appraisal contingency, like, what was that all about? You’re only putting down 10%, 30-year AMT, fully amortizing, albeit not knowable and at some really low interest rate and then I just said, guys, we need to really reconsider what we’re doing.
29:31
So, with us as your broker, obviously we negotiate all that crap out puts you in a very good spot, and we were able to produce a buyer for that same client I just mentioned the Alabama 30 day look, 15 day close. They put down, I think it was 30% yep, and we got some decent pricing on the park owned homes and all the equipment. They closed all in 45 days, versus the 120 up to 180 days the other guy was trying to get. So, I was able to deliver that after a few phone calls. It was an off market deal, and it could have been a horror story for them, but as a broker, there’s a lot of value that we bring to the table, and that’s why it’s very important for you to call me. I’m happy to help, even if I don’t get paid, I’m here to help you guys out.
30:27
Let’s move on to Mistake Number 5, failing to research a plan and exit strategy, can spoil your future or leave you vulnerable to excess taxation. So, all of this has to deal with how you sell your community. You got your 1031s, and the vehicle that is, is you get certain amount of time to go out and find a replacement property. You could go buy a McDonald’s ground lease and an Auto Zone. But one of the benefits is, working with me as your broker is we specialize in investment real estate, and I have a Rolodex. Can’t believe I’m using that word still, but all you old timers out there know what a Rolodex is, because it’s a, you know, old school thing of CRMs. But anyways, going back to the subject at hand here. The Rolodex I have a ton of people that sell retail, sell other investment vehicles. I’ve got a lot of people I can refer you to that can do the 1031 exchange and vendors and all that jazz. There’s another avenue that I’ve seen. I’ve never done it before, but it’s called a deferred sales trust. It’s a little bit more complicated than 1031 but I’d suggest you Google it or YouTube it. Search phrases of deferred sales trust. But essentially, you put the funds into a trust invest in other assets, like stocks, bonds and other real estate, but with no time on it, you just need an attorney you can actually trust and who is willing to hold a trust account for you. As I said, I’m no expert on that specific topic, but it is something that you should consider. Going back let me circle back. There is also a reverse 1031 that I recommend you look at as well. Essentially, it’s backwards 1031 where you identify the property you want to buy first, and then they give you about the same amount of time, I believe, to sell your property. Otherwise, it doesn’t work out. So again, we’ve got a vendor that can help you with that, but yeah, give us a call. (678) 932-0200 and I’m happy to walk you through that.
32:42
Mistake Number 6. About 25% of the park owners who speak to me have zero debt on their community, which is great. I love that. I’m not a big debt guy, so love seeing that and I think they have no need for any kind of liability insurance on the property. You need insurance, y’all, I get that, but you’d be surprised. A lot of park owners out there don’t put any kind of insurance on there. You just self-insure, which is kind of like I said, mind boggling. Somebody wanders onto your land, falls or gets bitten by a dog, your toast. Mobile Home Insurance, on the other hand, is pretty worthless as well, like liability insurance, but also those mobile home insurance providers. I mean, it’s it’s kind of a crock. I want to be brutal out with y’all. They’ll sell you insurance, but when it goes to pay, it’s a whole other thing, like I mentioned before, mobile insurance, if you have your park full of old homes not worth more than, like, $5,000 each, the value of mobile homes and will depreciate continually. They sink lower and lower every passing year. But you can insure the park with just liability and maybe some natural disaster items. I work with a great guy that I use and recommend. I don’t say exclusively, because I was a broker, I got to give you three, but I’ve got this guy in here because he’s one of my favorite dudes. Kurt Kelly of Mobile Insurance, out of Texas, yee-haaw, great guy does a lot of deals. One of the juggernauts in the insurance business for our industry, takes care of most of my stuff. I’ve got several other people I can refer you to, but he can educate you a lot more on the insurance component than I can he may even give you a friendly discount if you mentioned that you heard me talk about him on the podcast, but at a minimum, I think you really need to have liability insurance and some type of insurance for your manager if they’re driving home doing around errands for you, just make sure you have some good coverage, because if They you know, God forbid, they crash or do something that happens to them, you don’t want to be on the hook personally, it’s important to add liability, even if basic insurance, when it comes to operating your community, no matter what, even if you have zero debt.
34:57
So, in a nutshell, let’s wrap this chapter. Up, I’d be happy to sit down with all of you over a cup of coffee or a virtual meeting, or go and go over all the mistakes that I’ve talked about during this chapter, and all the decade plus experience decade and a half, hopefully this will be multiple decades of selling communities as always, my goal is to be the best resource I can be for y’all. Man, I pride myself on having the most up to date data and techniques when it comes to selling a community and with my team, I should say, with your team by your side, I’d love to share all that experience with you at your convenience. So, give me a call. (678) 932-0200 or email me at info@themhpbroker.com. Like I said, we are here to help and love to hear from you. Let’s move on to Chapter Three.
35:56
Chapter Three. How to cash in on your financials. It’s important to file your taxes in a timely manner. Blah Blah, blah, blah, blah, blah, pay your taxes. Pay your taxes. I know, I know. But Max, I hate paying taxes as a park owner. I like to collect cash and, you know, go buy dinner with cash and, you know, down with the Federal Reserve, right? All that, all that conspiracy, well, maybe not too conspiracy, but you know where I’m trying to get at nobody likes to pay taxes. I get it, but at the minimum, right before you sell your community, you need to have at least, I would say, two years to be super conservative. Of rent deposits in order to properly get some bank financing, you might be able to get it a little bit less, maybe up to 8 to 12 months. I’ve seen that pass through the sniff test with some community banks, but it’s pretty tough. You know, there’s not too many people out there that are willing to finance a mobile home park on, you know, 8 to 12 months of data, but if you at 6 months and you’re ready to sell, you might be able to get the same price that you were wanting to get, or what you and your broker, ie, The MHP broker discussed, if carry the financing, carry the financing, you’re going to have to have to delay the amount of cash you’re going to get into the future. But if you start filing your taxes properly and depositing the rents, it’s ultimately going to allow you to get cashed out at closing. You’re not going to have to carry any paper, so they need to be on your K1s in order to get them approved and through the sniff test for a community bank and if you’re out there trying to sell your community and a syndicator comes to you, or a fund manager, or whomever the institutional buyer is, they’re really going to need to see all those financials, i.e., the two years I just talked about, so they can show it to their investors and really just white glove it, because anytime they’re raising money, the financials have to be white glove. That’s a fact, unless you’re dealing with somebody that’s got a lot of experience, knows how to do work around but when it comes to financials, the more information you have, the higher the price you’re going to get. If you’re vague about your financials, meaning you’re not making deposits or it’s under the mattress, you’re increasing the risk or the exposure for that incoming buyer, because it’s not provable. Now, if you show up with them and say, look, I’ve got six months of cash in this briefcase, let’s do a deal, then that might help a little bit. But the end of the day, you got to have recordable data. That’s what’s needed in order to get fully cashed out and get a community bank or any kind of credit union, or really anybody that’s institutional to give you funding on your mobile home community.
39:01
Let’s talk about a real deal, holyfield story about a no financials mobile home community. So, here’s a story about a park owner that had zero and I mean zero mobile home data financials on their community. The story begins with a nice, beautiful sun is shining grasses cut 65 space community that we heard about as a referral from another park owner we had just closed the deal with. We were down in middle Georgia, and we were trying to sell this community, and the park owner, offhandly, mentioned that he didn’t like paying taxes. Uh oh, right? I nearly had one of the biggest belly laughs when he told me that, because who actually likes paying taxes, y’all so after further discussions, he gave us the rent roll and you guessed it, that was it. This deal was worth about an 8.5%-9% CAP in current market times. Don’t think that 8.5-9% CAP is forever. The current cap rate of selling a mobile park, since we had limited data on the financials of the park, we ultimately landed at a 12% CAP, which was 300 basis points above the 9 or 3 points for layman terms. I guess to land on that 12 cap, I hated it for this park owner, but when you have a park that’s being priced on its income versus real estate value, you’d better have your finances in order. What does order mean? Great question. Give me a call, and I will gladly explain to you what the minimum is in order to get the highest price you can get. I am tongue-in- cheek, giving you a little self-promotion there, but yeah, you can call us (678) 932-0200 or email me at info@themhpbroker.com, and I’ll walk you through exactly what it takes for you to get the premium you deserve when you sell your community, otherwise, you’re going to make great friends with your buyer and the reason for that is not because he likes your smile. It’s because he’s getting owner financing or getting a very, very low price on your community, because nothing is provable. So; but going back to that deal in Middle Georgia, he ultimately sold it out of 12% CAP because didn’t have those numbers.
41:21
So let’s move on to the next section here, under contract for six months, let’s go in the last part of the story. We just started selling a mobile home park. Is still pretty difficult, even when you have your financials in order, but you’ve bought multiple communities. Always tell me this, because they are just so many variables that could blow up in your deal as your broker, my job is to figure out all of these variables up front so I can set expectations with all the prospective buyers. So, once we told the buyer that we didn’t have any tax returns on this 65-spacer property that I mentioned earlier, he told us, look, I trust you guys, but I don’t trust this deal because there isn’t any numbers on it. I think I’m repeating myself here y’all. The only way I’m going to buy this deal is to sell or deposits six months of rental income into a bank account and shows me the bank statements and shows me the bank statements, I should say which does work sometimes. We’ve had deals where we’ve been on a contract for several months. Typically, it’s 3 to 6 months. You might be able to get away with three, but I doubt it. I have once, I believe maybe twice out of over 500 communities that I have sold transactions but it’s very rare, and a lot of people want to see more than just, you know, 3 to 6 months, but if you’re carrying the financing, um, that might work. So the story that I just, you know, I’m going over, illustrates that what I say to everybody, and that is the next point of that time kills deals. While the deal was under contract, COVID-19 hit, and then the guy’s financial partner decided to bail on him a week before closing. COVID really messed us up, and time always kills deal, because as we were waiting to get the numbers in, obviously we were like, month six, a week before closing, the guy’s financial partner bails out just because of COVID. I mean, time kills deals, y’all. That’s why it’s very important to plan your sale if you’re going to sale, willy-nilly. I understand there might be some detrimental thing that happened in your life, or some transition or, you know, whatever, whatever happens that forces you to sell quickly, but at the end of the day, like that’s not the best time to sell. So, what that buyer told us with the partner, he said, look, I’m not going to do anything for another 60 days Max. So, we’re just going to sit here under contract for another two months until I find another partner or this guy comes back to the table. So, as you guessed it, that did not work for us. Now the deal, we had to wait another 60 days because of COVID-19, the seller just said, look, I don’t know what I’m going to do. I’ve been doing exactly what you told me to do. I thought we had a done deal. We were supposed to close at the end of March, but here we are in May. It was very frustrating, and now I’ve got a buyer seller waiting until May to finalize this deal, but I don’t even know if the buyer’s money source is still gonna be around. Time kills deals y’all. Move into a MythBusters.
44:33
I can close on a park even if I don’t have titles. You must have your mobile home titles when selling your park. Sometimes you can finagle it and get it done but if you’re getting a bank loan, typically the bank is always going to want those mobile home titles. Your owner financing probably not? But the only time I’ve seen a bank not require mobile home titles is if they are a specialized Community Bank that does mobile home community loans, and they’ll typically get it restated, retitled, I should say, and have it bonded. After that bond, it takes about 90 days or longer to get a new title in the mail. So, while several of our banking relationships, i.e., we broker debt y’all, will play ball with us. 90-95% of the lenders are going to require titles at closing for all the park owned homes you own. Community Bank lenders understand that without the home on the lot, the lot is pretty much worthless, because the amount of money it takes to get a replacement home is extremely high. The only exceptions I’ve ever seen lenders not caring about titles are institutional lenders, meaning, like CMBS, and for some unknown reason, these institutional lenders don’t care about titles. The community banks and secondary tertiary markets will be out in the field, walking through the park with the buyer, because they are run by locals versus Wall Street guys and girls. Community banks understand the risk more than institutional lenders and will always want to control the mobile homes you own. The main reason why that is is that the seller has the titles and gets foreclosed on them by the bank. There’s nothing stopping the buyer or the operator from taking all those mobile homes and moving them to some other piece of property, or maybe he’ll make a quick sale with a huge local park owner and you know, within two weeks, homes could be gone and the bank has just sat there with a bunch of vacant land. So, that obviously doesn’t help them. That’s why the value of your mobile home park is always based on the lot rent and if there is no lot rent, you got no value period! But the industry is ever evolving y’all. Bankers are starting to get smart and realize that they need to keep those titles. I think it’s only going to get better for investors as time goes on, as bankers realize that mobile home parks can be some of America’s safest investments.
47:03
Moving on to Owner Financing, buyers, look at owner financing as the mythical unicorn creature that only comes out every so often. I can see it now, a shining light, a big white horn and a rainbow going over that unicorn, aka owner financing. However, owner financing is pretty common in our industry, as many bankers shy away from financing communities because they’re perceived as being too “Headline Risky” that I’ve heard from a hedge fund guy. Little do they know, right y’all, but there are many ways to finance your community. This sky is the limit! I personally love owner financing deals, because if you can’t afford to wait for your money, you can basically have your cake and eat it too. Let me tell you why. If you’ve been light on donating your shares of taxes to our dear Uncle Sam, you can usually still get a good price when it comes time to sell, if you’re willing to carry the financing. The reason is that buyers are not going to have to go through this usual third party reports, loan committees, blah, blah, blah, blah, blah, all that politics. You get to actually sit back and decide what terms you want and see if you can get the buyer to jump on board.
48:21
As I mentioned before, risk comes into play here. Banks hate risky deals. In their eyes, missing tax returns mean risky bank loans at this point, owner financing is usually the best way of demanding a premium on your park, and you can usually get an above or at market value on your community through the owner financing method. The buyer doesn’t really have to get qualified like they typically would on a regular bank loan. There’s no appraisal, no bank committee, no financing contingency, blah, blah, blah, no third parties and really what’s taken into consideration is your down payment and monthly amount. It has to be fair, obviously, if you want to, you can usually get buyers to slightly above market interest rate with 20% to 50% down on a loan with a balloon within a few years, I recommend having a buyer sign a quick claim deed, which can be held in escrow with your attorney just in case they default. We can go into that a little bit if you’d like. Just give me a call, (678) 932-0200, but the quick claim deed tactic is very aggressive, so it’s going to be a little tough to get that across finish line, but is a good idea. I have seen it and done it, but like I said, buyers usually kick and scream about that because they put down a lot of money and they want some breathing room, and if times get tough, but you get to be the ultimate decider on that, because you’re the one in control of the property and the deal. You can structure the paperwork any way you want, but it’s a way to protect yourself against dealing with the state foreclosure laws and other legal tactics they buyer might put you through if he gets to that point.
50:08
In a nutshell, the best thing you can do is get your finances in order, file your taxes for at least 2 years prior or remove any co-mingling with your expenses and investments. I’d be happy to go over the Standard Expense Ratio and expenses for a mobile home park and help you get setup for a success in maximizing the value of your community. If that may have interest y’all, you got my number but I give it to you again (678) 932-0200 or email me at info@themhpbroker.com.
50:46
Now, we’re on to the next chapter. Chapter Four. How to prep your park to maximize the sale price. Getting the biggest bang for your buck relies on first reactions. The biggest move you can make is to have your park free of debris, your signage should be clean, the phone number legible and visible and your landscaping up to par with the best looking neighborhoods in your area. It’s like how you met your spouse, on the first time you met ‘em you were on your Ps & Qs, you made sure you didn’t have stuff in your teeth, you made sure your hair was combed, you made sure your breath didn’t smell, same thing with when you’re selling your park! You gotta have the first impression at the tip of the spear per se whenever you are trying to sell it. For obvious reasons, like I just explained. A lot of park owners I know have successfully flipped communities that have; I should say flipped communities have repaved the roads just before they put it on the market, nothing really pops like a freshly paved or sealed road even if it’s gravel or dirt, you should make sure it’s properly graded with holes filled in to show consistency throughout the entire park. Railroad ties are another great way to accent gravel and dirt roads. You always want to make sure the first impression your community gives is bankable and proves that your asking price is well-deserving when you exclusively list your community, obviously with us for sale! Keep your skirt on! That’s right, keep your skirt on (laughs).
52:22
The next thing is to install and replace skirting around your mobile homes so there are no missing pieces. Also, make sure you pressure-wash the sides of your mobile homes to get rid of any green gunk that may accumulate over time and you wanna make sure that it look like somebody actually cares about the cosmetic appearances in your community. Even if you don’t own the homes, you’ll need to put some Kool-seal on the roofs to get rid of the ugly rust-spots all over the top of your homes that’s because when we exclusively list your community, we’ll photograph the community with drones and those ugly brown roof-stains really stand out for all the wrong reasons in your community. I would even offer these cosmetic upgrades to those tenants who are just paying lot rent because when the bankers and the buyers come to look at the park their first impression should be Wow! This guy is maintaining the crap out of this place! Or there’s a lot of pride of ownership in all these Tenant Owned Homes all of which increase the value of your community. Example, I literally just had lunch with a banker, a national banker and they hire a third-party to come out and look at communities that they are about to lend on and they literally do exactly what I just described. They drive through, see if you’ve got skirting, see if the homes look good, see if the decking; see if the decks look good, you know even if they are old, just make sure they’re maintained or painted but literally that’s what they lend on based off of first impressions and then they’ll get the appraisal done but it was very surprising, well – not too much but it was surprising because they were all inspecting the parks themselves but they hired a third-party to do the inspections and it’s literally just a fly-by and drone shots and they don’t walk through the homes or anything like that at least in this situation. I’ve seen lenders do that on the appraisal but, yeah so just keep that in mind, like first impressions are very important.
54:29
So, what happens though when you don’t prepare, here’s a little story I got for ya. I was working on a park in Birmingham, Alabama that was an all-lot rent community. It had what everybody wants including dedicated roads, city water and actually septic tanks, let me curb that back, not everybody wants septic tanks but dedicated roads and city water everybody does like but anyways, each individual tank was operating very well and all the field lines were doing what they were supposed to be doing. When I did a walk-through, umm inspection I recommend that the seller cut the grass on the 30 empty lots. They were overgrown and just looked really bad. I also pointed out the green moss on the side of the homes. I further suggested that we spend a few 100 bucks on putting out a new sign with the park phone number and website, and cut down the vegetation that was almost choking the park entrance that was making it hard to even read the park sign. Later, when I showed up to take drone photos, he told me he was ready. What a shocker. His place looked exactly the same as when I last seen it. He hadn’t made a single improvement. I warned him that the lack of effort would affect his price and not for the better. He said, I’m too old and I don’t want to mess with it. Just sell it as is. Well, instead of getting a million dollars for he ended up just getting 800 grand. So, with that money, he would have spent, you know, at most 25 grand, he would have gotten an extra $200,000, do the math, there’s value in curb appeal.
56:04
Appraisers and Buyers are Eagle-eyed. That’s the title the next section. Case you didn’t notice, appraisers look at your property much like buyers. They’ll examine the local lot rent and their sales comps. They’re going to look for curb appeal and for what the park’s first impressions would be due to its current appearance, obviously, as a brokerage firm, us, we specialize only in communities. Not only did we provide the data needed to show the park was under market with rents, but we also provided all the recent sold communities for the last 12 months in the state the park was in. Why is that important? Comps? That’s how appraisers gauge how the local market is doing. If your broker doesn’t have these, then you’re going to be in a world of hurt when your appraisal comes back super low. Here at the MHP Broker, we send out over, it’s actually; it says 15,000 but it’s closer to 20,000 mail pieces every month, and we have updated it to 36 different states, not 15, and when we get these undeliverable mailers coming back, like, you know, when you get returned mail because the address was mad, we take note on why, most of the time, it’s because the park was just sold and the mailing address doesn’t work anymore. With that info, we change the data and update who the owner is, and scrape all the sales data so that we can give it to you when we sell your park for you. Why is it important? It’s what reveals the value of your community. No other brokerage firm in the industry does this! It’s why we are involved. The chances at getting the highest price at sale are greatly increased. No other firm does it! We do it! We’re passionate about what we do, and we want to see you, guys and girls, get the highest price we can when we sell your community for you. So, give us a call (678) 932-0200.
57:58
Seis, Siete, Ocho, Nueve, Tres, Dos, Cero, Dos, Cero, Cero for all you Spanish speakers out there, that was for you.
58:09
Now we move to Chapter Five.
58:13
Chapter Five. What types of buyers will my park attract? Nearly everyone falls into one or more of these five categories we’ve identified as brokers, and the last one is the one you want to avoid like the plague. So, the first type of buyer we have is the Turnkey Buyers. Everyone loves these types of people. They pay market pricing. They love high occupancy deals, in-place management and excellent books and records. Next one we have is Retirees. These buyers are looking for a lifestyle change. They like deals, typically with a little bit of upside. They pay their fair market value, and they pursue communities in nicer areas of the country. The Value-add Buyers. We work with many value-add buyers because quite honestly, all of the communities that I’ve seen in secondary and tertiary markets typically need some advances into the real world of what technology and skill set to modernize how it’s operated, as well as, like I said, tech. So, there’s a lot of those deals out there still in this day and age, a lot of value add in this industry and those markets. There’s some in primary markets, but typically, the primary markets attracts the institutional operators, and they typically got their crap together simply because they’ve got a bunch of money behind them, and that money wants a guaranteed return, or try to get a close to guarantee return, and with that requires very efficient operating and when you’ve got something in a primary market, typically the occupancy level is very high organically, and don’t require as much. So those are going be trading at a pretty fair price when you go to sell them with us, but going back to the Value-add Buyers, we work with a lot of Value-add Buyers, because a lot of mobile communities need major rehab. Just like I said, sometimes these buyers are time vampires, what I like to call them, because they suck the time out of you. But most are pretty serious. It’s all about doing excellent upfront due diligence on your community. So, we can point out all the variables that Park has. We can then focus your expectations on what are going to be some major negotiating points they’ll bring up and help you navigate what is fair for the given situation.
1:00:39
Next type of buyer we have are First-time Buyers. Not all First-time Buyers will be the same. Our industry has a saying. As the market heats up, so do the number of First-time Buyers. They go to guru seminars and usually look for no money down deals or owner financing because they lack funds. They use brokers to help manage them because they’re trying to operate it from afar and we sell a lot of communities to First-time Buyers, and we know how to manage them and get them to close on your deal.
1:01:10
The last one we have are the Scam Artists, people that are literally just bad people morally and don’t really care about anybody but themselves. We do come across bad eggs every once in a while, we label them as Scam Artists in our actual database. We all know that every industry has them. These people do things like re-trade deals for no reason right before closing, never deposit Earnest Money, make big promises with no intention of delivering. We have a growing list of buyers, and I’ve been through the ringers so many times. We know how to spot them from a mile away. They all say the same thing. They just about do the same thing, and always cause you and your family heartache. So, I think it’s good for you to hire us so you can avoid them because selling a park is difficult. There’s a lot of variables. There’s a lot of things that you don’t know, that you don’t know, and you’ve got on top of that these slick profile individuals that will re-trade you, give you heartache and ultimately make it very difficult to sell your community on your own. That’s why you hire a broker, because we see these types of people, and we know how to spot them by the questions we ask. We flush them out before they even get to the table to start making offers. So, circling back with these types of 5 Buyers, you can cater your mobile home park to the category you want to deal with when you hire our firm to be your exclusive agent and represent you, we will evaluate your community and identify everything each category of buyer will have issues with whichever category matches the condition of community best, we’ll tailor our marketing to reach them and help boost the probability of you getting the highest price possible. Bottom line, it’s crucial that you understand how to market these different types of buyers with the different types of communities out there depending on what you’re trying to sell. If you contact us, we know how to position your community to get the highest price possible. Next chapter is Chapter Six.
1:03:21
Chapter Six, ‘Why trying to sell your community on your own is a little risky?’ Whether in law or real estate, you need to have a professional mediator and guide. It helps you keep an arm’s distance between yourself and the adversary, the Buyer. You want to be able to leverage what they say, strip out all the facts and leave the emotions out of it, having a trusted third party allows you to do that. As a professional mediator like those here at our company, The MHP Broker, we have the ability to ask the right questions, interpret perspective buyer’s answers, and gear the marketing of your community to a certain type of buyer. A good brokerage firm will tell you whether or not your buyer is legitimate. The brokerage firm can strip out all the facts, variables and emotions and give it to you straight. If a buyer is negotiating with you directly, you’ll be exposed to the emotions, to their instant rapport building skills and have to deal with the silver-tongue tactics to get you to sell them your park at some sort of discount. I know several buyers who are about as slick as they can get. Hiring The MHP Broker will be your best bet for getting the most out of your community, creating the least amount of stress and boosting your confidence that is all being taken care of by professionals who do it every day. These Wall Street type buyers who will woo you all the way to closing are really good at hammering you at the last moment to adjust the contract price downward, asking you to throw in valuable operating equipment for free, requiring all sorts of contract contingencies that make little sense, and before you know it, you’re selling your park to them with 10% down, 30-year amortization and 120 day contract to close. It’s important for you to hire somebody who can separate and mediate all of that crap that they will throw at you. I negotiate all the time with these slick people. They hate it anytime I get involved, because they know I’ll prevent them from making the best deal for themselves. A lot of times, they’ll say, Max, why are you involved in this deal? Now, the buyer might not always be thrilled, but I always get the best price I can get in the terms possible for our sellers.
1:05:37
Case in point, there’s a deal I was working on here in the south that the couple was in a divorce, and one of the spouses was a lunatic, and they were always trying to cause drama for the deal. What it looked like after we closed on it was, they had inserted a straw buyer so that they could later, downstream, take over the park without the other spouse getting as much money as they could have, if they would have just played nicely with one another. So, with a broker i.e., us, we were able to get the spouse that was getting taken advantage of the best price they could get, simply because we punched holes through all the stuff that the other spouse buyer brought to the table and literally scared away that buyer. That buyer also had a shady real estate agent that was causing a bunch of drama and contacting the seller directly, which is highly unethical in the industry for brokerage, but we were able to save the deal, and we were able to get it done so a good broker will protect your interest and always try to make it fair for you know, the situation that be the Divorcee and a Divorce. It was a challenge, but a good broker will help mediate that and ultimately, if there’s any funny business that the other spouse is bringing to the table, a good broker will be able to sniff that out and, in this case, we were able to sniff that out because the buyer that the other spouse brought to the table had a really crappy contract. They were literally just trying to tie the deal up and cause a bunch of drama to keep it in lawsuit for the next 6 months, 12 months, who knows, maybe even longer but we were able to use our company contract that we have spent a lot of money on through specialized attorney in our industry, and the buyer basically walked away because he felt like he couldn’t get what he wanted. We ultimately found a better buyer that would play by our rules as the seller and got it done. So, case in point on why it’s very important to hire a broker that knows what they’re doing and knows how to identify the crap that some of these people bring to the table.
1:08:06
Mythbuster, that is the title of this next section of Chapter Six. Little Mythbuster for y’all, you can save a lot of money by selling the park yourself. This is a big myth in our industry. A lot of mom-and-pop organizations want to sell their parks by themselves, but it’s hard to evaluate mobile home parks. There are a lot of slick negotiators and contract variables that you will need to thoroughly understand and be able to see through. A lot of lenders out there will be evaluating your financials and curb appeal you, need data in order to maximize your profits with the appraisals and the sales comps, rents and rental comps all help with that. There are so many other variables involved in selling a park that it makes sense to hire us as your broker. That’s why teaming up with us that have all the information you need to maximize your price, the data and knowing all the pitfalls and the Wheelers and Dealers could save you from losing 1000s, if not millions, of dollars, or could make you extra 1000s or 100,000s or 1,000,000 dollars more by leveraging our skill set. Our firm has done, it says 150 here, but we’re closer to 500 this book’s a little dated, but we have done a lot of transactions we’ve done over the last 15 years. But the reason why I say that and I bring it up is because I don’t want to say I’ve seen everything, but after a certain time, you know what to bring to the table. You know what people are going to say. You know how the communities are going to be presented to the lenders. So, we’ve pretty much seen just about everything that the industry can throw at us when it comes to putting deals together. So, in a nutshell, remember that a buyer is trying to make as much money as possible. It’s a classic mistake to think of them as your friend. They will only leverage that friendship to get themselves special favors to lower pricing and free stuff from you. Don’t fall for these tactics. The buyers are adversaries who want to make money off you. While it happens, it’s very rare to have a buyer coming in and trying to be your best friend when it comes to probabilities, you want to limit the number of pitfalls you’re going to fall into when selling your community. That’s it for this chapter. Now we move on to Chapter Seven.
1:10:29
Chapter Seven. ‘How to choose the right broker to sell your mobile home park?’.
1:10:36
Let’s go over the last subject. It’s near and dear to my heart, being good friends with your neighbor real estate agent doesn’t mean they’ll be good at selling your mobile home or RV community. I have more broker friends than I can count because I’m in the business, but I will tell you one of the ways that my friends and I separate ourselves from the competitors. We actually meet once a quarter to talk about this very subject, is we all specialize in one field.
1:11:04
One of my buddies only deals with retail shopping centers. Another buddy of mine strictly apartments, and I only do mobile home parks. Hiring a specialist is the best way for you to make as much money as you can on your community when it’s time to sell. I’ll tell you right now that I don’t know everything about parks. It’s taken me over a decade to learn this information, and I pay rent on that every day but I’ll give you the best pointers that I know on brokers. Brokers who talk fast that act like they know everything about the business and have solutions to all your problems are what we call the Wheeler-Dealer Brokers. You know this type of person. They love to talk over you, and you can barely get a word in. Number Two, Brokers who promise you a high price on your park that isn’t anywhere near what the market is calling for, are called Brokers that Buy Listings because all they want is to get your listing at any cost. They don’t care if it doesn’t sell, because they’re using your listing to get more listings. They just want to look busy in their marketplace. In the back of their minds, these types of brokers are planning to squeeze you later to lower the price, or when rates drop, they feel like they can wait it out and get the price that they promised you later. So, let’s go ahead and list your park or community or portfolio for sale and wait for the rates to drop. That’s a bunch of BS y’all! They’re literally buying the deal and they’re going to sit on it for however long it takes. So, don’t fall for that trick.
1:12:43
Number Three, there’s also these “National Brokers” who say they sell parks everywhere. While this situation is sometimes true, I can guarantee you that they probably haven’t researched and found every single park in your state. Most likely, they don’t even have a team of researchers updating the database every day, finding out which parks are selling and where the trend of rents is going across your state. At a macro level, National Brokers are good at skimming your local market with buyers they have but they really suck at producing any local buyers because they haven’t spent the time updating every trade in your state. Trade, meaning every sale, it takes a lot of work, and like most people, they try to make as most money with as least amount of time from them.
1:13:30
Number Four, next, we have these Brokers just seem to disappear once the part goes Under Contract. I like to call these brokers the Ghost Brokers. It’s quite magic trick to disappear, poof! once the deal goes under contract, then they magically reappear. Abracadabra when it’s time for closing and it’s time to get paid. In some nightmare scenarios, these brokers don’t even check whether or not the buyer has deposited their Earnest Money. This is really bad, because when a buyer decides not to buy your park after their due diligence period, you should then get their Earnest Money right? Wrong! If your broker isn’t micromanaging the deal from the effective date of the contract until closing, you’re going to get hammered one way or another.
1:14:20
Number Five. Now the next broker is one that we only hire, and that broker is called “The MHP Broker”. Our brokers have researched the entire state and found out where rents are have identified the most active buyers. They also set expectations on where your park will eventually trade at the team who also stays engaged once we go under contract and stays two steps ahead of all situations on your deal, so we can put out any potential fires before they even happen, a broker from our firm will also advise you to possibly make improvements to increase your price and lower the park’s perceived risk profile. Finally, our team has connections with most, if not all, the local lenders who will finance the deal in transaction for you. We are actually your one stop shop for anything related to mobile, home and RV, community related marketing and sales, you must pay your rent in order to get that kind of information, and we do it every day.
01:15:25
So, moving on to the next section, which is Thinking Regional. Let’s look at your needs. As regional brokers, we try to look at every deal we list, and even our competitors’ listings. We’re looking at them all the time to see what they’re trying to sell their communities for, I like to study the surrounding market to see how the local economy is doing, from the sales and rental comps to all the other data. Doing that leads for a lot of good feedback for you as a seller, when it all comes down to is that the regional broker just has a better and bigger advantage to getting you the best price, they can we’re closer to the action. We get up to speed faster because we already know the geography and the local and regional business climate, the culture, the mood on the ground. We can act faster with more accuracy, and we simply already know what we’re going to do, and have a higher probability of getting you the highest price, faster!
01:16:23
Generalists aren’t Specialists. Is the title of our next section. If my spouse were pregnant and we were about to have a baby, I wouldn’t go to a General Practitioner, would I? I would much rather go to a specialist, an OBGYN, to deliver the baby, while a GP can do this work, I don’t think I would trust that physician, because she’s not specially trained in our specific needs of having a baby. It’s the same thing when making one of the biggest sales transactions of your life, you wouldn’t go to a generous Real Estate agent who sold your house a few moments ago, or even an agent that said he sells commercial real estate a few years ago, or maybe even did a deal for you a few years ago. You go to somebody who specializes in that very distinct real estate market. You want to have a specialist who can deliver the deal or the baby error free every single time. Specialists know how to look out for all the pitfalls. If they start seeing some red flags, they’ll try to immediately adjust and fix them. That’s the reason it’s extremely important for you to have somebody who specializes in selling mobile home communities or RV communities, just like the one you have and are thinking about selling. That’s it for this chapter. Let’s have some closing comments in the next.
1:17:46
Here’s how The MHP Broker can help you on your transaction. The decision to sell your mobile home park is not an overnight decision. You spent years, maybe decades, successfully managing your community. If I asked, you could give me hours’ worth of insight into what it makes to be successful in your community, that hard earned information didn’t come cheap, most likely, it came through a lot of blood, sweat and tears. In the end, you have been successful, as you know, success only comes when you have feet on the ground, when you know the daily ins and outs of your mobile home or RV community, and we actually feel the exact same way. Nobody knows your business as you do, and nobody knows our business like us. It is our hope that you have been inspired by this book and that we have a great service in helping you steer clear of many potholes you might steer around lots of them in the process of selling your mobile home or RV park. The process is a tough one, and to navigate on your own. Even if you decide we’re not the best brokerage for you, our true wish is for that you find a third party to be your guide. On the other hand, if you have found these techniques and tactics in this book to be of value to you and would like to learn a little bit more about our unique process, let me share that information with you now. Schedule an appointment with us, and we’ll discuss how we can maximize the value of your community. You can call us at (678) 932-0200 or you can email me at info@themhpbroker.com and you can also go to our website at www.themhpbroker.com. We appreciate y’all listening to this book. We look forward to seeing what we can do for you and all the stuff when it comes to selling to your mobile home community, and if you have any deals that you just want us to look at, any offers that somebody brings to you, I’m happy to work with you and see what else I can do to help you make sure you’re making the right decision. We do that all the time. So yeah, feel free to give us a call and let’s keep moving forward. Be well y’all!
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