In this episode, we explain a deal that had its challenges from the first. It shows the value-add from getting the involvement of experienced brokers who’ve “seen it all” and can save even the most run-away deal.
As always, this episode, hosted by Maxwell Baker and featuring MHP Broker’s Eric Wanck, was brought to you by our proprietary Community Price Maximizer. With our system and our very experienced brokers like Eric, we’ll guarantee you a higher price when you later sell your mobile home or RV community.
Here Are The Show Highlights:
Want to know more about The MHP Broker ® approach to buying and selling RV and mobile home park communities? Even the most challenging deals can lead to success for both parties. Just drop me a line at firstname.lastname@example.org or give me a call at 678-932-0200.
Power Quotes From Max and Eric on Episode 10:
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 and welcome to another beautiful episode of the mobile home park brokers,tips and tricks podcast. Today, I am pleased to once again say congratulations to Eric Wanck and another closing cocktail. Eric, (clapping) two no three parks sold in the last 30 days I think it is. Dude, you’re killing it this year. I think this is going to be a record-breaking year for Eric and a lot of people on the team. But Eric follows a system and follows the process and does a really good job here at the firm and it’s an honor to have him here on the team. Before we jump into his deal, this episode is as always brought to you by the Community Price Maximizer. This is a proprietary system here at The MHP Broker ® that will guarantee you the park owner, RV park owner or mobile home park owner, the highest price when you sell your mobile home or RV community, like I just said in four simple steps. If you have any questions about it, I’d love to talk to you about it and how we can add value to your pocketbook when you co-sell your community. Let’s move on to the park in Pennsylvania’s, a little portfolio deal you did. This one had a little bit of hiccups. I mean, it’s negotiation like you said sometimes people are choice with how they want to deal with things. As your broker, we’re the media, we’re a professional bomb mitigation if you really want to look at it one way. Our job is to prevent the deal from blowing up and there’s always plenty of opportunities in all of these deals for it to blow up. So, tell us a little bit about Asbury Manor.
02:02 Eric Wanck
Asbury Manor was 104 space, side by side, two park portfolio. The great thing about these two parks was they were both on city utilities, water and sewer sub-metered, and it was 90% tenant owned homes. There’s a lot of factors that go into cap rates, location condition, lot rents. There’s little whole myriad of things that can go into what risk profile a buyer may have. We got a very good cap rate on this deal, a selling cap rate, low eights and that’s good. I say it’s good considering the fact that these two parks, they were distressed, we’re talking about older homes, ownership was up in age and frankly didn’t have the time or the effort or resources to really want to continue the operations the way they should. This was where a buyer had to come in, it was a regional buyer that we had, and put significant capital into the park. But at the end of the day, that infrastructure, that location, the fact that you have a lot of tenant own homes already, it was very desirable.
03:03 Maxwell Baker
Yeah. You had a couple of buyers on this one. But didn’t you only put her on contract once?
03:10 Eric Wanck
Yes, I believe that’s right. I think we had it under contract once and it was some seller finance terms. We were going back and forth on, it took a while there in negotiation, I think we got, I don’t even remember why it fell out but it was very early on. I tell sellers this all the time, sometimes that the right buyer does not come through in the first 30 days, it may not be 60 days. I’m amazed by sometimes, we just had a recent marketing campaign on a park that I’ve had on the market for 90 days and the response on this last campaign that we did is unbelievable. I think we’re going to get some good qualified offers out of this and some buyers coming through. Just because it’s been on the market doesn’t mean that it’s a bad park. Contracts fall out; sometimes these negotiations go on for two to three weeks and we kind of sit in a holding pattern. You may see the park a month later.
04:02 Maxwell Baker
04:03 Eric Wanck
It’s just not a lot has happened. You know, each buyer is a little bit different on how much criteria they need. I’m happy to say that we got a great, great buyer on this one. When they put the deal together, I could tell they were experienced and made it easy on me. It’s not all the time do we get buyers that kind of control that process even though I’m checking in. We’re here to hold hands if we need to, because at the end of the day, if you need something we’re gonna get it done for you.
04:25 Maxwell Baker
Yeah, that’s why people hire us. Selling an asset like this is very difficult for the simple reason is that there’s a ton of variables when it comes to selling a mobile home park. You’ve got tenant profiles, how the water and sewers are set, older park on homes, newer park owned homes, you’ve got rent to own how to prorate those. You’ve got some parks that are got annual leases, semi-annual, daily. That’s why people hire us y’all because there’s just so many things that when it comes to selling an RV or a mobile home community that a lot of people out there don’t know. You don’t know what you don’t know until you’re in the thick of it. Having somebody ride shotgun on your journey, when it comes to selling a community that’s sold well over 250 communities is going to make your life easier, the transition easier and ultimately gets you more money in your pocketbook, when you go sell your mobile home community or RV community. So, give us a couple of nuggets here of what you learned about the deal. I’d love to hear a little bit about how the negotiation went with the seller and the buyer. Tell us a little bit about that.
05:33 Eric Wanck
I will say that one thing as brokers we do that maybe overlooked sometimes in the transaction is what happens to the park and any changes to the offering memorandum till closing. In this example, we had a couple homes that were actually brought into the park, the seller bought them, put them on the property, we had one home was sold off, for cash that the seller collected. So there’s a lot of moving parts there and the last thing that you want as a buyer to get one-two days before closing, and think that you were buying five park owned homes, and now there’s only two, or maybe now there’s eight. We’re constantly in that communication chain with a seller to make sure that the buyer understands what’s happening. If any adjustments need to be made to the terms of our contract, because of you know, homes being brought in or whatnot. I just want to throw that out there as kind of a nugget for everyone, because a lot of things can change on parks. Some of them don’t and it’s exactly the way you go under contract. But other times, you may have some things pop up that need to be addressed, or else they’re gonna delay closing or possibly blow the entire deal off. And as a buyer, you could waste a lot of money.
06:43 Maxwell Baker
Yeah, a lot of money and due diligence. One thing I’ll mention to everybody out there listening is if you’re a buyer, and you are under contract, and you’ve got money spent on a survey and appraisal, a phase one, septic inspection, all these inspection reports that come out when you are buying a community and you blow out of it for who knows what reason, give us a call, we’ll probably be able to place it and get you your money back on all of those third party costs. When it comes down to buying a mobile home community or RV community, a lot of times we’ll find another buyer, and the buyer is going to have to spend the same kind of money on it. That might be you know, six months, or maybe even 12 months old. But it’ll make it a lot easier for the next buyer downstream if they have that kind of information on hand. And as your broker you are going to be referring us. We’ll pay you 25% referral on the =list side, and see if we can sell all these third party reports if you blow out. I just wanted to share that with you all out there listening. Just because you bought a deal doesn’t mean you lose all your due diligence money. I think that’s really it. Unless you have anything else you want to say about PA,
07:57 Eric Wanck
I think one last thing Max is, is when it comes to negotiation. This was a husband-wife partnership, in a sense, and you want to make sure that you are negotiating or talking to both partners because one voice might be louder than the other but they might not be on the same page. This was one of the few deals that happened in the sense but the husband-wife sometimes had different views on what terms they should accept and I had to separate them. I had to make separate phone calls and say, “Hey, where are you with this?”, and make sure that at the end of the day, we’re all on the same page and that was beneficial. So, if you’re negotiating a park without a broker, don’t advise it and which has come to us. But if you’re negotiating directly with the seller, make sure you’re dealing with both parties, or else you could be spinning your wheels.
08:45 Maxwell Baker
Yeah, there’s always multiple decision-makers on every deal. It’s not just the person that’s signing the deed over to you. There might be relatives or friends or might be spouses. There might even be some pets out there. I don’t know, troll, how they feel about silly deals, or even friends that a lot of community others are friends with some of the tenants in there. When you get in there, you got to uncover all the variables. And I say this to a lot of people that are on the team and Eric can says like negotiation is all about facts and variables. Whoever has the most facts typically can outmanoeuvre the negotiation; you’ve got to uncover all the facts in order to successfully navigate that stuff. If the other party has more facts than you, and you haven’t uncovered all the stuff on their side that could cause whether it swing positive or negative your way, you’re probably going to get hosed. You’re probably going to lose that negotiation and this is a good point that Eric just made here is that you want to make sure that you’re talking to the right people. So great job Eric again (clapping) dude, killing it this year. He’s killing it. That pretty much wraps it up unless Eric, you got anything else you want to say to the internet world.
09:57 Eric Wanck
Hey, thanks for the time and it’s a very is the time of year I think 2021 even though we’re almost halfway through it, it’s been a very active year. I think a lot of things politically are motivating folks to get out there and buy parks. Capital gains, 1031 talks going away, inflation is bound to come up. I think they’ve already announced a rate for next year coming. This is the opportunity for investors to capitalize on these park purchases right now. Yeah, give us a call, happy to work with you and we’re on a roll. We’re busy over here and we know how to get them to the finish line.
10:30 Maxwell Baker
Yes. 678-932-0200. Give us a call. Ask for Eric Wanck, he does a lot of deals here in the Southeast, up north obviously in PA as well. And he knows all about the Community Price Maximizier. It is our proprietary system here at the mobile home park broker that will guarantee you the highest price when you sell your mobile home or RV community four-step program. You want to learn about it. Give our boy a call, here again, that’s 678-932-0200 thank you all for listening. And I hope you all have a great day.