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’s your host, Maxwell Baker.
Maxwell: Hey, y’all. This is “the” Mobile Home Park Broker’s Tips and Tricks. Today we are going to be interviewing one of our rock star agents, Eric Wanck, from beautiful Acworth, Ga., and his recent closing for the Troy or Arrow Woods Mobile Home Park.
As always, before we get into that, this episode is brought to you by the Community Price Maximizer. This is a proprietary system that we have developed over a decade of trial and error to guarantee you a higher price when you sell your mobile home park.
Without further ado, Eric Wanck, welcome to the show, man. Closing cocktail time.
Eric: That’s right. That’s right. Thank you, Max, and happy to be here, and do a little deal storytelling, but, yes, this was a recent closing. Thankful to have it done. It’s always nice to get them to the finish line. [01:14.0]
A little background on this park. It was a 75-space park in Troy, Ala. Troy University for those familiar with it. Good little town. Good submarket. Good jobs. This was a clean park, everything that a lot of buyers were looking for. We’ve got the city utilities direct-billed, a high number of park-owned homes that were then being sold off to the tenant, what we like to call RTOs. There is 90+ percent of those homes being sold off to the tenant, made for low maintenance, nice wide paved roads.
I mean, this was a deal that I knew was going to generate interest from the start and I knew it was going to sell. As brokers, we have a good pulse on what deals are going to be challenging to sell – [02:02.3]
Maxwell: Yeah, definitely.
Eric: – and what deals are going to be more streamlined as far as not only cosmetically and curb appeal of the park, but books and records, number of par-owned homes, title issues, things like that. From the very get go, I felt good about this park. I felt good about how we underwrote the park, and so we got it out there and we got it sold.
Maxwell: Nice, man. Congrats on that. Tell us a little bit about the underwriting. That was probably one of the biggest variables on the RTO income because there are a lot of variables when it comes to RTO income. You’ve got the paperwork, how the paperwork is set up. You’ve got the tenant profile. You’ve got the local magistrate, how they review it. You’ve got the seasoning of the tenant in there. You’ve got the credit score. I mean, is was just the beginning of things that we review and we’re looking at RTO or rent-to-own.
Tell us a little bit about how much of a discount you gave and if they were priced according to what the value of the mobile home was or was or was it above the value? Just get into the nitty gritty there, so we can share with the audience a little bit about how we evaluated this RTO. [03:12.7]
Eric: Yeah, absolutely, and this is a big thing with the mobile home park industry where now everyone is trying to figure out where to put value or on what do they put a value on these RTOs.
This specific park, what we did and how I underwrote it was, I not only took a lot of those factors that Max just talked about and those are factors that we look at for seasonality, tenant base, how much of a down payment, and I was able to get good books and records from the seller on this, and they gave me an itemized breakdown of the principal balance remaining on those notes. I mean, we’re talking 68, 69 homes and they’re all late-90s and early-2000s, good condition, good quality, maintenance was very, very good on this park.
So, I was able to kind of look at what they were giving as far as the remaining balance versus how do we usually see parks with this similar home as a shell value, and the RTO balance, just to use kind of round numbers here, came to roughly a million dollars on this park. [04:15.6]
Eric: How I underwrote it was to say, Look, market, this is the balance we have and I want you to make an offer. The inside knowledge of folks that are listening to this, most RTOs are going to sell between 60 and 80 percent of that principal balance, and all those factors that Max talked about are what’s going to swing that needle one way or the other.
Eric: Obviously, I’ll mention and interrupt you real quick. The value of the mobile home will determine how big of a discount as well. I think that’s probably the biggest thing. You can’t have a $5,000 mobile home and expect to sell for $20,000 on the face value of the note, if that’s what the face value is. That’s obviously going to take a huge discount on the price of that note because the product is not worth what the paper says it’s worth. [05:06.2]
Maxwell: But, anyway, I just wanted to throw that in there.
Eric: No, it’s a great point and, in this case, it actually did coincide quite well with the condition of the homes and how they aesthetically looked to compare it to what they were asking for it on the balance of those notes and what they were selling them for.
Eric: They were nice homes. I actually went and looked at this park out in Troy. It’s right next to another park we sold last year, Brantley Mobile Home Park, which was an all-lot rent deal. A little bit easier, but it had a little infrastructure issues. But, anyway, yeah, those homes in there were pretty nice, so I’ll say, that’s what I could say about that.
Tell us a little bit about what you learned on this deal as far as kind of like how to navigate a deal like this and what you learn with a buyer or just with… I’m just kind of wanting to leave it open to what you think you learned on this specific deal.
Maxwell: Sure. How the RTOs are priced is always a little bit of a learning curve on each and every park, so it’s good to get buyer feedback. I want to hear how you’re looking at the value. Are they going to sell for 60? Are they going to sell for closer to 80? [06:08.9]
This is all part of us evolving it as an industry. One was just getting buyer feedback and it’s always good to get their feedback on components of the evaluation such as that. Other lessons as far as takeaways is maybe more so from a broker standpoint, but we’re here to facilitate the sale really on both sides. We work for the seller and, in this case, I did work for the seller that was my client. I was able to procure the buyer or they came through our office.
Actually, this was the first park that he bought that was over the pads, so it was a big step up for him. All buyers require a little bit more handholding, I like to say, than others, and this buyer, while he had other real estate, he wasn’t completely green into this industry. I knew from the get go that I was going to be answering a lot of questions and I was going to have to manage the deal much more closely than I probably would other buyers. [07:12.7]
Eric: That’s a big thing from deal to deal, but I learned that lesson very much so with this particular deal.
Maxwell: And, albeit, you said it was his first park?
Eric: Yes, first park of 50+ pads.
Maxwell: Yeah. I mean, and it was like north of $2 million purchase price. Tell us a bit about the buyer profile. I know you had been trying to put a deal in front of him for quite some time. Tell us a little on the journey on how he came into your life and then how it ended up evolving to putting him out on this deal.
Eric: Sure. To give him a little bit of confidentiality, I won’t mention where he’s located or his name, but he is a doctor that [has] other single-family home holdings in his home state and, even in out-of-state, a few of his holdings. He was constantly calling the office. He did a great job. If there are buyers out there listening to this podcast, one thing is, as buyers, if you are really hot for a park, call me. Bug me. Every 30, 60 days, call me. [08:11.5]
Maxwell: No emails. Pick up the phone. Deals are made on the phone, not on email. Give them a call. But, anyway, go ahead.
Eric: That’s right. That’s right, and he was very good at this. He said, “Look, I actively want to buy a park. I’ve got money.” We actually looked at three other deals that I had and he put LOIs in. We couldn’t make them work and, finally, he said, “Look, what’s going on with your Arrow Woods listing?” which is the one here in Troy. We had a discussion about it. We talked numbers, and so we put it together. It was someone that I probably worked with a good six to eight months, and that was just purely conversations and trying to put things together before one landed.
Maxwell: It takes some time to…sometimes takes a little longer, but it’s all about the engagement, y’all. Always call your brokers. Always call your agents. Every week there’s a new deal, so if you’re sending him a text, shoot him on the call. [09:07.6]
Stay away from email because they get hundreds of emails all the time. I know I’m sending them stuff all the time. I know the research team is sending them stuff all the time. Just keep that in mind. If you want a deal, if you’re serious, pick up the phone, shoot him a text. Do that. Try to omit the whole email chain thing.
I know we had a little thing with the closing attorney, but tell me about something you wouldn’t do again on this deal.
Eric: Yeah, something I would not do, that kind of goes back to my earlier point where our job is always to keep the deal moving forward, and any hiccups that come up, obviously, we’ve got to mitigate that and keep things moving. With this one, the buyer up front picked his mortgage broker and I was more passive because we do have buyers that are working and they have lender relationships, and we kind of take it on face value. [10:03.5]
In this case, I took it on face value that he was working through a reputable broker, and for a good month, I let him run that process. The problem was that the mortgage brokers were shopping him all over the place and these lenders were not giving them favorable terms, and we wasted valuable time where he could be speaking to a qualified lender.
The lesson that I learned on this that I will not do on other parks is, if there seems to be a stall on the lender side, and if you’re a buyer out there and you’re getting tossed around, you’re not getting the financing terms that you want, let me know. Let anybody that you’re working through as far as the broker know, Do you have anybody in your back pocket? In this piece we did.
I give a lot of credit to Max. Max stepped in and said, “Look, we’ve got a preferred lender here out of Georgia and let’s introduce them to this lender and see if they get it done,” and, lo and behold, they took the reins and we got it closed. [11:07.2]
Maxwell: Yes, it’s very important as a real estate agent in the investment world to know where your debt is coming from. As a buyer, you want to come into the deal saying, Look, a) I’m either coming in all cash or b) I’ve got a lender relationship. Albeit, of all the mortgage brokers out there, some of them are great and some of them are not so great, so you’ve got to be really careful with who you are.
We know who the great ones are because we’ve done deals with them, and we know a lot of community lenders out there as well that we know will close the deal like we had the bank close on Troy. It’s always important for you guys to have your debt ready and in the chamber, ready to pull the trigger. That’s pretty much about it. [11:56.3]
The last thing I’ll mention is the closing attorney. Eric is such a gentleman, he’s a little shy about it, but this closing attorney was quite the learning experience for us as a company because now we have a closing attorney checklist of what their job role is once we go under contract on a deal. As park brokers, we’re all over the country trying to put deals together and our reliable attorneys that we’ve got some guys here in Georgia that we like to use and in some other states, but sometimes we’ve got to use whatever the seller provides.
With that said, a lot of these closing attorneys have never closed on a mobile home park before, so it’s a huge variable to try and teach them what that consists of. A lot of times they can figure it out, but I’d much rather them not figure it out on y’all’s deal, right? I mean, let’s be real about it. We don’t want to deal with that. We do have a closing attorney checklist now that we’ve drafted and started handing out once we go under contract to the sellers and make sure that they hand it to their attorney, whoever that may be. [13:00.6]
But, yeah, it was a great deal. Took a little while to sell. I think it was a record price per pad for the local area. I don’t think another park in the area has ever sold for that much. Yeah, pretty excited about that.
Eric, do you have any closing comments that you want to mention?
Eric: Yeah, I mean, just a real quick addition to your closing attorney. I would agree, we work throughout the entire country, so finding good attorneys that understand how to close on a mobile home park is still in development. We track this, of course, but having a close attorney that knows what they’re doing is very monumental. In this deal, it ended up being kind of a communication thing, but they were very nice at the end of the day and, of course, we got it done, but it is an important part of the deal. I mean, nobody wants to stress on the last couple of days of closing, so it’s important to have a good closing attorney there on the transaction.
Maxwell: Yeah, definitely. That pretty much wraps it up on this closing cocktail. Actually, it’s a closing coffee. It’s a little early for cocktails. Actually, I don’t know what he’s drinking over there. I’m drinking a little coffee, but… [14:03.0]
Eric: We’re going to wake up here, man. We’ve got to wake up. We’ve got to get going.
Maxwell: I know. I’ve got to get my drink on here. I do have an Arden’s Garden here if you guys would…
Eric: Yeah, he’s a healthy guy right here.
Maxwell: As always, we are here to add as much value to y’all’s journey of owning, operating, or even selling a mobile home park here in the beautiful US of A. We are doing a lot of cool new things here at the company.
As always, this podcast is brought to you by our new proprietary system, which is called, you guessed it, the Community Price Maximizer. I mentioned it earlier in this podcast. It’s a four-step program that Eric knows very well that will take you guaranteed to a higher price if you follow the guidance that we give you or the agents give you. Our goal is to put as much money in your pocket, maximize your investment and a walk away happy.
That pretty much wraps it up. Next time on the podcast, we’re going to be going over, hopefully, another deal closing, another closing cocktail with Craig Nielson. I believe he is closing another deal this week, so, yeah, we’ll be talking about that. [15:07.0]
Eric, thanks for coming on the show, man. First time we’re here, so we’re excited to get this into a rhythm. Thanks again, man, for being on the team.
Eric: Yeah, absolutely. I appreciate it. Thanks, Max.
Maxwell: Yeah. As always, give us a call (678) 932-0200 or shoot us an email Info@TheMHPBroker.com. Eric, do you want to give them your email or should they just shoot it over to info? It’s up to you.
Eric: Yeah, shoot it over to info. If you do want to call me directly, I’m happy to give you my cell phone here. It’s (770) 688-5448. If you’re looking for a park two and a half million or under, I know the market better than a lot of other brokers out there. Deal with somebody that knows this industry. I’m happy to talk with you.
Maxwell: Thanks, Eric. All right, y’all, thanks for tuning in. We’ll talk soon. Bye-bye. [16:03.2]