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. Welcome to the third episode of the Mobile Home Park Broker’s Tips and Tricks podcast. Crowd is going wild. I can hear you guys through the virtual world that I’m staring at. Anyway, this episode is, as always, is brought to you by the Community Price Maximizer. This system is a proprietary system that will guarantee you a higher price when you sell your mobile home part. I’ll explain a little bit later.
This episode, we are going to go over how to choose a mobile home park broker or real estate agent to sell your mobile home community or RV community. [01:04.1]
Tip number one, let’s jump right into it. You really need to talk to these agents, all of them. We’ve got several competitors. A lot of them I know and have done business with a lot of them, or I’ve tried to do business with some of them, and some of them are wheelers and dealers, and kind of difficult to deal with.
This episode, I’m going to talk about what kind of questions you’re going to ask, but what kind of things you needed to look out for and ultimately what you should probably do when you choose an agent. Not saying it needs to be me. Obviously I’m a little biased because this is a podcast on what to do, but anyways, yeah, let’s jump into it.
Tip number one, ask questions. Ask for references. Avoid the know-it-all real estate agents and brokers. You’ve got them. You’ve seen them. They talk really fast. They act like they do everything. They act like they’ve got a lot of activity. [02:01.7]
There’s a lot of people from certain firms, I won’t call them out, that will say even when the market is down, that they’re killing it. I mean, we know it is B.S., y’all. It’s really not happening. If the market slows down, everybody’s feeling it. They’re going to be optimistic about everything all the time. In reality, you just need to pay attention to your gut anytime you speak to somebody, but if they’re a know-it-all fast talker, you’ve got to be careful. Sometimes they sound like used car salesmen. No offense to the used car salesman out there. I love you guys, but there’s a culture around that.
Anyways, you want to ask them those questions, ask them what their contract to close ratio is. That’s a big deal in a brokerage role. Once you put a park on our contract, how many times is a fall out? Does it fall out 75 percent of the time, 80 percent of the time, 10 percent of the time? I’m proud to say that as a company, as a whole, anytime we put a park under contract, based off the ratios we recently did, we closed them 87 percent of the time, y’all. That’s pretty good. [03:05.8]
If you put a deal on a contract with us, we’re typically going to close it. We have a high close ratio as a company. Some of the other agents in our company have an even higher close ratio and when they put the deal on it contract, and it’s all about the upfront due diligence. Surprises kill deals. Problems don’t, and in order to uncover all the problems, we have to do impeccable upfront due diligence.
That leads me to tip number two, the data. There’s a lot of data you can buy these days. I know Frank Rolfe over at Mobile Home University, when you go to their seminar, they’ll give you a database to work off and that’s great and you can locate them. But my team in India, we rent office space and we have seven full time people working 45 hours a week, sometimes a little less, sometimes a little more, and we are going through and opening up state to state. [04:00.0]
I will tell you that the reason why this is important is when we go into a new market, we’ll pull the rental data and we’ll also pull the sales data, and that’s very important because the sales data shows you, shows us, who the active local buyers are, and then every year we get that. Once we go through it, we go through it twice a year. We’ll give that data to our agents. Anytime we find a deal in your state, we’ve got a list of buyers. We know who’s closing deals.
A lot of brokers are just going to shake as many trees as they can and see what falls out, and that works. There’s nothing wrong with that strategy. However, we’re a long-term company. We like to build relationships and the way we know how to build relationships is if we can provide you with the rental data and help provide you a list of buyers whenever y’all are ready to sell. [04:52.4]
That’s tip number two. It’s to make sure that the data they’re getting is not just some bought stuff or high-level stuff that they just bought from somebody. You want to know where they’re getting their data, how they’re gathering it and whether or not they have an infrastructure to support them when they list your mobile home park, because I already said, we have a high close ratio. Because of that reason, we don’t fall out of contract very often because we know who the players are. We know who is closing deals. That’s the thing.
Tip number three, avoid the generalist. You don’t want to do business with a real estate agent that sells everything. You wouldn’t hire a pediatric surgeon to do heart surgery or brain surgery, or anything that’s not related to pediatrics care. Why would you do that in any other thing in your life? Real estate is very much an example on finding a specialist.
Specialists will always have more knowledge about the ins and outs of deals, and closing and financing. There’s just a lot, especially in mobile home parks, y’all, is one the hardest assets to close on because there are so many moving variables. It’s not a triple net lease. [06:02.4]
A triple net, y’all, is going to be a 10-year lease. They sign it. If it’s double net, you pay for HVAC and insurance and taxes. I think that’s double net and I’m not a triple net lease guy, so I wouldn’t know. I’m not going to pretend to be one. On mobile home parks, they’ve got a lot of different variables. There’s a stream of plans. There’s just so many different things that a specialist is going to know about and understand the risk factor when pricing a mobile home park.
If you’ve got bad county ordinances, if you’ve got a sewage stream or plant, or a lagoon, those are going to be higher-risk profile communities, which will demand a higher cap rate when selling a mobile home park. If you don’t know what a cap rate is, Google it. Otherwise, give me a shout and I’ll help you through it. But the higher the cap rate, the lower the price. That’s typically it, in a nutshell. [06:54.2]
If you’ve got low risk and you’ve got a park that’s full of seniors or you’ve got a lot of seasoned, and in tenants, “they’re seasoned” means that they’ve been in the park for years, months, however long you want to look at it, but if they don’t have more than three evictions a year, that is a key indicator that the risk profile is going to be much, much lower than on somebody who has a revolving door and there’s a new influx of 20 percent new tenants every month. That obviously is going to make the cap rate go up. That kind of leads into number two, but number three, you want to avoid the generalist.
Let’s recap on them.
Number one, tip number one, ask them questions. Questions to ask: what’s their contract to close ratio? How many deals have they actually sold? There are people that say they sell a lot, but in reality, I know that ain’t true. There’s a lot of those guys out there. Just calling them out, seeing how it is. Ask them how they’re getting financed. Ask them who are the most active buyers they know. Obviously, some people might not share that with you or some of them will. It just depends. Ask them how many deals or how much volume did they do last year? [08:05.8]
Those are the types of questions you need to be asking them. Where did they find their data? Are they finding the data through third parties or are they digging it up? Like I said, if they are finding their own data like we do, we know anytime we get into a new state and every six months when we go through that state, we see which active buyers are buying deals. We know who the active buyers are because we’re going through and scraping the database every single time, every six months in 12 different States. Pretty powerful.
Tip number three, avoid the generalist. Like I said, you don’t want to hire a pediatric surgeon to do a heart surgery. You want to find a specialized person to do that.
Those are the three things you need to look out for when you are choosing a mobile home park broker. Obviously I try to wrap this up to be a little short and sweet. I can go on for hours, but we’ll keep it short and just do the top three things. [09:00.0]
Next episode, we are going to be celebrating our very first podcast closing cocktail. Woohoo. What we do in these closing cocktails is we get one of our rock star real estate agents on the podcast and we talk about what they learned when they closed that deal, what the buyer profile was of that deal and what we won’t do next time when we put a deal on under contract. This is going to happen every time we close the deal. It’s really exciting to hear deal stories.
I’ll be drinking. Personally, I’m a tequila guy. I might do a little water, meal, but you won’t even know because it might be in the morning or it might be at night. Depends on when we do it. We will be having our celebration of closing cocktails for actually I believe it’s Eric Wanck. We just closed Arrow Woods, so I’m excited to talk about that deal next time on the podcast.
This episode, as always, is brought to you by the Community Price Maximizer. This is a proprietary system that guarantees you a higher price when you sell your mobile home park with us. It’s a four-step process. We’ll get you in. We’ll look at your park. We’ll make recommendations. You’ll mold it. You’ll change it. You’ll make it more marketable. Then we put it on the market and, like I said on the last show, that’s when that magic happens. [10:18.9]
I’m excited to talk about it with you guys. Just give me a shout, (678) 932-0200, or shoot me an email at Info@TheMHPBroker.com. Appreciate y’all’s time. Thanks for listening.