How to Get Your Mobile Home Park Appraisal Right Every Time

October 14, 2021 by Maxwell Baker

Here Are The Show Highlights:

  • Appraisals are difficult, even if you’re buying your second, third, fourth, fifth or tenth community. The MHP Brokers has worked with clients who own more than 100 mobile home parks or RV communities and even they struggle with appraisals. (1:08)
  • There are three common appraisal obstacles or challenges that could screw up a deal for even a veteran buyer. (1:08)
  • The first of these is getting a deal with artificially high, inflated lot rent numbers that can make a community look more valuable than it might be. (1:45)
  • The second possible obstacle is getting a quote asking you to pay what might be the highest per pad price in the state when our sales data might have identified a more realistic figure based on our constantly updated market analysis. (2:06)
  • The third error is when your lender receives bids and picks an appraiser with little or no experience with mobile home or RV parks. That’s why it’s so important to let us work with you. We work with appraisers all the time and can recommend appraisers with experience in this narrow field. The lender doesn’t have to accept our recommendations, but they’ll often add at least one of our contacts to the list of three from which they’ll make their selection. (2:28)
  • The MHP Broker ‘appraisal in a box’ is our systematic and organized marketing package of rent comps and other marketing information that can make the appraisal easier and more accurate. (3:58)

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.

00:20 Maxwell Baker

Welcome to The Mobile Home Park Brokers podcast, I am excited to say we’re going over something that we’ve kind of learned the hard way. That is how to get your appraisal right on your mobile home and RV community every time you get a loan on your park. I’m excited to say that a lot of it has to come with trial and error of us failing multiple times. That’s basically how life works. You got to fail forward right? Fail often, Fail fast, Fail forward. So as always, this episode is brought to you by the community price Maximizer. This is a proprietary system that will guarantee you a higher price when you sell your mobile home or RV community with the mobile home park broker. So we’ll jump right into it.

01:08 Maxwell Baker

How to get your mobile home park appraisal right every time? When you’re applying for a loan, it can be difficult to find a lender to begin with. But the other bigger hurdle is really trying to get your appraisal done correctly. Appraisals are pretty difficult, even if you’re buying your second, third, fourth, fifth tenth 100th. We’ve got some clients that own over 100 mobile home parks for real and they even struggle with these mobile home park appraisals or RV appraisals. It’s got a number of things that could go wrong with your appraisal.

01:45 Maxwell Baker

You can get into a deal that’s got high inflated lot rent numbers, which is pretty normal. A lot of these buyers out there or operators will buy a deal raise rents above what the market is and try and sell it on that. When they get the appraisal, they move the needle back and say look, you’re $100 above market, that’s pretty unreasonable, you’re not a differentiator between everything that’s on the market.

02:06 Maxwell Baker

Second, you might be paying the highest price per pad the state has ever seen. We have done a lot of benchmarks for several states where we have sold the highest price per pad in each state and it all comes down to data.

02:28 Maxwell Baker

Thirdly, you might just get an appraiser that doesn’t know or hasn’t really done very many mobile home communities or RV communities in their career. That’s probably the hardest thing to get around. But there are some ways to mitigate it. The broker price opinion in a box or appraisal in a box is what we call it, we’ll jump into in a minute. With that said, let’s get into how we as your broker can help you get the appraisal right every time you work with us. That’s why a lot of people hire us because we’re good at making sure that things don’t get re-traded.

02:58 Maxwell Baker

When you put your deal under contract, and you finish doing your happy dance just like everybody does once they put their park under contract. It’s time to get a business. When approaching your lender or lenders, you’ll need to figure out how their appraisal is done.

03:15 Maxwell Baker

Since 2010, community lenders have had to source a minimum of three appraisers and then go through a blind bidding process to get the job. So long are the days that the lenders will choose Johnny on the spot right down the street from where they live to do the appraisal. That just doesn’t happen anymore. They have to source it, I think it’s a federal mandate that they have to source three different lenders out there. As your broker, it is extremely important to have us ride shotgun during this time when you’re talking to the lender, and they’re starting to interview and see the bids come in from each appraiser to make sure that you get the right one when they choose.

03:58 Maxwell Baker

What we try to do, like I said earlier, it’s called an ‘appraisal in a box’. Essentially what that is, is it’s a marketing package that we have, but we add a little bit more data-oriented items in there. We pull fresh rent comps, we pull fresh sales comps, and we make sure that it’s all in there to show them where the market is.

04:18 Maxwell Baker

Be very aware that some of our competitors, I obviously will not name their names, but in their marketing packages, they’ll put rent comps in there and they’re completely bogus. Never ever, even with us, never ever check and see what the real rent comps are. We are very strict with our research crew in India with getting rent comps so we’re very accurate but a lot of these big name guys will just fart up a number and just throw it in there. Be careful with that and make sure you do your own rent comps.

04:53 Maxwell Baker

Secondly, the sales comps. The sales comps is another variable that you need to check. We had a deal where we had sold personally, and we saw a competitor had a listing in the state that we’re in, right here in Georgia. They used a sales comp that we sold, but it had like nothing in there was accurate. It was just a complete lie. If you call them and say, ‘Hey, how’d you get this data’, they’ll even tell you, we just made it up. I mean, they’re not going to lie to you over the phone. I commend them for that. But putting fake data in your marketing package is pretty slimy, in my opinion.

05:28 Maxwell Baker

But like I said, make sure you double check how big the park was, what it’s sold for, make sure that it’s fresh. Here, at The MHP Broker we double check everything sales comps, rent comps, how the local municipality operates. It’s all gone into a nice little pot that we create to give you a very good value on your mobile home park. It’s all about risk, right?

05:48 Maxwell Baker

So secondly, let’s talk a little bit more about the sales tab. Our research team spends a combined 315 hours a week databasing and finding real sales data for 15 different states that we operate in. We always have the most up to date sales data and trends for your community locally. Along with that, we also have the most active buyer list because we clean the whole database every six months to make sure that you have the right data and that you have the most probable buyer for when you put your park on the market with us. Just be wary, don’t let these fast talking brokers out there tell you that they can buy all the data, it’s bogus, they’re just not willing to invest in helping you get you the highest price possible. A lot of times it just shooting from the hip and making numbers up like we mentioned up earlier.

06:35 Maxwell Baker

So lastly, we tried to go out when we find the appraisals coming in or the lenders have ordered the appraisal. We try to give them three different appraisers that we’ve actually, The MHP broker has personally used to appraise mobile home communities and RV Communities. The lender probably won’t pick all three, but the probability of them getting one in there is pretty good. So better to have one in there in the mix to bid for the job versus some local person or somebody that did the self storage down the road, you know, two months ago for them. You just got to be very careful, or very proactive, I should say, in making sure you give them the appraiser that really knows what they’re doing. That’s the biggest variable there.

07:19 Maxwell Baker

We are really good at sourcing this network of appraisers for you. That’s why people hire us is because our contract close ratio is north of 80%. We put a deal on our contract and we make sure that it closes because we have all the right data. We’ve done all the upfront due diligence and make sure that all the stuff that we are giving you is actually real numbers, not some bogus thing that they just put in there to make it look good.

07:45 Maxwell Baker

That pretty much wraps up this week’s episode, I will go over one more time what those three things that we just went over.

07:56 Maxwell Baker

That is making sure that you have up to date data, making sure the sales and rent comps are accurate.

08:00 Maxwell Baker

Making sure you double check the data that other brokers out there are putting in their marketing packages, because don’t rely on that you need to look it up yourself. Or as always, you can hire us, and we’ll help you with that.

08:13 Maxwell Baker

And then third is you always want to try and see if you can slide in another appraiser in there that’s going to help you get that appraisal done correctly.

08:23 Maxwell Baker

Like I said, since 2010, the rules have changed. Not very many people out there really no lender should be doing this, but they are out there sourcing three different lenders, they’ll bid then they get to choose which one they want to use. Sometimes it’s the cheapest, it might not be but just like I said, if you hire us, we’ll give them our top three appraisers that we know that do a lot of business in the industry and hopefully they choose one of those.

08:48 Maxwell Baker

That wraps up the top three things I wanted to go over for getting your appraisal right every time y’all. This episode is always and forever will be brought to you by the Community Price Maximizer – this proprietary system that guarantees you a higher price when you sell your mobile home park or RV park with us four step process. Give us a jingle 6789320200. Next month’s episode, we do one a month up here – we’re going to be going over the lot rent versus park owned home rent. They are not equal. All income is not created equal no matter what people tell you. But I’ll leave that the top three things that we’re going to go over next time. As always, we’re grateful that you listen appreciate your time. Have a great day.

Maxwell Baker

Maxwell R. Baker founded The MHP Broker in 2009 as a commercial real estate broker specializing in helping Investors buy and sell mobile home communities throughout the Southeast. His family got started with mobile home parks in 2000 where Max gained experience in management, rehabilitation, and selling mobile home parks. Today, The MHP Broker has grown to a team of several agents with expanded services focused on owner and investor brokerage services, mobile home park audits, and in-depth market research, resulting in the sale of over $500 million worth of mobile home communities.