The MHP Brokers Tips and Tricks Closing Cocktails Interview with Broker Eric Wanck About Two Recent Deals

In this episode of The MHP Broker’s  Tips and Tricks Closing Cocktails podcast, Maxwell Baker, president of The Mobile Home Park Broker, chatted withThe MHP Broker Erick Wanck about two recent deals, one in South Georgia and the other in Alabama.

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:

• Max introduced Eric to the podcast and congratulated him on two recently closed park deals. (Max, 00:22)
• The first of these was Caine’s Mobile Home Park, an 83-space RV and mobile home park in south Georgia. (Max, 1:16)
• Eric had first spoken to the owners of the park three or four years ago about the possibility of selling, but nothing had happened at that time. (Eric, 1:35)
• Fast forward three years or so, and now the owners did want to sell. They’d tried doing business with a traditional home real estate agent and had a few offers, but not what they were looking for. It took Eric 60 or 90 days to get the park under contract, and he helped set a good listing price. It was a mom and pop community, but in very nice shape, well cared for. (Eric. 1:52)
• One potential obstacle was the fact that the prospective buyer was a syndicator still in the process of gathering fellow investors and raising money for the deal. This was a party that Eric hadn’t done business with in the past, so he knew there was some risk potential, but they were upfront about the group’s status and goals, and they were able to raise the money.There were also a few minor hiccups during the due diligence process, mostly in terms of the mom and pop sellers having some difficulty gathering all of the books and records needed. But it all worked out in the end, without major complications. (Eric, 3:43)
• The second deal was for Delmar Woods Park, a community in Alabama with a price set at less than $15,000 per pad, which is a remarkably good deal for a buyer. (Max, 4:30)
• The seller was already going to make a killing against what he’d bought the park for, so they were eager to sell. Highly motivated sellers. It was less than half occupied, but the park had over 50 pads. That’s a sort of “magic number,” meaning that parks with that many pads usually get a lot of attention from investors. It also had city water, another key selling point. The buyer was a first-timer as a mobile home park investor, but they had a great relationship with their banker-lender. The appraisal went fine, but they learned something that no one–including the county–knew: the park was somewhat smaller than the officially listed acreage. Uh oh. (Eric, 4:47)
• The seller did not have an Alta survey on file. They had another survey, but Alta is the gold standard. The survey they had got it wrong, and they found they had a “missing” acre and a half. In other words, the parcel was smaller by about that amount than what they’d listed and sold it for. It was going to impact the closing price for sure. (Eric, 5:44)
• Fortunately, everyone handled it maturely. The seller made a bit of a price concession, and the sale went through. (Eric, 6:46)
• Comparing the two very different deals, it just showed Eric that every deal has different situations and obstacles, but you take ‘em like they come. (Eric, 7:06)

Like Eric noted, every sale is different. But if you have an experienced mobile home and RV park broker on your side, every obstacle can be overcome. Call Eric Wanck or Max Baker at The Mobile Home Broker, (678) 932-0200. Or drop us a line at info@themhpbroker.com.

Power Quotes in This Episode:

(Regarding the South Georgia deal) “We typically see the RV parks take a little bit longer to sell. They also sell at a little bit higher cap rate, and I think that’s just indicative of the industry. There’s a lot more attention on mobile homes right now, but the RV is definitely picking up steam. We’re finding more buyers that are chasing it…It was great working with (the buyer), and I look forward to working with him in the future.” (Eric, 1:52)

“In this business, you’re always hit with curveballs every once in a while but that one was definitely something to throw in there as the deal story, because I’ve never had one off that much (in acreage size), and it definitely had us coming back to the table and saying, ‘Hey, what are we going to do about this?’” (Eric, 6:26)

“…it just shows that, you know, we got a lot of different deals across our desk. Doesn’t matter if you’re looking for (a) turnkey (deal), doesn’t matter if you’re looking for a massive value-add. I mean, we even have some development deals within the company right now, if you really want to take on a project.” (Eric, 7:06)

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 beautiful episode of the Mobile Home Park Brokers Tips and Tricks Podcast. As always, this episode is brought to you by the Community Price Maximizer. It is our proprietary system that will guarantee you a higher price when you exclusively list with us, and today we have again, yet again, I should say, Eric Wanck, welcome to the show and we are talking about two deals that you just closed. Congrats, man. Always closing deals, even when the market; our competitors are complaining about not closing deals. Eric Wanck is still closing deals. So congrats, dude.

01:02 Eric Wanck

Yeah, definitely thankful and blessed to get things across the finish line. It’s definitely been a wild last 12-16, months in the industry. But yeah, hey, we’re here today. We’re talking about two that got done and we got across the finish line.

01:16 Maxwell Baker

Yeah. So, let’s talk about this park that you just closed, Caine’s Mobile Home Park, 83 space community. Tell us a little bit about it. Tell us kind of the buyer profile. I think it took a minute to get this sold, and we had some hiccups too while we were under contract. So yeah, just love to hear about it.

01:35 Eric Wanck

This was an interesting deal story, because I actually spoke to these; the owners probably three, almost four years ago.

01:44 Maxwell Baker

I remember when this lead came in. Yeah, I do remember, getting in. You were you drove down there too to meet him, right?

01:52 Eric Wanck

Yeah, I mean, they, they tipped their toe into what it would look like to go to market. We’re back and forth for a while, and they decided to hold on to it, lo and behold. Here we are. Fast forward three years. Kept that relationship alive and they were looking to sell again. I think they had some not-so-great success with a local realtor. They had some offers that came forward, but not quite what they wanted. You know, they reach back out to the folks that are in this game each and every day, this is what we do. So, we had another meeting, we got it on the market. We got a price, you know, it did take probably 60 to 90 days, truthfully, before we got this under contract. We typically see the RV parks take a little bit longer to sell. They also sell it a little bit higher cap rate, and I think that’s just indicative of the industry. There’s a lot more attention on MH right now, but the RV is definitely picking up steam. We’re finding more buyers that are chasing it. The cap rates are better. I think that’s indicative of the risk that you take with a little bit more transient tenant base but the key is finding good quality parks that sometimes you have folks paying six months to a year up front for Pad rent and this set of it was a very high occupancy park. This thing stayed full about 85% all year round and this is South Georgia. You wouldn’t think that it would, but it did, and it was a really, really nice park and not to stress that too lightly, because this was a mom-and-pop operation, they took care of it. Yeah, I’m glad to have this thing went under contract when we did, because it had to be sold. It was a really nice park for somebody.

03:33 Maxwell Baker

Yeah and the buyer was a syndicator, right? They had; raising the money, and thought going into the details on who it was, but the buyer, I think you told me, was raising money to buy the deal.

03:43 Eric Wanck

Yeah, that’s right, Max. I mean, this was, you know, one of the first few deals that first time buyer going through this with them and I knew they were, they were up front with me from the get go as to syndicating and raising money for the deal. I had no problem with that. But do you always take a little bit of a risk with folks that you haven’t done business with before? But hey, we all know how it ends. They were able to get it across the finish line. We had a few hiccups along the line, as far as DD material, but nothing that we couldn’t overcome and it’s not stuff that we haven’t seen before in this industry, sometimes the mom-and-pop operations that the books and records are not super clean, as you would maybe see on an institutional deal. But hey, we got through the hurdles and we got it done.

04:30 Maxwell Baker

Nice man. So, moving on to the next deal. We have here is the Delmar Woods Park that you just sold too. Tell us a little bit about Delmar and how that went down, the type of buyer they secured and and less than $15,000 a pad, which is crazy.

04:47 Eric Wanck

Yeah, it’s definitely one of those metrics that you look for and if you could find it under 15,000 a pad, you’re typically going to find a buyer for it. This guy was a motivated seller, in a sense that he picked it up super, super cheap. He knew he had a good price on it as far as his cash basis and this is all 50% occupied and the magic number was over 50 pads. I kind of feel like whenever you get over 50 pads, it draws some good attention to it. There’s some good meat on the bone for the next buyer. This did have, I believe it had city water on it as well. So, it was a huge plus, another first-time buyer, but they had a really great banking relationship. They put, you know, probably a decent amount of equity down, and had some money in reserves to get that bank loan done. But hey, appraisal came in fine. The one little interesting thing on this deal was even the county had the acreage wrong!

05:43 Maxwell Baker

Wow!

05:44 Eric Wanck

We don’t see that too often, but it just shows how much; for buyers out there that may be listening, or sellers, for that matter, just what you actually have and the seller did not have an Alta survey on file. He had a survey, but it wasn’t an Alta survey and believe it or not, when we got the Alta, it proved that he had another like, it wasn’t small, it was like another acre and a half that was decreased from what the county was showing. So, that was a very interesting little obstacle in the deal to all of a sudden everybody learning that we don’t have another acre and a half here on the parcel.

06:20 Maxwell Baker

That’s a pretty big whiff (laughs) on the surveyor, whoever did that previously.

06:26 Eric Wanck

(laughs) I know, I know. It’s you never know. In this business, you’re always hit with curveballs every once in a while but that one was definitely something to throw in there as the deal story, because I’ve never had one off that much, and it definitely had us coming back to the table and saying, Hey, what are we going to do about this going to do about this?

06:43 Maxwell Baker

Yeah, what did y’all end up doing to save the deal?

06:46 Eric Wanck

Yeah, it was a little bit of a price concession at the end of the day. It wasn’t a much because some of that acreage that was being taken off really could not be used for expansion or putting on lots. So, there was a small concession done just for the sake of acreage not being there.

07:02 Maxwell Baker

Yeah, anything else you want to say about Delmar before we wrap up?

07:06 Eric Wanck

Yeah, no hey, every deal is a little bit different in this business. You know, both deals being completely different ones. You know, great, well-maintained RV and mobile home park. The other one was sort of out in the country of Alabama, 50% occupied with a lot of work to be done. But it just shows that, you know, we got a lot of different deals across our desk. Doesn’t matter if you’re looking for turnkey doesn’t matter if you’re looking for a massive value add. I mean, we even have some development deals within the company right now, if you really want to take on a project. So, that wraps it up.

07:39 Maxwell Baker

Cool man. Well, again, congrats on closing those deals as always. If you guys would like to get a free analysis and start with our Community Price Maximizer program, Eric can help guide you through that entire process, four-step process, and it will guarantee you the highest price possible in today’s market when you go to take the community out exclusively with us. So, give us a call. (678) 932-0200, or email us at info@themhpbroker.com and feel free to reach out. Ask for Eric. He knows as much as anybody in our company, if not more about underwriting, about how to put deals together. He is a very well knowledgeable guy when it comes to Mobile Homes and RV park. So, give us a call. Appreciate y’all listening, and let’s keep moving forward!