The MHP Brokers Tips and Tricks Interview with Broker Eric Wanck Regarding a Recent Mobile Home Park Sale in Southern Alabama

In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed The MHP Broker Eric Wanck regarding his sale of a small park in a tertiary market in southern Alabama with a challenging appraisal.

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:

• The MHPBroker Eric Wanck recently sold a small park, for the second time, in a tertiary market in southern Alabama–but not without its challenges (Max, 0:22)
• The park made for a challenging sale because it was small, with less than 30 pads, and had an abundance of park-owned homes (POH) and rent-to-own (RTO) homes, On the other hand, it had city water and a good septic system. There was plenty of buyer interest, and Eric found a buyer with some industry experience, but not a whole lot. The buyer needed help getting financing, and Eric and The MP Broker were able to find a good debt source. (Eric, 1:22)
• However, the appraisal process became a hitch. The bank appraisers came back low. Eric didn’t give up on the deal, but got his clients to hit the middle ground on price so the deal could go through to the satisfaction of all parties. This took a little more time than he would have liked, but they were able to close in five or six months. (Eric, 2:55)
• The appraisers didn’t appreciate the presence of the several POHs. They didn’t take into consideration the significant rent deposits due to all of those POHs and RTOs. Eric worked with the lenders to get that stable income considered, but it was the kind of challenge that park sellers always run into when selling properties with a lot of POHs. Lenders tend to see that as more of a liability than the consistent income-producing asset it might be. (Eric, 4:22)
• At the end of the day, Eric and the MHP Broker team knew how to handle the obstacles, and they kept in constant communication with the appraisers and put together a deal that was beneficial to their client as well as the buyer. (Eric, 5:56)

Even the toughest obstacles can be overcome if you have talented and experienced mobile home park brokers on your side. At The MHP Broker, we guarantee a park sale at the highest possible price. Call Eric Wanck or Max Baker at The Mobile Home Park Broker, (678) 932-0200. You can also drop us a line at info@themhpbroker.com.

Power Quotes in This Episode:

“…because we had buyers coming to us left and right, saying ‘How am I going to get this done?’ and we provided that solution.” (Eric, 1:28)

“We’re not biased. As long as you can come and you can show that you can get the deal done, we will work with you.” (Eric, 1:28)

“…we always figure out a way to get it done, and that’s what we pride ourselves in, that we’re not just going to toss up our hands and say, ‘Let’s cancel the contract.’“ (Eric, 2:55)

“We do our best in terms of marketing and providing information to the appraisers.” (Eric, 4:22)

“At the end of the day, every deal has a little bit of its bumps, and this one did with the appraisal, but the good news is that we knew how to navigate it, and we got it to the closing table.” (Eric, 5:56)

“We do sell the easier ones, which most brokers are fighting over. The ones that they don’t fight over are the ones that we are very good at, and those are the value-add deals. We don’t mind getting our hands dirty, albeit, we do like the easier ones out there, but, you know, obviously not every mobile home park out there is a beauty up front. They’re just diamonds in the rough, and we are very good, especially Eric, at explaining how the next buyer coming into the deal will be able to make some money.” (Max, 6:12)

00:02

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 Broker’s 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. Four step program. Give us a call (678) 932-0200, cero, dos, cero, cero for all you Spanish speakers out there, Anyways, today, we have the great pleasure to have one of our All-Star brokers here, Eric Wanck close on a deal that we’ve sold twice now. They definitely took a part of the Community Price Maximizer, bought the deal, improved it, unless Eric tells me otherwise, came back to him and we sold it again. So, Eric, welcome to the show. Let’s talk about this deal.

01:18 Eric Wanck

Thank you. Thank you. Always good to be on the podcast. One of the wonderful things about the job is talking about closing deals. So…

01:27 Maxwell Baker

Yesss!

01:28 Eric Wanck

Glad to be here and yes, this deal in southern Alabama was definitely familiar to us, smaller Park, less than 30 pads, but it was on city water. Septics were all in good condition. So, right now, I should say this one, we just started kind of getting to the debt side, and this was a very difficult Park to get financed. One, given its size, two, there’s a lot of Park Owned Homes (POHs) and RTOs in there, and those two variables always kind of play havoc for us in trying to find debt. So thankfully, our department worked hard and we were able to source the debt on this deal, and because we had buyers coming to us, left and right, saying, “How am I going to get this done?” and we provided that solution. So, you know, grateful to Max, back-office team here putting the debt together here over the last, you know, year or two, working hard on that. So, if you guys are out there looking for debt on deals and you don’t want to do it yourself, ‘Hey, give us a call!’ But yeah, so we got a buyer on this one who was relatively new to the industry. Not going to say he was brand new out of a boot camp, but you know, he’s not one of the portfolio owners that we would typically sell to, but that’s okay. We’re not biased, as long as you can come and you can show that you can get the deal done, and we will work with you.

02:55

A pretty clean park, but we had to get through the appraisal process, and this is where the doom and gloom and a little bit of drama of this deal came in, because we had a low appraisal come back. Something we always got across is a hurdle in every transaction that involves lending, but we always figure out a way to get it done, and that’s what we pride ourselves in, that we’re not just going to toss up our hands and say, ‘Let’s cancel the contract’ thankfully we had two good parties and you know, there’s several different options you can do when a low appraisal comes back. But in this case, we kind of got a middle ground on price, instead of trying to, like a seller second, or, you know, something like that. So, we just tried to make it as clean as possible and while it wasn’t the quickest of all deals, I think we were probably to market to close, maybe that five-six month mark. But again, because it was small, because a lot of Park Owned Homes, that’s kind of what you expect sometimes on these kind of parks and tertiary markets. So, the good news is we got it done.

04:01 Maxwell Baker

That’s right. Man, tell us a little bit about the value on the Park Owned Homes, because that was a pretty big variable, at least from what I remember on the financing side and it was like everybody’s pointing at each other saying they knew what the value was but in reality, the bank decided what it was worth (laughs)

04:22 Eric Wanck

Right! I mean, this is quite common in a lot of deals that have heavy POH in them. So, not just specific to this one, but recalling, there was pretty good income, if you take a look at the rent roll, roughly 50% slot rent, maybe another 50% POH this one was, I think, right around there maybe a little bit heavier on the POH income. Our appraisal, unfortunately did not include any of that income. So, you know, there’s kind of this back and forth. The buyer knew he was getting a good deal, because obviously it was not appraised. Uh, any of that income but when you look at his cash on cash, on what he was buying, it for, it was, it was a home run. So, there’s, there’s ways of of kind of working that into negotiation, as far as working with the lenders and the appraisals and how to get that, that’s probably a whole another conversation. But we do our best as far as marketing and providing information to appraisers, if they reach out to us to show that, hey, there is real income coming off these homes, and without the home, there is no income from the lot rent and certainly, if you were to replace that home, it’s going to cost you a lot more than what we’re asking as far as Shell value, probably 98% of the time, how we market it and how we sell those homes is probably well under what the replacement cost is so…

05:51Maxwell Baker

Yeah. Well, any closing comments, man, before we wrap this little rendezvous up?

05:56 Eric Wanck

Yeah, well, I guess that was; kind of went through it in a nutshell but hey, I guess at the end of the day, every deal has a little bit of its bumps, and this one did with the appraisal but good news is that we knew how to navigate it, and we got it to the closing table.

06:12 Maxwell Baker

That’s right, y’all. So, if you’ve got some crazy deals out there, that’s what we specialize in. We do sell the easier ones, which most brokers are fighting over. The ones that they don’t fight over are the ones that we are very good at, and those are the value-add deals. We don’t mind getting our hands dirty, albeit, we do like the easier ones out there but you know, obviously not every mobile home park out there is a beauty up front. They’re just diamonds in the rough, and we are very good, especially Eric, at explaining how the next buyer coming into the deal will be able to make some money. So, give us a call. We’d love to talk about you and your deals, if you want any offers on your stuff, or if you want to take it to the market. Obviously, that’s what we do. So, call us (678) 932-0200, or email us at info@themhpbroker.com, and as always, this episode is brought to you by the you know it. You got it the Community Price Maximizer. It is our proprietary system that will guarantee you a higher price when you exclusively list with us. So, like I said, call us would love to hear from you, and as always, let’s keep moving forward. Have a good day!