The MHP Brokers Tips and Tricks Interview with Broker Eric Wanck Regarding Five Points MHP

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 Five Points Mobile Home Park, and the challenges that were involved.

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:

• Super broker Eric Wanck recently sold Five Points Mobile Home Park, though not without a little drama. (Max, 0:22)
• From the outside looking in, it was a great park. Five Points is in a favorable metro, it has a good, solid resident base, all tenant-owned homes, with direct-billed city water and sewer. Everything investors are looking for. (Eric, 1:28)
• On top of all other buyer advantages, the park was priced at an almost 11% CAP. (Eric, 1:56)
• THe reason for the high CAP is that the tenant-owned homes were all pretty old and run down, from the late 1970s and early 80s. (Eric, 2:10)
• Max remembers being highly unimpressed with the homes as he rode through the park, inspecting it and taking pictures. He knew then it would be a hard sale. (Max, 2:28)
• The seller had approached Eric probably about a year before the sale, and asked him to evaluate the property. Eric appraised it and recommended that the owner spend a little money on improvements. The seller did so, and Eric was ultimately able to get about $800,000 more for the property than he had originally thought it would sell for. (Eric, 2:44)
• They got a lot of interest in the park, and the high bidder was a man who owned real estate, but had never owned a mobile home park. He already had a lender in place, but the lender got nervous. It made so many unrealistic demands that it looked like they didn’t really want to fund the deal. (Eric, 5:36)
• One and a half weeks before the proposed close date, the lender pulled out of the deal. Fortunately, the buyer was already in backup communication with another lender who came into the deal. They were able to complete the sale in 30 days with the new lender, and that included a new appraisal. (Eric, 6:36)
• The prospective buyer was a little gun shy with the appraisal, based on what he’d already been through with a lender, and the general aesthetics of the park with the old homes, so he did something Eric had never seen before. Even though he wasn’t the owner yet, he paid about $10,000 out of his own pocket to improve the look of the park. The strategy worked. The appraisal went through without a hitch, and the park was sold. Proof that even a drama-filled transaction can be successfully overcome with experienced mobile home park brokers. (Eric, 7:33)

We can’t guarantee a total lack of drama, but we do guarantee a park sale at the highest possible price. That’s the bottom line. 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:

“It’s not a deal without drama, bro.” (Max, 3:38)

“Every Tuesday, we talk about all the deals that we’re working on. We talk about all the drama that everybody’s coming across. We are a giant think tank for you, the seller and the buyer. So that’s why you pay us.” (Max, 4:21)

“It just goes to show that you always run into something with these transactions…great cash flowing park definitely had its rough edges, but I think at the end of the day he’s going to be very happy here, in the long run, with the asset that he purchased.” (Eric, 7:33)

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 Brokers Tips and Tricks podcast. As always, this episode is brought to you by the Community Price Maximizer. You’ve probably heard me say it before, but I’m going to say it one more time, maybe a few more times in my lifetime, but 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 for your number one broker in the country, highest performer. I’m trying to come out with all the Google SEO words, because this will be transcribed, and we need y’all to know that we are the Number One Mobile Home Park Broker and the reason why we are number one is because we just closed another deal! Eric Wanck here, closed Five Points. Had a little bit of drama with that one but Eric, welcome to the show again. It’s always good to have you buddy. Get to see you tonight too, celebrate another grand quarter of working together. But yeah, man, welcome to the show. Tell us a little bit about this deal.

01;28 Eric Wanck

Yes, absolutely always good to be on a podcast talking about closing deals and this one did come with a little bit of drama. He did preface that correctly, this deal was kind of cream of the crop, when you look at it from a highlights standpoint, good MSA. Good, solid population, all Tenant Owned Homes. City, direct billed water and sewer.

01:55 Maxwell Baker

Nice!

01:56 Eric Wanck

I mean, this thing we knew was going to get attention, and on top of that we had priced it almost an 11% CAP!

02:04 Maxwell Baker

Stop it! You’re gonna make my wife jealous. Quit talking about it.

02:07 Eric Wanck

Yeah, yeah

02:08 Maxwell Baker

(laughs)

02:10 Eric Wanck

You may start to wonder, okay, well, why? Why a park like this priced at 11% CAP? And there is a reason behind it and a lot of those Tenant Owned Homes that were in the park were older, 70s, early 80s. So not the prettiest park in the world, but…

02:28 Maxwell Baker

Oh, they’re crap boxes, man. Those things were shoe boxes with wheels, or Wonder Bread, whatever you want to call it. But they were, they were rough. I drove through the first time when we were talking to the owner and taking pictures, do you? I was like, Damn dude, this thing is a war zone.

02:44 Eric Wanck

Yeah, no, it’s, it’s definitely not your prettiest park in the world and interestingly enough, the seller came to us probably a year prior to us putting this on the market, and we did an evaluation for him and took a look at everything, you know, ultimately, he decided to put a little bit more money into the park. And I think that was well worth it, because the number that we went back out to the market and sold, it was about $800,000 higher than we were looking before.

03:11 Maxwell Baker

He was probably happy with that!

03:13 Eric Wanck

Very happy, very happy that it came to us and I appreciate both parties on this one, sellers, a great gentleman. Yeah, this one going into the drama on it, Max. You should have been a shoe in deal, but every deal has a little bit of drama.

03:38 Maxwell Baker

That’s right, it’s not a deal without drama, bro.

03:32 Eric Wanck

Yeah, and that’s not to say anything bad about a seller or a buyer, because we have some great folks we’ve worked with time and time again. It’s just this business. You’re always going to run into a little bit of an issue. Sometimes it may be small, but you always run into something with mobile home parks. There’s so many variables!

03:52 Maxwell Baker

That’s what keeps it fun, though, right?

03:53 Eric Wanck

Oh yeah. I mean, you, you are the problem solver at the end of the day, and that’s what we’re here for and we’ve seen so many different scenarios pop up and Max, you’ve been in this business now decade and a half, and you’ve literally almost seen everything. I’ve been going on a good, nice run with you here in the company, and starting to see almost everything myself. But I always say, I’m always learning though, because just when I say I’ve seen it all, we get some crazy park popping up with…

04:21 Maxwell Baker

No, yeah, dude. Like, right now we’re dealing with some deal that has got a long-term lease, a ground lease, and a portion of it’s on fee simple, and other ones on a lease with a government entity. And we’re having to structure two different transactions in order to lower the basis for the seller. So, he’s done getting taxed a million dollars on capital gains. Like there’s so many new things that we can cover that I’m like, All right, how do we structure this deal? and so it’s that’s the reason why people hire us. Is why people they hire Eric. Y’all because we all are a think tank. We all get together. Every Tuesday, we talk about all the deals that we’re working on. We talk about all the drama that everybody’s coming across. We are a giant think tank for you, the seller and the buyer. So that’s why you pay us. What would you do is because we’ve seen most of everything, and we are on the tip of the spear. So, when something happens, like, case in point, in Five Points, like, I don’t remember what the drama was, Eric can enlighten us here, but we know how to solve it, and that’s why it’s good to hire a specialized broker like us here at The MHP Broker. But what kind of drama did we have over there, E?

05:36 Eric Wanck

Yeah, so this should have been a shoe in, we had multiple offers on this park ultimately, of course, came to the best terms. It was a new buyer who never actually had a mobile home park portfolio. He’s owned some other real estate. But so those that are listening to say, well, I don’t have a big portfolio. There’s no way I can get in to this game. That’s not true. We did go with somebody that he was well financed. You know, he had what it took to get it done, and he had a lender relationship already in place. The drama was that that lender relationship ended up asking for the most craziest things in their underwriting just prior to funding commitment on this where they wanted to see, like verification right off from the CPA on tax returns, and we provided letters, and it wasn’t good enough, like it was just, it was almost like the lender was not wanting to do the deal at the end of the day.

06:36 Maxwell Baker

Yeah

06:36 Eric Wanck

So, here we were a week and a half from our original close date, and we find out that the lender is not going to work. So, as you can imagine, it creates a little bit of deal drama, and we’ve worked through it. Thankfully, he was already communicating with a lender that we knew, and we put him on and that second lender was able to expedite it, and we got it done in 30 days, and that included new appraisal site visit from the lender, you name it, all of it was done in 30 days, which, if you guys have gone through the process, that is incredibly quick. Just because this park; this is the interesting part of this whole transaction, I’ve never had it done in all the transactions I’ve closed. The buyer wanted to close so badly that he was a little bit worried about the lender site visit and what they would think of the park’s condition.

07:31 Maxwell Baker

Yeah, it was a rough!

07:33 Eric Wanck

So, he paid out of his pocket $10,000, you know, I don’t know that. I think it was like 10 grand, but he paid to have it cleaned up before he actually owned the property! Some of you may think that’s crazy, but he was very committed. He knew the numbers, and I can’t say anything bad about the buyer, great guy, you know, if he ever listens to it, I think highly of him and at the end of the day, he got it closed, and he was confident in that. Of course, that’s why he did what he did. But it’s just, it just goes that you always run into something with these transactions but, all said and done, great cash flowing park definitely had its rough edges, but I think at the end of the day, he’s going to be very happy here, in the long run, with the asset that he purchased.

08:16 Maxwell Baker

Nice. E, appreciate the insight on all that. It’s very enlightening for our listeners, A and B, Congrats, buddy. I mean you, you’re doing great here at the firm, and I know Josie is hitting the phones hard for you and doing pretty well with the calls and what not. So yeah, if you’re listening out there and you’d like to hear a little bit more about what we’re doing over here and what we can do for you and your communities, RV or mobile home, give us a call. (678) 932-0200. Eric, you got anything else do you want to holler at?

08:53 Eric Wanck

That’s it. I think I think we hit that one pretty good. Hopefully that was enlightening for you all.

08:58 Maxwell Baker

Yeah. So, like I said, as always, this episode is brought to you by, you got it, the Community Price Maximizer. It is our four step process that will guarantee you a higher price, when you exclusively list with us. Give us a call again that number (678) 932-0200, or email me at info@themhpbroker.com and ask for Eric and I will make the introduction, and we can do some business that we do. Thanks for listening y’all, appreciate it. Let’s keep moving forward!