Should I hire a lawyer/attorney for Due Diligence on MHP

Question

So I have found many potential deals in the MHP market and trying to narrow down the best one for me. I have read the BP Due Diligence checklist along with many other checklist on the net. I also have considered paying Dave and Frank @ the MHU website along with some others to review all the paperwork, P&L's etc.

For someone that is new to MHP investing, I would like to hear from some seasoned vets on my best approach to reviewing all paperwork and determining the best deal for me. My concern is that I will miss something or not be able to identify some type of falsified documents or numbers buried in the paperwork. Recommendations please

Thanks BP

Adam Hershman · Answer

Hey Account Closed

My rule of thumb for things like this is pretty simple, it's a 2 step checklist.

1) Do I 100% understand the situation?

2) Am I confident enough in my ability in this area to justify risk?

If the answer to either is No, then seek professional help. I use this for literally everything in my life from attorneys to CPAs, to realtors, to doctors.

For example, if you are considering purchasing a $62M multi-unit mega property, even the most experienced RE investors would likely have an attorney look at the contracts, but a $75,000 SFH might not warrant the same treatment.

It's all about determining if you REALLY understand the situation, and the worst case scenario if you don't do things correctly yourself.

Adam

Russ Wallace · Answer

Anthony, I suggest separating the due diligence checklist items into two categories: free and fee. The free items are handled first by you, if you feel confident in your ability to properly complete them. The fee items come afterwards and are best delegated to qualified third-party service providers. Managing the process in this manner should prevent spending monies unnecessarily. For example, you can gather all of the property’s public records, operating records and relevant jurisdictional authority regulations, compile the market competition survey, demographics analysis and prepare the pro formas. If no "deal breakers" are discovered, you move-on to engaging experienced professionals to supply the phase one environmental inspection, property survey, water/sewer systems inspection, title search, closing services etc.

Joseph Catalano · Answer

As I tell all my clients.  You never enter into a legal contract or courtroom without an attorney.  There is nothing simple about the law.  We spend entire careers trying to figure out loopholes to the law, it is what we do and it is what we are trained to do and how we are trained to think.

That being said.  I am a practicing attorney and I always have an attorney review my contracts and even potential contracts no matter what the price of the property.  It is called covering your ass-ets