BLIND OFFER - HOW TO CALCULATE W/NO INFO?
When sending an unsolicited purchase offer to a park owner, how can I calculate a good offering price while being sure I get a good cap rate when I don't have any property income & expense information? Please help.
If you don't know market rents, expenses or cap rates then you should probably not be making blind offers.
Dave Reynolds did several deals this way. I'm wondering what formula he or other investors use. Im pretty sure finding out what area lot rents are is easy....but what other calculations is he using?
Agree with @Account Closed, don't do it. Sending offers in the mail to random parks you know nothing about is a waste of everyone's time. For the fish that do bite expect Trailer Park full of sex offenders with pit bulls sitting next to the car on blocks, adjacent to the failing Lagoon.
In most cases you're just going to anger people by giving them a letter with a good price to find out they fit the scenario above and you're overpaying, or anger them because you're way under and they won't even contact you.
This is why people don't do it. Most send polite letters to get into contact with the person to make a reasonable offer based on very very basic information - if you cannot afford it then they wrap it up under contract and assign it to someone who can and make money in the process.
I know you're trying to differentiate your letters to Park owners, but this will be a painful lesson for you. It's easy to do this with SFH but not commercial deals.
I guess you can halve studio rents for a lot rent and then google earth the number of homes on the property. It's like driving without a steering wheel but what the hell.
I don't recall MHU advertising this as a good practice in any of their material...where did you see this?
I was reading their "Mobile Home Park 10/20 Investment Sysytem" book and it is a part of Dave Reynolds direct mail strategy. He did many many deals by sending blind offers.. .I was surprised by that...
I tried this once when I first started and I accomplished nothing more than freaking those sellers out. People remember you. Even now, those 8 owners (2 have since sold-not to me) I sent contracts to want nothing to do with me. Just a little food for thought on that strategy.
I would go to the MHU Forums and post this there to see if Frank or Dave will chime in. Usually if they have something like this in their materials they will tell you how to do it properly, otherwise why mention it?
Ok. Will let you know if I get a response
@Nichole Menzies It was of his marketing strategies in his book. However, if you have the audio with him, the strategy did not work well. As @Account Closed said it scared the park owners.
@Andriy Boychuk thanks! I didnt hear that part yet but i will keep listening!:-) I would expect to frighten all but the most desperate sellers lol but I thought i guess you never know....