How we closed two parks 168 miles apart within 6 hours

Question

Hi all! Just wanted to post about our busy Friday. We had two parks that closed today. There are still a lot of great value add buys in the market place . Each one was about 30 units , all city utilities (water and sewer) , all being paid by the tenants. In all of the lots, we are only inheriting one home that will be owned by the park which we will be working with the current long term tenant in place to see if they would like to purchase the home. One deal was seller financing , one was financed with a local bank.

How did we close two deals 168 miles apart from each other in 6 hours time? Well the whole truth is that sometimes to expand our reach , we try and be efficient and partner up if the circumstances are right . Our partner closed Park 1 and we closed Park 2. So that was how we accomplished this one in a single days work.

We also like that fact that since we only have one POH, there are not as many moving parts as there might be with another park. I have seen topics come up about questioning the merit of smaller parks and really feel that the 20-30 space market has a lot of opportunities. We will buy them all day long if we can make the numbers work on the deals. We are excited about the room for improvement on these parks as the markets are good, occupancy is close to 100% and the communities just need a bit of elbow grease. The rents should increase steadily in the coming years and there is also some room for improvement via operational efficiencies.

Right now we are looking for parks in a lot of different. We will look at small deals and big deals. Deal size will be determined by location , market, and price. We are also going to be looking at exchanging into some deals via a 1031 so if you have any deals that you are connected to, we would love to take a look at them so feel free to shoot them to us. I think to date, we have only made one offer on a lead that we received from a fellow Bigger Pockets member but a lot of times, the local relationships you establish, are ones we would not be able to make on our own. Please keep us in mind if you want to sell your park as well or want us to help you work your leads if you are not sure if they are deals or not.

Account Closed · Answer

@Howard Abell Mom and Pop for sure does not mean they are not keen to value. A good chunk of the deals we have been working on lately may be called mom and pop operations but these can often be fair deals on both end. They recognize there might be some work that needs to be done on the property and they maybe have not done some things professionally but they are not giving the deals away . We like them because there is a value add component. Also I know Frank uses mom and pop referencing the original developers but a lot of the ones we talk to have not developed it but maybe have had an ownership interest for 20-40 years. I love realistic sellers . Unrealistic sellers just usually end up always being that because there is never a buyer on the other side of the transaction. Appreciate your suggestion on Behavioral Economics, I have heard that term before , thanks .

Account Closed · Answer

@Howard Abell There you go Howard! Id take a 20-30 space park over most any type of real estate out there. Only thing that might beat it is a bigger park! Thanks for commenting and looking forward to seeing you at the Oakbrook event coming up here shortly. I believe our lender that underwrote the bank deal will be there and they are always looking to do more parks so a great contact to have.

Account Closed · Answer

@Charles Williams I have found some people are way out of line, some people are kind of in line, and some people are in line. The 2nd and the 3rd are the ones we always follow up with and see if we can get a deal going. On some of the desirable parks ( large parks, great markets, stabilized etc) are at much higher values and would not doubt your statement. Id also follow up to see if that one closes because maybe they were off base as they got into it if they were substantially off on valuation. It can be frustrating but there are deals out there. I cant telly you how much stuff we look at for each deal we find. Then we get them under contract and find some in curable issue with them. Parks are great IF YOU BUY THEM RIGHT. If you buy them wrong, they can be a mess. I think that is the most valuable part of parks is having an understating of the whole machine. Also, the more deals you look at, the better you become at recognizing a deal, anything suspicious, any red flags etc. I think its especially important to see a lot in person because then you can get a feel of whats scary, whats good, and what needs further attention.

Account Closed · Answer

@Stephen Moore thanks Stephen , appreciate it !

Howard Abell · Answer

Account Closed looking forward to seeing you there as well. The issue of finding the right value is an interesting one. In the last ten years both buyers and sellers have learned much about how to value parks. Even those “Mom and Pops” know how to read and are more sophisticated than given credit for. One thing we don’t take into account is our personal biases, which is a very human condition and colors our analysis. Buyers will always tend to value low and sellers will always value high. Check out Behavioral Economics, which is a new idea (last 30 years) on how our biases and minds tend to form the way we approach markets. However, being aware of this phenomenon does help us to move away from the extremes and find common ground.

Howard Abell · Answer

Congrats to you Account Closed. I agree with you that smaller parks have great potential. Maybe because I own one? LOL

Charles Williams · Answer

hey Account Closed

That's great news, congrats! We've been underwriting like crazy the past several months and really close on a couple, but haven't taken down that first park yet. It's been very frustrating but keep charging ahead. We do find it amazing how much some of these owners think their parks are worth...and actually one owner did get their park under contract with a big group that paid almost twice what we (and others he told us) offered...

Stephen Moore · Answer

wow way to go man! Congratulations

How we closed two parks 168 miles apart within 6 hours

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