I have somewhat of a naiive question. So I really am starting to dig into MHPs. I look on all the websites to find deals, however I don't really have capital to act on them. I don't want to cold call and create deal flow if I can't even fund a deal.
The question is, if I were to find an off market deal. Do I NEED to put it under contract to start telling people about it? If so, would I do some deeper due diligence and the phase 1, or would the potential buyer?
Yes get it under contract. You need to perform the financial diligence on the park and then assign it to a new seller.
If you’re looking for a partner in the deal then your choice on whether to continue the physical diligence part because the clock is ticking on your contract.
@Dominick Dahmen I agree with @Jon Dorsey get it under contract and at least perform the initial financial due diligence to make sure deal really makes sense. Then figure out what price you can offer to an end buyer and go to that buyer. You want to make sure the deal is solid for the end buyer. Maybe you make a little less initially but you build those strong strategic relationships with buyers that allow you to scale. If it’s a great deal you should be able to find an interested MHP Operator but it’s important to have your ducks in a row as the clock starts ticking once you sign that contract and/or receive dd docs and a buyer will not want to take the deal if he only has a few days or a week or so before he has to close. Best of luck!
Another tip would be to insert into your contract that the time clock does not begin on due diligence until you have received a laundry list of items from the seller (rent roll, P&L, etc.) and that typically buys you an extra week or more of diligence time. During that period, you can check out the typical deal killers (zoning, utilities, etc.) and then offer the assignment with the full time clock on diligence for the buyer.