I need advice on how to present a new listing to developers or investors
Involved In Real Estate · Port Lavaca, TX · Member since 2013 · 19 posts · 4 votes
I need advice on how to present a new listing to developers or investors
Most Popular Reply
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
13yYou can't buy them on the potential because it takes blood, sweat and money to get there. An investor is going to want to know how many lots there are and how many have manufactured homes in place with paying tenants? Do the mobile homes come with the park or are they individually owned? How much lot rent is being charged and what does the lot rent include? What is the collection rate? Is it on city water and sewer? What is the condition of the roads and other infrastructure? What are all of the expenses. What is going on in the local rental market? What can you rent a 3 bed room apartment for in the area and is there demand for them? What is the reputation of the park locally and is it a desirable area?
For the most part the only way to increase the occupancy rate towards the potential is going to involve bringing in units to fill the empty spaces and then selling or renting these units. You can;t expect that folks will just magically wish to move a unit in there- in this market. Financing for manufactured homes in parks is virtually nil, so it is cost intensive to find and bring in units and there are few cash buyers so you will have to rent or carry the financing costs as well.
6 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes13y
Hi Josh,
You have to know your sellers goals. Are they wanting to 1031 exchange into another property or properties?? Are they under a time crunch??
The goal is to figure out what the highest and best use is for that piece of land.
For example developers specialize in various things. A retail developer will give you a different purchase number than an office developer, senior living, apartment developer, etc.
The reason is they are all looking at different cash flow models and exit pricing when the project is complete and cost to construct.
Hope it helps.
- Real Estate Investor · Englewood, CO · Member since 2013 · 988 posts · 258 votes13y
Joshua Daniels,
I am an investor with a history dating back to the 1990s around mobile home parks. They can be outstanding cash flows with very little effort.
The very first thing, is the price reasonable to spark an investor’s consideration. Most serious investors do not spend much time negotiating. They get right to the best numbers. If the seller is seeking a sucker, they will quickly pass.
If the seller is not forthcoming, most serious investors will pass. If there is a sense of deception, the investor will quickly pass. If the seller plays games, the investor will move on. I have sellers request I put up earnest money prior to providing detailed information. I never considered the investment opportunity again. No opportunity is the deal of the century.
Then, your optimism should be at a minimum. Facts, not assumptions, are a premium. Investors have their own assumptions.
Put together a detailed 3-ring binder. Assemble very detailed information about the offering, neighborhood, employers, target market, location, etc. Instead of offering opinions, provide historical facts. Of most import, most investors will require 5 years of financial information, including payment histories and copies of current lease agreements. You must document and provide proof of the cash flow, debt, and expenses. If this is slow to be produced, red flags are exposed.
I also recommend a detailed website.
You are not only marketing this property, you are marketing yourself. The creditability of your work will influence your future.
I hope this helps. Best of luck. This could be an outstanding investment.
- Involved In Real Estate · Port Lavaca, TX · Member since 2013 · 19 posts · 4 votes13y
Joel Owens - This is something to consider, because this mobile home park is still somewhat undeveloped, and I never even thought about it as anything else. I will have to step back and consider that.
Tom Goans - That is helpful. The guy that is selling this property did not take very much initiative in maximizing what I think this place can make. He didn't even rent out half of the park because he didn't want people living near his home on the property. So, it is very difficult for me to make a financial case for the property on the basis of rental history. I would gladly disclose everything to a developer - within my rights as the seller's agent (this is a sale that I would prefer the buyer having their own agent, or mediating with one in our office). With your history in MHPs, would you ever consider a property on the basis of potential or room for expansion, or is it primarily based on past numbers.
I appreciate the advice gentlemen.
- Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes13y
You can't buy them on the potential because it takes blood, sweat and money to get there. An investor is going to want to know how many lots there are and how many have manufactured homes in place with paying tenants? Do the mobile homes come with the park or are they individually owned? How much lot rent is being charged and what does the lot rent include? What is the collection rate? Is it on city water and sewer? What is the condition of the roads and other infrastructure? What are all of the expenses. What is going on in the local rental market? What can you rent a 3 bed room apartment for in the area and is there demand for them? What is the reputation of the park locally and is it a desirable area?
For the most part the only way to increase the occupancy rate towards the potential is going to involve bringing in units to fill the empty spaces and then selling or renting these units. You can;t expect that folks will just magically wish to move a unit in there- in this market. Financing for manufactured homes in parks is virtually nil, so it is cost intensive to find and bring in units and there are few cash buyers so you will have to rent or carry the financing costs as well.
- Real Estate Investor · Englewood, CO · Member since 2013 · 988 posts · 258 votes13y
Joshua,
I am probably not the best candidate to acquire your listing. Although I have extensive experience in Texas with mobile home parks, manufactured home developments, and the owner of manufactured homes as rentals, the location of this park is not very appealing.
Plus, I never negotiate through a real estate agent, especially, two real estate agents. I want the seller to tell me directly why the property has not been developed. My experience suggests there is much more to this story.
I recall times when my father stated he could not afford something. If you knew his financial position they way I do, you know this statement is never true. Your seller may be using the same tactic as well.
I do rely on historical facts as well as current facts.
Thanks Joshua for the offer. I wish you the best of luck.
- Specialist · Houston, TX · Member since 2012 · 579 posts · 301 votes13y
Great thread. Poorly managed parks are an investors dream b/c that can be easily fixed. Selling on potential means a great of capital outlay before seeing a return. We just had a MHP expert speak to our group in Houston and there are now tons of us actively looking for parks to turnaround. Be sure to post it the BP Marketplace so we can find the listing when you're ready. Thanks!
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