How did you buy your first mobile home park?

Question

How did you buy your first mobile home community? Please share your story to inspire others.

Account Closed · Answer

My partner's first deal was discovered on Loop Net.  It was a mis-advertised, small REO park in Atlanta.  At purchase, the park had 32 lots, 29POH's, and 0% occupancy.  After a lot of tough negotiating, the deal was had at $200,000 and financed through a hard money lender.  Him and another partner closed the deal, put up an additional $100,000 to renovate the homes, leased all 29 homes through a rent credit construction, and are now in the process of refinancing into long term debt.

My first two parks were found using cold calling and direct mail.  I'm using two, because they both closed on the same day.  The first was a 131 space park in Burlington, NC.  It was about 60% occupied and the park was financed by the seller.  $1.1mm with 9% down, 30yr am, 5% interest, and a 9 year balloon.  The second was a 52 space park in Petersburg, VA.  That one was about 90% occupied and also financed by the seller.  The financing was 25% down, 7% interest, 25yr Am, and a 6yr balloon.

All three parks are performing at or above a 30% CoC return at the moment.  All three are home runs in their own way.  What I can say is that we sent out over 5,000 letters and made hundreds of calls to find them through.  No matter your approach to finding a park, volume will be your best friend.

Curt Smith · Answer

Hi Andriy,  I'll try to hook in other park owners.

@John Fedro

@Jefferson Lilly

We will be closing our first park 48 pads, expandable to 70, in 2 weeks via a USDA loan.  $1.1M purchase and 25% down.

Presumably you are asking about how is owners (and soon future owner for me), got that deal?   We went to Frank and Dave's boot camp, mobilehomeuniversity.com definately go to the in person boot camp.  You will get 10x the cost of benefits.

Find local MHP brokers via networking and in loopnet.com.  Find parks in your area, forget those parks, they are 98% over priced, contact those brokers and develop a relationship.

You will need a credible team, proof of funds for the down, or a cash partner who has the down funds.

We did the above for 1.5 yrs post Frank and Dave's boot camp.  We even singed an exclusive rep agreement with one broker on the buy side.  We were sorry we did that.  There's no reason to sign an exclusive agreement as a buyer!

We eventually had brokers emailing us deals.  We found the current deal we are buying via networking over that 1.5 yrs. One fellow refered one fellow to another and then the seller.  No broker involved.   In general most commercial deals are found through brokers.

You can do yellow letter campaigns to parks you google up:  <state> mobile home park.  To find sellers yourself.

Bottom line all commercial deals need: a team, some cash, alot of education.  Commercial purchase contracts are long and complicated.  There is no requirement for the seller or sellers broker to tell the truth as there is in single family to buyers who will occupy.

Andriy Boychuk · Answer

Account Closed This is a great story. Thank for sharing. Wow 5000 per month is a lot.

Just curious about the cold calling. If you do not know the owner's phone number, do you call the park?

Account Closed · Answer

I like to use brokers who are local and have at least 20 years of experience in the market I'm trying to get into.  I generally just google search and call 4 or 5 of them and then make a decision on who to go with.  Things you want to hear when you tell the broker what you are trying to do:

1. I know the owner of that park.

2. I know who the owner is.

3. I'll go find out who owns it and get in contact with them

You need to follow up with these brokers on a weekly or bi-weekly basis to see what they are doing.  In most cases, the owners you connect with will treat this broker as a buyer's broker so go into this with the expectation that you'll pay the commission and adjust your numbers accordingly.

Account Closed · Answer

That was 5,000 over the course of the year.

For owners where I can't find the phone number or mailing address,  I hand these off to a broker.  For instance, if there is a market where I am having trouble connecting to 5 or 6 park owners, I contact a commercial broker with a lot of experience in that market and give them a list of the exact parks I want to look at.  It is more important for the broker you use to be tapped into that market rather than be experienced in valuing parks.  Calling the park manager is generally fruitless.

Andriy Boychuk · Answer

@Ken Rishel thank you for the advice.

Andriy Boychuk · Answer

@Ken Rishel I did search PA state for licenses info and was not able to find. You recommended me  this method in another post here or MHU forum. Should I contact Mary Gaiski or somebody else in PA?

Ken Rishel · Answer

In a number of states, mobile home parks are licensed by the state. While it can be a bit of a pain, the ownership information is public information that the regulator is obligated to release under the FOIA. You may have to pay something for it, but it isn't a large amount.

The only cautionary note is that some community owners, including myself, go to considerable lengths to avoid appearing in those documents so not every file is going to list all of the actual human owners. You will likely find some files with part of the ownership being a blind trust. However, that is not most files, and the ones that spend the money to do that would not like being contacted by you anyway.

Andriy Boychuk · Answer

Account Closed thank you

Andriy Boychuk · Answer

Account Closed this is great advice. I love the idea about outsourcing the work to others.

Maybe  it is a stupid question but how do you fix Experienced broker? It is easy to find a broker in the is but how do you know if he is good.

How did you buy your first mobile home park?

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