All Forum Posts by: Andrew Warner

@Lucas Bonasio Mobile Home Parks are extremely safe investments compared to hotels or apartments. I would recommend buying a large MHP and hiring a single manager. It will be much easier to deal with and has less turnover, and a single manager. I am a little biased however since that is my specialty. However MHP owners from my experience seem to have been the only ones who made it through the last crash.  

like what Jim Johnson mentioned a lot of MHPs are off-market. The best deals are often known by agents in the area that specialize in the niche and usually shown to their best clients first. 

Source: I'm a MHP broker in AZ 

@Ciro Affronti Welcome to the site! I am also a recent ASU Grad, currently working as a commercial real estate broker with my dad (family business as well). I have heard of your company before and would like to keep in touch.

@Rohit Jindal 

To add on what @Brad Johnson has said: Banks first have underwriting requirements that must be met. This would be the first stage of the loan and often depends on the bank you go to. An example would be: No RVs components in the park, only newer mobiles, a certain number of double wides, or a minimum number of mobiles. These requirements, especially when dealing with mobile home parks are often hard to meet. Smaller parks often require a carryback, and it is difficult to get financing on smaller parks. Most lenders want a million dollar loan or higher at least.   If you meet the underwriting requirements from the bank they will then hire an appraiser who will value the property based on the Market, income, and cost approach. My father has been an appraiser for 16 years before becoming a broker here in AZ and has told me appraisers often do not know how to value parks, since they are so unique and often gets calls from appraisers for help. Since it is a smaller park I recommend asking for a seller carryback. In the event you can meet an underwriter requirements banks, at least here in AZ, usually do conduit loans (like Wells Fargo). 

But like I said before your best bet would be a seller carryback, and in the event you can get a loan on the park, that often means it will be priced much higher. 

best of luck,

Andrew

@Matt Wharton I went to AZ School of Real Estate & Business in Scottsdale which I thought was a good school. Only school I went to though so I cant really give any comparisons. Good Luck

@Rohit Jindal MHPs are probably the safest investments. As a MHP broker here in AZ the only property owners who made out in the 2007 crash were MHP owners. Month to month is fine when renting out in a MHP since it costs several thousand dollars for tenant to move. 

A few things you should ask and be ready for:

Does the park use sewer or septic? City sewer is prefered and easier to deal with. Septic works as well but will be more of a hassle especially if you have minimal understanding of how septic systems work. If it has septic I highly recommend having the septic systems inspected during the due diligence process.

Walk the park and look at the homes. Are the single wides or double wides? Double wides are best and are preferred by lenders. Here in AZ lenders loan on parks only if they meet a minimal amount of double wides. Also how old are the homes? Older homes have rounded roofs, the newer ones have angled roofs like houses. Look to see how many for sale signs are in the park. If 10% of the mobiles are up for sell it means the rents are too high or there is an issue with management. If it is the rents I would not recommend buying the park. 

Research the rents for MHPs in the area and compare. If the rents in the park you are purchasing are lower then that is a good sign. Ask the seller to raise the rents before selling to you (that way you aren't the bad guy). It also means you can start raising the rents.

Look to see if the homes are individually metered for the park. If they are not and the park is paying utilities and just charging rent this is an opportunity. You can meter the homes for pretty cheap and increase your revenues and park value right away.

Also do you plan on managing this park yourself? If not make sure to calculate the manager's salary into your expenses. Small MHPs are not as profitable as bigger ones for this very reason. A manager salary can eat into your rent income real fast. Usually want at least 50 spaces in your park to have a manager. 

good luck!

If anyone is looking to invest in a MHP here in AZ feel free to contact me. We only do off-market listings. 

@Jimmy Klein Banks usually don't like land as collateral since it does not produce income, is not liquid and a liability (taxes). But you never know until you ask, wouldn't hurt to go to the bank and see what sort of financing can be made out of it. 

@Curt Smith &

@Account Closed  Off market listings are standard for MHPs. This is because most sellers do not want to spook their property managers, who often lose their job when a property is sold. Because of this many sales are off-market and not publicly listed & marketed. 

@Curt Smith As a MHP broker in AZ 6% commission is the standard we use for MHPs that are in the lower 1 million dollar range and it usually decreases as the property value increases. For example we have a current deal in escrow for 15M and are doing that at a 2% commission. If this broker is charging a 10% commission it could be warranted if they are one of the top brokers for MHPs in the area and have buyers coming to them with exchanges (which are usually the best buyers since they have a time limit to buy and pay retail prices). We usually avoid smaller deals like yours however because new investors are the most nervous and hardest to deal requiring the most work and the smallest pay out. I'd shop around and see what his competitors are offering and go with the best option. He may be willing to lower the commission if he realizes he is in competition. 

Regards,

Andrew Warner

As a real estate broker I use a database everyday. If you want a simple database I would recommend ACT or Outlook. Access, although more complicated has the most uses from what I have heard.