All Forum Posts by: Russ Wallace

Chris, I licensed my boutique brokerage nearly four years ago in order to focus on income property investors and commercial/residential developers. Most of the large firms require brokers to work as generalists handling leases, listings and buyers. I wanted to specialize in representing the money – the buyers and/or developers. So far, it’s worked well. In each of the last three years I've worked on $50M of apartments, car washes, mobile home parks, retail and mixed-use developments, etc. I‘ve been able to accomplish this by developing the needed skills and networking with the right people. If you’re truly interested in doing something similar, I suggest you consider the CCIM training (it’s a fantastic foundation upon which you can build a successful business) and compile a personal reference library of books on key subjects, such as commercial mortgage underwriting, property appraisal, income property syndication, etc. Accumulate the knowledge, develop the skills, establish the right relationships and believe in yourself.

Gert, Google "pay rent at 7-11", "pay rent at Wal-Mart", or "paylease".

John, I would question the use of a 10 cap for a property with 55-60% occupancy. It sounds like a riskier investment given the potential for rehabbing/replacing rental units and correcting other deferred maintenance. If the stick-builts can be rehabbed and rented for the same monthly amount as a mobile home, why not do so rather than absorbing the expense of demolishing/removing/replacing them? 

Anthony, I suggest separating the due diligence checklist items into two categories: free and fee. The free items are handled first by you, if you feel confident in your ability to properly complete them. The fee items come afterwards and are best delegated to qualified third-party service providers. Managing the process in this manner should prevent spending monies unnecessarily. For example, you can gather all of the property’s public records, operating records and relevant jurisdictional authority regulations, compile the market competition survey, demographics analysis and prepare the pro formas. If no "deal breakers" are discovered, you move-on to engaging experienced professionals to supply the phase one environmental inspection, property survey, water/sewer systems inspection, title search, closing services etc.

You could also search the Certified Commercial Investment Member database for brokers that have experience with the types of income properties you want to buy. On the home-page, open the "Networking" drop-down menu and select "Find a CCIM".

Devan, it sounds as if you may want to investigate the property further before preparing a pro forma. For example, how did the owners arrive at their asking amount? What did other parks in the county sell for ($/developed pad, $/occupied pad) within the last 12-24 months and what were/are their rental rates? Do you have the last two years comprehensive operating statements for this property? When were the park owned homes manufactured? What is their interior/exterior condition? Is the county population growing? What is the average weekly wage and what monthly rental rate will it support? What do area mobile homes and c-class apts rent for? Do the tenants work for a variety of employers or the same one? Is the property close to more than one employment center?

Will, it sounds like you should get to know your prospective business partner better before working on the deal structure. Ask him a lot of questions: what does he want the investment to do (create cash flow, grow his capital, both?) what type commercial properties is he comfortable owning (apts, mobile home parks, office, retail, etc), what role does he want to play (equity partner, co-manager), when does he want the initial investment returned (five year hold period, longer?), what is the annual return/IRR he wants, (10% cash-on-cash, 20% IRR), etc.

MJ, is there sufficient demand for your proposed offering? For example, how many area new mobile home sales are to owners looking for rental lots as opposed to land they can own? How often are mobile home movers being hired to relocate homes and what does it cost? Is the county population growing or shrinking? What rental rate can the average weekly wage support? What is the area vacancy rate for comparable rental housing? What is the entry level/new home buyer housing price range? 

John, the Interest Based Negotiations model has worked exceptionally well for me in resolving contentious transactions and working with highly skeptical sellers. It's a conversational approach that illuminates what's truly important to the other party and allows you to innovate mutually agreeable options. But in order for the model to work properly, you must develop the skill of "hearing what the other party is saying" as opposed to simply listening to what they're saying. I highly recommend it. This link provides a concise overview: http://www.adr.af.mil/factsheets/factsheet.asp?id=7363

Eric, if you decide not to pursue the park I would appreciate an opportunity to evaluate it. My partners and I may be interested in buying it. Thanks.