Are there any firms who assist with due diligence? If so, to what extent (fully understanding that DD is really your own responsibility)?
Also, at what level of spaces in a park is it beneficial to have a mgt company manage the deal vs a manager within the park? And who are some reputable mgt companies? Thanks.
DD is on the buyer. The MHU guide on this site is highly recommended.
I don’t have any experience nor recommendation but something you can check out if you are considering outsourcing DD.
With apartments we use several people during DD. A contractor, a furnace guy, an electrician, a plumber, a roofer and may others each has their own expertise.
You can have PM comp help with DD, but its definitely on buyer! check in with local city/county officials re: any health/environmental/zoning - violations & biz development dept. on employers, check out utils, if private especially, plumber, gen. contractor, flood zone, if applicable. these are first steps. Use DD guide for sure! Easy to miss things.
There will ALWAYS be things you missed during DD. Your role is to minimize the risk the unknowns pose. What’s the worst that could happen? If you’ve had someone actually look at the utilities, and you ask a lot of questions, you know what your worst case is and you can get a handle on its likelihood. Same for legal, financial, economic, other infrastructure, etc.
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Hi @jmcole ,
I’d be willing to give you a hand during due diligence. Send me a PM if you’re still pursuing the deal and would like some help.
As far as management, there are a few great companies out there who will manage larger parks and portfolios that aren’t their own. @CharlesD just started using one and might be able to let us know about his experience with them.
We bought a park out of receivership that was being managed by a local apartment manager. He was doing a decent job. If all you’re hoping to do is hold the property for a while, let it appreciate, and keep the quality of the park consistent, I think you can find a local management company that could do that for you if you’re willing to give away the majority of the cash flow. If you want to improve the property, fill vacant lots, and repair homes, I’m not sure there are too many companies out there that will do that. I have seen on-site managers that will do that work and are compensated with a percentage of the gross collections.
We once used a park management company that has a brokerage arm. It turns out they run parks into the ground and then try to get the listing when the owner becomes frustrated. They are the true slum lords of the park industry. My guess is that if we had asked around and done our research we would not have ended up with this company. Sadly, this was before we met Frank and before we knew what we were looking for and we put our faith in them.
Best of luck. If you’re on the forum, you’re already looking in the right place. Will