I dont care about proforma - Crazy owners and brokers


#1

If you are trying to sell your park and you think I’m going to pay a price based on some bullshit pro-forma that you have never hit or the possibility that its going to be developed into a shopping center or apt complex you are dreaming. I don’t care about your pro-forma. If its that amazing then you do it.


#2

There are a lot of BS proformas out there but not everyone is like that. How else would you take recent rent increases and added tenants into account?


#3

Well today I looked at 2 parks. One of them had a cap of 2 but was 30% full and has been the same for over 10 years. When I asked the broker how they came up with the price they said “the potential is enormous”.

Then I looked at another one and when the broker finally got me the numbers it was all based on proforma of a study that was made by a consultant of how good the park would be if it was redeveloped in an area that will never be even close to what they imagine it to be.

That’s the type of proforma BS I can’t stand.


#4

On the flip side of that is the “investor” who thinks you are just going to GIVE them your park. Just saying, it can be insulting and unrealistic in both directions.


#5

Yep… you don’t overpay for “potential”… that is the exact way to get in trouble.


#6

@WhiteTrashGator :smile:
If i had a little more time - i would start compiling a list of deals that are from “WTF is this BS?” category.


#7

Amen Gator!

It’s so annoying to look at these “projected” numbers from brokers that totally ignore what the actual operating numbers have been in the past.

My feeling is this: If the park COULD operate like that, why hasn’t it been doing so? If I have to take the risk to see if it WILL operate like that, and then I have to put in the time and effort to make that happen in the future, why should I pay the Seller a price today that is based on the possible future earnings, instead of the actual current earnings?

If those future earnings don’t materialize, will the broker and the Seller give me some of my money back? Of course they won’t. The same way I will not purchase based on their BS pro-forma numbers. Do they really think there are really that many stupid buyers out there?

Are there any brokers who don’t put these overly inflated numbers in their pro formas?


#8

Yeah, there was a guy on here trying to sell a 155 lot park in Kentucky with only 16 homes for 1.5M! It was 90% occupied 20 years ago. Based on actuals is was 1.8 cap. So yeah, if I dropped another 3M on homes and actually got them sold, maybe I’d have a good investment.


#9

You are full of yourself with all due respect. Proforma is for the bullshit brokers and sellers.

Like the BS listed park in michigan from some scammer with no phone number or company name. And MHP Store has it listed at the very top. What a Joke! Caveat emperor!

I am with gator MHP brokers are lower then used car salesman.


#10

Not sure why you would think that Steve. Let me ask you this: if you were selling your mobile home park and have the actual 2017 P&Ls showing $100k income a year but you’ve added and rented out another 4 mobile homes ($300/mo each) and increased rents 10% since the last year, would you still sell your park based on the 2017 numbers?

Maybe you guys are talking to the wrong brokers.


#11

The proforma sounds pretty BS. I don’t know why anyone would need to hire a consultant. A standard proforma should only take into account a rent increase (if the park is full and it is scheduled to take effect). I usually use a 2% increase for utilities costs. If any mobile homes have been added I add those to the revenue. Anything like what you are saying is ridiculous. Usually in those situations, especially in small to mid sized parks you have alot of mom and pops and brokers who convince them they can get some ridiculous price just so they can have the listing. It’s pretty much 90% of Loopnet


#12

The other thing most brokers neglect to mention is that property taxes could triple or even quadruple. That’s never in the Proforma. I always call the tax accessor and it’s been a deal killer more than once.