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.


#13

NO, I would sell it on the actual rented homes and rent increases. Forget vacant lots and vacant homes.
If the current owner values them at anything. Then why did he not do anything with them? Second what your
proforma spreadsheets never ever show is defered maintence. That is the number one reason why bozo the clown operatators who bought based on fancy spreadsheet and proforma get their head handed to them.

Just the the t-12 please! Nothing more nothing less.

Be very leary of the so called broker with the Vision. He starts out with a vision and no money. And he who
listens to him will be left with the vision and parted with his money.

Just business man nothing personal


#14

Amen @Scoundrel8! That seems to be the case with every commercial broker property pro forma I see. Whether MHPs, apartments, or anything. It’s so disingenuous. The brokers all KNOW the property taxes will be higher after the sale and they just hope that a Buyer who is too stupid to notice will come along. And I guess, they also hope this buyer will get a loan from a lender that is also too stupid to underwrite the deal…? I just don’t understand why Brokers put these inaccurate numbers in there. I mean, I get that they want to justify a higher price, but surely they realize that 90% of buyers will see right through that in the first 30 seconds…?


#15

I’ve been frustrated when ma and pop operations list with a local smaller residential or partial commercial broker. They list the listing incredibly wrong and I have to hunt down the right numbers any ways. I’ve seen a listing that quoted 3 different number of lots in the same park. Ive also seen a park advertised as 100% full for years when the first picture in the listing showed vacant lots… I’ve been trying to figure out why would a seller go with someone who doesn’t know what to look into. One guess is they don’t care and another is they know how much is wrong and if they go with someone who doesn’t know what to ask it doesn’t have to be disclosed.