When submitting my latest offer on a $1.4M Park, I got push back due to my lack of qualifications. This will be My 1st rodeo with mobile home parks. Any suggestions on how to proceed. I considered adding a clause that would allow them to cancel the sale within a certain timeframe if they reimbursed me for due diligence costs.
Why would any seller offer to pay anything a buyer who turns out to be a flake?
I don’t know what your background is, but it sounds like you are getting ahead of yourself. Don’t be one of those crazy people who doesn’t have any money but goes into Ferrari dealerships and lead the sales staff on about how they are a real prospective buyer. All you end up doing is demeaning yourself on a deep physiological level by acting out what is actually a lie.
There is a level of investing that is appropriate to your situation. Start there and work your way up like most of us here did.
Any sellers who has been around the block will demand proof of funds when they receive an offer. They do that because for some strange reason real estate investing seems to attract the same crazy people who are acting out fantasy’s and do things like test driving Ferrari’s and then acting like they are very interested to know what it would take to get in their favorite color. Or, putting in offers on expensive income properties when they have no money, experience or backing.
I don’t know if that is your case, but from what you wrote it sounds like it.
Money not the issue. Lack of specific experience with MHP is. My experience has only been with small multis.
OK, but if you had the money to purchase the park, why could you not close the deal?
I would try to create a deck to provide to potential sellers and lenders. Include your background, investing goals, strategy for property, market stats, etc. Put it in a nice pretty portfolio to submit to folks. Make it detailed enough to let them know you can talk the talk. I’m sure you are well versed in real estate from your multifamily experience and hopefully you’ve been on this forum enough (and maybe to a boot camp) so you know how to speak the MHP language.
Get on the phone with the seller (or better yet, meet in person if possible) and ask intelligent questions. Remember, people like to talk about themselves so ask questions about how (s)he runs the property, issues with infrastructure they’ve had, how they collect rent, etc. Let them know you’ve researched market comps for rent. In the end, they just want to know you have the ability and willingness to close the deal. If you can prove you have the funds and that you are motivated and excited about the property they should have no reservations about selling it to you. Good luck!
I would put together whatever experience you have in real estate, proof of funds , if you went to a bootcamp etc.
I think what i have done before ( probably in a competitive situation ) is offer the seller 1k or you can even do 5k if he accepts your offer as option consideration or whatever. Can you lose it? Most definitely but sometimes you need to pay to play.
I had another deal the guy had a flaky time wasting buyer , so i told him i was serious , i talked to his attorney who was directing the deal. I would pick up the first 2 or 3 hours of attorney fees to show i was serious . Got the deal under contract ( but illegal zoning). Did i lose money ? sure but sometimes you cant trip over the pennies . Figure out a way to differentiate yourself.
Did you talk to a lender, you can talk about that, see if they will write up something that appears you are qualified for a loan or whatever and build it up into your presentation.
I have found that offering a very quick close on a very simple LOI (e.g. 1 month) can usually alleviate concerns like this. But you have to bring your A-game to get the diligence done quickly…
In commercial real estate it’s very common to get backup offers and continue marketing a property while it’s under contract. Your ability to close quickly and demonstrate there is little time lost (even if you back out) is a key differentiator. If the Seller’s agent is still “heeing and hawing” then move on and tell them good luck.
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I would never deal with anyone that asked me to reimburse them for any due diligence. That is crazy.
Here’s an article by our very own Frank Rolfe: 7 Steps To Convince Almost Any Mobile Home Park Owner To Sell To You! - Mobile Home University
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Well don’t say never, because if the community is in a Right of First Refusal state and the seller wants due diligence to happen during the RoFR period it would be justified. Not hugely common, but I’ve had that clause in a contract before.