Are the deals still out there? Is there a crowd of potential buyers for every park?
It might seem that by now, the number of investors who have attended MHU seminars equals about half the number of parks left in the USA.
I am contemplating repeating the seminar next month to get that ‘shot in the arm’ [i attended in 2018]. I know I have what it takes, having flipped about two dozen houses. I love the process of searching for deals, sifting through all the hay to find the needle. I am very attracted to this asset class. I know this business is for me. Just wondering about its current status, especially from the perspective of folks who have been immersed in deal-finding in the past 1-2 yrs.
For the past 4 years have signed at least 12 contracts with some DD completed and have closed on just one. The only one we closed on a broker called us and it was an all cash deal. A banker just called us if he could give us a loan on the all cash sale. There is LOTS of cheap money with LOTS of very smart buyers. Flipping homes is fine but having having a portfolia of nice rental homes is also a good deal since you have a ground floor of knowledge on the subject Looking for 2 more good value parks–maybe take another 5 years. Take your time and be careful–stay away from parks in flood plains!!!
I managed parks and other commercial real estate for three years then left and attended MHU in January of '19. I just closed my first deal a year to the day I attended MHU. Lots of people I speak with found their first deal in shorter timeframes than one year. I move slow for whatever reason. I was the kid who always took the full time to finish an exam in school.
It’s a seller’s market so it’s tough to find something that works and my learning curve contributed to the time it took to close a deal. You can definitely find something, but it will take time and you’ll probably drop a few deals before you close one.
A couple things to remember:
Developing relationships with brokers is important, but it’s also really important to develop relationships with lenders. You need to have a good handle on what your cost of money is going to be and what type of property fits for a given lender so you know who to go to when you are pricing out a deal. Maybe that is obvious for most people, but I didn’t talk to lenders enough in the beginning, which led to some mistakes in my underwriting on deals that I ultimately dropped.
Really pay attention to the appearance of the park. It’s an indicator of how the property is being managed and if the place looks like crap then assume the mismanagement stretches to all aspects of the operation. You will have to add a lot of expense to your underwriting because you’ll probably need to evict people and pay for certain things that the current owner didn’t bother with, like tree trimming.
It really comes down to what you are looking for. I closed on my second community within the last year, but I know I could have found my second deal much sooner if my requirements were broader. For example, if you are willing to own a community outside of your state and you are willing to buy something as small as 30 lots, you could find a deal tomorrow. There are just so many factors/requirements to consider:
location of community
number of lots
utilities (are you willing to own private systems?)
quality of the park
CAP/ROI you are comfortable with
Are you willing to call owners up and make an offer? (Too often people wait for the deals to find them through a broker or something posted online)
There are plenty of deals out there. You need to decide what works for you and go for it!
@EricBarshinger Awesome advice. Be focused on what you want and what you can work with as Eric says. Don’t drop all you “wants” as I have found from experience that when I just do a deal that meets none of my “wants” I end of paying dearly in money and time. And wishing I never bought it.