How do you approach MHP owner or broker when the asking price is almost double of realistic value? Any advise?
Show them you’re methodology (occupied lot rents x lot rent x .6 or .7 (based on who’s paying the water/sewer) x 10 = the value, and then say “so what am I missing here?” If the seller says "you used $150 lot rent and the rent is really $250’ or “you used 50 occupied lots and I have 80” then you might have something. If the seller says “so is that really all that it’s worth? I thought it might be worth more”, then you have a shot and you might say, “here, call Security Mortgage Group and they’ll tell you what the banks will loan on”, But if the seller says “yeah, I know – I think a 2% cap rate is all a buyer should want” then they are just “fishing for an idiot” and know that the price is absurd by design. That type of seller is not worth spending time on.
That being said, when they learn that there are no idiots to catch on their line, the price will suddenly crash, so keep calling them periodically. Sometimes they die, Sometimes they get sick. But eventually, they just get tired of having the park sit on the market.
Frank pretty much hit it on the head.
We also will sometimes just ignore the stated price entirely - as if it was not even on the offering document - and just make an offer in writing at a price that works for us and deliver it. You’d be surprised how much mileage you can get with an official, signed contract just waiting for the seller’s countersignature.
One of my early mentors in this business said “I bet a lot of people use my offers for toilet paper, but I don’t care. I’ve bought several good parks with my low-ball offers, and that’s all that counts.”
Your mileage may vary,