I am looking at an MHP in Upstate NY. I have never done an MHP deal before, and I’d like some thoughts from the more experienced folks here.
1.- The property is being represented by a broker. Would you recommend that I do the same and have get a broker to represent me? I didn’t know what the norm is, but I am always leery when the person I am looking to for advice happens to be compensated directly on the sale. The only experience I have in real estate is on the residential side, where it is customary to have a buying and selling agent.
2.- The listing says that the park owner is asking selling the park confidentially, and asks that the tenants and PM are not to be disturbed. Is this typical? If so… how is someone supposed to do their DD if they can’t talk to the people who would know the most about the property?
I am also trying to confirm my arrangements to attend MOM later this January, to get a thorough understanding from the people who do this on a regular basis.
I do not feel that it is necessary to hire a broker to represent you as it may hurt in getting the broker representing the seller to push your offer through. However, the key is that in whatever offer you make, you give yourself 30-60 days of due diligence in which your earnest money is refundable. Then in those 30-60 days you conduct proper due diligence and do not rely on what the broker or seller says without getting Written proof.
It is common to have sellers that do not want you to talk to the residents in the park or the managers. I agree with this until you have a signed offer. At that point you MUST talk with the manager, residents, seller’s contractors, etc. This is part of your due diligence process. However when you talk to the residents, you want to get their take on the park and any problems it may have. You can be discreet in this and pose as a potential resident looking to move into the park.
As always, when you are new to something you should educate yourself first and this forum is a great place to start. In addition to MOM, you should consider Mobile Home Millions 5 and any other books and resources you are able to purchase on the subject. By getting this education you will most likely know more about investing in mobile home parks than most brokers and sellers.
Let me tell you my experience and perhaps you will find the info useful.
I had been buying and renting SFRs for many years when I bought my first mhc in Arizona about 3 years ago. I read some books and figured I knew what I was doing. WRONG. Got taken to the cleaners and eventually forced the sellers to take the property back. I gave them the choice of taking the property back and releasing me from liability or face a lawsuit for fraud, mis-representation and non-disclosure. Had I had the education I now have, it would have been much harder to burn me and I probably walked away from the deal.
I am now in contract to buy a place in Texas so I still believe in this business. Were I you, I would get as much hands-on education as possible before buying anything. This includes MOM (I’ll be there), MHM, and especially a boot camp. You can also hire Frank Rolfe (as I am now doing) to assist with DD. I do not know anything about your particular transaction but my feeling is I would rather let something go rather than take too much of a chance on getting burned. Deals are always out there but it can take years to recover from a bad purchase.
Hope this doesn’t sound too cynical but this is something I now live by: Trust absolutely no-one and nothing unless you are paying them directly and then still double-check the info. I thought residential brokers were pond scum until I started dealing with mhc brokers.
Please don’t take this as total negativity. There is plenty of money to be made in this business but you need to go at it with your eyes really wide open.
Thanks for your thoughts. Rolf, I am on the same page as you and I don’t take it as a negative post. While I may be new to the MHP world, I am quite cautious, because of the damage which can be done by a bad first deal. I am not sold on any one deal yet, but rather I would like to know how to move forward through the DD process (sorting out the trash from the gems).
I agree (esp for my first deal) that it would be advantageous to use an independent source such as Frank. Unfortunatedly, I can’t bring Frank to every MHP look at. I am still trying to figure out how to evaluate a park to the point where I would consider making an offer and bringing in an expert for further DD. Thank you for thoughts. I am looking forward to MOM.