I received some questions and comments from one of the attendees that I thought were great questions. I am posting them here and Dave & Frank have agreed to answer them.
Thanks for the great questions Michael…
Perry, Dave, Frank, and talented staff,
Its hard to believe that it has been a little over a week since the summit and I wanted to extend my congratulations on the 1st of hopefully many successful future events. I know there is a great deal of preparation, coordination, and hard work behind the scenes that goes into producing a powerful multi day seminar and your efforts paid off. Thank you.
After reflecting on the event, the speakers, and information presented I would like to offer my feedback, as you requested, that may be useful as you plan other like kind events. This is under the assumption that you desire to have each successive summit generate a greater impact on the attendees than the previous one.
I have been investing full time for the past 12 years in real estate and mobile homes including owning a couple of small parks as well and have made my fair share of “learned from” decisions. Recently,I purchased the mobile home park investment course you offer and have read or listened to the information repeatedly and seem to glean something new each time. The purchasing model of finding and investing in smaller communities which can be bought below market (high CAP rates) from motivated sellers and increasing the value is a model used in other types of real estate and investments but the process you have developed for buyers to qualify a “deal” is extremely effective. This type of investment requires a unique set of skills and knowledge unlike any other and your program definitely helps bridge that gap for us wanna be park investors.
After speaking with a number of people at the summit, I found as you may have that not all, but many of the attendees are green park investors. They have little or no experience in buying / operating parks and if they own parks, they are the “mom and pop” owners with one or two communities looking how to make their next investment or increasing the profits on their current properties. The speakers who spoke directly to the operation of a community from insurance to utility billing were very effective and relevant to any current or future park owner for protecting their assets and maximizing revenue.
That being said, I have a few follow up questions and observations on other areas and topics covered at the meetings that may or may not be helpful as you plan for next year. The questions and comments are simply a way to convey my desire to see a topic of information covered at future events that may have been lacking at this most recent seminar. My interest is only to see future events make a bigger impact on the attendees and see the education aspect of your business grow and become more successful.
QUESTIONS & OBSERVATIONS:
- What types of financing techniques does or did Dave and Frank use to purchase parks? How many parks out of the 100 or so in their combined portfolios did they purchase with 30% down (their own money) and bank financing? How many parks did a partner assist in qualifying for the bank or provide whole or part of the down payment? On parks where they paid cash, what were the sources for the capital? (not names but the entity type - private $, partners, etc)?
The lender presentations although informative may not have applied to the majority of participants and or the parks they intend to make offers on. The model you teach and have used successfully yourself is for people to purchase smaller communities 30 to 100 spaces, many times an older community with “mature” homes, where there is upside to fill vacancy, raise rents and or sub meter utilities. Unfortunately, these aren’t the type of finance darlings the Wells Fargo of the world today want to fund in this economic environment. The best financing presentation I heard was from Frank on or about the last day for 30 seconds when he mentioned the park lender on the MHPS website who specializes in deals (Dave and Frank type) $500k to $1.5M in size and flexible on park size and borrower qualifying. That was the financing information that was relevant to the attendees and may have not even been mentioned if not for the other financing options presented. It would be helpful to know how you are buying parks differently than the traditional down and bank loan offered faire now available which would apply to a large number of attendees making offers on non-conforming properties.
- How is someone who has never owned a park, has little or no capital, credit, or experience get started making money in this business? How did Frank or Dave get started? How was or is Dave and Frank able to finance and buy multiple parks in a year with the huge down payment requirements from lenders? How do they utilize OPM strategies for investing?
This business seems to have a large barrier to entry for the novice investor but there still were a large number of non-owners in attendance at your summit. Dave and Frank have a wealth of knowledge of putting deals together that don’t require a bank but they rarely speak or teach on - owner financing, flipping parks, assigning contracts, paying bird dogs for leads, etc. This is a very capital intensive business especially if you listen to the lenders who require putting minimum 30% down on each deal. How can you buy more when you run out of $ or credit? You show how to find parks but in my opinion and just as important is how to find the money or use alternative creative strategies to put the deals together.
- What is the current state of the market? Where do you see the business going in the next 1 to 5 years? What is your personal investment strategy for the same period? How do you plan to continue to buy parks when financing may become even more difficult? What are your intentions with parks in the near future - buy and hold until values come back, flip or trade and why? Do you see more opportunities for seller financing?
Being experts in your field, it would be extremely beneficial to hear your thoughts on the industry as in specific areas such as the problems facing investors (buyers and sellers), the opportunities and strategies that are available today and in the future especially with the purchase financing environment, marketing ideas for finding purchase funding and refinancing, park development as an option, ideas on manufactures creating an affordable park model home for privately owned communities, creating paper on park owned homes and reselling the note or borrowing against to generate capital, opportunities to network and or partner with other investors on deals, how to negotiate the best deal possible, etc. Again, just addressing your customers’ challenges who are following the investment model you have created and are marketing.
The above questions and comments reflect what I would enjoy hearing presented at the next summit if not sooner. Obviously most of the above topics deal with the financing and purchasing end of the business but funding parks may be just as important as finding them. Being the 1st event of its kind, as in anything where you break new ground, it becomes a learning experience as much as anything. Your hearts to teach and give the participants a broad base of knowledge for the industry was truly evident. I hope this feedback will also assist you when selecting speakers for your events who will present helpful and accurate information in keeping with Dave and Franks’ investment model. This may include brokers presenting properties that are much more in line with the buyer size and pricing targets at your events.
I can’t thank you enough for sharing your knowledge and experiences in the mobile home park industry. Your passion for the industry and educating investors is reflected in everything you do. I look forward to attending many more events and putting what I am learning into action.
Answers from Frank & Dave will be posted as their schedules allow.