Hello MHU community,
Do you always engage a third party for PCR, ESA, PZR and a survey for your acquisitions? Even for parks that are < $1 mil? What is the typical cost range for these reports? Will all lenders require these reports?
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Most small banks that you would use for <$1 million acquisition will have their criteria… I’m guilty in the past of not doing full phase 1 ($2,500+) if the bank only requires a desktop screen ($250). I typically do the zoning research myself with the municipality so I know what we’re getting into. The appraisal will also do some digging in that regard.
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Yes, some banks will actually require these items. Some of those items will be bank-generated (you dont have a choice in the matter). Other items will be up to you.
I’d say we dont always do the survey component. Though, we also realize there is associated risk there. PCR can be done by the operator (buyer), given they have the knowledge and expertise, especially if the park is mostly TOHs. If you dont feel comfortable with this, definitely hire out for PCR.
Here are some costs we’ve encountered on a park this size (<$1M):
ESA: $750- 1250
Appraisal: $1500-3000. most institutional lenders will require (though some may be comfortable with a BPO or “desktop appraisal”. IMO, with today’s technology an appraisal isn’t always needed. Unfortunately, many banks disagree (and they dont care, because the cost of the appr is on you not them - so they make you get one!)
PZR: never done this. May be a good idea, as zoning can be super convoluted. The last Park we looked at had county plus town ordinances applicable, and getting straight answers from the Town was difficult. Zoning and Planning can be scary thing if you get it wrong (worst case, they can cease your operations and you are then stuck holding a $$$ non-producing piece of land. Though this is rare, it’s still something than can haunt you. Unlike other aspects of the deal, matters with the local government may not always be negotiable and bureaucracy can be a huge pain)
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Thanks Dave. Is that a national or regional ESA provider at that price point?