Hi, We will be meeting the current onsite manager during due diligence. The amount of information that the managers give is very important. When you do meet the onsite manager, what are your top questions you ask to gather regarding the health of the park, utilities, tenants,etc.?Thank you.
First of all, bear in mind that the manager is worried about losing their job, so they are going to tell you anything they think you want to hear. In addition, if it’s a turn around park, will also be trying to hide all the illegal stuff they’ve been doing (stealing rent, renting POHs and not telling the owner, hiring plumbers for work that never needed to be done and splitting the money, etc.) so their information is seldom accurate in any way. You are way better off getting your answers from reputable third party electricians and plumbers, running a camera down the sewer, and figuring everything out yourself based on real facts that you can verify. For example, I once went to a park we were buying and asked the current manager if we could go walk through all the vacant POHs. He tried every excuse possible not to have to do that. Then, when we started the walk, he would try to stop me from going into every home, saying things like “this home is a disaster and needs to be torn down” and then when we got there I found someone living in the home. Basically, he had rented about 10 POHs that were supposed to be vacant, and was pocketing the money. If I had listened to him, I had listed those homes as worthless and to be demolished. In reality, they were in fine condition and fully occupied at $500 per month.That’s not to say that there are not some great managers in some parks, But, on average, we have to get rid of 90% of the managers that come with the parks, and have found over the past 20 years that they are normally part of the problem and not the solution. And that extends to getting accurate diligence information.
Talk to the tenants. they are the ones that will give you the most info in regards to good/bad tenants, infrastructure, management etc. What you see for yourself is more important that what the owner or manager will ever tell you. Confirm the rent collection with the owners records and determine what if any leases exist and if the park has a written set of park rules. Existing park rules are important. Visual confirmation on whether they are being followed will tell you a lot about the management of the park. If there are no written rules then there is no management of the park.Get a written confirmation on what every tenant is paying in rent and if there are any special side deals with tenants.It is a given you will need to get rid of the present manager unless it is a high quality park and assuming that manager has been there for a considerable period of time.The bottom line is that every community is as good or as bad as the owner. Managers are only tools intended to operate a community to the standards of the owner.
I just want to say this is a great question. Brandon@Sandell