Been looking for a good park to buy for almost 6 months now and am having a very difficult time finding a park that is really worth purchasing as a turn key operation. Everything I see either needs to be fixed up or is well water or has 12% occupancy. I have not tried the mailers or cold calling but I am not convinced that method works. What is everybody doing??
It takes a while to find a decent park that meets your criteria. I just got a park in contract after about 6 months of making offers.
I’ve networked with a few other MHP investors from other websites, and now it seems like I have more deals to choose from than money to invest!
So be patient, network if you are the type of person who would be interested in partnerships, and don’t compromise on your purchase criteria.
Any deals you want to throw my way?
There are plenty of turnkey parks that have wells, septic, dirt roads, master water meters, etc. The management is in place and you just pick up your check. But you still have to effectively manage the manager, and that’s where experience turning around a park helps make sure you have competent management in place.
I made 20 offers over the last 3 months, and have a game plan to make them all turnkey - most within 12 months, some of the ones with severe occupancy issues 24-48 months. Only 2 were accepted, but I got a great deal on them and they will cash flow plenty from day one, including debt service and depreciation.
I have had luck contacting commercial brokers for pocket listings in my area. Just make sure they know what you’re looking for and that they don’t send you listing from loopnet or mobilehomeparkstore and think it’s a great find. They know other brokers that may have had trouble selling a MHP because it was mis-classified on MLS or many other reasons.
Even if a property is not something you would buy, it could very well be something you could assign to another investor for a fee if you negotiated the price well. This stuff gets your feet wet evaluating more deals so that when the right one comes along you are ready.
How are you convinced that cold calling and direct mail don’t work, yet you haven’t tried them?
I have cold called over 1000 parks, and though it can be frustrating, it produces results. As Frank says, this is a “volume business” and the reality of it is, the perfect deal won’t show up on loopnet, etc. and if it does, good luck getting it before an institutional investor.
While I have only just started my MHP search I can tell you that finding the right one won’t be easy nor is it likely to just drop into your lap. Prior to making the move to MHP’s we were investing in smaller multi family properties and sometime it took me in excess of 8-12 months to find the right mix of location, price and ROI for me. Don’t lose heart keep working at it but I do believe that you will need to do some form of cold calling and networking to make this happen or at least easier on you. I have contacted numerous brokers and have only heard back from a handful so while I dislike cold calling and mailers I’m going to give it a shot as what have I got to lose?
Hope this helps some.
I believe (would have a tough time with the math) that in theory, if you had an infinite supply of parks that might meet your criteria, you would on average expect to pick about the third-best one you have seen since the last time you picked one.
To put it another way, you have to figure out where the sweet spot is by letting a few good ones go by (along with a lot of medium and poor ones), and then start picking your target zone. If you swing too soon, you won’t have the background to know what were the “good ones” and what were the “bad ones.” But if you wait too long, the one you are waiting for may be a real outlier. (You let a really good deal slip by – and it anchored your bias high). You have to jump on that outlier when you recognize it and if you don’t recognize it yet, you probably haven’t seen enough deals yet. That’s my theory of the moment, anyway.
Hang in there. Be educated. If the price doesn’t make sense to you, keep moving. The price may come down in a month or a year or maybe it will be sold to someone else who is willing to take a lower return. You want to deal with motivated sellers and a significant portion of your return will be captured in the nature of “I got a good deal up front.”