Many park owners are reluctant to sell and for good reason. The process can be a lot of work, disruptive, expensive and ultimately, unsuccessful. Good brokers can help but selecting an experienced and flexible buyer is the key to a successful, low stress, “win-win” transaction. If you’ve been putting off selling for any of the reasons listed below, let’s talk!
- You don’t to spend $50K, $100K or more in brokerage commission!
- Having a buyer cancel a contract after a long due diligence period.
- Disruptions at the park when a buyer talks with the manager, tenants or vendors.
- Spending hours and hours providing an endless number of documents to buyer(s) who cancel late in the due diligence process
- Replacement properties are impossible to find (especially in 45 days!)
- You want to finance the sale at fair interest rate with a 10 – 15 year term (to maximize cash flow) or a balloon payment
- A concern no bank or lender will finance your MHP
- No time, money or interest in making the necessary repairs to ready the MHP for sale
- Private utilities and there are issues with the County, EPA, State of California, etc…
- There’s a history of violations and perhaps some current unresolved issues with the state or county regulators
- Problems with tenants or tenant’s rights organizations (GSMOL) will be discovered in the due diligence process and scare off the buyer
We’ve experienced every one of these problems or situations in our parks at one time or another. If you want to sell, call us, we will work through these issues and find a solution that is fair and equitable for both buyer and seller.
Occasionally we are contacted by a park owner who wants to sell but has an immediate need for property management services. This might be the result of a family emergency, health problem or other personal issue (lost interest in the park, “stuck in another country, etc!) Whatever the circumstances, here are some thoughts about how we can help.
- We are not in the fee-based property management business. All the property management work we do is related to our own properties.
- We will provide services if the owner wants to sell, the park meets our buying criteria (see Buying Criteria) and there’s a good chance we can complete a deal.
- Fees, $500 minimum + $10 a space, per month, for basic services including billing, deposits, rent collection and working with the on-site manager.
- We can start service immediately, within 24 hours. At the time we start or within a few weeks, we will meet and formalize the price and terms for the sale of the park (see What’s a Fair Price for more info about this process.)
- We will provide services up to 12 months so the park owner has sufficient time to get their situation stabilized so we can proceed forward and complete a purchase.
- If we can’t come to an agreement on the sale of the park, we will continue to provide property management services at the discretion of the owner for a up to 90 days.
Please don’t think us altruistic – we are not a charity! We offer property management services to owners who need help and want to sell because it’s a good business strategy. If you’d like us to manage your property with a long contract term, give us a call!
How do we determine our offering price and terms when we purchase a park? Here are some thoughts and guidelines we use to navigate the process!
- Generally, if the park is all buffed-up for top $, the seller has signed a listing agreement with a broker and it’s all about price, we don’t look too closely.
- We want a fair price, a good transaction (win-win) and no surprises after the close. If we “drive a hard bargain” and save $100K but the septic system fails in the first year, did we really get a deal?
- Before writing an offer, we talk with the seller and ask a lot of questions: what are your goals, why do you want to sell, what do you plan to do with the proceeds, when do you want to close, how did you determine the price, etc…
- This is a business transaction but many sellers have owned and sometimes built these parks and they want to leave them in good hands. As buyers, we want to perpetuate this legacy, be good owners and successfully operate the park for the next 5 to 10 years.
- Net/net, we use what we learned to write a compelling offer, something that aligns with the sellers goals and meets as many of their selling criteria as possible.
If all goes well and we have a “meeting of the minds” we get a deal done. If the negotiation is difficult, lengthy and stressful, the deal probably shouldn’t close and usually, thankfully, it doesn’t.
“We Love Private Utilities” is a complete overstatement but it got your attention! I don’t know any park owner who likes master meters, septic systems or wells. Certainly banks don’t and some absolutely won’t lend on a park with private utilities. If you want to sell a park with private utilities we might be the perfect buyer!
- Private utilities don’t scare us. We currently own 4 properties with wells and 2 have septic systems. We have 2 parks with master metered natural gas and electricity and and 2 more with outsourced propane systems.
- We are very familiar with the process around managing and maintaining water systems including well pumps, tanks, pressure pumps, distribution systems, water meters and billing. We understand test plans and EPA standards, chlorinators, TMFs, how to handle a positive coliform tests, how to hire an operator and work with regulators.
- We have similar experience with gas and electric including panels, tanks, distribution system, meters and billing. We recently negotiated a rate change in a park with PG&E, quite a process. On the gas side, we’ve managed and negotiated contracts with 3rd propane providers and managed our own propane system including all maintenance and billing.
- Septic, we know what it takes to maintain tanks, pumps and leach fields. 3 years ago we learned the whole process when adding tanks and new leach fields from perk tests to engineering, county approvals, negotiating with vendors and managing the construction.
Net/net, we know what we are doing. We know who to call to evaluate, repair, upgrade and maintain private utilities and how to manage all of this with the tenants and regulators. If you want to save some time, money and frustration when selling a park with private utilities, call us before you sign a listing agreement with a broker!
We are currently looking to meet and connect with buyers, especially first time buyers, who plan to purchase a MHP in the next 24 months. Why do we want to do this?
Before buying in 2015 we have a park to sell. We plan to use the proceeds from the sale to complete a 1031 exchange. By identifying buyers early in the process, we hope to coordinate our buy and sell transactions so we achieve a successful exchange.
What’s in it for the buyer? The opportunity to reviews all aspects of the property and start the due diligence without deposit money “going hard” or needing to close in 30 days.
If you are interested in working with us and buying of one of our parks, give us a call and let’s start the conversation!
If you are a MHP owner/future seller and interested in working with us, here’s a list of our buying criteria for our next purchase:
- Northern California
- Mobile Home Parks (few RV spaces is OK)
- 40-100 Spaces
- City Water and Sewer (preferred, but not a requirement)
- Direct Billed Utilities (also, preferred)
- 75%+ Occupancy
- Affordable Housing (2-3 Star)
- $1.0 – $4.0M Price
- Park Owned Homes, OK (fewer the better!)
- B & C Markets (must be sufficient demand for affordable housing)
Having said all this, we make exceptions to just about every one one of these criteria on every deal. If your park meets some, most or all of these criteria, please give us a call!