One thing many individuals discover when they’re looking to buy a park is that everyone wants the same park. Why is that? My belief is there is so much literature online about what to look for when buying a mobile home park and what to avoid. People get hung up on certain details. I can tell you that I don’t agree with it all, but I do agree with some of it. But I’m not the one buying a park. I’m the person that is selling the park, so I respect everyone’s opinion, whether I agree with it or not.
What to Keep in Mind When Approaching a Seller
Most likely, why you’re reading this is because you’re trying to buy a park. Let me help you by trying to understand a few key points below.
First Communication with Broker or Seller
Let’s talk about your first piece of communication with a broker or seller. First, I’m going to tell you what not to do. Don’t tell someone you’re going to write them a check because you have so much capital. I personally get this sent to me at least a half dozen times a day. Even if you can write someone a check today, don’t say it because it’s used way too much. Brokers and sellers are typically interested in individuals who have a genuine interest in the property and have insightful inquiries on the property. But there is a fine line that you don’t want to cross. The fine line is trying to get an extensive due diligence package before anyone knows who each other are or if there is even the possibility of a deal happening. There is a time and place to get this, we will talk about it shortly.
Sellers and brokers appreciate when someone visits a park or the person selling the property if they can. I know this isn’t always possible, but it goes a long way. Brokers and sellers get inundated with calls and emails to buy parks every day. It’s good to know a person is real and to get an understanding of the type of person they’re thinking about doing business with.
Don’t lead the conversation by asking if they will offer owner financing. It’s quite possible that they will want to do it, but you can come off as someone who isn’t a qualified buyer or not fully committed to the purchase. It’s better to understand the property owner’s financial strategy post-disposition to have this conversation.
Have something to show you’re a strong buyer and that you can work to close. When someone is ready to sell, they typically have a few offers. Even if it’s an off-market deal. The last thing anyone wants is for a deal to be canceled, it stigmatizes a property. Price isn’t always the deciding factor when it comes to choosing a bid.
Don’t go into a bid with an offer so low that you know it will get countered. If you’re bid is low because of genuine reasons, that’s fine. But try to avoid deal fatigue from arbitrary price negotiations that can lead to a loss of goodwill between the parties. Once everyone’s defenses go up on a deal, there’s a high probability that talks will fail. It’s unfortunate.
Asking for basic due diligence like expected financial information, lot size, utility makeup, and other general questions are fine and should be done. But if you’re due diligence list is 30+ items long, try to ask for that with a letter of intent and your qualifications. You will have much more success getting those due diligence items before the contract if everyone knows there is a potential deal on the table.