Mobile Home Park Syndications for non accredited investors

[Tony Xu]

Hi, has anyone here invested with or can refer any good options for mobile home park syndications for non accredited investors? I've been interested in getting in to this space. 

Thanks,

Tony

[Jack Martin]

@Tony Xu As it relates to mobile home park investing, that is all I do, and can certainly share some guidance. However, the investments you are interested do not allow for public solicitation, so syndicators like myself are not allowed to solicit for investors through any public forum. With that said, I can share some general guidance for the benefit of everyone in general, and if you want to reach out directly I can share further detail in private. 

The private investment space for non-accredited investors is traditionally governed through Regulation D as Ryan suggested, more specifically a 506b(b) private placement offering.  In general, the "b" allows for up to 35 non-accredited investors, per offering.  A syndicator (or sponsor) of an offering should still take the necessary steps to ensure non-accredited investors are qualified through an investor questionnaire to avoid allowing the wrong kind of investors into their offering. 

There are a few things anyone seeking an investment through a private placement memorandum (PPM) should be aware of.  I can post some further guidance with detail at a future date, but I will identify the areas where investors should focus.  

• Character -  When you invest through a PPM, you are a passive investor and the syndicator is in the active management role, so if they are dishonest everything below will not matter. Make sure to do proper due diligence on the syndicator and acquire testimonials from current/prior investors.
• The strategy - Does the overall real estate strategy make sense?  Strong returns are nice, but you will want to also make sure you understand the risks. Has the syndicator worked through all the potential risks, related to the current and future market, economy, interest rates, etc? Have they worked through all the property specific challenges, both current and future? Make sure the overall strategy has been well considered and stress tested.  Even if you have a syndicator with great character, the project can still be a bad one if the strategy is poor.  This step will help you avoid jumping into an investment just because you know a good guy who "has a great deal". 
• The model - The relationship between an investor and a syndicator as it relates to how income and profits are split is extremely important.  Most investment models include a host of fees, splits, inversions, waterfalls, lockups, tails, etc. which can be complicated and confusing for investors.  Most of those models are designed to weigh heavily in favor of the syndicator, so make sure you understand the model completely before you invest.  Consider the most important question to be: with this model, will every decision that is made be in the best interest of all parties?  
• The business - Most real estate syndicators are good at real estate.  Rarely are they also good at everything else a business requires. Some of the areas where that will cause investors to become frustrated are regular reporting, timely delivery of payments, accurate and transparent financials, timely delivery of tax documents, and the ability to meet target projections related to timing and returns.  To be candid, this may be the most important and most overlooked component of choosing a syndicated investment.  

I cannot stress the importance of getting comfortable with those items before you invest.