How to get better offers for your mobile home park

[Andrew Warner]

I’m a broker specializing in MHPs.

The first thing you should ask yourself when finding a listing agent is: “are your agents specialized in this property type?” If they are, they will be much more likely to know who the most likely buyers are, which re-trade on a regular basis, which have performed in the past, and which are in exchanges or are otherwise highly motivated. The list of “highly motivated buyers” changes regularly. Does your broker know every owner of every park in your market? Ideally, he should have contact information and be calling EVERY owner on a regular basis. If you are in a smaller market area (100,000 population, is a small market), it is often difficult to find a broker who has both experience and an efficient database. It could be that the best broker, lives in a different city or even a different state, particularly if you are in a state without a major market (i.e., a state with only a few hundred parks).
I’ve seen instances where the nearest qualified broker is hundreds of miles from the property. If your park is in Florida (5,000+ parks), Arizona (1,300 parks), California or Texas you have many options. If you’re in Kansas, Nebraska, or Wyoming – your options are limited to non-existent (I don’t mean to denigrate brokers in small markets, but it just isn’t possible to be a specialist and make a living in many areas. It just may not be feasible or wise to spend the time to create a database, maintain contact with owners, lenders and prospective buyers when there are few transactions).
Conversely, available product is scarce in major markets, and as a result, a MHRV broker in a nearby state likely knows many eager qualified buyers.
In large markets, I think posting a listing on Loopnet or other listing sites can be the kiss of death for a good quality/easily financeable property – before you know it, tenants and employees are alerted, and you have a bunch of worried employees and tenants on your hands. If the manager quits and/or the property doesn’t sell within the first couple months, buyers start to wonder what’s wrong with the park—remember, the MHRV community is very tight. Word gets around quickly, and sometimes “the word” isn’t favorable to a seller. A specialist will know who has an exchange to fulfill and who REALLY wants your property, and will likely be better at achieving a high price with the least commotion.
Lastly, is the park easily financeable? Sometimes financing terms are poor. Three to five-star parks can usually be financed non-recourse through a conduit lender or FNMA at very attractive rates and terms (75%-80% LTV). Lower quality parks may require a recourse loan through a local commercial bank at a low LTV or with shorter amortization (20 or 25 years, vs. 30 years). Sometimes, in rural areas the buyer's only financing option is a Farm Credit loan or a seller carryback. Remember, if there is attractive available financing or you're willing to do a seller carryback, you can likely expect a higher price and a lower cap rate.
In summary, there are many other unknowns. It could simply be priced too high. Do you have a well and on-site leach fields/septic? Are there flood plain issues? Are the spaces small (Small spaces make it difficult to replace old homes). Is the park located in an area where a major employer is down-sizing or relocating? I hope this helps.