All Forum Posts by: Chase McArthur

@Tori Kolasa

I don't think theres really any books per se, but I know you can Google loads of info. MHC is relatively new to main stream investing. It was really only recently that they have caught the eye of investors due to the increasing cost of traditional multifamily properties. Investors are beginning to see the value as well as stability in these properties. Demand will always out way supply due to zoning regulations in many towns that prevent new parks from being built.

Cap rates are typically higher for MHC properties due to the fact that they are essentially income producing land holdings with long term leases and little to no real structural assets.

As for what to look for, with MHC properties, the real value comes by the way of management structure. There are a few physical attributes to look for in regards to utilities that have to be considered, however. How are the plots metered? How is the septic system set up? For communities that have park owned units, you need to determine maintenance issues as MHs can be difficult to maintain. Do zoning laws prohibit you from expanding the park? What kind of value add strategies can you apply to increase cash flow? These are a few things that should be considered.

I will invite @Chase Louderback into the conversation as he has experinece in potential management issues that you may face, as he owns and manages a large MHC property in VA.

@Frank Bonzai

Let me go back to the beginning. When you first make contact, the best approach is to simply get them to talk to you. You want to try and establish a relationship, try and get a meeting with them. Try and get some insight into any issues they may be experiencing, maintenance issues, cash flow issues, tenant issues, anything that you can potential provide a solution to.

@Frank Bonzai

1. Allowing access to the books

2. Potential deferred maintenance

3. Any outstanding liens

Ok that being the case, you need to tread VERY careful. While it is legal under Reg D, there are hoops of fire that you will need to jump through to protect yourself and your project. The amount of disclosure that you will be required to disclose is going to cost you an arm and a leg and a half in legal documents. Otherwise you could find yourself in a proverbial sh*t storm. 

Secondly, I am having trouble wrapping my head around the kind of returns that will be gained from so many hands in the pot. 

Could you give us some numbers?

@Justin Yurong

Are these investors accredited?

@Justin F.

@Justin F.

I absolutely agree, KISS is better. Per my comment about the yield curve, that was just an exaggerated example, as you are right in the fact it has no bearing for smaller projects. It does however have a macroeconomic effect that has the potential to trickle. And unless you are Zell, holding billions in real estate, real NASA level quantitative analysis is moot. Hell, I'm sure Zell himself puts little weight on quant analysis.

However, there is a real place for FinTech in the CRE realm. Unlike residential real estate where hedonic regression is prevelant in valuation models, CRE assets follow a more dynamic pricing model, hence the income approach to valuation. However, CRE assets are not immune to hedonic regression since cap rates ultimately dictate investment value.

But, yes, overall simple is always better.

P.S. love the "no-timer" comment!

@Michael Wayne

Not a problem at all. As @Shadonna N. mentioned there are attorneys here that specialize in TOPA laws but not with any integrity for the violation of said laws, but to legally extort owners.

For example, tenant recieves TOPA notification, contacts attorney, attorney finds some ridiculous reason to litigate, says "oh, don't want to hold up your sale in a nasty lawsuit, my client would like $30k and we will drop the suit and they will waive their TOPA rights." True story.

Now imagine you own a 100 unit asset.

@Aaron Laster

It sounds like a solid plan. Question...after the first domino drops how much capital gains do you expect to clear to put into the development deal? Secondly, what incentive does a developer have to invest in a new construction project in an opportunity zone?

Developers already have tax deferral mechanisms in place through 1031s as well as a lower LTCG tax as they tend to hold properties longer than 12 months. The OZ is essentially bait for a developer to attract capital for it's project,which after completion it will offload and move on.

Are you able to have your capital locked in for the next 9 years?

I'm interested in hearing more about this plan. Please provide some more details.

@Frank Bonzai

As @Oleg Shalumov stated, there's really no script that can produce results. Cold calling owners is literally like playing roulette, truth be told you probably have better odds with roulette.

Convincing someone to sell a property that they have no intentions of selling takes time and nurturing.

As a broker there are certain tricks that I have up my sleeve that will enable me to open a dialogue and take on an advisory role that may eventually result in a listing.

I have a bit of an advantage though because as a broker there is a level of value that I bring to the table, market knowledge, transaction experience, deal velocity, essentially tens of millions of dollars of investment experience. Moreover, if they are in the mood to sell their property I don't bring just one offer to the table, I bring twelve. It is in their best interest to talk to me whether they want to sell now or not.

The moral...give them a reasonto talk to you and you can say whatever you want.

@Rob Mudd

You have a real opportunity here. I'm sure it was well taken care of, plus if its in a trendy neighborhood I would roll with the vintage look. Clean it up, make it trendy and charge boutique rents.