I’m headed out on the road to California, and I always look forward to these trips because I get to do a lot of stuff that I REALLY enjoy.
I get to:
– Meet with residents in parks that have successfully purchased their community.
– Meet with groups that are getting organized to approach their park owner.
– Tour potential projects to get a handle on how to finance and get the park purchased.
– Meet with brokers who list parks for sale to explain how the resident group is a viable purchaser and can offer benefits to the owner that other investors can’t.
– Meet with attorneys for park owners to show them the benefits of selling to the resident group so the attorneys can advise their clients.
My next trip is fairly typical.
I start off in the Santa Cruz/Watsonville, CA area to look at two parks to evaluate them for a resident purchase. Evaluation includes a bunch of items. I look at the park real estate (layout, amenities, landscaping, street appeal) to make a judgment on the most likely funding sources. I look at the homes to get a feel as to whether the group can actually buy the park – are the homes neat and well cared for and are there signs the group is organized or can get organized. Is the park of a quality that the group might be interested in buying it. Are there infrastructure issues that need to be dealt with? Should I plan for share loan financing for a portion of the resident group.
I then move on to the Riverside, CA area to evaluate another park.
The interesting aspect of these three parks is that the resident groups do NOT know that the owner is considering selling the property to the group.
Owners are very ‘tentative’ about embarking on the resident group purchase process. Owners don’t want to excite the group unless the owner thinks the deal can actually get done. Once that bell has been rung, it is hard to ‘unring’ it.
Remember, the owner is willing to consider the group as a buyer only because he thinks it is in his best interest.
Often I have to sign a Confidentiality Agreement that I WILL NOT contact the group without approval of the owner. I have to evaluate the park, get the owner’s financial information and prepare a Financing Plan for the owner’s initial approval. That is NOT the final plan,
Only after the owner is on board am I allowed to contact the group.
After Riverside, I head to San Diego to meet with the leaders of a park already owned by the residents to develop a refinancing plan for their existing debt combined with funding for improvements to their park infrastructure.
Finally, I end up in San Diego to meet with an attorney who represents an owner interested in selling several parks to the residents, and with two brokers who have listings of parks currently for sale to explain how, for some parks, the resident group might be the best buyer.
I then head back to my office to process everything I have learned and see if these projects are viable.
All in all, a pretty normal trip but one with exciting prospects.
I’ll keep you posted.
Deane Sargent and PMC Financial Services have been helping mobile home park resident groups and cooperatives to organize and find financing to buy their parks for over 20 years.