Sorry, I have been busy
For those of you who hang on every word of this Blog, I apologize for not writing for a while.
I have been really busy closing a resident park purchase transaction, which, of course, is my business and why I can write this Blog.
Such transactions not only take a lot of time, they are also very important since it might be the only time the group gets the opportunity to acquire their park.
This particular transaction was different than most resident deals. The park itself was a moderate-income family park – some retired seniors, some working Moms, some young families, some independent contract workers, several Hispanic families. You get the picture.
I think their were a couple of reasons the deal progressed slowly.
First, the transaction was initiated by the park owner, and there was not a resident organization present in the park. Thus, we had to locate interested resident leaders and overcome suspicion in the general park population.
Second, there was uncertainty about the future – the economy, job prospects, status of local rent control and ongoing attacks on rent control, and, finally, lack of real resident relationships throughout the park.
In order to purchase the park, the group needed enough members who were willing to go off of rent control to become owners. They faced a (modest) rent increase plus a share loan purchase of almost $10,000. Although financing was available for the share purchase, that still meant a monthly loan payment in addition to the rent increase.
Consequently, we spend a lot of time with each prospective member explaining the transaction in detail. Lots of details. Lots of paperwork.
But, at the end of the day, we had almost 75% participation, way more than was needed for the deal to be successful.
Interestingly, some residents never did participate and probably would have preferred to not have to face the decision.
But, in these types of transactions, when the opportunity presents itself, residents have to ‘suck it up’ and make a choice. If enough choose to become members, they have a deal. If too many decide to remain on the sidelines (and remain on rent control), they don’t have a deal.
So now this park is resident owned. The members are happy and are busy beginning the process of owning and operating (with their new management company) THEIR park.
The owner/seller is happy because he achieved his transaction goals and can move onto another phase of his life.
All in all, a WIN-WIN scenario.
Deane
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.