" 30 Days of Successful Due Diligence "
by Frank
Rolfe and Dave Reynolds,
DON'T RUIN YOUR LIFE
!
Consult the Mobile Home Park Due Diligence
Experts
We have finally written the book
(manual) on performing due diligence on a mobile home park
- Over 200 Pages
- Covers the entire due diligence
process from writing the contract to the actual due diligence and final
negotiations with the seller.
- This manual could save you hundreds
of thousands of dollars!
- Includes an Excel Worksheet so you
can fill in all of the information and create your own mobile home park due
diligence report
- And Much More!!!
If you are buying a mobile home park,
you owe it to your future sanity to get this manual before you put it under
contract!
Dave Reynolds and Frank Rolfe, Industry Professionals with a combined total of
over $100,000,000 of completed mobile home park deal experience!
Dear Fellow
Investor,
Many people who purchase their first mobile home park
investment grind it out, paying for the “privilege” of being in the mobile
home park business with every hour of their day, and every ounce of their
energy.
And guess what? Many of these mobile home parks do not work as expected –
their owners do... And they spend hours and hours spinning their wheels… doing
the WRONG things, for the WRONG reasons.
Bottom line, if you want to get into the business and not make mistakes that
could end up costing you thousands, if not hundreds of thousands of dollars
and wasted time and energy, and if you are open and honest about this “reality
check” then we are giving you a chance to wiggle free from this trap you have
burrowed yourself into... or are about to dig yourself into.
Now… how do you know if you are “trapped” or "will soon be trapped"?
Well, simply check off any of these thoughts that may have crossed your mind
from time to time:
- “Does this mobile home park
actually make as much money as the owner has reported it does? Is the owner
cooking the books?”
- "How
do I check on the water lines or sewer lines?”
- “How do I check on the
market?”
- “What questions should I ask
the seller? The city? The electrician?
- "What about all those Park
Owned Mobile Homes?”
- “Am I missing something?”
- "What will I do if (fill in
the blank)?
- “I wish there was someone
else that could help me… this stinks!”
We have covered it all
in this manual.
Now, how many times after you
made a mistake did you hear or think "You should learn from your mistakes" or
"I won't ever do that again"?
Frank and I have definitely done this many times. But there was never someone
there to steer us in the right direction.
Instead of wasting time and potentially thousands of dollars wouldn't it be
nice to keep that hard earned money and make a wise investment?
Instead of learning from your Mistakes... why not avoid making them in the
first place?
So let us ask you –
- Do you want to invest in the
right Mobile Home Park and not regret it later?
- Do you know how to determine
if the park is a "Deal" or "No Deal"?
- Are you sure you have not
missed something?
- Are you ready to get some
advice from an unbiased and experienced third party?
Included in this manual is a
day by day schedule that will help you plot our your strategy and schedule
everything in the most cost effective manner.
Here is an excerpt from the beginning of the book...
FOREWORD
This manual is designed
to give you a roadmap, from start to finish, in achieving a successful due
diligence examination of a mobile home park.
Since the failure of any one step of due diligence might result in your
decision not to buy the park, we have organized the order of steps in such a
manner as to minimize expense and effort. We have chosen the order to put the
items most likely to fail at the front end of your examination, to get the bad
news early on and to act on it accordingly.
We have organized the manual in a day-by-day manner and while this makes for
good organization, not every deal is going to fit into this order and if
possible you would like to have 45 or 60 days to do the diligence, or at least
a provision in your contract that allows you to extend the period in case some
of the third party reports are not able to be completed in thirty days. The
real key is to make sure to complete all the steps in a complete and timely
fashion.
Is 30 Days of Diligence Adequate?
Thirty days of diligence is an industry standard, but there is no rule that
the due diligence period must be exactly thirty days. Of course, the longer
the diligence period, the better it will be for you, the buyer. Sixty days is
far superior to thirty if you can get it. And, of course, you can’t get it
unless you ask for it. Most people ask for thirty days because they are afraid
that sixty days will scare the seller off, and less than thirty is way too
short. That being said, I have done fourteen days of diligence on deals that I
really wanted but that had a difficult seller. Less than fourteen days and you
may just be wasting your time, since it is near to impossible to get a lot of
third party reports completed that quickly, not to mention just the regular
stuff that you perform yourself. If you are willing to forfeit your earnest
money, then you can go as short as you want, and then walk the deal prior to
closing, at the end of the financing period, if you don’t want it after all.
If you have not completed your diligence in the required amount of time, say
thirty days, it is sometimes possible to get the seller to give you an
extension of time. If that is the case, the best way to get the extension is
to meet with the seller and show him all of the work you have performed, so
that he knows that your request is legitimate. When you propose such an
extension to the seller, he is normally concerned that you are just wasting
his time, and that you have no intention of buying it, or that you lack the
money. It’s your job to convince him that you can close, and will close, if he
just gives you a few more days to complete your diligence. And you can even
tell him what you have left to do, so that he knows you are not pulling his
leg. If he says no, and you really want the deal and feel 99% positive it will
work for you, you may elect to go forward anyway, and risk losing your earnest
money if you walk before closing. Make sure that the contract does not require
“specific performance” to buy the park. In that event, you cannot go past the
diligence period without having to buy the park, even if you don’t want it.
You never want to sign a contract with specific performance in it for the
buyer. The seller, on the other hand, should almost always face specific
performance if he fails to consummate the sale to you.
Diligence periods in excess of sixty days are pretty unheard of, except in
cases of extreme lack of park stability, such as not having any books, rent
roll, etc. For example, it would not be unusual to ask more than 60 days to
sort out bank foreclosure. However, except in that type of difficult
environment, you will probably do some degree of damage to your reputation by
asking for more than sixty days of diligence.
You will find in the due diligence process that there is no perfect park.
While successful due diligence will help you formulate an idea on the true
economics and risks of a mobile home park, it will still ultimately be your
business decision as to whether or not to proceed with the purchase. Often,
after assembling all of the data, you will still be unsure as to whether or
not you want to proceed. This manual only helps you to collect that data. The
decision to go forward is one that you will have to make on your own.
Good luck on your due diligence!
Frank Rolfe & Dave Reynolds
BEFORE YOU START
TO DO LIST
- Purchase Contract
- Due Diligence Clause
- List of Items to Request
from Seller
Your Purchase Contract
One of the most important items that you will need to have is a
good purchase contract that has been reviewed by your attorney. Don’t ever
just take a purchase contract you find on the internet or receive from the
seller or seller’s broker and sign it without first having your attorney
review it.
A good purchase contract will have, at a minimum, the following:
- Full and Correct Legal Name
of Seller (the correct name or company)
- Name of Purchaser and right
of Purchaser to Assign Contract to an entity owned by Purchaser
- Legal Description and
Address of the Property
- Description of Personal
Property to be Included with Sale
- Purchase Price and Terms
- How Prorations are Handled
- Right of Purchaser to
Conduct Due Diligence for a Period of at least 30 Days
- Right of Purchaser to Cancel
and Receive a Refund of the Earnest Money and be Released from the Contract
for any Reason during the Diligence Period
- Right of Purchaser to Cancel
and Receive a Refund of the Earnest Money and be Released from the Contract
if Financing cannot be Obtained at Reasonable Terms Approved by Purchaser.
- Who Pays for What: Survey,
Appraisal, Title Policy, Phase I, Closing Costs, Broker’s Commission, etc.
- Date of Closing and
Possession
- Representations of Seller
- Representations of Purchaser
- Acceptance Deadline
- Signature Block
In the past I have
provided a copy of the contract that I use to buy mobile home parks and if you
would like a copy of my contract, I am more than happy to send a copy to you
with the understanding that before you use it that you will have it reviewed
by your attorney.
Due Diligence Clause
In your purchase contract you want to make sure that you have a
good due diligence clause. Here is a copy of the clause that I have in my
contract:
PURCHASER’S RIGHTS OF INSPECTION, LOAN APPROVAL, AND CANCELLATION.
- PURCHASER may inspect or
cause to be inspected the condition of the Real Estate and all improvements
and Personal Property;
- PURCHASER may inspect or
cause to be inspected all other documents and materials relating to the Real
Estate and Personal Property;
- Within seven (7) days after
the effective date of this agreement PURCHASER shall make a written request
of SELLER to deliver all documents and materials needed from SELLER for
inspection and evaluation. Upon receiving this written request from
PURCHASER, SELLER shall deliver any such documents or materials requested
within seven (7) days of PURCHASER’S request;
- After all documents and
materials have been delivered to PURCHASER, PURCHASER may cancel this
Agreement for any reason, at the sole discretion of PURCHASER, within Thirty
(30) days after receiving all documents and materials from SELLER. After the
initial Thirty (30) day inspection period, PURCHASER may cancel this
Agreement during the next Thirty (30) day period in the event that PURCHASER
does not obtain a loan approval for the purchase of the Real Estate and
Personal Property that is satisfactory to PURCHASER, and the determination
of an acceptable loan shall be in the PURCHASER’S sole discretion.
- In the event that any Third
Party Reports are required by Purchaser or Purchaser’s lender, and these
Third Party Reports are not completed during this initial thirty (30) day
inspection period, the inspection period will automatically be extended for
an additional thirty (30) day period and PURCHASER shall have the same
rights of cancellation as PURCHASER has during the initial thirty (30) day
inspection period.
SELLER shall allow PURCHASER,
or PURCHASER’S representatives, access or provide documents for review,
whichever the case may be, to the Real Estate and Personal Property, at all
reasonable times and cooperate with PURCHASER’S efforts to conduct the
inspections permitted herein.
And that is why we have written this manual... We want you to learn from our
Mistakes... and not make the same ones we have made!
We don't want you to feel frustrated and broke!
And it doesn’t have to be this way… not for you…
