Editor’s Note: Welcome to the companion article to Episode 6 of the MHP_IRL podcast! The purpose of this article is to expand your podcast listening experience with additional content. Companion articles will unpack larger concepts that we talk about during each episode that will give you practical and most importantly, actionable advice that you can apply to your MHP investing journey.
Sellers become overly confident when they start to get multiple offers to purchase their property. Regardless of the condition of the asset, they become convinced that they’re sitting on a gold mine.
The property could have deferred maintenance and need a lot of work, but these properties are listed at the premium cap rate and people are willing to pay for them.
You’ve got single investors snapping up properties, small practitioner groups trying to get their feet wet, and large corporations that already know how the game works.
BUT (and this is a HUGE but) in these conditions the market becomes overly optimistic. Buyers are waltzing in paying top dollar or even above asking price for properties that need a lot of work and require a large lift to get up and running. Thus, a seller’s market is born, and the price of your deals increases exponentially.
For those that are average Joes that are trying to invest in mobile park homes, you’ve got to stand out, and you’ve got to be able to compete in a frothy market. How far are you willing to go to make the sale?
My answer to you?
You’ve got to be willing to go just a little bit farther than anyone else out there in order to set yourself apart.
If you don’t have grit, get out of the game.
Grit, by definition, is perseverance combined with passion, and according to Margaret M. Perlis, there are not one, but five characteristics of grit.
Courage
Conscientiousness
Long-Term Goals and Endurance
Resilience
Excellence Over Perfection
Sure, you can have a snappy sales pitch (looking at you Billy Mays and OxyClean), but if you don’t have the grit and strength to drive forward when the door slams in your face...this game isn’t for you.
It’s really about overcoming objections and feeling people out - that’s what true salesmen do. Salesmen don’t stop at the surface objections. Good salesmen play therapists and figure out the true objection to selling hidden in between the lines of the conversation.
Those who are successful become that way because they put themselves in difficult situations, and are willing to navigate nuanced and complex conversations with sellers...even if it doesn’t work out in the end.
In Episode 6 of MHP_IRL we meet Broker, Sam Kline, who spent two to three months getting to know a potential seller after knocking on their door. He took the time to understand their assets and even had a full cash offer in front of them. After months and months of working with this person, they still decided not to sell. What was even worse was that Sam recently found out they eventually did sell. And even though he was told he would be the first person they would call, they went with someone else.
What’s the lesson?
You can’t be the quarterback who obsesses over the interception. You have to go back to the next drive and get your team to the touchdown.
Personally, I admire the hell out of people who have the guts to walk up to someone’s front door and say, “Hey. Can I have your listing?”
We’re at a time in our lives where our face to face interactions have been replaced with social media. I mean, you can’t even walk down the street without seeing everyone’s faces buried in their phones.
When you’re a salesperson, nothing beats out face to face contact - you’re not going to convince anyone to sell just by picking up the phone or sending a postcard.
You have to get out there, go door knocking, and talk to people. If they’re like everyone else on the planet, they will want to talk about themselves.
According to Scientific American, people spend, on average, 60 percent of conversations talking about themselves. Use this to your advantage. Ask them how they got their mobile home park started.
People who own mobile home parks might not want or haven’t thought of selling. Asking them about their pride and joy is a simple way of showing your interest. This property has been in their family for generations. And they often look at these parks as their family's legacy.
This means getting in their living rooms, sharing a cup of coffee with them, hearing the good, the bad, and the ugly (even if it means you STILL won’t get the deal). You just can’t replicate this kind of personal touch over the phone.
I have to pause here and recount some of my conversation with Sam as he’s told me that many people would accuse him of being aggressive for going to knock on doors.
“When someone’s tough on the phone, it’s even harder for me than going to see them,” said Sam. “I work the phone too, but I get a lot of enjoyment driving around to look at properties and talking to people.”
“Don’t you just get a thrill thinking about getting out of the office?” I said to Sam, “driving with the windows rolled down on a nice day, and cruising through areas looking at properties? I admire the hell out of people who do this. It’s a rush because the more you turn over cards, the more of a chance of getting a listing.”
For me, it’s one reason why I get so “lucky.” People ask me all the time, “Ryan, how’d you get your last five listings?”
My first reaction is to say, “right place, right time.” But mostly it’s because I put myself out there, listening to 100 stories about generations of families passing this property down, and out of those 100 stories, I get a few bites.
As Larry Bird says, “The more I practice the luckier I get.” You just have to get out there and put yourself in those uncomfortable situations. “What’s the next guy doing and how can I one up it?” should always be your go to question.
Investor #1’s main strategy is to send a few postcards and wait for the deals to come to him. This is pretty comfortable and low risk. He might get a couple of bites, but it’s pretty much up in the air.
Investor #2 takes it one step further. He spends everyday banging the phones, looking to close deals. This is a little less comfortable and kind of risky. He could get a crabby person on the phone telling him to take them off his list and he’ll never sell.
Investor #3 in a league of his own. He’s not sending a postcard or making phone calls. He’s knocking on doors. This step is SO uncomfortable that not many people are willing to do it. I have so much respect for the ones who do though because they put themselves inside the opportunity and don’t leave it to chance.
The lesson here? You want to be investor #3.
“Right place, right time” is less about luck and more about what situations you’re willing to put yourself into.
Unfortunately, just because you’re willing to put yourself in these situations doesn’t mean you won’t face objections. Trust me, there will be TONS and you’ll have to overcome them. Be ready and willing to face objections.
For Sam, he says he sees it all the time. You’ve got people who are making MONEY on these properties who want to sell.
Sam’s motto is “I don’t sell real estate, I solve problems.”
He says, “In these situations where you’ve got people making money from their property and they want to sell, you have to ask, “why do they want to sell?” because who sells when they’ve got money coming in (am I right?).” People don’t sell an asset when money is flush, there is a problem somewhere down the line. And most of the time it’s because they don’t want to pay capital taxes.
Instead of just trying to sell the property, Sam offers alternatives.
Say you’ve got an individual who can sell a mobile park home for $1.3 million, which puts them in the AAA lease game. This person can probably buy a cheaper property and while they’ll cut their income down, they’ve just offloaded the work that they would have to do for the mobile home park. It’s practically a win-win situation.
Then, you’ve got the people who are just tired. They don’t want to continue putting in the work. That’s fine too. This is where “luck” comes in. You’ve put yourself in a situation (knocking on their door) and can offer them a solution.
It’s called being persistent. Not every knock on the door is going to be a win. You don’t need 10 wins (although that would be great), you just need one.
Sam and I sat down to talk with one gentleman for 45 minutes about his property. I brought out the big guns and told him that I was Irish Catholic. This guy loved me. Everything is going swimmingly, until we get to the price. The guy wants to sell for an out of this world price. And no matter how much this guy liked me, we were just too far apart on the selling price to get to a deal.
It’s a lot more common than you think. Nine out of ten of these conversations go like this especially in a seller's market. You just have to grind this out and bring the seller to your level.
If there is anything that I want you to take away from this article it is this:
In order to stand out in a competitive market, you’ve got to be willing to do things that other people aren’t willing to do.
Get out of the cookie cutter box: Everyone wants the same type of property and those properties don’t come cheap. Do a little extra digging. Find the property that is a little out there, maybe it needs some work.
Be willing to take on some challenges: Once you’ve found a property that isn’t going to be a galljillion bucks, recognize that might face some challenges. Maybe there’s some maintenance on the property that will need to be taken care of. That’s okay.
Come to terms with what you’re willing to sacrifice: When you’re just starting out, you’re not going to have it all figured out. Figure out quickly what you’re willing to live with and to live without.
Figure out if you want quick, low risk cash or if you’re willing to roll up your sleeves: If you want a property that you don’t have to do anything to and it is low risk, it will cost you a pretty penny. But, if you’re willing to get down and dirty, it can be worth it.
I’ll leave you with one last story that Sam told me.
If you’re a regular person and not a corporation, you have to realize there is a fringe in the area you live. There are opportunities for you to purchase a building that needs work (the more work, the lower the price).
Sam recently had a building that was vacant. It was gutted on the inside. The building was listed for $99,900. He probably showed it 100 times. Out of that 100 times, one person got excited. The buyer wanted to create a gallery space. Ultimately, she bought it for $58,000 and fixed the building. The building looks so good that Sam takes individuals on tours and points out this building.
This game is all about figuring out what you’re willing to endure to get the deal and improve the asset . Beyond that the only thing left to do is GO FOR IT.