AI Live - Land Shark Mastermind

Okay, so what's interesting, um, is, uh, Tommy, I know you got to step away for a minute, but so I popped into Instagram because I had a bunch of messages, and this really, um, interesting, uh, article pops up on Instagram, and I'm going to share this for just a moment because this is very relevant. For just who we are and what we're doing, and the importance of doing your due diligence. So says Scottsdale restaurant mogul pleads guilty in investor fraud scheme. So a Scottsdale-connected restaurant investor who once pitched a major Old Town project pleaded guilty in federal court after prosecutors accused him of using investor money to fund a lavish lifestyle. Eric Wagner or Aaron Wagner. Admitted to providing investors with false information about the success of his business ventures and diverting money intended for restaurants and real estate projects towards other expenses. So federal prosecutors say investor funds were used for luxury homes, private planes, exotic vehicles, vacations, and other personal costs. One allegation says $2 million intended for a restaurant venture helped finance the purchase of $8.3 million aircraft. Wagner had previously pushed plans for a 3-story restaurant and bar called Swags in Scottsdale Entertainment District and was also connected to the stalled Bottled Blonde project in Gilbert. His partner, Michael Maynes, has also pleaded guilty. Both are scheduled to be sentenced November 18th, and Wagner could face decades in federal prison. And did the luxury lifestyle help sell the, uh, image investors were buying? So here's what's interesting. I actually was at an investor presentation for this restaurant, and, um, uh, it was interesting because I, I don't think he liked me very much because I was asking the hard questions. And one of the questions I asked is, tell me a time that you failed and how you actually dealt with it. And neither him nor any of his partners would actually answer the question, which was really telling. And inside of doing the due diligence, there were just way too many holes for me to feel comfortable to raise capital and invest with these guys. And it came— and the restaurant concept was amazing. It was absolutely incredible. But who the guys were, Definitely left me questioning and not feeling like 100%. And so why do I share this? Because at the end of the day, like that gut feeling was a piece of it. But the other piece was was having the courage to ask the hard questions of these guys. And I'm glad that I did, you know, because again. You know, here he is indicted and could go to prison for several decades for being irresponsible with investors' money. So again, you know, it could be a really brilliant project, absolutely. But if they are crappy sponsors and operators, I mean, it says everything. So anyway, it was, um, it's just interesting, um, interesting that this would pop up first thing this morning. So yeah, you know, investors need to be cautious and they need to be responsible, which is why I talk about with everybody making sure you're crystal clear what your conditions of satisfaction are. So, um, one of the things that we have is, um, the, uh, our conditions of satisfaction and our conditions of satisfaction. We created a whole GPT around it where we upload the entire deal into it, and then it makes sure that, uh, all the questions, all the hard questions get answered, and then evaluates how they're answered too. So anyway, just something to, to be present to and yeah, pay attention to. So interesting stuff. The other thing is, and I think I've shared it, I'm going to share it again. So I started telling everybody I started listening to another audiobook. This weekend. You can also read it as well. I just happen to do audiobooks, um, but this one I'm getting deeper and deeper into it and it's so freaking good that I really believe everybody should be, um, uh, reading this one as well. Let me put it in here. It's so, so good.

Copy.

I'm putting it in the chat for you. I want everybody to read this book.

Where is my Zoom?

It disappeared.

There we are.

Okay.

Good morning, Luke. Okay, so there's a book I want y'all to read. Again, really, really great stuff. And if you've been investing in growing your portfolio— I'm sorry, Tina's gonna be calling and bringing a realtor in for us to talk to. What was my point? My point was saying something.

My brain.

Oh, if you've been in the game long enough and you've been working long enough and doing 401s and all the things and essentially believing the lies long enough, this book is gonna really piss you off. That's the truth of the matter. So, um, Definitely be prepared. And for Luke, I'm thinking like, because you're still young and new to this game, uh, you having your eyes wide open going into it, uh, I think is, uh, very— gonna be very empowering and exciting because you don't have to go down the wrong road as long as a lot of people have. And I remember one of my coaches, he always said, you know, no matter how far down the wrong road you've Gone, just stop. Just stop. Go the other direction. So it's anyway really great book. And then the next book that I'm going to be reading is this one. It's the investor, the lifestyle investor. So I'm going to be reading that and letting you guys know how that is. So got some good things going on. And then more fun things with ChatGPT. Is we the property that we looked at? What day?

Monday.

We looked at that property on Monday. Tommy has been doing some renderings for a couple of the houses because I think what we're going to do is we're going to possibly build two houses on that property and. Selling both of those houses will pay for the entire property, uh, and then leave more money to be able to actually build my chateau, which is really exciting, that overlooks this preserve in the mountains, and it's absolutely breathtaking and stunning. So anyways, very, very cool stuff. There's Miss Tina. How are you, honey?

Excellent. How are you guys?

I'm good. So I see you're wearing a vest. Is it cold where you are?

It's colder than it's been. I guess I'm just not adjusting as well.

I kind of like—

I love wearing vests.

Yeah, me too.

I was sitting outside earlier this morning, and then it kind of dropped a little bit. So I would say it's probably maybe 65, 60. Which isn't bad. That's just winter here.

That's winter.

Amazing.

Yeah, it's pretty out. Last night was gorgeous.

Yeah, we're still in the triple digits here.

It's a lot, but it's been a little bit better.

Yeah, yeah, it's— well, for us it's getting cooler. I jumped in my pool last night, and it was a little bit chilly, which I'm not used to. Normally, it's like definitely still warm when I go for a swim. So, I mean, again, chilly is relative, right?

Yeah, right.

Like, if I'm saying it's chilly, like, everybody up north would be like, what are you talking about? Right? But again, yeah. So, yeah. So, Tina, your girl is gonna call here in about 15 minutes.

I sent her an email with my phone number. Let me see if she's replied here. She should be expecting because she confirmed that that would work with her. So, let me see. I would plan on it. I think we kind of coordinated it, and she said, yes, that's good. So about 11:30, and then I just sent her my phone number. So.

Okay.

So she can call around that time. So yeah, I got your— yeah, I couldn't pull up the ChatGPT, but I'm looking at what you sent to me. Oh yeah, so she just replied back and said, sounds good.

Okay, cool. And then I sent you an email with the ChatGPT from yesterday. Yesterday.

I am looking at that. Yes, I don't know why ChatGPT wouldn't let me. I even upgraded to the Plus plan again. So, and it was like, no, you still can't get in. Okay.

So yeah, they did some sort of update, and since that update, it's just being weird.

Yeah, yeah, locking us down. They're locking us down. Okay, so I think we had kind of gone over this on the last call too, about the concerns that we had with, uh, the owners Having the right of refusal. We wanted to know, is there buildable land outside of— or can we— I was curious if we could build on any of the additional land.

Yeah.

Who owned it even, maybe, you know, maybe the same owner that owns the mobile home park owns some of the surrounding land.

Yeah.

And also, how many units could we put on the existing 5 acres? It was 5 or 8? It was 5, wasn't it? With 8 parks. Yeah, it's 5 acres. They have a contract that allows them to sell off their— Yeah, it'll be good just to have a conversation with her and see what else she can tell us about the park. I'm curious as to why They're selling.

Yeah, let's put— let me pull up that chat and actually prepare for the— prepare the questions for the call. Let's do that so we can show people. Okay, it looks like it actually has most of the questions.

Okay.

I'm gonna share my screen. So we're gonna have a quick conversation with it because I want to show everybody. So we're in Deal Hunter, and yesterday we went over this property with Tina. It's a mobile home park.

It's got—

what was it, 5 pads on it? I think it was.

Yeah, I believe it was.

Oh, no, no.

8 on 5 acres.

5 acres. That's what it was.

Okay.

And so it went through and analyzed the thing. And so we're gonna have a call with the realtor about this. And what we— so let me just put it in here. So we're going to have a call with the realtor about this, and we want to list out our questions so that she can get those answers for us on this property. One we want to know is how many more pads could we actually put on this property, which is also determined by the utility infrastructure, the septic sewer, water, all of that. And understand that. What else do we want to know from her other than these questions that are already here?

I was curious as to why They're selling, and if they own any of the land surrounding the park, or if there would be an opportunity to buy any additional land if we wanted to expand. Then we also wanted to know about the right of refusal.

Okay, perfect. So list out those questions along with these next action questions as well. So we have a clear list to talk to the realtor with.

So now also, Catherine, it says here, do not accept a 2-year balloon. I don't know if that was one of the offers.

MHP.

If that was the original, what they changed it to.

Part of the original thing that was loaded in there. Because you had said, hold on. I think it got it from this. You had texted me, uh, the OM has updated price. The seller is willing to do seller financing with $60,000 down with a short-term hold time amortized 30-year balloon. So it was saying like that to be careful about that because they're underwriting the whole thing with $400 a month and it's not at $400 a month.

It's right. $375.

So we can't do future. We can only do what's sold.

And so did it find any comps nearby so we could see?

Let's actually— that's good. Please do your research and go find comps in the area that are similar to this property. We need to know what they're being priced at.

One thing I might be interested in asking too is if she knows how long the current tenants have been there.

There we go.

Yeah, if they have had a lot of turnover in the units.

I pulled current manufactured home park listings in Wayne County and the surrounding Finger Lakes Central NY market. The key point is that true small park comps are thin, so I would not average everything together. The strongest comp is the 6-pad Red Creek Park in the same county. The Palmyra Park is useful for price-per-pad cap rate context but is much larger. Your subject is 8 tenant-owned home pads on roughly 4.7 acres, currently under discussion at $280,000 or $35,841 NOI. While a newer public listing now says the planned rent increase could produce $37,970 NOI, 700, 8,280,000. Property pads unit.

Okay, so this is the subject property, uh, $35,000 per pad. The only one in the same county is this Red Creek, and it's only at $28,000 a pad.

Oh, that's interesting.

So that's something to know. Also, even yet, these other ones, $41,000, $24,000. 58, 44, 27. So yeah, like, where is it that they're valuating the 35? Again, putting like trying to do the numbers at $400. This is where, again, the difference between knowing what you're talking about versus understanding the marketing that they're putting into it. Matters significantly. And clearly it's marketing, which is why they tried to— are trying to advertise this for $400 a pad instead of the $375, trying to get the higher amount. So, and they could very well just have done that knowing it's going to be negotiated down.

True. So then I have other questions. I'm curious, one which I just mentioned, how long have the current tenants been there?

Yeah.

What—

so here, what is the current lease agreement?

Did you see that in there anywhere? Are they locked in for a year? Are they—

So, so say those again because we're going to capture those questions.

What are the— what are their current lease agreements? 1 year.

And how long have they been there?

And how long have they been there?

Yeah.

Uh, and I'm curious how long ago this was listed, if they've listed it before and they weren't able to sell it, and why, since they're coming back with— um, oops, did somebody just call me? Oh, I think she just called. I'll give her a call back. Okay. All right. They also— also, I didn't see what they're paying in taxes, if the taxes have gone up out there.

Okay. Okay.

So I— and I did let her know we're on a group call. So, okay, I will just give her a call back and put her on speakerphone. Let me know if you have any issues.

Yes. Add these to the realtor call list.

Let's just wait because I want Tommy to be on the call. He, he just had to step out for just a second.

Okay.

She didn't answer anyway.

Okay.

I'll just send her a text message and let her know.

Yeah.

Let her know 9:30 for sure, or 11:30, whatever. Thank you for this. Now give me the full list of questions.

Do you, Catherine, is Tommy still gonna be available for the showings we had scheduled for today?

Yeah, we had a pre-meeting and it's all—

Full realtor call question list. Lions mobile home park question list.

Okay.

That one, one of them's at 11:30.

Yeah, he— yeah, I have one. At 11:30 and then the other one at 12:15.

Yeah, because they're a little bit far from each other.

Yeah.

Okay, cool.

Okay, you guys are, um, Mountain Time right now?

We're Pacific Time.

Pacific.

Oh, okay.

We go Mountain Time in the fall.

Oh, okay.

Yeah, Arizona is one of those— we don't change times, we change time zones.

Right.

It gets— it's confusing. I feel like people— I've had people who I'm like very surprised that they don't understand the time zones, getting it, messing up appointments and stuff. But it's confusing for Arizona.

Yeah.

Okay.

This is a lot of questions.

That is. Maybe we'll narrow that down.

So this is a lot of questions, which is great. However, we're just gonna have a brief call with her. So I want the high-level questions to help us figure out if we even want to go further with these questions. So let's ask the questions that matter the most.

That sounds good. I think the recent updates, but what's there really to update?

For a brief call, I'd cut this down to the questions that can—

Okay, so here's the high-level 10 questions. So why is the seller selling? What are the current tenant leases? What is the real current income? Where does the tenant right of refusal stand? How many more pads could realistically be added? Can the existing infrastructure support expansion? Does the seller own any surrounding land? What major repairs or capital expenses are coming? What exactly are the seller financing terms? And then what documentation can she send immediately after the call? So does that help?

I think so. I think that's a good— and she seems, she seems, uh, really nice as far as like, um, willing to answer some questions. So we could just have probably a casual conversation with her if there's— if something pops up while we're going through these 2.

Love it.

No, I, I think that's really good. There's not much You know, because I'm thinking, because of the location to the lake, I don't know how far away from the lake this was. Would it be— would there be an opportunity to maybe have a couple of RV pads there where people could come in? And then, you know, it's just, it is a pretty rural location.

Yeah.

How far did they say it was from, uh, I think it was like $50,000 to $60,000 average income, but it's a small town. I think it was like 5,000 maybe.

Oh wow.

Yeah, when I was looking at the, um, and, uh, I think I was doing a Google, like a Gemini search, and it was telling me That it wasn't finding that address. It was like it couldn't link it to New York. It was more of like a New Jersey, which it is actually, I think, closer to Newark when I was looking at it than it was giving me the right address.

Let's, let's go look at it again.

Okay, so now we zoom.

Out.

All right, so there's Syracuse.

Oh, maybe there's New—

is that Newark? Yeah, Newark, Arcadia.

Oh, okay.

Hi, Tommy.

Sorry about that. Um, so plumber just came by to, to give us some ideas of what's going on.

Yeah, that looks like Newark, doesn't it? Yeah, or is it a different type of— it's not the same.

This is Newark, New York, not New Jersey.

Yeah, no, that's Arcadia, New York.

Is Newark the county?

Newark is kind of like a, a, a, an area. Oh, like there's 17 different, uh, Smithtowns or whatever. There's a Lockport, Illinois, and a Lockport, New York.

So, but it's close. It's been between Buffalo and Syracuse.

Okay.

Rochester.

It's closest to Rochester, New York.

Oh, okay.

Yeah.

So she just called it about, oh, about 6 minutes ago. I missed the call, but she said that I sent her a message and asked her if she could call back at 11:30 that we would be available. And I'll turn up my ringer so I hear it.

So these are the top 10 questions that we came up with for Tina to ask her based on Deal Hunter. Are you able to see those, Tommy?

Yeah.

Um, so are you ready for Tina to call her?

Yeah, I mean, you can. Did she already say that she wanted to do seller financing? Was that something that was in the—

Yes, because I think originally they had just a price, and then they came back and said that they were willing to do some seller financing terms, or they modified the seller financing term. I know there was, but for sure they are.

Yeah, no, we can definitely call her. Yeah, let's definitely—

okay, I'll see if I can give her a call.

Uh-huh.

Hi, Tina.

Hey, Allison, how are you?

Good, how are you doing?

I'm doing really good. As I mentioned in the email, we've— I've got a kind of a group of investors on the call with me. Okay, so if that's all right, and we're all— we just all have a couple of questions about the property. I think I've received some other emails from you about different— yeah, I think I am on your email list now as I went through some things because of Victoria. Yeah.

Yeah, through Victoria. Yes. Yeah, yeah.

Um, there might have been one on the river, like right along the river over in New York somewhere.

An RV park, or there still is an RV park on a canal.

Maybe that was it.

And maybe that's the one. That one, $4 million, 100 acres. Yeah, yeah, perfect.

Well, what can you tell us about this, this property? We had, uh, We were concerned about the current owner, if they've had it for a while and why they're looking at selling it, and some, just some additional questions. So maybe we can start there.

Yeah, so he's retiring. He's had it for, gosh, I think since the '90s. He's just ready to To retire. He lives, oh, probably about an hour away. So he has a manager on site that takes care of things for him primarily. But then this guy, he goes to Florida for the winter and doesn't really have to sell. But I think it would be more amenable for him to just sell and just don't have to think about it.

Yeah.

More. But, you know, it's a great property. It's in good shape. It's very Very clean, very well maintained.

Yeah, it looks like it's in a beautiful area.

It is. It's right in the middle of— right in the middle of the farmland out there.

Yeah.

And then just 10 minutes away from a little town that has a store in it, that kind of thing.

So is it fairly close to the lake as well?

Not that one in particular. It's more like Ontario. It's further north. Lake Ontario is probably About 25 minutes away.

Well, that's not too bad, though.

Not too bad. Yeah, I should— I should— I'm like 10 minutes from Three Lakes over here.

Right. Yeah.

Yeah.

So, but yeah, so it's— but I'm not sure about, like, public beaches. They kind of think maybe if one were to do anything, they'd probably have to drive a little further out. So, yeah. Yeah.

Okay. Curious. So with New York and some of the restrictions for— maybe it's not as Landlord-friendly. I— we noticed that it did have a tenant's right of refusal. How does that play out in this? Like, we need to get a— they would need to approve the sale and who they're selling to. And what does that mean exactly?

Pretty much, it was a big question. So, right of first refusal for the tenants, usually what happens there is Once they— once the owner gets an offer, he says he writes a letter, or his attorney writes a letter to the tenants, and they have to sign off to see if they were interested in buying the park at that particular price that has been offered in those particular terms. So we give them— by law, they gotta be given 60 days to Say yes, they want to buy the park, or no, they don't want to buy the park. And then after that, it's released to the buyer. Then there's no interest of anybody in the park wanting to buy it.

Okay.

So far, nobody knows. No one knows that he's selling it at this point, but he's That's, that's just the new— well, not new, it's maybe since August of 2024 now, um, that, that has to be, uh, put out there.

Oh, that's a new New York—

New New York, yeah.

Law, whatever.

Okay.

Um, how long has he had this? Has he had it listed before? It looks like he changed some of his Like his offering for seller financing? Was that because he wasn't getting any bites on it at the price he had it listed at?

Well, right. What we did is it's been about 30 days and we had it at $295,000 with the equipment. And I said, Pat, really, honestly, we can't— the banks aren't going to finance your equipment. So I said, look, let's just You take care of your equipment, I'll just take care of the property. So that's why we lowered it to, um, $280,000, because he's— I said, just have him take care of the equipment that's on site separate in a separate sale.

Okay, what equipment is on site?

So the equipment is a zero-turn, um, John Deere, and then a 4-wheel drive loader, and each of them have their own separate shed. Got it.

Yeah.

Where's the property manager located at? Do they live in the park, or—

Yeah, they do live in the park. That's a great question. Also, yeah, they live in the park. And so what he, the owner, has done is tacked on like $25 per month for the property manager to mow the lawn and plow. And so that's all year long. $25 a month. So that's where the property manager lives on site. He gives— Pat gives him like $100 a month deduction.

And that's all he gets paid then?

Yep.

Okay, so out of the 8 units then, uh, do you have— does he have kind of a pro forma where he can put out all of his expenses and Uh, the rent.

Yeah, he said we have— we had to read the— be, um, we have to update that because he just changed the price. But he does have a pro forma, uh, profit and loss statement. Yeah, like an 8, uh, 8-pod.

Did he already update the price on the tenants to $400 a month?

He's in the— he says he did give him the notice this month, and it's supposed to start in October. And I asked him, did he get any pushback? And he says, no, he hasn't. So that's the way we left it. I think he's got it. I think the listing says $400,000, but then he changed his mind to $395,000.

Oh, so he's notified them at a $395,000 price point, not at $400,000?

Correct. Yes.

Was that because they were pushing back at $400,000?

He just changed his mind. Just another $20 instead of $25. I, you know, I, I really don't know the rationale behind that. Initially, he did say $400, and that's why it ended up still lingering in the advertising. So I'm sorry about that.

No worries.

Yeah.

Okay. So what about expansion? Could we get additional homes on the site? Is there infrastructure to support that?

Yeah, it's a great question. I'm getting— practically everyone is asking me that question. Yeah, it's just— there's just one pad site left, and it's— I don't think my guys has not done anything with it in years. So it's The pad is— would need to be replaced. It can certainly share the septic system that the other home is on, mobile home is on, and that is at parcel number 2. It's adjoining parcel number 1, which is over an acre of land.

So how many acres per home then?

So, gosh, I don't know. It's 4. 0.25 acres. I guess divide that up, you know, by 8, probably like a half an acre. But they're situated such that they're lined up on their own private driveway roadway.

Mm-hmm.

There's like a little bit of an eyebrow of a roadway, and then there's some leftover land just across the street in the woods. But the wood is probably not a great place to put another home on because it's a hill. And it's a wooded hill. Yeah, a little bit slightly, slight elevation there.

And then how many acres would encompass that? That's the second parcel, or that's the little section? Across the street.

Yeah, it's just kind of a funny— oh my gosh, I can't remember. I have a tax map on that. I can send it to you. It's like 3 parcels, or 2 parcels, but 3 locations. So you've got parcel 1 and 2 that are adjoining, and I can send you the tax map.

Okay.

And then the parcel It's part of the one parcel is across the street, and it's carved out portion of the woods across the street.

But it's not usable land.

I don't think so. I haven't really— it's very wooded. Okay, you know, unless you'd want to clear the woods and monkey around with all that. It's actually kind of nice to have the woods across the street. You know, just walk around that if you want.

Yeah, kind of a little privacy maybe for them too. What about an opportunity since he is surrounded, it looks like, by farms? Are any of those landowners interested in maybe selling a little bit of their land?

Oh, gosh, I've never thought of that. That's a great question. Um, we haven't really explored that. Possibility?

No.

Okay, I know there's another mobile home on another parcel close to it, but I— gosh, I don't even know.

But that's maybe a single.

Maybe a single, right? Because the parcel number 1 is designated as a park.

Yeah.

Okay. Yeah.

Okay, we had a couple of other questions. How long have the tenants that are there now been there? And what kind of a lease do they have?

Yeah, so that's— they just have— they've been there for a year or 2 or more. I haven't really gotten— I'm supposed to be getting a rent roll here, and then over the next few days, and I can ask the landlord how long they have been there. It's been— it's a variety, so I'd have to get back to you on that one.

Yeah, I was just curious kind of like what the turnover was, if he's had any issue with vacancies.

Yeah, yeah, I think he has issue with one. Okay, presently. Yep. And he's in the process of getting that one removed. But other than that, everybody's been fine. And as far as a lease, he really doesn't have a lease. This is really month-to-month oral lease. Yeah, but it does have park rules and regulations.

Okay, now the park itself looks like it's in really decent shape. Uh, the home— are the homes themselves— I know they're owner-owned. Are they also well maintained?

Yeah, they're well maintained. They're fair. They're not newer, but they're fair condition.

Okay.

Mm-hmm.

Guys, did you have anything you wanted to ask on that? I know we also wanted to know— I wanted to know, like, if you could include the taxes. How have the taxes been there? Are they— have they gone up? And then also, are there any major capital expenses that would be coming, like Anything with the road septic drainage. Doesn't look like there's much there other than 2 sheds for the equipment and the mobile homes.

Yeah, there's just like the 3 sheds for each one, for each piece of equipment. And there is— everybody has their own shed. Tenants have their own shed, and some people are keeping their boats on there. I can get the taxes to you. I'll have to— I have to rework the, um, the APOD just to give you an update on, on like the new price and all of that. But I can, I can get that worked out, and it also has the taxes there for you as well. I think they're like around $8,000. They do have it, um, appraised or, you know, assessed at $320,000. Okay.

Okay.

Okay.

I was just curious then if his if his his yearly income off of those off the park included all of that his taxes and insurance that he pays.

Oh, I see what you're saying. So the the yeah, I do have it worked out in the in the A pod, but he's got like a net operating income of about twenty four thousand.

Yeah.

$600 or something. And in that expenses expense sheet, there is taxes, insurance, the snow and the lawn, and a couple of other things that are in there as well.

Okay.

But once I get that together, I can send that off to you so you'll have it. It just, it's just such a new change. Yeah, you know that I haven't been able to catch up.

Okay, perfect.

Yeah.

Group solar financing was the other thing I wanted to learn about.

Oh yeah. Did you, did you hear the question, Allison?

No, I'm sorry. What was that?

What are the, what are the terms that the seller is considering for the financing?

Oh, yeah, good question. Yes. So I— he is— I did talk to him earlier about that. He said 20 to 25% down, shorter term, because he is an older gentleman, 3 to 5 years. Last we spoke, 6%. Yeah, balloon in 3 to 5 years, 6% of the financing. And I cannot recall if it's 25 or 30 years amortization. Okay.

Do you think he'd be flexible?

That sounds good.

Possibly.

I mean, you never know, you know, until an actual— we haven't had any letter of intents come in yet. So far it has just been people just asking a lot of questions. Yeah. Since the price has been changed over the past 24 hours, I've gotten a lot of calls.

Okay.

Yeah, reach out.

What about the, just in general, the housing market around there? I mean, do you see, and as far as like opportunities for remote work, or, you know, there's a little town you said close by. But what, you know, what do we have like for— I looked at the average income around there, but I'm just curious, do we have mostly farmers? What are we— who's our tenant base, I guess, is what I'm wanting to know.

That's a great question. We do have a lot of farmers. A lot of people do work for the neighboring hospitals. There's one out of Rochester, which is probably about an hour away, one out of Syracuse. I mean, the income is okay. The housing market is needed because of the— it's like that all over the United States. Everyone needs a home.

Yeah.

And the rents, even if he's got it raised to $395, it's well below the average rental rate. They usually get about $450 out that way.

Okay. Yeah, we were trying to pull up some neighboring parks, and there really wasn't anything close for us to look at comps.

So, yeah, so typically on the average in Wayne County, it's $450,000. Okay. So it's, it's got room to, room to grow. Um, mobile home parks, again, we've got like another, uh, regulation in New York State. They only allow a 3% Increase.

Oh.

However, what I have said to people is there's a lot of opportunity to add on. I would add on extra for the mowing fee. I would add on, I get $5, $10, add on extra for the private driveway maintenance fee, boat storage or extra storage. I'd tack that on to pull the rents. Up higher than the 3% of the base rent, if that makes sense. Yeah, okay.

Yeah, okay. I think that— I think that's all I have until we can kind of see the, the, uh, um, the P&L statement, you know. Okay, uh, and then we'll kind of mull over all of these answers and see if we have anything else that we want to shoot over at you and We'll go from there.

Yeah, sounds like a plan.

Thanks so much, Allison.

Oh, you're welcome. Thanks for connecting. Okay, you too. Bye-bye.

That was good.

Yeah, I mean, I don't see it being as like, oh, slam dunk, yeah, that's definitely something I'd want to invest in. It just doesn't seem like there's Maybe a lot of potential to expand it.

Yeah, there's not a lot of upside.

No, I don't think so. And I, you know, her comment about charging them extra for— I mean, why wouldn't she just increase the rent of the rent? You know, as opposed to trying to—

because if you can only increase the rent by 3%, that's the loophole that she found. That's what she's trying to say.

Yep.

Okay.

Well, that was fun, though. This is fun, just learning how— so New York just passed that in 2024. How interesting that the tenants get to choose whether or not they approve the sale. That's kind of a pain as well because they have 60 days to make that decision.

It's called the first right of refusal. And what it does is in New York, something that's very popular is you have Um, you'll have a co-op. It's called a co-op where there'll be all the tenants in the building will then decide to buy the building. And so every tenant's responsible for getting $50,000 or $100,000 together to buy the building, and they buy it as a co-op. And then that co-op is basically structured and A lot of deals get done that way in New York.

A lot.

It's, it's, it's ancient. It goes back to the 1800s.

But I've actually heard of that, Tommy, just even in rural communities trying to get where they create kind of like a co-op or an investor group and they go in and within the defined within the community and then they buy a building and renovate it and decide what's going to happen to it, you know, so they have ownership of it. But okay. What are you guys' thoughts overall on it then?

Um, I mean, again, it, it's—

Well, the numbers need to be redone because again, they base the NOI and everything off of $400 a month, and she just admitted that they're not that. And he vacillated and went back and forth and then just did a, um, a rental increase, which means like, when, when can the next rental increase? So the numbers need to be redone is what it is.

I freaking hate when people lie on their numbers like that. It's like, okay, now we can't trust anything you say.

100%.

Yeah. Yeah. So, yeah, it's the trust and verify. So now we just become really good detectives and dig into all the numbers and, you know, go from there.

I was curious when she said, oh yeah, the neighboring parks are charging $4.50, but I don't really see anything around there. There's not a legitimate comp anyway.

Yeah, there was one park in that county, it said. And again, they were only at— what was it? $20,000. So right now they base the numbers off of $400 a square foot or $400 a month.

Sorry.

Which is $35,000 per pad. But the other— there's only one other park that has 6 pads in that county, and they're only at $28,000 per pad.

Mm-hmm.

So again, it's— and it's interesting because that one says that there is expansion potential, where this one is saying no expansion potential. So it's, um, again, going back to Tommy, if we were buying this at a cap rate When let's actually do that for a second because I thought this was really, really educational.

Hold on.

I think this is this would be really, really valuable for everybody to understand.

Yeah.

Okay. So if you look at these parks here, you can see the different cap rates. Now these two parks are the only two that are actually in this county.

The other first of all, first of all, cap rates on any kind of any kind of Any kind of mobile home park cap rate starts at 10, right? Everyone—

this is already at 7.8.

They have no clue what the hell they're talking about.

So, right, so that right there, again, clueless. Um, so let's, let's just talk to— so Tommy, let's do a little class on cap rates and like where this park should be actually priced.

Yeah, we can do that real quick.

Okay, ready?

Good. So the, the cap rate list showing here for the best current comps, uh, it shows the subject property in, uh, Lyons is, uh, set up as a, uh, at a 7.8 or an 8.8, whereas the median is somewhere around 11. So Give us, give us the breakdown on this property based on it being a more, uh, correct cap rate of, of, uh, 10.5 to 11.5 instead of the 7.8 to 8.8.

And we found out that the rents—

Oh, don't— like, again, you can't— okay, something that's going on with AI right now is that the more you try to feed it, the crazier it's getting. Okay, hallucinates, hallucinates like crazy now. So very like spoon feed, spoon feed, spoon feed, spoon feed.

My son's theory with that is that if we underwrite this park at a 10.5%, 11.5% cap rate instead of— important clarification, I would not call 11% a proven market median from just a handful of listings. The strongest nearby small park comp we found Is Red Creek at 10.65%, while current New York listings also include parks around 10.55% and 11.29%. Meanwhile, the larger Palmyra Park is listed at 8.49%. So 10.5%, 11.5% is a reasonable stress test buyer required cap range for a small park like this, but not a verified closed sale median.

So that's how to evaluate a park. And there's the different— so the other piece is we were on a completely separate property. We were looking at, um, where it should actually be, and, and Deal Hunter has built in there what the cap rate should be for that particular type of property and the, um, uh, the condition of the property and everything as well. So that's the other piece that you could actually be using this for with Deal Hunter is whatever cap rate they have Are— is that property currently at the— are they evaluating it at the correct cap rate? Because that's going to tell you a ton, right?

And if they advertise— if they advertise a cap rate like that, that's when I challenge, how did they come up with the cap rate? Where, like, that's my question. What did you use to calculate this? Because a cap rate just isn't based on, like, how fast you can get your return.

Yeah.

Um, it's based on the, the, the, the actual property itself too, you know. Um, Class A properties are rated between 5 and 6, uh, cap rate. Class C properties are closer to 8 and 9. This is a Class D or worse. It's not even a Class D. So this particular property at best is, is a 10+, 10.5+. Uh, cap rate just like the rest of them. And so that's where they need to run the value.

Yeah.

Can you guys explain this for me? The cap rate, for some reason I have a hard time like understanding. Is it a higher cap rate means more profit?

You're the buyer. Higher cap rate, lower price, higher profit. So let's do—

so like 11.5 at the $189,000 would be the best opportunity?

Yeah, for us, but not for him, right?

Yes.

Put a— put a dictate to this, please.

Come on.

Eli 10, cap rate, and include images. And change it to cap rate.

Don't you love? It's like, was very clear to me what you said.

Yeah.

What is that word anyway? It came up with capriche. It's not even a real word.

Capriche.

It's Tommy's accent.

My, my son, my 19-year-old, he's like, here's his theory. He's like, Mom, it learns By the people that feed it information, and he said, "You've just got a bunch of stupid people out there feeding it information, so it's just getting dumber and dumber." Scary.

Well, and that's why that's why some people get frustrated and give up is because like oh, it's dumb. No, you're dumb. So leave it alone. Don't touch it. But you're right. Like I said, I've told people when I started on ChatGPT, it had no idea what anything before 1999 was.

Yeah.

Like I had to teach it about the '80s. I had to teach it about the '70s. All kinds of stuff.

So this is nice.

Expand that, please. But. Good. Maybe, Catherine. Yes, expand the image, please.

Sorry, somebody's doing a presentation with Deal Hunter in their office right now to a bunch of people.

Oh, very cool.

I literally just got a text message. Somebody is sitting in their office with a room full of people with a giant screen, and they're doing Deal Hunter up there for the whole conference.

That's awesome.

What?

Yeah.

We're not even there.

And where? Who and where? Like, get pictures. I need proof.

I've got pictures.

That's royalties.

Hello.

I was like, what is going on? Where's my royalties, please?

Yeah.

Right there.

There's the, the conference room.

You can't hold it in front of you. Yeah. That's cool.

Anyway, I'll show you after.

All right, so cap rate 101. Um, what is a cap rate? The cap rate is the annual net operating income divided by the purchase price. And what that just— all that comes out to is you have your income and your purchase price, and you come up with a cap rate that way. So, uh, you know, by, by dividing the, the the income by the price they want to get, that's how they're ending up with a 7.8 cap rate. Okay, but to understand a cap rate, a high cap rate equals potential for return, right?

Mhm.

A low cap rate, lower immediate return, usually more stable and higher priced. Okay, but with more risk and lower price That's why you need a higher cap rate. So the cap rate varies on location, property type, size, and risk. Risk is the biggest component to that.

Oh, see? Yeah.

So how would you evaluate—

how do they evaluate the risk?

A Class A property with 100% occupancy gets a 5% cap rate because it is super easy. To know you're going to make money there, whereas it's a guaranteed basically. Whereas you have a mobile home park in the middle of Podunk nowhere, next door to Methuselah's house, and you have no idea what it's going to cost to fix anything if it breaks. And and half the people that live there work for it, and you got like again like all these. red flags, the more red flags, the, the higher the cap rate, right? So every time you add a red flag, you add a point, right? And so you went from a 5 to a 10 because there's 5 massive red flags. Yeah.

So this is you as an investor, how you could actually protect yourself and understand, like, use Deal Hunter to understand what cap rate the property should be at versus what it is at. Like, you know, it's good to want, that's awesome. And then there's the reality of like, here's where it actually should be. And just to be clear, most realtors are clueless when it comes to this actual valuation. And they don't even understand like that properties have a cap rate based on like the actual property, um, it was an A class, B class, C class, and there's an actual rating system, right? And I know this because I have an RV park that unfortunately, um, my partners have done a terrible job choosing residential realtors to sell this who are freaking clueless through this entire process. So again, part of my conditions of satisfaction is How many actual parks have you sold yourself? Or how many parks have you, if you have one representing you, how many parks have you assisted investors in actually buying so that they're negotiating properly on your behalf as well?

Right?

Again, not all realtors, just because they have a realtor's license, doesn't mean that they actually know what the hell they're talking about. So again, that's a little bit of a rant. me, and it was clear she has no idea, right? Like, she's like, well, he wants that. Like, it's good to want, that's awesome. Now let's actually do the economics around this because it's a business, it's not a bunch of feelings.

Yes, and he bought this in the '90s. Exactly. I'm curious.

And he hasn't done any— he hasn't done any work to it since then.

Probably no.

I mean, other than just keeping it mowed and looking, that's it. I mean, that's it. So, and that's why I was curious if these are, if these are tenant-owned homes and she's saying, well, they've only been there maybe a year, does that mean they've just recently moved their homes on?

No.

Or do they buy the home when they move in? So they have maybe potentially a mortgage on their home.

No, they'll get chattel loans on those, but typically, typically a chattel loan Um, you can check to see if they have chattel loans, but typically these are, these are owner financed from one to the next.

Mm-hmm.

You know what I mean? So finding out like, yeah, if they've only been there a couple years, these are not— they didn't move them in and drop them off.

No.

That's not what they did. No, they just bought them a couple years ago from somebody else.

Yeah.

You know.

Interesting. Very good.

Yeah.

Thanks, guys. We'll see what she comes back with. Just out of curiosity, I want to see.

Yeah.

Maybe it'd be an opportunity to educate her too, Catherine, on. Oh, good luck with that.

Most realtors aren't interested in being educated.

No.

Do you see why it says real estate agents needed, not wanted? Because I don't want them. I need, I need real estate agents to show up to this podcast and want to learn something. Yeah, but the ones that want to come in here and not learn shit, that's, that's right there. Yeah, that's what I deal with.

Yeah.

Oh, it's a nightmare.

Great, guys.

Thank you. Super excited.

Glad.

Yeah, I'm glad that you brought this. This was good. I think this was valuable. So Ashley and Luke, did you— was this valuable? Did you guys learn anything? Maybe they're not there. Maybe it's just their AI.

Yeah, I'd say so.

And I think that, you know, again, hearing like these are probably all new, like words and stuff. So again, I remember the first time I heard cap rate, I'm like, what the hell is that? And understanding that it's, it's reversed, it's flipped. Um, that was a whole like mind bend.

Um, yeah, because, uh, you know, when they're talking about Class A properties, if you're thinking about something, you know, downtown fancy, like, you know, newly built apartments, and the cap rate is maybe 3%, and then I'm thinking 80%, does that mean I don't really have very— a very good profit opportunity out of those?

It's the opposite, you know, it means it's a killer deal.

Oh, lower cap rate, higher price, better options.

Yeah.

Okay, so again, again, you want to verify that it's a valuable 5 or 6 cap. Yeah, right, because if it's got value add, it needs to be at an 8 or 9 because it's got risk. The more flags, the more, the more, the more, you know, the more red flags, the more Things you have to tack on to it for sure.

Well, and one more thing I just want to add. Tommy pointed out, it's that when you understand what the cap rate should be, then, and you're negotiating basing on a cap rate, now when they come back and they have the actual numbers and you do an audit on the numbers, you go, hold on, if your cap rate is this and your numbers are this, then your price actually needs to be this. Like, you're using all the numbers To your benefit.

Yeah.

So that's a whole other thing anyway.

Well, one real quick question just on feedback on my conversation with her. How did the, the questions I was asking her, my, um, my tone, how was all of that?

Yeah, no, delivery-wise was great. Like, I piss people off. You— I only make it about 3 minutes into that phone call before they hang up on me. So you did excellent as far as I'm concerned. Like, Ashley probably doesn't have the same problem I do, but Ashley, are you in here? What do you think?

She's here.

She might be dealing with her kiddos, maybe.

Yeah, but yeah, that's what really what it came down to. It's like, yeah, I, I don't make it very far with people. I have this allergy, allergic reaction. I, um, I break out in sarcasm. Um, and insults, unfortunately. I don't know, um, when I have to talk to people that aren't using all their brain cells.

No. Funny. Excellent, guys. Thank you then.

Yeah, that was awesome. So I, I look forward to seeing what she sends you.

Absolutely.

Yeah, for sure.

Awesome.

Okay, everyone, uh, Tommy, do you want to wrap it up?

Yeah, I'm gonna, uh, pray over everyone today. Heavenly Father, we thank you for the blessing of this day and the blessing of this life. We ask that you continue to bless and guide us and, and give us an opportunity to go out and do your will. And Lord, protect all those that, that don't have the brain cells. Amen.

Amen.