Tuesday, February 22, 2011

Environment Due Diligence: Part Two

You have a Phase I ESA report and it indicates possible contamination. What's next?

It depends on the situation. Is the intended use of the subject property residential or commercial where "sensitive receptors" may be present (e.g., children, elderly or infirm) or commercial or industrial? Are you the buyer or seller? There are differences in clean-up regulations and site "closure" standards for different types and uses of sites. For instance, the standards for a pre-school playground are more stringent than a paved-over industrial site. Working with a qualified and experienced consultant can answer these questions and help solve the problems for you.

Another answer to "What's next?" depends on the type and degree of the environmental impact on the property, the value and amount of equity one has in it and the intended use for the property by the targeted buyer. In most states, the buyer and seller can come to an agreement and the buyer can purchase an "impacted" property. In other states, the property transfer is "locked" until the clean-up is complete.

Also, the findings in an assessment report will provide information allowing lending institutions to continue the loan approval process, require additional information or even, in rare cases, pass on the loan.

What are my options if I get a Phase I ESA that indicates that there are "environmental conditions"?

It is important to understand that, depending on historical and current local land use, environmental site assessments typically are not "deal killers". If assessment findings indicate regulatory deficiencies or environmental conditions, often some type of routine or straightforward corrective action is all that is necessary. The discussion below addresses more serious findings of environmental conditions.

If you are a potential buyer, there are several options if you receive a "negative" assessment, including:

• Walk away. This option is open to anyone who has not entered into an unconditional contractual obligation to buy. To keep this option open, you must make any offer conditional upon receipt of an ESA report with no adverse findings.
• Have a Phase II ESA performed. This option offers the buyer much more leverage. Once can confidently make an offer factoring in the cost of site remediation.
• Buy the property. If you are satisfied with the ESA report provided by the seller and convinced that the property is worth the asking price (including the environmental issues reported), you can go with this option. Extreme caution should be exercised in this case. Consultation with environmental professionals is strongly advised before any action is taken.


If you are a potential seller, you must deal with a negative assessment with several options, including:

• Do nothing. Although Federal and state laws require you to disclose known environmental problems with your site to prospective buyers, you may decide not to offer the property for sale in its present condition. However, you may be contacted by a buyer willing to purchase the site "as is". Do not proceed without the advice of counsel, as you may be legally required to take further action. The other side of the "do nothing" option simply is to do nothing at all. This may inevitably lead to escalating costs and serious future problems. This option is the primary reason for the existence of "brownfields"; defined by the U.S. EPA as "abandoned, idled or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination."
• Have a full Phase II ESA performed. Depending on the extent of the indicated liability, it may be prudent to go forward with a full Phase II investigation. With the results of the Phase II in hand, you can make a more confident estimate of the net value of the property.
• Have both a full Phase II ESA and Phase III Investigation and Remediation performed. Depending on the value of the property in contaminated condition versus its remediated value, this option may make sound business sense.
• In some states, there are options to avoid liability exposure for contamination which are generally based on the Phase I/II approach outlined herein.

Mr. VerSluis is a 20-year veteran of the environmental industry, and is a Registered Environmental Property Assessor (REPA), a Certified Environmental Strategist (eS), an NSF Certified On-Site Wastewater System Inspector, a NEHA Certified On-Site Wastewater System Installer, and is the Vice President of the Michigan On-Site Wastewater Recyclers Association. Mr. VerSluis is a frequent speaker and advisor on behalf of MHPS.com & RVPS.com clients, specializing in MH & RV communities nationwide.

Friday, February 11, 2011

New FACEBOOK Page!

Come check out our new Facebook page!!!

We can be found under: The Niche Investment Network

See you there!

Friday, February 4, 2011

Slowing things Down is Key in Mobile Home Park Management

When I first got in the mobile home park business, it seemed like everything came at me always in a sense of emergency. There was no time to act - only react. There were constant threats that if I did not make a decision right then and there the consequences might be crushing. And for about a year or so, I believed every word of it, and I cringed every time the phone rang, because I knew that, even if it was Christmas Eve at 2am, I'd have to run down to the park to solve the latest crisis.

Then it suddenly hit me - I was being scammed. By everyone. The biggest threat to mobile home park management was exactly what I was engaging in, working from a position of speed and terror, and not from one of calm and control. Here's how it happens, and how you can correct it.

Tenants

Mobile home park tenants are very good at using "the system" to their advantage. They know how to manipulate people. These are essential survival skills for most park residents, whether in the park or in prison. They have learned from experience that their best chance of getting what they want is to railroad people into making snap, and bad, decisions, with little information to go by. In their world, everything is a rush and if they don't get what they want right now, they're going to sue you or call the authorities.

I remember getting calls from them in the middle of the night demanding that I be at their home at 7 am to fix their doorknob, or air-conditioning (this is back when I still had rentals) and, if not, they were going to turn me into the authorities. Clearly, this could not go on forever. I was losing my sanity, and the park was losing money.

So one day I just put the brakes on. I turned off my cell phone at 10pm. I did not rush to call tenants back. I did not freak out when they threatened me. And you know what? Nothing happened. I didn't get sued. I didn't wake up to find swarming inspectors. None of the threats came to be.

Now, you can't just hide from your tenants. The first thing you have to do, before you can slow things down, is know the laws. You need to become an expert at landlord/tenant law. And you have to make sure that your park is in decent order and can withstand the scrutiny of an inspection.

The next thing is to let all the calls (unless you recognize the caller I.D.) go to voicemail. This sends a message to tenants that you just don't care enough to be there for them. They need to grow up and take care of themselves. And it insulates you from the screaming threats that most calls include.

When a tenant has a problem, let them know that you'll get to it when you can. You are not making any special exceptions for them. Think like a big company - do you think that your local Saturn dealer is going to drive all night to make your warranty repair? No. They may offer concierge service at the Ritz, but you'll have to charge the tenants $300 per night if they want it.

Vendors

Every repairman, with a few exceptions, that sets foot on your park is wanting to rip you off. Some are very moral people, but darn it, they need cash to cover their bills. Never think anything to the contrary. Give them the same trust as the allies would a German prisoner in WWII. Every time a plumber tells you "you need to re-pipe the entire sewer system starting right now!" tell them you'll have to get multiple opinions and bids, and then you'll get back to them on that breakthrough concept [I might add that I have never re-piped an entire utility system, although I've been told by contractors that it was essential about 100 times].

And even when you have a bid, and are certain the work needs to be done, don't get in a hurry. Look at your budget. Can you afford it right now? I've found that only master-metered gas and electric normally produces life-or-death decision making. The same would be true for failing private water and sewer systems. But the point is, be calm and in control - never be rushed into a bad decision. Look at the pilot who landed the plane in the Hudson River. He never got anxious, he stayed level-headed throughout. That's always your best mindset for success.

Conclusion

If you are already past the rushing phase, I'm proud of you. If you are not, then turn over a new leaf that you are getting out of the stress business. Everything can wait a day. There's no reason to be in a hurry. If you can get those pressures behind you, you'll be a lot happier, live a lot longer, and have a more profitable park.

Thursday, February 3, 2011

Slow Things Down!

When I first got in the mobile home park business, it seemed like everything came at me always in a sense of emergency. There was no time to act - only react. There were constant threats that if I did not make a decision right then and there the consequences might be crushing. And for about a year or so, I believed every word of it, and I cringed every time the phone rang, because I knew that, even if it was Christmas Eve at 2am, I'd have to run down to the park to solve the latest crisis.

Then it suddenly hit me - I was being scammed. By everyone. The biggest threat to mobile home park management was exactly what I was engaging in, working from a position of speed and terror, and not from one of calm and control. Here's how it happens, and how you can correct it.

Tenants

Mobile home park tenants are very good at using "the system" to their advantage. They know how to manipulate people. These are essential survival skills for most park residents, whether in the park or in prison. They have learned from experience that their best chance of getting what they want is to railroad people into making snap, and bad, decisions, with little information to go by. In their world, everything is a rush and if they don't get what they want right now, they're going to sue you or call the authorities.

I remember getting calls from them in the middle of the night demanding that I be at their home at 7 am to fix their doorknob, or air-conditioning (this is back when I still had rentals) and, if not, they were going to turn me into the authorities. Clearly, this could not go on forever. I was losing my sanity, and the park was losing money.

So one day I just put the brakes on. I turned off my cell phone at 10pm. I did not rush to call tenants back. I did not freak out when they threatened me. And you know what? Nothing happened. I didn't get sued. I didn't wake up to find swarming inspectors. None of the threats came to be.

Now, you can't just hide from your tenants. The first thing you have to do, before you can slow things down, is know the laws. You need to become an expert at landlord/tenant law. And you have to make sure that your park is in decent order and can withstand the scrutiny of an inspection.

The next thing is to let all the calls (unless you recognize the caller I.D.) go to voicemail. This sends a message to tenants that you just don't care enough to be there for them. They need to grow up and take care of themselves. And it insulates you from the screaming threats that most calls include.

When a tenant has a problem, let them know that you'll get to it when you can. You are not making any special exceptions for them. Think like a big company - do you think that your local Saturn dealer is going to drive all night to make your warranty repair? No. They may offer concierge service at the Ritz, but you'll have to charge the tenants $300 per night if they want it.

Vendors

Every repairman, with a few exceptions, that sets foot on your park is wanting to rip you off. Some are very moral people, but darn it, they need cash to cover their bills. Never think anything to the contrary. Give them the same trust as the allies would a German prisoner in WWII. Every time a plumber tells you "you need to re-pipe the entire sewer system starting right now!" tell them you'll have to get multiple opinions and bids, and then you'll get back to them on that breakthrough concept [I might add that I have never re-piped an entire utility system, although I've been told by contractors that it was essential about 100 times].

And even when you have a bid, and are certain the work needs to be done, don't get in a hurry. Look at your budget. Can you afford it right now? I've found that only master-metered gas and electric normally produces life-or-death decision making. The same would be true for failing private water and sewer systems. But the point is, be calm and in control - never be rushed into a bad decision. Look at the pilot who landed the plane in the Hudson River. He never got anxious, he stayed level-headed throughout. That's always your best mindset for success.

Conclusion

If you are already past the rushing phase, I'm proud of you. If you are not, then turn over a new leaf that you are getting out of the stress business. Everything can wait a day. There's no reason to be in a hurry. If you can get those pressures behind you, you'll be a lot happier, live a lot longer, and have a more profitable park.

Wednesday, February 2, 2011

Pick A Good, Used Home for Your Park

Many mobile home park owners are faced with taking matters into their own hands to fill vacant lots. Sure, dealers will tell you that they can “fill you up”, but in reality, most dealers these days are lucky to put one or two homes into a park in any given year. If you wait on dealers to fill your lots, you’ll be like a fifty year-old starlet waiting by the phone for that big offer to come in – and it never does.

So if you are faced with choosing older homes to bring in, rehabilitate and then sell in your park, it is critical to be able to spot a winner from a lemon. And often times, your initial walk-up impression can be very misleading. Here’s how to size up a winning used mobile home from a total loser:

Metal Exterior

The best construction of a home, as a park owner, is “metal on metal”, which means metal exterior with a metal roof. Many modern home buyers prefer imitation wood and vinyl, but that should be their preference, not yours. A metal home is a real workhorse that needs very little TLC on the exterior. As long as moisture does not get behind the metal wall to rot the wood it is attached to, these homes can last forever. And you often can simply wash them with bleach as opposed to painting them, to bring back that “new” look.

Straight Body

Under any mobile home is a frame. This metal chassis has a lot of force on it, both from the home but also any accidents in moving it or improper set-up in the field. Any home that has a “bow” in it should be avoided. Such homes are prone to break-apart when transported, which will not only destroy the home but create massive liability for you. And the home should be straight looking down the walls, as well. Just like a car, you do not want any home that has a damaged frame.

No Signs of Water Intrusion in the Ceiling

If you walk into a home and the ceiling is covered in evidence of water intrusion, in the form of stains, then you are in trouble. Moisture in a mobile home is like cancer in a person. It can sometimes be controlled, but it is very costly and there are no guarantees. Mobile home floors cannot tolerate much moisture, and there is also the danger of black mold and other items that can cause you liability.

Solid Floors

This goes with the water instruction theme. When you get moisture on a mobile home floor, especially particle board, it becomes so soft that a person will fall through it. If you go in a home and it has very “soft” floors, you know it has had water issues. Those are the homes you avoid. Be sure and check nearest the walls – that’s where most moisture damage will be found.

Original Breaker Panel

Mobile homes since about 1976 have been HUD code – which means that HUD inspects their manufacture. It is illegal to alter a HUD code home. Yet many mobile home owners will often do the repairs themselves, including completely re-wiring a home. This is definitely not a home you want to buy. Not only has it violated HUD, it has a great chance of catching on fire, and you might be held liable. If you see any signs of tampering with the wiring, avoid the home at all cost.

No Gray or Black Plastic Pipe Plumbing

This kind of pipe is called polybutylene, and was subject to a $1.1 billion class action settlement in 1995. Why? Because this stuff leaks like crazy. It was a terrible idea that created a host of plumbing issues in mobile homes that are plumbed with it. If you see a home that has it, it is guaranteed that you’ll have to replace it – and that can be very expensive. It also suggests there are moisture issues, and those are not acceptable.

A Large Master Bedroom

Of all the floor plan issues in a mobile home, the size of the master bedroom is the most important. Mobile home buyers want a bedroom that will hold a king size bed – and have room to spare around it. Modern homes have the whole end of the mobile home as the master bedroom, so it is always 14’, 16’ or 18’ wide. But many older homes have tiny master bedrooms that will hardly hold a queen size bed. Nothing kills a sale faster than a small master bedroom. Their kids’ bedrooms can be smaller than a closet, but they want theirs to be big.

Conclusion

Buying a used mobile home can be scary stuff. The last thing you want to do is buy an old used mobile home, and then pour so much into fixing it up that you could have bought a new one. And cosmetically, they may look awful to begin with, often with windows and doors missing, and junk everywhere. But you need to focus on the actual construction and design of that home to judge it fairly. A good used home can fill a lot and make many times its cost back just in lot value to the park. A bad home can cost a fortune, or go straight to the dump before it even hits your park. So put a little diligence in on the front end, and make sure all your homes are winners. Save your lemons for lemonade to celebrate buying a good mobile home.

Tuesday, February 1, 2011

Simple Ways to Make Your Park Bilingual

A growing number of mobile home parks have an ever-increasing number of Hispanic residents. This has many park owners worried that they cannot adequately attend to their resident’s needs due to their inability to speak Spanish. However, modern technology has made making your park “bilingual” easier than ever.

Translation Software

A modern marvel, translation software allows you to type a letter in English and have the computer print it in Spanish. The computer automatically makes the translation. So you can write a notice to tenants to let their faucets drip in the winter in English, and you can automatically make the flip side of the notice in Spanish. Without learning any vocabulary, or how to conjugate a verb, you can effectively be fluent in Spanish – at least as far as writing is concerned.

And these translation software packages only cost about $100.

Cell-Phone Translations

Do you know anyone who speaks Spanish, who also owns a cell phone? Then you are as good as fluent. When a resident wants to talk to you, but does not speak English, you simply call the person who is fluent on their cell phone, and hand the phone to the customer. They tell your “translator” what they want, and then they hand the phone back to you and he translates it for you. You’ll find that this one arrangement will permanently end your concerns about communication.

And since you have such incredible efficiency of time, you can pay this “translator” a very small amount per month, and they still think it’s a win/win.

Conclusion

There is no reason to go back to junior college to brush up on foreign language, or listen to CDs in the car. Modern technology gives you the freedom to be fully bilingual without memorizing a word or learning a phrase. And it doesn’t cost much to have that capability.