In this episode, Senior Advisor Craig Morby discusses how multifamily and mobile home park transactions have changed over the course of the last few years. Craig also goes into how long-term relationships with clients can lead to deals down the road.
Below is an excerpt from the interview. Listen above for the full podcast.
How did you get started in commercial real estate? I started doing residential when I first got my license in 2006 and it was because I had another business. It was more of a part time thing before I sort of worked my way into it. I was doing that, but I fell into commercial real estate. Not literally, but definitely figuratively I fell into commercial, in a good way. I'm loyal so I was there for a long time.
How did you get to SVN | SRD? I had made the decision in June [2022]. It was probably going to be made earlier than that, but it's hard when you move. Forget even personal moving or life moving, it's hard to move brokerages. It takes a little planning and strategy. I needed some ramp.
I had an interview with Jonathan [Barreras], but Eric [Ammon] was here. Eric and I have worked together for many years. Even though we worked for different brokerages, we sort of commingled, we made it happen, and it worked. We were able to sort of sell the “best of both worlds.” That's the way that we got around things. Now, not really much has changed except that we're next door to each other and can talk more freely.
Do you and Eric have a specialty? I think that we would love to have a specialty. We have done a lot of multifamily over the last bunch of years. We have done a lot of mobile home parks, but there's a lot of really interesting detail to mobile home parks and the way they work. The constitution that you need to have to be able to manage one of those as owner or manager. I think that we like that business because we're familiar with it, but honestly, if you read the profiles, we've done pretty much everything.
If you looked at the list of stuff that we've got listed or the things that we're working on right now, you wouldn't necessarily say, “Oh, those guys are multifamily.” Not in the sense that some of the other folks in the office are very specialized, but I like being general. I like to learn about everything and I do learn every day. Every day.
Have you noticed any changes within the multifamily industry? On the multifamily side, the biggest thing that we've seen in the last few years is what we call the “Mobile Home Park 101 People”. There's a lot of people who watch stuff on multifamily and think, “I need to get into this”. There's a lot of young people that want to get into that kind of business because they see the dollar signs as you've got one plot of land and a lot of rent coming in. We've seen a lot of that and we've sold some parks to some young guys who are fairly sophisticated and know what they're doing.
The other thing we've seen, like everything else over the last few years, is the increase in price per unit and the decrease in the cap rate. Going back a few years, no one would really look at a mobile home park if it wasn't producing a 12% to 14% cap because the risk is fairly high. These are week-to-week, folks. Depending on whether you're park-owned or lot rents, there's a lot of chasing to get rents.
We're going to take on another one in Tampa this week that's probably going to be an off-market deal, but we'll send it to all of our buyers. His ask is fairly extraordinary, but it's a great park and we don't know.
Is there any hesitation in the market? Even going back a year, there was such a FOMO (Fear Of Missing Out) thing going on with all the buyers. For certain properties, there still is. I'm doing a deal right now with somebody in our office for a downtown property. I told a buyer of ours that “you need to get this property,” and he listened, but there's FOMO. People used to just want to jump on things, but now you're seeing that pause because of interest rates and everything else that's going on.
I think if we as advisors set the expectation and give our opinion, it’s not something to fight with our sellers about. It's about them, it's not about me. It's about getting them the best price. If we've given them that expectation and say, “Hey, this is what the market tells us. If someone goes out to a lender and we need an appraisal, we may run into a problem at the price that we are right now.” You just need to give them those sorts of caveats. If we do that, then I think we're doing our job. In the end, it's about them and we want to get them the best dollar.
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