The MHP Brokers Tips and Tricks Podcast Interview with Kevin Caiaccio, closing attorney with Robinson Franzman in Atlanta

The Mobile Home Park Broker's Tips & Tricks To Investing

In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed Kevin Caiacci, a closing attorney who represents multi-family and mobile home park investors and sponsors.

This and every Tips and Tricks podcast episode is brought to you by The MHP Broker’s’ proprietary Community Price Maximizer. Use this four-step system to get the highest price possible for your mobile home park or RV community when you sell it through The MHP Broker. Guaranteed. Ask Max for details.

Here Are the Show Highlights:

• Kevin Caiaccio is a closing attorney who works with Robinson Franzman in Atlanta and represents investors and sponsors in the multi-family, and specifically mobile home park sector of commercial real estate. (Max, 1:21)

• Kevin graduated from the law school at the University of Georgia in 1995 and has specialized in commercial real estate transactions for most of 28 years. (Kevin, 1:48)

• His primary focus has been on multifamily housing transactions, and a subset of that--mobile home park transactions all over the country. His focus is on trying to make sure deals happen, rather than stifling deals. (Kevin, 2:30)

• Kevin cautions investors and sponsors to remember that, in the vast majority of deals, they’re using other people’s money as part of the capital stack, so they have to stay in compliance with the various loan covenants and obligations. (Kevin, 4:46)

• For instance, if it’s a Fannie Mae loan, there might be limits to the number of park-owned homes you can have in the deal. Other lenders might mandate tenant protections. You must be aware of all such regulations and restrictions regarding the lender portion of the capital stack. (Kevin, 5:31)

• When you take investment money from other parties, whether it’s a corporate syndicate or family and friends, you have a fiduciary duty to act diligently and invest that money prudently. (Kevin, 6:08)

• Sponsors should also remember that no one wins every deal. Some go bust, and when they do you end up with unhappy investors. There’s always a threat that they’ll sue you as the failed sponsor, so it’s imperative that you’ve acted prudently every step of the way. (Kevin, 6:40)

• Kevin writes operating agreements for investment partners that clearly spell out the rights and disclose the risks to all parties. (Kevin, 7:25)

• There’s no guarantee that you won’t be sued for a deal that goes south, but a well-written operating agreement can help reduce the risk. (Kevin, 7:59)

• Kevin sees more uncertainty in the market today than has been there in many years. The value of real estate has steadily climbed since coming out of the Great Recession in 2010. Even the pandemic didn’t create much of a shock to the system. (Kevin, 9:48)

• But today, a couple factors have created a heightened sense of uncertainty. Steadily rising interest rates and questions as to when they’ll come down and how this will impact rent growth have shaken the market despite very low unemployment figures. (Kevin, 10:33)

• Another negative point is the insurance situation, especially in Florida. Increased hurricane activity of late has disrupted insurance markets. Despite all of this, and the confusion in the capital markets, business is still going strong and transactions are still getting done. Kevin’s clients are bullish on the markets, at least in the mid-term. (Kevin, 11:29)

• As a broker, Max has seen lost titles to park-owned homes as a common challenge for sellers. (Max, 12:32)

• Some park owners don’t keep great records, and sometimes the titles to older homes or those bought through affiliates can get misplaced and need to be retitled. Sponsors need to be aware of this problem upfront and address title access as soon into the transaction as possible. (Kevin, 13:15)

• Do this before going to close because the lenders will be sure to ask for all titles, and it will disrupt the timing of the sale if you don’t have them. There are title service companies that will help get homes retitled. (Kevin, 14:14)

• Another due diligence challenge is utility deposits, some of which can be as much as $20,000. (Max, 14:45)

• As with title acquisition, the issue of deposit money must be addressed during early due diligence. Buyers should not feel pressured to close quickly, as the seller wants. Make sure you’ve first handled all loose ends such as questions related to titles and deposit money during well before the close. (Kevin, 15:36)

• Just make sure all of these questions get answered before the transaction deadlines so as not to put your earnest money at risk. (Kevin, 16:22)

• Proration issues can cause problems at closing, too. That’s money collected and held by park owners for taxes, insurance, homeowners fees or other purposes. It’s important that park owners hold these funds in segregated accounts so it can be properly handled during a sale. (Max, 19:08)

• For investors and investment sponsors who want Kevin’s help, he can be reached through rfllplaw.com, which stands for Robinson Franzman Limited Liability Partnership Law. Or contact Kevin by email at [e-mail] or 404-255-2503.

If you’re a sponsor or investor in a real estate deal, reach out to Kevin Caiaccio at Robinson Franzman in Atlanta for deal closing legal issues. If buying or selling, contact Max Baker at [e-mail] or give him a call at [phone].

Power Quotes in This Episode:

“As soon as you get a lender involved, you're going to have loan covenants and obligations, there's going to be personal guarantees (and) leasing restrictions.” (Kevin, 4:46)

“The most important concept to remember is as soon as you take someone else’s money, you have a fiduciary obligation to act diligently and prudently with that money. It's no longer you making whatever decisions you want, you have an obligation to these investors.”(Kevin, 6:08)

“I would say that if if you haven't had any deals that didn't exactly work out, you haven't done enough deals, because ultimately over your career, you're gonna have some that might lose money. And when that happens, investors are unhappy. And there are lawyers out there, that will come in after the fact.” (Kevin, 6:40)

“So it's always extremely important to not go cheap on your attorney in the people creating your paperwork if you're raising hundreds of thousands or even hundreds of millions of dollars.” (Max, 9:14)

(On the economic state of the mobile home park industry) “I think if you take the kind of mid-term or long-term view, things will be fine.” (Kevin, 11:29)