Value-Add Mobile Home Park Syndication Returns & GP Deal Structure

Transformative Investment in Tifton, GA

In a transformative mobile home park deal in Tifton, GA, we demonstrated the substantial returns potentially achievable through strategic investments, even in seemingly General Partner (GP)-heavy deal structures. By initially focusing on value-add opportunities and leveraging a 40/60 LP/GP split, we not only met but exceeded our investors’ expectations within a 19-month timeframe! This was made possible by our hard work and diligent efforts of cold-calling and sourcing off-market opportunities with equity in them from day one of ownership. This approach likely safeguards our investment capital by potentially avoiding retail market pricing, ensuring a strong equity position upon acquisition.

Investment Highlights

Key highlights include a capital raise of $655,000, turning into significant distributions totaling $2,140,209.64 throughout the hold period, thanks to meticulous improvements and operational efficiencies. For investors contributing $100,000, this translated into a 130.57% total return and a 65.28% annual cash-on-cash return, significantly outpacing our projected 12% return. Furthermore, they have received post refinance distributions of $26,073.34 as they continue to remain invested in the deal, further enhancing their overall return on their initial investment.

Strategic Deal Structuring

Crucially, our deal structure prioritizes investor returns, offering a preferred return before any GP compensation. This motivates the GP team to focus on increasing property value and achieving a quick refinancing event. We effectively created infinite returns for our Limited Partners (LPs) by returning their initial capital while they continue to earn on their investment. They have no more money in the deal but they remain equity share holders for as long as we hold the property!

Unlike many big operators who buy average deals and hold them for 10+ years, our value-add strategy is designed to return the investor capital and their preferred returns as quickly as possible, propelling the GP team towards the “promote” stage where they get to partake in distributions alongside the LPs after their initial capital is returned.

Evolution of Deal Structure

Our newer deals now feature a 20/80 LP/GP split after a 10% preferred return. This model is setup to pay the preferred return and all initial capital back before the GPs get any compensation. This deal structure prioritizes a return on investment for our LPs and makes sure that the GPs only win if the LPs do as well.

Beyond Financial Success

The Tifton deal not only highlights the financial success but also the social stewardship that we were able to offer the community by creating a better place for the residents to live. This case study proves that the right deals found off-market (through cold-calling) with equity in them from day one of ownership, that are even perceived as GP-heavy structures, can yield exceptional returns for LP investors.

Download our free eBook on the “Top 10 Things to Review When Considering a Passive Mobile Home Park Investment “

By Andrew Keel

Disclaimer:

The information provided is for informational purposes only and should not be considered investment advice, nor a guarantee of any kind. There are no guarantees of profitability, and all investment decisions should be made based on individual research and consultation with registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations