On this episode of The Mobile Home Park Lawyer Podcast, Ferd takes us through 10 land mines to avoid in due diligence. These tips can help you get the best deal, and save you from a disaster deal. Enjoy!
“It’s a lot easier to avoid the nightmare than it is getting out of it.”
0:00 – Intro
0:52 – Warren Buffet is much better at avoiding a problem than getting out of a problem
1:40 – Advertising your properties
4:16 – Most mobile home park owners want to own the land not the homes but most tenants don’t want to buy
7:55 – You have to look at the size of the lots and make sure you don’t get hurt with set backs
10:10 – Read the zoning code, understand grandfathering and then negotiate with the city
11:12 – What are the development restrictions and requirements for maintenance and operations
12:00 – Make sure you have an operating city permit
13:30 – Run a police report and a sex offender check
14:19 – If someone is selling drugs in the park, hire an off duty cop to monitor the park for 2 nights
17:33 – Make sure inspect the utility and infrastructure, such as the roads and gas lines
18:42 – Make sure your title survey easement review matches up to your inspections
20:15 – Inspect the water and sewer
21:21 – Make sure there is valid title
22:10 – Make sure due diligence doesn’t start until he gets his title and survey
24:50 – Inspect the bankability of the property, make sure it will appraise, make sure it will pass the condition requirements for bank financing
25:43 – Get a phase one environmental
Welcome back MHP nation. Today, we’re going to be talking about how to save you millions, potentially millions of dollars during your due diligence, how to avoid an education from the school of hard knocks, and how to really just avoid the 10 landmines that can come up during your due diligence. These are the things that can make or break your deal.
Famous investor Warren Buffet, the Sage of Omaha, he’s known for saying I’m not really good at solving complex problems, but I’m really good at identifying complex problems and avoiding them. What Mr. Buffet is talking about there is during his due diligence from buying a company, figuring out what could potentially be a nightmare for him, and then avoiding that. It’s a lot easier to avoid the nightmare than it is getting out of it. This skill, similar to his business model and company acquisition and stock acquisition skill, is crucial and I’d say more crucial in a mobile home park business because there are some nuances that do not exist in other real estate and do not exist in other asset classes. So today we’re going to talk about these top 10 rules, top 10 landmines to avoid and go from there.
First off, I’d say it would be running a test ad and by a test ad I mean, this is your marketing and the old school way of doing this. We put an ad in the thrifty nickel or the classifieds in the newspaper and maybe on Craigslist, and Craigslist is still out there. But today, by and large, Facebook Marketplace is the way to go. So I recommend placing an ad in the marketplace. Because while there is a demand for affordable housing nationwide, your particular location that you’re under contract to purchase, there might not be as strong a demand for some odd reason, you might have a weak economy or there might be a demand, but the people may not have the ability to pay your pricing. There may be a demand for $500 a month, and you need to get $700 a month for your home ranch or for your lot rent plus mortgage payment. So you got to really run that test ads. The best way to do that, in my opinion is to run several ads. And then these are free. I mean, you can boost ads and Facebook Marketplace or boost ads on Facebook, and I’ve done that. And ultimately kind of determine that doesn’t really work that well, the personal ads from your own account or from one of your staff person’s account or your manager, those ads get the most traction. I think it’s something to do with the algorithm of the Facebook ads. But for the test ads, what I’ll do is I’ll run an ad with the proposed price that I need for a home rent and the proposed price I need for lot rent plus mortgage payment. And it’s a pretty simple ad I mean, just, mobile homes for rent, three bed, two bath $750. Test your prices. And typically, you can put some pictures in there, obviously, maybe some links to the type of homes, the general location.
I like to put the school district, I’m here in Kansas City. So the Kansas City School District does not have the best reputation. So if I’m in Kansas City suburbs or Kansas City proper, but a different district, I may say, hey Kansas City, Metro Platte County School District, Park Hill School District. And for people that live in that market, that trade area, they don’t know what that means. I know where I live and I know my market, but if I’m looking at a park in Rantoul, Illinois where I own a park, I don’t know which school district is the best. And I’m working with a client now in Wichita. And there’s a couple of school districts in Wichita, Derby that are more desirable than maybe Wichita proper. Your test ad will help flush that out. So reference to school district, you can later click on my website and I’ll give you some actual print test ads and some photos, and it could show you kind of a sample of what we’re working with here. But the test ad is crucial to see what kind of demand you will have.
And typically most mobile home park owners would want to own just the land and not the homes. You know, we’re in the land business, but most tenants don’t want to buy, most prospective buyers don’t want to buy. In part because they don’t think they can buy because they’ve been told no their whole life, they got rough credit, they’ve been told you can’t buy this car. You can’t buy this house. The American dream of home ownership is really, in their mind, and not within reach. But it really is within reach. And you can help them with that. But the way you got to get them in the door is you got to run a for rent ad.
The next key here is that your for rent ad has to be at least $100, like $150, or higher than what your purchase shop option would be. If it’s going to cost $600 a month to own the house. And I have the option to rent for $600, I’m going to rent because then I have no responsibility long-term, no maintenance responsibility. So what you’ve got to do is you’ve got to price it appropriately. And by that, I mean, you’ve got to price your for rent at $750. Later, what you can do is say is hey, Mr. and Mrs. Prospect, you were going to rent for $750. Guess what? I can sell you this home. And you can have home ownership, build equity, and have control long-term. And it’s going to save you $100 a month, what do you say? And then it’s a lot easier to do what we call a conversion, but you don’t want to miss-price your ad, and then you can’t get anybody to convert.
So one of the keys is to make sure you know what your pricing should be, and if nobody can pay at that price. And if you get crickets when you post your ad well, that’s going to be pretty telling. It’s not uncommon to get 10 responses on Facebook every day. You post an ad for a week and you get 1500 responses. You’ve probably got a strong demand there at the price point you’ve quoted. If you get one or two or three, you might want to dig a little deeper because you may have an issue with eventually selling or renting homes.
I also post the homes for sale and I’ll put payments from, in this example, $600 a month. And I’ll put in parentheses includes property taxes, insurance, lot rent. So people know this is an all-in cost. It’s not just lot rent. And then I’ll say so, for example, for sale $35,000, $3,500 down payments from $650 a month. And sometimes I won’t include the purchase price or I’ll put in that separate ad. I’ll just put the payments. Cause most of our prospective buyers or renters, they are payment shoppers, it’s kind of like buying a used car. They don’t really care about the price. They care about how much down and how much per month, because that tells me can I afford it. And we don’t want to charge a lot of exorbitant interest rates like a lot of car dealers do. So you want to make them welcoming.
And because of some regulations with Dodd Frank Act and Safe Act, which I’ll cover in another podcast, you’re not supposed to really promote pricing. So one way that people get around it, so to speak, is you put in an asterisk and then I put subject to bank financing and it makes it clear. I’m not the lender because under Dodd Frank and Safe Act, which is suspect law in some respects, you’re supposed to be a licensed mortgage loan originator, which is basically your bank officer, which you’re not. And you’re like not likely to go through that brain damage. The guys at 21st mortgage, they’ve gone through that process. They’re regulated and that’s who you’ll likely be using for financing for your potential buyer. But at this point, you’re just doing your test ad. So sometimes I’ll do an ad with the pricing per month. And that seems to let people know there is a buy option. Cause a lot of people will ask you, do you need rent to own? Can you work with me? That kind of thing. And by posting ads like that, it kind of can lead you into the rent-credit discussion that we’ll talk about it at a later date and really just help you get a better feel for your demand. So number one deal-breaker is if your test ad flops.
Number two, and this is one that people miss all the time is the size of the lots. And there are two factors to it that are important to take into consideration. One, what’s the actual physical size of the lot. If it’s a 42-foot lot, it’s going to be tough to put a 66 or 76-foot single-wide on there right? But another reason that you need to look at the size of the lot, you got to look at the setbacks and that’ll kind of dovetail some of these other items related to zoning. But a lot of cities, municipalities have exterior setbacks, meaning grounds you got to leave vacant. So if you’ve got a 10-foot setback from the outside or in a 10-foot setback in the inside, you can’t put home closer to that together. It’s not uncommon to have a fire code that is 10 or 15-feet between the homes. When you can’t put the homes that densely packed together, and the fire code is one of the few exceptions to grandfathering, because it has to do with health and safety which can trump kind of your constitutional rights to property. The government has a reasonable right to health and safety, but the extra setbacks, there’s no buildings next door. You know, a lot of times those could be 25 feet even. So you need to know your setbacks, measure your lots.
I’ve got a park here in Kansas City market, where I was able to convince the city that I’m grandfathered with zero setbacks. And that was huge because from my street, interior streets to the backside of my property was about 76 feet, 1 inch. Coincidentally, I have put 76-foot homes, literally touching the fence line along the exterior of my property, a 76-foot home. If I market that, 1,216 square feet for a 16 by 76, that’s going to sell and lease way better than a 66-foot home. So having that setback allowance, getting that zoning letter was huge to get to maximize the size of my lots. Down the street from me, literally two blocks away, there’s a national operator that owns hundreds of mobile home parks. They didn’t stand up to the city. They got stuck with a 10 foot setback on the same size lots. Now they have 66-foot homes and I’m just kicking their butt on sales. And part of that’s because I’m running better ads. But part of it is because I’ve got bigger houses because I measured them. And I also fought back on the zoning.
So that’s another thing, I’ll jump in here to number three is the zoning letter. A zoning letter is basically, this is a good idea, good opportunity to hire an attorney. Typically an attorney who has experience with municipal law to read the zoning code, understand grandfathering, and then negotiate with the city. Some cities hate mobile home parks. So those cities, you got to really beat them down and threaten to sue at times. Or just kind of lead them to the water, show them existing case law, which may or may not exist in your state. But typically a mobile home park lot is just a parking lot from back in the heyday. There’s no structure. So a lot of the rebuilding, reusing, lack of grandfathering, provisions that come up with regular real estate and structures do not apply. So ultimately you want to get the city planning director or the city attorney or the city manager or administrator to give you a letter telling you what you’ve got and what you don’t. And if they give it to you the way that you drafted it, great. If they don’t well, then you’ve got to go back to them and you’ve got to try to negotiate. And sometimes you can’t get everything, but sometimes you can. And it’s really important to look at zoning provisions in the code. What are the development restrictions and requirements and the redevelopment, and then just the maintenance and operation?
A lot of times the zoning code is very onerous for new development and there’s tap fees. There’s new setback requirements. You have to put in 30-foot streets, 4-foot sidewalks, curbs, gutters, storm shelters, basically a lot of things that make development cost prohibitive. So you want to get out of those. If you want an existing park, you want to be able to get in writing that, doing things like repaving the streets, tearing down houses, replacing houses in the same lots, replacing new houses, professionalizing old houses, all of those things are permitted under your current zoning. So that’s something to look at. With another deal breaker we’ve gone through test ad, size of the lot, and then the zoning letter.
Another thing related to zoning would be your city permit. That would be the next item. Make sure you have an operating city permit. Sometimes this is free. Sometimes it’s $50. Sometimes it’s $50 per lot, but that’s the most important check you’re going to write all year, because if you lose that permit, good luck getting another one. So you got to stay on top of that. You got to make sure the seller has it during due diligence. If it lapses during due diligence, you have to get an extension. I have sold two parks, one park to a couple big investors out-of-state and they just, they were sophisticated guys, but they didn’t know what they were doing on some of the permit issues. And I kid you not during the due diligence the permit lapsed, not through my own fault, but because the government was slow and I had a pending state EPA permit, which basically needs to, they would have been rejected. These guys would have bought a million dollar piece of nothing. So they literally could have lost $1 million. And luckily they didn’t and post-closing I was like hey guys, this just came in the mail and they lucked out. I sold another park recently were it also lapsed. And it was partially cause of COVID and everything was slow and shut down, so the government is really disgraceful and they tried to take the permit away. We would’ve had a good action to beat them, but we had to go through a fight or maybe a lawsuit. So you want to make sure you got your city permit.
And then the next item is your state permits, department of public health permits, EPA permits. So those are, I guess, numbers four and five on the landmines to avoid is making sure you have proper permits.
And the next item, number six would be, this goes along with kind of getting to know your market, kind of like your test ad, but it’s run a police report and a sex offender checklist. So the police report, you just call the local police station. Say hey, I’d like to get a report for all crime incidents in the last year in this community. And they pretty much have to give it to you. It’s public information. They generally are compliant, especially if you tell them hey, I’m looking to buy this, I’m going to clean it up. I want to make sure, I want to know what my problems are. And they generally do that. Sometimes you have to bug them. But this is really valuable to know.
And if you’ve got a park that has 50 convicts in there, 50 drug dealers, you know all kinds of other problems you might want to bail, or you might want to go out with a different approach. I mean, one thing we do sometimes is if we’ve got a house that’s been arrested for drugs four or five times, I mean, we end up buying the park anyway. Because of one bad apple, we will hire an off duty cop to moonlight the first two nights from eight to midnight and just park them right in front of that guy’s house. And they’ll show up in a squad car and stuff. And guess what? If you’re buying drugs from that guy and you roll up and you see a squad car, you’re going to either think A, this guy is getting busted or B, this guy’s working with the cops, and you’re going to go find your drugs somewhere else. That happens to 10 customers the first night and 10, the next night. Guess what? This drug dealer may say, this is not a good place to run my operation anymore, maybe I should just leave. And this is largely a bluff against the drug dealer because frankly we can’t afford to hire off duty cops for $35 an hour all day, every day. But he doesn’t know that, he says oh crap. And then we’ll hire a patrol for the first weekend or two. And it really sends the message that, hey there’s a new sheriff in town and we’re here to clean up your neighborhood, which also helps later when you clean it up and push rent increases,] that you’ve made it a better community, a better quality of life. People are getting better value, so they’ll pay a little extra and not complain.The police reports are really important.
Related to that is a sex offender report. And you can find this on government websites, on the internet, just basically research sex offenders. Sex offenders are very highly regulated as far as disclosing where they’re living. And this is one of the few areas where you can discriminate under the FHA. Like you can’t discriminate obviously from somebody if they’re white, black, purple, you know, Christian, Jew, Muslim, you can’t do that obviously. And then lots of other classes, but one cae you can is a sex offender. I mean, nobody really has a lot of empathy for these guys or sympathy for these guys, either one. So, and I’m not saying they are, you know, their soul can’t be saved or be redeemable, but I’m saying you can’t live here and do it. Because it’s too big a risk. I have responsibility to other families, other children, and sometimes you buy a park and they have a sex offender. And I did that one time in Taylorville, Illinois we had a sex offender. So this guy was a problem child. So what do I do next? I got to find a way to get rid of him. If he pays his rent and takes care of his property, that’s not going to be that easy. But if he’s a bad actor, I don’t have to give any grace right? If he doesn’t pay his rent on time, I can hit him with fines and fine him to death. And it sounds like you’re being a jerk, but like, hey man, you can’t be creeping on people. And in different, you know, I guess there are different levels of sex offenders. But sometimes you get guys that are super bad apples. And to some degree I don’t want to mess with it either way.
So if you’re a sex offender, that’s an automatic rejection for one of my parks. If you’re already there, well, it’s not as easy but there’s some ways to say hey, here’s a thousand dollars to go away. Because I’ve personally had renters and sometimes sex offenders they don’t apply to get in. This is a problem too. If I’m a sex offender, I know I’m going to be tough to get approved. So I’ll have my mom or my friend or somebody apply. And then I’ll just sneak in. I had that happen one time to a house next door to me and there was no sex offender living there. And I’m like, this is a little old lady. Well, all of a sudden I had three college girls looking to move in. And then the day before they show up to sign the lease, their parents say no way. What are you talking about? There’s a sex offender next door. I said, no, there’s not. And apparently the guy had snuck in next door and I’ve had people try to do that in my parks as well. And it could be a problem. So look into that stuff. It might be a deal breaker. You got too many criminals, criminal activity going on, you might just bail.
The next item, number seven on the landmines to avoid would be your utility or infrastructure inspections, your utilities and infrastructure typically your roads. This may not be a deal breaker. But it could be depending on your lending. I mean, some conduit or agency debt sources. Maybe you need to pave those gravel roads, you need to fix those asphalt roads, things like that. So you need to understand that and get bids. If the bid is $5,000, probably not a deal breaker, but you could easily spend $100,000 on road infrastructure. So you need to get at least three bids during your due diligence and depending on your lender, talk to them about what kind of road condition they need.
Okay. The next utility system that could be a challenge for you would be master-metered gas or master-metered electric. And in general, just the gas and electric. You want to make sure that the lines are good. The lines are in the right spot. So I had a property in Illinois where the gas lines were in the wrong location and I couldn’t put homes on these vacant lots. So those are huge problems. So that’s landmine here. But utility inspections, one is inspect the condition, but two is see where the location is.
So another item here in my list, the next step is a title survey, easement reviews. So I’m going to kind of meld these two together for a second. And what I found out when I pulled title was there was a gas easement. Well then when I looked at the survey and looked at location easement, I found out, okay, the gas lines are supposed to be in a straight line, five feet wide by 200 feet long. But then on my physical site inspection of the gas lines, I said, Hmm, these gas lines are in a wrong location. This is a problem. It ended up turning into a fight with me in the gas company where I said, you need to move your lines. They said, no, they’re your lines. I said, you put ’em in the wrong spot. They go well, we’re not going to pay for it. So for $105,000, if you want we’ll just pull the service out and you can do all electric homes to which I said, you already have 30 families here, you’re just going to bail on them? They said, yep. We’ll tell them it’s your fault. I said okay, what happens if I put a house in, and I dig and I blow up a gas line? My crew blows a gas line? Somebody gets killed? Who’s getting sued here? Probably both of us, but who’s going to lose? You, because you are illegally in the wrong location. And you’re the government utility provider. Eventually they caved, they put in all new gas lines, saved me $105,000, made it easier to bring in homes. Gave me upgraded utilities, which helped me when I eventually flipped that park. So understand the inspections on gas is important. Electric is important, a master-meter electric or in general, just electrical pedestals that are low amperage, say 50 amps or 100 amps. You may need to upgrade them to 200. So it’s just important to get licensed professionals to inspect those, and then give you reports. And then you’re smarter than you were the day before, and you make decisions.
The next utility infrastructure inspection would be water and sewer. This is really important, especially if you have private utilities, if you have a well, if you have septic system, if you have a lagoon, you need to get professionals involved and you can also recognize those sorts of private utilities are going to make your property less desirable on your exit strategy from a lender perspective, appraiser perspective and eventual buyer. And you can, you need to check the cleanliness when you get into water sewer, I just punt it to the licensed environmental engineers. On the infrastructure, the lines, you know, obviously there’s old sewer lines like Orangeburg and things like that. The idea would be, schedule 80 PVC for the sewer packs water lines. But most of the mobile home parks were built in the 50, 60, 70’s. And some of the materials didn’t exist or they weren’t used at that time period. So really do your own due diligence. Dig deeper. There’s a bigger discussion for that today. But don’t be afraid to hire a professional to look with you during your due diligence.
Okay. Next moving on to title survey. I kind of touched on that, but in addition to the easement stuff, one of the next landmines is that you’ve got to make sure the person has title. Always close the title commitment, at a title company. Even if you’re doing seller financing, you need to make sure that you have valid title, get an owner’s policy. There’s a whole bunch of checklist items. I’m going to cover title work and closing work in another podcast, but you want to make sure there’s no liens on the property or the liens will go away at closing, like mortgages, things like that. You want to make sure that the person actually owns it and you’re dealing with the right person. I was trying to buy a three part portfolio in Iowa. It turns out the guy that owned it didn’t own it by himself. And the other guy wouldn’t sign off, waste of time. My dad, me and another guy. We went and spent all day doing due diligence on these three parks, turns out the guy didn’t own what he said he owned, big waste of time, but luckily I didn’t get further down the pipe. Didn’t order the environmental and survey and all that other kind of stuff.
And another element of title is survey. I typically like to have my due diligence period start upon receipt of title and survey, that way your clock doesn’t really start ticking until you’ve got all the facts. And the survey will disclose not only the boundaries of the property, but where are the roads? Where are the utility easements? And then there’s all kinds of ad-ons, table items that you can add on, I’ll provide on my website here, the www.themobilehomelawyer.com some opportunities to get some checklists and stuff for what survey items or items I recommend. Sometimes you need to know how close the houses are together, but if it’s obvious, the houses are 50 feet apart, you don’t need to pay a surveyor to measure them. But if they’re maybe 14, maybe 16, you better pay a surveyor to measure them. If the setbacks are an issue, so forth and so on.
I think it’s the seller’s responsibility kind of morally if you will, to provide title and survey, because I basically say hey, you claim, and this is what you got. This is what you’re selling. Prove it, show me what you got, because surveys can cost on the low end, a boundary survey, maybe a thousand bucks. You start getting to base all survey and that’s the best in all the surveys, you’re talking three, four or five thousand, depending the property you start adding in these table A items. I mean, it would not be uncommon for a good detailed full table A survey to surpass 10,000 bucks. So as the buyer, you’d be really pissed if you spend 10,000 bucks to then find out the guy was misrepresenting. So I’d really try to push it on the seller. Sometimes even if I sell, I’ll do it. So it’s not, I’m not being hypocritical here. But if, sometimes the seller will not go for it and he did then maybe put that into negotiations. Okay. I’ll pay for the survey, but I get a credit for it if I close. It mitigates some of your risk, some of your expense. Sometimes you just got to suck it up and pay for it. Typically a good way on the survey or title is to find the last company that did it. If it’s been done previously and then just pay for an update, typically cheaper. When you get a survey, you always want to ask for a copy of the file in AutoCAD or DWG format. That way, if you do some modifications, it’s easier down the road. So like I’m looking at an expansion in Illinois in a park that I bought two years ago and I want to hire the same surveyor, right? He has the DWG file and I can then figure out where I want to put in the roads and utilities and all that kind of stuff. And then I also asked for a plotter size, you know, big two feet by three feet copy. So I’ve got it for my files. It’s a lot easier to throw that on a table and look at that and get a sealed color copy of the survey. It’s, they may charge you 50 bucks for it or something, but it’s totally worth it. I typically get it, throw this in for free. And nobody really pushes back. If you do it at the time of contract signing. If you ask for additional copies later, they’re going to nickel and dime.
Okay. That’s survey, title, easement review. Then the ninth due diligence landmine to avoid would be the bankability. And what I mean by this is you’ve got to make sure this property is going to appraise. If you’ve got bank financing, you’ve got to make sure it’s going to pass the condition requirements. If you’ve got bank financing and then just your own condition requirements and in internal value, if it’s seller financing. But then the third little sub-component of that is financial feasibility. You need to make sure to run the numbers. Hey, is this bankable whether it’s bank financed or otherwise, does this deal make economic sense for me to proceed with? And we’ll get into that in another episode, but there’s a number of metrics you can run from, cap rate to get the valuation, cash on cash return, internal rate of return, debt service coverage ratio, your lender, etc. So just bankability, you’ve got to make sure you’re not buying yourself a problem by overpaying, which I see happen all the time.
The 10th due-diligence landmine to avoid is your phase one environmental. This one is probably the easiest for the owner. Because it’s, I mean, it’s expensive, anywhere from three, four or 5 thousand bucks for a phase one environmental. But it’s basically thumbs up, thumbs down. You hire a professional licensed environmental engineer. They do a phase one. And in phase one basically they do a brief site inspection and they pull the paper, historical records on the property to figure out if there’s any recognized environmental conditions and hazardous conditions, was there a gas station there? Was there a dry cleaning plant? Was there a smelting iron or an asphalt plant? Things that drop nasty stuff into the earth? And if the report comes back, thumbs up. You’re good to go. And I mean, these reports were like 200 pages of boilerplate and level five physics and science and stuff. All I care about is the conclusion paragraph, no recognized environmental conditions apply, no further study required. Okay, great. I’m golden. Sometimes you’ll get it where we’ll say potential or some recognized environmental conditions. We recommend a phase two. We recommend a ground penetrating radar or geophysical survey. Those items start getting more expensive. Another $2000, another $5,000, you got to dig up some old tanks, $10,000. So at that point, you at least are smart enough to say, okay, I’ve got a quote dirty phase one. I got to go the extra mile to get to clean phase one. And you can determine if it makes sense to pay the money to do that or to walk away, or really, this is a great opportunity to re-trade with the seller because, hey, you didn’t represent there was this problem.There’s this environmental problem.
And I’ve had it before, had properties before where phase one fails, phase two is questionable. We had to dig up some tanks, apparently there was an old gas station nobody knew about. And then using the ground penetrating radar and that dig and the core samples and things like borings, things like that. We were able to, we were able to determine all is good and clean. Well, now that made my phase one clean. This is often a requirement for lenders, but it really should be required for you because you may have a limited liability company and you may think you’re golden. But reality is if you get an environmental problem, you’re talking about the EPA coming back to you one day, that is going to ruin your weekend all right? So it goes to anybody in the chain of title, but if you have a clean phase one and they later find a recognized environmental problem and they make the current owner pay a million dollars to fix it, they can go up the chain of title. Meaning if you sold it five years ago, they could come knock on your door and say, hey, you were an owner of five years ago. We have no proof who dropped this chemical in the earth. So we’re going to go after everybody and the richest guy and literally everybody. So that in phase one, environmental is an absolute must. I see a lot of people kind of cut corners on this, which is foolish and you can’t do it yourself. You need to get a pro.
So with that in mind that we’re gonna cap off the top 10 landmines to avoid in your due diligence, that will save you money, save you nightmares and keep you from having to pay that horrible tuition to what we call the school of hard knocks. Until next time, signing off.