Mobile Home Park Investing Newsletter

April 15th is the national deadline for filing your tax return. And mobile home park owners have certain advantages when it comes to taxation. The two main benefits are 1) depreciation and 2) capital gains. However, there is a third potential benefit that is coming to light, and that’s Qualified Opportunity Zones (see article below). The U.S. government is finally waking up to the necessity to promote all areas of our nation and not just the most expensive or heavily populated. That’s why they have already ramped up Fannie Mae and Freddie Mac financing of mobile home parks so heavily that it now represents 50% of total dollar volume of mobile home park lending each year. And the Duty to Serve law is requiring these same lenders to make loans that are in areas of lower population. 2019 is also the first year of the new Fannie Mae and Freddie Mac test program for the securitization of mobile home loans in an attempt to jump start retail sales of mobile homes. The bottom line is that there is greater government intervention to help the industry these days, and that’s a great thing. It makes paying your taxes a little more palatable.

A recent article in the Washington Post exposed something that we have been talking about for years now: there’s an unbelievable housing shortage in Nebraska and other states. The writer is even extremely bullish on mobile homes. But the bigger question is how could these states have allowed housing to be so short in supply that it’s keeping jobs from being filled and new industries from being formed?

These are markets that have flown under the housing radar for years

There’s nothing “sexy” about Nebraska and many other Great Plains and Midwestern states. They are shoved out of media coverage in favor of California, Nevada and Florida – all of which spend huge amounts on tourism advertising and media gives them payback in the form of additional coverage. While everyone in America knows Las Vegas, few can even name the capital of Nebraska. Since they get little attention, they also garner little notice by housing developers.

Stronger economies in many cases amplify the problem

The fact that Mississippi is rarely noticed or mentioned simply adds to its economic woes. But states like Nebraska have extremely strong economies, and this robust nature is what amplifies the housing shortage. They have it all except for publicity that garners the attention of builders and bankers. When’s the last time you saw an article in the Washington Post about Nebraska? Never. But what about Maryland (a darling of homebuilders)? Every day. The housing shortage would not matter if it was not for the fact that the state is nearing 100% occupancy and jobs go unfilled because there’s literally zero available housing stock.

There’s no simple way to catch up

There’s a limited amount of labor for housing construction in the U.S., and it takes months and years for zoning and getting plans approved, so there’s no way that you can catch up on housing starts after decades of absence. If there’s a building boom coming for Nebraska and similar states, it’s still years away. And, even then, there’s no guarantee that traditional housing channels can provide the low price points that entry-level buyers need. Low house prices yield low margins and, with the median home price topping $200,000 in many markets, few builders may want to tackle trying to make a profit on $100,000 homes.

The negative impact of the SAFE Act and Dodd-Frank and credit market stigma

You would think that the U.S. Government would do its best to encourage affordable housing in Nebraska and similar states. But the reverse is true. Due to an insane over-reach by HUD (described later in this newsletter) the U.S. has actually increased the price of mobile homes in Nebraska by about 30%. This roughly $8,000 “tariff” in the form of requiring piers or slab foundation under the mobile home has negligible benefit – it saves customers supposedly about $200 every 5 years in re-levelling costs. The industry has been fighting this insanity for years but it’s still on the books. At the same time, Fannie Mae and Freddie Mac are yet to begin their program, under the Duty to Serve Act, to encourage mobile home mortgages through securitization. It’s much harder to buy a $40,000 mobile home than a $250,000 single family home today – even on credit scores above 600.

What’s the solution?

While it’s an easy answer that all affordable housing woes can be solved with mobile homes and mobile home parks the truth is that this is not the case. Most of the mobile home parks in Nebraska and similar states are already at 80% or greater occupancy. And the cost to privately prepare a lot for a mobile home – for those who can afford to buy land – is daunting, as mobile homes are not allowed inside city limits unless they are going into a mobile home park, so customers have to adapt rural land for occupancy. This includes building a well and septic system, power access, and a road into the property – about $20,000 of infrastructure.

Conclusion

Some of the hottest housing markets – based on demand – are those that are rarely discussed. States like Nebraska have gone for years without notice from the housing industry, and now that inaction has resulted in a tidal wave of woes. While this is great for the mobile home park sector, it’s hard to believe that nobody took notice years ago when the situation could have been averted.

In 2018 we became huge customers of Purchasing Platform – one of their largest. And we suggest any park owner to look at what this new buying service can do in regards to positively impact your community. It’s literally a game-changer.

What is “Purchasing Platform”?

Purchasing Platform is an online GPO (group purchasing organization) and eMarketplace that has been created specifically for the mobile home and mobile home park industries. More than 1,800 MH communities access Purchasing Platform every month to take advantage of their pre-negotiated pricing, single checkout from 40+ vendors, auto expense mapping to their chart of accounts, multi-level workflow approval to provide accountability across their portfolios, etc. They offer 20-30% savings on more than 10 million products and an integrated "Buying Desk" service that acts as a purchasing agent for your community to make sure they always deliver aggregate savings on every order. 

How big do you have to be to use Purchasing Platform? Can you use it with only one property?

The answer is yes – there’s no minimum limit of properties or dollars spent. Some of the largest industry portfolios use them but the majority of their clients own and operate between 1 and 30 mobile home parks. This is not a service that is only available to the largest owners – it’s one that every park owner in the U.S. can utilize.

Why use Purchasing Platform?

In addition to the obvious cost savings on products and services, use of Purchasing Platform drastically reduces the number of trips your manager has to make to retail stores (time spent not managing your property), eliminates the need for expense classification and receipt transcription while also providing valuable oversight to the owner with workflow approval. They also allow members to load their own catalogs to make sure that managers only can order what they want them to.

Summary of benefits

Here are the main reasons that we have become huge users of the Purchasing Platform:

• Easy to use interface. Not hard at all for any manager to master.
• Single checkout from more than 40 of the industry’s largest vendors.
• Huge savings on more than 10 million products.
• Price Match Guarantee: if you can find it lower somewhere else, they’ll match it.
• Create your own custom catalog.
• On-Demand Buying Desk feature gets you immediate support for volume quotes.
• Comprehensive Workflow Approval functionality to keep you in control of all buying.
• Maps out all expenses to your Chart of Accounts.
• Integrates everything seamlessly into your property management software.

You can try Purchasing Platform at no risk for 90 days

Purchasing Platform allows all park owners to try their system for three months with no obligation to continue. That’s how we got started – we gave it a try and liked it. So if these advantage look good to you (which they certainly should) we recommend you contact Purchasing Platform today at 312-622-6552 and [email protected] and get set up on a 90 day trial.

We think you’ll find this to be one of the big improvements in your operation for 2019.

I was recently in Le Claire, Iowa driving mobile home parks, and shot this photo in front of the American Pickers store, as seen on the popular television show that’s based on real-life negotiations between the store owners and antique sellers and buyers. Negotiating is also a key part of buying a mobile home park, yet too few people are good at it. Perhaps the problem is that the average American has little practice at this craft, as there is little in our day-to-day lives that allows for negotiating. In the U.S., most all pricing is fixed and not subject to change regardless of haggling, so the consumer never even attempts to strive for a better deal. As a result, most people don’t even know the basics of how to do it and pay thousands more than they need to on their mobile home park acquisitions. So how can you improve your skills?

Understanding the basic principles

There are several basic building blocks of negotiating mobile home parks:

• Have the seller name the price. It’s always best to have the seller throw out the first price – you might get lucky! If that fails to happen, ask them what the park is currently valued at on the tax assessor’s rolls (typically lower than reality).
• Start lower than your target. Basic negotiating is based on the back-and-forth of offers, hopefully arriving somewhere in the middle. That means you have to start low to end up at your target. For example, if you want to buy the mobile home park for $300,000, the last place you’d want to begin your offer would be at $300,000. The seller would naturally counter at $400,000 and you’d end up at $350,000, take it or leave it. Bad strategy. Also start at least 20% lower than you want to end up.
• Never give the seller the price they are asking, even if it’s mathematically correct. In the above example, if the seller is only asking $300,000, the worst thing you could do is say “I’ll take it!”. That sends the message to the seller that they have priced the asset too low. Instead say “would you take $290,000” and then he can counter at “no, it’s $300,000 firm” and you can sign it up and he thinks to himself “what a great negotiator I am – I made an extra $10,000”.
• Act pained at every increase. The worst thing you can do when negotiating is to let the other party know that you’re negotiating. Instead, you need to act worried at every counter offer and like it’s terrible news that they’ve asked for more. If you just go through the motions without an emotion, the seller will feel that the whole process is “phony” and the price will go higher.
• Have a “walk-away” price. You should not negotiate without already establishing at what price you will not buy it. The time to figure that number out is not with the seller on the phone. If you determine that $360,000 is the absolute most you’ll pay and feel good about it, then you cannot agree to any price over $360,000. Sellers will push you until they can feel through your body language that you’ve hit your limit. Without knowing that limit, you can’t send out the vibe.
• Offer a “cash” vs. “terms” price. One trick to getting more seller financing is to offer the seller two different prices: 1) an all-cash price and 2) a seller-carry price. Obviously, the price with seller financing is higher and therefore promotes the seller to take this option.
• Show enthusiasm – don’t pretend to be uninterested. Books on negotiating at your local bookstore have some really bad advice in them. One is that you should always ask uninterested in the asset to elicit a lower price. That may work great with a car or refrigerator, but with a mobile home park owner it’s insulting. It sends the message “your park really isn’t that great and I don’t know why I’m wasting my time really talking to you”. Instead, be 100% enthusiastic and that will make the seller like you and want to work with you. When you compliment their park and say “this is a great property and I’d really like to own it” it makes them feel good about you and that you have the passion to close the deal.

Watch shows that are based on negotiation

There are two great shows on television – both on the History Channel – that are virtual “think tanks” of proper negotiating skills: Pawn Stars and American Pickers. Both have literally 10 or more full negotiating processes in each episode. You will quickly see the fluid motion and the standard strategy in getting the seller to name the price, offering a lower amount, acting pained at each counter, bantering back and forth and ultimately arriving at a win/win price.

Practice – go to a farmer’s market, estate sale, antique store or swap meet

Don’t wait for a mobile home park to come up to practice your skills – you can start the process right now. So where do you find negotiation every day in the real world? Typically farmer’s markets, estate sales, antique stores and swap meets – places where prices are never firm and often not even marked. If you can negotiate a book at an estate sale, it’s the same skill on mobile home parks only at a quantum higher price.

Conclusion

Negotiation is fun once you know how to do it. But nobody is born with that skill. You have to develop and practice it. Since there are thousands of dollars at stake with a mobile home park you may be looking at, shouldn’t you get good at this skill quick?

Virtually all of the media coverage of the mobile home park industry is negative. Television shows such as COPs and Trailer Park Boys create a negative stereotype and this feeds other outlets, which love the words “trailer trash” to gain headlines and attention. However, the truth is that there is much good work that goes on in mobile home parks every day, with a lot of great residents that form the backbone of the American economy. Fortunately, a few accurate news stories still slip through each year, and we wanted to share one with you regarding one of our communities called “Hamlet”. The managers have worked hard to make this property the best that it can be, and it has garnered local attention. Here’s the article that just appeared in the paper there. It’s sad that the media does not see the benefit of running positive, accurate stories regarding our industry but instead prefer to sensationalize and misguide the public on this issue. But maybe things will change in the future as more stories like Hamlet leak out and people begin to question what really goes on in mobile home parks.

There’s an old concept of tying a string to a dollar bill and buying each item in the vending machine and then yanking the dollar back out and using it again. That’s illegal in most applications, but not in buying mobile home parks. The way mobile home park owners yank the dollar back out is in the form of cash-out re-financing. To accomplish this, you need to obtain a conduit or Agency loan that allows for this to occur. And the master of putting together this type of debt product is M.J. Vukovich with Bellwether. We have been using him on all of our institutional debt (which means deal sizes of $1.5 million or more). If you are working on park financing on deals $1.5 million or greater, you should give M.J. a call at 720-758-9227 to discuss the options, or email him at [email protected]. The call costs nothing and the results may give you huge cash-out proceeds (which are also tax free as they are technically a loan).

While capital gains tax rates are at historic lows, there’s one tax rate still lower. The U.S. Treasury has certified roughly 8,700 “Opportunity Zones” which allow for 0% tax on gains if the investment is held for at least ten years. This new opportunity is part of the Tax Cuts and Jobs Act. Since many mobile home parks fall in areas considered economically depressed, there will probably be a potential for many park investors to take advantage of this new law. Here’s a map of the current Opportunity Zone areas.

Of course, like any other mobile home park investment, it’s important to understand the key drivers to a successful purchase which include 1) infrastructure 2) density 3) economics and 4) location. You would never want to buy a mobile home park simply to forestall taxes – you should make the purchase to make money and the taxes are a result of that success. That being said, you will certainly see more discussion of Opportunity Zone investing in the years ahead.

This is the 10th Anniversary of our annual think tank on the latest trends, developments, and predictions for the mobile home park industry. Our theory is that every attendee should come away with at least a couple ideas that are worth ten times the investment in time spent listening. And this year we outdid all former events with more speakers and more topics than ever before. These are this year’s speakers and discussions:

• Megatrends In The Industry By Frank Rolfe
• Mobile Home Park Laws And Regulations With D.J. Pendleton
• Mobile Home Park Financing With M.J. Vukovich
• Revenue Enhancement Concepts With Amy Moore
• How To Properly Insure Your Mobile Home Park In 2019 With Kurt Kelley
• Purchasing Platform With Dave Bowen
• Filling Vacant Lots With David Graham
• Environmental Report Issues With Mike Renz
• Buying Used Homes To Fill Lots With Quinn Keyser-Cochran
• Hiring, Retaining And Firing Managers With Todd Burget
• Third-Party Management Of Mobile Home Parks With M. Shapiro Real Estate Group
• How To Sell Mobile Homes With George Andrews
• Filling Vacant Lots With The CASH Program From 21st Mortgage
• Creating The "Sense Of Community" With Heather Blanks And Tory Wilson
• Water/Sewer Sub-Metering With Metron Sustainable Services
• Legal Issues In Buying Mobile Home Parks With Dave DiMarco
• Buying Mobile Home Parks In 2019 With Two Top Industry Brokers
• The State Of The Mobile Home Product With Clayton Homes
• Making Marginal Deals Great And What Deals To Avoid With Dave Reynolds
• Summary And Highlights With Frank Rolfe

If you would like to share in this portfolio of information – on both park purchasing as well as operations – then you can still buy the recordings and full text transcripts of the entire event for only $99. Order your copy today!

We are enthusiastic readers and listeners. Here are some of the top investing quotes that help shape our opinions on what we buy and how we go about it.

Enthusiasm

Warren Buffett once said “without passion there is no energy, and without energy there is nothing”. We believe that this is the reason we have grown so large over the past decade – we are excited to get up each day and re-position properties from “trailer parks” into “manufactured home communities”. We have tried to only hire personnel that share this passion for work and for doing good.

Diligence

Benjamin Franklin said back in the 1700s “diligence is the mother of good luck”. Although he never owned a mobile home park, he was 100% correct in our industry, as well. Due diligence is what takes the risk out of a deal, and makes disappointment rare. Good “luck” in this industry is not a matter of luck at all, but simply ensuring that all risks have been addressed and mitigated.

A Moat

Warren Buffett is a big believer in what he calls a “moat” which is a barrier to competition. Buffett believes that all successful business models must be protected by a giant moat. Mobile home parks have one of the best “moats” in the U.S., as there have not been any significant permits issues for new mobile home parks since the 1970s, and the hatred of all cities against our product precludes that from changing. It should be noted that Buffett must already appreciate this, since he is the largest owner of mobile home production and financing in the world.

Time Kills Deals

This quote is a reminder that time if of the essence and there should always be a sense of urgency in everything from making offers on mobile home parks to tying them up under contract and making the needed turn-around steps. We’re not sure where this quote came from, but it’s been hanging on our wall for decades.

Healthy Risk Relationship

Sam Zell’s theory on buying real estate (and he’s the largest mobile home park owner in the U.S. with his public REIT Equity Lifestyle) is to buy deals that have large reward and little risk and avoid deals that have large risk and little reward. We have tried to apply this concept in our own park buying, by shunning many markets as too rural or unstable, and steering clear of the most dreaded infrastructure problems (like orangeburg sewer pipe).

Problem deals are opportunities

William Kaiser, the steel industrialist, one said “problems are only opportunities in work clothes”. We think that quote sums up our opinion of buying turn-around properties. By buying “broken” parks and “fixing” them we unlock the largest profit opportunities in the industry.

Conclusion

Quotes are great reminders of simple business basics and reflect common approaches to issues. These are some of our favorites and we think they translate well into the mobile home park industry.

We have been rapidly converting every existing water meter in our 30,000 lot portfolio to Metron-Farnier Sustainable Services. So why are we such huge fans of the Metron metering system? The answers are many:

• These meters are read remotely and do not require our managers to read them (or screw up the readings).
• The meters are read by Metron every 60 minutes, 24 hours a day. As a result, Metron can alert you when there’s a leak, and that can save you thousands of dollars per year.
• The meters are amazingly accurate and strong.
• Metron’s meter bodies have been manufactured in Europe for years – they are well-established and a proven performer.
• Metron’s electronics are built and tested in Boulder, CO.
• The cost is only around $5 per month per meter, and in most states this cost can be passed on to the resident.
• These meters do not require you to have access to them, so they are perfect for winterization or difficult access situations.

So why would you not use Metron? We don’t have a clue.

To get more information on Metron metering, call Rick Minogue at 303-449-8833 or email him at [email protected]. Tell them that Frank & Dave sent you. We’re their biggest fans.

Harry Potter had a “cloak of invisibility” that allowed him to travel unnoticed. And the mobile home industry appears to possess that same ability. Although our product has been around for over a half-century, many regular people apparently have never seen it or read about it. Case in point is this issue of Dwell magazine, in which the cover photo shows a home with “ground-breaking” design yet is fairly identical to a standard mobile home in proportion and functionality. In fact, this type of “glass” mobile home has been available for years now from numerous manufacturers, with Clayton designing a line of advanced mobile homes years ago. So why does everyone ignore the mobile home product?

Limited marketing

Our industry has done one of the worst jobs of self-promotion in American history. We were at the forefront of modern housing in the 1950s, with articles in everything from Popular Mechanics to Town & Country. Elvis lived in a mobile home park in the movies twice, as did America’s #1 star of the 1930s Mae West. Frank Lloyd Wright designed a mobile home prototype, as did Raymond Loewy. But since the 1980s, the industry has forgotten how to promote itself, preferring to sit back and watch others tear the business down in such movies as 8-Mile and shows like Trailer Park Boys. Most people have no idea of the latest designs of such manufacturers as Clayton – ones that are far nicer than what Dwell put on their cover.

Stereotype leads to looking the other way

The average American never even thinks about mobile homes. They drive past them and don’t even look. They have been shaped by the media to assume that the industry is all about “old trailers” and that there’s nothing new going on. Nobody knows that the industry has annual housing shows and even its own museum in Elkhart, Indiana. As a result, the writers at Dwell probably don’t even know that similar mobile home designs don’t exist.

Financial motives

Of course, being inexpensive also has its problems when it comes to marketing. Mobile homes cost about 25% as much as stick-built homes. Our industry is a tiny microcosm of the greater housing industry. So any publication that is trying to make money with advertisers would be crazy to promote a mobile home in a stick-built publication.

Conclusion

There are mobile home variants that are just as interesting as that shown on this cover of Dwell. But virtually nobody knows they exist. Only Clayton has put forth the effort to educate the public with their television ads. It may be decades more before we’re “discovered” by mainstream designers.

One of the biggest things going in the mobile home park industry is the CASH program from 21st Mortgage. If you own a mobile home park, the power of this program is astounding. You can fill vacant lots with zero out-of-pocket cost. You can get customers approved to buy homes with amazing speed and a “can-do” attitude. You don’t have to get in the middle of financing or the SAFE Act. And you can tap hundreds of thousands – or millions – of dollars sitting there in vacant lots. The demand for affordable housing in the U.S. is enormous, and the only thing holding most parks back from 100% occupancy are new and used homes that your customers can qualify for. With the CASH program, those obstacles can be overcome and your occupancy can soar. We are the largest users of this program in the U.S., and we know how great it is.

For more information on this program visit their website or call Candice Doolan at 800-955-0021 ext 1735 or email her at [email protected].

It’s a little known fact that the sales of Tiffany & Co. fell to impossibly low levels during the Great Depression. Total annual revenue in the 1930s was as low as $10,000, which would not even cover the basic costs of utilities and property tax. Yet the founders elected to march on and hope for better times ahead. Had they given up, the ubiquitous turquoise-colored boxes would not be a part of our retail experience and there would be a lot more vacant retail space then there currently is. The same is true for Steve Jobs Pixar animation studio, which lost money for so many years that nearly all hope was lost before it brought out “Toy Story” and became one of the great financial success stories of all time. Over and over, persistence has been instrumental in achieving great things. And the same is true for the mobile home park industry. So how does this relate to “trailer parks”?

Finding parks to buy involves continual, repetitive contact

When you call the typical mobile home park owner to see if they would sell, you normally are beginning a journey that may require 5, 10 or even 100 follow-up calls. Here’s how it normally works. The seller says “I might be interested in selling, let me talk to my wife”. Next call: “OK let me now talk to my son”. Next call: “OK let me talk to my accountant”. You get the picture. Those who lack persistence will quit after the first couple of calls and will never get anywhere with most sellers.

Lending issues

Getting a loan to buy a mobile home park sounds easy enough. But there’s a big gap between what’s said and done. To get a loan you’ll need an appraisal, survey, legal work and other reports that you don’t control and will require patient on your part to assemble. And that’s assuming that you don’t have to pitch a large number of banks in the first place to find the right lender. This is particularly tree on parks that are “outside the box” as far as low occupancy, private utilities, and rural markets. The bottom line is that the persistent buyer prevails and those who quit never get the loan.

Collections is a continual battle

After you buy the mobile home park, the need for persistence does not end. One of the key struggles when housing the nation’s lower wage earners is collections. Although it’s possible to have perfect collections each month, it doesn’t happen without staying on top of it every day. Some residents won’t pay in any structure than no pay/no stay, and that requires sending the demand letters on the right days. The bottom line is that persistent is a virtue in operations as well as buying parks.

Selling and renting homes is a volume business

The general metric for selling or renting mobile homes is that you need three calls for one showing and three showings for one sale or rental. Add that all together and it’s 9 calls per 1 showing or sale. That’s a lot of volume. And that’s in a perfect world. If you have a new homes that is more expensive, or an old home that has tiny bedrooms, the amount of volume you need grows exponentially. And when it comes to volume of business required, persistence is once again key as you have to grind out all those calls and meetings and weak people will want to quit.

Conclusion

We’ve never met a truly persistent person who has not done well with the mobile home park business. It’s one trait that pays huge dividends, both in buying and operating parks.

In our recent 2019 Affordable Housing Summit event, you heard several times that one of the top-selling models is the “front entry” – a mobile home where the front door is on the short end facing the street, not the long end perpendicular to the street. These front entry homes normally feature a porch or screened in deck that also fronts the street. So what is this becoming so popular?

A more conventional look

In 99% of American neighborhoods, the front door faces the street. It’s been that way for hundreds of years. When you have a front-entry mobile home – even thought it’s HUD code – it looks like traditional stick-built. This makes the buying decision easier for the new entrant who is not familiar with the mobile home product and has some fears of it. It’s also important to note that front entry homes do not look like regular mobile homes, so that helps to reduce the negative stigma many Americans have against the product thanks to decades of poor media coverage.

Sensible outdoor living space

The porch – screened in or not – is an important living space for most customers. People enjoy sitting outside and watching the world go by. Unlike the deck on the side of a traditional mobile home, which simply looks into the side of the neighbor’s home and has no traffic going by, the front deck is a very pleasant and social place to sit.

A return to traditional living

Although mobile homes began as cutting-edge alternative to traditional housing (just look at the early models such as Frank Lloyd Wright’s “Americana Usitonia” model) this may not be the right fit for today’s customers. With 10,000 Baby Boomers retiring per day and downsizing their housing, this group is not looking for a radical design but the type of living they are used to. And the front entry homes most closely mimic stick-built housing. Even millennials like the front-entry product as they enjoy nature and being able to sit outside in a pleasant, covered manner is a real hit.

Conclusion

Front entry homes are a hot commodity in many mobile home parks. This is not a fad but here to stay. While they are not the right fit for every community, you should definitely look at them as an option if you are buying new homes to fill your vacant lots.

How many deals have you seen go down the drain because your attorney stacked up a million roadblocks to even the simplest problems, and then failed to offer any path to solve them? This is called “deal killing” and some attorneys do this so that they take no risk – if the deal never happens, they can never be criticized for missing a deal point, or for not spotting a flaw in the contract. The problem with this, however, is that you can’t get anywhere. At the other end of the spectrum are the “deal maker” attorneys that recognize real problems from trivial ones, and strive to solve these roadblocks using common sense and legal experience. And the best of those type of attorneys is Dave DiMarco from Woods Oviatt Gilman. We once had a deal go south in a big way – the very driveway into the property was determined to be on somebody else’s property. Any other attorney would have said “well, that’s it, the deal’s dead” but Dave DiMarco sprung into action. We located the owner, negotiated a purchase, personally handled the details, and the deal went forward. And all that over a weekend, no less. And that’s why we love Dave DiMarco and you should, too. If you need service like that, then consider using Dave DiMarco on your next transaction. You can reach him at (585) 987-2833.

In virtually sectors of real estate, newer is better. Newer hotels, newer apartment buildings, newer retail is always considered infinitely better than older stock. But this is not true in mobile home parks, where older homes often have attributes that are far better for both the park owner and home owner. So what are the benefits of older homes in mobile home parks?

Benefits to the park owner

Let’s start off with the benefits to the park owner, who relies on the homes to act as the conduit to receiving lot rent. Without the home, there’s no customer to pay the monthly land fee.

• Lower risk of the home moving out. Mobile homes built before 1976 are called “pre-HUD” and cannot be moved into any city in the U.S., so they are a permanent fixture. Those built after 1976 all the way to the end of the 80s are too old to move without substantial risk of breaking in transport. And the cost to move any home is around $5,000. So the only homes that move out are typically those that are new and have large mortgages on them subject to the repo man in default. Since all homes older than the end of the 90s are debt-free, old homes take virtually all of the risk off the table.
• Stable residents. It makes common sense that somebody who has lived in your park for decades and paid rent timely throughout is a much better risk than somebody that has just moved in. Older homes typically have older, more stable residents.
• Often high pride of ownership. A customer who has their home paid off has more discretionary spending for items such as carports, landscaping and outdoor furniture. These items help to build the desirable trait called “pride of ownership” which the lenders favor.
• Well-built and sturdy. Older homes often weigh more than their new counterparts. They have greater amounts of lumber in them – and solid lumber at that. This gives the home plenty of permanence. We have homes as old as from the 1950s in some of our properties.

Benefits to the home owner

Older homes also benefit the resident, as they have some unique traits over the new homes.

• Debt free. There’s no greater feeling of security than owning outright the roof over your head. America is built on the premise of the desire for home ownership – it’s the “American Dream”. New homes take 15 to 30 years to achieve that status, but old homes have already arrived.
• Lowest possible monthly cost. When you live in a mortgage-free home, you have a substantially lower hurdle in monthly housing cost – often 50% less or more. For example, assuming the lot rent is $300 per month and the home mortgage is an additional $400 per month, then the new home resident has to bring in $700 per month in payments, while the paid-for home costs only $300 per month.
• Low property tax. In many states we operate in, older mobile homes have extremely low personal property tax evaluations. In states such as Missouri – where personal property tax rates are only 1% -- a $2,000 mobile home only has property tax bills of $20 per year. A $40,000 new home, by comparison, would come in at $400 per year.
• Well-built and sturdy. As discussed above, old mobile homes are often built stronger than newer ones. This is because HUD has allowed for less expensive designs over time and the early homes were often “over-built” by the manufacturer. Just look at the weight on the title of the older homes and newer and you’ll see what we’re talking about. Old homes never die as long as they are properly maintained.

Benefits to the American public

Older homes also have benefits beyond just those of the park owner and resident.

• Provides the purest form of affordable housing. The affordable housing crisis in the U.S. is well known. Older mobile homes are the purest form of affordable housing as there is only lot rent involved and you are providing a home with yard at a price that is often $1,000 per month less than apartments.
• Keeps the American Dream of home ownership alive even if low capital and income. If the American Dream is truly home ownership, then older mobile homes are the only shot that millions of Americans will have at that dream.
• Architecturally interesting and part of the U.S. culture. Whether society wants to admit it or not, mobile homes are a part of American culture. We created them, and are home to 99% of them globally. Elvis lived in one in real life (he had it in the woods behind Graceland) as well as in two movies (“It Happened at the World’s Fair” and “Speedway”). The pink flamingo is a cultural phenomenon. Classic “trailers” have graced the Neiman’s catalog as well as several automotive museums. Roughly 8% of Americans live in mobile homes – that’s a huge part of our housing fabric.

Conclusion

Older homes have some amazingly attractive attributes – and it took decades to achieve them. Never think that new homes are the solution for every property. Often it’s the older homes that are what you and your residents need.

The New York Times called Frank a human encyclopedia of all things mobile home park and, if that’s true, then Mike Renz is the human encyclopedia of all things under the ground. You see, when it comes to Phase I Environmental Assessments, nobody in the industry is more knowledgeable than Renz. He’s our go-to guy for all things pollution-oriented, from Phase I reports to simply asking questions on what we see going on next door to the property (or even inside that concerns us). We were once walking through a property and saw a brown colored solution oozing from the property. Within minutes, Mike had pulled up the data and figured out what it was (rusty water from an iron-ore- rich artesian spring). That’ the kind of information that we find invaluable in today’s litigious world of environmental condition. On top of that, we’ve had Phase I reports that failed for existing pollution, and Mike Renz has been able to solve them by using common sense and technology, like the time he proved the EPA wrong by doing a simple core-drilling to prove that a supposed landfill on a mobile home park did not actually exist (it had been phoned into the EPA by a former manager who had a grudge against the owner). If you want that level of expertise on your side, then you need Mike Renz to be your Phase I Environmental provider. That’s who we use, and he’s amazingly good.

You can contact Mike Renz at (614) 538-0451.