I recently toured the MH/RV Hall of Fame Museum in Elkhart, Indiana. If you are ever in the area, it’s absolutely amazing to have a national museum devoted to our industry. I took a substantial amount of photos, which will be featured in the March Newsletter, since the Louisville Show review wiped out our available space in this issue. One of the biggest revelations from the museum is that the mobile home park industry has its roots in camping – and that’s why the product is so different than the other forms of housing. All mobile homes sprang from RVs. And RVs sprang from camping; communing with nature in tents. So mobile home parks are perfectly justified in having less formal infrastructure and a more “folksy” feel than apartments and traditional single-family, as our roots are in recreation and not a 9 to 5 day job. The MH/RV Museum will put in perspective where mobile home parks – and mobile homes – came from. So take a look in our next issue.
Memo From Frank & Dave
What I Learned From The Louisville Show
I was at the Louisville Manufactured Housing Show a couple weeks ago. For those who have never been, I think you’re just fine each year looking at my review, as the value add of driving to Louisville and paying for a hotel is very small for any park owner. However, if you’re within a day’s drive (like I am) and want to walk through a bunch of mobile homes, then it’s not bad exercise and – who knows – you might meet someone you know. Most of the time, the show looks 90% the same as the year before, with the exception of some macro design themes that the manufacturers have dreamed up, some of which you can adapt to your own home renovations. So here’s what you would have noticed if you had gone to the show this year.
Nothing has changed on the price points
If you’re looking for exciting new pricing, you’ve come to the wrong place. Single wides ran from $15,000 to $90,000. Doublewides twice that. TRU was the cheapest and the most expensive were companies you’ve never heard of (and there’s no reason why you would, since you’d be an idiot to buy a home like that for a park).
There sure is nothing new on exterior design
Except for the $100,000+ models, that have strived to replicate standard single-family looks, the exteriors of the homes looked the same as always. Basically, miles and miles of vinyl siding in predominantly earth tones, white and yellow. The usual plastic shutters and skirting, and decks that are made of lumber and are a dead giveaway, even when sited on a 100 acre farm, that “this is a mobile home, dummy”. I keep thinking that they will someday come up with better exterior options, but maybe the manufacturers have just run out of ideas.
A return to the dark side
The man cave look is back. Dark wall colors coupled with dark carpet and dark cabinets seemed a popular theme this year. While it went well with the interior designs for the show homes, I have my doubts that the dark palette is a winner in that old 1980’s home you’re remodeling right now. It makes the rooms seem very small and, well, depressing. The plus side is that it’s easy to mask any cosmetic flaws, since it’s too dark to see anything. Most of the models sported very low lighting this year, as well. All you needed was Dean Martin and a couple starlets and you would be set for the evening. Not sure we’ll see that same look next year, as there are very few parks in Vegas.
The disappearance of the accent wall
Last year the big item was the “accent wall” in each room, painted in a wild color to give the home some life. I think that yellow was the big accent color last year. However, this year the accent wall concept is kind of gone, except for the homes that sported one wall that was just a darker shade in the same color family. Not sure why they toned it down, but it’s not a bad design concept and one that you could employ in your remodeling. If you don’t like it, you can always paint back over it.
Even darker cabinets
Last year, I noticed that the kitchen and bath cabinets were trending darker from the old white color. This year, they’ve gone virtually black, replicating the dark exotic woods of expensive custom homes. They don’t look bad, and even tend to make the home look more modern, as this is the same trend you see at Home Depot and Lowe’s. Add some brushed nickel knobs and you’ve got a definite Martha Stewart look going.
The big takeaway: depth of color
If there was one feature of this year’s show that was unique and worthwhile to explore for your rehabs, it was the “depth of color” that the best homes featured. Essentially, the idea is carpet, walls, trim and cabinets in separate colors that all support each other, but keep things interesting. One home that caught my eye had medium dark walls with white trim and light carpet. It looked very similar to what you see in new SF construction, and is a reversal from the standard military barracks color palette. Most of us park owners think in terms of painting the entire unit one color (normally off white) and then adding a carpet that is pretty similar. What this gives you is a pretty bland design. Under the new “depth of color” concept, you just mix it up a little bit and make a visual canvas that is much more pleasing. We could all, for example, paint the trim a different color, and it might give any home a boost. Nothing radical – not pink, red of silver – but simply a darker or lighter tone of the wall color.
The winner of the strangest new design element that I sort of liked: the extra wall
You normally never see a wall in a single-wide mobile home that separates the kitchen from the living room. It’s typically just one big room. But several model homes featured a wall with two openings, that separated the kitchen from the living/dining area. Of course, the down side is that it makes the living room and kitchen seem even smaller. The upside is that it makes the interior look more like a traditional SF home. In most SF homes, the kitchen and dining areas share the one big room, and the living room is separate. So this design is an attempt to capture that same look. I would never add an interior wall to a mobile home, but I applaud the designer for at least trying something new. Putting up a mirror that features Dale Earnhardt is old hat.
I was sure glad the show is indoors
Have you noticed that it’s freezing outside? Upon my arrival at the show, the temperature was so low that the mercury had exploded in the thermometer and snow plow futures had gone up 900%. There were rumors of polar bears roaming around Kentucky, and I think that at least one exhibitor had been attacked by a walrus (or at least that’s what he told his wife to hide the fact that he had been drunk and lost his car keys). So the best thing about the Louisville show is that it’s indoors.
Louisville is not a bad town
If you do ever happen to go to the show, you’ll find that Louisville features a ride range of restaurants and hotel choices. It’s a big city, and sports a real downtown with real office buildings. My wife really likes Louisville, and looks forward to going there (although she didn’t go this year due to school obligations for our daughter). If I had to rank industry events, I’d have to rate the NCC event in Chicago as #1, the MHI show in Vegas #2, but the Louisville and Tunica Shows tied at #3. And third place is nothing to be ashamed of – you still get a trophy. I’ll be there again next year, so if you’re planning on going, let me know and I’ll meet you there.
The 2014 Summit On Affordable Housing Recordings
After five years, we decided to bring back the Affordable Housing Summit. Since we all have such busy lives, and no one can afford to lose two days to travel, we held it via Webinar on January 28th.
We had some of the most knowledgeable people in the industry, and a jam-packed day of revealing discussions on varying topics. If you missed it don’t worry!
We recorded the whole thing! And they are being made available for a limited time!
Along with the Summit Sessions you will receive two bonus Sessions!
Bonus Session #1 “How to Work with Brokers”
Bonus Session #2 “Park Evaluation Tricks” With Dave Reynolds!
We don't want you to miss this invaluable conference so we decided to extend the original event price of $49.99 for the recordings.
Remember, the recordings will only be available for a short period of time!
How Refuse Specialists Has Saved Us Thousands Of Dollars, And Why You Are Crazy If You Do Not Get A Free Consultation On Their Services
We got a call from a guy named Jack Johnson about six months ago. He was pitching a new concept to us: a company that would re-negotiate our trash contracts for a part of the amount saved. We are suckers for 100% performance driven concepts, so we gave them our blessing, assuming that it probably would not amount to much. To date, this relationship has saves us tens of thousands of dollars, and resulted in ten times more in additional property value. How do they accomplish this? We still don’t have a clue, other than they really know trash well. If you want them to look at your park or parks, give Jack a call at (817) 525-3241. You have nothing to lose and everything to gain. And it paid off big in our case. Check out this video about their services.
New Dodd-Frank Laws Are Sure To Upset Everyone Except Plaintiff’s Attorneys
Just when you thought that Dodd-Frank and the SAFE Act couldn’t get any more stupid, they go and outdo themselves again with the recently enacted rules regarding borrower’s ability to repay. Now, for the first time ever, the lender is responsible to verify all income and expenses on the applicant for the mortgage, and must ensure that they can make their payments. If the borrower can’t make their payments, then the borrower can sue the lender and win 36 times the monthly mortgage amount as the penalty. Yes, you heard that right. The lender not only does not get its payments and has to sue for foreclosure, but now it also gets sued for 36 times the monthly amount for making the loan in the first place (of course, I’ve over-simplified it, but that’s the general idea). Personal injury lawyers are planning on mass marketing, via billboards and other media, the simple ad “Can’t pay your mortgage? We can get you a big cash settlement fast!”. Thank heavens that we elected to change over to straight rentals on our homes and never attempted to become SAFE licensed mortgage providers. In our opinion, the mortgage industry is heading for certain destruction, and millions will be out of the running for the American Dream of home ownership, and have to be stuck with rentals for their entire lives, when the mortgage companies just stop writing new mortgages. Of course, this is great news for mobile home park owners, as any injury to the SF model only increases the demand for mobile homes. But it’s the sheer insanity of Dodd-Frank that makes you wonder if anyone in government has any brains at all (and we all know the answer to that question at this point).
Kurt Kelley Is The Only Resource You Need For Insurance
We use Kurt Kelley for everything -- from quick estimates on parks we're buying to random questions on how to mitigate risk and, of course, carrying the insurance on every park we own. That's not only our opinion, but that of most of the larger park operators. If you need insurance -- even just pricing on a park you're buying -- then call Kurt. If you want high prices, sloppy service, restricted coverage and low levels of expertise -- then call somebody else.
The Power Of Wal-Mart
A recent trip to our park in Kankakee, Illinois revealed that Santa had come early this year, and left us the greatest gift a park owner could ever want: a new Super Wal-Mart. There, just a couple blocks down from the park, was a brand new, beautiful Wal-Mart, with the usual Taco Bell and other fast food pads, new hotel and gas station. This one event has flavored the park so much that the appraised value has probably gone up 25%. There is nothing that gives a mobile home park peace of mind more than a Wal-Mart nearby. When you’re looking at mobile home parks to buy, one of the first items in diligence should be “where’s the Wal-Mart?” Besides Sam Walton’s contribution of the cut-price megastore, his team that picks new store locations is the best in the business.
Renz And Associates Has Become Our Official Phase 1 Expert
We have used many different Phase I providers over the years. But some recent events have changed our opinion on who the best Phase I provider is, and we want to spotlight some “beyond the call of duty assignments” that have saved the day on some deals recently. One of the most important occurred on a property we were buying in Indiana. The park already had a Phase I that had been done when the owner purchased it and financed it with a well-known bank. However, at the final hours when the deal was to close and be financed by a new lender, a Phase I issue popped up that we had never seen before. A disgruntled former manager of the park had called the EPA and claimed that the park was operating an illegal landfill, in which entire trailers were demolished and buried near a barn. Although the report was suspicious, it had to be substantiated before the deal could close. So Mike Renz immediately went to the subject area and, using a device that he developed, was able to do immediate boring and testing to prove that the claim was a lie. There’s probably no other Phase I provider in America who could do that work, or do it that fast, or do such a good job of it. As a result, we are now using Renz and Associates as our exclusive Phase I provider, and we suggest you look into using them, as well. You can contact Renz at (614) 538-0451.
Filling Your Vacant Lots Just Got Easier With The Legacy Park Finance Program
Most mobile home park operators have vacant lots to fill in their parks. They know they have the demand to fill the homes, and they know that they can get enough in rent to cover the costs. But the problem is financing – nobody carries the paper on the homes so you have to come out of pocket 100%, right? Well, that’s not the case anymore. Legacy Homes has brought out a new Park Finance Program that allows you to buy homes to fill your lots directly from Legacy, and they’ll finance 70% of the cost of the home including installation. We think that this will be a game changer for many operators, as they have been dreaming of a dependable financing source for their home purchases. And the Legacy product is outstanding as a home – nice floor plans, attractive colors, and great low pricing. We have been customers of this program from day one, and are excited that Legacy is now offering this program to all park owners, large and small. If you are interested in it, call Mark Ledet at Legacy at (786) 785- 9827, or contact us for a reference. We’re one of their largest customers.
Don’t Overlook RV’s To Fill Vacant Lots
Our park in Rantoul, Illinois recently picked up 12 full-time RVs. They are all from the same company, and are part of a long-term construction project. A lot rent is a lot rent, and these 12 RVs were never in our budget so it’s 100% gravy. Of course, we prefer mobile homes over RVs any day of the week. But we didn’t have to spend a dime to get those RVs in the door, as opposed to $10,000+ each to bring a mobile home into those same lots. If you own a park – and RVs are allowed in that park – then don’t overlook filling vacant lots with RVs while you save up to bring in more homes. All you need to get in the RV marketing business is a listing on a Google search of RV parks for that area, coupled with a decent website and some flyers at the Chamber of Commerce. This return on investment in time is huge, and no park owner should overlook this opportunity.
Security Mortgage Group Is Our Banking VIP
We did a lot of conduit loans -- and regular bank loans -- in 2013. A common feature of those loans was Security Mortgage Group. If you are buying or financing a mobile home park, let Security Mortgage Group get you the loan. They'll get you better terms than you'll ever be able to find on your own. That's why the win the industry mortgage broker award virtually every year from MHI. If you have any loans you need help on, you can reach Anthony or Gerry at (585) 423-0230.
The Market Report
Equity Lifestyle Properties - 86.07
Sun Communities - 88.63
UMH Properties - 17.18