The recent articles in the New York Times and Bloomberg News have started a lot of discussion about the mobile home park business, and the added scrutiny of having national reporters has caused the industry to confront the facts about many of the misconceptions that have plagued the mobile home park business for decades. We’re glad that these myths are finally being debunked, so we can all embrace the real statistics and forge a new industry devoted to affordable housing and creating the American Dream for millions of households that were not lucky enough to share in our nation’s prosperity – roughly 20% to 30% of our total U.S. population. We think you’ll find many of the news stories in this issue to be enlightening for not only yourself, but your bankers, investors, and others who have never really known the truth about the business.
Memo From Frank & Dave
The Bloomberg Article
During the time that the New York Times article about us was being written, we received a phone call from Bloomberg on a story that they wanted to write on the mobile home park industry. We told them that we were already the subject of a similar story, but would be happy to provide them with whatever information they needed. As it turned out, their story was really a continuation of the New York Times story, as it went on with the same theme and expanded it by following the adventures of three additional park owners, one of which was a Boot Camp veteran. The title to the article tells the tale “Double-Wide Returns” while the title on the cover of the magazine for the article is “Why Wall Street Loves Trailer Parks”.
To read the article, Click Here.
Do You Spend Enough Time Building Your Defenses?
During the Civil War, baskets were filled with dirt and sand and used to guard against shrapnel and bullets. Walls were built of wood and earth. These photos are from a Civil War museum in Tennessee that I passed by while coming back from the Tunica Mobile Home Show. Defensive fortifications were not just a good idea in 1861; they are still a good idea today. Only, instead of creating barriers from pieces of lead, we need barriers to guard against litigation from personal injury attorneys and a inadequate legal system. To build a good defense, we suggest that every park owner do the following:
Remove all items from the park that could create liability
Want to avoid a slip and fall claim? Then take away uneven curbs and cracked concrete. Park owners can sometimes be their worst enemy when it comes to litigation. If you proactively remove the source of liability, then you have won without the pain of going to court. Walk your property every time you visit, and see what potential problems there are that you can fix. Exposed holes, like water meter boxes? Dead tree limbs? Get rid of those now.
Carry a ton of insurance, and in the correct areas
In the modern world, $100,000 of insurance is not going to get you anywhere. You need to be thinking in terms of $1 million+. American juries are absolutely insane. Think the impossible can’t happen? Remember O.J. and Casey Anthony? Trusting the American judicial system is like trusting a crack addict to feed your dog while you’re out of town. Insurance – and plenty of it – is mandatory in the modern world. And you also need to carry more than just liability insurance. Workmen’s comp and other options are necessary if you want to have complete peace of mind. Need to know what insurance to carry and in what policy amount? Call Kurt Kelley at Mobile Insurance at (800) 458-4320. That’s who we use (and so do most of the professional operators in the industry). He can give you a free consultation on exactly what you need.
Have a decent formation structure
While there are many options for setting up your park ownership – and we are certainly not lawyers or tax advisors – we’re confident that you should not own a park in your personal name. That being said, you should explore the options of asset formation strategies to maintain advantageous tax and liability positions. A good attorney and CPA should be able to steer you in the right direction.
There is a slogan on a wall in a house in Charleston, Carolina, from the time of the Civil War. It says “anticipation is superior to revenge”. That means that you are way better off fixing potential problems before they happen, then fighting them later and carrying a grudge. There weren’t any mobile homes in 1861, but some of the philosophies from that period hold true today. Protect your assets and you will sleep much better at night.
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.
The Strange Mis-Conceptions About Trailer Park Males
While there are around 20 million people who live in mobile homes – and roughly 10 million men -- American culture has determined that they fit into three basic types: 1) the macho 2) the redneck family man and 3) the weirdo. While most of our customers fit none of these stereotypes, American culture has relished these three character types. The macho mobile home guy? Dallas Buyer’s Club. The redneck family guy? How about the show “My Name Is Earl”. And the mobile home park weirdo guy? How about the show “Myrtle Manor”. So why won’t someone do a show about a normal guy who works at a normal job and has a decent car and a normal family in which the normal kids go to a normal school? Not interesting enough to draw an audience. That’s sad, since out of our 10,000 households, that represents 90% of our customers. But until boring sells T.V commercials, we’ll have to continue to face those stereotypes that entertain audiences, and the keep the truth to ourselves.
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.
Why The Industry Name Change Has Not, Nor Ever Will, Work
Trailer park, mobile home park, manufactured home community or land-lease community? The argument over what to call our industry never ends. Well, it needs to, because there is scientific evidence which shows the winner, and is so convincing that it needs no further discussion.
The importance of SEO
SEO stands for “seach engine optimization” – essentially doing what it takes to stay at the top of Google and related search engines that the public uses to locate your business. In today’s competitive world, not being at the top of Google can damage or destroy your business quickly, as it removes your ability to attract customers.
What the results show
If you look at Google analytics, you will see that the following names for the industry pull the following searches in a given month:
Trailer park 14,800
Mobile home park 1,600
Manufactured home community 70
Land-lease community 40
Why you can’t go against SEO and succeed
It should be fairly obvious, but for a business to succeed in 2014, the internet needs to be your biggest weapon. Not showing up on search engines is sheer death if you are trying to reach customers to buy or rent homes or lots. If you do not use the lingo “trailer park” or “mobile home park” you have basically elected to not have your product on store shelves, leaving you to rot.
Hopefully, this bit of scientific research will put to bed the industry argument over re-naming itself. Before the internet, the concept was stupid. With the internet, the concept is supremely stupid.
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.
Why Mobile Homes Do Not Have A Shelf Life
We get asked all the time “what’s the actual life of a mobile home?” We shock people when we answer that they don’t have a shelf-life. But it’s the truth, and we’re not sure why people think that they are disposable.
The ingredients inside a mobile home
What the results show
The following is a break-down of the elements that go into a mobile home, as well as the time it takes for them to decompose:
Treated Lumber: 1,000+ years
Metal: 1,000+ years
Plastic: 450+ years
Glues and Resins: 500+ years
Unless you are talking about thousands of years of time, mobile homes have no reason to have a shelf-life any longer or shorter than a stick-built home.
What can destroy those ingredients
There is a way to destroy these components much, much faster. And that’s with moisture. Those terrible, abandoned, rotted mobile homes you’ve seen on the side of the road in Mississippi are the result of letting moisture run loose in the home. And that does not even include the danger of black mold. So any analysis of the life expectancy of a mobile home has to revolve around what type of maintenance will be kept up. If you can keep the roof from leaking or the pipes from bursting, then the mobile home will certainly outlast us all. In fact, we have mobile homes in many of our parks that are already 60+ years old, and show no sign of age.
Note that moisture is also capable of destroying a traditional stick-built home at a rapid pace, so the single-family home has the same shelf life as the mobile home both wet or dry. And with simpler roof designs and fewer pipes, the mobile home has a better chance of survival with a bad owner.
Mobile homes are built to last. The industry was injured by unscrupulous mobile home dealers that attempted to pretend that you had to “trade in” your mobile home every few years, like a car. In fact, a mobile home has nothing to do with an automobile, and should never have been suggested to be in the same species. A mobile home has no engine or transmission. It’s made from simple materials that have an extremely long life expectancy. It’s about time that this myth was de-bunked.
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.
Why Mobile Home Parks Are Not Crime Centers
We can probably thank the show COPs for the common perception that mobile home parks are dangerous to be in, and are ground zero for criminal activity in every city. It’s shocking that the industry allows this concept to persist, when there was a landmark study done in 2010 that disproved this theory once and for all – yet nobody has ever heard of it.
In 2010, the U.S. Department of Housing and Urban Development did a report on the relation between crime and mobile home parks, written by William P. McCarty, an assistant professor at the University of Illinois at Chicago. It was the first such statistical study ever done on the concept of mobile home parks being breeding grounds of criminal activity.
What can destroy those ingredients
The results of the study were extremely clear-cut.
“Despite this negative stigma, academic research focusing on crime and life in mobile home communities has been virtually non-existent.”
“Official police data from 2000 through 2002 in Omaha indicate no statistically significant difference in the rates of crime between blocks with mobile home communities, blocks adjacent to mobile home communities, and all other residential blocks.”
“In regressions controlling for a variety of other variables, the association of mobile home communities remained statistically insignificant. Blocks adjacent to mobile homes also manifested no significant association with either property-crime or violent-crime rates.”
So there is no correlation between mobile home parks and crime. Period.
It’s amazing that the industry never publicized this report. But you can get a copy off the internet and read it for yourself. Here’s the link to the complete report:
We never thought there was a correlation, having spent a huge amount of time in our parks. If anyone ever tries to claim that mobile home parks are crime centers, have them read this report and that should put an end to the discussion.
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 - 74.73
Sun Communities - 77.40
UMH Properties - 12.44