The Necessity Of Test Ads

We’ve all seen the Progressive Insurance commercial where they build an “insurance amusement park” called “Progressive Park” and nobody shows up to attend – because without risk it’s not fun. This commercial should be a regular reminder of the needed “test ad” that should be completed during due diligence for every mobile home park purchased.

Demand is of crucial importance to any park’s success

It is impossible to do well with a mobile home park in the absence of demand. Although the need for affordable housing in the U.S. is vast, it is not the same in every market, and some locations render parks of no value at all. The solution to the question of demand is solved with a “test ad”, which is simply an advertisement in the largest metro newspaper classifieds section on “mobile homes for rent” as well as on Craigslist”. The ad should use a Google or similar number, and the calls should be tracked and transcribed for 10 days. A typical test ad should pull roughly 20 calls in 10 days.

Nobody knows a city like the locals

No stranger can expect to size up the desirability of a mobile home park location in one visit or a quick search on the internet. The only one who knows the desirability are the locals – your future customers. We’ve had parks in locations that seemed perfectly charming that got no calls at all and other seemingly rural locations where the phone ringed off the hook. The moral is that only a test ad can tell you the truth about your market demand.

Low cost/huge benefit

With the success of a mobile home park dependent on strong demand, any buyer would be making a huge mistake to risk their down-payment on a property with unproven affordable housing desire. The cost of a classified ad is only around $200 and Craigslist is free. From a risk/reward standpoint this should take no consideration.

Can use the list after closing so nothing is wasted

If you go forward to buy the property, you can use this list of test ad calls to form the first roster of potential customers. In this manner it’s a very efficient process that results in no wasted time for any of the parties involved.

Conclusion

A “test ad” is an essential part of the due diligence process on any mobile home park. It’s as essential as a Phase I study, a survey and a title report. You should never buy a mobile home park without this essential step.

Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.