In 1955 a business school professor named L.E. Michelon published the first text book on mobile home parks titled “How to Build and Operate a Mobile Home Park”. Sadly, this book could not be further from the truth in how the industry operates today. In this episode of Mobile Home Park Mastery we’re going to discuss what the main differences are between 1955 concepts of construction and management vs. the modern equivalent. Come see how times have changed (and for the better).
Episode 133: 1955 Time Warp Transcript
For the longest time, the mobile home park industry only had one book. It was the 1955 book entitled How to Build and Operate a Mobile Home Park by a business school professor named L.E. Michelin. Now when I got in the business, I was able to obtain a copy of this book and then recently I bought a second copy of it as well. It's a hardbound, small book. It's about 150 pages in length, but it gives you an unbelievable look into the industry in 1955. And it's fascinating now comparing that to the industry some 65 years later. So what have we learned? How has the industry changed from 1955 to 2020? Well, let's review it step-by-step. First off, the very title of the book, how to build, not just how to operate, but how to build a mobile home park means back in 1955 you could build mobile home parks virtually anywhere. And many, many people did.
That's where the industry began. That's where the 44,000 parks in the United States began was back in the 1950s and the 60s. Of course today you really can't build it all. So the first observation on the book in 55 versus today, is the very title. The very first few chapters of the book mean nothing today because you just can't build in the US. Now there's about 10 new parks they assume built in the US each year, but there's also about 100 torn down. So we're actually a shrinking, an endangered species. But when this book was written, building them was as simple as going down and pulling a permit and getting some bids done and bringing in the old bulldozer, and firing it up and getting going on it. So that's a huge change. The next item in the book is an emphasis on the fact that all mobile home parks need big clubhouses.
And if you read the book, the reason you need the clubhouse is that people who can't really live in mobile homes back in 1955, they can sleep in them, they can hang out in for a little while, but they get claustrophobic. Because bear mind in 1955 most of your homes are only about 30 feet long and eight feet wide. So really about the size of a modern bedroom and in some cases bathroom in a modern home. So surely people just got claustrophobic in there. Bare in mind, in that little tiny space, there was often two bedrooms, a kitchen, a living room, and a bathroom. I don't even know how everybody fit. So the book gives you a glimpse into that period where you had to have a large clubhouse simply so you wouldn't go nuts, a place to hang out. And then you just go back to your mobile home at night to sleep.
Of course, today's it's a different matter. The homes have grown much larger in size. Your average mobile home today is around a thousand square feet. So people have plenty of room now to live in their mobile home. They don't need the clubhouse anymore. However, the clubhouse's role has changed. Now the clubhouse is the place where people go to meet other people and build relationships. So in 1955 it wasn't about relationships, it was about trying to stave off insanity. Today the clubhouse is basically a social center.
Next item you notice in 1955 in the book is all about building laundry rooms, how to do it, how big they need to be, washers and dryers, and how many. That's because in 1955 they had no washers and dryers in mobile homes. You had to have a laundry room, otherwise you had no laundry. Now I guess some towns had Quick Wash like structures back in 1955. But they probably weren't very near the park and that's probably not everyone's dream.
And also remember in 1955 the average us household only had one car. So it was very unlikely that whoever was home was going to have any form of transportation to get to the Quick Wash. So needless to say, you needed to have a laundry building. Today, all mobile homes have washer, dryer connections and even some of the olders have been retrofitted with washer and dryer connections. Such that no one really uses those laundry rooms today. Now in some mobile home parks, who have RVs in them, they're still used. Because RVs do not have washer dryers in them. But for the most part there's probably no feature of 1955 in a mobile home park less valuable than the laundry room. So what do you even do with them in today's parks? If we were rewriting the book today, what we'd say is finding an adaptive use for that building.
Maybe you should rip out all the old plumbing and washers and dryers if they're still in there, and make it into some kind of community building where people can go and forge relationships with each other. Another option would be to make it into some kind of a housing unit, like an apartment. It typically does have water and sewer and electricity, so it might work well for that. Even if you had to cut it into self storage. You need to find some use other than laundry. There is simply in mobile home parks today, not enough quarters going in those washers and dryers to even make any sense of their existence. Another big item in the book from 1955 is the necessity for park owners to make money on everything but lot rent. That's right. They were trying to make money on all these other items, but not the lot rent. Because a lot rent was viewed as something that was not where the money was.
It's kind of like a gas station. You know a gas station today, they sell gas, but that's not where they really make their money, where they make their money is when you go in to buy the gas and you buy that bottle of Snapple, or that Slurpee, or that candy bar, or potato chips, that's where all the money is. Those have huge markup. The gas has very little markup. So in the book it tells you you definitely need to build a store. And you need to sell gas. It has probably 50 items you can do to make money with your mobile home park and not a single one today would be appropriate. No owners that I know have stores, gas stations, and these variety of items are just down the street and way better than anything you could ever do. So today of course the money is not in selling knickknacks and bags of potato chips, but actually in the lot rent itself and that only makes complete sense.
I was kind of shocked the first time I read the book in fact, there was such an emphasis, such a weight on these extra add on items. Because it didn't make a whole lot of sense and I was even having trouble figuring out why lenders would make loans against properties like that. But we'll come to that in a minute. Another big shift between 1955 today is simply the way that you manage. When the guy wrote the book, he was focused on people that were going to self manage. And you can see that everywhere you go in America and look at mobile home parks, you always notice there's always that frame house or that brick house, that's to the left or right of the entrance or maybe it's behind the mobile home park and sometimes right in the middle of it. That's where the owner lived. Back in 1955 it was very, very, very common by far the norm that the owner of the mobile home park with live on site.
Now, why would people even want to do that in 1955? Well, if you recall in 1955 the demographics of people in mobile home parks was higher than single family homes. So these were like highfalutin neighbors. So who wouldn't want to live in the middle of the mobile home park? Those folks in the trailers have higher demographics than you and your stick-built home back in 1955. Of course times have now changed. Modern owners don't want to live in the mobile home park. They look at it for much more passive investment than that, so they're more than happy to hire someone to manage, but they have no desire to self manage. Now in the RV park industry, it's fairly common still even at the larger parks for people to self manage them. That's because a lot of people who own RV parks look at that not only as a financial investment but a lifestyle investment for them.
They don't like their job, often they don't like where they live and they want to live out in a scenic area where they can have interaction with the residents to keep them entertained, and make money and basically create an all new lifestyle for themselves. But that's no longer really true of the mobile home park and that's why the management part of their book is also equally odd. It's not about hiring the manager and having the manager manage for you. It's all about you managing it yourself and that's something that most people have no desire to do. Finally, in the book and throughout the book, there's a general theme of the difficulty in obtaining financing. That's because 1955, this was a very new product. It was like self storage back in the 60s. It was considered weird, funky. No one knew if it would work or not. And most banks didn't want to put a whole lot of money in it.
So getting lending was tough and that ran for a long time. Even 40 years later when I got in the mobile home park business, getting a loan was often the hardest thing you had to do if you wanted to buy a mobile home park. Harder than finding one harder than due diligence. The hardest thing of all was often simply finding a bank that would sign a note to give you money to buy a mobile home park. Because coming off of decades of stereotypes, most banks were terrified of the asset. Weren't sure how you made any money with it. There was no positive reinforcement out there. No books, no courses, no articles, no nothing. So a lot of banks just looked at the industry as being strange, and a misfit industry, and wouldn't touch it. Of course today, 65 years later, one of the easiest things for many people buying mobile home parks is obtaining the financing.
We have such a wide variety seller, financing, bank financing, conduit financing, agency financing, there's even insurance financing, all different variety. I rarely hear anymore of anyone who has to drop a mobile home park deal because they couldn't get financing on it. And that was clearly not the case in 1955 where often that was the most difficult struggle of all. So what does it all mean? Well, it means that the mobile home park industry, although it got its early origins in the 50s it doesn't have a whole lot to do with it today. So you can't really read that book. And even though he put a lot of effort into writing it, and even though he may have been a well-respected business professor at the time, things have just completely changed as far as the product and the customers go. But that doesn't mean there are things in there that are not to be learned.
Clearly there's a focus in the book that we should all try and build an attractive product, a well built product. That's all still true today. We watch over the aesthetics and the streetscaping. That's entirely true also. And there's a general theme to the book that we're providing a very valuable service of affordable housing for Americans. And that's still true. So there are many things in the book that are still adaptable, perhaps to the new era, but unfortunately most of the book, although very, very interesting, is merely trivia, doesn't really apply today. So if you're trying to learn the correct way to build and operate a mobile home park, that book from 1955 is probably not your best bet. But it is a very interesting anecdote as far as how things were about 65 years ago in the industry. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Enjoy talking to you, and talk to you again soon.