People living in school busses is charming on the Partridge Family, but not so much in real life, In this second in our five-part series on Tough Turnarounds, we’re going to review a park that had a half-century of decline and the battle to bring it back to life. You’ll learn what makes a mobile home park worthy of such an effort, and the exact steps that were taken to make this park a nice place to live again.
People living in a school bus. No, I'm not talking about the hit show from the 60s, The Partridge Family. I'm talking a different kind of crew, a different kind of use for that good old school bus that probably was not intended when it came off the assembly line. This is Frank Rolfe with Mobile Home Park Mastery Podcast, and we're back on the second of our five-part series on great turnaround stories from mobile home parks called Tough Turnarounds. We'll be talking today about a property in Oklahoma City. I'll give you the background on it, everything that was wrong with it, how I fixed it, and the lessons learned.
This property's called City View, and it's on Shields Boulevard there in Oklahoma City, and it came to me from a broker who said, "I've got a deal that's so screwed up, you just won't even believe it." I went out and looked at it and he was totally correct. This was a park that was filled with people living in school buses, they were living in camper shells. They were living in conditions I had never seen before, full-on Appalachian poverty, straight out of the Oklahoma Dust Bowl. But these are in modern times and looked like something out of Life magazine.
So, what do you do? Would you even buy it? Well, that was the first thing I had to ask myself. Would I want to take on a park where the people were living in conditions that I've never seen before, maybe, outside of National Geographic? The answer was, well, maybe. I did my diligence on it, and what I found was that the location was pretty good for one big reason: it's in the Moore School District, and Moore School District is one of the best school districts in all of Oklahoma City. But could I turn this thing around, and if I could, how would I even finance the transaction? It looks so bad, it would be seemingly impossible.
However, the good news is since it was such a terrible-looking property in such poor condition, I was able to convince the seller to carry the financing, and I mean carry it big time with a very, very small amount down. So, with the financing in hand from the seller, the location being stellar, I thought, okay, I'll give this a shot. I think I can tame this beast, and so I began. First thing I did is I walked through the park, trying to determine who was salvageable and who was not. I came upon one family of four, living in the popup shell of a pickup truck, sitting on cinder blocks. So, they did not even have a pickup truck; they just had that camper shell thing that you see in a pickup truck. A full family of four.
So, I told them, "Gosh. I'm with the management company. We're taking over the property, and I don't think they're going to let you stay." And she said, "I don't understand why." I said, "Well, you can't live in a camper shell, and you certainly shouldn't live in a camper shell with two kids." She said, "Why not?" I said, "Well, number one, you don't have a bathroom, and in Oklahoma, you have to have a bathroom in a residential dwelling." She said, "I don't need a bathroom. I already got one. I just go down the street to McDonald's." I thought, okay, kind of a strange concept. I said, "Well, what about the fact that, under Oklahoma law, you have to have a bathtub or shower or sink?" "I got that too." "Where do you got that?" "I got that at McDonald's."
Boy. I would not want to be the folks cleaning the bathroom at the McDonald's, and I'm not sure how many people in the park use that same excuse, that all of their bathroom facilities were in a McDonald's, but there they were, living in vehicles and school buses. It's just a terrible sight. So, I made a list of the ones I thought could survive, and there was about 50% of the park that would have to go, and 50% that would have to remain. So, what do you do? Well, I went ahead and decided on the front end, let's just get it all over with at once. So, I non-renewed all the people in the school buses and the camper shells and the vehicles, and just said, "You got to go." Yes, of course they were not happy. They wanted to remain, but under law, they had to go, and ultimately, got all of them out of there.
The next thing I did was I put together ... With their leaving, of course, many of them abandoned their vehicles and all their junk. I went ahead and cleaned up, for the first time in half a century, the park. I had this amazing picture of a pile of debris that is 150 feet in diameter, 10 feet high, and in the background of the picture, you'll see actual ... That giant, earth-moving machinery like stuff. That's what we brought in to clean up this property. 50 years of accumulated trash and debris. Quite spectacular, except I was having to pay for it. Once we got the pile of trash out, then, the next thing is what do we do with what's remaining? I went door to door on the homes that remained, and we did little touch-ups. We would put the skirting back where it was missing, we repaint a piece of the house. We change out the foil in the window with white mini blinds. So, the folks that were remaining now were sightly; now, I had something I could build the park back from.
Up to bat next was how do I get rid of the name? The name was City View, and City View, in Oklahoma City at that time, basically meant that's where you go to buy drugs. That's about its total identity in the marketplace. So, I knew I had to change the name, but what do you change the name to? What could I change it to that would be a benefit to the park? Well, I thought what is my greatest advantage with this property? Why did I buy it to begin with? And that was the fact it was in the Moore School District, so I knew the best thing I could do would be to put the Moore School District into the name. That way, I'd converted the name to a marketing tool.
So, I renamed the mobile home park Moore Estates Mobile Home Park. In fact, not Mobile Home Park, Manufactured Home Community, to give it some extra class. So, now I've got a good name, I've got a cleaned up property. Everyone who's left, home looks presentable on the outside. Now, on the inside, I'm not sure what's going on. But now, I had something I could actually work with. So, then what do I do next? Well, the former mom and pop owner had not properly spaced the lots. He had homes that were too close to each other. When I started ripping out all the old junk in the school buses, I realized what I needed to do next was I needed to actually re-space the park.
So, if I was going to bring in homes, I could not put them back exactly where they had gone before, because they were all jabberwocky at different angles, and in many cases, you had two school buses that were only a few feet from each other, and they would never fly with the fire marshal. So, I re-spaced my lots, so now I'm ready to actually start bringing in homes and, at this point, because I cleaned up the park and changed the name and changed the demeanor, and now it's a very clean and sightly place to live with an all new fence and an all new, proud entry sign, I get a huge break. The huge break is that they announced they're going to shut down a park a couple blocks from me to build a loze.
So, what happens? I rush over to the park, I give everyone fliers, saying, "I really would like you to come out to Moore Estates. I will help pay part of the cost of the move. Please come to my park." And lo and behold, I ended up with about 30 people ... 30 mobile homes from that park that was being demolished moved into good old Moore Estates, and that really helped enormously. That took the park from being at half occupancy or worse going in, to being nearly stabilized occupancy, and that really was what I was waiting for. After I got that done, I continued raising the rents, I continued doing all the things you need to do to stabilize the financials, and then I sold the property off.
So, what were my lessons learned from this tough turnaround, from this giant pile of debris, from people living in school buses? Number one, location, location, location. What made this turnaround possible was the fact that I was in the Moore Schools. Had I not been in a favorable school district, I don't think I would have bought it. People really, really like school districts; it's one of the misconceptions of a lot of people entering the industry. They think, oh, they're trailer park people. What do they know? What do they care? They care a lot. They have the same hope and desire for their kids as you do, and they want the kids to go to a good school, and then later go on to college and have a nice career.
Secondly, everyone has learned that school districts, particularly good school districts, are a precursor to generally charming quality of life. I've never seen a situation where there was a good school district in an area that had high crime or low pride of ownership. So, location was key. When you're looking at doing a tough turnaround, you got to have that great location, because that's what you have to really have to make yourself feeling compelled to do it.
Next, changing the name is very important. If I had gone in and cleaned up City View, but left the name City View on the park, it would not have had as good an ending, because even though I would have cleaned it, the first impression of everyone in the area was, "Oh, City View. It's nasty," and nobody would want to live there. So, changing the name was a great idea. We've changed the name on many parks over time, and I'll give you a little insider's secret, which is kind of odd, but cities have no problem in renaming mobile home parks. You can take any old mobile home park out there and change it to, really, any name that you desire, and they have no problem with that. But they won't let you touch the streets. The reason is that they have a 911 database of all the street names. So, you would think you could just go out and change the name of a street, maybe to your parents, or your daughter or something, but changing street names is just impossible. But changing names of t he entire macro park? Not a challenge at all.
Number three, I was smart to re-space my lots on the front end before bringing in the new homes. It would have been easier to leave them as they were. I had to pay extra to move over some power pedestals and some water and sewer connections, but that's what gave it that uniform look that lenders down the road wanted, and they became very important when I sold the park. So, when you see fundamental flaws that mom and pop made, even though it's a little more money on the front end, you're probably smarter in fixing that, because that'll come up when you later try and get that park when you sell it, or refinancing it appraised.
This next one's very, very important as far as a lesson learned, and I've learned this many, many times. Don't even think about trying to maintain a slumlord business model. I could write entire books on how much I hate slumlording as a business model. It just makes no sense. Here's what happens, you think you're making money by not putting any money back in the property. Every month you take the rents and you put nothing back. You have absolutely no care of what happens, but in the end, when you go to sell it, you're penalized by having a horrendously high tap rate and a very low appraisal amount, and the banks don't like to finance it. If you just look at it just from a dollar perspective, the slumlord always loses. It's not a winning proposition.
Then there are the moral angles. It's just not good; it's just not smart to have people living in a camper shell or a school bus on your property. What would happen if one of them caught on fire? What would happen if the media went out there? What would happen if an inspector went out there? What would just happen to you, yourself, going out there and seeing the park that you are a functioning part of the slumlording process? So, slumlording doesn't work. I never, even after I lost half my occupancy, ever looked back and regretted that I was kicking out people who were not living in legitimate living conditions. So, don't maintain slumlording parks. When you see them, on the front end, acknowledge you know what? That's not a business model I agree with. I'm not going to continue on with that, because I don't think it's a smart idea to do.
Next, always try and seek out deals that are hugely, cosmetically flawed. What made this deal so attractive in the end was I got it at such a low price and the seller would carry the financing on it. Why did they? Well, it's supply and demand. Basically, there were not many people that would want to tackle a tough turnaround of this magnitude, and deals that have really poor cosmetic issues are foolers. They're really, really good from a buyer's perspective, because it doesn't cost much to fix the aesthetics on a mobile home park. What made this park look so bad were people living in school buses and vehicles, but if you really think about it, it didn't really cost me any money, having them do that, and then when I non-renewed their leases, I wasn't out a whole lot. So, getting those school buses and vehicles and things out of the park, that was a very small price to pay for getting a really, really good price on the park and getting seller financing.
Now, it's very important to also note there are some things out there that are very expensive to fix, and some things that are not. In this case, what I was fixing was not really capital intensive. The park had pretty good roads. Water and sewer was pretty decent; the power system was fine. Those are things that cost a lot of money, not just general appearance and cleanliness. And yes, I can say, "Wow, I build this mound 100 feet in diameter, 10 feet high of trash." And yes, it cost me thousands to clean it out, but that doesn't even hold a candle to what it would have cost if I had to repave a section of the roads. So, it's always a good situation when you can find parks that are cosmetically flawed, because fixing cosmetics is relatively inexpensive.
Now, next week, I'm going to go over a different kind of turnaround. I'm going to tell you about a tough turnaround where the seller did not even have a rent roll. They had never invoiced the customers. The customers had never paid their rent, and in trying to resolve this next tough turnaround, I was chased down the street by a 300-pound man in a diaper. So, we have that in store for you on our next podcast on Mobile Home Park Mastery. This series, again, a five-part series on the toughest turnarounds, and yes, there are some really tough ones out there. But the good news is tough turnarounds are typically very, very lucrative if you know what you're doing. Again, this is Frank Rolfe with the Mobile Home Park Mastery Podcast series. Hope you enjoyed this, be back next week.