Tornadoes. Hurricanes. Fires. Mobile home parks are not immune to natural disasters. So how do you deal with them? In this final segment of our six-part series on “Dirty Jobs” we’re going to discuss the different types of disasters that can happen in a mobile home park and how to clean up the mess and restore order to your mobile home park investment. In a world in which things can go bad quickly and without warning, it’s important to know how to deal with worst-case scenarios.
Fire, flooding, high winds, it sounds like an advertisement for the Weather Channel, but it's not. This is Frank Rolfe with the Mobile Home Park Mastery Podcast series. I'm here in our sixth and final segment on our dirty jobs that mobile home park owners have to deal with. We're going to talk all about disasters, natural disasters. Things that happen that came out of the blue. You can't possibly plan for them, however you need to know what to do when they happen.
We're going to break this down into five different categories of things that can happen that you don't want to have happen, but could. The first one's simple, power outage. What can cause it? Many things can cause a power outage. You've been watching it in the news. Those hurricanes up in South Carolina. Or maybe it's a tornado somewhere else. Or maybe it's just the fact that the power grid went down.
What happens when the power goes out in the mobile home park? Well, this one is simple because typically nothing happens when the power goes out in a mobile home park. People lose their electricity. It's not your fault. You didn't cause it. And when they get the power company thing fixed, they turn it right back on. But there's one type of park you have to be aware that you have to do something different on, and that is if your park has what's called a lift station.
Now what's a lift station? Sewer can only drain down. It can not drain up. So when the city's sewer line is higher than the park's sewer line, you have to push it up the hill. And the device that pushes it up the hill is called a lift station. It's a concrete cylinder. It typically has two pumps inside. The sewage goes into the cylinder, and the pumps in the cylinder then blast the sewage up hill. But what's powering those generators is not gasoline. They're not gasoline powered pumps. What does it is electricity.
When the electricity goes off, you have no more power in those engines and no more way to blast the sewage uphill. When that stops, here's what happens: all the sewage that you were blasting up hill turns around and starts coming down. And meanwhile that little cylinder keeps getting filled with water and sewage from all the mobile homes. So what do you do? That's a two step process.
Number one, you need to have a generator. So if you're a mobile home park owner, you've got to have a generator if you've got a lift station sitting there somewhere in a garage or the club house because if you lose the power to that city, it's too late. Everyone's already gone down and rented every generator they can find. They've also bought every generator that's to be sold, so sometime as a hobby find yourself a good, used generator with enough capacity to power your lift station, and keep it handy. It will keep you from having nightmares at night should the power go out.
Let's say, however, you're just now listening to this podcast, and gosh darn it, you lost your electricity, and you have a lift station, and you can't get a generator. Then run down and turn off the water. Because if you turn off the water, it will greatly restrict the flow, obviously, into that lift station and may buy you enough time to go ahead and get, that generator, and get it fixed.
The next item is fire. Now how does fire work? Well, we don't own any parks in California, so we're typically not too worried about wildfires. Most of our parks are located within city boundaries. Our neighbors are all stick-built homes and office buildings, and there's a whole lot of concrete around. I've never had a raw, raging fire hit a mobile home park, although I know people in California who probably have. I'm talking instead the fires that happen inside mobile home parks because mobile homes have been caught on fire by the resident.
So what happens? How does that work? Well, number one observation: I was once in a park right when a fire began in a mobile home. I don't know how I timed it that way, but I just did. I just happened to be there. You would not even know the mobile home was on fire, except for the fact that there was smoke seeping out from around all the windows and the door. That's the only way you would know it was on fire because mobile homes don't burn very well.
The reason they don't burn very well is for several reasons. Number one, a lot of the materials inside are man made, a lot of resins and plastics. Those things don't burn very good. The other item is a mobile home is like a shoe box that's sheathed in metal. There's not a lot of airflow going in, and fire has to have airflow to burn. So what happens is it just kind of smolders and smokes.
You won't see any flames when a mobile home burns, typically until the fire department comes out. They'll knock a hole in the wall or in the ceiling to put it out. And when that happens, there's a sudden rush of air in, and then you have flames shooting out the top. But I've really never seen a case where any mobile home park had to survive the burn of more than just a home. Normally that one home will burn just hot enough that it might cause some major damage to the homes surrounding. Maybe it would make their vinyl siding bow a little bit, but typically it's not a big deal, so I have not seen a lot of fire issues.
A bigger issue when you have fire in your mobile home park often is it gets the fire inspector further looking at your park and anything else that he perceives it to be deficient on. The first thing might be that says, "Hey. Why don't we put in fire hydrants?" Well, that kind of goes in last weeks talk about grandfathering because in many cases you're not required to do that. The fire martial says, "Hey. I think that would be a good idea." That does not mean you have to do it; it's just on their wishlist.
Another problem that can come up though is the street's width and the capability of handling major fire trucks and ambulances. If your park was built for off-street parking, and your residents have too many cars and have started to park on street, that will often restrict the width of the street, and now there may be a problem getting emergency vehicles in. So what do you do then? Well, you may have to go ahead and stripe your streets as fire zones, no parking, and then just taking some vacant land on the property, wherever it may be, and make that overflow parking.
That's typically been the biggest issue I've seen from fire is really not the burning, not fire catching or spreading between homes because they don't burn well at all, typically instead it's issues with access of the emergency vehicles. So if you've got a park that does not have a parking plan, and the cars are parking on the street, and you have a fire, it's my bet the city will come down on you, and you will have to build a reasonable plan such that ambulances and fire trucks can get down your streets. But as far as mobile homes are burning, as far as one home catching the next ten on fire, never seen it happen, never heard of it happening.
Bear in mind that all of your ceilings in mobile home parks are either metal, which doesn't burn, or they are asphalt shingles, which also don't burn. So I'm not really sure how the fire could spread. The exterior of the homes are all, again, metal or vinyl for the most part, so I don't really know how you would catch the fire from home to home.
Now the third one is non-hurricane flooding, just regular old flooding. Maybe there's a lot of rain that happened upstream. Like right now in Austin there's a lot of flooding on because it rained a lot in Texas, and it's all flowing downstream, and now it's going into Austin. So, how do you deal with that dirty job? How do you deal with flooding?
Well, here's the good news, mobile home parks have an advantage on almost everybody in the whole city, and that's that the mobile homes are already up on stilts. Our typical mobile home is about three feet off the ground, and that gives it a three foot headstart over that stick-built home next door that's right on the ground, so we actually deal with flooding pretty well.
However, there's something you need to know. Anytime you buy a mobile home park in a flood zone, look up and see what's called the base flood elevation is, also known as the BFE, because what you have to make sure is that in a normal flooding event that the water does not rise to the bottom of the floor in the home because if it does that, the home will be destroyed. So what you have to have happen is you've got to have it where the BFE is significantly lower than the floor of the home in order to be happy. As long as that meets the criteria though, typically you will do okay in normal flooding.
Back in Hurricane Harvey and the gigantic rains that happened there, we owned some parks in Houston. We still own them today. And the water, although the highest in recorded history, and we were even there downstream before that one dam broke, we had not one home damaged because we were the lucky folks that were three feet off the ground, but all the surrounding stick-built and the first floor of the multi-family got wiped out. So again, mobile homes and flooding, although a dirty event, it's not always the end of the movie.
Now what will happen, your skirting will be in many cases destroyed, not all of it, but certain portions will be washed away. So wherever the water ... When the water hits that mobile home as the roaring rapids, it finds the weakest point in the skirting, and blows through that, then it blows through the other side's weakest spot. So all your skirting won't come down; the weakest sections will to relieve the pressure.
Now let's move on to tornadoes. This is something we know very well because we've had parks directly hit by tornadoes. We've had entire parks wiped out, and we've also had park sections damaged. So what happens in the tornado. Well, we all know what a tornado is. It's a phenomenal wind event. It's the highest winds you'll find, much higher than you find in hurricanes, so high that pieces of straw can be lodged into telephone poles from it. However, what happens is they're not typically large scale events. So normally when you have a tornado what happens is it wipes out portions of a city, but not the full devastation that a hurricane can do.
So what happens when it happens? Well, here's the real life story. What happens is the Red Cross and FEMA descend upon whatever market was unlucky to have the tornado, and they basically give the residents in the mobile home park $30,000 each if they didn't have insurance, so they can go out, and buy another home, and put it back in the lot. We in fact are the default setting for FEMA and the Red Cross for housing. You probably saw it in Katrina where they bought all those mobile homes and RVs. That's what they do.
So when you're in a mobile home park in one of these areas that gets hit, life is easy because they're going to go ahead and repopulate you as part of their standard plan to get people back in housing. If you have old homes going into a tornado and they blow them all down, you're likely to get new homes put back. So sometimes a resident actually comes out ahead. They get their old flat roof home replaced with the newest model and nothing out of their own pocket. Then, the same folks from the Red Cross and FEMA go into the main city. And anyone there who has a stick-built home that had no insurance, they go ahead and give them $30,000, and tell them to go put a home in the mobile home park. So really mobile home parks and tornadoes get along pretty well.
Now you might say, "Well, why is that? And what else can go wrong?" Well, tornadoes are unique. I went into the Joplin market after the Great Joplin Tornado a few years ago. And as you all may know, if you'll recall from back then, Joplin was almost completely leveled. It took out their shopping mall. It took out their hospital. It took out almost everything. I mean that path of that tornado was right through the middle of town. However, 18 months later, over 80% of the city was already back: the mall, the buildings, the hospital.
How did they do that? Well, think about it for a moment. All of those properties all had insurance for wind. Wind is the most normal of all insurance products, so the mall had insurance, and the hospital had insurance, and all of the burden fell upon State Farm, and Progressive, and all the people that insured, and the government didn't have to put in a penny. So basically the government just followed behind in where there were holes in the coverage because people had not paid that had insurance or were under insured. They would step in and cure that. But the bulk of it, 99% of it was paid by the American insurance industry.
Which brings us to the final one, which is mobile home parks and hurricanes, not as happy a relationship. Here's the deal. When you have a hurricane, almost nothing that happens is insured because most of what happens is flooding. Let's just take Hurricane Harvey as an example. Hurricane Harvey had 200 billion dollars of damage, but only $20 billion was insured. So only 10% of the total price tag was insured. 90% fell back on the consumer. There was no State Farm. There was no Progressive, nobody to go in and fix it. As a result, the government could not possibly afford to make things right.
If you'll recall, the government had huge arguments. Lots of debate in congress over allocating the first 10 billion dollars of cost to help, but that's still $170 billion short. Obviously in those kinds of situations, they don't have the money. They can't go to everyone and give them $30,000 and say, "Go get a mobile home." They could not possibly afford it. So as a result, hurricanes do not have the same exact impact as tornadoes. The only positives of the hurricane I can tell you is again the homes are three feet off the ground. If you have giant flood waters rage through, everything else will be destroyed before the mobile home park, so all of your stick-builts, and office buildings, and anything on the first floor. Even a multi-floored structure will be wrecked. But that's about the only good thing I can tell you.
Now another thing I can tell you is that you can get loss of income insurance, but that's not going to save the day because in a hurricane, if everyone's homes are destroyed and the government can't afford to give them any money to move back, then what happens with your loss of income insurance is it starts at the time of the natural disaster, but it doesn't run forever. It turns off typically in one year or two years. And you've still got a good 28 years to go on your mortgage in some cases. So hurricanes are a really dirty job that there really is no set solution.
So what does it mean? It means if you're looking to buying a park in a hurricane area, that you probably don't want to have that mobile home park right on the coast. Because even though that ocean view is attractive, I don't know if you can handle the risk of the flooding. The parks we have in hurricane areas. For example, we have a park in Charleston, but we're about 30 miles inland. Our park in hurricanes has wind damage, but no flooding. That's the key, stay away from the flooding. As long as it's wind, it's insured. As long as it's wind in the general area, the government can come in and prop you up at the end of the movie and save the day.
But if you've got a coastal park where flooding is rampant, what's going to happen is your park is going to be washed away, and there's nobody out there to save you. The government doesn't have the money, sadly, to go in and fix those situations. That's why Katrina a full decade later is still not put together, while Joplin was completely finished in two years. It was simply the matter that if the private insurers take the brunt of the hit, then the government is more than happy to step in and be just the little frosting on the cake, but they can't be the entire meat and potatoes of all of the loss. We just don't have enough money as a nation, as everyone's I'm sure is aware, to step in and fill in that gap.
So hopefully you learned a lot in our analysis of the six dirty jobs that mobile home park owners have to deal with. We went over collections, rules enforcement, park owned homes, water and sewer, city problems, and now natural disasters. And as you can see, there is a strategy for everything that can happen with a mobile home park. So if you just use your mind and follow the strategies that other park owners have developed over the years, you should be fine.
Again, this is Frank Rolfe of the Mobile Home Park Mastery Podcast, and we'll talk to you again soon.