Mom and pop owners share a set of behaviors that must be understood if you are going to successfully strike a deal with them. In this final segment in our four-part series on “Park Psychology” we’re going to look into what motivates mom and pop owners and how to appeal to their basic instinct to help both the new owner and residents alike and to proudly be the “Greatest Generation”.
Webster's Dictionary defines mom-and-pop as denoting a small store or a business of a type often run by a married couple. Is that an accurate portrayal of a mobile home park owner? Not entirely. I tend to think of them as something much, much more. In fact, I think of them as the greatest generation, some of the finest people I've ever worked with, in fact.
Today on the file of our four-part series on park psychology, we're going to talk about why mom-and-pop sellers behave as they do and some tips on the best ways to interact with them. Number one, observation on mobile home park mom-and-pop sellers is often they have just simply lost energy, and why not? Their biological clock is ticking as it is with all of us. As they get older, they lose energy. As they get older, often they lose enthusiasm. But just because they've lost some enthusiasm, just because they've lost some edge in their business, does not mean they're not still completely smart in a fully knowing of exactly what's going on.
A lot of people when meeting with moms-and-pops where the park is not in good condition, the grass is a little high, rules are not in forest, perhaps the collections aren't really good, they simply assume that mom-and-pop just weren't great business people and they could not be farther from the truth. In fact, if you went back to the beginning when they built those mobile home parks or bought them in the early years, they've been making a note payment on time every month for often 30 years and even then they've had the part paid off perhaps for decades after that.
Somebody who's not very good at business could never pull that off, nor could they be the pioneer who came up with the idea to begin with of building the mobile home park and built it at a time when America's demand for affordable housing wasn't so high, nor were the lot rents. So they're very, very good business people, that's the first thing people do not often realize, and no matter what condition you see the mobile home park, don't be thinking they don't know better because they certainly do. And if you lie to them, they'll know it in a minute.
The second thing I've learned about mom-and-pop sellers is they really, really want you to succeed. One of the most important factors often in buying a mobile home park is a concept that's called bonding. I have hundreds of bonding stories, but what bonding is all about is when mom-and-pop like you and they want to help you. And because they like you and want to help you, money is not often their sole priority. Sure, they'd like to sell their park for a good price, but they'd also kind of like to help somebody in doing so.
They've got a lot of people looking to buy in the park, but you're special, they like you, and therefore they want to help you by putting the deal together and really bending over backwards and make it happen. That's why so often mobile home parks that are so with moms-and-pops can even include seller financing because they're willing to do whatever it takes to make sure that you don't fail. They want you to do very well.
One thing I've also learned about mobile home park, mom-and-pop sellers is they're very, very concerned about the next generation. Other groups are not so concerned. Baby boomers are typically criticized for being part of the me generation. I've actually known baby boomers who tell me, "Well, I'm going to spend down every asset I own and if I die on the day where I have my last dollar then my life was successful." That'd be an abomination to a mom-and-pop mobile home park seller.
You see, they see the thing they've created, this mobile home park, this equity, that's something that needs to be passed on to the next generation and they're very concerned about what happens to the next generation and you, as a buyer, qualify because you're looking at passing the mantle of their largest asset, something they built from scratch, had a huge amount of their life invested in. They're going to pass that to you, and as a result, they want you to do really, really well with it.
Another factor of mom-and-pop mobile home park owners is they really, really want the residents to be happy, too. Now, I know modern people in real estate investing and even sometimes in mobile home park investing, may be thinking more about their pocket book than possibly the resident, such as the nature of being a landlord, such as the nature of capitalism. But a lot of mom-and-pop sellers, they kind of transcend that. They really want those residents in that mobile home park to have a happy life. They want them to do well.
And in so doing, they want to choose someone to buy the mobile home park who will be a good steward of the property. If you tell mom and pop, "Well, after buying the property, I'm going to cut every cost. I'm going to raise the rent as high as I can humanly go. I don't give a darn about the residents." I can assure you, you will not be selected to buy it. What mom-and-pop want to hear instead is, you may raise the revenue, you'll keep it in line with market conditions, and as part of raising the rent, you're going to do certain things to make the park nicer.
Improve the entry, improve the common areas, expand the common areas, create a greater value for the dollar, make it the nicest park in that entire city. Those are the type of things that they want to hear about. And who wouldn't? If you spent your life devoted to one item, if you've had these customers for decades, the last thing you would want to do as a good person is not watch out for them, not take care of them.
Also, mom-and-pop, to make sure that you are a good steward, they want to help you get off on the right foot. I again have many stories of mom-and-pop sellers who bent absolutely over backwards to make sure that I had an easy transition. I'll give you two examples.
I had a mom-and-pop seller once who, I wondered why I never did any repairs and the city tipped me off that my seller was in fact going through and making all the repairs to the water sewer system without my knowledge. Anytime there was a backup, anytime a line broke, they would step in and fix it. When I called and asked them why they were doing that, they told me, "Well, I knew you were too busy to jump right on it. I'm a local person so I just thought, 'Oh, what the heck, I'll do it.'"
In another case, I had a mom-and-pop seller who saw I was struggling with some park and home rentals. I was having trouble keeping tenants in them for long periods of time, so they called me up and said, "I've noticed you're struggling with those rentals, so here's what I'll do. I'll just start paying you and I'll handle the rentals for you." It was an absolute blessing to me. Why would they do that? In neither case was in any way profitable for them. Surely they lost money on both cases, but they wanted me to get off on the right foot.
They also want you to be a good person and they want you to also watch out for your residents in manners that are not always profit-centered. One example of the things that we do is, whenever we buy the mobile home park, we effectively ride off all the old past due balances. We start fresh. We start with a new month. Someone might be, in some cases, in these parks, by two or three years in arrears. I'll never be able to collect two or three years. I know that, so what am I going to do? Displace that family from their home or I'm going to go ahead and give them a fresh start, a clean slate? I think it's the better policy.
Finally, mom-and-pop sellers are what we call the greatest generation. They're also called the silent generation. They're wonderful people who don't really talk a lot. They never talk about themselves. They just do things, and they're some of the nicest people that you'll ever meet. One thing that my partner, Dave Reynolds, and I are firmly convinced of is one of the greatest dangers in America, more than the affordable housing crisis, more than all of the different things going on, is the fact that we will at one point lose the greatest generation. They will eventually all die off.
What the heck will we do then? Because we found the greatest generation to always be very successfully our mentors. We look up to these mom and pops that we buy from. We've learned a lot from them. In fact, everything we know about the mobile home park business in many ways came from them. Bits of wisdom, tips on how to do things. I all the time am reading the history books on the industry, looking back on books from the '50s in the '60s. Huge amount of information in those.
Back then it was more of a hobby than a money making endeavor, kind of like hot rod in a car or something. No real money in it. Just something that people did for fun. And because of that, there's almost a fraternal atmosphere among those moms-and-pops. Very, very giving of their time. If you've ever question about mobile home parks, the best person to call is the mobile home park owner down the street. He's on that park probably since the '60s, maybe the '70s. He knows everything about the business and he's more than happy to surrender his time to you to help you. They're just so unbelievably helpful.
I was at a mode manufactured housing association meeting recently in another state, and sitting with some of these older mom-and-pop sellers. They could not have been nicer. Forgot to bring your pen? Oh here, here's my pan. Keep it. Oh, didn't bring any paperweight? I have an extra pad in my car. I'll go get it. Absolutely wonderful people. You have to ask yourself, why are they so good? What did America do right back in that era? I don't think we really know. I wish we did. Perhaps future eras will be as nice as the greatest generation, the silent generation where the jury is still out.
The bottom line is what makes mom-and-pop sellers is simply they want you to succeed. They want the residents to succeed. They really want everyone to succeed, and I guess that's what makes them the greatest generation is their greatness spills over into everybody else. They've mastered the universe as far as they're concerned. They've had a happy life, they've had a successful life, they're well-respected at what they do, and they want to transfer some of that happiness onto you. Who knows where the world will be in the future? They certainly doubt and we certainly don't, but they're going to give it their all, their absolute best effort, to make sure that everyone comes out a winner.
And that's why we are convinced that if you want to work with mom-and-pop sellers, if you want to buy mobile home parks successfully, you have to adopt a win-win attitude. In a win-win attitude, mom-and-pop are happy at closing and you're happy at closing, and you can really expand that even farther in a really, really good mobile home park transaction. It's win-win, win-win. Seller is happy you, the buyer, are happy. The residents are happy and the surrounding community, including city hall, are also happy.
Happy with the end result, happy that the park is being handed off to someone who cares as much as mom-and-pop did, and glad that there's now someone possibly more youthful to step in who's got renewed energy and renewed drive to pick the pieces back up sometimes and to make it the best property that it can be.
This is Frank Rolfe, The Mobile Home Park Mastery podcast series here on our fourth of our four-part installment on park psychology, all about moms-and-pops. Hope you enjoyed this and I'll be back again next week.