Some people think that managing a mobile home park is harder than herding cats. Is it really like trying to nail jello to a wall, or is there a scientific method that always yields the desired results? In this fourth and final episode of our series on “Breaking the Barriers” we’re going to examine what really goes into mobile home park management and the action steps necessary to make a success of it.
Managing a mobile home park is like nailing Jello to a wall. Is it true? This is Frank Rolfe from 'Mobile Home Mastery Podcast Series'. We're in our fourth and final installment on our series of 'Breaking the barriers, understanding the misunderstanding and myths', about the mobile home industry. We're talking about managing mobile home parks, and trying to discern what is real from what's not.
Now one of the first things many people think about mobile home park management is it's impossible to get the money. You'll never get paid, because our residents, which we've talked about in several of this group unit podcasts are always perceived as being so poor that they cannot possibly pay the rent. Now let's break that myth apart and see if it's true.
The average income of someone who lives in a mobile home park, according to the U.S. government is $34,000 per year. That is hardly poor. Our national definition of poor would be roughly $15,000 a year of household income, so clearly our customers are not poor. They're making roughly $3,000 a month before tax. So, it's really a priority issue. It's not a financial issue. They have the money to pay the lot rent, but do they want to pay the lot rent? And the answer, of course, is no, they don't.
So how do you make people pay things they don't want to pay? Well, you train them that it's a top priority to make the payment. How you do that is, you have a very rigid system. We call it 'No pay, no stay'. If you don't pay your rent, you can't live in the mobile home park. Also, if you don't pay by the due date, you'll also be assessed a late fee.
So most people learn over time that if they want to live happily in the mobile home park they know they have to make their payment every month. As long as they're going to make it, they might as well make it on time, because if they don't there'll be a large late fee, and then later, court costs and filing fees if we have to file for eviction. Once you adopt 'No pay, no stay', once you train people that the rent is due every month, it's not that hard to get paid.
We have many mobile home parks, but in many of our mobile home parks we have perfect collections each month. Even at larger properties that you would think certainly you couldn't get everyone to pay each month, we do. The simple reason is our rents are so low, so easily affordable, that our customers can definitely afford them. So it's not hard to get paid.
Now the next myth, that people have, is that mobile home park residents simply won't behave. It's like herding cats. Nothing you do, nothing you can say, will ever get the job accomplished. They're going to leave that tire in the yard, that old jalopy in the yard, aluminum foil in the windows, no skirting, and while there are many mobile home parks like that, that doesn't have to be the way it is. The properties like that all suffer from one issue, which is mom and pop refuse to crack the whip and let people know that they do, in fact, have to behave. If you let people do whatever they want, with no ramifications from their actions, of course they're not going to keep their properties up. Why would they?
But we call it, 'No play, no stay'. Just like 'No pay, no stay', means if you don't pay your rent, we evict you, 'No play, no stay', means if you won't play by the rules, we're going to go ahead and non-renew your lease, which ultimately leads to eviction. We find that when you lay out very clear the ground rules for living in the property, most people have no problem meeting them. And let's be honest, the ground rules are not that hard. In most mobile home parks, these are the requirements: your home has to have skirting. Your home has to be decently painted. If you've got a fence, it has to be in good working condition. Your yard has to be mowed. You cannot have any non-running cars. Your window treatments must be neutral.
Now, this isn't that hard, right? That's not that high a barrier for most people to meet. But, if you don't police and enforce that, here's what happens: the person in lot number five, they never bothered installing their skirting, so everyone else says, "Why should I bother doing mine?" The person in lot nine has a yard filled with junk, so everyone else says, "Why not? Let's also just throw our stuff out in the yard." And pretty soon, yes, in fact, it's impossible to manage. But, just like collections, it can be tamed. It can be conquered if you simply will adopt a strategy, where you inform people the simple ground rules and the ramifications if they don't follow those ground rules.
Number three. People find or think that managing mobile home parks is very time consuming. They think, "Oh, man, I will have to be out in that mobile home park all the time," that it's going to take a lot of time to manage the mobile home park. Well, let me tell you what you'll find. If you listen to these recordings I've done, called the 'Lecture Series Events', I often interview people who own mobile home parks, because I figure people would like to hear people's opinions beyond just mine. There's a lot of park owners out there, so hey, let's get the opinions of other people.
You'll hear the same thing, over and over in those 'Lecture Series Events' and that's what people spend roughly four hours a week managing their mobile home parks. "That's impossible," you might say. "How in the world can you manage a mobile home park in four hours a week?" Well, it's not that hard. There's basically five gauges on the dashboard of the park owner. We've already discussed two of them, one is collections, the other is property condition, which falls under rules. Then, of course you have occupancy. Right? Then you've got water and sewage billing. And then you've got what's called budget actual difference, which means you compare every month, the reality of how your operations went to what the budget was when you bought it.
As long as you follow those five guides, it's not so hard to manage the property. That distills down the key systems you have to monitor to make sure your park is working adequately. And it doesn't take a lot of time to do so. Otherwise, a typical park owner sends out invoices once a month, and of course you have deposits to log in, and maybe ten checks to write, and most people use a bookkeeper to do that for them, so that doesn't really count.
But as far as being a management intensive business, it's simply not. It's not like owning a pizza restaurant, or miniature golf course, where all the time you have to be doing this and doing that. Sure, there are things that happen out in the park, but that's done by your on-site manager. That's not things that you do. You don't mow the mobile home park common areas, and you don't go around and write up rules and regulation violations for the tenants, and you don't physically collect the rent when they come by.
So what does the owner do? The person who is not actively managing the park and the answer is not very much. So, as far as it being a very time consuming endeavor, that's completely wrong. Now, some people wish it was. Some people will always try and buy a job. They're unhappy with their job, and they think, "Well, if I buy a mobile home park, I'll quit my job because I'll have to actively run the park." That's not true. You can pretend that that's true, if you'd like, but it's like the Maytag repair man, you won't have any work to do. So, really, it's about a four hour per week endeavor to manage the mobile home park.
So what about the concept that you have to be there all the time? Let's take this whole, this whole time thing to another level. Now, my very first property, Glenhaven, I had that same thought. I came out of owning a billboard company, and when you own a business, everyone knows that the people who spend more time at the office always seem to be more successful.
I know that there's an Italian restaurant in St. Louis that I go to and part of going there is, the owner of the restaurant, who looks like he's a million years old, walks from table to table the whole time you're there, saying, "How's your meal? Isn't it great? Isn't this the best spaghetti ever?" And you realize what makes that restaurant so very good is the owner is so very actively involved. He's probably there at the crack of dawn to inspect all the fish and the meat and the vegetables. He's there to watch that the chefs do all the right preparations on the soups and the sauces, he's there to make sure all the waiters show up on time or properly dressed, and that everything's going smoothly. And that's great if you own an Italian restaurant. It's probably very important. If we were talking owning an Italian restaurant, I would probably tell you, "Yes, you need to be there all the time." But that's not what we're talking about here.
Because here's the sad truth. You don't have any value to add to that park. It took a while for me to figure that out and to embrace that idea because I wanted to feel like I was important. But the owner really isn't important. So you being there doesn't make the park any better, one way or the other.
I learned that lesson the hard way in my park I owned in Springfield, Missouri, many, many years ago. For me to drive from Dallas to Springfield was the farthest of any park I'd ever bought. So now, instead of a, behind my house kind of drive, I was looking at a multi, multi hour adventure. About six hours to the park and six hours back. So, what does it mean? Basically, that was a long ride. And one time I drove all the way out there, six hours. I get out my pad of paper, I was ready to write down all kinds of things to fix, and I could find nearly nothing. All I could find was a pile of leaves on lot 14. A little bit of mold on home number 22. Things the average person would never even notice.
Was that worth my time? No, it really wasn't. So I pretty much learned that I have very little value added by being there. And once you accept that, you'll find you only go out to your property once or maybe twice a year. Now you'll still see it throughout the rest of the year, because most park owners today use HD videos to get a good idea of what the park is looking like. They'll have their managers get a Polaroid cube camera, with a suction cup mount, put it on the hood of the car, the car will drive around and video the entire park and then send you the chip. You can download it, and lo and behold, it looks just like you were there, driving the car around yourself.
So it's never like you're fully out of mind. It's kind of FaceTiming your park, with the HD videos. But as far as you physically going out and being there, mano a mano, and getting out of your car and walking around. Again, that's typically reserved for most owners once or twice a year. So, again, you don't have to be there all the time.
So what does it mean? Why does everyone have so many strange ideas about managing the mobile home park? Probably they've heard these things from people who don't know what they're doing, or they've just made that decision from driving through the occasional poorly run mobile home park and thinking, "Oh, man. I bet managing this thing is a nightmare. Look at the way these people live, it's incredibly bad." I would urge people who think that, drive through the parks owned by the institutional owners. A YES community, an RHP community, a SUN community, an ELS community. You'll find something entirely different. You'll find order. You'll find nice, manicured areas. You'll find a completely different product than what you thought, and I think that's what really causes a lot of the myths around the management.
So the bottom line is, it's really not hard to get paid. Think, 'No pay, no stay'. You can conquer this. You can train people. It's not that hard to make them behave. It's called 'No play, no stay', if you don't play by the rules, you can't live on the property. It's not very time consuming, roughly four hours a week, and you don't have to be there all the time. Most people visit their properties only once or twice a year.
The bottom line is, managing a mobile home park is really not that difficult.
Now this completes our four part series on 'Breaking the barriers, understanding the misinformation and myths of the industry'. Hope you learned a lot. Hope you now realize that some of the things that almost all of us used to believe are not, in fact, true. Hope you can hang your head proudly if you are a park owner, that you're producing a great value for the consumer and a nice product, and you're part of the solution of the affordable housing crisis. And if you're looking at buying, hopefully will now realize that many of these stereotypes, many of these stigmas you had, were in fact, false. Where they come from? They came from lots of bad media portrayals. Those are still going on today. Reruns of the show, 'Cops', 'Myrtle Manor', 'Trailer Park Boys', the movie 'Eight mile' with M & M. These all reinforce the stereotypes, but the bottom line is they are completely false.
This is Frank Rolfe of the 'Mobile Home Mastery Podcast Series'. Hope you enjoyed this four part series on breaking the barriers, and we'll be back again soon.