How you fill your lots is somewhat like a game of chess, with certain pieces more important than others, and every move filled with the potential for benefit or damage. In this Mobile Home Park Mastery podcast we’re going to explore the strategic considerations required to maximize your park’s value.
Episode 397: A Game Of Chess Transcript
I am not a very good chess player. I in no way could give anyone who understands the chess game a run for their money. But I do respect the game, and I think there's a lot of things about the game of chess that is easy to overlay onto the successful ownership of a mobile home park. This is Frank Rolfe of Mobile Home Park Mastery Podcast. We're going to talk about playing your parks chessboard, all those individual little lots that you get when you buy the park, making the most out of the arrangement of mobile homes on those lots, some tips and things you need to think about as you're trying to maximize your park's value. So let's start off with what the king is on the chessboard of a mobile home park. And the king is the three-bedroom mobile home. Nothing makes the phone ring more than when you have a three-bedroom mobile home for sale. It's always been that way. It was that way when I got in the business in the '90s. It's always been the same old story. Three bedrooms go out the door many, many times faster than two bedrooms, which are many, many, many times faster than one bedrooms.
So as a result, you have to treat every lot in your mobile home park that will hold a three-bedroom mobile home with a very high level of respect. You've got to really embrace and cherish those three-bedroom lots. And the last thing you would ever want to do is to sacrifice your king or that three-bedroom lot for a lesser home. Because the three-bedroom lots in most mobile home parks are somewhat limited. We've owned a lot of parks where there's one street that will hold three bedrooms, which are typically as much as 76 feet long. And then the other streets won't. They'll hold sometimes two-bedroom, two-bath on the next street, then two-bedroom, one-bath. And in some parks, it falls all the way down to one ones and even down to RVs. So when you buy your mobile home park, the first thing you want to do with all of your vacant lots is measure them. Measure them accurately. Go from your setback off the front to your setback on the back or the utility easement, whichever is greater. And look for anything that has the potential for a three-bedroom home. And it doesn't have to be a three-bedroom, two-bath, it can also be a three-bedroom, one-bath.
It doesn't have to be 76 feet long. You can get three-bedroom, one-baths all the way down to the 60-foot range. So those lots, any lot that will hold a three-bedroom, one-bath home, those you have to set aside. And you say, these are my most valuable pieces that I have in this mobile home park. And then you rank all the others in the same manner. Take all your other vacant lots, measure those vacant lots, and see where they fall. Now we have the beginnings of a handle on the priority scale of the pieces. The king, the three-bedroom lots. The queen, the two-bedroom lots. And really the pawn being the one-bedroom lots, which we'll get to in a moment. So after you've mapped all those out, the next thing you want to look at is which lots in my park are really too small to use. And by too small to use, I mean things that will not even hold effectively an RV. Or if your city will not allow you to have an RV, it would be any lot that will not even hold a one-one.
And a one-bedroom, one-bath is typically 14 by 36 feet. And yes, there are some lots in many mobile home parks that are so tiny, particularly parks built back in the early '50s and the early '60s, that they will not handle even a one-bedroom, one-bath mobile home. It can also be due based on the width that they won't handle that. And then look at those and say, okay, what are my options on these little tiny lots? Now, in some cases, you'll say, well, these lots are too small for a mobile home, but they will hold an RV. And I check with the city and/or county and they said, yeah, you can put an RV on that lot. So that's my plan. So that's one option. Or you may say, well, that lot could hold an RV, but I can't put an RV in this park because of my permits. So you gather up all those little lots and then you say, what's my best use of these little lots? In many cases, your best use of those little lots may be such things as overflow parking, if your parking is somewhat tight, or an amenity area, a green space.
Number one amenity for mobile home parks today is outdoor grills, good old charcoal grills, and outdoor seating, typically picnic tables. Just the arrival of those will cause mass happiness from your residents who really enjoy gathering, sitting together with friends and family and cooking hot dogs or hamburgers out on the open flame. So that's another perfectly good use for those small lots. Now, once you've got your list of the tiny lots, which are your ponds, those aren't hugely valuable. They may never be used for mobile homes. They may only be used sometimes just for common area space. And then you've got your kings, which are your three-bedroom lots. Then you have everything in between. And all the other pieces, all the lots that will hold the two bedrooms, they're pretty much interchangeable. Not that important. They'll be the last things that you fill. You'll fill all your three bedrooms first. You'll sell all your three bedrooms first. But the two obviously have value. So we still want to know the dimensions of them. But more than likely, if your park cannot handle new homes, you'll be filling those two bedrooms, probably using used homes. That's normally the safest and easiest way to go.
Not easy because you still have to remodel them, but easy as far as being able to get them out the door. A used home today costs roughly half of what a new home does. And while you have people who will stretch mightily to get that three-bedroom one or that three-bedroom two-bath, people are not as willing to stretch to get a two-bedroom. You'll have much greater competition from apartments. So those other lots, which you inventory, those will probably be used, that inventory will, as you watch over used home inventory, things that come up on repo lists or from home wholesalers or even things you find on Craigslist, et cetera. And as you look at used homes, you'll be able to match them to which lot they should go on. And in that way, you'll be filling up those three-bedroom lots almost immediately. The two bedrooms over time, simply based on the luck of the draw of what comes your way. Now also on your chessboard, you have the already established common area, which in most mobile home parks, or at least many, involves some type of existing playground area and/or even an office.
Now some of the offices in some of our parks can be quite elaborate, like a Pizza Hut franchise made out of brick. Others typically can be a frame house, which at one time mom and pop grew up in and later made into the office. But they sometimes are also just a mobile home. And if you want to maximize the value of those pieces on your chessboard, when you get your park completely full and nearing the end of the movie, you should look into converting those into some other income producing form of housing, depending on how your park is organized. So for example, if you had a 50 space mobile home park and you had a mom and pop frame structure, formerly their house, now their office, it would make a lot more sense than using that as a manager's dwelling or office to go ahead and rent that thing out. We've had mobile home parks in the past where at the very end of the movie, we take the manager's office, which often is a mobile home itself, and then sell it off and get it occupied and clock in that lot rent. You can sometimes actually convert even some of these old structures inside mobile home parks, washing rooms for a... for example, washer and dryer places, you can often get those converted into apartment units.
Now you'll need the blessing of the city to do that. You'll need them to give you the thumbs up, it's okay. But remember, in a laundry building, you've already got water, sewer, electric, and sometimes gas access already there. And what's important to remember is you're in the housing business with a mobile home park. So all those ads, everything correlates right back to the idea of looking for customers. So you probably have a steady stream coming in, and it's not that hard to rent an apartment or a stick built dwelling when you're out there in the mobile home park space. Those customers walk in all of the time. Now, things on your common area, your grassy areas, your playground areas that were built as part of the original plan of the park. If you were a good chess operator, we understand and appreciate the value of that green space. Because mobile home parks are high density residential installations. Lots are not very big, not a lot of room between homes. So having a green space to kick a soccer ball or run around and play tag is an important feature to many of your residents.
And even those without kids appreciate the serenity of sitting outdoors kind of by themselves. Take those green spaces and let's do productive things with them. The number one thing, as I already mentioned, that tenants really like is outdoor charcoal grills and picnic tables. That's such a simple amenity, very low maintenance, not that expensive. So that's a good start. But if you have lots of children in your park, and you have the budget to pay for it, you could also add on a small but functional playground for them. And then also based on your space and your budget, you could build a pavilion. That allows people eating those hot dogs and hamburgers or chicken breasts or whatever they want to cook off the charcoal grill, the ability to sit on that picnic table in the shade during the summer and indoors when it rains. So it gives much more longevity to that whole outdoor experience. Some of the home parks we've had come with actually fairly large fields. Sometimes those fields are a hallmark of 70 years ago when mom and pop had a mobile home dealership at the front. And that's the leftover space from that. There were never any mobile homes put on the land and they won't let you do it today.
So what are we going to do with that? Well, we've in some cases put in soccer goals at either end of them, made them into soccer fields. We even went to a city once and had that city agree to take over our large green space and put in a city park, one that they paid for in full. It was a perfect win-win opportunity for everyone. The park got a much better green space playground amenity, and the city got something for others in the neighborhood to share. Also, don't forget that what you do with every inch of that property should have a purpose. In every mobile home park, every square inch has to tie to something of value. It does not have to be income-producing, but yet most things are income-producing based on the fact that the residents feel they're getting value for their dollar. It's the hallmark of a bad owner who doesn't look at that mobile home park as a giant chessboard and doesn't say, well, gee, the way I position my pieces could ultimately lead to success or failure. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.