A bad mobile home park manager is often like a cancer that can infect other organs, and you have to know where else to look when it turns out that your manager must be replaced. In this Mobile Home Park Mastery podcast we’re going to review what needs to be investigated and fixed upon a manager change over, as well as how to proactively minimize the damage.
Episode 418: Bad Manager Collateral Damage Transcript
Mobile homes are notorious for having water issues. All you have to do is introduce water into a mobile home, either through a leak in the roof or around a window or door flashing, and that water, when it gets in that mobile home, can begin its nefarious work of rotting out the floor, could even potentially cause black mold and other issues. And you can't just go in and then just mop up the water because that water may have seeped into other areas and caused widespread damage to the home. And the same is true with a bad manager. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. We're going to explore bad manager collateral damage, things that managers who are not cut out for the job, managers who are in the job with bad intent, all the many additional things they can screw up with the mobile home park, and then how you have to protect your interest by going through all these additional items. And we want to help you get a better idea of where to look. So what happens with a bad manager? That's not what really is at issue here because we have to fire managers all the time for a long laundry list of reasons.
Everything from the fact they just don't even show up at work to they don't do what they're supposed to when they are at work. Some get into even embezzlement plans and other kinds of schemes. And it's never fun to fire a manager. No one likes firing people. It's just part of human instinct. We, for some reason, all love hiring people. That's all kinds of happy. But we always hate firing people. So the first problem a lot of park owners have is they delay firing the manager for way too long. They knew the manager was not good for the business starting at point A, but they can't seem to come to terms with firing them immediately. So often it stretches and stretches into the future. And kind of like the water going in the mobile home, the longer you let it happen, as long as it sits there and seeps into other areas, the worse the damage can become. And then finally when you go to fire the manager, after delaying it way too long and procrastinating, there's a lot of things you then have to start cleaning up. So the first obvious thing you've got to clean up typically when you get rid of the manager who was a bad manager is resident relations.
So what's happened now is sometimes the manager has poisoned that relationship that was there. It may be a very strong bond between the owner and the residents who the owner had come in and cleaned up the quality of the park and made it nice and people were very happy. And now the manager goes in and ruins all that. So then how do we clean up this resident relation issues? Well, the first most immediate thing you have to do with a new manager is watch for signs in windows that say home for sale, those kinds of things. And see if you can go to them and say, look, okay, the manager's gone. Is that why you were moving out? And often the answer is yes, I was moving out because I hated the manager. I hated the direction they were trying to take things. And you say, well, you don't need to move anymore. You can take the sign out of the window because the cavalry is here. We're not going to let any further problems occur. So the first thing you would want to do is get out there and really find out what other things the manager did to make your current resident base unhappy because we don't want to lose any residents.
So you've got to mend fences where you can with the residents and the ones who are the most upset typically were going to come in the ones who have voiced their concern by putting home for sale signs in their windows or in their yards. And this is where the manager is so important. The new manager who hopefully has good human relations skills can go to these people and explain what has occurred and get things resolved. Sometimes the bad manager also leads to city inspector issues. And that's why if you have a good relationship with your city, it may not hurt to call when you change managers, particularly when you had a really bad one, and just tell the city inspector, look, I just want to let you know we've replaced the manager. Is everything fine at the park? We just want to double check, make sure there are no problems. Because we've had cases where the city manager or the inspector says, yes, we do have some problems. We have a couple of citations. In fact, we had sent them and they never even responded.
Because clearly what's going to happen is the manager is going to deep six any citation because they know that will get them in trouble. So you need to make sure there is no outstanding violations of any type with code enforcement. So again, if you're firing the manager because they weren't selling enough homes, well, that probably never trickled down to a city inspector problem. But if you're firing the manager because they weren't getting the job done on the park turnaround or they were embezzling or something like that, it's possible that there are some outstanding violations that you are unaware of, and you've got to get that figured out. Also, if you've got rental park-owned homes in there, I can guarantee you the repair and maintenance on them has probably not been done. So you might reach out to the people who have your rental park-owned home inventory, if you have any, and find out, hey, are we okay? Is there anything that we were supposed to fix in there? I bet you there's going to be at least five items that were promised to be done that never were, and the manager promised the people, yes, we'll get that solved, but they never did. So you're going to want to jump in there and try and get those fixed. Also, if you have any vendors, recurring vendors, people who mow, people who pick up trash, things like that, better reach out to them because it's pretty common for them not to have been paid. Sometimes the corrupted manager will actually take money that was intended for them, and they will take it themselves. So reach out and make sure there are no unpaid invoices. You would hate to lose a multi-year vendor who was doing a great job for you, for example, on mowing, because the bad manager had not paid them. So let's make sure that everyone is paid up and everything is fine there.
Also, make sure you've unraveled whatever embezzlement plans they had up to. If you suspect that could be the issue, we have seen parks that we've done due diligence on where the managers had actually raised the rent to the park and never told the owner, and then were just taking that rent differential as their own little embezzlement side income. Now, it's hard to do in a world of money orders and checks. This is traditionally found more in parks where it's been cash rent received. But nevertheless, we need to make sure there are no other embezzlement problems going on. And don't forget, one of the big embezzlement issues right now, there's two of them. One are managers moving tenants into homes which the owner has told are vacant, and they pocket the rent themselves. Pretty common in the industry today. So you're definitely, with the changeover of the manager, want to send the new manager to those homes, maybe on FaceTime, to see what's in them. Because you may think they're vacant, and in fact, there's families living in them. So that's one biggie. The other one would be where the manager gets in collusion with a vendor who then tells you that you've got some kind of terrible problem with water or sewer traditionally, and there isn't any problem. And then they split whatever you pay with the manager. So we need to unravel all those embezzlement schemes with the changeover in management. We also need to make sure that all permits and licenses are current. You hopefully have a laundry list of items on a sheet of paper which you treat like the Holy Grail. It should have when your loan expires and also when your annual permit and license expire, if you have them. And if they haven't come up recently, then you're probably fine. But if they came up recently, you better check to make sure that the manager filed for them or whatever other steps you were supposed to do on your end.
Do not assume that that's all going along smoothly. Also, do you have your upcoming mowing or snow plowing contract in hand? Because you probably told the manager to do it. They probably never did. Probably one of the many reasons you're firing them. Make sure that you have all those things already completely worked out. Do not take any assumptions on any of those vendor agreements having been reached. Now, how do we solve, though, on the front end? How can we do a better job of mitigating these problems with managers? Well, of course, the first answer is fire managers quickly. Stanley Marcus, the founder of Neiman Marcus, once said, take your markdowns in people and merchandise as quickly as possible. And that simply means don't procrastinate. When the manager is not working out, get the manager the heck out of there. Number two, always make sure that you have an active helpline on the property. This is a phone number or email that allows the residents to go directly to ownership and get away from just only talking to the manager. Because if they only talk to the manager, the manager will obviously destroy any incoming complaints. But if you have a helpline, which is traditionally a phone number and or email address, you can give them a magnet that says need help, question mark, put that phone number and email on it. They can then reach out to you and they can turn in the manager basically for doing bad things. So you have to have a very, very good helpline system. Number three, you got to keep the files out of the park office because it's pretty common for a bad manager to destroy all the files to get back at you when they get fired.
So I'd hardly recommend on the purchase of any mobile home park, take those files tangibly, throw them in your car if need be, and put them fully under your control. I don't care if they're in your garage or a self-storage unit, that's a far better place than being kept in the park office. And then finally, don't delegate too much to your manager because we all realize at any given moment, we have a very high risk of doing a manager changeover. We don't want the manager to have access to anything that goes beyond just the regular things needed for traditional day-to-day park operations. If you have any complicated sensitive issues you're negotiating with the city, do not include the manager in those loop. Similarly, do not give the managers access to personal information on anybody because again, when you do go to fire the manager, their first instinct with the bad manager is how to get back at you, how to blackmail you. And traditionally, that's the kind of ammunition they are looking for. The bottom line is we all wish that we had nothing but good managers. It would make life so simple. You hire a manager one time and it's your manager for life in that mobile home park. Life just doesn't turn out that way, sadly. The manager attrition rate is pretty high. Not because the job is that difficult, but because many people just are not cut out to be mobile home park managers. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.