The mobile home park industry has adopted weak guidelines of ratings – none of which is embraced in a cohesive manner – and mobile home parks basically fall into two camps: 1) upscale retirement communities and 2) everything else. Long gone is the star system in any reasonable application. But is a two-party system enough? In this Mobile Home Mastery podcast we’re going to discuss the concept that maybe there should be a third standard category, similar to the rise of the Dollar General DGX model, and what the attributes might be to fall into this category.
Episode 228: Is There Room For DGX? Transcript
In the beginning, there was Woodall's Directory. It was an offshoot of the 1935 Trailer Travel Magazine list of mobile home parks in America was tried to establish a rating system. Woodall's ran with that ball and for decades produced a directory of the mobile home parks in America they felt were worthwhile. Of the roughly 44,000 parts or only 13,000 that they deemed a high enough quality to be in their nearly 1,000 page directory. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're going to be talking about the concept of parks, park ratings, the old star system, and if it isn't time we do bring back some kind of comparison between the quality of parks.
A Woodall one-star park in the 1970 guide stated that it must be a decent place to live and it has to have the following issues: a fair appearance, patios, something on the ground, grass rocks or shell not even sure what that means exactly. Streets fair to good, maybe dirt or asphalt or even gravel if it's in reasonable condition. Restrooms clean. Of course you don't have restrooms in mobile home parks anymore. Adequate laundry, don't have those anymore either. If fences allow they must be neat, okay. Has to have mail service, okay, fine. And the homes can be old but they have to have at least a little bit of care. All right, well, that's one-star.
Now the two- star of Woodall included now you wanted landscaping, with some lawns and shrubs, streets in good condition made of dust free crushed rock, gravel or shell minimum. Neat storage, not sure what that means. Well equipped laundry, long gone. 220 volt electrical connections available, well that's kind of the norm these days. If children are accepted, the park should have a play area and the park free of clutter such as old cars and other abandoned equipment.
Now a three-star Park in 1970 had to have the following additional attributes. An attractive entrance. All mobile homes must be in good condition. Awnings and cabana rooms on some homes in southern area, interesting. Some spaces for larger mobile homes, okay, and paved streets. Moving on to the four- star park we had to have even better landscaping. The homes had to be skirted. The streets had to be paved, the lots uncrowded, utilities underground. Most tanks if present concealed, I guess that means propane. Any hedges or fences must be attractive and uniform, awnings, cabanas and porches. Most lots must be able to hold larger homes. Where there's a row of parking, homes exist all homes must be lined up uniformly from the street. A community hall and/or a swimming pool, and/or recreation program.
And then the five-star Park which was the top of the line, you had to have it be well planned and laid out, spacious appearance, good location, wide paved streets, homes set back from the street, exceptionally attractive entrance and park sign. Patios of at least 8 x 30 feet, paved off street parking, all home skirted, all hitches concealed, and some form of recreation including a golf course, horseshoe pitching, hobby shop, hobby classes, potlucks, dances, or natural recreation facilities. Now, those all sound great and everything but that system was abandoned in the 1970s. Woodall ceased producing the directory. Up until the time they had a team of 20 inspectors that combed the nation to give every mobile home park of those 13,000 parks they listed a rating. Once a year, they would go by and they would rate your mobile home park. Of course you paid a fee to be in the book. But you had to have it back then because park owners rated each other based on their number of stars. However, then Woodall stopped because park owners decided they didn't want to pay the annual fee and Woodall decided they didn't want to do it for free.
So when that ended, you ended up with basically two types of parks today. When you're talking to a lender or a buyer or a broker, kind of things are lumped into two basic categories: one, more of that higher end retirement based park, and the other everything else. You really don't have much of a separation today. Everyone has kind of blended everything together. If you say to someone, "What is the rating on your park in a star system?" they'll say, "Five star cashflow." That's how ridiculous stars have become. However, it's probably about time our industry starts thinking if not in a star perspective, but how we can differentiate each other.
Look no further than Dollar General. Dollar General, as we all know, sells products and it's mostly a downscale audience. I don't look down on it. I shop at Dollar General frequently myself when I'm looking to find things cheap. But there are a few people out there who would rank Dollar General as a luxury store. But now maybe you've been a DGX. What's $1 General X mean? The DGX chain by Dollar General is trying to hit a more upscale market. In the dollar Gen X store, you will find such items as fresh produce, and many higher end products all again at a discounted reasonable price. Because Dollar General decided it couldn't just go through life with just Dollar General. That wasn't appealing to more high end people, yet they were store locations in high end neighborhoods. Why didn't they harness the power of everyone liking to shop at a low cost? Thus the DGX brand.
So how would you apply a DGX separation to mobile home parks? Well, I think what you'd have to do is you'd have to come up with a name for this subgrouping. Personally, I'm thinking more like affordable housing plus would be nice. Maybe you could call MHX, I don't care. What would be in it? What would separate parks from the rest of the pack? Well, from the description I just gave you it's pretty apparent what a one-star park is, and I think still today, there'll be a very large section of parks that are not of a similar quality. Things that have dirt roads, things that have homes are in poor condition, that they have no skirting, the stuff that most of the media applies to all of our industry to make fun of us but in fact is not, it's a subset.
But what would be then the step up? What would be an affordable plus community? Well, obviously number one, I think you'd want to have a desirable location. A location where you have strong, high single family and apartment rents, a good school district, the kind of place where the phone rings a lot on your test ad and there after purchasing at the park office. I think you'd also have to say that a plus property would have paved roads, because that's what most lenders want. And let's all be honest, that's kind of what we all expect to see in a better mobile home park. We'd also want to have city water and sewer, or private utilities in good repair. I think that would exclude a lot of those mobile home parks out there that do not have city water and city sewer, but instead have old private water sewer that is literally just patched together with duct tape and baling wire, and is sure to collapse at any given moment. And you'd also want to have pride of ownership. You'd want those homes to look nice, the yards to be clean, the kind of place that people will like to live and are proud to call home.
Now, what would be the benefit of having affordable housing plus? Why can't we just have the fancy retirement, mostly called lifestyle choice? Why would we need anything more? Well, it's not fair to those who aspire for better. So if I go to a bank, and I say I'm looking for a loan on a mobile home park, I want them to know that mine is a lot better than the rest of the pack. Woodall's again found 13,000 of the 44,000 that they thought to be better. So they excluded roughly 75% of all the parks all the way back there starting in the 50s. Well, I'm not saying we have to exclude everyone. But let's do give greater consideration, let's give greater affirmation of value to those properties which are a cut above. Not to reestablish the star system, because you can't do a star system in our industry. It's impossible. You have to have inspectors to do it and no one in our industry will pay for it. Why? Because we're all mostly full. And we don't really care. And we're not really confident to be honest with you, as bad as our industry has maintained the star system, that anyone would even pay attention or fairly rate their parks accordingly.
But I think we could handle having just one general subcategory which simply means Hey, this mobile home park is a step above the rest of the competition. You could have basically three stratas. The lifestyle choice high end retirement, mobile home parks, the kinds that are part of the portfolio of people like ELS and Sun. And then kind of the affordable plus tranche, which would be parks that also have a standard paved road system, high pride of ownership, a good working utility infrastructure, and a very desirable location. And then you'd have all the rest. To me, that's the only fair way you could treat things going forward. A system where people wouldn't cheat, it would be very, very easy what the make or breaks are, you cannot say you're in the affordable plus category if you had dirt roads, or if you had very low pride of ownership, or a terrible location.
But I think at some point, we all have to start looking at our giant industry and say, Okay, how can we compare ourselves not to try and put each other down, but to help sort things and speed things up when it comes to the all important criteria, bank lending, buying and selling, and just all talking on the same page. I don't in any way propose we go back to a star system. I don't think it's possible at this point. I'm not even sure that the star system was really necessary back when they did it. But I do think it is to the advantage of our industry to start having at least the conversation of how we can come up with a rating system that helps at least break us down into one additional tranche for the betterment of the industry. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.