Mobile Home Park Mastery: Episode 129

Kung Fu Lessons For Mobile Home Park Owners

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Sometimes the best course of action is to go with the force instead of against it. In this edition of the Mobile Home Park Mastery podcast, we’re going to review effective strategies for park owners to harness negative energy and use it to create powerful solutions. As you’ll see, these are some classic moves that work every time if you just know how to complete them.

Episode 129: Kung Fu Lessons For Mobile Home Park Owners Transcript

Have you ever had a Kung Fu lesson? It's really interesting. What you do is you take the force of the person attacking you and you shift that force around and use it against the person who's attacking you. It's very interesting stuff and I see that in many occasions in Mobile Home Parks, the need for Kung Fu mastery as far as shifting the force from your adversary and turning that force around to get what you want. So what am I talking about?

Well, let me just give you some examples and it should be apparent. First, let's start with what happens often in Mobile Home Parks where you have the resident who's just unhappy and they're constantly demanding and threatening you that if you don't do this and you don't do that, they are going to move out of the property. Now the demands can range anywhere from, if you don't lower my rent to, if you don't tear down the tree in my backyard because I don't like the way things fall off it in the fall or possibly, hey, well I'm going to move out of the park if you don't make that guy over there move out because I don't like him. Well, here's the best thing to do when you have the resident who's attacking you with that kind of negative energy.

Just flip it around and say, "You know what? Go ahead and move out. You're obviously not happy being here. As a result, I think it'd be best for everybody if you just didn't live here anymore, so I won't hold it against you. Just let me know when you're moving out." Now, what happened then? How did that just work? Well, I've now disarmed the resident because he never really wanted to move out anyway. All they wanted to do was to be able to complain endlessly to try and influence me to do certain actions, which I wouldn't normally do and don't even have to do under my lease agreement. So they're threatening me, blackmailing me, trying to wear me down with constant negative energy.

When that happens, just go ahead and go with the energy. Just say, "You know what? Again, you're not happy here and you need to live somewhere that's happy." It makes complete logical sense. But here's what always happens. The resident then says, "Oh wait, I can't really afford to move my trailer or well, there's no really anywhere else I really want to live." And then you never hear any more negative thoughts from them again because you've called their bluff. You've let them know that you're not that concerned about them leaving. They represent only one small microcosm of your revenue and if they're unhappy they can simply move on down the road. Now we see the same thing happen often with the seller when they want to highly value their park owned homes.

So what happens then is the seller tells you, "Yes, this 1980s mobile home I have, I need to get about $25,000 for it. And then this 1970s one here, I think it's worth about $20,000." Throwing out these endless amounts of value on things that are worth nearly nothing. It's pretty well known that homes that are pre HUD and even slightly post HUD are worth very little. Maybe $1,000 maybe 5,000 and that's net of the cost of putting them in good order. So if it costs you $4,000 to fix that 1980s home and it will only sell for $5,000 it's only worth $1,000. But what do you do when the seller says, "No, I want 20 times that. I want $20,000." Well, here's a good Kung Fu thing to do. Take that force and just shift it around back on them. So you say, "Oh well, if that 1980s home is really worth $25,000 to you and the 1970s is only really worth $20,000 to you, you just can go ahead and keep those homes and then you can sell them with those price points and just pay me the lot rent."

Now you haven't been a trap because only moments earlier they were trying to threaten you. Well, if you don't pay me all this money for this home I'm not going to do the deal. And now you've said to them, "Well, if they're that valuable you should just keep them then and sell them because if you think that they can bring that much money, well certainly there's somebody out there who would want to do it. It just doesn't work for me exactly." What happens when you do that technique and you turn it around on them and say, "Oh, well if they're that valuable, then I can fully appreciate why you're going to want to retain them and sell them yourself." They always end up giving you the homes typically for free or next to nothing. Why? Because once again, they knew it was a false bluff.

It was kind of coercion, kind of blackmail and they knew that it really wasn't true. And that's the other part on these Kung Fu techniques we're reviewing. It works best because the person knows that it isn't a fact and as a result, when you spin it around on them suddenly the problem evaporates. Take another example. Let's say the residents are just complaining beyond belief or certain residents are complaining beyond belief that they can't stand the lot rent, that they can't stand the lot rent going up. Just all kinds of problems. They hate the property. They hate it all and you're just a predatory capitalist. Everything else. Then shift it around and just say, "Look, I have one other option here. The other option I have is I could just redevelop the land." Because, in many parts of America it's completely true. Mobile home parks not only sit on fairly well positioned property but they also have one other interesting feature, which is that most city governments hate them and as a result will give you any zoning you want if you want to redevelop the property.

In many cities in America the number one most valuable property to develop in the whole city is the Mobile Home Park because the city wants to eradicate it and often the neighbors want to eradicate it. So they will go ahead and grant any zoning you want if the transaction will include demolition of the Mobile Home Park. So when you turn it around like that, once again, it sends a message to the residents, which you won't be bullied. You won't be threatened. You're charging a fair rent. You're charging rent that allows it to remain as a Mobile Home Park. I was driving through the state of Indiana not too long ago and I saw a giant Mobile Home Park, probably about 150, 160 lots, which had just been I guess they just been given notice it's shutting. So about a third of the people had already pulled their mobile homes out.

Another third were taking them apart and another third didn't know what to do. And I thought to myself, what lot rent would it have taken to keep that Mobile Home Park in business? And once we know that number, why didn't they do that? Why didn't they go to the residents and say, "Hey, we're going to redevelop this into a Home Depot, but here's the deal. If you're willing to pay X dollars a month we can try and keep this park open." The residents would have jumped at that opportunity, but when people understand there's a direct correlation between lot rents and redevelopment, then perhaps they will be more amenable to the fact that rents need to be a little bit higher because most people like where they live in the Mobile Home Park and they really don't want to move, but often they just don't understand or accept the fact that there are many more profitable uses for land than the Mobile Home Park if the rents are too low.

Finally, let's talk about what happens with the city sometimes. You have the city inspector comes to you and starts complaining about all kinds of issues in the park, but none of them are your issues, not your common areas, not your water, not your sewer. What they want to complain about are things like home additions. What's a home addition in a mobile home? Well, typically what happens is somebody at some point in the movie, puts a roof over their deck so that when they go in their door and it's raining, they don't get any water in their home. Perfectly reasonable. Then later they decide they like sitting out there, but they don't like sitting out there when it gets cold or because of the wind so they build walls on the deck typically on two sides. So you've got the house on one side and then two sides framed in and then one side open.

And then ultimately in some properties they put up that that third wall which fully encases the deck and sometimes even pop a window air conditioner in it. And what will then happen is sometimes the city will come to you and say, "Hey, I've noticed these additions in the Mobile Home Park and I don't like them. Make them stop. Get them out of here." Well, here's what you should do when you have that issue with the inspector. Once again, flip that force around that negative energy. If, they hate those additions so much let them deal with it. It's not your problem. The way most Mobile Home Parks are set up legally is the park owner owns the land and they rent the land out, but the improvements on the land, those fall under the jurisdiction of the city itself. In every Mobile Home Park that I know if you bring in a new mobile home or used mobile home and you want to turn on the power, you have to go to the city and get a permit and there's an inspection and a green tag before you get the power on.

Similarly, if you did any additions to your property in the city limits you would have to based on the addition, based on the work have to once again obtain a permit. So what happened is that deck or whatever it is that the inspector doesn't like, that's his fault. He approved it. He approved it by not taking action earlier if that was the case. It's up to him to now solve it. Now they don't like to hear that because the inspector, the last thing they want to do is go over and knock on some stranger's door they don't even know who it is. Make a new fresh enemy in town. It's just not very appealing. So they want you to do all the dirty work. They want you to be the bad guy with a resident. You want the resident to like you, to respect you, to pay the rent and now they want you to take on their role for no reason because it's not even your problem.

So once again, the best thing to do is just flip it around. When you say, "Inspector, you know what? If you hate him that much, well then you just go forward and you fix it. You just go over there to that door right there and knock on it right now. Go ahead." They won't want to do it anymore. Every time that's ever occurred that's how it always ends. The inspector at the end of the movie has no personal desire to get involved. No one else's complaining outside the property. There's no neighbor who's calling the city saying, "Wait, isn't there an addition on that home on lot 43?" So what's happened is this one particular day they've just got, for some reason some kind of personal uproar, maybe a problem with a resident in the Mobile Home Park they feel didn't respect them earlier at the Red Lobster or something and now they have this vendetta, but they can't pin the vendetta on you as a park owner.

They have to do it the correct way. Once again, it's their issue, not your issue, and it's their issue to fix. So what you see often with try to apply Kung Fu tactics to Mobile Home Parks is take that negative energy and simply twist that negative energy around. Throw it back at the person who's coming after you and deflate them by letting them know, okay, if that's what you think, well then just do it. Don't fall into their threats. Don't allow them to bully you around. Just say, "Okay, if that's the way you see things then I think the best thing for you to do is to run with that idea." And often when you do that all the negative energy disperses. This is Frank Rolfe with the Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.