Mobile Home Park Mastery: Episode 262

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Stanley Marcus – the founder of Neiman Marcus – once said “take your markdowns on people and merchandise as quickly as possible. Unfortunately, many mobile home park owners refuse to follow this advice and end up holding on to unsuccessful managers for months or years longer than they should. So why do they do this and how do you correct this behavior? That’s the focus of this episode of the Mobile Home Park Mastery podcast.

Episode 262: Listen To Stanley Marcus Transcript

Stanley Marcus, the founder of Neiman Marcus, once said, "Take your markdowns on merchandise and people as quickly as possible." This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're gonna be talking about the need for all Mobile Home Park owners to take those markdowns very, very fast when you have a manager that is not performing. Now, Stanley Marcus owned Neiman Marcus, but what many people don't know is he also owned a Mobile Home Park. I looked at buying it once, it was in West Dallas, the clubhouse looked just like a Neiman Marcus store. He was trying to build what I guess would later have been a franchise community. And this is back when parks were fancy back in the 1960s, back when Neiman was in its heyday. So if Stanley Marcus had in fact ultimately operated that Mobile Home Park or chain of them, I guarantee you he would have spread the gospel to everyone that when a manager looks like they're not going to work out, we need to move on from them, we need to replace them. But why is it so hard for owners to do that? 

Well, there's lots of reasons why it's really, really hard for you to take the manager that you've hired and trained and worked with for a while and cut them loose. So what are those problems? Well, the first is basically empathy. We're all innately just too nice. And good-natured, nice people just don't like firing anyone 'cause we always put ourselves in their shoes. We think, Oh gosh, how embarrassed would I be? How unhappy would I be if I were let go from this job? So we just kinda can't bear to do it because we feel that sense of disappointment that we're sticking on that person, we're internalizing that through empathy. That's the first problem. The next one is fear of finding a new manager. Many park owners really know the manager needs to go, but they just can't bring themselves to do it because they don't wanna have to go out there and find the replacement. They'll rationalize and say, "Well, maybe the next one I get will be just as bad, so why bother?"

So that fear of finding a manager, that can also cause you a lot of grief. And then there's just the simple hatred of training them. When you hire a new manager, you invariably have to spend time with them going over the basics of the business, and many people find this very repetitive, they find it very boring. They don't like taking their time away often on a weekend to train the manager.

So it's another reason we just typically just innately don't wanna do it. And then you just have that continual feeling that it's just futile, that all Mobile Home Park managers are gonna be flawed, they're not gonna be great, so why even take the time and take the bother of going out in the marketplace and finding a new one because they're just all pretty bad, right? And that's just a rut you get into, that kind of mindset is what really holds so many people back. There's so much money lost annually in the Mobile Home Park business because people just can't break out of that mindset. They're stuck in it. So the question is, how do you break out of that mindset? You know Stanley Marcus is right, you know you need to take your markdowns early. But how can you take them early? Because you have so much in you that says, "No, don't do it, let's just go ahead and let that person stay in their job." Well, here are some ideas to help you break out of that rut.

The first thing is only hire great people to begin with. How about that? Then you don't have to fire people because you're getting in people who are gonna stick and do well. And we found the number one overriding quality of the successful Mobile Home Park manager comes down to people skills. So many park owners make a mistake, they think the key item when they're talking to candidates is prior real estate management experience. Someone looks really good on paper, they talk well, but then they get shot down in the interview when asked the question, "Have you ever managed any other kind of real estate?" And they say, "No, I've never done that before." I don't think that's that important a characteristic. Let's be honest, the real estate marketplace is changing rapidly. The requirements of the manager are changing daily. It's not that important they have certain skills today that may be offset by technology. For example, in our parks, we are up to 92% of our rent is paid online. So having a heavy background in collections is no longer really that necessary.

So what is necessary? The ability to go to residents in that property and get what you want done without creating hard feelings or losing that customer. Now that's essential. You have a feud between two customers over a lot line, I need a manager who can go in there and mediate that dispute so both parties are happy and pay their rent and stay there for decades and maybe forever. So look for managers with great people skills, that is the number one criteria. If you're interviewing a manager and they talk that they're really strong on the computer and all that stuff, that's all fine and dandy. But if you really look at what a manager does, particularly the best manager, they're really in the people business through the public relations business. And if someone does not have strong people skills typically, they're always going to fail.

Next, you've gotta train the manager properly. You can't just stick someone in the role of being a Mobile Home Park manager and just see whether they sink or swim. No one really knows how to manage a Mobile Home Park. It's really, really hard. It's something that there is no class in, there's no prior training, it's very unlike most any other business. So you have to show them how it works. If you give them superior training, you'll get a superior performance. That's why we have a very, very strong training team at our Mobile Home Park operation because we have found that the more we put into the training, the better the resolve of the customer that we get as far as our manager to be.

So train them well, and then manage them well. Let them know how they will be accountable. People all like to succeed, they don't like to let anyone down. Tell them what those typical things that you care about would be and of course, we know what they are. Repeat after me, collections. You wanna make sure you getting the money. Occupancy, you wanna make sure you stay where you're supposed to be. Utilities, you gotta watch that water bill 'cause if it goes wild, it can cost you thousands of dollars every month. Property condition, you wanna see those HD videos and you wanna see that that park is always looking better every time they shoot the video. And then finally the ability to hit your targets in the budget. Those are the five factors that we judge managers on. Tell them that that is how they're judged and tell them how you are grading them on those.

And once they know what they have to do to make you happy, to feel good about their job, they'll try hard to do it. But you can't just thrust them into the job and think they'll figure all that out, they're not going to figure that out. It would take them their entire first six months to a year to even determine what those gauges are. You don't need to make them put out there like Naked and Afraid TV Show where they have to fend for themselves and figure it out. Help them out, show them what to do, tell them how they'll be judged, you'll get a better quality manager. Also you've gotta set metrics in which they have to hit or you simply have to get rid of them. A lot of times looking at your Mobile Home Park managers, you need to look at more or like being the manager of a baseball team or a football franchise, because those who perform need to stay and those who can't just have to go.

Even though you may like them and you had high hopes for them, it's simply going to be a fact that it's... Everything is based on performance. So set some standards for yourself under which when a manager does not hit it, you automatically have to get rid of them. That will help offset all those things we talked about earlier for why we hold on to managers. Make it so you can't hold on to them anymore, come up with a grading system. Say okay, for this... For me to feel good about this manager, they can't do X, Y, Z or if they do... If they fail in this regard for three straight months, out they go. Write that down somewhere, write down what the minimum performance is. And if they don't hit it, agree to yourself before you even begin the exercise, then they just have to go. That'll be the trigger for... You've gotta go ahead and replace the manager. If you don't do it that rigidly, well, what will happen is you'll keep carrying them even though they fail because they'll tell you, "Oh, I'll do better next month." And you'll say, "Well, they'll probably do better next month, maybe." And the next thing you know, you burn another month, six months and a year, and you've been failing the entire time.

Also make sure you keep all your new hires on a probationary period. So what does that mean? Well, it's really, really hard to fire people, we've all admitted that. So instead of having to fire them, put them on initially a probationary period in which they're not officially your manager until they complete that probationary period. Now make sure you understand what the limitations are by law, so don't violate any employment law in your state or federally. But when you bring people on initially, make sure that everyone is in agreement, this is a trial basis. We're gonna see if this really works out. It's also good for them because it may not work out for them too.

Remember the being about Mobile Home Park manager isn't really something that fits for everyone. I've had candidates before that I thought would do really, really well and they failed miserably. And others that I thought didn't have a chance who are some of the top performers. But it's always best if you make it easier on yourself to let them go by not even fully hiring them on the front end to begin with. It just makes sense. Let's give it a test, give it our best shot. If it works, it works. If it doesn't, it doesn't. There's an old Mobile Home Park saying that I was told when I first got in the industry which is, "It's easier to change people than to change people." It's a very true statement, it means it's easier just to go ahead and replace somebody who's not doing well rather than sticking with them and trying to actually change them. We all know it takes years to change somebody.

If you have a manager who just can't show up at the office on time or can't show up to anything on time, it would take you years to solve that person, to get them where they are timely. Maybe you could do it, but you don't have the time to do it. Your business will suffer mightily. We only have typically one manager in the field for each property, you cannot afford when you have only one person to rely on for having a single weak link in the chain. So the bottom line to it all is we've all... Every single Mobile Home Park owner had to be more vigilant to make sure that we only hire great manager prospects, that we train them properly, that we show them the systems, that we motivate them as best we can, because we want them to succeed. But if they can't, if they're just not cut out to be a Mobile Home Park manager or a Mobile Home Park manager for your property, you definitely need to as Stanley Marcus would say, "Take your markdowns as quickly as possible." This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.