Mobile Home Park Mastery: Episode 127

Mobile Home Park Owners Vs. Rodney Dangerfield

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Rodney Dangerfield got no respect – and that’s a common problem with mobile home park owners. In this edition of the Mobile Home Park Mastery podcast series, we’re going to review strategies for owners to gain respect among sellers, bankers, brokers, residents and their peers. With respect an important part of self-worth, it’s important to discuss this topic and concrete steps to improve your standing.

Episode 127: Mobile Home Park Owners Vs. Rodney Dangerfield Transcript

Rodney Dangerfield, a popular comedian in the 1970s and 1980s built his career around one phrase, "I can't get no respect." Respect is very important to all of us. In fact, the dictionary defines respect as a feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements. And we all want respect.

This is Frank Rolfe, the Mobile Home Park Mastery podcast series. We're talking about respect in the manufactured housing industry and how to get it. Let's first start off with getting respect from your sellers. As we all know, the first thing you have to do to be a mobile home park owner is to buy a mobile home park. And what it means is you have to buy a mobile home park from someone who already owns one, which is called the seller.

So how do you get the seller to respect you as the buyer? Well, several thoughts on this. First, the most important one is, don't lie. It doesn't work when you lie to the seller. If the roads are in good condition, don't pretend that they're bad. If the sewer system's in good condition, don't pretend that it's not. If the location is good, don't pretend that it's poor. Be an honest person. Sellers respond very favorably to people who are honest. Those who are honest, they will respond back with honesty. If you appear dishonest, they won't work with you at all.

Another item with the seller is what we call being easy to sell to. Always meet your appointments very punctually, be right on time. If the person says, I want to meet you at 3:00 on Tuesday, get there about 2:30 just in case there's a traffic issue, you never want to be late. If you're late at all, the seller then perceives you as someone who can't be trusted and that may also means not only they don't want to sell the mobile home park to you, they may also not want to do any seller financing if that was originally something they were considering. So you want to be very, very easy to sell to.

The final item with sellers is, go in with a win-win attitude. And what that means is you want both seller and buyer to be happy at closing. Win-lose just does not work in our industry. You cannot push sellers around who have plenty of money and typically no debt, so don't even attempt it. Go in with a very consultative, very inclusive win-win attitude, that's what makes the sellers really respect you as a buyer.

Next, how to get respect from your banker. It's very similar to the seller. Don't lie, be brutally honest with the banker. Bankers like people who tell the truth, why not? They need to because bankers are very, very attuned to the fact that you need to make your payments. They don't want to have you miss the payments, nor do they want to get burdened with they have to sell the collateral. Bankers also respond very favorably to buyers who are thinking longterm. So if you are a buyer talking to a bank, what the bank wants to hear is not only what your plans are, but what your plan B and your plan C is regarding if your initial plan doesn't work. If you tell the bank, I'm going to fill these 20 lots with new homes, but if that doesn't work I'm going to use used homes. If that is a work I'm going to try and find some "Lonnie Dealers". If that doesn't work, I'm going to try and bring in RVs.

That's the kind of things they like to hear. They want to hear that you've got multiple tronches of effort, so if one thing does not work you can just fall back to the next. Now, always remember with a banker, this is a very important statement. Before you can have return on principle, you have to have return of principle. What that means is, to a bank, the best they get is the interest and if they have any loan that defaults, it wipes out the gain on many other of their other loans. So that's what bankers want to hear. They want to hear that you're a very stable person who thinks far, far ahead. That's what's going to get you respect with them.

What about the respect of the broker who may be bringing you the deal to buy that you're going to get financed? Well, what brokers want to hear, once again, is honesty. Who are you? What are you trying to achieve? How big a deal can you afford? How big a deal will you buy? What parts of America will you buy it? What issues with the mobile home park are you uncomfortable with such as private water and private sewer? So brokers basically, once again, want to hear the truth. And what they really want to know is, what it will take to make you actually pull the trigger and buy it. They love to hear issues as far as how much money you have for a down and simply how enthusiastic you are.

And that's a key item to discuss, enthusiasm with brokers. Enthusiasm tells the broker that you will go forward with the sale even though there's always potholes and bumps in the road between signing of the contract to the actual closing. There may be an issue with what the seller told you. There may be an issue with the lending. Enthusiastic people overcome these issues. People who have no enthusiasm do not. So brokers, typically, what they are always seeking when they talk to potential buyers is they're listening for the person who's enthusiastic, the person who they feel will get the job done.

And you never want to mask your enthusiasm, that does not work. I know in other forms of business and other sectors of real estate, often people believe there's a benefit to pretending like you don't really care, playing it coy. No, this property, it really isn't perfect for me but I guess I might buy it at the right price. That sends a terrible signal to the broker, that you're kind of wishy-washy, perhaps a tire kicker and you're definitely not someone to be trusted to get the deal all the way to the end zone. So they will not treat you with the necessary respect to perhaps put it under contract. So you have to be extremely careful on the brokers that you send a very clear message, you're very enthusiastic, that you have the money, that you want to go forward.

Now, how do you garner respect from your residents? Let's talk about that for a moment. That's a very important topic. How do you make the residents respect you as the owner and respect the fact you can be counted on to get the job done? Well, here are some items. Number one, once again, be truthful in what you're doing. When you buy the mobile home park, explain to them what improvements you're going to make, what the anticipated timeframe is on those improvements so that you're all on the team. Also, reassure them from the beginning, you're not going to be redeveloping or tearing the mobile home park down, that you want to keep it as a mobile home park and that you want to make it "the best it can be". They respond very well when you tell them the truth on the front end, what you're doing.

Number two, do it. If you promise you're going to go in and make this property the best it can be, then you failed if you don't proceed on. What happens to some buyers are, they tell the residents they want to do great things and the intend to do great things, but they don't do them fast enough. When you buy a mobile home park, you want to immediately address a few items. Number one, you want to make the entry very nice. Number two, you want to fix up the common areas. Why? This sends a message to the residents that you mean business and when they see you making improvements, then they will step out of their comfort zone and start doing improvements to their own homes and lots. If you don't actually follow-up your talk with action, you lose their respect almost immediately.

Also, be sure at all times maintain an era of fairness with the residents. Your managers should never pick favorites. Your manager should treat everyone the same. Have some very fair management systems like no pay, no stay on collections, which simply means, if you don't pay your rent, you can't live there, but not in a negative fashion, it's people's choice. The same as your power bill, if you don't pay your power, your power gets turned off. So in this case, you don't pay your rent, you can't live there. Never is there the option that you don't pay the rent and you can continue to live there, that's not on the table. That tells everyone it's a fair system. Those who pay can stay. Those who don't pay can't. But your manager should never pick favorites and ever allow anyone to live there who isn't paying the rent because that's not fair to those who are paying rent.

Also, another system is called no play, no stay. If you will not play by the rules of the park and of the greater community, then once again, you can't live there. There's nothing more unfair than having several homes that follow the rules to the letter, looking out on that one home that does nothing it's supposed to do. The homes in terrible condition, non-running car in the yard. These are not issues that are fair. It's not fair for those folks to look out their windows onto that. Now the person in the home that looks horrible, they look out on their windows and they see well manicured yards and homes in perfect condition. That's great for them, but that's not fair. So what it means is, in trying to gain respect from your residents, you have to be extremely fair in the way you treat them. If you give them respect, then they will give respect back to you.

Also, you can gain respect from residents by being very fair on the value of what you're providing. Now this is Avery important item because the media keeps getting everything completely wrong. Most people in mobile home parks, they do not seek out paying the lowest rent for the lowest quality of life. Most Americans want to have a nice quality of life. They want to be proud of where they live. They want to pull into a community that is well maintained and attractive, and they know that requires higher rent. The only way the owner will put the money back in to those cap X improvements to keep the park nice is with higher rent. The only way the park won't be redeveloped is with higher rent. People have no problem paying higher rent as long as it ties back to that thing known as value.

Where you'll lose the respect of your residences is when you raise the rent but you do not put things back in to go ahead and garner the rent. So it's not going to work if you decide, well, I'm going to go ahead and raise the rent annually just because I can or just because I want to. You've got to do certain things to make your residents feel that that raise in the rent is fair and if you don't do that you will very, very quickly lose their respect.

Finally, your peers, how do you go ahead and maintain respect with your other park owners that may surround you or are located just within the market? Once again, treat them honestly, treat them fairly. Don't do anything to undermine their interests. And the number one issue on that is what is called rating. If you have a mobile home park just down the street, probably about the dumbest thing you could ever do is to try and go down to that mobile home park and convince a resident there to move their mobile home to a vacant lot in your park, because what will happen is that owner will now go down to your park and repeat the same favor. And next thing you know, your occupancy has not increased one iota, but you each have got ahead and had to pay to move a mobile home from one location to the other at a cost of about $5,000. You would never want to do that. That makes no sense. So respect the business model of your peers down the street.

Also, enlist their aid and freely give their aid of information on such things as people who are rehabbing homes, people who are installing homes, vendors who trim trees and asphalt. There's no reason that park owners can't get along very well together and they can actually help each other and provide a lot of information. But once again, you have to do it in the proper format to keep that respect.

Once again, respect is very, very important in the industry. It's important in life in general. I don't think anyone can have a high quality of life if they don't garner respect. These are some tips to help you get respect and hopefully you can achieve respect and keep respect because it will definitely make you a happier person.

This is Frank Rolfe, the Mobile Home Park Mastery podcast series. Hope you enjoyed this. Talk to you again soon.