A “lever” is defined as “a rigid bar used to move a heavy load when pressure is applied to one end”. But in the mobile home park business, sometimes the strongest “lever” is made of paper and roughly 6” long. In this Mobile Home Park Mastery podcast we’re going to explore the different ways in which a little cash can get the desired results if you know where to apply the “lever”.
Episode 391: The Biggest Tool Is Often Just A Little Cash Transcript
Wikipedia defines a lever as a rigid bar resting on a pivot used to help move a heavy or firmly fixed load with one end when pressure is applied to the other. So we all know that a lever is basically a tool. In fact, back in the 19th century, when a train derailed, a group of men using levers could lift even the heaviest locomotive and put it back on the tracks. But what would you think if I told you one of the greatest levers in the mobile home park industry is just a tiny little thing made of green? It has no strength at all. And of course, what I'm talking about is cash. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're going to talk about using cash as a lever, as a means to get people to give you the decision that you want or to get the desired effect. So let's talk about some of the things that you can do as a park owner using money to solve situations. First one, which became very popular during COVID was the concept of cash for keys. So in this scenario, you have a resident who has not paid their rent. Under the terms of the lease, they're in full violation.
You give them the correct court-mandated notice that you're going to evict them. You file eviction, you go to court. It could take months and months and months in some states, maybe even a year to go to court. And then of course, if you win, they have the right to appeal. They don't appeal. You can get the writ of possession. But what if you could avoid all that simply by paying the resident to leave? And that concept is called cash for keys. So here's how it works. You go to the resident who can't pay the rent, who can be evicted, and you say, look, this is very embarrassing for you, and I have a solution that is not embarrassing for you. In fact, it gives you a nice fresh start. So instead of me evicting you, which will hurt your credit, instead what we'll do is I will pay you money to leave. I'll give you $500 if you can be out of that home by Monday, if it's a rental home, or I'll give you $500 if you can be out of that home by Monday and just go ahead and give me a bill of sale on the home or title if you have it.
You'll go your merry way, I'll go my merry way, you'll have money in your pocket and not a single hit on your credit. Pretty compelling, right? Well, a lot of people, when given that pitch said, wait a minute. Yeah, that's way better than me being evicted. Sure, I haven't paid the rent, can't pay the rent, don't have a job, whatever the case may be. But now it's a win win because you're helping them get on their feet and they're leaving that home early. And let's look at what it costs you. If they don't leave early, you're going to lose lot rent every single month. Let's say your lot rent is 400 a month. Let's say in some states it takes you four months to get to court. That's $1,600. And on the filing cost, you're already at $2,000. Then if they run off and destroy the house and you have to remodel it, well, that's another anywhere from probably 4 to 5 to up to $10,000. And you can see how pretty rapidly it adds up to probably around 10 to $15,000 every time somebody runs off and abandons their home. But what if you could instead just give them cash to leave now?
Isn't that a better solution? So cash for keys is one great way to use money as a lever. Another one is if you've got a dumpster in your park. So in other words, not Polycart tri-service, but dumpster tri-service. One problem you always have when you have dumpsters is illegal dumping. It's been around as long as probably dumpsters were created. It's where people who do not live on the property come in and throw things they shouldn't in your dumpster. It can be everything from tree limbs to shingles. And the only good way to get rid of that is to let everyone in the mobile home park know that if they turn in, if they take a picture of the illegal dumper and their license plate and turn it into the office, and you end up being able to prosecute that person for illegal dumping, they'll get a reward, typically $200, $250. Suddenly the dumping ends. Why is that? Well, it's because normally the people who illegally dump in a mobile home park are connected somehow to people who live in the mobile home park. That's how they learned of the dumpster to begin with. That's why they're so brazen they can do it is they figure that person will protect them.
But there's a lot of eyes looking out of windows in every mobile home park. They're pretty high density. And suddenly they may think, oh, I better not go in here anymore, because someone's going to Rat me out. Someone's going to take the reward. So once again, using cash as a lever, you've solved the problem. Or let's say that you want to go out there and you want to expand your mobile home park. To do so, you have to go through planning and zoning and maybe the city council. How do you do that? How do you apply cash as a lever in that situation? Well, what you do is you go to every person on planning and zoning and say, what would I have to do to get you to vote for my proposal? What would you want to see in my expansion proposal? And they will all have their own personal opinion. It will always, each one will cost money. Some will say, I want to see a better landscaped entry. The next one says, I want to see a big old fence down the side so I can't see the park anymore.
You go through each of them and say, now, okay, if I added this onto my proposal, would you vote for it? And they'll say, yeah, if you did that, I'd vote. I'd vote for it. Once you've collected all those opinions and if you have a majority of people who will vote yes, then in your application, it's not just to expand your mobile home park, it's to expand your mobile home park and add all those additional pork barrel items on there. Expand your park and improve the entry. Expand your park by adding this fence down the side. Once again, I've used cash in the form of what each person wanted in those plans as a lever to get the desired effect. Another thing you can do is if you're buying a mobile home park, you're an out of towner and you're not really a part of the good old boy network, and we all know that really everything in America works on a good old boy network. You can join that thing by simply becoming active in that city or town. You can join the chamber of commerce, that's not expensive. And then you can do items beyond that.
You could do an annual gift to seniors who are graduating in the form of a scholarship. Maybe $500 a year on a scholarship. I've seen scholarships in the paper in small towns for as little as $200 a year. Or maybe you want to become a blue ribbon sponsor of the football team. That'll get you on the cover of every football program. Total cost, maybe $100 a season. You can sponsor a little league baseball team if you like. But what happens is this is basically getting you protection from issues inside the city. Because a way a lot of cities and towns work is if you're inside the good old boy network, if you're a member of the chamber and you're active in the town, you're somewhat insulated from rogue inspectors or issues which those who are outsiders are not. So once again, we've used cash as a lever, and in this case, to get protection from rogue city employees. Also, if you're looking to buy a mobile home park, of course you can always use as a lever cash to get more VIP treatment from brokers by simply taking them out to dinner, buying them gifts, whatever you like to do that will give you preferential access to them.
You possibly may see pocket listings and things ahead of others. So once again, we've used cash as a lever. Or let's say you have a problem with the city. City says you can't use your vacant lots. It's pretty common in a lot of areas, typically blue states. What do you do? Well, I will use the cash as a lever to go out and hire a really, really good municipal lawyer. This is a lawyer whose specialty is suing cities. Cities are typically terrified of this individual specialty type of lawyer. And by hiring those, you can often get the desired effect. You simply have to pay whatever their hourly rate is. We have many, many stories of municipal lawyers who went in and saved the day and protected our rights as property owners from rogue zoning officials, councilmen, even mayors. So once again, I've used cash as a lever to get the desired effect. But in this case, the cash is the payment of legal bills that may come in. And then finally, you can use your cash as a lever to join your state MHA, and they're going to take all of that cash, all those little levers, and combine it into one big leverage and try and protect your rights.
Because right now, America has never been more screwed up politically. I've never seen anything really quite like it in my entire lifetime. And the only one out there really in the trenches defending you and your property rights as a park owner is your state mobile home association. And they can take those dollars that you contribute through your dues or even individual additional contributions. They can collectively add that together, and they can then use that as their own larger lever with a lot of different folks in the state house and Senate in the form of gifts to those who are positive for the industry and those who are not. And I'm not talking bribery. I'm talking basically campaign dollars for their reelections. So giving money through political contributions has always been a big part of American politics. Look at the amount that's spent every year on every race in America, not to mention Presidential and Congress seats. And you can see that basically money is a massive lever in America when it comes to raw politics. And once again, even though you may not want to spend anywhere near not even a fraction of the amount necessary to actually get the desired effect, the state MHA through collectively grouping that together like a giant co-op can get the job done.
The bottom line is that you don't need to have a giant 30 foot long metal beam to get the desired effect to get things back, put back in order, but simply that little dollar bill or 20 or $100 bill you have in your pocket can really have a massive effect in changing the course, the direction of how things are going for you and get them back to where you wanted them to be. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.