Mobile Home Park Mastery: Episode 288

The Science Behind Selling $70,000 Singlewides

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Mobile home prices have nearly doubled since the advent of Covid, and that has put a stress test on selling “trailers”. However, many mobile home parks continue to sell new homes despite the higher prices. In this Mobile Home Park Mastery podcast, we’re going to make some observations on what is needed to sell a $70,000 mobile home in today’s market.

Episode 288: The Science Behind Selling $70,000 Singlewides Transcript

Prior to the advent of COVID in 2020, we were bringing in mobile homes, new mobile homes from factories, prepping the lot, put it in on a deck, put it on the skirting, the whole package altogether would cost around $30,000 or so. Customers loved it, it was so affordable compared to the single-family home selling at a very big multiple of that price point. So you couldn't go wrong, you could bring it in on almost any lot in America, a $30,000 roughly single-wide, and you could get it sold all day long. And then what happens? COVID comes in, they blamed it on supply chain interruption, and the next thing you know, mobile home prices have doubled. Today, there's an entire science to selling $70,000 single-wides, which is what they cost, new homes cost in many markets. Yet many parks are still selling those homes even at that bigger price point. This is Frank Rolfe with the Mobile Home Park, Mastery Podcast. We're gonna talk about the lessons we've learned from being an operator that's been selling lots of these $70,000-plus homes. So the first thing you have to know is that for a market to be able to sell a $70,000 home, one clue you can have as to its capability is to look at the price of the 1000 square foot stick-built home.

So if you go to, for example, and you put in the location of the park you're looking at buying or a park you already own, and pour over the listings, not the most expensive, not the biggest homes, but look at the ones that are kind of the single family alternative to a mobile home, which would be roughly something around 1,000 square feet. If you're in a market in which that 1000 square foot single-wide comes in at about $100,000 or so, you're in luck. Given the fact that is one factor that allows you just to seemingly always have success selling these more expensive single-wides. If however, the thousand square foot single-family home only sells for $40,000 or $30,000, then you probably will not do as well because someone who can buy a $70,000 single-wide, who can qualify for that through a mortgage company, can typically also qualify for a stick-built home, and you've gotta have a price advantage of that mobile home over that stick-built. Now typically, those thousand square foot stick-builts in most markets are in terrible condition. If you ever look at them, they're just awful. These are homes that were built back in the '50s and the '60s, and they really weren't well-designed, they have horrible floor plans, they're very, very dated and they're typically in awful condition.

So I'm offering then a new mobile home, that's in great condition, with a good floor plan, and as long as I'm in that same price point, with that advantage of about $70,000 versus $100,000 or so, typically, I'll sell really well. So that's the first thing you've got to realize is you've gotta compete. You have to have that price advantage over that comparable single family type of home. Another thing you gotta know is how much of your park is comprised of seniors, because often what happens in these parks with these more expensive homes is that the senior down scales from their stick-built home, they come to your park, and when they look at buying a new mobile home, whether it's $30,000 or $70,000, they just write a check, or they write a big check for half of it, and then they get a loan from a bank that they've been doing business with for years, and it makes the transaction so very simple, and they're not really that worried about the cost. Sure, they would have rather paid $30,000 or $40,000 rather than 70, but they can afford it.

So it's kind of like if they go to the restaurant and the value meal is no longer available, well, they still eat there, they still buy the hamburger. So if you have a lot greater senior component, that also helps in determining whether your park can handle the $70,000 single-wide or not. Another item is how many bedrooms you have, because a three-bedroom two-bath, which is a fairly standard mobile home size, that's very rare when it comes to multi-family and in markets where you're competing head-on head with apartments, finding a three-bedroom, two bath apartment is like finding a needle in a haystack. So something which is kind of the standard, the norm of the mobile home park, the classic 14 or 16 by 7632, is very much a rarity in the apartment world. So if you've got three-bedroom homes for sale for $70,000, that's gonna work because three bedrooms are very hard to come by. If you've got two-bedroom $70,000 homes, it's much more difficult.

Now, why is it such a big deal between the two and the three-bedroom? Well, because if you have families with kids, typically the three-bedroom is kind of the gold standard, they wanna have everyone with their own bedroom, or if they have boys and girls, they wanna have one bedroom from the girls and one bedroom for the boys, and it's just very, very hard to find. So the rarity, the scarcity of the three-bedroom, two-bath in the multi-family sector leads to enough demand that you should be able to then sell that 70,000 home, 'cause you are gonna have a lot of customers looking at that. Another observation on selling the $70,000 mobile home is you've gotta have a really great salesperson, and you have to have a really good office to get the job done, because people get much more discriminating when they're looking at writing a big check and taking out a big mortgage, on a mobile home. We all know the mobile home industry has suffered from a negative stigma for decades now, probably never going to be corrected, so as a result, shoppers are very hesitant to buy the mobile home because they already have kind of a negative feel to it.

Maybe a friends or family they fear will say, "Oh my gosh, you're kidding me, you paid $70,000 to buy a single-wide trailer in a trailer park?" So to get them over the hump, to make them feel good about that purchase, you gotta have a salesperson with really, really good sales skills who gives them the confidence that they're making a good decision, and then you also have to have a very professional office. The old days, you could sell a $30,000 single wide out of your manager's mobile home, right there in their kitchen, around the dining table with the cats running around in the background and the TV blaring, the demand was still so high, the price was so cheap that people will, despite the unusual surroundings of the sale, they'd still do it. But when you start getting into the $70,000 single-wide, people want to feel like they're buying something that's a quality product from professionals. So it's very important. Now, if you don't have an office in your park, if you say, "Well, gosh, I don't really have a real office to sell that home out of." Well, you know you can sell it out of the home too, just make you meet in an environment that is professional.

So if you get a mobile home, a new mobile home, and you put it in your park, you put it on the lot, there's nothing holding you back from getting a folding table and some chairs and putting those right there in the living room or in one of the bedrooms to be used as your sales office, just don't let the customer have to go as always classically occurred to the manager's home to seal the deal. They're gonna look around, the home will be probably very dated, maybe a little eccentric and they'll say, "Oh gosh, I don't know, I don't know if this is really a smart move for me to spend $70,000 based on the environment that I'm seeing." Another option is to get a little portable building in some markets and make that your official office, put a table and chairs in there and pop on a window, air conditioner heater. And that should also do the trick. You can buy those kinds of little offices which coming on skids and they look like little portable buildings for not a lot of money, and it is... Again, it will make all the difference in the world.

Finally, if you're going to get a $70,000 home out the door, you've got to adopt some extremely sophisticated and reliable and aggressive sales tools to get enough volume of customers in to get the job done. Now, we originally pioneered the concept, it was roughly three calls to one showing and three showings to one application, because that's what we were seeing in the field. We just started tracking it, and today we saw so many homes because we do follow the science behind it. So how does that science work? Well, the first thing you have to do is you can't just let the manager answer the phone without being able to monitor what's going on. So you've got to forward your park's phone through a service like who's calling, or if you have a software like red manager or their VoIP system. And what happens is when the customer calls, they are gonna record you saying, "This call is being recorded for customer service," and dah, dah, dah. And then it ports through and then it tracks the incoming phone number, it also tracks how long the call was, and it also records the call.

Now, the reason that's important is you've got to know how many calls are coming in, because that's the first building block to know in the science of your sales. For most parks to get a home out the door, you've got to bring in at least nine calls, three calls for showing, three showings for an application, nine calls for an application. Now, if you're hitting those kinds of call numbers and you're not getting homes out the door, then something is falling a part in the process. And when you look through your who's calling log, you'll rapidly see what that is typically. And that's that no one's answering the phone. You'll notice that because you'll see each call has a duration of only a few seconds. So that's not going to work. So you gotta make sure the manager is actually answering the phone. Number two, you have to make sure that they understand the whole reason of answering the phone is to get someone to come in to a show, and you cannot sell a mobile home over the phone. So the whole purpose is to encourage them to come down and look for themselves at the home.

If you have a lot of calls and very few showings, it's safe to bet that the manager is not answering the phone and is not asking anyone to come down to take a look. Now if you have the required number of calls and you're seeing a result in number of showings, but you're still not getting in any application, you have two options now, one is that the manager is doing a terrible job of sales, or the other is the home is simply not in keeping with the other market pricing, maybe there's a park down the street where the price is far lower, and therefore, even though people are coming and looking, they're not making an application because of competitive market forces. Now, you can see what the manager is doing in two ways. Number one, by listening to those calls that are recorded through who's calling or VoIP, and number two, you can pay someone to go down and mystery shop. They can call as a customer locally in that market, you can get those kind of people off Craigslist, typically for $50. They can set up the showing time and then go and then you can talk to them and say "What happened?" And sometimes they'll say, "Well, I showed up, but they never did," or "I showed up and they showed up and they didn't seem to understand the product or couldn't tell me anything about it."

So you have to really start unlocking what's really going on with your park regarding getting this home sold. You can also do exit interviews 'cause you have those numbers, capture the people who call in, you can call them up and say, "Hey, I know you called about our home, but I don't think you bought it. What happened?" And you'll learn a lot from talking to them. Now, once you know the science behind it, once you know you're monitoring the calls and the showings, to sell the $70,000 home will require significantly more lookers because now the home price point has being basically doubled. So if before I was able to get a home out the door with three applications, now I might need six, I might need nine, I might need 12. You'll still get there, but it may take a little bit longer to do it, and you've gotta have very, very professional management along the way.

Also don't forget that even though single-family new homes are costing or single-wide new homes are costing around $70,000, used ones don't. You can still buy a $30,000 complete used homes for parks. So that is the fall back, but before you know you need that fall back, you've gotta understand the science. You'll not be happy and you'll not feel like you've done a job well, or that you really have a handle on what's going on with these higher price times until you've given it your best shot. And to get the best shot you've got to adopt science. This is Frank Rolfe, with Mobile Home Park, Mastery podcast. I hope you enjoyed this. Talk to you again soon.