In August 1860, Annie Oakley was born. She went on to become one of the most famous sharpshooters in U.S. history, being so good at marksmanship that she was able to pay off the mortgage on her widowed mother’s farm from the earnings of hunting and selling animals to Ohio restaurants – all by the age of 14. She began hunting out of necessity at the age of 8 and developed her talent through endless practice. In many ways, there’s a little Annie Oakley in any mobile home park owner who spent time hunting mobile home parks for sale, and perfected the valuation, negotiation, purchase and operation of these properties with persistence and repetition. It’s also worthy of note that Annie Oakley was the highest earning star in Buffalo Bill’s Wild West Show, earning only slightly less than Buffalo Bill himself. That’s how fascinated the American public was to see her do seemingly “impossible” tasks such as shooting a playing cards tossed in the air 100 feet away, often hitting them on the edge and cutting them in half. It’s truly amazing how good you can get at any endeavor if you apply enthusiasm and practice, and that’s definitely true of amassing a mobile home park portfolio. Haven’t found the perfect park yet? Keep trying and you’ll get really, really good at it.
Memo From Frank & Dave
The New York Times Gets It Right Again
Frank Rolfe and Dave Reynolds “are the best thing going in affordable housing at a time in which the nation’s need for low cost places to live has never been higher”.
- New York Times,
Sure, we’re pretty proud of that quote because we took a big risk to get it – we let Gary Rivlin, a writer for the New York Times, live in one of our parks in St. Louis for a week so that he could learn the truth about the industry. And he loved what he saw. [insert link] We’ve always respected the New York Times for their devotion to honest journalism regarding the mobile home park industry. So we were impressed that they once again gave an accurate portrayal to the potential closure of a mobile home park in Seattle, Washington [insert article]. The article explores the issues regarding the pending re-development of a mobile home park called Halcyon and brings forward many valid points.
Mobile home parks are becoming an endangered species nationwide
Virtually every city in the U.S. has effectively banned new construction of mobile home parks since the 1970s. As a result, there are only roughly 10 built per year in the entire nation, while there are many times that town down each year for re-development. This has created an environment in which the total number of mobile home parks in America declines monthly. The New York Times noted this in discussing the potential redevelopment of the Halcyon Mobile Home Park in Seattle where it was noted “… owning a mobile home on rented land has always come with the risk that the landlord would one day sell or redevelop the property, though that prospect seemed less dire when alternative sites were plentiful”. They then expanded on the situation in Seattle specifically where “there were a half-dozen mobile home parks in the neighborhood as recently as the 1980s; by 2007, there were just five left in the whole city. The most recent to close, a 63-unit community not far from Halcyon, was redeveloped in 2017 as multifamily housing”.
Land prices are exceeding mobile home park values in many markets
The New York Times talked about the saga of the Firs Mobile Home Park in Seattle, which was re-developed in 2017 after a three-year legal battle by the residents attempting to block the re-development. In the end, the property owner prevailed and the 6.67 acre parcel was turned into an apartment complex. In fact, that’s where most mobile home park developments are heading, since apartment rents are roughly $1,000 per month higher than mobile home park lot rents in many markets. On top of that, mobile home parks are essentially “single-story” while apartments are often three or more stories high, and offer much greater density on the land mass.
Mobile home parks offer a quality of life that is not replaceable for the residents
The article also touches on the fact that mobile home parks offer a lifestyle that is extremely attractive to the residents including 1) no neighbors knocking on walls and ceilings 2) having a yard 3) parking by your front door and 4) a sense of community with a strong support network. Apartments do not offer any of these options, most particularly the benefit of being a homeowner as well as a cost of living that is a fraction of apartment rent. Although the owner of Firs Mobile Home Park paid each household $10,000 to offset their relocation costs, it was merely a token gesture as there was no way that any household could ever find another housing option that remotely replicated their lifestyle in the mobile home park.
Rents must go up in order to stop re-development
Of course, if mobile home parks are shrinking in number and their lifestyle cannot be replicated, the important issue going forward is to offer solutions to protect them from re-development. Of course, the biggest solution is higher lot rent. Although it’s not a popular topic in today’s politically charged environment, it’s the only actual driver to the basic economics of land use. The remaining mobile home parks in Los Angeles have lot rents that range from $1,000 to $2,500 per month – which is required to keep them as a sensible land use. With the average lot rent only at around $280 per month in the U.S., even economist Charles Becker of Duke University noted that lot rents are at least 50% too low to remain economically competitive. Without higher rents you simply have faster re-development. The only other solution would be rent subsidies by the U.S. government (used aggressively in the apartment industry under the Section 8 program) but Congress has shown little interest in such a program for mobile home parks.
The New York Times has proven to be non-biased in relation to the mobile home park industry. Although the concept of affordable housing can often fall into a politically-charged narrative, the truth is that the reality of economics is non-negotiable and is the key metric of land use.
The Many Benefits Of Using M.J. Vukovich To Get Your Mobile Home Park Loan
M.J. Vukovich is one of America’s top loan brokers – a specialist in not only bank debt but also the more desirable CMBS “conduit” and Fannie Mae/Freddie Mac “agency” debt options. In this podcast that M.J. recently participated in, he gives insight into the current debt markets and opportunities. You can see from his level of knowledge that he is right person to be the quarterback on obtaining debt for your mobile home park acquisition or refinancing, which is why we’ve been a client of his for years. To discuss your loan needs with M.J., you can call him directly at 720-758-9227 or email him at [email protected].
Giving A Hand To Residents Is Always A Great Idea
Betty is a resident at our property in Carter Lake, Iowa. She is 87 years, and her husband passed away two years ago at the age of 92. She is a pillar of the community, and everyone pitches in to install her annual Christmas decorations because she is unable to install her elaborate lights these days. But her home needed significant work, and we felt it was important that we help her to get these improvements done. So we recently replaced some siding and trim, caulked the exterior, fixed her gutters, sealed her roof, repaired her deck, and painted the entire home. All for free. The end result was spectacular and it’s this type of project that unites the community and creates a positive spirit among all residents. Do you have any homes in your property that could use some extra help? It’s a win/win for the resident, the community, and the owner.
Our staff with Betty in the community clubhouse.
Hard at work.
The end result was well worth the effort.
Luxury Living In 1962 – “Spaciousness, Graciousness And Convenience”
It drives us crazy that most Americans think mobile home parks have always been about strictly affordability. While certainly that’s one part of the puzzle, the truth is that mobile homes have a colorful past that too few people realize. Case in point is this advertisement from 1962 promoting the Nashua mobile home product. Clearly, there’s no mention of “affordability” in the ad because that had nothing to do with selling mobile homes in 1962. At that time the average mobile home resident had a higher income and educational attainment than the traditional single-family home owner. The year after this advertisement came out, Elvis lived in a mobile home park in the movie “It Happened at the World’s Fair”. While things have changed a lot since 1962, there’s no question that there is still more to the success of mobile home parks than strictly dollars and cents. Despite the negative stigma with some Americans, people just seem to love the product, and it’s become a part of U.S. culture. Even Elvis liked it – he bought a mobile home and lived in it behind Graceland often. In fact, Priscilla Presley later remarked that she enjoyed her time in the mobile home with Elvis much more than in Graceland.
Why Most Smart Park Owner Are Changing Over To Purchasing Platform To Buy Virtually Everything For Their Property
In 2018 we became huge customers of Purchasing Platform – one of their largest. And we suggest any park owner to look at what this new buying service can do in regards to positively impact your community. It’s literally a game-changer.
What is “Purchasing Platform”?
Purchasing Platform is an online GPO (group purchasing organization) and eMarketplace that has been created specifically for the mobile home and mobile home park industries. More than 1,800 MH communities access Purchasing Platform every month to take advantage of their pre-negotiated pricing, single checkout from 40+ vendors, auto expense mapping to their chart of accounts, multi-level workflow approval to provide accountability across their portfolios, etc. They offer 20-30% savings on more than 10 million products and an integrated "Buying Desk" service that acts as a purchasing agent for your community to make sure they always deliver aggregate savings on every order.
How big do you have to be to use Purchasing Platform? Can you use it with only one property?
The answer is yes – there’s no minimum limit of properties or dollars spent. Some of the largest industry portfolios use them but the majority of their clients own and operate between 1 and 30 mobile home parks. This is not a service that is only available to the largest owners – it’s one that every park owner in the U.S. can utilize.
Why use Purchasing Platform?
In addition to the obvious cost savings on products and services, use of Purchasing Platform drastically reduces the number of trips your manager has to make to retail stores (time spent not managing your property), eliminates the need for expense classification and receipt transcription while also providing valuable oversight to the owner with workflow approval. They also allow members to load their own catalogs to make sure that managers only can order what they want them to.
Summary of benefits
Here are the main reasons that we have become huge users of the Purchasing Platform:
- Easy to use interface. Not hard at all for any manager to master.
- Single checkout from more than 40 of the industry’s largest vendors.
- Huge savings on more than 10 million products.
- Price Match Guarantee: if you can find it lower somewhere else, they’ll match it.
- Create your own custom catalog.
- On-Demand Buying Desk feature gets you immediate support for volume quotes.
- Comprehensive Workflow Approval functionality to keep you in control of all buying.
- Maps out all expenses to your Chart of Accounts.
- Integrates everything seamlessly into your property management software.
You can try Purchasing Platform at no risk for 90 days
Purchasing Platform allows all park owners to try their system for three months with no obligation to continue. That’s how we got started – we gave it a try and liked it. So if these advantage look good to you (which they certainly should) we recommend you contact Purchasing Platform today at 312-622-6552 and [email protected] and get set up on a 90 day trial.
We think you’ll find this to be one of the big improvements in your operation for 2019.
Revisiting Splash Pads
The swimming pool used to have a monopoly as a recreational amenity. It was the sole feature of any mobile home park that offered endless amusement during hot summer months. You either had one or you didn’t – and parks that did featured it distinctively in all marketing materials. However, a few years ago a new water feature came to town. It also offers cool water amusement on a hot summer day, but does it at lower cost both up-front and operationally – plus it’s all-inclusive for kids and adults of all ages and requires no skill at swimming. That new entrant is the “splash pad” and it’s making quite an entrance into the American summer season. We thought it was time (with temperatures over 100 in some parks) to revisit this exciting new opportunity.
Much more reasonably priced
Let’s start off with the cost of a splash pad versus a conventional pool. You can build a respectable splash pad for around $25,000, which is roughly half that of a conventional swimming pool. That’s significant. And you don’t have to build expensive decking and safety fencing. You also have a much more flexible foot print, as each splash pad is basically custom and can fit a number of sizes based on your park’s demands.
Easier to maintain
But even more important is the on-going cost differential, since that pool might be in operation for 50+ years. Swimming pools require a working filtration system (sand or DE), proper chlorination, and continual testing in accordance with the law. You have to maintain a constant water level, post depths, worry about decking condition, clean the pool daily, and provide all kinds of safety gear and instructions. Then, on top of that, you have to worry about the perimeter fencing and gate to make sure that nobody gets injured. By comparison, most splash pads do not have recirculating water (only giant ones do, like water parks) so you don’t have to do any filtration or water testing as it’s just good old fashioned city water coming out of the jets. In addition, there’s no safety concerns, as you can’t drown – all a splash pad is made of is jets of water like a giant garden hose on a stable surface designed for such an application. Your park manager can turn it on in the morning and off in the afternoon. It’s insanely easy and cheap to operate – with the exception of the water bill.
Anyone can participate in a splash pad. There’s no age limit nor is there any requirement of proficiency in swimming. There is no barrier for those with disabilities. It’s truly a marvel of participatory fairness. Parents can happily sit on a bench and watch the kids play without any worry about their safety. And you can just run through it for a second if you want to cool down without the all-of-nothing commitment of jumping in the pool.
People love them
Splash pads are fun. A lot of fun. What’s the most popular spot at the water park? The bucket that dumps water on the heads of those underneath every few minutes. It always has a giant crowd. Why? People love the excitement of getting sprayed or splashed with water. Pools are boring, all you can do is swim or float. It’s kind of like the difference between a board game and a video game – one is fun but the other is fantastic. In a head-to-head challenge, the splash pad beats the pool.
Have I mentioned that people love them?
A city about 30 minutes south of me recently built a splash pad as an addition to a city park. It’s been so popular that, after just one year, they’ve announced they’re going to build a second one because the crowd is too large. When’s the last time you heard of a city building a second swimming pool due to excess demand? The bottom line is that splash pads are not only cheaper and easier, they’re also preferred by the customers. Also note that many RV parks – our close cousin in real estate – have started replacing their pools with this amenity, which they call a “splashground” to compliment their “campground” .
If you are looking into amenities for your mobile home park – or just getting tired of the cost of your existing pool – you should consider a splash pad. They are one of those rare items that wins in every segment from cost to enjoyment.
The Interesting Relationship Between The U.S. Military And Mobile Home Parks
In the midst of World War II the U.S. military reached out to the mobile home industry to solve the massive shortage of base housing, and thus began the remarkable relationship between this unlikely duo. So what is the unique bond between the military and mobile home parks?
The biggest buyer of mobile homes in U.S. history
The outbreak of World War II caused many shortages in manpower and materials – and also in base housing. The army grew from roughly 100,000 soldiers to over two million virtually overnight. There was no way that conventional housing could be built fast enough, but there was another option. The military ordered 500,000 mobile homes, which represented the entire production of all the plants in the U.S. plus all existing inventory. It was the largest mobile home order in U.S. history.
The public relations tool that made them desirable
With this giant influx of mobile home housing came an unexpected dividend for the industry: familiarity and acceptance of this new way of living. Many servicemen found they really liked this exotic housing format and had very positive impressions. There’s no doubt that the modern mobile home park would not exist without this early P.R. stunt by the U.S. government. Millions of people who had never heard of a “trailer home” prior to enlisting soon became aficionados of the business model.
The impact of the GI Bill
Following the end of the war, these same servicemen qualified for the GI Bill, which provided free college education to whoever wanted it. Over two million soldiers went to college on this program. And, once again, there was not enough housing to accommodate this surge in demand. So the government turned to those 500,000 mobile home it had purchased for World War II and re-positioned them. If you look at an aerial of almost any college campus in the 1940s and 1950s, you will see mobile home parks surrounding them. Stanford University, for example, had a mobile home park called Manzanita with about 150 mobile homes housing 600 students, located just off the central quad. Once again, mobile homes became a part of the American dream.
The up and coming soldier post-college
Following their positive experiences in mobile homes while in the military and college, these same soldiers sought out this type of housing after graduation. They stayed in mobile home parks while starting their careers. If you look at advertising from this period in the 1950s and 1960s, you’ll see well-dressed men and women in the yards and sports cars in the driveways of the average mobile home park. This would not have been possible without the advance promotion of the U.S. military.
The U.S. military had a win/win relationship with the mobile home industry that lasted for decades. There can be no question that the modern mobile home park would not have been possible without the assistance of the U.S. government.
The CASH Program From 21st Mortgage: One of the Big News Stories of 2019
One of the biggest things going in the mobile home park industry is the CASH program from 21st Mortgage. If you own a mobile home park, the power of this program is astounding. You can fill vacant lots with zero out-of-pocket cost. You can get customers approved to buy homes with amazing speed and a “can-do” attitude. You don’t have to get in the middle of financing or the SAFE Act. And you can tap hundreds of thousands – or millions – of dollars sitting there in vacant lots. The demand for affordable housing in the U.S. is enormous, and the only thing holding most parks back from 100% occupancy are new and used homes that your customers can qualify for. With the CASH program, those obstacles can be overcome and your occupancy can soar. We are the largest users of this program in the U.S., and we know how great it is.
Insider Secrets On Moving A Mobile Home
Moving a mobile home can be a stressful experience. It’s still worth the effort, because every lot you fill in your mobile home park makes you around $30,000 to $50,000 in equity, but we’ve never heard anyone say “boy, moving mobile homes is lots of fun!” Here are some tips on how to have a more successful experience moving homes, based on our own school of hard knocks.
It costs about $5 a mile
Moving mobile homes is never cheap. Figure on $5,000 for the move and set, but it can grow exponentially based on how far you have to move the home. Some movers charge around $5 per mile to get from Point A to Point B. Before you ever buy a new or used mobile home to fill a lot in your park, you’ve got to scope out what the moving cost will be. It may make more sense to hold off and find a home that is located closer.
You may need to be licensed in the city – not just the state -- for delivery and setup
All legal mobile home movers are licensed to do so in the state the home is being delivered to (but check to make sure they are). But that does not always mean they are licensed in the actual city you are bringing the home into. You may need to go and get a local moving or installation permit (or they may have to). Always better safe than sorry on this topic. An irate city inspector can run out and block the move or installation, and that’s a catastrophe that is completely unnecessary. All the city typically wants is a small permit fee to be happy.
Find them on MHA, dealers, google, and other park owners
Finding mobile home movers can almost be an art form in some states – they are few and far between. So cast a big net. You can build a list of mobile home movers from your state’s MHA, home dealers, a Google search, or even other park owners. You would think at $5,000 per move there would be a lot of people in this sector, but the actual process is so risky and nasty that nobody wants to do it in a modern world. Volume of potential movers is the key.
Check the Better Business Bureau for complaints
Just because you found a willing mover does not mean that they’re a good one. In fact, there are some that would beg the question “is anyone watching over these folks?” A good idea is to check the Better Business Bureau report on the mover to see if they have a positive or negative reputation. If nobody has had success with them in the past, it’s a low odds bet you’ll be the first.
Know roughly the regulations on installation
Even though the mover is supposed to be licensed and bonded and fully knowledgeable on the laws of moving and installation, it’s not always the case. You need to also be a quasi-expert to make sure they are not screwing things up. Talk to your state MHA and research the state’s laws on mobile home installation and shut the mover down if he does something that looks questionable until you get a second opinion. The #1 issue is often site preparation: specifically if you need to pour a concrete pad or not. This is all buyer beware stuff, so be an educated consumer.
Pay them nothing in advance
Most good movers get paid on performance. Most bad movers want to get paid in advance. Makes sense right? So if a mover says “I need to get my money up front” you better find someone else unless there’s a really good reason for the request. Once you pre-pay the mover there’s no guarantee he’ll even show up with the home in your lifetime.
Moving mobile homes is a fact of life for most park owners. These tips will help you have more success in this regard. The good news is that most mobile home moves and sets are fast, so this is not like some hobby that can take you months to endure (like remodeling your kitchen) .
What To Do If Your Mobile Home Park Is Hit By Flooding
U.S. weather is growing more severe. And part of that shift has been extreme flooding – the type that seems impossible on paper, such as 5’ of rain in Texas during Hurricane Harvey, or the enormous rainfall that hit parts of Iowa and Oklahoma just recently. It is more likely than ever before that any mobile home park with flood plain in its boundaries will have rising water at some point in the near future. So what do you do if flooding hits your property?
In any stressful situation, the first requirement is to stay calm. You have to make good, solid decisions, and working from a reactionary platform is never in your best interests. If you have never seen it before, you might want to watch this short video of Sully Sullenberger landing the jet in the Hudson after striking a flock of birds. He remains calm throughout the entire ordeal, and that allows him to make the right decisions and land safely. One way to help you stay calm and in control is to always have a plan for the worst case. You need to think about what would happen in the event of impossibly high water, and be prepared.
Focus on safety
Property can be replaced. Humans can’t. Make sure to head any safety warnings and do not put your manager into harms way. You need to make sure that you are perpetually aware of any action that could cause injury to your manager or residents. Do not try to do any heroic stunt to stop the flooding if it imperils anybody, such as trying to have your manager run out and build an earthen berm with a backhoe that they don’t even know how to use.
Remove what you can if you have time
All RVs should be immediately moved out of harm’s way. Additionally, if you have brought in new or used homes that are not yet set up, get a mobile home mover to relocate these to the highest point of the property.
You will probably have evacuation orders and power shut off
In rising floodwaters, it is common for the city government to order evacuation of those in the path of danger, as well as to shut the power off as a precaution. Do not fight these orders. It is a temporary disruption and is simply designed to minimize damage. Evacuation orders are often lifted within a day or two and the power is turned right back on.
Order dumpsters ahead of the pack, as well as remediation crews
If floodwaters have already hit your property, then you need to act fast to get dumpsters and workers ahead of the pack. Everyone will be needing these services, so you need to line them up immediately. Call to get dumpsters dropped off before the trash company runs out, as well as contact companies that work on water remediation to set up their arrival. Being just a couple days late can result in massive delays.
Get grounds clean up going immediately
One bit of good news in most floods is that they do not leave behind much property damage. Floating debris tends to go back out with the water, so there is not much left on the ground. That which is there can be quickly removed. There may also be mud in the streets, but this is normally not a big deal and once it dries is easily swept up. You may also have some skirting missing, but this can also be fixed without a lot of expense.
Contact insurance agent and take photos to document
If you have flood insurance, you will want to get your insurance agent involved immediately. Let them tell you exactly what to do, as they will be writing the check and have some very particular instructions. Everything that occurs from the flood should be photographed and well documented. Do not touch or correct anything without this archive.
Make an organized action list
Make a complete list of any and all homes affected by the flood. Remember that to damage a mobile home the water must typically be higher than the floor of the home (generally the transom of the front door). Many mobile homes will be sparred from loss because of the simple fact that they are on “stilts” of concrete blocks as part of their natural design. If the water was 18” high, the home is probably fine. If the water gets high enough to impact the insulation under the home, then it will need attention. Make a list of all homes that may have water that hit the floors or insulation so this can be addressed. You can often visualize exactly how high the water went by discoloration on the skirting or exterior wall of the home.
Keep in constant contact with all effected residents
If these homes were occupied, then there are belongings to contend with, as well as disruption to lives and work. You will need to stay in constant contact with these residents to get the path to resolution addressed. Have your manager get the contact numbers for all affected parties, who typically will now be staying at local hotels.
Get everything wet out and into the dumpsters
Of course, the first step in solving a flood issue is to remove everything wet and start the drying process. On homes where the water only rose to the level of the insulation on the bottom of the home, this involves its removal. On homes where water went over the floor, then it will often require removal of all furniture, carpet and padding. These wet items must be thrown in the dumpsters, and then typically fans are installed and turned on high to increase the speed of drying. Additionally, drywall and paneling will need to be removed to stop the potential of mold.
Help show the way for the privately-owned homes
Any park-owned homes are your concern, but you also don’t want the privately-owned home residents to give up and leave. So help instruct them on what to do. Have your workmen act as mentors to show them the correct steps and push them along. Let them utilize your dumpsters. Be a part of the solution on a macro scale.
Get ready for a demand spike
Following most floods, mobile home parks are seen by FEMA as the solution to the housing crisis. All those residents of stick-built homes and apartments fare much worse than mobile homes because their residences are at ground level, not 3’ in the air. FEMA will often rent every lot in your park to bring in FEMA homes to house these people. Additionally, any vacant park-owned homes are suddenly a hot commodity with those who have been displaced. So the initial issues of flooding are soon swapped for a huge spike in demand. That’s another reason you want to move quickly to harness this need.
Flooding is becoming a more common weather disaster. Fortunately, mobile homes fare better than most any other type of housing in these cases. That being said, this list will help give you some pointers on what to do when waters rise.
Inexpensive Office Options
Virtually every mobile home park needs some type of office. Sometimes it’s because you’ve got a big operation with multiple employees, or maybe because you have to have a physical structure with an address in order to get a dealer’s license to sell homes. Or maybe its because you’ve got a bunch of homes to sell and need a central contact point that’s easy for customers to find. But sometimes your park does not come with an office, as the original owner self-managed and their house didn’t come with the deal, or they owned a couple parks and maintained an office in the other one. That being the case, how can you create a functional – yet inexpensive – office that gets the job done?
The manager’s home
For many parks, the obvious choice is the manager’s personal home inside the park. Whether it’s a singlewide or doublewide, the concept is that the manager meets with the residents in their living room, or sometimes devotes one bedroom as an office space. Although it sound strange, many managers prefer this arrangement, as it allows them to stay home all day and in their familiar surroundings which may include kids and pets. Typically a sign is placed in the yard that says “Office” with possibly a feather flag and you’re in business.
The old laundry building or garage
Many parks have free-standing structures that come with the park purchase, but are abandoned. There were, at one time, laundry buildings or garages to hold parts and supplies. We even had one once that mom & pop had used to store vintage cars that pop restored. These structures can often be made into extremely functional offices. All you have to do is paint, add flooring, turn on the electricity, add a window heat/air, install some furniture and you’re in business. Best of all, many of these structures just happen to be near the front of the property which is the ideal location. Since the majority of these buildings are abandoned laundry structures, they already have water and sewer and installing a working bathroom is not a big deal.
Buy a portable building/shed
If the manager does not want to have the office in their home, and there’s no existing structure to utilize, then another option is to buy and bring in a portable building or shed. You see these being sold along the highway in many markets, and some are really quite functional, with a nice door and windows. We recently installed one in a property and it turned out really nice. To do it up right, you’ll need to accessorize it with tasteful shutters and potentially a bush in an urn on either side of the door. A window heat/air unit is more than ample. You can buy these for around $2,000 on up. They are designed to sit directly on the ground, and do not need foundations (but check your local code) .
Having an office is a necessity for many parks, but requires creative thinking to make it a reality. Fortunately the space requirements are small and you can convert many objects into a suitable office if you explore the options.
Is Your Attorney a “Deal Killer” or a “Deal Maker”?
How many deals have you seen go down the drain because your attorney stacked up a million roadblocks to even the simplest problems, and then failed to offer any path to solve them? This is called “deal killing” and some attorneys do this so that they take no risk – if the deal never happens, they can never be criticized for missing a deal point, or for not spotting a flaw in the contract. The problem with this, however, is that you can’t get anywhere. At the other end of the spectrum are the “deal maker” attorneys that recognize real problems from trivial ones, and strive to solve these roadblocks using common sense and legal experience. And the best of those type of attorneys is Dave DiMarco from Woods Oviatt Gilman. We once had a deal go south in a big way – the very driveway into the property was determined to be on somebody else’s property. Any other attorney would have said “well, that’s it, the deal’s dead” but Dave DiMarco sprung into action. We located the owner, negotiated a purchase, personally handled the details, and the deal went forward. And all that over a weekend, no less. And that’s why we love Dave DiMarco and you should, too. If you need service like that, then consider using Dave DiMarco on your next transaction. You can reach him at (585) 987-2833.
The Sweet Spot Of Mobile Home Park Investing
When they hear the words “mobile home park” most investors think of the run-down, dirt road trailer park that they drive by on the way to Home Depot. But that has nothing to do with the actual industry of mobile home park investing. The truth is that mobile home parks range from those dirt road nightmares to super-luxury parks in California that rent for $2,500 per month in Newport Beach and Malibu. But there’s no money to be made investing in either of those two extremes. Instead, the sweet spot of mobile home park investing is something in the middle.
Follow the lending
To discover the sweet spot of mobile home park investing, start by analyzing the qualities of mobile home parks that lenders favor. Since virtually all mobile home parks are bought with debt, it is therefore essential that you only buy mobile home parks that are attractive to banks. So what do banks want? They want paved roads, parking pads, homes with “pride of ownership”, good mowing and immaculate entry and common areas.
Lenders want nice high-density “subdivisions” not “trailer parks”
When you add these qualities together you basically get high-density subdivisions – an asset that looks nothing like that stereotypical dirt road trailer park. A place that is strong competition for Class-A apartment complexes and older stick-built homes. A place that the residents can be proud to live in. And an enigma for those who put down “trailer park” residents as “low class” when they actually live at a higher standard than most other Americans in that same earnings group.
Ramp up value creation by buying certain economic attributes
But the true sweet spot in mobile home park investing is when you match the above traits with certain economic attributes. Most mobile home parks (roughly 40,000 of the 44,000 in the U.S.) are still owned by the original mom & pop. Often, these owners have lost interest in the asset years ago and the rents are far below market, the occupancy is lower than it could be, and the costs are out of control. This allows you to buy a great mobile home park that lenders love, at a good price, and with a huge amount of upside. It’s the best of all worlds.
And this is a win/win
Just as lenders prefer these type of properties, so do residents. They are willing to pay much higher rents to live in a nice community over the dirt road trailer park. It’s no different than customers preferring to stay in the new Hyatt Place over the Tiki Motor Court down the street. It’s all about value, and as you make the park nicer, you command higher rents. It’s a win/win for everyone.
Most Americans have the mobile home park business completely wrong – they don’t have a clue. The truth is that the sweet spot of mobile home park ownership is not a dirt road trailer park but a nice place you can be proud to own.
Can This Home Be Saved?
When you bring an old mobile home park back to life, you are frequently confronted with homes that look terrible and damage the aesthetics of the entire community. This is a photo of one such home. But can these old homes be brought back to life, too? Yes, if you approach it properly.
- Paint it. The first step to bringing this home up to a modern standard is to paint it a new, more attractive color. The best thing to do is to go down to your local mobile home dealer and exactly copy the color palate of the home you like on the lot – way safer than experimenting. On most homes, this is a $500 expense.
- Neutral window treatments. All mobile homes should have white mini-blinds installed in the windows. No home looks good if you put any colored window treatments that then clash with the exterior color. These are extremely inexpensive. Figure on maybe $20 per window.
- Shutters. All homes of this vintage were designed to have shutters as an aesthetic addition. They need to be painted the correct color palate to go with the homes. Cost is about $20 per window.
- Nice deck and stairs. The deck of a mobile home serves many purposes, from outdoor living space to necessary landing to stand on when opening the front door. While these come in many sizes, the bare minimum should be around 4’x8’ to be an attractive asset. Figure on a cost of around $500.
- Remove junk in yard. This goes without saying, but the debris in the yard is going to make the home look trashy regardless of how nice you make it. Everything’s got to go. Cost $0.
- Remove weeds. A well-mowed yard is an essential part of any home with pride-of-ownership. This one needs a complete mowing redo. That includes weedeater and round-up of any grass or weeds in the concrete pad. Figure on $20.
- Awning over door. This is optional, but from a workability stand point it’s great to have the ability to open the front door without rain getting in. These cost about $250 and you can buy them almost anywhere including Lowe’s. Paint to match the shutters.
- Attractive lot number on home. This is one of those finishing touches that makes the home really pop. You can buy these numbers at any hardware store or even Walmart. They cost about $5 per number. They screw into the wall of the home. Total cost around $20.
- Landscaping. We’re not talking much required here. Maybe a couple hanging baskets on the deck rail or a nice potted plant on either side of the front door. No purpose is doing a lot of greenery installation because there’s no guarantee the resident will properly water it. Total cost around $100.
- Carport. This is a purely optional asset, but nothing gives an old mobile home a feeling of solidarity more than a good old metal carport. This is about a $1,000 price tag, so you don’t do it on every home, but a highly visible one on a prominent corner is definitely worth the investment.
If you did all of the above steps, you’d have to spend around $2,600. While that may sound like a lot, if you were to replace this home with a new one, you’d spend that much just in demolition costs. If the home is in decent condition on the inside – or is already occupied by a private owner – there’s no reason you cannot make it a positive asset for the community.
Need A Phase I Environmental Report? Mike Renz Is Your Man For The Job!
The New York Times called Frank a human encyclopedia of all things mobile home park and, if that’s true, then Mike Renz is the human encyclopedia of all things under the ground. You see, when it comes to Phase I Environmental Assessments, nobody in the industry is more knowledgeable than Renz. He’s our go-to guy for all things pollution-oriented, from Phase I reports to simply asking questions on what we see going on next door to the property (or even inside that concerns us). We were once walking through a property and saw a brown colored solution oozing from the property. Within minutes, Mike had pulled up the data and figured out what it was (rusty water from an iron-ore- rich artesian spring). That’ the kind of information that we find invaluable in today’s litigious world of environmental condition. On top of that, we’ve had Phase I reports that failed for existing pollution, and Mike Renz has been able to solve them by using common sense and technology, like the time he proved the EPA wrong by doing a simple core-drilling to prove that a supposed landfill on a mobile home park did not actually exist (it had been phoned into the EPA by a former manager who had a grudge against the owner). If you want that level of expertise on your side, then you need Mike Renz to be your Phase I Environmental provider. That’s who we use, and he’s amazingly good.
You can contact Mike Renz at (614) 538-0451.
Should You Bring In A New Or Used Home To Fill Your Vacant Lot?
The demand for affordable housing in the U.S. is vast. If you are in a good market, there’s no reason to have any vacant lots. But the only way to fill your park with homes is to buy the homes yourself, as the U.S. government offers no assistance to mobile home buyers and dealers can rarely get customers qualified for a loan. To fill lots rests upon the shoulders of park owners, who are forced to provide this service out of necessity. So if you are looking at filling lots in your mobile home park, should you consider a new or used home to complete that mission? There are several issues to get a handle on.
What does your test ad tell you?
When you ran your test ad, what price point did you use and how many calls did you get? Many park owners run the test ad using the full market lot rent plus about $400 per month, which would roughly cover the mortgage, taxes and insurance on a brand new home. Assuming your lot rent was $400 per month, then the ad would go in at $795 per month. For that number to be a good target, you’d have to get roughly 20 to 30 calls over ten days to feel good about bringing in new homes. If you only got significant calls at $695 per month, then the only way to go is with used homes.
What does the lot rent tell you?
Smart park owners try to tie the value of filling one vacant lot with the price of the home that fills that lot. Let’s assume that the value of a vacant lot is -0- and the value of an occupied lot (at $300 lot rent and with the resident paying their own water & sewer) is $350 x 12 x .7 x 10 = $29,400, so that means that any home that fills a vacant lot creates around $30,000 of value at a 10% cap rate. As a result, any home we purchase to fill that lot that costs $30,000 or less (including shipment and installation) is appropriate – even if we gave it away for $1 we would at least break even. But you will notice that this same formula sends a warning sign when you are completely out of control. Let’s assume the lot rent is $150 per month ($150 x 12 x .7 x 10 = $12,600) and you fill it with a $50,000 doublewide – you’ve just lost $37,400 of value until such time as you recover the first $37,400 of principal on the sale of the home. We have seen park owners that are so out of whack that they have $800,000 mobile home parks encumbered with $3 million of home debt. The correct step, with a $150 lot rent, would have been to find a used home that you could provide for $12,600 including transportation. So often the choice between old and new is based on the value of the occupied lot.
What are the state’s installation requirements for new vs. old?
When a mobile home is placed on a lot, there are certain requirements for how the lot is prepared. In some states, such as Texas, the home is placed on the earth with little preparation. But in other states, there may be the requirement that a concrete pad be poured under the home, or concrete piers or runners. But some of these same states only require this installation type of brand new homes. On used homes they require much less expensive preparation. As a result, many park owners select the type of home (new vs. used) based on the lot preparation requirements. With concrete pads costing around $8,000 to build, this is a huge impact on overall home cost.
Can you qualify for CASH or similar program?
21st Mortgage – as well as others – offer a special financing assistance program for new homes. Since new homes cost more than used, this is a very important asset to promote the purchase of new homes, since it requires zero dollars out of pocket for the park owner. However, if you cannot qualify for one of these programs due to too small a number of lots or other issue, this may greatly impact your decision on whether to buy new homes or used.
What can your customers afford?
It’s one thing for the phone to ring, but another for the customers to be able to qualify for the home based on income and credit score. Some customers simply are not new home material. This requires used homes to meet the financial needs of this resident base. Even though you may prefer bringing in new homes from the factory, the financial reality of your customers may steer you towards strictly used homes.
Availability of used homes?
Some markets are just really hard to find used home inventory in. This is an algorithm of default, and some states just have few folks that don’t pay their mortgage (which is a good thing once you get a home on that lot). As a result, it is often hard or impossible to utilize used homes in these markets. However, the offset is that these customers are traditionally higher earners and, as a result, can more readily afford new home price tags.
How much capital do you have?
Of course, the bottom line on many home purchases is simply dollars and cents. If you do not have a lot of capital and are unable to become a part of the 21st Mortgage CASH program or similar opportunity, then you will have to stick with the used home option. Even then, there is a wide variety of used home price points, ranging from Craigslist 1980s homes starting at around $2,000 to 1990s repo homes that can be found for around $7,000 and up. Of course, those prices are not the complete picture as you still have roughly $5,000 in transport and set-up, plus the cost of any needed renovations.
There is much more strategy involved in selecting new vs. used homes to fill vacant mobile home park lots. These tips will start you on the road to making the right decision for your property.
Properly Insuring A Mobile Home Park Is More Complicated Than It Looks
Mobile home parks are a unique asset class of real estate. And their insurance needs are equally unique. You have to make sure you properly protected against a number of factors including liability, property damage, employee practices, flooding and fire – it’s a long list. Your typical insurance agent at State Farm will not even be able to populate this list, and their rates would be far too high if they did. You need a specialty lender who is completely focused on mobile home park insurance. That agent is Kurt Kelley at Mobile Insurance. He has spent most of his working life focused on the needs of park owners throughout America who are wanting to get the right insurance at the lowest price. We’ve been using Kurt for over two decades, and we heartily suggest you think about doing the same.
You can contact Kurt Kelley at 800-458-4320 ext. 17 or [email protected]
Why The Smaller Buyer Can Frequently Beat The Big One
I have lived my entire business life as an underdog. I started my billboard company straight out of college and had to compete with giant public companies on every ground lease (and beat them most of the time). Then I started buying mobile home parks from scratch and again had to battle larger competitors with every transaction (and once again beat them most of the time). It’s a little known fact that the small operator often has an advantage over the bigger company, and not visa versa. Why?
Smaller buyers can more easily bond with sellers
Most mobile home park sellers only own one property – they are small to begin with. So they bond best with smaller buyers. That makes the larger owner the odd man out. To bond with sellers, the larger owner has to put in much more effort since they have less in common. Big companies often delegate the park buying to simply employees who are not stakeholders, and this immediately causes a huge disruption to the bonding model. Since most moms & pops sell their park to who they like the best – not who pays the most – this immediately gives the small buyer a key advantage.
Smaller buyers can often make decisions faster
Another advantage the small buyer has is that they can make snap decisions without needing committee approval or even a second opinion. When I bought my first park, Glenhaven, I agreed to buy is on the first phone call. I didn’t need anyone else’s input – and with seller carry I didn’t even need to worry about getting a bank. It was pretty much “I’ll take it”. Big companies can never do that. They have to get multiple people to review and approve the deal. This additional time can be the difference between success and failure, and it also angers mom & pop sellers that there is this endless delay.
Smaller buyers can often pay more – contrary to what you may think
Big companies often have higher overhead. They have to because they have more formalized processes of management than the small operator. But this also means the small buyers can pay more for a property since they have less in overhead to cover. Additionally, small buyers can sometimes gamble their management income on higher rents later, and just not pay themselves at first – big companies can’t really do that since they have real payroll. Many of the deals with lower cap rates in the U.S. are purchased by small buyers who cut every corner to make them happen when big companies will not go down that path.
Small buyers have distinct advantages over larger buyers – they often just don’t realize it. If you want to win any deal, just offer a fast response and a whole bunch of bonding time with the seller, coupled with the desire to bend the rules a bit to make the deal happen. Few big companies can defend against that maneuver.
Why New And Old Homes Can Happily Live Side-By-Side
It’s a common sight in a mobile home park – a brand new home next to one that’s decades old. But does this work? Is it possible for neighbors in two homes from entirely different eras and price points to live happily side-by-side?
Both residents live in the same mobile home park for the same general reasons: 1) they appreciate affordable housing 2) they like having no neighbors knocking on their walls or ceilings 3) they like having a yard 4) they like parking by their door and 5) they like the sense of community forged from residents who rarely move. This is true regardless of the home age. So they have much in common initially.
Same commitment to the community
Time magazine raved that mobile home parks are “gated communities for the less affluent”. Indeed, there are strong bonds between residents regarding shared goals for the greater community. Living in a mobile home park is, in many ways, like being in a club, and there’s an old t-shirt design that says “mess with me and you mess with the whole trailer park” and that’s fairly true. So there is a bond between neighbors regardless of home age.
Older homes are not unattractive if properly maintained
It’s a terrible and unfounded stereotype that old mobile homes are pieces of junk. In fact, a mobile home that is properly maintained can last indefinitely. In many of our communities, the older homes are among the best looking thanks to owners who install upgraded windows and doors over time and refine their homes with nice shutters and awnings. Architecturally speaking, older homes may actually have more interesting designs than the class “shoebox” that many criticize, with many pre-HUD homes featuring higher ceilings and even a story-and-a-half model.
Carports, garages and sheds
Older homes also frequently include capital investment in carports, garages and sheds that new home owners cannot afford since they have a mortgage to address. This can make many older homes appear even more desirable and ensconced in a better drive-up appeal. One of my favorite older homes is located in a park in Denver – a classic 1960’s model that the owner modernized with an architecturally significant outbuilding that resembles something I.M. Pei would have sanctioned.
Mowing and landscaping
Older homes have better landscaping – those bushes and trees have had decades to grow and mature. I once had a resident that had a virtual botanical garden in their yard that had taken years to design and produce. Many of these residents also offer superior skills at mowing and edging. If you see beautiful topiary hedges in a mobile home park, it’s always a safe bet that the home is 30+ years old.
The lesson from the single-family housing world
The best example of the fact that old and new homes can happily live together can be found in many stick-built subdivisions across America. Older neighborhoods with homes of one architectural style often have that new entrant who tears the classic home down and builds a new modern one. While this may initially be shocking to the neighbors, over time people respect the large investment this neighbor made and the fact that they are breathing new life into an old community.
Old and new mobile homes can definitely thrive as neighbors, as long as the park owner demands strict adherence to the park rules so that older homes are always properly maintained. With so many vacant lots today being utilized by bringing in new homes, it’s a concept that is always tested, but appears to be a success for all involved.
The Story Of The Trailer Coach Manufacturer’s Association
Just as the mobile home park industry has a colorful past, so does its national association, known as Manufactured Housing Institute (MHI). It all began in 1936, when a group of mobile home manufacturers started the Trailer Coach Manufacturer’s Association, based out of Detroit, Michigan. It then moved to Chicago in 1938, and by 1948 it had 41 members. In 1953, the name was changed to the Mobile Home Manufacturer’s Association (MHMA), and then to the Manufactured Housing Institute in 1976, in tandem with the HUD takeover of the industry and mandate that all manufacturing had to be under the supervision of HUD with the placement of the HUD seal as affirmation that the home was safe to live in. One of the first actions of MHI, in fact, was to change the name of the industry – as far as the government was concerned – to “manufactured homes” and never again “mobile homes”. Of course, as Google analytics today proves, the name change never extended to most folks outside of the association and a few manufacturers (Google shows that 95% of all on-line searches use the name “mobile home”). Somewhere along the way, the National Manufactured Housing Federation was also brought into the fold.
So what about the RV manufacturers that were also part of the original Trailer Coach Manufacturer’s Association? They got mad when a manufacturer named Elmer Frey started building a new “tenwide” unit in 1953 that was 10’ wide as opposed to the current 8’ wide uniformity that all RVs and mobile homes shared. Many in the industry accused Frey of destroying the business model by increasing the width and fracturing demand, and the RV manufacturers went their own separate way and formed a strictly RV association.
Where did the word “coach” come from? It’s a term that many moms & pops use and one that stumps most buyers since it’s not a part of modern industry vernacular. If you simply Google “luxury motor coaches” you’ll see that the name lives on but only in the RV kingdom. Clearly, it was a term that went with the RV manufacturers when they left the building in 1953 and was no longer used in the mobile home verbiage thereafter.
Listening To Our Residents
I’ve really enjoyed living in the park, making my home the perfect home for me and getting to know my neighbors. I feel safe and secure in knowing my neighbors and how we look out for and help each other in the little things. It’s also nice to see how everyone keeps their yards clean and appealing. I wouldn't want to live anywhere else but Platteville Mobile Home Park.
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