Mobile Home Park Investing Newsletter

As we gather with friends and family for the holidays, let’s remember that the Holiday Season is a great time for reflection on life and its most important aspect: people. Harvard University did a study that stretched on for almost a century. They studied the lives of a group of participants – from birth to death – to try and unlock what was the key to happiness. In the end they found it had nothing to do with income, health, or any material possession. The true key to happiness on the part of the participants was one key item: having positive relationships. Humans are a social group and we need strong bonds with others to feel truly fulfilled and supported. And, in many ways, that’s what the mobile home park business is all about. Most mobile home park owners are striving harder than ever to help residents build positive bonds with their neighbors. This manifests itself in everything from the addition of pavilions, playgrounds and picnic tables in green spaces to holding periodic community-wide events, such as a Spring Clean-Up. We are making one of our main missions for 2020 to come up with new, creative ways to improve the lives of our residents and we will be reporting on our progress throughout the coming year.

But mobile home park owners are also a group that enjoys bonding with other like-minded individuals in the pursuit of the solution to affordable housing. We have never seen as many friendly faces as when we attend industry events and gatherings – the “fraternal order of mobile home park owners” is an inclusive and welcoming body. And we really enjoy our relationship with each and every person that reads this newsletter, sends us emails, calls us, and just participates in what used to be a very lonely business just a couple decades ago. Relationships truly are the key bedrock to a happy life and we really appreciate each and every one that comes our way. They are precious and vital. So let’s pour a glass of eggnog and toast to the importance of building relationships with our family, friends, colleagues and customers. Have a Happy Holiday Season! We’re glad you’re a part of ours.

What makes a mobile home park unique? Some would say it’s the fact that the resident owns their home but not the land underneath. As a result they pay a monthly lot rent for the land. Are single-family subdivisions really that different? No, not really. You see, we all pay a monthly lot rent for the land we live on – every single homeowner in the U.S.

We all have a higher authority

When you own the land your house sits on, do you have to pay anyone ever again for that right? Yes, the tax assessor. You see, there is property tax due annually on every inch of land in the U.S. unless it’s exempt as a religious institution, a museum, or some other type of public land use. But private property is anything but private when it comes to the tax man. If you own a $1 million house in Dallas, your property tax is about $24,000 per year, or $2,000 per month. If you don’t pay that amount, you get evicted by the tax assessor in the form of a tax sale. Even if you own your house outright, it will be taken away from you in that sale.

So it’s really just a matter of what you call it

The $2,000 per month you’re paying on that $1 million house in Dallas is called “property tax” but it’s no different than the $2,000 per month the folks in Point Dume mobile home park in Malibu are paying. They call their monthly obligation “lot rent” while the homeowner calls it “property tax” – but it’s basically the same thing with a different label. Of course, the lot rent in Point Dume also includes management and common area costs. But wait a minute – in many subdivisions that’s called an “association fee” and covers those same items. So is it really just a matter of semantics?

And it’s only going to get worse

The media constantly complains that mobile home park lot rents are rising too quickly and pretend that a $30 per month increase is abhorrent. This is ridiculous in comparison to the increases in “lot rents” for those who own stick-built homes. The average stick-built home in the U.S. is $200,000. If you assume a property tax increase of just 3% per year (which is low) and a tax rate of 1% (which is low), that’s an increase of $600 per year, which is $50 per month. And that amount is three times higher in states with no personal income tax, such as Texas. And that does not even include the increases in insurance and utility costs – which have all been skyrocketing.

Why nobody is aware of this problem

Up until now, there has been very little discussion of the increases in “lot rent” for stick-built homeowners, as the media loves to push the narrative that homes are genius investments and that the American consumer can handle any increase with no problem (probably because homebuilders and mortgage lenders are among their largest advertisers). The truth is that home values and debt are now higher than 2007 levels and the next crash is only days away, in all likelihood. When Americans feel poorer, all those increases will be discussed dramatically, no doubt.

Conclusion

We all have “lot rents” to pay. They are all going up. Stick-built “lot rents” are skyrocketing faster than mobile home. It’s only a matter of time until all Americans realize that.

For the Holiday Season this year, our office in Denver decided to make food baskets for residents in need and personally deliver them to the mobile home community we own in Commerce City. The only question was who had more fun: those that made the baskets and delivered them or those that received them? One elderly resident remarked that without the food basket, she could not have had her normal Thanksgiving dinner with her friends. We were delighted to make that possible.

There are all types of things every owner can do to make their residents’ lives a little better. We urge all mobile home park owners to explore the spirit of giving in 2020 and believe that the holidays are a great time to begin that quest. Whether it’s giving food or money to those in need, helping create spaces for residents to gather and build friendships, putting together events such as Spring Clean-Ups that create an atmosphere of working towards a common good, or creating a Yard of the Month concept to give thanks to those that make the community great, all of these collective efforts are a win/win. What new ideas can you come up with to give back to your residents and your community?

The Federal Reserve has continued to drop short-term interest rates to stimulate the economy and that has created a really good dynamic of low rates and a strong lending environment.

Check out the recent rates we obtained for our clients on loans that recently closed:

• $22,000,000 portfolio at 3.93% on a park in Iowa
• $2,100,000 at 4.29% in Minnesota
• $32,000,000 portfolio at 3.85% in North Dakota
• $2,300,000 at 4.23% in Louisiana

If you have a new financing – or refinancing – on a mobile home park valued at $2 million or more and you want to get the lowest rates and best terms, then contact M.J. at Bellwether at 720-758-9227 to discuss the options, or email him at [email protected] He can give you a free overview of what the options are on your deal. We have been using M.J. for over a decade and are an extremely satisfied customer. Lock on these low rates while they’re still available.

Here’s a mobile home built by a William B. Stout – one of the hundreds of mom & pop manufacturers in the industry before the advent of HUD’s supervision in 1976. To me, there are two key takeaways when I see these ads or articles in old magazines:

• Mobile homes were definitely not cheap in the 1930s (or really until the 1970s). If you inflation adjust the $3,650 price point of 1935 into 2019 dollars, that would price this home at nearly $70,000 – which would be anything but affordable housing – particularly given its small size. Clearly, mobile homes of 1935 were appealing to a market far more affluent than the one today (and that was during the Great Depression).
• HUD’s takeover of manufacturing in 1976 may have been the right move for safety and manufacturing competence, but I often wonder if it was the worst thing ever for design of the product. This home from 1935, in many ways, looks more appealing than modern editions.

I’m always fascinated by old ads and articles in popular magazines of the 1920s to 1960s regarding the mobile home product. The say that history repeats itself, and I’m always wondering what there is to learn going forward from these infrequent findings.

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.

Most mobile home park owners have a business model of bringing old parks back to life. We do this through large capital investment in infrastructure. As part of the process – and to make economic sense of it – we must increase lot rents, often substantially. And we get endlessly criticized for this, with the media perpetually failing to realize the basic concept of economics and the direct link between rents and capital spending. Well, the tables are about to turn. You see, American cities are about to face the biggest “turn-around” in U.S. history, and all Americans are about to learn the hard way exactly what mobile home park owners have known for decades.

Getting a handle on the scale of this issue

Across the U.S., bridges are failing, highways are crumbling, water and sewer lines are collapsing, and the bread-and-butter infrastructure that holds our country together is coming apart at the seams. And it’s on a financial scale that the nation has never seen before. Roughly $4.6 trillion will be needed to bring American infrastructure back to life https://money.cnn.com/2017/03/09/news/infrastructure-report-card/index.html . And there’s even some debate among experts as to if that’s nearly enough realistically. Mobile home park owners have known for decades what it costs to bring back old worn-out streets and utility lines – and it’s a lot.

Who is going to pay for it?

You can guess the answer to that: the U.S. taxpayer. Of course, there’s only around 50% of Americans that actually pay income taxes. So is that the only group left holding the bag? Not exactly. Everyone will end up paying the tab with higher utility bills, property taxes, sales taxes, and every other type of tax even if they don’t pay income tax. The bottom line is that every single person in the U.S. will be financially impacted, and in a big, big way. And nothing builds awareness like a big cost of living increase.

What will the increases be to all Americans?

$4.6 trillion dollars is around 25% of the total outstanding debt of the U.S. A good guess is that the interest alone on the debt will be roughly $2,000 per year per household, but the reality is that more prosperous households will pay a much larger share, possibly $4,000 to $10,000 per household in annual burden, if not more. And that does not even include the principal portion of the debt. It will be nothing like the $25 per month increases that many mobile home park residents face annually, which will pale by comparison.

What have mobile home park owners learned about this topic?

When this reality becomes apparent – which will be very soon – Americans of all income strata will become enraged and say that it’s not fair and point fingers at all who should pay other than themselves. Nobody will want to accept the simple fact that these infrastructure upgrades must be made and prices and taxes will have to go up as a simple function of economics. Instead of fighting reality, the better path is to embrace it and be thankful that we will have such good infrastructure going forward.

Poetic justice?

Sure, it will be very satisfying for community owners who have had to deal with unfair treatment over bringing old mobile home parks back to life to finally see the very groups that harassed and belittled them being stuck with the exact same road forward. But the truth is that this national event will spur a continual dialogue on how we got into such a mess – by refusing to confront the reality years ago and letting it fester into a crisis – and this will also educate Americans on the situation new park buyers often find themselves in. And possibly this cataclysmic event will change our nation’s course on not properly setting money aside in reserves or managing what we spend better (all of these numbers are based on the absence of government waste, which we all know is impossible based on recent cost overruns on everything from airports to subways).

Conclusion

It’s a simple fact that bringing old things back to life is expensive and, as a result, monthly costs must go up, whether it’s a mobile home park or a nation. And the coming replacement of U.S. infrastructure will give this issue clarity on a scale that’s never been seen before.

The average American finds the Christmas holidays to be the high point of the year. It brings back happy memories of gifts under the tree and being surrounded by friends and family. It’s the #1 season for retail sales which rely on December for 20% to 30% of annual revenue. The bottom line is that it’s a really big deal, and a great opportunity to bond with your customers. So how can you bring the holiday spirit to your mobile home park?

Decorate the entrance

The first spot to focus on is your primary chance at “first impression”: your park’s entry. Here are some inexpensive ideas with a lot of “bang for the buck”:

• Go to the dollar store and buy a bunch of large red bows and tie them to the top of the posts on your white vinyl fence (if you have one).
• Go to the dollar store and add green garland to the top rail of your fence, in addition to the bows mentioned above (if you have one).
• Put garland all around the perimeter of your property sign (I know you have one of those).
• Put real or fake winter plants at the base of your entry sign.
• Put an inflatable snowman or other character (roughly $30 at Walmart) at your entrance if you have an electrical outlet nearby.

Decorate the office

Here are some inexpensive but effective ideas to decorate your park office:

• Put a decorated Christmas tree in the window with the drapes open so it can be seen by everyone driving by both day and night.
• Put a giant cardboard Santa or Snowman on the office door.
• Put a garland around the door, or Christmas mini-lights, or both.

Decorate the common areas

Many park owners have a theme for the property that is carried through at all common areas:

• Buy wood cut-out Christmas figures of possibly elves or similar theme.
• Christmas wrap a huge crate or box with a ribbon to look like a present, and put them in groups.
• Install inflatable holiday figures from Walmart (about $30 each) but you have to have a power source to inflate them.
• Install Christmas lights on every structure from the office to the shed.

Send cards to residents

This is a much more complicated effort than any of the above decorating initiatives. How it works is that you buy holiday cards in sufficient quantity to send one to each lot, along with envelopes. You then sign each card and mail it to the resident, with a stamp on the envelope. Seems like a hassle, but this simple initiative is well received. You can buy inexpensive cards at the dollar store or similar shop.

Give financial gifts

We started doing this a few years ago, and it is a win/win/win if done properly – it makes you happy, the person you help happy, and sends a positive pulse throughout the entire community. But how do you select who to help? In some cases we have given $50 to every kid in the property as they come home on the school bus at the end of the last day of school before Christmas break (but if you do this, make sure to identify and gift those kids who were not in school that day for whatever reason). And we have also given single gifts to those in need, ranging from building wheelchair ramps for the elderly or updating their bathrooms, to cash gifts and even special presents that would make them uniquely happy. Your community manager will have the best ideas for these projects as they know the residents and who is in need.

Conclusion

The Holiday Season is a time to bond with your residents and promote a positive experience based on a lifetime of happy associations. You can decorate on a shoestring budget and you’ll find that the holidays are a great time to build a better sense of community and positive impression of your property and its management.

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.

For more information on this program visit their website or call Candice Doolan at 800-955-0021 ext 1735 or email her at [email protected].

This is a photo of a 1930’s “Covered Wagon” brand mobile home being pulled by an Indian motorcycle. This was the brainchild of a motorcycle dealer in Cedar Rapids, Iowa, and appears to defy the laws of science. It’s unlikely that the slogan “Easy to Pull/Easy To Stop” was truth in advertising. Although speed limits were lower in the 1930s, it’s hard to imagine the laws of physics make an exception for mobile homes. Any science experiment of stopping a 10,000 pound mobile home object going 50 mph with the mass of a motorcycle would end in tragedy. The fact that we’ve never heard stories of the motorcycle/mobile home combo that wiped out Main Street USA means that few, if any, of these pairings was actually sold to the public.

Whether you are simply in need of an insurance quote or you have the unfortunate, yet common task, of filing a claim, Mobile Insurance is ready and waiting to take your call. We’ve used Mobile Insurance for over a decade, and their superior service is known throughout the industry. Kurt, the owner of Mobile Insurance, is a top resource for any park insurance question, and they provide free quotes on parks that you are acquiring. That’s why around 2,000 park owners in the U.S. are Mobile Insurance customers.

Mobile Insurance can help you engineer the policy you need to cover all your concerns, and their prices are unbelievably low. Being able to contact them when you need them is just as important. We recommend that every park buyer call them first, as we know of no other group that has the same expertise, quality of service, and low prices. Call them at 800-458-4320 or email [email protected].

One of our holiday traditions for years now has been the production of the Frank & Dave Christmas Show. It’s an opportunity to review industry news from the past year, predictions for the future, and to spread the holiday cheer with many helpful gestures for those in need. Watch for the email announcement of this holiday event. We look forward to you joining us by the fire with your favorite holiday beverage!

I saw this T-shirt in a mall recently, and thought it offered an interesting take on the holiday season for park owners. Even those with negative thoughts at Christmas should be able to find some good aspects to ponder. So what are some positive attributes that we can all agree on?

99.9% of our customers are great people – and the other .1% still have some good attributes

Park owners are frequently only faced with issues from unhappy or difficult residents – but they simply don’t represent the majority of your residents. If you think through who has been driving you crazy, you’ll realize it’s typically one or two residents over and over, and the rest of your customers give you no problems at all. It’s amazing how just a couple impossible people can skew your opinion of mankind, but you need to remember how very, very few people it actually is. And, on top of that, just because they refuse to pay their rent or maintain their property does not mean they are 100% bad. They may have some outstanding qualities you just don’t see, such as good parenting. I used to represent my communities personally at eviction trials, and I often found that even my hardest to handle residents, when I talked to them before or after the trial, were not really that bad – they just had problems conforming to society’s most basic rules of behavior.

The media’s persecution of our industry can’t go on forever

Sure, it’s getting ridiculous right now, with articles seemingly every week about park owners having the gall to actually collect rents or enforce rules, but this crazy cage fight between socialism and capitalism can’t go on forever. At some point the American public will lose interest in these ridiculous stories of park owners investing hundreds of thousands of dollars in infrastructure and then having the nerve to raise lot rents $30 and will go back to more important topics like the Kardashian’s latest plastic surgery shockers and which Real Housewife is getting divorced.

Most American mobile home parks look the best they ever have right now – and cities are noticing

We are perpetually impressed with the elevation of the quality of mobile home parks throughout the U.S. As moms and pops have passed the baton to the next generation of owner, those new folks are taking significant steps to bring these properties back to life. New entry, new sign, new landscaping, tree shaping and removal, road replacement or repair, common areas painted and mowed – it’s completely apparent. As a result, the mobile home park is gradually losing its negative stereotype with the American public as well as breaking down the hostility of city government.

We were all blessed by doing business with the Greatest Generation and Silent Generation

We have often said that the greatest risk to the nation going forward is the loss of the Greatest Generation and Silent Generation individuals – the people who built this nation. It’s scary that, at some point, future generations will never know these individuals or their morals and work ethic. Even though you sometimes have to talk to 100 owners to find 1 that will sell at a good price, just be thankful that you got to talk to these people and learn from them. All of the basic business information we had when we bought our first parks came from casual conversations from the moms and pops who built this industry from scratch.

When all else fails, the law prevails – and that’s clearly in the park owner’s favor

This is a crazy world today, and any idiot can file a lawsuit for $50 or dispute an eviction filing for free. But the good news is that the U.S. legal system – despite shortcomings – is still pretty good at dispensing justice and courts are unaffected by fictitious resident stories or lack of a paper trail. And case law continues to support park owners in such important areas as grandfathering and property rights.

Conclusion

Don’t be a Grinch this Christmas. Don’t let a few rough residents or bad luck on some legal filing sour you this Holiday Season. Residents are basically good people and life is basically fair and productive. Get happy!

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.

Back in the 1990s, selling or renting a mobile home meant hoping your yellow page ad would make the phone ring. There was no Google, no iPhone, and if you wanted a picture it meant a drive down to 1-hour photo. You asked the manager “did anyone call” and no matter what they said you had no evidence whether or not it was true. But today, all that hope, desperation, and wonder has been replaced with good old-fashioned science. So how do you scientifically sell or rent a home today?

Confirm that all ads are running correctly

Most successful mobile home campaigns revolve around 1) newspaper classifieds section 2) Craigslist 3) social media such as Facebook Group and 4) Google search engine utilization. The good news is that all of these can be easily monitored at any time from your laptop. So never take your manager’s word as the gospel truth – instead remember the words of the late President Ronald Reagan who often said “trust but verify”.

Track exactly how many calls your community is getting

If you will simply port your park’s phone number through Who’s Calling or a similar service, it will log in every number that calls in and you can then monitor the total call volume each week, as well as how many times the manager missed the calls. It will give you complete visibility of demand again from the convenience of your laptop.

Know exactly what your manager is telling customers

If you use a call service like Who’s Calling it will record all incoming calls. That allows you to listen to these whenever is convenient for you and to then know exactly what your manager tells customers. You can quickly get a basic idea on their friendly greeting, sales pitch, ability to answer questions, sales ability, and even how many calls they miss. And since your manager knows they are being recorded, it makes them strive to do a better job.

Track how many showings your community is having

All community managers should fill out a “guest card” for every showing (or even better, for every call they receive). They should track how many showings they do each day and then add them up and give the total to you at the end of the week. You’ll need that number to do the calculation coming up shortly.

Confirm what your manager is doing at these showings

While there’s no service that allows you watch your managers performance at showings, there is still a way to find out how they’re doing. You can simply take the in-coming numbers from Who’s Calling and then “exit interview” those customers to see what happened and why they didn’t buy or rent the home. If you hear “the manager never showed up at the time we agreed” or “the manager told me that you won’t make repairs like you’re supposed to” you now have a good handle on what’s really happening in the park and can take the appropriate action.

See how many applications are coming in

The proof is in the pudding – how many applications to buy or rent are you seeing come in? A good salesman knows that nothing matters except the closing of the sale. No matter how good the nuts and bolts of sales and rentals that you perform on the front end, the absence of a “closer” renders all other efforts pointless.

Watch how many of these are approved

This one is not a sign of your manager’s success or failure, but simply a great way to gather data on your potential customers and the necessary price or terms changes to increase the closing ratio. For example, if you process 10 applications and all 10 are denied because of insufficient credit scores, then you may need to shift from new homes with tougher standards and fall back to used homes and/or more rentals. Smart park owners are always following along with the narrative of customer demand and qualifications and watching for opportunities to import homes to fill vacant lots that are the solution to the affordable housing needs of the surrounding community, and not simply provide more housing that is unaffordable or unattainable given financial realities.

Follow the 9/3/1 formula to find your faults

Here’s the most important part of the scientific focus on sales and rentals: comparing results to the standard metric of 3 calls = 1 showing and 3 showings = 1 sale or rental. We – and most other park owners – have found this rule to be extremely accurate in most communities. What is all means is that you should close on one sale or rental for every 9 calls that come in. If you are not getting at least 9 calls per week, then your advertising is not good. If you are getting at least 9 calls but failing to get 3 showings, then your manager is not doing a good job on the phone and you need to listen to all those calls to determine the problem (remember that the only goal of answering the phone is to set up a showing). And if the manager is giving 3 showings but failing to make one sale or rental, then you need to exit interview the customers to see what the problem is. And if the problem – based on application results – is not the manager but the market itself combined with customer demographics, then you should change the price or terms to solve the problem.

Conclusion

It is indeed possible to scientifically control your sales process today, thanks to technology and more test results provided by mobile home park owners who are aggressively trying to fill their vacant lots with new and used homes to sell or rent. Apply this science to your property and you will find your success ratio will go up exponentially.

I wanted to tell you about a situation I encountered with Mike Renz. I needed a Phase 1 done on a property in Ohio. Mike and I had already agreed to a price, and after I told him the name of the property he immediately told me that he had done a Phase 1 on it several months ago and it failed. Mike could of performed another Phase 1 and financially benefited from it, but instead he told me the whole story. Mike's ethics are of the highest standard and I thank Frank and Dave for recommending him and helping me avoid a potential catastrophe.

Best,
Tony

This is a common theme when you talk to people who have used Mike Renz to do their Phase I environmental report – they are blown away by his integrity, timeliness and quality of his work. That’s why we’ve been using him for over a decade.

If you need a Phase I environmental report, and want it to be of outstanding quality, then give Mike Renz a call at (614) 538-0451.

Warren Buffett has long preached that the hallmark of a great investment is the size of its “moat” or barrier to competition. This has never been more apparent than in the internet age. The photo above is of a kiosk in a mall for Lyft, the ride-share company, which went public at around $78 per share and now hovers around $43 about eight months later. Apparently trying to compete with cab companies and Uber – anything with absolutely no “moat” – is not a winning business strategy

The speed of competition today is brutal

Those industries that do not offer a “moat” are finding themselves under attack at a faster rate than ever before in American history. It’s literally changed from a few competitors to a virtual horde. The internet has allowed new entrants into every business to aggressively reach your customers immediately and undercut your pricing, delivery times – nothing is taboo. And this feeding frenzy has rendered virtually every industry – from car dealers to office supplies – in constant peril 24/7.

Consumer awareness is vast

Today’s consumer is better equipped than ever before to “game” the system and literally buy virtually almost everything at a loss to the seller. Between Amazon, eBay and 1,000 other sellers on-line, a simple Google search is all it takes to toss any hope of profit for the business out the window. Just look at buying a car. You can find in 30 seconds all the car value guides, reviews, and hundreds of offerings on AutoTrader, CarGuru, Cars.com and other sites. They can compare new to used. They can compare the offerings not only in their state but in all 50 states. It’s a total disaster for business owners.

The only solutions are businesses with barriers to entry

In this insanely competitive environment – in which businesses are willing to sell almost any product at a loss to gain market share – the only salvation is to invest in business models that are armored plated with a “moat”, and the bigger the better. We like the “moat” around the mobile home parks business model in the form of the simple fact that cities across America have not allowed any measurable number of new parks to be built since the 1970s. This half-century moat has rendered every mobile home park a priceless commodity, as well as an endangered species since around 100 are re-developed each year. And the odds of cities every allowing new mobile home parks to be constructed again – despite what many mobile home manufacturers would like investors to believe – is zero. Not sure? Simply go ask the zoning department in every metro of 100,000+ and see how many they have permitted to be built in the past 20 years. As always, actions speak louder than words.

And those are the only profitable businesses in the U.S. today

We can’t name a single successful business in the U.S. that does not have a “moat”. We’re making that statement based on profitability defined as net income – not including stocks such as Tesla where shares may have gone up on speculation but not actual performance. If you look at a roster of the most profitable companies in the U.S., they all share a common trait regardless of industry: a big old “moat”. Even in the real estate sector, profitability is now all about the “moat”. Mobile home parks have the largest one and, as a result, have been classified the most profitable by a number of analysts, while self-storage has virtually none and the roughly $10 billion of new storage facilities built over just the past two years have destroyed rents and occupancy in many markets. Personally, we would never invest – at this moment in American history – in any concept that is not protected by a “moat”.

Once again Warren Buffett was 100% correct

And, of course, we can’t emphasize enough the simple fact that Warren Buffett was 100% correct again. And why wouldn’t he be, since he’s the #1 investor in American history? If you have not read any of the many biographies of Buffett, it might be about time, as his theories on business have proven to be accurate over and over.

Conclusion

The benefits of a moat have been known and embraced since medieval times when they were a fixture at all well-protected castles. Modern moats don’t include water but a barrier to competition that is essential in an internet-fueled, profitability-blind business environment such as America today.

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