Every park buyer must initially choose what part of America they are interested in pursuing. But what should that footprint look like? Here would be some of our suggestions.
Initially a 4 to 5-hour radius from your home
Over the past two decades, we have learned that the distance between your home and the mobile home park has no bearing on the park’s financial performance, we would be hypocritical to say that we would have been comfortable with our first park being a Southwest flight away. Frank’s first park was 10 minutes from home, and Dave moved into his first park. But you’re not going to get anywhere if you insist on being a bicycle ride from your property. Instead, you need to cast a larger net. We would suggest that a 4 to 5-hour car ride from your house is definitely within your comfort zone, as it means you can leave at 8 am on a Saturday, be at the park by noon, and home by 5 pm. That’s not a scary situation. So draw a 5-hour radius circle around your house, and that’s a fine territory initially.
A preferred region
You will notice that, in most of America, your 5-hour radius will take you into several states (there is 700 miles between the polar opposite edges of your circle – which is roughly 25% of the entire width of the U.S.). So you should divide this circle into four quadrants, and the see which of those you prefer the most. For example, if you live in Little Rock, Arkansas, you would probably want to focus on the Southwest quadrant, which would include Tulsa, Oklahoma, Oklahoma City, Oklahoma, Dallas/Ft. Worth, Texas, and Texarkana, Texas. But then you might prefer to work the Kansas City and St. Louis quadrant, which is the Northwest quadrant. The bottom line is that you probably already have, once you draw that circle, an idea of which markets and regions you prefer to invest in, so focus on those, first.
Unusually attractive markets in that region
Clearly, you are going to focus on the largest metro areas first, but there are always secondary and tertiary markets worth considering. We prefer metro markets of 100,000 population or more, but we’re also with markets with even lower metro populations if they have something spectacular about them to offset that. Remember that, unlike all other real estate asset types, you can’t build mobile home parks anymore, so you don’t have to have the same extreme population numbers for the industry to work. Apartment owners, by comparison, are constantly having to battle new construction to keep occupancy high – it’s like trying to fill up a cup with a hole in the bottom.
Micro niches inside markets that are unusually compelling
Here’s where it gets really interesting. Once you start seriously looking at deals in these metro areas, you will find niche spots that are unusually compelling. For example, let’s say you are looking at parks in Tulsa and you suddenly hit a neighborhood with a median home price of $280,000 and a three-bedroom apartment rent of $1,300 per month. You know you’ve hit a little-known gem of affordable housing demand, as everyone is going to want to live in that school district and zip code. So you then double-down on that area and start hitting every park by phone or direct mail. While the metro area is important for employment, city limits within that metro are what provides schools, services, and desirable housing environments.
Choosing the correct territory is vital in finding a mobile home park to buy. This plan should at least get you off on the right foot.