School has now ended across the U.S., and that ushers in the prime selling season for mobile homes in your park. Summer is to mobile home parks what Christmas is to retailers. We move the bulk of our inventory during the summer months, when people naturally tend to combine their tax refunds with school ending and warm weather to create a mass exodus to new locations to live. If you have let your vacant homes sit idle during the winter months when it’s hard to renovate them and find customers to sell to, you should be riding your managers to make sure they are getting the homes renovated, placing all the normal ads, and showing homes like crazy. Our metric is that it takes three phone calls to make a showing and three showings to make a sale – which means that it’s a volume business. If you are not seeing a lot of activity in your park, then something’s wrong. You should be getting bills for newspaper ads and credit checks from Kroll. This is the time of year to be mystery shopping managers and demanding smart phone photos of the inside, outside, and yard of every vacant home to make sure they look great. Don’t let this time of year go by without harnessing the demand. And the same is true of RV lots, as this is the prime time for RV activity. Make sure your park shows when you Google “RV lot in (name of your town)”, and have a good website to direct these potential customers to. Also make sure that your park has a great looking entry and that the mowing is first rate. There is no idle time in any successful mobile home park in the summer.
Memo From Frank & Dave
How To Improve Your Mobile Home Park In One Day
If you have even one park-owned home, here’s a trick to improve your park’s performance in one day. We’ve learned this the hard way over the years, but modern technology now makes it possible to figure out what’s wrong with your park almost immediately, and to take away the shields your manager uses to shirk doing their duties on a regular basis.
Do a quick home inventory audit
Call your park manager right now and tell them that you are conducting an audit today of all your vacant home inventory. Tell them you want at least three photos of the outside, inside and yard of each vacant homes. You want them taken on their smartphone and texted to you within one hour. Sure, your manager will go berserk, and say “I can’t get to it today, I’m too busy” to which you say “it will only take 10 minutes, so put it ahead of whatever else you’re doing and get it to me now”. They’ll have 100 more excuses, but stay firm that it is the top priority for the day and you’re not going to let it go. They are fighting you because they know how bad things look. That’s the whole point – you want to embarrass them and put them on the defensive. Wait until you see the photos – they will be nothing like you had hoped. The yard will be a mess, the shutter will be missing off one side of the window and there will be a soiled sofa and a trash bag in the living room. Knowing the truth is the first step to recovery. Tell the manager how disappointed you are and that you expect them to have the home perfect within two days, evidenced by new smartphone pictures. And never let this happen again, by demanding new photos every week or two weeks. The days of manager mischief are over. And it costs you nothing to do this audit and it’s all over in an hour.
Do an advertising audit
Sure, the manager says that you have a sign out front saying “home for rent” and maybe a banner. Do you believe them? I don’t. Ask for a smartphone photo of it right now. And what about that newspaper ad? Have them send you a smartphone photo of it, too. They don’t have a newspaper around? Then tell them to run down and buy one right now and send you the photo. You’re going to find the same results – ads that are nonexistent or screwed up. Those days are now over for them.
Do a park drive-through from your own home
Smartphones also take videos. Tell them to shoot you a video of the entry and down each street. Videos are more revealing that photos – you can always get the camera shot just right to block out the non-running car and the weeds that are ten feet high. It’s much harder to cheat with a video – but it takes longer to transmit it to you.
And don’t just stop there
Where many park owners screw up is that they assume that, after being caught slacking, the manager is redeemed. They never are. Don’t ever stop these sudden audits. It will keep the manager scared 24/7 that you’re going to want to do it again. If you do it once and stop it actually makes the manager even more lazy and it makes you look lazy. Like Lay’s Potato Chips, don’t stop with just one.
A smartphone is the greatest invention ever made when it comes to mobile home park management. Use that tool relentlessly, and you will see immediate improvement in your park’s performance. And you can do it all in one day and without leaving your house. Now that’s immediate gratification!
The Importance Of Having A Great Attorney
Of all the alliances you have to forge in successfully buying and operating a mobile home park, one of the most important is your attorney. There are many different attorney profiles, and you must select the one that is best suited for the task at hand. The most common occurrence, for most park buyers, is the attorney to read and protect your interests regarding loan documents and questions that come up on title and contract issues. Like anything else in life, if you chose a bad advisor, you will have a bad outcome. So how do you find a terrific lawyer well-versed in mobile home park law and issues?
The best corporate lawyer we have ever used is Dave DiMarco at Woods Oviatt Gilman, LLP. We have used him exclusively for all of our conduit loans, as well as traditional bank loans. What we love about Dave DiMarco is that he knows what we are trying to accomplish (get the loan closed quickly and inexpensively) and he can quarterback the situation and push it to the goal line without us having to bug him or worry about our progress. How many attorneys have you had to nag, or even worse, call 100 times to get them on the phone? With Dave DiMarco, you don’t have to worry about if he’s making progress – he’s typically bugging you to push you along on your part of the equation. We have given Dave some extremely complicated, time-sensitive tasks and he has successfully completed them on-budget and on-time. He also has terrific people skills and can take charge of a rogue bank attorney and bring them back around both in speed and complexity. Our success rate with Dave DiMarco has been 100%. We get calls all the time from people looking for a good lawyer, and we always tell them to call Dave. If you need a lawyer to represent your interests in a transaction, then you will be well served to call Dave DiMarco at (585) 987-2833. And, yes, he’s the brother of Anthony and Gerry DiMarco – the #1 mobile home park loan brokers in the U.S. This is a family that definitely shapes the industry.
New Parks for Sale on MobileHomeParkStore.com
Another State Rules In Favor Of Mobile Home Park Owners
The Mississippi Supreme Court has ruled that mobile home parks cannot be blocked from filling vacant lots. The case revolved around a lawsuit filed by the City of Richmond which was sought to block Cleveland Mobile Home Park from bringing mobile homes into its vacant spaces.
Following the ruling, Mayor Mark Scarborough said the only condition is that installation of the manufactured homes meets current state and city codes, including a city requirement that the homes be placed on cement slabs. Michael Cory Jr., Cleveland Mobile Park’s attorney, said the park owner had planned to put at least a couple dozen new manufactured homes on vacant pads in the park at 110 Old Highway 49 South. Richland had refused to allow replacement homes in the park on the basis that the park was a non-conforming use and that installing new homes ran afoul of rules for non-conforming uses.
The Mississippi Supreme Court said otherwise last Thursday in upholding an Appeals Court ruling that blocked Richland’s attempt to stop a mobile home park from re-renting vacated mobile home pads. The unanimous ruling could prove troublesome for cities throughout the state that had hoped to eradicate grandfathered mobile home parks based on attrition. At issue in Richland was the authority of the City to prevent the 138-lot Cleveland Mobile Home Park from moving mobile homes into vacated lots. The Mississippi Court of Appeal deemed Richland’s ban on lot re-use “arbitrary and capricious and illegal.” Richland’s appeal to the Supreme Court got the same treatment. Richland’s interpretation of its zoning law “was both arbitrary and capricious and violates” Cleveland Mobile Home Park’s “constitutional right to enjoy its property,” the high court said.
In their appeal of the lower court’s ruling, owners of the mobile home park argued that Richland’s zoning ordinance applied to the mobile home park as a whole, not to individual lots within the park. The owners argued that as long as they did not expand the non-conforming use, the park’s operation was permitted. The key, they said, was that re-filling the lots was a continuation of an established use, not an expansion of a non-conforming use. The ruling affirms a view of property rights the state’s high court established more than 90 years ago, said Ben Williams, a Watkins & Eager partner involved in challenging the anti-multifamily measures of both Ridgeland and Pearl. “Citing both the Mississippi Constitution and the U.S. Constitution, the Mississippi Supreme Court reiterated its 1923 opinion that a citizen’s ‘lawful use of his property is one of the most sacred rights reserved to him under our Constitution,’” Williams said. “This case is important as it specifically upholds a citizen’s right to lawfully continue a nonconforming use. Simply, the government cannot manufacture a zoning violation by changing the rules,” he said.
We have been fighting the ignorant concept that cities can deny filling vacant mobile home park lots for two decades now. We have been involved in a number of these cases and won every single one without ever having to even go to court. As more State Supreme Courts make these rulings (Missouri made a similar ruling recently, as have others), cities will abandon the practice of making these erroneous statements altogether.
Learn About Warren Buffet's New Program For Park Owners
Clayton Homes and 21st Mortgage have partnered together to bring a game changing new program to mobile home park owners. If you have any vacant lots in your mobile home park or in a park that you are looking to buy, then you definitely need to be aware of the CASH program to fill vacant lots with zero capital out of your pocket.
For more information you can contact Lance Hull at 21st Mortgage. You can call him at 800-955-0021 ext.1218 or email him at [email protected]. You can also contact Aaron King at Clayton Homes. You can call him at 865.380.3000 Ext. 5164 or email him at [email protected]. To visit the Community Calculator webiste discussed in the webinar, click here.
Disclaimer: The materials and information available from this posting are for informational purposes only and not for the purpose of providing legal advice. The contents should not be construed as, and should not be relied upon for, legal advice in any particular circumstance or situation. Further, the information presented on this posting may not reflect the most current legal developments. An attorney should be contacted for advice on specific legal issues.
Disclaimer: The information in this posting is not for consumer use and is not an advertisement to extend consumer credit as defined by TILA Regulation Z.
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How The 1955 “How To Build And Operate A Mobile Home Park” Shows Why Amenities Used To Be Important – And No Longer Are
We get asked all the time why we are so “down” on mobile home park amenities. People want to know why we don’t operate our clubhouses and washers and dryers, and don’t install pools and playgrounds. They point to the amenities that are found in many mobile home parks, and think it’s cruel that we don’t actively use and promote that tenants use these items. A quick history lesson in mobile home parks demonstrates why that was important decades ago, and not important today.
Mobile homes and RVs used to be the same thing
Many people forget that, prior to around the 1960s, mobile homes and RVs were the same thing. They were pulled behind a car – not specialty truck – and were only 8’ wide and around 30’ long. They were, in a word, tiny. As a result, there was no interior space and elbow room, and you would go insane if you were stuck in one much longer than to sleep and eat in. Have you ever been on a cruise ship? Could you spend more than two hours awake in your cabin without having a nervous breakdown? That’s why there had to be a clubhouse – where else could you spend the rest of your day outside of that tiny RV? But times have changed. RVs and mobile homes are no longer the same food group. Mobile homes are now 14’ to 18’ wide and up to 76’ long – twice that of an RV. They have large bedrooms and living rooms. They have big screen TVs and king-size beds. There is no reason to leave your home and camp out in the clubhouse.
Mobile homes used to not have washers and dryers
Back in the day, mobile homes had no washer and dryer connections. How could they – would you sleep on top of them at night with a mattress? Back then, every mobile home park had to have voluminous laundry rooms to allow the residents the ability to have clean clothes. But those days are over. All mobile homes have washer and dryers in them – even some modern RVs have them, too. Nobody needs the laundry room. And if they did, there’s always a Kwik Wash down the street.
Mobile home parks used to be out in the “country”
Another reason that mobile home parks used to have to offer pools and playgrounds and even convenience stores was that most were located way outside of the city. We own two mobile home parks that were the first developed properties in the cities that there are now in. Our park in Glenn Heights, Texas – now a city of 12,000 – was the first property there, and the builder of the park was considered the father of the city. The same is true of our park in Arnold, built as the first property there in the 1950s, and now surrounded by a population of 21,000. As populations grew around the parks and they were no longer “rural”, the need for amenities dissipated.
Cities used to not have many amenities of their own
Just like mobile home parks have changed over time, so have cities themselves. Most cities today have extensive public recreation areas, offering public pools – both outdoors and indoors – and state-of-the-art community centers and playgrounds. Nobody needs a rickety old slide in a mobile home park when there’s a water slide just down the street.
Amenities used to be a crucial addition to mobile home parks. Without them, the residents would go insane in their tiny units and have no ability to wash their clothes or have human interaction. But that was decades ago. Today, the mobile home park is no different than a residential subdivision, and there is no need to waste communal time and money offering second-rate amenities that can be easily found down the street.
A Testimonial For Renz And Associates
I wanted to share my recent experience with Mike Renz. Jeff and I needed a Phase I completed for a mobile home park purchase late last year. I shopped around, including Mike Renz as one of my quotes, and eventually chose a local consultant to perform the work. The savings was on the order of $300, and the local guy was "local"--meaning, he should be familiar with the area databases, industries, geology, etc.
In my initial conversation with Mr. Renz (and during every presentation he's given for you), he mentioned that regardless of who I chose, if I had questions, to call him. His advice would be free of charge.
The report I received from the local consultants was pretty bad. Being an engineering consultant in my prior life, I was expecting a much higher quality report. The local guys didn't really do any consulting, and worse, made blanket assumptions, suggested scientific theories that were incorrect with no supporting data, and worst of all, erroneously listed recognized environmental conditions (REC). I called Mr. Renz--he immediately/graciously reviewed the report, talked me through his major concerns, and provided a detailed email with a list of talking points that helped me discuss the report with the local consultant. With the talking points, I was able to reason with the local consultant. The final product was a Phase I report that I felt comfortable with, and more importantly, that the bank accepted.
Needless to say, next time Jeff and I need a Phase I, we're calling Mr. Renz.
As always, Jeff and I appreciate your help and advice and your willingness to share your experiences. After listening to Mr. Renz' presentation oat the Summit, I wanted to thank you again for bringing professionals like Mr. Renz to our attention.
You can contact Mike Renz at (614) 538-0451.
Why Nada Values Don’t Work With Mobile Homes
Car values are easy to document. You simply refer to the NADA guide – or similar publication – and look at the chart of the car’s make, model, year and condition. And bingo – there’s your value. So why don’t mobile home values work that same way? There are numerous reasons.
Nobody cares about makes or models
Not all cars are created equal. Even though a Mercedes and a Ford both have four wheels and drive down the road and get 25 mpg, the values are miles apart. Americans put a huge amount of focus on car makes and models, as though they are not vehicles but works of art. A Lamborghini is like a Matisse while a Yugo is a print from Walmart. While Americans all share this fixation on automobiles, mobile home park owners have absolutely no phobia over any certain make or model: it’s just basic shelter. Those goofy names that mobile home manufacturers have used over the years, like the “Executive Mansion Deluxe”, must have only been for the amusement of the corporate board room. In twenty years, I have never had a customer say to me “I’d buy this home but I’m a Fleetwood customer and refuse to live in a Redman home”. Nor have I ever heard a customer say “holy smokes, it’s a Southern Energy – I’ll pay double for that!” The bottom line is that, in the world of mobile homes, nobody cares who made it or when it was built. Sure, they can figure out new from used, but that’s about the limit.
It’s just basic shelter at an affordable price
And what’s wrong with that? The biggest trend in fashion is the trend to basic looks that are devoid of concern over the logo (H&M, for example, does not even put logos on their clothes, and are one of the highest volume clothing retailers in the world). Generic brands are booming in everything from cake mix to batteries. The fact that our tenants don’t put any store in brands is not alarming, but it makes calculating used home prices nearly impossible, except as macro values on basic shelter in certain formats. For example, we figure that a 1960s and 1970s home is worth around $1,000 to $5,000, a 1980s home is worth $5,000 to $10,000 – based on market – and a 1990s and newer home is worth about $10,000 to $15,000. The only home that gets a premium are brand new homes because they have never been lived in, and some customers are willing to pay top dollar to not have a used home, with $30,000 or so attainable, not because of the brand, but simply because it’s new.
Location has more to do with the value
Since a mobile home is basic shelter, where it is located determines what basic shelter is worth. In a market where the median home price is over $200,000 and the average apartment rents for around $1,400 per month – like Austin, Texas – an old mobile home in average condition may be worth twice as much as a market with median home prices of $100,000 and apartment rents of $700 per month. In California, for example, old singlewides can sell for $50,000, simply because they are in markets where stick built homes cost $500,000, and in Malibu, where homes cost $5 million, you can find mobile homes priced at $500,000. Unfortunately, NADA guides do not take location into account.
The market is limited on re-sale – you can’t move them very easily
Another key reason why NADA price guides don’t work on mobile homes is that they cost $5,000 to move, and so your buyer pool is limited to those in the immediate area. Cars can be hauled across the country or across the globe. I once sold a used car in Texas to a guy in Washington State. But mobile homes are anything but “mobile”, and if you don’t want to live in that specific town the mobile home is in, then you’re not going to look at it. This reduced buyer pool has a huge negative effect on values (or positive if you are in a hot market with high home prices).
When pricing mobile homes, it is not as easy as grabbing a NADA value guide and locating the make, model, year and condition. Mobile home parks and cars are nothing alike when it comes to valuations. Many a park buyers has made this mistake and overpaid mightily for the mobile home inventory. Don’t follow their example.
Security Mortgage Group Is Our Banking VIP
We did a lot of conduit loans -- and regular bank loans -- last year. A common feature of those loans was Security Mortgage Group. If you are buying or financing a mobile home park, let Security Mortgage Group get you the loan. They'll get you better terms than you'll ever be able to find on your own. That's why the win the industry mortgage broker award virtually every year from MHI. If you have any loans you need help on, you can reach Anthony or Gerry at (585) 423-0230.
Why Are Landlords So Hated?
Here is a quote from a recent hate email we received.
"I honestly don't now how you can sleep at night. You're making money off people trying to live off $20,000 a year? I can't wait to read your eulogy someday. "He really embodied the American spirit - sucking every drop of hope his countryman to further his own profit." No doubt you are getting government handouts in the form of tax breaks and incentives to accomplish your life's work... Way to be a leech. I hope you don't have kids. If you do, please don't tell them what you do. Tell them your a Nazi instead. It will be less traumatic for them."
We receive, on a regular basis, anonymous emails of hate like this from individuals protesting that we are “evil” landlords. They typically tell us that we’re going to “rot in hell” because we dare to raise rents and – even more sinister – actually demand that tenants pay on time. Of course, all other industries that we’re aware of, increase their prices regularly and shut off or repo their goods and services if payment is not made on time. So we guess the real issue is simply that we’re “landlords”. So why is there so much hatred in the U.S. towards “landlords”?
They are taken for granted
Except for a select few, everyone has a “landlord” whether they rent or own ( in that case, it’s the mortgage company). These landlords hold power over 90% of Americans for nearly their entire lives, and do so 24/7. As a result, everyone takes them for granted, since they are around from birth until death. Cars, for example, are something that you normally can’t buy until you are at least 16, and even then are something special and of your own choosing. So the car company is treated with respect – even when demanding payment – because it’s something that you had to work up to and are proud of owning. Landlords, on the other hand, are the poster child of the old saying “familiarity breeds contempt”. No tenant seems to realize that, without the landlord, they would be homeless and living in that car. The bottom line is that Americans owe a bigger debt to landlords than any other group in the country, as they would be living in tents without them. However, you will never find a bigger case of Americans having no gratitude.
The media has confused their role
Making matters worse is the manner in which the media portrays the relationship between landlords and tenants. In “I Love Lucy”, Fred and Ethyl Mertz (the landlords) hang out with their tenants, loan them money, babysit, go on vacations, and devote their lives to the happiness of their tenants. In “Three’s Company” Mr. and Mrs. Roper (the landlords) are the benevolent watchmen of the well-being of their tenants, even screening potential boyfriends. Over and over, in movies and television, the landlord is not just someone who rents property, but who is an unpaid superhero which protects and supports the tenant’s every wish and desire. Of course, this is a ridiculous request and, if that was the real requirement of owning property, nobody would do it.
They are always pressing for collection
Landlords are pictured as always pressing for payment of the rent. Of course it’s true because the tenants never pay as promised. I’ve evicted tenants who make good money, but choose to spend it on everything in the world but rent. What are they thinking? Can they tie up that big screen TV between two trees and live under that for a roof? Rent is the one big item that nobody wants to pay, because it’s not fun or exciting. A vacation – that’s exciting. But keeping a real roof over your head is boring and mundane. Landlords don’t want to spend all their time in collections, but they are forced there by tenants who won’t behave. We’ve always admired businesses that only give you the service after you make payment – like Disneyland – but we have to extend credit every month, and then collect on it.
They’re rich so they don’t need the money, right?
And where does the “landlords don’t need the money, so they are evil to ask for it” assertion come from? Since when is someone’s net worth the criteria for collecting money or being a non-profit. Bill Gates is the richest man in America, yet nobody complains about him charging for Microsoft products. There didn’t seem to be any complaints when the late billionaire Steve Jobs charged $900 for an iPhone. Basically, this is just another rationalization used to not pay the rent – nothing more.
Landlords are not evil. Tenants are. They often don’t pay their rent on time, and typically treat the property poorly. They show no appreciation for the landlord providing them shelter, or respect for the landlord’s feelings or rights. Never, for a minute, let their hatred rattle you. Stick with your business model. The good tenants are the ones that you should focus on, the ones that pay on time and appreciate what you do. Ignore the “haters” and, if anything, have pity on them.
The Market Report
Equity Lifestyle Properties - 86.10
Sun Communities - 86.46
UMH Properties - 15.01