The Great Panic of 1893 began 124 years ago this month. Unemployment soared to 25% and things got so bad that the U.S. government had to borrow gold from J.P. Morgan to maintain the Gold Standard. The U.S. gets mired in recessions at regular intervals, long before the Great Recession of 2007. And it’s unlikely that 2007 was the final recession of modern times. What’s important in times of economic uncertainty is to focus on “basic needs and wants” and not things that can be cut back on. Case in point is the current collapse of the U.S. retail industry, with the closing of more stores than any other time in American history, with 89,000 layoffs announced since October 2016 from such former employers as The Limited, Sears, and a host of others. The bottom line is that we’re very proud that we picked this time in American history to be invested in affordable housing. Owning a yacht marina might sound better at a cocktail party, but the only safe bet today is on a continually challenged American economy.
Memo From Frank & Dave
Successful Free Advertising Campaigns To Fill Vacant Homes
The demand for affordable housing is enormous. But that does not mean that you don’t have to do some intelligent marketing to tap into that demand. Fortunately, there are a number of free avenues to effectively sell or rent the park-owned homes in your park.
This is one of the best ways of finding good candidates for your homes – people who are already friends or relatives of your existing residents. So how do you tap into this important resource? Typically, the best way to begin is with a simply flyer that announces a referral system that gives the resident $250 or so off their rent if they refer someone that signs up and moves into the property. This flyer can be sent in the same envelope as the monthly invoice, or separately. They can also be hand delivered door-to-door by the manager. Since these customers are already familiar with the mobile home park and have a support base, they are some of your best potential residents.
Craigslist is one of the most important “free” ways to attract potential customers. Any marketing campaign should always include Craigslist at the top of the list. If you are unfamiliar with how to harness this internet sensation, you can probably enlist the aid of any teenager. Be sure to update your ads with frequent re-posts. These ads will create more calls than virtually any other form of advertising, other than classified ads in the largest metro newspaper – but unlike the classifieds, Craigslist is free.
Another free advertising option is on Facebook. Again, if you do not know how to utilize this resource, you can certainly find a young person who can. Local groups are the best place to post these ads.
“For Sale” signs in windows
Now here’s a low-tech option that pays huge dividends. Simply put a “for sale” or “for rent” sign in the window of the mobile home – as well as in the yard – and wait for the phone to ring. Make sure your phone number if big and bold and can be seen from the street. You will be amazed at how many people drive through mobile home parks in search of housing options, or existing resident guests that want to move in.
“Tear Sheets” in laundromats and grocery stores
Think back to college. Remember how you found that dorm room refrigerator via a sheet of paper with a bunch of phone numbers turned vertical that you can tear off and take with you? That same marketing gimmick works on mobile homes for sale or rent. Place these “tear sheets” in high-traffic areas in the general neighborhood as your park, such as laundromats and grocery stores. You can often go back in a week and every number will be detached.
Banners at your entry
The road frontage to your mobile home park is one of your powerful marketing weapons. The typical major street in the U.S. carries around 5,000 cars per day, and the average highway carries 50,000 per day. That’s a huge audience of potential customers. Although the initial banner is not free (think around $300) it can be used and re-used, and the only cost after you own it is some zipties to tie it to your fence.
It is possible to rent and sell mobile homes with a marketing budget of zero. In many cases, you can sell or rent all the mobile homes you need to using the free advertising methods shown above. And you can thank the U.S. affordable housing crisis for that.
National Geographic Airs Its Segment On The Affordable Housing Crisis
National Geographic spent 30 hours filming Frank several months ago, and the final piece aired on the National Geographic Explorer show on April 24th. Titled “The Booming Mobile Home Park Business” it discusses the affordable housing crisis and the attractiveness of the mobile home park business model. Probably our biggest problem with the segment (other than the fact that they refused to show our nicer properties or interview our more affluent – and normal – residents) was the strange discussion after the piece with a so-called “expert” on housing giving this thoughts on mobile home buying vs. renting. This person was emphatic that buying mobile homes is a stupid idea for the residents, and that they should only rent them. Of course, the opposite is true. His argument was that mobile homes depreciate, rather than appreciate, which is standard for personal property such as automobiles. What he failed to understand is that the real numbers suggest the opposite. Let’s look at the example given on the show of one of the old homes in our park in Arnold. The home rents for $550 per month, or the customer can buy it for $500 cash. The lot rent is $375. Over a ten year period, the renter of the home would have spent $21,000 ($550 minus $375 lot rent x 12 x 10), and the buyer roughly half that amount (including property taxes and projected repair & maintenance). From a strictly financial perspective, it’s clearly bad advice to tell the customer to rent and not buy. In addition, when you buy the home, you are free to make whatever modifications you want both inside and out, and to truly make the home yours. The “expert” left this priceless item out of his flawed analysis altogether. Finally, the “expert” told the audience that nobody should buy a mobile home unless they plan on living in the park for at least a decade. Apparently, this guy is unaware that in a modern America, nobody can make this assertion – and would be lying if they said they could. However, even over a one year horizon, owning the mobile home is clearly superior to renting. So why did they even put that guy on at the end and embarrass themselves? Maybe another “expert” at the station told them to. The world is too full of “experts” that have absolutely no clue as to what they are talking about!
Join Us In Denver At The Mobile Home Park Boot Camp On May 19th - 21st
If you want to learn how to correctly identify, evaluate, negotiate, perform due diligence, re-negotiate, finance, turn-around and operate mobile home parks, then you should definitely consider attending the Mobile Home Park Investor’s Boot Camp in Denver on May 19th to 21st. It’s a three-day immersion weekend on all things mobile home park – and it is 100% Q&A from the minute it starts. It also includes one day in the field walking and analyzing real mobile home parks, using the I-D-E-A-L evaluation system. If you don’t know what that is, then you should come to the Boot Camp. Warren Buffett once said “risk comes from not knowing what you’re doing”. Before the Boot Camp, mobile home park investing was full of risk – after the Boot Camp began there’s no excuse. Come see why the New York Times call it “…the best thing in affordable housing”. As always, the course is taught by Frank Rolfe who, with his partner Dave Reynolds, is the 5th largest owner of mobile home parks in the U.S. with over 25,000 lots in over 30 states. Classes are small enough to allow for continual access and discussion. For more information and to register, Click Here or call us at 855-879-2738.
How Much Does Debt and Equity Really Cost? - By MJ Vukovich
I have a number of groups that I'm currently working with who are looking for capital to expand their businesses. As we're working together, it strikes me that there is a flood of optimism in beginning these endeavors in a expanding real estate market. However, the measure of a good capital partner isn't what happens in the days when NOI is growing and investment dollars are readily available, it is what happens when the clouds darken and times are tough that really mark a good partner.
It's with that thought in mind that I attempt to guide my clients. I like to think of the true cost of capital which includes not only the interest rate or rate of return, but also the intangibles. Things like how much control you give up, how the capital structure has an effect on your operations and what happens when times get tough.
For example, a former company that I worked with took on a very large private equity group as its capital partner to do a major expansion. The expansion included buying a number of assets and doing a very large development. The rewards would have been great, but the risks were high as well. During the good times, as the project progressed as scheduled, all was well. But then the development hit some hiccups and progress slowed. Immediately, the capital partner put in additional oversight in the form of someone who had never seen the properties before and had very little experience with the property type. It completely cratered the rest of the project due to over burdensome reporting and approvals. Then it led to a 10 year lawsuit that drained both companies of millions of dollars and threatened to bankrupt the operating company. Long story short, the projected 16%-20% IRR that the operating company thought they were working towards with the investor turned into a major drain that nearly cost them their company.
Does that mean that every private equity company is bad? Of course not. In fact, even the one that my former company worked with isn't full of bad people, but it did end up being a bad match for them. Are these types of experiences limited to just equity? By no means. Many people have had great difficulties with CMBS and bank loans where the properties got in trouble. It doesn't mean these products are bad, it just means you need to count the cost when engaging with these types of capital.
As you are going out for your expansion capital, here are some things to keep in mind as you evaluate each option:
1) How will this impact the way I operate my business? Is there something in the structure that they are asking me to do that will make it difficult to attract customers/tenants or attract good employees that will negatively impact the effectiveness of our operation?
2) If things don't go according to plan, what is going to happen? Have I asked my capital source what they have done when things went wrong in the past? Do they have some references of current partners whom I can reach out to?
3) Can my current operating platform handle the expansion? What types of additional personnel or infrastructure costs will we incur, along with the cost of the additional capital, to grow the company?
4) How much control am I giving up by getting this new capital source? Is there a potential that could have a major impact on my business or business plan? Could that jeopardize the other assets in my portfolio?
5) If I need to get out of this partnership or loan, what are my options? How much will those cost? Does this give me enough flexibility to make sure that I have choices for exiting the project or partnership?
More than anything, it is really valuable to have trusted advisers who are on your side. It's good to get the perspectives of as many people as possible, especially those outside your organization with experience who may be able to see things more clearly than you can.
Expansion is a very exciting prospect for any company and there are a number of capital sources that can help your company achieve its growth goals. However, it is very important to consider the full cost of each capital source as you are going out for additional funds. Not all the costs are readily apparent and those can be the most costly of all.
To get ahold of MJ Vukovich for questions or to get the loan process going, email him at [email protected] or call him at 612-335-7740. Let him know Frank & Dave referred you for VIP treatment. And let us know if your loan closes and we will send you a $500 gift card to the home improvement store of your choice to get you started on your park renovations.
The Carlyle Group Continues To Grow
Recently, the Carlyle Group paid $45.52 million for a 437 space senior mobile home community in Boynton Beach, Florida. Built in 1973, the price worked out to around $104,000 per space. Given the pricing on many properties today, this sale would not get a lot of notice if it was not for the fact that the Carlyle Group is the largest private equity concern in the U.S. with over $158 billion of assets under management. So what’s Carlyle doing? Since they purchased their first community several years ago, they have tried to fly under the radar, but are rumored to now own around 3,000 lots. General conjecture is that they are testing the industry out before making larger strategic purchases of portfolios. We have written for several years about the future consolidation of the mobile home park industry and, yes, Carlyle is definitely one of the names that is linked to that theory.
Why Mobile Insurance Is The Best Protection At Affordable Prices
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]
Mobile Home Park History Circa 1950
The owner of a property in Pittsburgh recently showed us this photo of their park circa 1950. We love seeing these type of photos because they are so different than the general perception of the industry. Mobile home parks have as long a history – and as much nostalgia – as any other American enterprise. If more people knew the history of the “trailer park”, they would understand that it was a compliment to live in one back in the 1950s. The residents in this photo had higher demographics than those in the surrounding stick-built homes, something that most Americans would never believe today.
A Story About Dave DiMarco
The best corporate lawyer we have ever used is Dave DiMarco at Woods Oviatt Gilman, LLP. We have used him on virtually 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. Here’s a story that illustrates why we use Dave Dimarco.
A few years ago we bought a mobile home park and, after turning it around, went to refinance it into conduit debt. Everything looked great until the lender’s counsel found a minor problem with the title: a city street that fed into the park actually belonged to the park and not the city. On top of that there was around 16 square feet of land that the park owner had not obtained an easement for 40 years ago, and that made one side of the city’s road in jeopardy. Now, the whole situation was ridiculous, as the city itself was adamant that they owned the street. In fact, state law mandated that, under adverse possession, they had owned the street for decades. It even showed as the city’s street on the street map. However, the impossible-to-please lender would not move forward unless we could obtain a letter from a judge stating that the city owned the street – which could take months or years. So Dave DiMarco ran out and located the owner of the 16 square feet, initiated negotiations, and we bought the easement. It saved the day on that loan. No other attorney on earth would have taken that outside the box effort. We knew then that Dave Dimarco was our man.
If you need service like that, then consider using Dave DiMarco on your next transaction. You can reach him 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.
The Dangers Of Thinking Big On Park-Owned Home Prices
While the appearance of the mobile homes in a park has a great bearing on the drive-up appeal and even appraiser’s perceived cap rate, some owners have taken this concept too far. We have purchased properties that contain mobile homes with prices of $100,000+, and it never fails to amaze s that any owner would think that was a good idea. So what’s wrong with incredibly expensive park-owned homes in your park?
Damages your goal of providing affordable housing
When you bring in an incredibly expensive park-owned homes, it begs the question “what business do you think you’re in?” If it’s affordable housing, then you are defeating the whole goal of being affordable. While a reasonably priced double-wide could qualify at the upper end of affordability, no home with a monthly price tag (including lot rent) of over $1,000 is really part of the affordable housing solution. In fact, having a hugely expensive home in your community (unless you’re a lifestyle choice operator) is actually confusing to your tenants.
Diminishes the amount of lot rent you can charge
Assuming that every customer has their price limit, every dollar that they spend on the mortgage is a dollar less they can spend on the lot rent. Since the lot rent is real property and valued at a 10% cap or less – as opposed to the personal property income of the home that is far less valuable – then the smart owner wants to maximize the lot rent. Obviously, the best way to do that is to keep the home mortgage low, and an extremely expensive home is simply counterproductive.
Maximizes potential losses on the home
It’s an industry tradition that many park-owned homes get sold at a lower price than what is expected. If you have a home for sale for $10,000, you’re going to take a cash offer of $8,000, right? But while you can afford a $1,000 or $2,000 loss on a home, how are you going to handle a $25,000 or $50,000. We recently sold a home that we inherited on a property we purchased from mom & pop. They had installed a home for $80,000, and we budgeted to sell it for $50,000. That’s a $30,000 loss. You can buy an entire new home for less than that from the factory.
Limits your exit strategy – too much home debt
Many a mobile home park turn-around has been ruined by creating too much home debt that has to be assumed by the future buyer. Imagine a 100 lot park that has 20 vacant lots to fill. You decide to go overboard and bring in 20 top-of-the line doublewides for $50,000 each – for a total of $1 million of home debt. Meanwhile, the real estate is valued at $3 million ($30,000 per lot). While there would be many buyers for the park, few people would want to inherit the home debt. And even if they did, no bank would finance it, so the seller ends up with a giant illiquid mess.
Mobile home parks are all about affordable housing. Owners should acknowledge that and strive to provide homes that are nice, but at a bargain price. Bringing in mega-expensive homes only serves to damage the business model and your exit strategy. You can look at those expensive triple-wides at the Louisville and Tunica Shows, but don’t even think about adding one of those to your park-owned home line-up.
Why We Love Clayton’s CASH Program So Much
As many people know, we are the largest users of 21st Mortgage/Clayton Home’s CASH program in the U.S. We have around 1,000 homes in our parks under this initiative. So why are we such huge fans of CASH?
- It allows you to fill your vacant lots with no money out of pocket.
- You are not the home owner: the customer is the buyer and 21st is the lender.
- 21st Mortgage handles all the paperwork, so you do not have to be SAFE Act licensed.
- 21st does a terrific job of screening applicants, and has very low defaults.
We’re not alone in our excitement for this program, as the number of homes ordered under CASH has more than doubled this year from a variety of park owners, both large and small.
For more information on this program, call Candice Doolan at 800-955-0021 ext 1735 or email her at [email protected].
Is The Mobile Home Truly Becoming Hip?
We were shocked to see the cover of a hipster publication sporting a photo of a bus converted to a micro-home, with a sizable article supporting the concept of tiny home living. And we are seeing more and more of these articles in everything ranging from Architectural Digest to Town & Country. Is the mobile home truly becoming hip? Wikipedia defines “hip” as “beyond all trends and conventional coolness”. There’s no question that the idea of living in a mobile home is beyond all trends, as most Americans strictly think of stick built dwellings. So we guess that the battle is to be beyond conventional coolness – which requires to be cool to begin with. The plethora of HGTV shows on micro homes is definitely helping to promote that mobile homes are “cool”. Let’s hope that trend continues.
Don’t Forget Site Preparation Costs When Budgeting For Vacant Lots
In many states, the mobile home sits directly on the ground – or at least the blocks that hold the mobile home up do. Those states require little or no site preparation, so your budget can be as low as zero. However, in other states, you are required to build a concrete pad underneath the home, or concrete piers or runner. This can tack on up to $7,000+ in cost to prepare each lot to take delivery of a home. So here’s a primer on taking into account your state’s site preparation laws.
Ask your state’s MHA
As with most questions regarding individual state regulations, the first place to start is talking to your state’s manufactured housing association (MHA). They will be able to shorten your learning curve by a thousand percent, and can often give you additional help in the form of the name of licensed installers for your area. Since the home installer is tasked with meeting the current regulations for that state, that’s the authority on the subject.
Price it out in advance
Before you ever order that first home, you need to know what the required site preparation with cost. In addition, you need to know how much advanced notice is required to get the work done. If you have to install a slab foundation under the home, that can never be accomplished overnight, so you need a timeline from the day you call to get bids until the actual concrete has been poured and is dry and ready to use. In addition, make sure to get three bids. Concrete pricing is extremely variable, so you may find a really good price available if you’re a good shopper – and we’re talking thousands of dollars in savings here.
A powerful reason to not buy new homes in some states
In some states, the more rigorous site preparation requirements are applicable only to brand new homes. In those states, you get a financial advantage in buying strictly used homes. That’s why your question to your state’s MHA needs to be more than “what’s the current site preparation requirements in this state” but rather “what’s the site preparation requirements for new homes vs. used homes”?
Not all vacant lots are created equally. Some require zero in site preparation costs, and others require thousands of dollars. If you have a vacant lot in your mobile home park, then you need to be fully aware of all of the requirements and costs to put that lot back in service, and budget accordingly.
What Is A Metro?
We are huge believers that one of the key drivers to a successful mobile home park acquisition is the size of the “metro” that the park is located in. But what’s a “metro”? Wikipedia defines it as “a metropolitan area, sometimes referred to as a metro area or commuter belt, is a region consisting of a densely populated urban core and its less-populated surrounding territories, sharing industry, infrastructure, and housing. A metro area usually comprises multiple jurisdictions and municipalities: neighborhoods, townships, boroughs, cities, towns, exurbs, suburbs, counties, districts, states and even nations like eurodistricts. As social, economic and political institutions have changed, metropolitan areas have become key economic and political regions. Metropolitan areas include one or more urban areas, as well as satellite cities, towns and intervening rural areas that are socio-economically tied to the urban core, typically measured by commuting patterns.
What’s equally interesting is that the U.S. contains three “megalopolis” areas, which are metros that are so large that they are regional in nature. One is called the BosWash after the cities at each end: it consists of Boston; Providence, RI; Hartford, CT; Greater New York City; Philadelphia; Wilmington, DE; Baltimore; Washington, DC and their vicinities. Another megalopolis is the southern California grouping of Ventura County, Los Angeles County, Orange County, San Diego County, part of Riverside County, and part of San Bernardino County. There are hundreds of cities and towns in this megalopolis, with the largest ones being Los Angeles, Long Beach, Irvine, Anaheim, and San Diego. The third is the Great Lakes Megalopolis, which consists of the group of North American metropolitan areas surrounding the Great Lakes region within the Midwestern United States, Southern Ontario, and parts of Pennsylvania, New York, and Quebec. The region extends from the Milwaukee–Chicago–Gary corridor to the Detroit–Toronto corridor, and even includes Buffalo, Cincinnati, Cleveland, Columbus, Dayton, Erice, Grand Rapids, Indianapolis, Louisville, Ottawa, Rochester, and Toledo, reaching as far as Pittsburgh and St. Louis. The region had an estimated population of 54 million for the 2000 Census and is projected to reach about 65 million by 2025.
If you think, however, that those are big numbers, be advised that the world's largest megalopolis is the Taiheiyō Belt (the Pacific megalopolis) which consists of 83 million people.
The Good Old Days For Mobile Home Parks Are... Now
People wax nostalgically about the “good old days” which are defined as “a period in the past, often seen as significantly different from the present, especially noticeably better.” Some would say the industry’s “good old days” were in the 1950s, when the demographics of the mobile home park resident were higher than the surrounding stick-built homes. A time in which mobile home parks were portrayed as being upscale with sports cars and men in jackets and ties. However, that’s not true if you’re buying a mobile home park. Back in the 1950s, mobile home parks were not particularly attractive investments, with tiny rents and little financing. We believe that the “good old days” for the industry are right now.
Still able to buy from moms & pops
One of the great losses for future Americans is the ability to interact with the “Greatest Generation”. However, for those lucky enough to be buying properties today, the fact that you can still buy mobile home parks from the original builders is amazing. Not only does this lead to lower pricing and seller financing in many cases, just hearing the stories and making the connections to the industry’s past is invaluable.
Lowest interest rates in history
Who would have ever thought that interest would drop after the 2007 Great Recession began to the lowest levels in American history? There’s no question that future generations will look back on this period and say “how could rates have been that low?” The answer, of course, is Quantitative Easing and basically artificial intervention by the government to make them so low – it’s definitely unnatural. But we are all beneficiaries of this once-in-a-lifetime event, and you can still get them today.
Huge demand for affordable housing
Never in American history has the supply of housing stock been as far out of touch with the needs of the American consumer. Around 30% of our nation is living on $10 per hour – and 70% do not even have $1,000 in liquid assets – yet the median home price is $200,000 and the average three-bedroom apartment stands at around $1,150 per month. This has created a severe shortage of affordable housing in the U.S. and an enormous demand. We have never seen demand as strong as it’s been since the Great Recession began in 2007.
New technologies for addressing utility line issues
Prior to the last few years, you had few options when you had to replace water and sewer lines. Now you can get bids to replace clay-tile sewer systems using “pipe-bursting” and coating the inside of your old galvanized water lines with plastic, using Nu-Flow. A leak in your water line can be found using sounding technology from American Leak Detection. And Metron-Ferrier can now install meters on your water lines that give readings every 10 minutes and actually alert you to leaks immediately. None of these concepts existed even ten years ago, and can save you a fortune.
New technologies for park management
And the technology revolution does not end there. The advent of the HD video allows the park owner to virtually “drive” their park whenever they want and stay on top of property condition. The introduction of management software like YARDI, Rent Manager and Park Sidekick allows park owners to get better reports at the push of a button. And the smart phone allows you to see real-time photos before making payment, and to reach community managers who are out in the field. And that does not even include the marketing possibilities the internet has brought, such as Craigslist, MHBay, Facebook and simply being on the Google list.
Right before the big run up in lot rental amounts
The average lot rent in the U.S. is around $285 per month. That’s insanely cheap. In a world of $1,150 apartment rents, why are we renting lots for nearly $1,000 per month less and giving the consumer a yard? The truth is that the only reason rents are so low is that mom & pop never kept the rents in-line with annual inflation, not because they in any way reflect the intrinsic value of our product. We predict that rents will roughly double over the next few years, so that they are finally in-line with the other housing types. People will look back at $285 rents and say “that seems stupid” and, of course, they are right. And today’s owners will look at the run-up in lot rents as the biggest bonanza in industry history.
Right before the industry became consolidated
There’s no question that the current period will come to be known as the “pre-consolidation” period in mobile home park history. Of course, the “post-consolidation” period will exemplify higher rents, more professional management, and reduced opportunities. Being ahead of the pack has always been the key to successful investing, and mobile home parks are no exception.
There’s no question that right now are the “good old days” for the mobile home park industry. There will be more good times ahead, but the combination of factors and megatrends that are present at this one moment will never be see again.
Why Mike Renz Is The Only Name You Need For Phase I Environmental Reports
You can’t buy a mobile home park without doing a Phase I – you could lose everything if it turns out to have environmental pollution on it. So who do you choose to do the report? We choose Mike Renz. Mike is the consummate professional and his range of knowledge is unparalleled. Here’s an example. We were buying a mobile home park and it failed the Phase I. Most people would have given up, but Renz knew that something did not seem right. It seems that a disgruntled manager had called the EPA and claimed that the owner had been operating an illegal land fill at the back of the property, yet Renz saw no evidence of this on aerial photos. So he did some quick borings and found the claim was a lie and the EPA removed it from their database. Case closed and park purchased. That’s the reason that we refer so many people to Mike Renz. Have you ever seen the “Beard of Knowledge” character on the show Pawn Stars – the guy who is a walking encyclopedia of all trivia? Well, for environmental issues, Mike Renz is that guy.
You can contact Mike Renz at (614) 538-0451.
Why Travel Trailers Do Not Work As Park-Owned Homes
Have small lots? A small budget to fill vacant lots? You may be tempted to buy those old travel trailers in the newspaper for $500 each and use them to increase your occupancy. But be forewarned of the difficulty in pulling this off successfully. Indeed, travel trailers simply do not typically work well as park-owned homes.
Built too “lightly” for rental property
The first problem is that travel trailers must be used delicately. While well-engineered, they are not meant for abusive treatment from renters. It’s like giving fine china to oil field workers: sometimes appreciated but rarely not going to end up broken. Items like doors and built-ins are the first to go from heavy handling.
Small room sizes
Let’s face it, travel trailer rooms are incredibly small. Those who love RVs don’t love them for the interior sizes, which are 8’ wide. A travel trailer bedroom is barely able to handle a double bed – and that’s assuming it does not just have a murphy bed or similar built in. While a travel trailer might work for a single individual or even couple, it’s a non-starter for a family, and nobody is going to select the RV when you have any mobile homes available.
Expensive to maintain
An RV compared to a mobile home is like a Swiss watch compared to a Timex. Nobody would dispute the fact that most RVs are built to a higher standard than a mobile home. But that also means that the parts are more expensive and much harder to install. While a regular workman can repair a mobile home, only an RV pro can fix a travel trailer. Those toilets and tubs you see at Home Depot are not going to fit.
Lenders and future buyers hate them
Of course, one of the key problems with putting travel trailers on your lots is that few appraisers and lenders are going to count those as occupied lots in the same way that mobile homes are treated. While mobile homes are considered stable and with pride of ownership, travel trailers are often seen as … a temporary, cheap way to fill vacant lots.
But there are exceptions
That being said, in many mobile home parks in the western U.S., travel trailers are the norm. You frequently find huge numbers of travel trailers inside mobile home parks in such states as Arizona and Nevada. In those cases, the addition of a few more RV units will probably not cause many issues as the lenders and appraisers are already faced with a different business model than parks in other parts of the U.S. Why the difference in the west? Probably the fact that there are a huge number of retirees who live in these parks and they prefer the smaller size to minimize the A/C bill.
While there are few ways to fill lots less expensively than by buying some $500 travel trailers, you may end up with a time-delayed disaster that has no net benefit. Use caution and make sure that the concept is viable before jumping in.
Stop By The MobileHomeParkStore.com Booth At The Vegas MHI Show
If you are going to be at the Las Vegas MHI event this week, be sure to stop by booth #498. It’s the MobileHomeParkStore.com booth. As you are probably aware, Dave was the founder of that website, and this year he’s dedicating the booth to teaching park buyers and sellers how to properly use the service. MobileHomeParkStore.com is an extremely valuable resource that most people only use for 20% of its potential. Dylan Schrader will be at the booth to show you the many facets of the listings that you can use to help you find the right park to buy, or be a more effective seller. So if you’re in Vegas this week, stop by and say “hi” to Dylan!
The MHU Investor’s Club Classified Ads
To advertise here, you must be a member of the MHU Investor’s Club which is a program available to our Mobile Home Park Boot Camp and Mobile Home Park Home Study Course customers. Contact us for more information.
The Market Report
Equity Lifestyle Properties - $87.22
Sun Communities - $88.70
UMH Properties - $15.68