Mobile Home Park Investing Newsletter

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May 1st, 2018

Memo From Frank & Dave

May signals the arrival of the dreaded mowing season. After the low-maintenance period of winter ends (other than frozen water pipes), in walks the never-ending pressure to mow, weed-eat and edge the common areas, as well as attempt to get your tenants to do the same. So how do you get geared up for “mowing season”. The key is to get three bids before the season begins. We typically try to get at least one well-known mowing company bid, a lesser mowing company bid, and sometimes even the local guy that mows (who sometimes lives in your park) mowing bid. Then we compare them. It’s the old Sam Zell risk/reward scenario in full operation. You are obviously going to go with the well-known market leading mowing company unless one of the other two is substantially cheaper. Sometimes they are, and sometimes they’re not. Remember that anyone who mows your property must be fully insured, as all it takes is one rock blown out of that lawnmower to create thousands of dollars in potential damages. But here’s the good news: when winter approaches, the grass dies and you have 6 months to reflect on what went wrong and get ready to do it again (unless your park’s in Florida or California).

The States With The Highest Number Of Mobile Home Parks: Representing Almost 50% Of All Parks In The U.S.

iowa state capitol

There are around 45,000 mobile home parks in the U.S., and 49 states that have them (there’s none in Hawaii). So that means every state has about 900 parks, right? Wrong. Some states have huge numbers of them, but others have very few, such as Connecticut. So which states have the most parks, and what commonality is there between them?

Here’s the list

These are the states with the highest number of mobile home parks, as well as how many they contain.

  1. Texas with 5,176 parks
  2. California with 4,000 parks
  3. Florida with 3,785 parks
  4. Kentucky with 2,099 parks
  5. Washington with 2,074 parks
  6. Ohio with 1,944 parks
  7. Georgia with 1,757 parks
  8. Pennsylvania with 1,505 parks
  9. Oregon with 1,417 parks
  10. Indiana with 1,193 parks

It’s unusual that some of the highest population parts of America have few parks

One of the first observations from this list is that the two highest population cities in America are in states that don’t have the highest number of mobile home parks. These cities, of course, are New York City and Chicago, which are #1 and #2 in total U.S. city population. Why is that? All we can guess is that both of these cities had high growth prior to the advent of the mobile home park era, which began in the 1950s and 1960s. Since Manhattan was already built out by the 1940s, there really was no room to build some parks. On top of that, the high cost of land in these two cities made anything less than high-rise construction uneconomical. It’s interesting to note that only Pennsylvania is located in the Northeast, although this entire region is hugely populated.

You can tell that the industry originally had large sectors of retirement in the product mix

The three biggest mobile home park states – Texas, California and Florida – are areas with high levels of retirees, as a result of moderate weather in the winter. Going back to the earliest days of the industry, the mobile home product (and the RV before that) was highly attractive to seniors who chose this style of living to downsize and flourish in retirement. Today, that demand is still going strong, and has been supplemented by extremely high housing costs that make affordable housing even more desirable there.

It’s a really diverse mix of states

It’s really interesting how diverse this list of top states is. There’s representation on all regions of the U.S., from North to South and East to West. Clearly, the mobile home park is a national treasure, as it has dominance throughout the nation. The only factor that really changes is the percentage of housing units in each region that are mobile home vs. stick-built. Many people think that mobile home parks are a product predominantly of the Southwest, but the truth is that this is clearly not the case.

Conclusion

The top ten states for mobile home parks is a real shocker. The top three were obvious, but the balance of the list are not the states you would necessarily expect.

Lessons Learned From A Steak And Shake

steak and shake

On a long mobile home park drive, I will typically sample the main fast food emporiums. Although I try to stay on a diet of mostly salads, there’s no question that it’s hard to stick to that type of dining when you’re out in a town of 20,000 or in the middle of nowhere. So recently I went into a Steak N Shake, and had probably the greatest hamburger and fries in history. The coordination between the staff was amazing, and the product of their efforts was epic. So why was this Steak N Shake so darn good?

Riding the wave

I came in at the busiest time of the day. There were no tables available, and the drive-thru line was huge. So I got the last stool at the counter. I expected it would take 30 minutes or more to get served, but instead I had my food in maybe 10 minutes. How was this possible? Apparently, the manager and staff had expected to be this busy, and had started cooking massive amounts of hamburgers and fries before the crowd moved in. Dave Thomas, the founder of Wendy’s, called this concept “riding the wave” and it means pre-planning in advance for times of highest demand. And good mobile home park managers should share this same trait as you approach the 1st of each month. That’s when 99% of all rent collections begin, and the good manager should never be away from the office during this brief period, so every rent check can be turned in. We do not allow any manager to ever take a vacation between the 1st and 10th of each month, because of this.

Understanding what’s important to customers

This Steak N Shake management team knew exactly what to give on and what not to give on. They were getting food out fast and letting cleanliness slack. You could see junk all over the floor in the kitchen as the focus was on fast food preparation and not on picking things up – that’s for after the crowd leaves. There was also the waitress rooming around with water and iced tea pitchers to keep the cups filled up. Good mobile home park managers have this same ability to focus on what’s truly important to customers – like fixing potholes and removing dead tree limbs – and not on the color of the flowers under the sign.

Building loyalty

The attitude of the staff at the Steak N Shake was stellar. Despite the fact that the restaurant was busier than a MASH hospital, the attitude was pleasant and professional. “Need some ketchup – no problem” was heard rather than “I don’t have time to get you some ketchup, sorry”. Every situation was oriented to the needs of the customer not the staff. As a result, you could not eat anywhere else. This is an equally important trait for park managers. If you treat the customer right, they will not be tempted to look at moving to another park, even if they can bet a lower price. Customer retention is just as important as a new move-in, and making customers feel valued is the first step to having long-term residents.

Offering a great value

Steak N’ Shake has great food. But this franchise was incredible. Everything was cooked to perfection and just the right temperature. The end result is that the customer knows that they are getting a great value – even if McDonald’s has a lower price. Many park owners fail to understand that the resident is not focused on just the lowest price – such Hillbilly Bob’s park down the street that has dirt roads and no skirting – but instead want to feel that they are getting a great deal, which includes a nice, safe place to live at a fair price.

Constantly discussing performance

What was interesting about this Steak N’ Shake was that was that the staff were constantly huddling to share communication and strategize their next steps. It was kind of like a football team that was always reviewing the next play. This is a great concept for owners and park managers, which need to maintain a constant eye on the overall business plan. In times of crisis – such as this restaurant at rush hour – it’s not a bad idea for the owner and manager to talk daily, or even twice a day: once in the morning going over the plan and once in the afternoon reviewing the day’s events.

Conclusion

It’s a shame that every mobile home park is not run as efficiently or successfully as this random Steak N’ Shake I happened upon on the road recently. If you ever get a management team this good, never let them go. And if you haven’t been to a Steak N’ Shake recently, you might want to give it another try.

Why Smart Community Buyers Are Using MJ Vukovich For Financing in 2018

mj vukovich

Obtaining a loan for a mobile home park can be difficult and time consuming if you do not know how to build an effective loan package, or which lenders to hit. And then there’s the unpleasant task of meeting with lenders and dealing with rejection, as well as knowing what terms are negotiable and how much you can push them. What’s the solution? For smart buyers, it’s MJ Vukovich at Bellwether Enterprise. MJ is one of the top loan brokers in the U.S. He goes out and gets the loan and all you have to do is pick which bank you want to go with from those that want the loan. It’s fast and painless, and the fee is around 1%, which is a real bargain. Best yet, you only pay on performance, with the fee due at closing. We’ve been using MJ with great success, and his real strength is in the “agency” arena with Freddie Mac and Fannie Mae, where his firm is a leading underwriter. Best of all, MJ is a third generation park owner, who understands the business and looks at the entire process from your perspective.

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.

Why The Most Important Thing Is Not Price – It’s Value

plymouth ad

This is an advertisement for the 1929 Plymouth. The Ford Model A of that time period cost only $385 – which was 40% less than the Plymouth. However, according to Wikipedia “Plymouths were initially priced higher than the competition, but offered standard features such as internal expanding hydraulic brakes that Ford and Chevrolet did not provide”. Yet this car sold like crazy to the lowest earning Americans. And the lesson learned has a lot of validity for mobile home park owners.

There’s more to happiness than price point

It’s hard for people to understand, but affordable housing success does not revolve around simply providing “cheap”. One of the first examples of this – although nobody ever knew it – was when the New York Times reporter lived in our property in Pontoon Beach, Illinois. He found that every single resident was extremely happy with the mobile home park, but what he didn’t know was that we had increased their lot rent 30% in tandem with cleaning up the property and re-paving the roads. The moral is that people don’t seek out simply the “cheapest” way to live, but instead want the best value.

Affirm the value you are providing

If you look at Plymouth marketing from 1929, you’ll see that every advertisement focuses on the benefits of the Plymouth product. Whereas Ford put their stock in price point alone, Plymouth was not ashamed to be more expensive because their cars offered much more to the customer. Park owners should do this same thing every time they interact with their residents. For example, when you send a notice of rents increasing, you should include with that notice a bar graph of the competing rents from nearby single-family homes and apartments to hammer home what a good deal they’re getting. You can never tell a customer enough what a good thing they have going – and they love to hear it!

Listen to the majority

The reason that many park owners think that price point is all that matters is that there are a couple residents in every park that believe that. These are folks that drink the cheapest beer, shop at the local dollar store, and furnish their home with items from Salvation Army. While they have the right to live in any manner they choose, they in no way reflect the tastes and desires of the majority of your residents. When you raise your rent, do you always seem to hear a complaint from the same people? That’s because no matter what you do – pave the roads, clean out the debris, skirt every home – all they care about is dollars. When you really consider the source, you’ll realize that you are being bombarded with bad information from the same two or three people. Don’t let them affect your judgement.

Conclusion

The average mobile home park resident is seeking only one thing: value not price point. Provide a great product and you can charge a higher price and still have a strong customer following.

Why Metron Is The Best Utility Sub-Metering Option In The Industry

Over the past year, we have been rapidly converting every existing water meter in our portfolio to Metron-Farnier Sustainable Services. And every new mobile home park that we change to sub-metered water & sewer use, we meter using Metron. Our entire portfolio – except for those parks that are directly billed water/sewer by the city, or not allowed to sub-meter by law – will be with Metron by the end of this year. So why are we such huge fans of the Metron metering system? The answers are many:

  • These meters are read remotely and do not require our managers to read them (or screw up the readings).
  • The meters are read by Metron every 60 minutes, 24 hours a day. As a result, Metron can alert you when there’s a leak, and that can save you thousands of dollars per year.
  • The meters are amazingly accurate and strong.
  • Metron’s meter bodies have been manufactured in Europe for years – they are well-established and a proven performer.
  • Metron’s electronics are built and tested in Boulder, CO.
  • The cost is only around $5 per month per meter, and in most states this cost can be passed on to the resident.
  • These meters do not require you to have access to them, so they are perfect for winterization or difficult access situations.

So why would you not use Metron? We don’t have a clue.

To get more information on Metron metering, call Rick Minogue at 303-449-8833 or email him at [email protected] Tell them that Frank & Dave sent you. We’re their biggest fans.

Don’t Miss Our Next Lecture Series Event With Charles Becker From Duke University

duke

Charles Becker is the Duke University economist that is studying the mobile home park industry. His latest work examines lot rent levels in the U.S. and where they stand in relation to other forms of housing. This is a topic of great interest to every mobile home park owner, as we have all grappled with where to set our rents as well as having to justify our pricing when, in most markets, we are $1,000 per month or so less than apartments. This Lecture Series event is special in that it marks the official release of this important research as well as a discussion of its key points and Q&A with Charles Becker. Keep an eye out for the details in the coming days!

Tips On Driving Parks For Maximum Effectiveness

mhp drive dashboard

This is the actual trip record for a rental car I kept for three days – driving over 900 miles per day. I visited about 20 parks on that drive, and it’s something that I do frequently. So what are some trips on driving parks to get the maximum return on your time?

Take a lot of photos, as you can’t possibly remember much

When you’re in the field, you often get this feeling that you’ll remember everything when you get home. The truth is that you’ll forget almost everything within a few days. As a result, it’s essential that you take plenty of photos and take plenty of notes so that you do not tax your memory. I also recommend that you summarize each drive back at your hotel room each night, while the memory is still vivid from earlier in the day.

Check out the competition

You can learn a lot from your competition. Drive their parks every time you get into town, and see what’s going on. Did they fill lots with a bunch of RVs? Did they bring in some new homes to fill vacant lots and, if so, what age and size and what’s the price on the banner out front? We have learned some significant strategic items from competitors over time, and changed our business model accordingly. Markets are always changing and adapting, and you’re foolish if you don’t constantly tough base with the competition to see where you fit in.

See what’s happening in the town

Drive the surrounding town with as much interest as the park itself. Look for clues as to market conditions, such as anchors shutting at the mall, or maybe survey stakes for a new development near your park. Remember that real estate is all about location, location, location. If you start getting concerned about the health of your market, it may be time to sell. However, if you see new things being built, it may also trigger the desire to try harder to buy more parks nearby.

Never tell the manager you’re coming

This is huge: never tell you manager that you’re coming in. If you do, they will deliberately stage things to look like they are doing a great job when really it’s the one time of the year in which they mow the grass and pick up the litter. While there is a slight risk that your manager will not be there that day, it’s worth the gamble to catch your employee completely off-guard and seeing what really happens when there is nobody looking over their shoulder.

Time your arrival to escape rush hour

If you own a mobile home park in a large metro – such as Dallas or Houston – you will soon learn the necessity of doing your driving during any time except rush hour. In most cities, I find that the traffic gets insane between about 4 PM and 7 PM. Since you don’t want to arrive in the dark, that means the goal should be to arrive in the mid-afternoon. Plan your travel accordingly, and work backwards to see what time you have to leave to get there before rush hour. I caught in traffic in San Antonio recently that was so severe that it took me an hour to travel only 9 miles. That’s an insane waste of your time.

Get out and walk every hour or so

Many people know that I have a hobby of collecting antiques. What many people don’t know is that I developed that hobby to entertain myself during long hours of driving (I’ve driven over 2 million miles during my business career). I have found that it is very unhealthy to sit in your car for more than an hour or two without walking for about 10 minutes. Antique stores give you that necessary break and are conveniently located along the highway about every hour or so. But you can replace that activity with something else of your choosing, whether it’s walking museums or walking malls.

Conclusion

Driving parks you own is a periodic necessity. Although getting HD videos from your manager should be a monthly or quarterly exercise, there’s nothing that can replace the face-to-face information gathering of driving your property and surrounding market to see where you stand.

Here’s Your Copy Of This Month’s Manufactured Housing Review

If you enjoy this monthly newsletter, then you will certainly also like the Manufactured Housing Review – the industry’s only monthly magazine that covers many different industry topics. Edited by our friend Kurt Kelley of MobileInsurance, MHR offers many insights and opinions that reflect current events in the affordable housing industry, with no topic taboo.

To view this month’s issue, click here!

mhp drive dashboard

Why Mobile Insurance Is The Best Protection At Affordable Prices in 2018

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]

Why MSN Got Their Story On Mobile Home Defaults All Wrong

mobile home

MSN recently proclaimed that the world is ending because the default rate on mobile home loans has gone up from 3% to 5%. Their argument was that mobile home owners have not benefitted from the current economic “boom” and that if you can’t get by with a cheap mobile home mortgage, then how can you possibly survive in a modern America.

A quick fact-check, for starters

The current delinquency rate for single-family homes in the U.S. is around 5% -- that’s exactly the same as the new mobile home delinquency rate. We’re not sure where the writer got their figures for the stick-built s. MH comparison chart, but here’s what we found on Google from a reliable source (the Mortgage Bankers Association). So we’re not sure what the point of the article is. There’s no reason why anyone would expect a mobile home owner to have less delinquency than a stick-built homeowner. On top of that, the writer points to the fact that 3-in-5 mobile home owners are having trouble paying their bills. That’s exactly in-line with stick-built home consumers, so I guess the message is that mobile home owners face the same financial strain as brick home owners, which would come as a surprise to just about nobody. Remember that 70% of all Americans – from McMansion households to flat-roof trailers – do not have $1,000 in cash. So if the writer’s point is that America is currently an economic wasteland, then I guess we all have to admit that. But mobile home owners actually are doing better than most Americans in other housing venues, and the writer missed that point entirely.

Most mobile home transactions are not reported – only the ones at greatest risk

Single-family mortgages are typically large, with the median home price in the U.S. standing at around $200,000. All of these mortgages are properly reported to the credit bureaus and are managed by professional lenders. However, most mobile home sales are used homes that sell for as little as $1,000, and these mortgages (or installment sales) are never reported. So the data the writer is using is strictly new mobile homes from the factory. Those new homes have an average mortgage of around $35,000 and are not representative of the greater whole of mobile home mortgages in effect in the U.S. – only the highest and most risky.

CASH program defaults are anticipated by the park owner and the byproduct of poor credit

It is estimated that 50% of all new mobile homes sold in the U.S. are to mobile home park owners who elect to have them shipped and sold in their properties using such programs as Clayton’s CASH program. These programs have produced a huge win/win for the industry, as they provide needed affordable housing and homeownership to households that would not qualify without the park owner’s participation. However, we all know that there is a greater likelihood of some of these borrower’s defaulting because they do not have the greatest credit scores (which is why the park owner’s participation is essential). Although it does not mean that there is any loss on the loan – and the park owner, in fact, has to clean it up and show it again for re-sale – the very fact that there is a growing number of loans for these residents will, of course, cause an increase in defaults. We would note that the defaults in the absence of these programs were around 3% -- which is nearly half of stick-built homes – and even with these programs our industry is now simply in-line with all consumers.

Over 80% of all mobile homes are owned debt-free

One big factor that the MSN writer missed is that by far the majority of mobile home owners have no mortgage. It’s estimated that 80% of the mobile home park residents in the U.S. own their homes free and clear. So the grouping that has an active mortgage to begin with is a very, very small percentage of the overall picture. When the writer talks about 5% being a big number of defaults, the truth is that it’s more like 5% of 5% of all mobile home owners – and that’s hardly worth writing about at all.

Conclusion

Today’s writers often use whatever available data they can find to try and support their article’s premise. It’s often called “fake news” but it’s also bad journalism. The MSN writer failed to paint an accurate portrait of the mobile home industry in its current state – but what can you expect from the same folks that bring you Myrtle Manor and Trailer Park Boys? The mobile home industry has suffered from more “fake news” for decades now.

Westland Is The Park Owner’s Wonderland

westland mobile home parts

We’ve been using Westland to buy mobile home parts for over a decade. We’ve bought entire 18-wheeler loads of skirting from them. And it always shocks us that more people don’t know they exist or what they have to offer. So here are the reasons that you should talk to Westland about all-things mobile home:

  • They have thousands of items in stock – virtually the Home Depot of mobile homes.
  • They have award winning customer service. That’s super-important when you don’t know exactly what part you need for certain homes (and don’t know the exact name of it, if you did).
  • They are truly a “one-stop shop” for all your parts needs. It saves you from having to make endless calls to different vendors (and staying on hold) looking for just one certain item.
  • They have great pricing. That’s why we buy 18-wheelers of skirting from them (trust us, everyone wants that order).
  • They have built the business on long-term relationships and live by the Golden Rule. They will go out of the way to make sure you are happy with their pricing and service.

But there's one new fact that even old customers may not know - they are under new ownership. The new management is an energetic, entrepreneurial group that is open to new ideas and growing together with your business.

So if you want to be able to talk to people who know more than you do about how mobile homes are constructed and what part you need, and want to get great pricing and customer support, and want your parts shipped fast and tracked accurately, then you need to try Westland. You can reach them at 800-525-8847 or on their website. Tell them Frank & Dave sent you.

Here’s An Example Of A Perfect First Park

spring manor mobile home park

We often get asked what the perfect first deal would be for a mobile home park buyer. Well, here’s an example of one. It’s my old park in Lake Worth, Texas, just north of Fort Worth. There’s a wide range of reasons that this park had unique attributes that would make for a successful purchase.

Great location

For starters, this property has a terrific location. It’s on the banks of a lake that has boat clubs and an inherently attractive setting. Since most Americans love lakeside living, this property has that winning feature to begin with. On top of that, Lake Worth has some great stats. The median home price is $104,20 and the average three-bedroom apartment rent is $1,249 per month. The housing vacancy rate is an incredibly low 5.53% vs. the U.S. average of 12.45%. And the metro population is 7,102,800. There really is not a single negative stat on Lake Worth that I’m aware of.

Terrible cosmetic condition

We love to buy parks that have a poor cosmetic condition going in, as we can traditionally get really good prices and then fix the problems relatively inexpensively. Although overgrown grass looks like a huge issue to most people, it’s really not a big deal to fix. The same is true with such items as rusted fencing, debris in yards and those type of factors. In this case, I was able to buy the property for an insanely low price because it showed really, really poorly and scared off most potential buyers who could not see the vision through all the clutter.

Ability to cash flow

This property – despite a rough appearance – had just enough customers to cash flow from day one. And that was at a ridiculously low lot rent with plenty of room to increase, and some vacant park-owned homes that could be brought on-line relatively quickly. The worst type of parks are those that lose money every day starting at the closing, and puts you in a bad position of racing the clock to stop the hemorrhaging.

Huge upside

I bought this property for about $4,000 per lot. Yes, that’s crazy. But the owner (who was in his 80s) had completely lost interest in it and simply wanted to be free of the responsibilities. The combination of the low purchase price, the ability to raise rents and fill vacant homes and lots, and the spectacular location made this a deal with amazing upside and potential from day one. Pretty much a sure thing to do well with.

Sweet spot on “finished” park value

What also guaranteed this deal’s success was the fact that it has 24 lots and that is just large enough to propel it into the minimum deal size for most lenders. Since buyers never pay cash, really the integral part of making a park valuable is the ability to attract aggressive lending. While tiny parks just won’t interest most banks (who reason that it’s easier to make an identically-sized stick-built home loan). So once I made the necessary turn-around, I was assured substantial enough deal size such that the next owner (or refinancing) could tap into a large pool of banking options.

Seller financing

What really made this deal extremely attractive on the front-end was the fact that it came with seller financing. That allowed me to buy it without the stress of having to find a bank (that would have surely freaked out over its terrible cosmetic condition). Seller financing gave me an even greater comfort level that the deal would do well, and saved me from any type of banking pressure until I got the turnaround completed.

How it turned out

I cosmetically cleaned the property up immediately following closing. I removed debris from every lot, and demolished a few of the worst abandoned homes (one even had a large tree growing through the middle of it). I mowed and edged the entire property, and sprayed roundup on the weeds growing in the concrete. I installed an attractive entry sign. I painted and fixed the skirting on any home that needed it (whether I owned it or not). I renovated the vacant homes and sold them off. And I bought some new homes to fill vacant lots, as well as convinced mobile home dealers to send customers my way. I eventually filled all 24 lots. In the meantime, I increased the lot rent by about 100%, and the residents were still thrilled since I made them proud again of their community. And then, once I got it done, sold it for a multiple of the original price. All-in-all, a textbook good deal.

Conclusion

There is no perfect deal. However, there are some that have everything going for them, and very little risk. It is those type of deals that make for the perfect first park, as they give the buyer a huge amount of buffer in the event of any rookie error, and do not require exemplary management skills.

Despite A World Of “Deal Killing” Attorneys, Dave DiMarco Is A “Deal Maker”

How many deals have you seen go down the drain because there was attorney involved that stacked up a million roadblocks to even the simplest problems, and then failed to offer any path to solving 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 in business if you can’t move forward on a single property, regardless of how good the economics and market are. 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.

Can You Survive Master-Metered Electricity?

mobile home park electric meter

One of the greatest challenges in buying a mobile home park is coming to terms with the utilities. While city water and sewer, and direct billed electricity and gas, is the norm in most parks, there are also parks that have situations in which the park owner is effectively the utility company. And one of these types is called “master-metered” electrical, in which the park owner pays the power bill for the entire park (and in so doing basically serves as the power company). So how can you approach this type of deal?

Use an electrician in your diligence

Unless you are an electrician, you have no business doing the diligence on a master-metered power system. You need a quarterback who can lead you to victory – and you’re not it. Don’t try to nickel-and-dime this diligence or you could get in real trouble. Unless you know how to measure amps, then you are not the right person for the job. While there are many things you can do an exemplary job of in diligence on your own, this is not one of them.

Measure how many amps the system is currently pulling

You’re going to start off with having the electrician figure out roughly how any amps the system is having to handle at peak power draw. This is the combination of all those air-conditioners, televisions, light bulbs, everything. And you may need to extrapolate this by physically counting the number of A/Cs and roughly how many amps each home needs. Let the electrician do this, not you.

Determine how many amps the system can handle

Now you’re going to have the electrician figure out how many amps the existing wiring and equipment can handle. The differential between this potential and the actual power load is what determines the health of the operating system. In addition, you will need to have the electrician do a complete study of every component to see if it needs repair or replacement. It’s not easy diligence and you need to really like the deal a lot to be worthy of this much time and cost.

Make sure you understand what is and is not allowed in the event of problems

Some cities and counties (and even states potentially) have rules regarding what you can and can’t do to repair and replace a master-metered electrical system. We have seen systems that are blockaded from upgrades due to the city’s threat to yank the grandfathered status if such work was completed. You will have to work on the system from time to time and you need 100% surety that these repairs are allowed.

Understand the significance of electrical costs and your challenge in collections

There’s one other issue that’s worthy of discussion. And that’s the fact that, since you are the power company in a master-metered power system, you are also responsible to read the meters, bill them, and collect on them for each resident’s usage. Not only is that a whole lot of extra work, but the amount of power money your residents spend is vast and really adds to your collections risk.

Conclusion

Nobody likes master-metered electrical systems. But there are good things about some parks that far outweigh this inconvenience. But make sure to do exemplary due diligence on such systems and let a licensed electrician be your guide.

The CASH Program From 21st Mortgage: One of the Big News Stories of 2018

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].

The Top Ten Ways To Fill Vacant Lots

mobile home with for sale sign

A vacant lot is worthless. An occupied lot can be worth $10,000 to $100,000+. This basic principle is what motivates every park owner to try and find a way to fill every vacant spot. Here are ten different ways to fill a vacant lot, with some observations on the cost and difficulty association with each.

RV

This is one of the simplest way to fill a lot, as RVs are not very demanding as far as power requirements or lot finish-out. You can simply put out the word that you take RVs and start filling lots almost immediately if the demand is there. It costs the park owner zero out of pocket. However, there are basically two problems with filling lots with RVs. The first is that many cities don’t allow RVs to be placed within mobile home parks. The second is that RVs can pull out at any time, and this lack of financial barrier is a real turn-off for future buyers and lenders.

Organic

In this venue, you have an existing mobile home owner in somebody else’s mobile home park pull out and move over to yours. It costs you about $5,000 since you typically pay the full cost of the move. The great thing about these is that the customers is already a homeowner and you have extremely high retention. The downside is that if you do too much of this, other park owners may retaliate and steal your customers and you will have gained nothing.

Rent to the neighbor

OK, here’s a wild one. Rent the vacant lot to the next door neighbor. This gives that neighbor a double lot, and you get a little extra money (typically $25 to $50 per month) but more importantly don’t have to mow the lot anymore. It also creates a happier customer with higher retention. There’s no real downside except for the fact that you rented the lot for a fraction of what it’s worth.

Lonnie dealers

There are people who are acting on the business model of the late Lonnie Scruggs and his book “Deals on Wheels”. They basically buy, sell and rent mobile homes inside other people’s mobile home parks. Its not a business model that we care to speculate in, but it does fill vacant lots and that’s great. Find the Lonnie dealers in your market and see if they will start putting homes into your park. The only downside is that, if you let one person own too many homes in your park, they may start blackmailing you for lower rent or they’ll pull them out.

Dealers to move in old inventory and trade-ins

A mobile home in a dealer’s lot is not too compelling. But it’s a whole lot more saleable when you couple that home with a location and a turn-key offer to exchange keys for cash with an immediate move-in. We’ve done this successfully many times and it’s a total win/win. A simple model that requires little up-front cost and really has no downside.

CASH program

This program is offered by 21st Mortgage and it offers the park owner the ability to fill vacant lots with zero out of pocket, with 21st Mortgage offering the financing. It’s a great way to fill vacant lots, and there’s no real downside to it except for the fact that the park owner has to agree to cover the mortgage in-between residents and to clean and market the home if the customer defaults. The big observation here is that this program does not work in every market and park, as it requires potential residents with decent amounts of liquidity for down payments and decent (but not spectacular) credit.

Buy used homes

In this scenario, you buy a used mobile home, bring it in to your vacant lot, rehab it, and then sell or rent it. The downside is that there is significant capital needed for each step, and a whole lot of work, too. This is the classical way that park owners used to fill lots and it seemingly always works – but the other methods are a whole lot more fun and cheaper. An observation here is that you should try not to inject huge amounts of capital into old homes. When possible, buy newer ones that are more desirable and bluebook at higher amounts if you want to refinance them through 21st Mortgage or another lender.

Buy repo homes

The alternative to buying older homes is to buy newer “repo” homes from the mortgage companies. These homes are traditionally 1990s and newer, and feature updated designs both on the inside and outside. Customers love them and they require much less work and risk. You can find lists of repo homes on such websites as MHBay.com.

Home Wholesalers

These are people who buy used and repo homes on the cheap, do a little patching on them, and then sell them to park owners. The nice thing about these is that you know the home can be transported and they typically have the title in hand. The downside is that there’s a mark-up and you could have bought the home cheaper yourself. That being said, there’s no question that this is a valuable source of homes in every market.

Retention

No discussion of filling lots should come without a lecture on the importance of retaining the customers you have. It’s far easier to keep a customer in their home and lot than have to do any of the above-discussed options to fill a vacant lot. Treat people fairly and offer a great value and they will ever leave. Don’t forget that.

Conclusion

To maximize the value of most mobile home parks, you have to fill vacant lots. As you can see, there’s a variety of ways to do it, each with its own strategy and issues. Select the ones that are right for your community.

Mike Renz Is The Source For All Things Related To Environmental Pollution

When it comes to Phase I Environmental Assessments, nobody in the industry is more knowledgeable than Mike Renz. He’s our go-to guy for all things pollution-oriented, from Phase I reports to simply asking questions on what we see going on next door to the property (or even inside that concerns us). We were once walking through a property and saw a brown colored solution oozing from the property. Within minutes, Mike had pulled up the data and figured out what it was (rusty water from an iron-ore- rich artesian spring). That’ the kind of information that we find invaluable in today’s litigious world of environmental condition. On top of that, we’ve had Phase I reports that failed for existing pollution, and Mike Renz has been able to solve them by using common sense and technology, like the time he proved the EPA wrong by doing a simple core-drilling to prove that a supposed landfill on a mobile home park did not actually exist (it had been phoned into the EPA by a former manager who had a grudge against the owner). If you want that level of expertise on your side, then you need Mike Renz to be your Phase I Environmental provider. That’s who we use, and he’s amazingly good.

You can contact Mike Renz at (614) 538-0451.

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.

Member Name: Steve BaikPhone: 206-326-8764
I am looking for a park with City Water & Sewer. Septic will also be considered. I am willing to pay commission if you can bring me a deal. Off market preferred, but listed properties are okay. Brokers are welcome to contact me as well. 30+ lot preferred. Price between $500,000 - $4.0 million. Please call me at 206-326-8764 or email me at [email protected]
Member Name: Michael BothaPhone: 808-478-1479
Seeking to buy parks - Montana, Wyoming and Idaho We are seeking to acquire Mobile Home Parks in MT, WY and ID. Our target park size is 20-80 lots, with city water and sewer. We may consider other areas or opportunities. We are actively pursuing opportunities in these markets, and have the resources to make offers and acquire parks immediately. Please contact us if you own, or know of a park that meets this criteria in these areas. We are happy to work direct with sellers or brokers. Thank you Mike
Member Name: Lori GoodPhone: 619-933-1828
Distressed North Carolina park approximately 30 minutes north of Fayetteville. 28 spaces with 16 park owned homes that are in rough condition (rated F for rehab), 6 tenant owned homes, 6 vacant lots. Current rents are below market at $160. This park can be re-developed and bring in up to 125 spaces. The front 20 acres are all pine and owner would consider offers on this. Although it provides a nice cover area to maintain that country setting community feel. $234,000.00. Email: [email protected]
Member Name: Harrison HelmerPhone: 910-391-4993
Looking to purchase Mobile Home Park's in the Fayetteville,NC and the surrounding areas [email protected] [email protected]
Member Name: Michael HinshawPhone: 949-202-9806
Dear Mobile Home Park (MHP) Owners and Brokers, Donna and I are interested in purchasing a MHP and can act quickly to close the deal. We are principals and will be happy to pay referral fees or commissions when we close on your park. Our preferred park criteria include up to @$2M purchase price, 50 – 150 spaces, paved roads, city water, city sewer and a sound economy. With that said we do realize that few parks are perfect and we are willing to concede certain criteria for the right opportunity. We have quick access to additional equity and can purchase a park up to @$4M if the seller is willing to participate in a 1031 exchange. Please feel free to visit our webpage at http://gallerymhp.com for more on our background and objectives. If you do have a newly available MHP to sell we would like to discuss purchasing it with you. I can be reached at 949 202-9806 or [email protected] Sincerely, Mike Hinshaw
Member Name: Steven IltzPhone: 503-439-9069
Looking for a MHP deal size of about $3 million , with about $1.8 million of debt or larger. Have about $930,000 cash as part of a 1031 exchange. Need to identify a replacement by Sept 25th, 2018 . Looking for Mobile Home Park to own or joint venture with others. I have cash to invest. My preference is to own a park with city water/ sewer, paved streets. If your looking for someone for your team for Joint Venture that can add value and time along with cash, give me a call (503) 439-9069 Portland, OR. Former MHP owner, that turned a average MHP to a great MHP that was 100% owner occupied park. I can help to turn a park from good to great.
Member Name: John JacobusPhone: 408-499-8527
We are seeking 20-150 lot mobile home parks in the 75k+ population metros in the Southeast (VA, NC, SC, TN, KY, GA, AL) and Southwest (TX, NM, AZ, NV, UT). City water & sewer or septic preferred. We will consider distressed and stabilized parks. We will pay referral fees for leads that we successfully close. We are also seeking MHP bird dogs who will help us find opportunities. Contact John via phone or email any time.
Member Name: Shoaib KhawajaPhone: 312-568-6493
Looking for equity partners who would like to purchase MHP's in the midwest. (MI, IL, OH, WI, IN). I have cash to invest.
Member Name: Brian LamPhone: 415-816-0514
Looking to meet other investors in the space which may result in future partnering as deals arise. Our target is $1 - $3M parks in the Midwest on city utilities. We're interested in meeting like minded people who can deploy /partner at $100 - $500k increments.
Member Name: A. Baker MontgomeryPhone: 469-551-3851
My group is looking for parks up to 10MM in Texas, the Southwest and Midwest. Please feel free to contact me anytime, more than happy to pay finder's fee. Thanks
Member Name: Andy NissenPhone: 614-456-5391
- Capital partner wanted to buy parks Will provide Capital Partners with Tax benefits or Cashflow or Equity - depending on your needs / desires. Let us know how we can work with you to accomplish your goals through MHP investing. We currently own two parks. Have 4 years experience owning and operating MHP's. Real Estate investing since 2004. Experience as a general contractor. Accredited investors ourselves. Currently seeking Parks in and around the Carolinas and Ohio but will gladly go further if the deal is right. Call or e-mail any time. Will gladly provide resume, references and so on. Thanks, Andy
Member Name: Patrick O'HarenPhone: 408-206-8998
We are willing to pay a commission or finder's fee for off-market deals. 40-150 spaces, more if part of a multi-park portfolio. We have capital and MHP operating experience. Please call me at 408.206.8998 or [email protected] www.genuitycap.com
Member Name: Joan ProbertPhone: 604-985-8788
I am a Canadian investor looking at parks in the in the following states: Arizona, Nevada, Washington, Oregon, Idaho, Montana. My business partner and I are heading out on a road trip at the end of October and are keen to meet other investors on the way. We'll also be looking for great recommendations on where to stay and what to discover. We're looking forward to meeting other MHU investors along the way! If you have some ideas please reach out to my business partner Liza Rogers as she's planning the route! [email protected] 250 532 1625
Member Name: Bryce RobertsonPhone: 714-603-1394
To get you buy until your next Frank & Dave MHP Investing Bootcamp... Introducing; The A to Z of MHP’s - Everything you need to know about Mobile Home Park Investing! You’re invited to join our 2 day Mobile Home Park (MHP) Educational Experience in Asheville, NC. Call (714) 603-1394 or email [email protected] to secure your tickets now! $198 per person for CREIA Members (does not include lunch) $248 per person for Non-CREIA Members (does not include lunch) Saturday / Sunday August 18 / 19, 2018 - 8 AM to 5 PM Hilton Hotel – Biltmore Park, Asheville NC
Member Name: Mike TrilloPhone: 425-246-4785
Attn MHP Owners: we are interested in buying several parks! Attn MHP owners with large portfolio: If you need to offload your smaller parks, please call me! Attn newbies who want to birddog or assign deals: I’ll pay you up to 5% referral fee on any deals you send my way! Attn Realtors: I have a very healthy incentive commission plan with any deals you send my way! I’ve got the cash to close the deal from $500k to $5M, 30-200 lots, within 40 miles of a growing metro area of 100k+, public or private utilities (WA, OR, ID, NV, UT, CO, WY, MT, ND, SD, NE, KS, MN, IA, MO, WI, IL, MI, IN, KY, OH, PA, VT, NH, MA). Please contact me (425-246-4785), [email protected] or visit us at www.GreaterCauseRealtyGroup.com. Looking forward to hearing from you! :)
Member Name: Cindy Tucker-DavisPhone: 970-987-7523
Thank you to everyone I spoke to regarding a manager position. I learned so much from you! If you are in need of a manager, let me know and we can talk. Thank you! Cindy
Member Name: Nick VrscakPhone: 919-880-4086
MHP Owners & Brokers I am interested in purchasing a Park in NC (1M-1.5M) preferably in the Raleigh Durham Metro. Park criteria is 50 – 100 spaces, paved roads, city water, city sewer. However I do know that there can be potential elsewhere so I am willing to consider other deals in other markets with a good economy. Please do not hesitate reaching out to me if you have anything. Nick Vrscak (919) 880-4086 [email protected]
Member Name: Val WhalingPhone: 413-822-6960
To Brokers and Owners: We are interested in purchasing several MHParks and are set up to close the deal quickly. We are principals and will be happy to pay referral fees or commissions when we close on your park. Our ideal park criteria include up to @$2M purchase price, 50 – 150 spaces, paved roads, city water, city sewer and a solid economy. However, we do understand that few parks are perfect and we are willing to concede certain criteria for the right opportunity. Please feel free to call anytime: Val Whaling [email protected] 413-822-6960
Member Name: Ed WillisPhone: 907-460-6646
If anyone is looking to start a direct mail campaign to find deals I can help you. If you're not wanting to do the owner address research yourself I could provide you with lists for MO, KS, NE, IA, & ID (1000 owner addresses thus far). If you've got another state you want to mail I could help with that too. I can help you design your postcard or do it for you. I also know of deals I'm unable to do that I can refer. Let me know if you're interested, Ed Willis 907-460-6646
Member Name: Shelly ZickefoosePhone: 559-907-8080
Looking for a mobile home within 500 miles of AZ. Max size 18x70. Min age 2003. Max price $12,000. Call (559) 907-8080. Thank you,
Member Name: Brian ZobergPhone: 305-301-2443
I have several years experience of buying, owning, operating and selling (for excellent returns) mobile home parks. I am looking to partner with other owners, investors who are interested in buying their first park or expanding their portfolio. I am also offering to pay a referral fee for a mobile home park on any deals. Please contact me if you are interested. Criteria: minimum 25 occupied lots, city sewer or septic, city water or well water.

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