As the mobile home park industry evolves, owners are constantly pondering not only what the new role of community manager is becoming but also the necessity of them living on-site. Larger parks have allowed for on-site or off-site manager possibilities for years, but smaller parks have been relegated to strictly on-site options. However, those lines may be blurring. In this Mobile Home Park Mastery podcast, we will examine the issue of off-site vs. on-site managers.
Episode 285: Off-Site Vs. On-Site Managers Transcript
The mobile home park industry is nearing the 100 year mark, but there's still one area that's rapidly evolving. This is Frank Rolfe with the Mobile Home Park Mastery podcast. We're gonna talk about managers, and one item which is always come to bear when people think about the manager, is where to place them, should the manager be on-site or off-site? And some thoughts on that are rapidly changing, so let's go back a step to the earlier days of park ownership. Remember the mobile home parks came from the RV industry. RV parks and mobile home parks were originally the same thing. There was no, in fact, no separation till about the 1950s. So in an RV park, you have to have an on-site manager, 'cause it's an active daily business, people used to come into the RV park, they might stay for a day, they might stay for a week, maybe for a year, maybe for a lifetime.
And RV parks also had items like stores and they sold Propane and all that kind of thing. So if you have a restaurant, obviously your manager has to be on site at the restaurant at all times, because every minute that restaurant is open, there has to be someone there to man the store and man the cash register.
So when mobile home parks began with that heritage of the RV park industry, what did they do? Well, they had to have the same kind of manager arrangement, so the manager would typically live in the RV park. I'm sorry, the mobile home park just as the manager would live in the RV park. But over time, RVs and mobile home parks became very dissimilar. Mobile home parks became much more passive in management. Now the residents live there, at least by the month, typical tenancy was around 14 years in length, and it became very dissimilar to the RV park, and in so doing, you no longer really would technically have to have a manager on site. Yet most mobile home park owners maintained the model of having the manager living on the property.
Now there were some definite benefits to mobile home park owners because of this. Number one, it's always good to have someone on site at all times. 'cause if there ever is a major problem, power goes out, big storm, something in the middle of the night, you have somebody there to help the community out in time of crisis. So that's always good. Another issue is that many mobile home parks simply don't have an actual physical office, they don't have a building or any spot where a manager could go and meet with residents, so that was another important item. But finally, it was simply economics, if you had a small mobile home park 30 space or 40 space mobile home park, there's no way you could afford to hire an off-site manager to come to the office, so it became basically a side hustle, a part-time job for most mobile home park managers.
And when you had a park large enough to make it into a full-time job, which typically began at about 100 lots and more, then you could have the option of someone who lived off-site. So where is the industry heading? How is it morphing? Well, as the industry has grown up, one big item which has changed significantly in recent times is how rent is paid. Traditionally, in the olden days, people would bring cash to the office, terrible idea. Smart owners rapidly realized having lots of cash in the office made them a potential victim of crime and also in danger of embezzlement, so they changed that to checks and money orders. And the manager would go and make the deposits sometimes daily at the start of the month. And then the advent of the credit card and some people would pay their rent with a credit card, but then later people started just to pay their rent online, and that's become a really big deal in recent times.
In our own portfolio, we are around 92% of all rent is paid online. So no longer is a manager the person who collects up the checks or makes those deposits, so that item from their job has been reduced. Instead, what the modern manager does is they're more of a resident satisfaction agent because in today's mobile home park world where rents have gone up significantly, people are more demanding, and they should be, they're paying more, they should get more for their dollar, and your manager is really there to help resolve disputes, to offer customer service, to show vacant homes or vacant lots to customers and to basically keep that community spirit alive, which is such a powerful amenity. So you have high retention of your customers, so the manager's role has changed significantly.
And another part that has changed a lot is how much parks get in rent. So as parks have been increasing lot rents just to bring them up to market, not to gouge, not to take advantage, but if you look at the stats, the average lot rent in the United States from mobile home park was about $300 a month, and that is against the backdrop, the average apartment rent being $2000 a month, that's too big a swing. There's no way it makes any sense for a mobile home park to be charging anywhere from $1000 to $1500 a month less than an apartment.
Now, why were rent so low? It was because of Mom and Pop quantitative easy, moms and pops, they didn't like raising rents, so they often would just leave the rents flat-lined despite constant inflation. So the modern park owners is having to bring the rents up to modern times, and they're gonna have to catch up all of those decades of deferred inflation, all it, basically one time or in a very short order. If you look back at the average rent of a mobile home park back in the 1950s or 60s, the normal rate was $50 a month, which in today's dollars is around $500. However, the industry is about 50% of where things were 70 years ago.
So what's gonna happen? Well, as rents go up, there's more money there, and that means smaller parks, parks with 30 lots or 40 lots or 50 lots will ultimately be able to have enough income to pay more for managers, and as you pay more for managers, that may mean you get talent from the outside, not that you would have to. You might still use a manager who lives in the park, but it's equally possibly, you might find the best candidate doesn't live in the park, and those higher rents will give the ability to then hire them.
We've always said that one of the key benefits to mobile home parks and people like when we take them over, is we in instill professional management. Most people like professional management, professional management means things get done right, means the phone gets answered, it means the manager does not play favorites. People like it when the manager does a good job and by paying higher rents they make that possible and by paying higher rents, it may ultimately make possible having people who don't live on site to ultimately be the manager. Now, are there any downsides to having off-site managers?
Well, again, it depends on the park. Do you have an office? Many parks do. But many parks do not. If you didn't have an office and want an off-site manager, you would have to go ahead and put in something to house them while they are there, you, maybe it could be a portable building, maybe you could find some green space in the park that would fit a smaller mobile home that you could bring in and adopt a formally as the office, but where to place them would be one major consideration. Also, don't forget somebody who already lives in the park knows everybody, if you bring in an off-site manager, you would have a huge learning curve as they learn people's names and things about them, but sometimes it may not be bad having the manager off-site because the off-site manager often would be under less pressure, and will be able to make sometimes fair and better decisions because they're not stuck with the people who might ultimately be mean to them or rude to them based on what they decide to do.
It's really hard as a mobile home park manager to wear the hat of being the tough person, try to enforce rules and giving out unpopular information, so possibly the off-site manager could do that, knowing that at the end of the day, they would not be in the park, but then at their own private residents off-site. We don't really know where all this is going to head between on-site and off-site manager.
My personal opinion is as the rents continue to go up, when average mobile home park rent start to hit $500 and $600 a month, which has already been well attained and exceeded in many, many markets, they will finally give park owners the cash flow to start really putting more focus on managers, because even though their roles are being reduced in such areas as collections, and even though there are so many new technology-based tools to help manage, nevertheless, the manager is a very important piece of the business. The manager has always been the quarterback of the football team, your eyes and ears in the field, and we're all trying to figure out the best way to pay that important player and where to put them, and we'll all find out in the years ahead what the answer is, but the good news is the option of having an off-site management is becoming more of a reality as the rents rise for those smaller properties.
This is Frank Rolfe with Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.