Mobile Home Park Investing Newsletter

In August 1860, Annie Oakley was born. She went on to become one of the most famous sharpshooters in U.S. history, being so good at marksmanship that she was able to pay off the mortgage on her widowed mother’s farm from the earnings of hunting and selling animals to Ohio restaurants – all by the age of 14. She began hunting out of necessity at the age of 8 and developed her talent through endless practice. In many ways, there’s a little Annie Oakley in any mobile home park owner who spent time hunting mobile home parks for sale, and perfected the valuation, negotiation, purchase and operation of these properties with persistence and repetition. It’s also worthy of note that Annie Oakley was the highest earning star in Buffalo Bill’s Wild West Show, earning only slightly less than Buffalo Bill himself. That’s how fascinated the American public was to see her do seemingly “impossible” tasks such as shooting a playing cards tossed in the air 100 feet away, often hitting them on the edge and cutting them in half. It’s truly amazing how good you can get at any endeavor if you apply enthusiasm and practice, and that’s definitely true of amassing a mobile home park portfolio. Haven’t found the perfect park yet? Keep trying and you’ll get really, really good at it.

Frank Rolfe and Dave Reynolds “are the best thing going in affordable housing at a time in which the nation’s need for low cost places to live has never been higher”.

- New York Times,

Sure, we’re pretty proud of that quote because we took a big risk to get it – we let Gary Rivlin, a writer for the New York Times, live in one of our parks in St. Louis for a week so that he could learn the truth about the industry. And he loved what he saw. [insert link] We’ve always respected the New York Times for their devotion to honest journalism regarding the mobile home park industry. So we were impressed that they once again gave an accurate portrayal to the potential closure of a mobile home park in Seattle, Washington [insert article]. The article explores the issues regarding the pending re-development of a mobile home park called Halcyon and brings forward many valid points.

Mobile home parks are becoming an endangered species nationwide

Virtually every city in the U.S. has effectively banned new construction of mobile home parks since the 1970s. As a result, there are only roughly 10 built per year in the entire nation, while there are many times that town down each year for re-development. This has created an environment in which the total number of mobile home parks in America declines monthly. The New York Times noted this in discussing the potential redevelopment of the Halcyon Mobile Home Park in Seattle where it was noted “… owning a mobile home on rented land has always come with the risk that the landlord would one day sell or redevelop the property, though that prospect seemed less dire when alternative sites were plentiful”. They then expanded on the situation in Seattle specifically where “there were a half-dozen mobile home parks in the neighborhood as recently as the 1980s; by 2007, there were just five left in the whole city. The most recent to close, a 63-unit community not far from Halcyon, was redeveloped in 2017 as multifamily housing”.

Land prices are exceeding mobile home park values in many markets

The New York Times talked about the saga of the Firs Mobile Home Park in Seattle, which was re-developed in 2017 after a three-year legal battle by the residents attempting to block the re-development. In the end, the property owner prevailed and the 6.67 acre parcel was turned into an apartment complex. In fact, that’s where most mobile home park developments are heading, since apartment rents are roughly $1,000 per month higher than mobile home park lot rents in many markets. On top of that, mobile home parks are essentially “single-story” while apartments are often three or more stories high, and offer much greater density on the land mass.

Mobile home parks offer a quality of life that is not replaceable for the residents

The article also touches on the fact that mobile home parks offer a lifestyle that is extremely attractive to the residents including 1) no neighbors knocking on walls and ceilings 2) having a yard 3) parking by your front door and 4) a sense of community with a strong support network. Apartments do not offer any of these options, most particularly the benefit of being a homeowner as well as a cost of living that is a fraction of apartment rent. Although the owner of Firs Mobile Home Park paid each household $10,000 to offset their relocation costs, it was merely a token gesture as there was no way that any household could ever find another housing option that remotely replicated their lifestyle in the mobile home park.

Rents must go up in order to stop re-development

Of course, if mobile home parks are shrinking in number and their lifestyle cannot be replicated, the important issue going forward is to offer solutions to protect them from re-development. Of course, the biggest solution is higher lot rent. Although it’s not a popular topic in today’s politically charged environment, it’s the only actual driver to the basic economics of land use. The remaining mobile home parks in Los Angeles have lot rents that range from $1,000 to $2,500 per month – which is required to keep them as a sensible land use. With the average lot rent only at around $280 per month in the U.S., even economist Charles Becker of Duke University noted that lot rents are at least 50% too low to remain economically competitive. Without higher rents you simply have faster re-development. The only other solution would be rent subsidies by the U.S. government (used aggressively in the apartment industry under the Section 8 program) but Congress has shown little interest in such a program for mobile home parks.

Conclusion

The New York Times has proven to be non-biased in relation to the mobile home park industry. Although the concept of affordable housing can often fall into a politically-charged narrative, the truth is that the reality of economics is non-negotiable and is the key metric of land use.

M.J. Vukovich is one of America’s top loan brokers – a specialist in not only bank debt but also the more desirable CMBS “conduit” and Fannie Mae/Freddie Mac “agency” debt options. In this podcast that M.J. recently participated in, he gives insight into the current debt markets and opportunities. You can see from his level of knowledge that he is right person to be the quarterback on obtaining debt for your mobile home park acquisition or refinancing, which is why we’ve been a client of his for years. To discuss your loan needs with M.J., you can call him directly at 720-758-9227 or email him at [email protected].

Betty is a resident at our property in Carter Lake, Iowa. She is 87 years, and her husband passed away two years ago at the age of 92. She is a pillar of the community, and everyone pitches in to install her annual Christmas decorations because she is unable to install her elaborate lights these days. But her home needed significant work, and we felt it was important that we help her to get these improvements done. So we recently replaced some siding and trim, caulked the exterior, fixed her gutters, sealed her roof, repaired her deck, and painted the entire home. All for free. The end result was spectacular and it’s this type of project that unites the community and creates a positive spirit among all residents. Do you have any homes in your property that could use some extra help? It’s a win/win for the resident, the community, and the owner.

Our staff with Betty in the community clubhouse.

Hard at work.

The end result was well worth the effort.

It drives us crazy that most Americans think mobile home parks have always been about strictly affordability. While certainly that’s one part of the puzzle, the truth is that mobile homes have a colorful past that too few people realize. Case in point is this advertisement from 1962 promoting the Nashua mobile home product. Clearly, there’s no mention of “affordability” in the ad because that had nothing to do with selling mobile homes in 1962. At that time the average mobile home resident had a higher income and educational attainment than the traditional single-family home owner. The year after this advertisement came out, Elvis lived in a mobile home park in the movie “It Happened at the World’s Fair”. While things have changed a lot since 1962, there’s no question that there is still more to the success of mobile home parks than strictly dollars and cents. Despite the negative stigma with some Americans, people just seem to love the product, and it’s become a part of U.S. culture. Even Elvis liked it – he bought a mobile home and lived in it behind Graceland often. In fact, Priscilla Presley later remarked that she enjoyed her time in the mobile home with Elvis much more than in Graceland.

In 2018 we became huge customers of Purchasing Platform – one of their largest. And we suggest any park owner to look at what this new buying service can do in regards to positively impact your community. It’s literally a game-changer.

What is “Purchasing Platform”?

Purchasing Platform is an online GPO (group purchasing organization) and eMarketplace that has been created specifically for the mobile home and mobile home park industries. More than 1,800 MH communities access Purchasing Platform every month to take advantage of their pre-negotiated pricing, single checkout from 40+ vendors, auto expense mapping to their chart of accounts, multi-level workflow approval to provide accountability across their portfolios, etc. They offer 20-30% savings on more than 10 million products and an integrated "Buying Desk" service that acts as a purchasing agent for your community to make sure they always deliver aggregate savings on every order. 

How big do you have to be to use Purchasing Platform? Can you use it with only one property?

The answer is yes – there’s no minimum limit of properties or dollars spent. Some of the largest industry portfolios use them but the majority of their clients own and operate between 1 and 30 mobile home parks. This is not a service that is only available to the largest owners – it’s one that every park owner in the U.S. can utilize.

Why use Purchasing Platform?

In addition to the obvious cost savings on products and services, use of Purchasing Platform drastically reduces the number of trips your manager has to make to retail stores (time spent not managing your property), eliminates the need for expense classification and receipt transcription while also providing valuable oversight to the owner with workflow approval. They also allow members to load their own catalogs to make sure that managers only can order what they want them to.

Summary of benefits

Here are the main reasons that we have become huge users of the Purchasing Platform:

• Easy to use interface. Not hard at all for any manager to master.
• Single checkout from more than 40 of the industry’s largest vendors.
• Huge savings on more than 10 million products.
• Price Match Guarantee: if you can find it lower somewhere else, they’ll match it.
• Create your own custom catalog.
• On-Demand Buying Desk feature gets you immediate support for volume quotes.
• Comprehensive Workflow Approval functionality to keep you in control of all buying.
• Maps out all expenses to your Chart of Accounts.
• Integrates everything seamlessly into your property management software.

You can try Purchasing Platform at no risk for 90 days

Purchasing Platform allows all park owners to try their system for three months with no obligation to continue. That’s how we got started – we gave it a try and liked it. So if these advantage look good to you (which they certainly should) we recommend you contact Purchasing Platform today at 312-622-6552 and [email protected] and get set up on a 90 day trial.

We think you’ll find this to be one of the big improvements in your operation for 2019.

The swimming pool used to have a monopoly as a recreational amenity. It was the sole feature of any mobile home park that offered endless amusement during hot summer months. You either had one or you didn’t – and parks that did featured it distinctively in all marketing materials. However, a few years ago a new water feature came to town. It also offers cool water amusement on a hot summer day, but does it at lower cost both up-front and operationally – plus it’s all-inclusive for kids and adults of all ages and requires no skill at swimming. That new entrant is the “splash pad” and it’s making quite an entrance into the American summer season. We thought it was time (with temperatures over 100 in some parks) to revisit this exciting new opportunity.

Much more reasonably priced

Let’s start off with the cost of a splash pad versus a conventional pool. You can build a respectable splash pad for around $25,000, which is roughly half that of a conventional swimming pool. That’s significant. And you don’t have to build expensive decking and safety fencing. You also have a much more flexible foot print, as each splash pad is basically custom and can fit a number of sizes based on your park’s demands.

Easier to maintain

But even more important is the on-going cost differential, since that pool might be in operation for 50+ years. Swimming pools require a working filtration system (sand or DE), proper chlorination, and continual testing in accordance with the law. You have to maintain a constant water level, post depths, worry about decking condition, clean the pool daily, and provide all kinds of safety gear and instructions. Then, on top of that, you have to worry about the perimeter fencing and gate to make sure that nobody gets injured. By comparison, most splash pads do not have recirculating water (only giant ones do, like water parks) so you don’t have to do any filtration or water testing as it’s just good old fashioned city water coming out of the jets. In addition, there’s no safety concerns, as you can’t drown – all a splash pad is made of is jets of water like a giant garden hose on a stable surface designed for such an application. Your park manager can turn it on in the morning and off in the afternoon. It’s insanely easy and cheap to operate – with the exception of the water bill.

All-inclusive

Anyone can participate in a splash pad. There’s no age limit nor is there any requirement of proficiency in swimming. There is no barrier for those with disabilities. It’s truly a marvel of participatory fairness. Parents can happily sit on a bench and watch the kids play without any worry about their safety. And you can just run through it for a second if you want to cool down without the all-of-nothing commitment of jumping in the pool.

People love them

Splash pads are fun. A lot of fun. What’s the most popular spot at the water park? The bucket that dumps water on the heads of those underneath every few minutes. It always has a giant crowd. Why? People love the excitement of getting sprayed or splashed with water. Pools are boring, all you can do is swim or float. It’s kind of like the difference between a board game and a video game – one is fun but the other is fantastic. In a head-to-head challenge, the splash pad beats the pool.

Have I mentioned that people love them?

A city about 30 minutes south of me recently built a splash pad as an addition to a city park. It’s been so popular that, after just one year, they’ve announced they’re going to build a second one because the crowd is too large. When’s the last time you heard of a city building a second swimming pool due to excess demand? The bottom line is that splash pads are not only cheaper and easier, they’re also preferred by the customers. Also note that many RV parks – our close cousin in real estate – have started replacing their pools with this amenity, which they call a “splashground” to compliment their “campground” .

Conclusion

If you are looking into amenities for your mobile home park – or just getting tired of the cost of your existing pool – you should consider a splash pad. They are one of those rare items that wins in every segment from cost to enjoyment.

In the midst of World War II the U.S. military reached out to the mobile home industry to solve the massive shortage of base housing, and thus began the remarkable relationship between this unlikely duo. So what is the unique bond between the military and mobile home parks?

The biggest buyer of mobile homes in U.S. history

The outbreak of World War II caused many shortages in manpower and materials – and also in base housing. The army grew from roughly 100,000 soldiers to over two million virtually overnight. There was no way that conventional housing could be built fast enough, but there was another option. The military ordered 500,000 mobile homes, which represented the entire production of all the plants in the U.S. plus all existing inventory. It was the largest mobile home order in U.S. history.

The public relations tool that made them desirable

With this giant influx of mobile home housing came an unexpected dividend for the industry: familiarity and acceptance of this new way of living. Many servicemen found they really liked this exotic housing format and had very positive impressions. There’s no doubt that the modern mobile home park would not exist without this early P.R. stunt by the U.S. government. Millions of people who had never heard of a “trailer home” prior to enlisting soon became aficionados of the business model.

The impact of the GI Bill

Following the end of the war, these same servicemen qualified for the GI Bill, which provided free college education to whoever wanted it. Over two million soldiers went to college on this program. And, once again, there was not enough housing to accommodate this surge in demand. So the government turned to those 500,000 mobile home it had purchased for World War II and re-positioned them. If you look at an aerial of almost any college campus in the 1940s and 1950s, you will see mobile home parks surrounding them. Stanford University, for example, had a mobile home park called Manzanita with about 150 mobile homes housing 600 students, located just off the central quad. Once again, mobile homes became a part of the American dream.

The up and coming soldier post-college

Following their positive experiences in mobile homes while in the military and college, these same soldiers sought out this type of housing after graduation. They stayed in mobile home parks while starting their careers. If you look at advertising from this period in the 1950s and 1960s, you’ll see well-dressed men and women in the yards and sports cars in the driveways of the average mobile home park. This would not have been possible without the advance promotion of the U.S. military.

Conclusion

The U.S. military had a win/win relationship with the mobile home industry that lasted for decades. There can be no question that the modern mobile home park would not have been possible without the assistance of the U.S. government.

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].

Moving a mobile home can be a stressful experience. It’s still worth the effort, because every lot you fill in your mobile home park makes you around $30,000 to $50,000 in equity, but we’ve never heard anyone say “boy, moving mobile homes is lots of fun!” Here are some tips on how to have a more successful experience moving homes, based on our own school of hard knocks.

It costs about $5 a mile

Moving mobile homes is never cheap. Figure on $5,000 for the move and set, but it can grow exponentially based on how far you have to move the home. Some movers charge around $5 per mile to get from Point A to Point B. Before you ever buy a new or used mobile home to fill a lot in your park, you’ve got to scope out what the moving cost will be. It may make more sense to hold off and find a home that is located closer.

You may need to be licensed in the city – not just the state -- for delivery and setup

All legal mobile home movers are licensed to do so in the state the home is being delivered to (but check to make sure they are). But that does not always mean they are licensed in the actual city you are bringing the home into. You may need to go and get a local moving or installation permit (or they may have to). Always better safe than sorry on this topic. An irate city inspector can run out and block the move or installation, and that’s a catastrophe that is completely unnecessary. All the city typically wants is a small permit fee to be happy.

Find them on MHA, dealers, google, and other park owners

Finding mobile home movers can almost be an art form in some states – they are few and far between. So cast a big net. You can build a list of mobile home movers from your state’s MHA, home dealers, a Google search, or even other park owners. You would think at $5,000 per move there would be a lot of people in this sector, but the actual process is so risky and nasty that nobody wants to do it in a modern world. Volume of potential movers is the key.

Check the Better Business Bureau for complaints

Just because you found a willing mover does not mean that they’re a good one. In fact, there are some that would beg the question “is anyone watching over these folks?” A good idea is to check the Better Business Bureau report on the mover to see if they have a positive or negative reputation. If nobody has had success with them in the past, it’s a low odds bet you’ll be the first.

Know roughly the regulations on installation

Even though the mover is supposed to be licensed and bonded and fully knowledgeable on the laws of moving and installation, it’s not always the case. You need to also be a quasi-expert to make sure they are not screwing things up. Talk to your state MHA and research the state’s laws on mobile home installation and shut the mover down if he does something that looks questionable until you get a second opinion. The #1 issue is often site preparation: specifically if you need to pour a concrete pad or not. This is all buyer beware stuff, so be an educated consumer.

Pay them nothing in advance

Most good movers get paid on performance. Most bad movers want to get paid in advance. Makes sense right? So if a mover says “I need to get my money up front” you better find someone else unless there’s a really good reason for the request. Once you pre-pay the mover there’s no guarantee he’ll even show up with the home in your lifetime.

Conclusion

Moving mobile homes is a fact of life for most park owners. These tips will help you have more success in this regard. The good news is that most mobile home moves and sets are fast, so this is not like some hobby that can take you months to endure (like remodeling your kitchen) .

U.S. weather is growing more severe. And part of that shift has been extreme flooding – the type that seems impossible on paper, such as 5’ of rain in Texas during Hurricane Harvey, or the enormous rainfall that hit parts of Iowa and Oklahoma just recently. It is more likely than ever before that any mobile home park with flood plain in its boundaries will have rising water at some point in the near future. So what do you do if flooding hits your property?

Stay calm

In any stressful situation, the first requirement is to stay calm. You have to make good, solid decisions, and working from a reactionary platform is never in your best interests. If you have never seen it before, you might want to watch this short video of Sully Sullenberger landing the jet in the Hudson after striking a flock of birds. He remains calm throughout the entire ordeal, and that allows him to make the right decisions and land safely. One way to help you stay calm and in control is to always have a plan for the worst case. You need to think about what would happen in the event of impossibly high water, and be prepared.

Focus on safety

Property can be replaced. Humans can’t. Make sure to head any safety warnings and do not put your manager into harms way. You need to make sure that you are perpetually aware of any action that could cause injury to your manager or residents. Do not try to do any heroic stunt to stop the flooding if it imperils anybody, such as trying to have your manager run out and build an earthen berm with a backhoe that they don’t even know how to use.

Remove what you can if you have time

All RVs should be immediately moved out of harm’s way. Additionally, if you have brought in new or used homes that are not yet set up, get a mobile home mover to relocate these to the highest point of the property.

You will probably have evacuation orders and power shut off

In rising floodwaters, it is common for the city government to order evacuation of those in the path of danger, as well as to shut the power off as a precaution. Do not fight these orders. It is a temporary disruption and is simply designed to minimize damage. Evacuation orders are often lifted within a day or two and the power is turned right back on.

Order dumpsters ahead of the pack, as well as remediation crews

If floodwaters have already hit your property, then you need to act fast to get dumpsters and workers ahead of the pack. Everyone will be needing these services, so you need to line them up immediately. Call to get dumpsters dropped off before the trash company runs out, as well as contact companies that work on water remediation to set up their arrival. Being just a couple days late can result in massive delays.

Get grounds clean up going immediately

One bit of good news in most floods is that they do not leave behind much property damage. Floating debris tends to go back out with the water, so there is not much left on the ground. That which is there can be quickly removed. There may also be mud in the streets, but this is normally not a big deal and once it dries is easily swept up. You may also have some skirting missing, but this can also be fixed without a lot of expense.

Contact insurance agent and take photos to document

If you have flood insurance, you will want to get your insurance agent involved immediately. Let them tell you exactly what to do, as they will be writing the check and have some very particular instructions. Everything that occurs from the flood should be photographed and well documented. Do not touch or correct anything without this archive.

Make an organized action list

Make a complete list of any and all homes affected by the flood. Remember that to damage a mobile home the water must typically be higher than the floor of the home (generally the transom of the front door). Many mobile homes will be sparred from loss because of the simple fact that they are on “stilts” of concrete blocks as part of their natural design. If the water was 18” high, the home is probably fine. If the water gets high enough to impact the insulation under the home, then it will need attention. Make a list of all homes that may have water that hit the floors or insulation so this can be addressed. You can often visualize exactly how high the water went by discoloration on the skirting or exterior wall of the home.

Keep in constant contact with all effected residents

If these homes were occupied, then there are belongings to contend with, as well as disruption to lives and work. You will need to stay in constant contact with these residents to get the path to resolution addressed. Have your manager get the contact numbers for all affected parties, who typically will now be staying at local hotels.

Get everything wet out and into the dumpsters

Of course, the first step in solving a flood issue is to remove everything wet and start the drying process. On homes where the water only rose to the level of the insulation on the bottom of the home, this involves its removal. On homes where water went over the floor, then it will often require removal of all furniture, carpet and padding. These wet items must be thrown in the dumpsters, and then typically fans are installed and turned on high to increase the speed of drying. Additionally, drywall and paneling will need to be removed to stop the potential of mold.

Help show the way for the privately-owned homes

Any park-owned homes are your concern, but you also don’t want the privately-owned home residents to give up and leave. So help instruct them on what to do. Have your workmen act as mentors to show them the correct steps and push them along. Let them utilize your dumpsters. Be a part of the solution on a macro scale.

Get ready for a demand spike

Following most floods, mobile home parks are seen by FEMA as the solution to the housing crisis. All those residents of stick-built homes and apartments fare much worse than mobile homes because their residences are at ground level, not 3’ in the air. FEMA will often rent every lot in your park to bring in FEMA homes to house these people. Additionally, any vacant park-owned homes are suddenly a hot commodity with those who have been displaced. So the initial issues of flooding are soon swapped for a huge spike in demand. That’s another reason you want to move quickly to harness this need.

Conclusion

Flooding is becoming a more common weather disaster. Fortunately, mobile homes fare better than most any other type of housing in these cases. That being said, this list will help give you some pointers on what to do when waters rise.

Virtually every mobile home park needs some type of office. Sometimes it’s because you’ve got a big operation with multiple employees, or maybe because you have to have a physical structure with an address in order to get a dealer’s license to sell homes. Or maybe its because you’ve got a bunch of homes to sell and need a central contact point that’s easy for customers to find. But sometimes your park does not come with an office, as the original owner self-managed and their house didn’t come with the deal, or they owned a couple parks and maintained an office in the other one. That being the case, how can you create a functional – yet inexpensive – office that gets the job done?

The manager’s home

For many parks, the obvious choice is the manager’s personal home inside the park. Whether it’s a singlewide or doublewide, the concept is that the manager meets with the residents in their living room, or sometimes devotes one bedroom as an office space. Although it sound strange, many managers prefer this arrangement, as it allows them to stay home all day and in their familiar surroundings which may include kids and pets. Typically a sign is placed in the yard that says “Office” with possibly a feather flag and you’re in business.

The old laundry building or garage

Many parks have free-standing structures that come with the park purchase, but are abandoned. There were, at one time, laundry buildings or garages to hold parts and supplies. We even had one once that mom & pop had used to store vintage cars that pop restored. These structures can often be made into extremely functional offices. All you have to do is paint, add flooring, turn on the electricity, add a window heat/air, install some furniture and you’re in business. Best of all, many of these structures just happen to be near the front of the property which is the ideal location. Since the majority of these buildings are abandoned laundry structures, they already have water and sewer and installing a working bathroom is not a big deal.

Buy a portable building/shed

If the manager does not want to have the office in their home, and there’s no existing structure to utilize, then another option is to buy and bring in a portable building or shed. You see these being sold along the highway in many markets, and some are really quite functional, with a nice door and windows. We recently installed one in a property and it turned out really nice. To do it up right, you’ll need to accessorize it with tasteful shutters and potentially a bush in an urn on either side of the door. A window heat/air unit is more than ample. You can buy these for around $2,000 on up. They are designed to sit directly on the ground, and do not need foundations (but check your local code) .

Conclusion

Having an office is a necessity for many parks, but requires creative thinking to make it a reality. Fortunately the space requirements are small and you can convert many objects into a suitable office if you explore the options.

How many deals have you seen go down the drain because your attorney stacked up a million roadblocks to even the simplest problems, and then failed to offer any path to solve 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. 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.

When they hear the words “mobile home park” most investors think of the run-down, dirt road trailer park that they drive by on the way to Home Depot. But that has nothing to do with the actual industry of mobile home park investing. The truth is that mobile home parks range from those dirt road nightmares to super-luxury parks in California that rent for $2,500 per month in Newport Beach and Malibu. But there’s no money to be made investing in either of those two extremes. Instead, the sweet spot of mobile home park investing is something in the middle.

Follow the lending

To discover the sweet spot of mobile home park investing, start by analyzing the qualities of mobile home parks that lenders favor. Since virtually all mobile home parks are bought with debt, it is therefore essential that you only buy mobile home parks that are attractive to banks. So what do banks want? They want paved roads, parking pads, homes with “pride of ownership”, good mowing and immaculate entry and common areas.

Lenders want nice high-density “subdivisions” not “trailer parks”

When you add these qualities together you basically get high-density subdivisions – an asset that looks nothing like that stereotypical dirt road trailer park. A place that is strong competition for Class-A apartment complexes and older stick-built homes. A place that the residents can be proud to live in. And an enigma for those who put down “trailer park” residents as “low class” when they actually live at a higher standard than most other Americans in that same earnings group.

Ramp up value creation by buying certain economic attributes

But the true sweet spot in mobile home park investing is when you match the above traits with certain economic attributes. Most mobile home parks (roughly 40,000 of the 44,000 in the U.S.) are still owned by the original mom & pop. Often, these owners have lost interest in the asset years ago and the rents are far below market, the occupancy is lower than it could be, and the costs are out of control. This allows you to buy a great mobile home park that lenders love, at a good price, and with a huge amount of upside. It’s the best of all worlds.

And this is a win/win

Just as lenders prefer these type of properties, so do residents. They are willing to pay much higher rents to live in a nice community over the dirt road trailer park. It’s no different than customers preferring to stay in the new Hyatt Place over the Tiki Motor Court down the street. It’s all about value, and as you make the park nicer, you command higher rents. It’s a win/win for everyone.

Conclusion

Most Americans have the mobile home park business completely wrong – they don’t have a clue. The truth is that the sweet spot of mobile home park ownership is not a dirt road trailer park but a nice place you can be proud to own.