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This issue of the MobileHomeParkStore.com and MHBay.com
Newsletter includes:
Visit us at www.mhps.com or www.mhbay.com In the past 30 days, there have been over: 83 new mobile home parks listed for sale on MobileHomeParkStore.com and at least 17 confirmed sales. We have updated our Affiliate Program with new banners and products. It is FREE to join and make money when you refer people to MobileHomeParkStore.com. It only takes a few minutes to sign up. Find out more at our Mobile Home Park Affiliate Program Introducing our all new Q&A session
every Wednesday at 5:00 Pacific, 6:00 Mtn, 7:00 Central, and 8:00 Eastern.
Do you have any mobile home park related questions? If so, join us every
Wednesday evening. Here is what Carl had to say! Dave and Terri, I have been a mobile home park broker for over 30 years and used to get all my buyers from newspaper ads that were quite expensive. In the last couple of years you have helped me sell several parks and my advertising cost is now 90% less and I attract more calls from listing on your site than I ever thought was possible in my 30 years in the business. Keep up the great work! Carl (June 14, 2007) MHPCollege.com The first and second sessions on Buying a Mobile Home Park and Selling a Mobile Home Park have been completed. All sessions have been recorded and you can listen to them over and over.
Dave - I have read through the
materials and listened to the recorded sessions. The information
that you and Frank have provided is so complete and helpful. I am
sure it will prove to be invaluable as I embark on investing in a mobile
home park. Thanks again for sharing your experiences.
Regards,
Beth
Are you looking to Buy a Mobile Home Park? Are you looking to Sell a Mobile Home Park? Are you needing help to Turnaround your existing Park? If the answer to any of these questions is "YES" or "Maybe" then we are here to help! Find out more about our new Mobile Home Park College Selling your Mobile Home Park: We are still offering the 15 day trial run to SELL your Mobile Home park. No further obligation or strings attached! Find out more here about this special offer! Are you a manufactured home owner or community owner with homes or lots for sale or rent? If so, then you can list your new and used mobile homes for sale or rent and lots for sale or rent for FREE at MHBay.com Our traffic continues to increase so if you are looking to connect to potential residents and sell or rent more homes, then place your FREE listings on MHBay.com.
Q&A with Dave
Questions: Dave, When buying a park with park owned homes, how do you value the park owned homes? Richard Answers: Richard, Thanks for the great question. I have been asked this many times over the years. First of all, if you value the home based on a cap rate as you would for the lots, then you will be overpaying for the home. For example, if you have a home that is renting for $500.00 per month and the lot rent is $200.00 per month. You are really only renting the home for $300.00 per month. To keep the example simple, suppose that you have expenses of $100.00 per month to keep that home rented, repaired, insurance, taxes, etc. You would be netting $200.00 per month on the home and $2,400 per year. If you were valuing the home based on the cap rate approach and were using a cap rate of 10 percent, then you would place a value of $24,000 on the home. If this is a newer doublewide, it may be worth that amount. However, in most cases, the home is worth much less than $24,000. I have two different ways to value the home: 1. I look at that market and see what comparable homes are selling for. I may consult the NADA retail and wholesale guide as well. The key is to find out how much you can sell the home for for cash or on terms. If you can only sell it for $10,000 on terms, then you don't want to pay $24,000 for it. 2. Another way to figure out what the home is worth is to find out how much it would cost to buy a comparable home and have it moved and setup in the community. Being that the home is already in the park does add value to it. Suppose a similar home would cost $10,000 at the park down the road and to have it torn down, moved, and setup in your park it will cost another $3,000. This would be a total of $13,000. So, in this case you would not pay more than $13,000 for the home when you buy the park. The real key is don't just cap the income on the home as you would for the lot rent only portion. Dave Question:
Hello Dave,
We bought your book on MHPs and are looking at a park now. Wanted to
get your opinion if you have time.
We found a park. It has 7 unrented MH spaces, each
individually metered for all utilities.
Apparently, the current owner bid on it in an
auction and didn't expect to win. He lives too far
away and wants to get rid of it. He only wants
35K, with 5K down and he'll finance. We wanted to
buy it, and then turn around and sell each lot/space for
10K, but we called the city zoning and were told that it
could not be subdivided any further. Do we have
any other options that would be worth it? The price is
right for us as beginners in this type of investing.
Space rental only go for $100 to $150 in that area.
Would appreciate any comment you may have.
Thanks,
Natalie O
ps We're really finding you
book helpful.
Answer: Natalie, A GREAT SIGN FOR YOUR MOBILE HOME PARK IS AN INVESTMENT, NOT A COST Most mobile home parks I have bought come with a standard sign design – a 4’ x8’ sheet of plywood with a faded poorly written name on it and no phone number. This must be a popular design because I see it everywhere. There is also the design of metal or wood letters on a brick or masonry wall with some of the letters missing. My favorite was on where some kid had yanked off the letters and then spray painted some replacements so that the sign said proudly “F___ Y__ Estates”. What was equally funny what that the owner cared so little about the sign that he did nothing about it -- I drove by several years later it was still that way. You need to understand that your park sign is extremely important to making money. Your sign is a pretty busy employee:
I would propose that one of your substantial investments in fixing up your mobile home park be to buying and installing a professional quality sign. I would empathetically recommend against signs of wooden construction. Exposed to outdoor conditions, wood just doesn’t work well. It fades cracks and eventually rots. Even sandblasted signs don’t seem to be built for longevity. I prefer signs of metal or plastic construction with vinyl or molded letters – nothing painted. Paint fades and flakes off over time. I always put the name of the park and the address on the sign, and then attach the phone number with two hooks to hang under the sign. I do this so that if you change the phone number you can just change out this panel and not the entire sign. Also, when you sell a park, if needed, you can just detach the phone number and the new owner can attaché his phone number. I recommend that you pick a standard design that you can use at all you mobile home parks. It will really impress you banker, and you only have to come up with your dream design one time and then use it over and over again. I choose a sign design that works well with white vinyl fencing, which I also always use at the entrance. It would be a great touch if you came up with a standard entry design that helped accentuate you attractive sign. Sure, a professional quality sign is expensive – but look at all the benefits. When you go to sell the park, that nice sign and the great first impression it gives the buyer, may make you 100 times what the sign cost. And that doesn’t count all the income that the park derived from impressed drive-thru tenants. Remember, a sign is not a cost – it’s an investment! Frank Rolfe, MHPCollege.com WHAT DO YOU DO WHEN YOUR PARK HAS LESS SKIRTING THAN A MEN’S STORE Nothing is uglier than a mobile home without skirting. Even a brand new, top-of-the-line mobile home with a shingles roof and vinyl siding looks like junk in the absence of nice vinyl skirting to hide all the tie-downs and concrete blocks and pipes. So what do you do when the mobile home park you’ve bought has virtually no skirting on the homes? The first question to ask is what kind of finances do your tenants have? If you are like me, they live pretty much hand to mouth. So what do you do? You don’t have a lot of choices. You can’t afford to kick all of your tenants out, and so threatening to kick them out if they don’t skirt their house is a bad bluff. You also can’t leave the skirts off since it will scare aware new residents and will keep you from getting a good loan or making a good sale down the road. Here’s the solution, send a letter stating that effective immediately every home must have a skirt, but that you will organize to have all of the work done and then bill it to the tenant, broken down into six installments of $________ per month. Then, bid the project against several different contractors and then start the project. But what if you don’t have the capital to install skirting for every home? Forty homes at $1,000 each require $40,000 capital. If you budget is more modest, you will need for the tenant to put in at least the required labor to install the skirts, and then you will need to think creatively. I would be more flexible than to demand only new, vinyl skirting. I have seen great skirting jobs done with metal or fiberglass (see through roof panels for sheds) or even plywood – the important thing is that they paint it to match the house. Offer to donate the materials if they will install and paint it. Even if they are lousy carpenters, anything looks better than no skirting. And what if you have only a little money? Then start out with the most visible houses first or you can just do the skirting on the two sides of the home that are seen when driving though and pass on the rest for now. Those two sides are the front nearest the street (about 14’ to 16’) and the side seen most frequently from the street based on normal traffic flow. Or you can do just the front half of either or both sides. The point is to hide the ugly part of the home from the street, so that it does not turn off prospective tenants, banks or anyone else, while buying you time to complete the project. One important point I can’t emphasize enough is the enormous impact of paint. Even the ugliest skirting in the world, like a hybrid of old pieces of plywood, looks acceptable if it is painted to match the color of the trailer. Sure, new vinyl is your best option. But is it worth the extra cost? In many parks that have high density, you can’t even see 75% of the skirting anyway. The important thing is to get something up fast to block the ugly underside of the mobile home. This one action will make you thousands in immediate re-sale value and new move-ins. Frank Rolfe, MHPCollege.com Tell us what you think!
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Visit us at www.mhps.com or www.mhbay.com Until Next Time! Dave Reynolds |
October 22nd - 24th
Columbus, OH
