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Visit us at
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This issue of the MobileHomeParkStore.com and MHBay.com
Newsletter includes:
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The Marketing Contest!!!
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Updates and Other Announcements
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Marketing your Mobile
Home Park, by Dave Reynolds
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Comments
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Questions and Answers with Dave
-
Mobile Home Park
Bootcamp with Frank & Dave
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Tell us what you think and send us your
articles!
The Marketing Contest:
Earlier this month we asked people to
write down their best ideas on marketing. Whether it be to fill up vacant
spaces in your community, sell homes to potential residents, or sell you mobile
home park when it is time to sell.
All the entries are below and we need
you to help vote for the best one.
Just send an email to
contest@mhps.com with the number of the entry that you think is best.
The winner will get a copy of our new
manual on the "30 Days of Due Diligence".
Number 1:
Dave, thank you so much for your articles. I am a MHP owner. I have a pretty
large park with 120 spaces. It currently has 40+ vacant spaces, and I don't
have the cash to fill them.
With that said, I have found that if I can come up with the cash for a home,
(and I have purchased over 30 in 3 1/2 years), I can fill that thing
immediately with a type of lease purchase I have created. I have seen lease
purchases go terribly wrong here, (not personally), in that when you attempt
to evict a non-payer, then the local magistrate may consider there to be
equity in the home, and kick it out of magistrates court, and into master in
equity. This gets pretty ugly here, as you are then labeled a "predatory
lender" and it just goes downhill from there.
What I have done is set up a contract, that the tenant buys for a minimum of
$1500. In this contract, if my home is say 19,900, I run a 5,7, or 10 year
amortization, based on the tenants ability to afford the monthly (lease)
payment, plus lot rent. In this contact, I agree to sell them that home for
whatever that 12th month payoff would be. Hence, their best deal would be to
buy the home in month 1 or 2 of the contact. However, since in SC, a 12
month lease is all that is legal, I tell them that if they honor their lease
payments on time, I will renew that contract on a year to year basis,
reducing the price annually. So, eventually they will own the home, if they
will lease it for enough years to get their purchase option down to 0.
This seems to create a "owner" mentality, even though many have walked away.
I just wish I could afford to fill my park with homes, and then start going
to the tenants who have been in the park for years, and update them to a
newer home. Somedays, I wish I didn't own it, but, I keep looking to the
future. Gene H.
Number 2:
Because water is the most expensive utility I have, I've done two things
that should help. I've written a letter for my manager to distribute to the
tenants saying basically that for every dollar's worth of water they use,
the city charges an extra three more dollars to flush it down the drain.
The sewer cost is a 3x multiple of the actual water use and if they want to
help us keep rents down, keep water use under control, and report any leaks
or running toilets immediately...yakity yak. I have also
put in low flow shower heads. Push button. They're great.
Five bucks apiece at Wal-Mart.
Jim D.
Number 3:
Along with the subject of filling empty lots is
creating additional lots. The property I am
purchasing has an additional eight empty
acres. I wouldn't purchase an MHP just for that purpose, but since
I have it, how do I take advantage of it?
David D.
Number 4:
My daughter swears by Craigslist.... My
Park needs more owners rather than renters, I need more trailers to
rent... But I was surprised about all the postings for Housing
Wanted, etc. On Craigslist....
It's FREE!
Jane T.
Number 5:
Dave- They say word of mouth marketing is the
cheapest and one of the best ways to sell anything. Why not send
out a flyer offering an incentive to present court occupants for
referring 'qualified' prospective park occupants? A couple of
months free rent always looks good.
Ken C.
Number 6:
Dave,
Personally, I think that all too often we take our current
residence (customers) for granted and don't thank them for their
business. These solid customers are the real bread & butter
(CASH) of all businesses.
There are many, many ways of doing this and the methods will
depend on the size of the park(s).
For example:
- Yard of the month award. Nothing
expensive just a little award for them to show the
neighbors
- Park newsletter sent out monthly or
at least quarterly w/ free "in-park" classified ads
- Thank you notes for "little" things
that are not often seen (Clean yard award, etc)
- Cash awards or gift cards as
commission for helping rent out a space or sell a home
- Small fruit baskets or fresh baked
apple pie when a new residence (customer) moves in
- Baby gift for a new born (no matter
if the parents are legal or not)
- An 8 or 10 dollar frozen turkey or
ham for Christmas for all tenants
- A $20 dollar Walmart gift card for
renewing a one year lease.
- Every spring give away bulbs, small
plants and maintenance free shrubbery to plant on their lot
- A park sponsored Bowling Team
A free B-B-Q & watermelon for the 4th of
July for park residents only
None of these things will cost more than few dollars and will
help create a sense of community to the park. When you can get
get neighbors watching out for neighbors, and their children,
then the entire park will begin to jell into it's own little
community where people really want to live.
Dave, I have other ideas but those are enough for the moment.
Lee N
Number 7:
Hi Dave,
In response to the Marketing email, as your student, I would
like to response to that. From what I learned from you and
Frank, if I have a park, the first thing I would do is to invest
in a sign with a nice name and phone number at the entrance of
the park (this sign advertises 24/7 for you). Second, find a
good greeter. Third, have an ad on the local yellow pages.
Fourth, give an incentive to the current tenants to recruit
their friends and relatives. Fifth, have flyers at the local MH
dealers of the park. Sixth, find out who the Lonnie dealers are
and work with them.
As of to market any industry or service, I think the most
important part is to target to the appropriate people/audiences
and have them alter their behaviors to your specific goals.
Even better, those skilled marketers have you thinking it is
your ideas, but it is actually theirs all along.
As for me, I think one of the best marketing tools is word of
mouth. The person's integrity and trustworthiness are worth
gold.
Just some thoughts...maybe you are grading me a "C" for this. :)
Thanks,
Stella
After reading all of
these send an email with your vote to
contest@mhps.com. If you have any thoughts or additions to
this list I will post in the next newsletter. Thanks to all
that participated.
Updates & Other Announcements:
We
are getting closer to moving all of our websites to a new platform.
The web designers have been busy and the new site design should be
online sometime in May. The new site structure will have most
of the same links and same information but will allow you to search
and sort the listings much easier. Also, you will be able to
login and update your listings as often as you like.
Marketing your Mobile Home Park:
By: Dave
Reynolds
When I am
looking to market my mobile home park whether it be to potential residents to
bring their homes in or to sell homes in the park, I believe that the first
contact with the potential customer is key. This first contact may be
via a telephone call to your office, a drive-by by the potential resident, or in
many cases could be a referral from a current resident or some other local
business (chamber of commerce, dealer, broker, etc).
Let's face
it, if you or your manager is rude when they call in, they probably will call
the next park. If they drive in and the roads are in bad shape, the sign
is falling down, or there are dangerous dogs running around, they probably will
turn around and look for the next park. And the same holds true with
referrals from your current customers. If you current customers don't like
living there they will bad mouth you all over town and never refer their friends
and relatives to move in. Continuing on to other local businesses that
would otherwise refer your community to potential residents, you don't stand a
chance if you have a bad reputation.
So I think
the best form of marketing is to build your credibility in your town, keep your
current residents happy, and make sure that those potential customers have a
good first impression whether it be a phone call or a drive-by.
Before
you ever spend one penny on a newspaper ad, a flyer a the local dealer, or some
type of direct mailing to apartment complexes, you should make sure that you
have everything in place to attract good residents once they respond. Here
is my top 5 list of things you need to do first:
-
Focus on
the entrance to the park: A nice sign that says "Welcome to
___________ Mobile Home Community". Also plant some bushes or trees
near the entrance and keep the grass mowed and trimmed nicely.
-
Roads:
Your roads don't have to paved and have curb and gutters, but they do have
to be passable. If there are large potholes, patch them immediately.
If they need graded, grade them. Before a potential resident ever gets
out of the car they will see your entrance and drive on the roads.
Make that a good experience.
-
Park
Office: with the park office you want to make sure that it looks
inviting. I have been to many an office that is not properly marked
with "Welcome" or some other inviting remark. Instead it says
something like, "if your rent is not paid by the 5th it is late" or "take
your excuses somewhere else". Is that any way to greet a potential
resident?
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Park
Office again: I have also been to many parks that as you are walking
up to the office you are greeted by a fence with a dog inside and you have
to decide whether to enter or not. Other times you knock on the door
and then there are 3 dogs scratching at the door waiting to pounce on you.
I don't have a problem with my manager's home being duplicated as the park
office, but I do think they need to take precautions against scaring people
off with their own dogs.
-
General
Appearance of the Community: once the potential resident enters the
park and is satisfied with the entrance and roads, they will encounter the
rest of the park. If the park is a complete disaster with trash, junk,
high grass and weeds, and so on, do you think this will be a good selling
point for potential customers? At least it is not a good selling
point for the customers you are hoping to attract.
Ok, now that
we have the entrance, roads, office, and general look of the community ready for
new residents, what do we do next? Let's suppose that we are talking about
getting new customers to move their home into our park and that we have 25
vacant lots. Now apply one of the best marketing ideas I have ever heard
which goes something like this. Is it better to do ONE thing 25 times to
fill those lots? Or is it better to do TWENTY-FIVE things one time to fill
those lots? I think the latter is the better approach. Maybe in the
past you could just bring a flyer down to the local mobile home dealer and watch
as he fills up the park. This is not going to happen anymore. You
need to to get the flyer down to the dealer, run an ad in the paper, get
referrals from your customers, join the chamber, and generally get the word out
about your mobile home park.
Here is a
list of some of my ideas that should get you started.
-
Flyer to
all Mobile Home Dealers in a 25 mile radius - On the flyer, offer some form
of move in special (free 3 months, lower rent, etc).
-
Join the
Chamber of Commerce - then in all of your flyers and ads you can put that
you are a member of the Chamber - builds credibility.
-
Entrance
Sign - it works for you 24/7 and make sure to put your phone number on it!
-
Sponsor
a Referral Program to your residents - if they refer someone give them a
nice reward (not a $5 discount on the rent).
-
Talk to
local Real Estate Brokers - if they have a customer that can't qualify on a
house, maybe they will send them your way (give them a referral fee as
well).
-
Advertisement in the paper or papers - make your ad different from the rest
of the ads in the paper - not the simple... mobile home lots for rent, call
???. Instead, try something like... Incredibly Large and
Spacious Mobile Home Sites... We will pay you $1,000.00 to help with
moving costs! The first five callers will also get the first 3 months
Rent FREE! - you get the point, make it stand out and make it
enticing.
-
Start a
Community Newsletter and send out the best stories from your newsletter to
the local paper to have published. Most local newspapers have a
community or local section and are always looking for good stories to
publish. Also, if you get the email address from all potential
prospects, you can send them this newsletter every month so when they think
about moving they won't have forgot about you.
-
Signs on
Vacant Lots - put nice signs on your vacant lots with a phone number for
people to call.
-
Banner
signs at entrance - big move in special or discounted rate or we pay you
$1,000 to move your home to our park type of banners around the perimeter on
high traffic areas of the park.
-
Telephone Book - make sure that you have an ad in the phone book as this is
where many of your potential customers will find you. In the ad, you
might want to include something about your move-in specials or direct them
to your website to find out the move-in special of the month.
Finally,
when you are out there doing your marketing, it is important to test what is
working and what is not working. If you run ads in the paper and get no
calls... then stop running that ad and try a different one. If none of
your park residents are referring people to move in, find out way and up the
ante.
3-28-08
Terri: Had the closing at 10:00am this morning. You can mark it SOLD. Thank you
for a great site. Glen
3-21-08
Terri,
The Mobile Home Park is under contract for $8,000,000 and scheduled to close
5/12/08. I don’t know if you include this information on your website or not.
You will be happy to know the buyer saw the listing on mobilehomeparkstore.com.
Allyson
3-13-08
Hi Terri,
Can you please remove our listing from MHPS? We have not closed a sale yet, but
I am still getting a trickle of calls (your site is too effective!). I would
like to limit the amount of people out there who know about the sale. If we need
to re-instate the listing I will let you know, but I
would like to remove it from your site for now.
Thanks!
Jeff
3-11-08
Dave & Frank,
This note will be different than most you probably receive. I just wanted to let
you know that I purchased your cd's and books and found them to be very
informative. So informative that I have decided it is probably not a business I
would enjoy being in. I just wanted to say thank you for saving me from getting
into a business that I would probably kick myself later.
Thank you,
Bob M.
3-4-08 (4 Days After Posting the Ad)
Thank you so much...we have received so many inquiries since you posted our
information. We have a couple of people wanting to present offers...so I think
we should remove the ad for right now and see if any of the people that have
responded so far will buy it. Thanks again for all your help.
Alison I.
3-3-08
Terri,
Please remove our park for sale ad. We sold it using your service!
Thank you,
Danny P.
3-2-08
Hi Terri,
I need to remove my listing from your site for awhile. I actually got an offer
but discovered that I need to take care of a couple things before I re-list it.
Your website is great and I will use it again and again.
Thanks,
Gregory H.
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
Q&A with Dave
Question:
Dave,
Along with the subject of filling
empty lots is creating additional lots. The property I am
purchasing has an additional eight empty
acres. I wouldn't purchase an MHP just for that
purpose, but since I have it, how
do I take advantage of it? So I'm
thinking, how do I calculate the cost of developing
additional infrastructure (roads,
electrical, water, sewer, pads, etc.),
purchase used homes (I've got
your book on this), are bank loans available for all
this, attract lot-renters, and generate revenue quickly
enough to cover new expenses?
Thanks, David D
Answer:
David,
This is a good question. You are correct that you
should not base a park
purchase on the additional acreage in most cases. I
have expanded a few parks
in the past but only if I knew the demand was
there to fill the vacant lots. I would make
sure the current park was
full and I was receiving calls or had access to good
used homes to put in to
the new section to sell.
As to calculating the cost of developing the
additional lots it will depend on the requirements
of the city/county and other things such
as availability of the water/sewer, tap fees.
We had a park in Tyler, TX that had about 40 units.
The water and sewer line
was already there so all we had to do was to dig
trenches to connect to the
existing line. The electric company put in the
meters at no cost to us.
We had to put in roads which cost about
$50,000. We added base
and driveways to each lot
and for about $100,000 we had 30 more lots.
That was about 8 years ago. It would probably have
cost $150-200K in today's
dollars. Since you will already have the park you
will have time to get
estimates from contractors and utility companies to
find out what it
would cost to expand. I would guess it would
be somewhere in the $5,000 to $10,000 per lot range.
As far as getting money for the expansion, I have
had the best luck with
local banks. I am not sure if you could separate
the acreage when you
purchase the park so that it is clear of any
mortgages but that would be
a plus if you are
looking to get a construction loan. You would have
that piece of land to put
up as collateral.
If you can sort the financing out, the key will be
to know your market and
absorption rate. It is tough in most areas of the
country right now but I
have parks that if I could expand I would because I
have a waiting list for
people to get into.
Another thought would be to create land/home
packages on the 8 acres
where you buy the home set it up and sell it as a
land/home. I have done
this and in the right markets you can make $20-40K
per home.
Hope this helps.
Dave
Question:
Hi Dave,
I am new to the commercial mortgage industry and
have several prospective clients that are active in
mobile home parks. As a company, our expertise lies
primarily in multifamily and retail, so mobile home
parks are somewhat new to us. I should mention that
I have found your articles and website very helpful
in preparing me to effectively talk about mobile
home parks as a real estate investment.
One of my potential clients just recently sent me a
refinance deal and I was wondering if you had any
benchmarks for expenses in my underwriting? A lender
I am working with said he has seen total expenses
being around 35% of effective gross income and a
private investor said he uses 18% of gross potential
income.
Any insight you could provide would be very helpful.
Thanks! ANDREW
G
Answer:
Andrew,
The industry average is about 38.5%. However, it
depends alot on who pays utilities, who owns the
streets, age of park, and such. I have had parks in
the 10% to 50% range but would say a good rule of
thumb is 35-40%.
Thanks,
Dave
Question:
Dave:
I am learning a lot from the books and cds.
Right now the biggest issue I am struggling
with is how to convert from rentals to lot
only. This is clearly a "no brainer." My
question, though, is how to value the park
when you know you are going to lose that
rental income and the value (even if it's
small - when you have 50 or a 100 it can add
up) of the homes. You teach the 10/20 rule
and I like it. But if the park is going to
lose income by dropping out of the rental
game, then won't that immediately drop the
NOI and thus hurt your cap rate?
Obviously, related to all of this is how in
the world do you get the owner to discount
the price they have in their mind based on
income from rents and homes and to value the
park more based on lot rent only. It really
is two different businesses. He is selling
one kind of business and I am trying to buy
a totally different business. It seems like
it's my problem and not his. But if he
doesn't come my way some, then I'll never
buy from him.
Thanks, Doug
P
Answer:
Doug,
Thanks for the comments and questions. It has been
my experience that by converting the rental homes to
rent-to-own or notes that you actually increase your
cash flow because you still receive the same income
for 3-5 years but your expenses drop.
As the notes are paid off and you are collecting
just lot rental income, you may receive less gross
income but in most cases (with most of my parks),
this decrease in gross income also creates a
decrease in delinquency and expenses. A lot will
depend on the park you buy and that market but in
most cases they about even out when you consider the
home repairs and constant move-in's and out's. Not
to mention that you will have fewer headaches, you
can pay a manager less to run the park and so on.
There are always exceptions to the rule (when a
market is so hot that people pay on time as they
have nowhere else to go).
As for your next question, here are a couple of
suggestions:
1. Tell him to keep the homes and sell them
separately and reduce the price to you. I have done
this several times.
2. Show him on paper what it
would cost for you to go out and buy homes similar
to the ones in the park (ie: 1990 home down the road
for $10K plus $2K moving and setup equals $12K).
Then ask him why you should pay him more than that
for his homes that are in similar condition.
3. Ask him to sell the park only and then
lease/option the homes from him based on the price
you are able to go out and lease/option the homes to
the residents.
4. If you are going through a lender, explain to him
(or have your lender explain) that there is not a
way to finance homes with the park.
Thanks again,
Dave
Question:
Dave
I just wanted to ask what your experience
has been with mobile home parks during a
recession declared or undeclared. Anything
you would recommend.
Rick
Answer:
Rick,
I haven't really went through a recession as a park
owner and while I would be cautious, I am still
looking to do deals. Personally I am avoiding parks
that have high vacancy or one horse towns. I am
putting zero value on vacant lots right now. The
other type of parks I would be cautious of are those
that have many new homes with residents with large
mortgages or that are upside down on them.
The bread and butter parks (old parks, older homes,
decent markets), I don't think will be affected
nearly as bad as other types of real estate.
Just my two cents worth.
Dave
Mobile Home
Park Bootcamp
Frank and I
are in the process of preparing our first ever
bootcamp for mobile home park owners and investors.
The first
bootcamp will be held in Colorado in June of 2008.
Watch for
more details to come soon.
Tell us what you think!
We'd love to hear what you think of this issue!
We need your articles and press releases - send
your articles to
dave@mhps.com to be included in
upcoming newsletters. Where else can you put your press releases
and articles in front of thousands of people for FREE!
Please send your comments, questions, articles, and
ideas for upcoming issues to us at:
dave@mhps.com
Your feedback matters to us!
Visit us at
www.mhps.com or
www.mhbay.com
Until Next Time!
Dave Reynolds
MobileHomeParkStore.com
18923 Highway 65
Cedaredge, CO 81413
PH: 800-950-1364
FX: 970-856-4883
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