For Sale

Industry Services

Visit us at www.mhps.com

This issue of the MobileHomeParkStore.com and MHBay.com Newsletter includes:

1. Finding and Evaluating Mobile Home Park Investments by Dave Reynolds
    

2. Quick Mobile Home Park Deal Evaluation
    

3. Updates and Other Announcements
    

4. Being Soft on Collections Doesn't Help Anybody by Frank Rolfe
    

5. Questions and Answers with Dave
    

6. Join us in our largest direct mailing ever!
    

7. Tell us what you think and send us your articles!

Finding and Evaluating Mobile Home Park Investments

By Dave Reynolds 

Of all the questions I receive from investors that are looking to purchase a mobile home park there are two questions that are asked most often:

1. How do I find a mobile home park deal that makes sense?
2. How do I place a value on that mobile home park?

These are important questions and there are several ways to find mobile home park investments and even more ways that one can approach evaluation of that investment.  When I first started in the business about 12 years ago, I spent a lot of money driving across the country looking at listings I found in major newspapers and on the internet.  While this allowed me to see a lot of potential deals, it was a big waste of time and money.  Many times I would get in my car and drive 1,000 miles only to find that the park I was looking at was a complete dump, had unrealistic profit and loss projections, or was already under contract by another investor. 

I soon realized that it was worthwhile to do a more thorough analysis before visiting the property.  If it passed the initial analysis, then I would try to get an accepted offer and request detailed financials from the seller.  If it still looked good I would schedule a trip to visit the park.  Before implementing this strategy, I was visiting about ten parks for every one I purchased.  Now, that ratio is more like two-to-one and I am not on the road all the time.

If the mobile home park looks good on paper, get it under contract before spending $1,000.00 in travel and two days to visit it!

In order to find a mobile home park that makes sense financially the most important part is to be able to quickly identify and separate the good deals from the bad.  The only way to acquire this skill is to educate yourself on this business (through books and other resources) and start looking at as many mobile home park offerings as you can.  With the availability of information on the internet you can accomplish this task quickly.  Go to www.mhps.com and other internet websites where you can view over a thousand mobile home parks for sale. 

Whether you are a new or seasoned investor in this asset class I would suggest getting the information on as many properties as you can and then put them side-by-side and analyze each one.  You will get an idea of the capitalization rates, expense ratios, occupancy levels, and rental rates for different markets.  You will find prices all over the place but if you invest the time and effort in evaluating deals, you will start to develop an idea of what to look for in terms of price-per-space, how park-owned homes affect values and other important factors. 

Invest the time in evaluating as many deals as possible and invest the money on properly educating yourself on the business so that you can separate the good deals from the bad and concentrate on those with promise!

So where is the best place to find a mobile home park to buy?  The best answer to this question is that you should try as many logical approaches as possible.  As mentioned above, I would suggest you start by checking out the websites that have thousands of mobile home parks for sale like www.mhps.com and other commercial real estate sites.  There are new parks listed daily on these sites and the best way to utilize these services is to sign up for notification of new properties for sale.  This way you have a better chance of jumping on the good deals before they are available to the general public. 

I have purchased over 50 mobile home parks over the past 12 years and about 15 of those purchases came as a direct result of listings on the internet. 

The next strategy that I would suggest is to start a direct mail campaign to mobile home parks that are in the markets and states that you are interested in.  This has accounted for about 20 of my 50 mobile home park purchases.  If you obtain a good list of addresses, you can target mobile home parks with a certain number of spaces in select markets expressing your interest in purchasing a mobile home park. 

I have experimented with postcards, letters, and even actual purchase contracts and have found that the response is about the same for each of these.  The key has not been in the type of piece but in the frequency of mailing.  I have received many calls from mobile home park owners saying that they have received our numerous mailings over the years and are giving us first shot at the park since they know we are a legitimate company.  I actually had one seller pull out a file included over 25 mailings from us.  In another instance I mailed out 1,000 letters to two states expressing our interest in buying mobile home parks.  I followed this up about 2 weeks later with the same mailing piece (in error) and found that my response rate was about 100% higher from the second mailing.  So the key with direct mail is in getting a good list to mail to and frequency.

There are several other options that I have used with varying degrees of success.  I have listed some of these below.

• Driving through mobile home parks in markets you are interested in and talking with the onsite manager/owner or following up with cold calls or letters to parks that you would be interested in owning.  The advantage of this method is that you see the park before you start any communication with the owner and it will give the owner a level of comfort dealing with someone that made the effort to see the park first.  This works best with an owner that lives onsite and you can meet face-to-face.  I have purchased several parks this way and there are many other parks I still have an open line of communication with the owner that I anticipate purchasing when they are ready to sell..
• Making cold calls to parks in markets I am interested in.  While this works best when the owner answers the phone, it can be very frustrating.  I have been hung up on many times as have my employees.  However, if you don’t mind the frustrations, this is a viable method of finding potential deals.  Besides being hung up on, the biggest frustration I have had is that you often get the response that anything is for sale at the right price (which is usually more than it is worth).
• Another option is to stay in contact with real estate brokers that specialize in the sale of Mobile Home Parks.  The key here is to stay in constant contact with these brokers in order to get a copy of all of their listings as soon as they receive them.  Before they put the listings on the internet they will send out the information to the buyers they know are serious in hopes of making a quick sale.  You want to be on that list so you get first shot at the good listings.  Once you have a relationship with a broker and especially after you successfully close a transaction with them, they will know that you are a real buyer.  I have one broker that I have purchased three parks from and he knows what I am looking for and contacts me anytime he gets something that fits those criteria.
• Along with staying in contact with those brokers that specialize in mobile home parks and commercial real estate, you should contact brokers in those specific markets you are looking to buy parks.  Many times these brokers will not have any idea about the internet sites that can help them sell the parks and otherwise do not understand how to value and market mobile home parks.  While many times their listings will be grossly overpriced you will occasionally find those listings that are priced right or even better… under market. 
• Newspapers (online and offline), trade magazines, local and national MLS services, and other websites. 
• Country tax records, banks, appraisers, movers, dealers, and other industry professionals. 

The key to locating good potential mobile home parks investments is to be diligent in your search and use whatever methods work best for you.  The best deals are usually found by finding those parks that are the least advertised.

So how do I determine what a specific mobile home park is worth?

That will be the subject of next months newsletter.

The first Frank and Dave Show was a success.  You can find out more and sign up for future segments here.  Mobile Home Park Teleconference

Mobile Home Transporters/Movers:

We are in the process of creating our lead system to bring you more customers.  If you want more leads and customers from MobileHomeParkStore.com then email terri@mhps.com for more information.  You don't want to miss out on this as the spots are filling up fast.

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

We listed over 400 new homes on the site in November so far!

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. 

BEING SOFT ON COLLECTIONS DOES NOT HELP ANYBODY

By Frank Rolfe

When I first got in the mobile home park business, I was very inexperienced in collections.  My natural instinct was to be nice to my customers and never offensive.  So when I first encountered customers who would not pay their rent, I did not want to offend them by filing evictions.  Instead I tried phoning them or sending reminder letters.  Time marched on.  After they promised to pay several times and still never did, I realized my methods were not working and that I would need to “toughen up” and change my ways – and I started filing evictions as soon as I could once they had failed to pay on time.

You know what I discovered?  I discovered that this was the best thing for all parties involved.  Here’s why:

      Some people need strong direction.  Just like kids in school, some people need a firmer hand.  Your filing of eviction may be the trigger that the tenant needs every month to pay his rent.

Once you let a tenant get more than one month behind, they are doomed.  I learned early on that most mobile home and trailer park residents have great trouble saving money, or showing a surplus from their paycheck.  If you let them get more than one month back (and one month is pretty bad too) they will never be able to get caught up.  You are actually doing them a disservice if you let them get behind.  They can adjust their spending priorities or borrow from relatives and get current if you get tough early on.  Think of your own mobile home park mortgage.  If you let yourself get three months behind, could you get current overnight?

      Being tough on collections trains all of the tenants on the correct spending priorities.  Those priorities should be their taxes, housing, auto payment, insurance, gasoline, utilities, and then all the other fun stuff like cell phone, beer, etc. Not to sound like there is some great “bettering the world” angle here, but maybe their lives will be better because you taught them this lesson.

It is not fair to the other tenants if their neighbors don’t pay rent but still get to live there for free.  Not only will everyone stop paying eventually when the word gets around, but it is just not morally right.  Being tough on collections, believe it or not, is the only fair way of dealing with the issue.

 If the tenants don’t pay you and you can’t pay your bills then the park will shut down and nobody will have a place to live, or they will have to spend $3,000 moving their trailers to a new mobile home park.

Most everyone flourishes in consistency.  If the tenants know the rules of how things operate, they are better at meeting the rules and feeling secure.  This is true in any enterprise or relationship.  If the tenant knows the rent is due on the first, late on the 5^th, and they get evicted on the 15^th, then they know what to do.  When you make payment plans and are soft one month and tough the next, everyone is confused and unhappy.

It is also important to remember that a tenant who does not pay their rent on time, but does ultimately pay their rent, is your most profitable customer, assuming you have a significant late fee.  You should not become discouraged if many people do not pay on time—you should be enthused!  Those late fees are straight profit.

So don’t be afraid to be tough on collections.  You are really just following the natural order and it will be a win/win solution for everyone!

Q&A with Dave

Question: 

Hi Dave,

Thanks for all the information in your courses.   Your seminars are very helpful and have pointed out several issues that I would not have thought of had I not purchased them.    So, I’m thinking that if I do purchase a park, you’ve probably saved me a few thousand bucks and maybe more.  I have a few questions for you.

Why are you doing this?    If you’re not already a multi-millionaire, I don’t want to be in this business, so I’m really curious. 

I’m seriously considering purchasing a park and having a go at it.  I have the financial ability to do so and I think that it’s a good move.  My dad made a pretty handsome sum in real estate and he told me once that mobile home parks and self storage units were the way to go.   He never did it, but after looking at the numbers, I’m thinking he was a pretty smart guy.

So, what other services do you offer?  There are a number of parks on your site right now that I’m interested in, can you help me get going and what keeps you from buying them from underneath me? 

Regards,

Jim

Answer:

Jim,

You are welcome for the information.  As far as why am I doing this...I initially thought about doing this several years ago but never had the time.  After talking with Frank Rolfe on several occasions, we decided to launch our own educational products.  Frank and I both enjoy teaching and helping others out and making money.  It is not that I/we needed the money but more of a part-time hobby that is really taking off.  I continue to buy parks and just closed on one last month and have two more set to close before year end.

The mobile home park business can be extremely profitable but only if you know what to look for and what to look out for.  There is always some degree of risk and you just have to weigh those risks as you proceed. 

As far as other services, we offer due diligence consulting, park turnaround consulting, and deal review consulting. 

I don't have the time or desire to buy all the good deals out there and many of the parks on the site currently need some negotiation on price to be worthwhile.  There are a several parks that have promise on the site and I have seen more good deals in the last few months than in the last year.  I think things are turning around.

Hope this answers your questions,

Dave


Question: 

Terri,
 
Do you know of any place to get a management contract for use between a park and it's manager?  I am hiring someone that would like a contract.
 
Thank you,
 
Brad

Answer:

Here is a copy of a simple mobile home park manager's contract that I have used.

Mobile Home Park Manager's Agreement

Thanks,

Dave

Question: 

Hi Dave,

I bought your material and have been through it. We have our first park under contract. 79 lots for 1 million. It has 17 park owned which 8 are vacant. There are 15 empty lots. I don't want the expense of maintaining the park owned homes. Should I offer to increase lot rent by 50 for a couple years and tell them they own it or sell it to them for a dollar and have them be responsible for repairs. How do I fill the vacant lots. Should I buy used homes and sell them. Can they be sold, I'm not sure these people can get 15,000 loans. The water and sewer is paid by the park at 30k per year. you said it's about 200-300 to meter it. Should I do it right away or gradual. Also should I lower the lot rent when I submeter. First park Dave I appreciate your advice.

Mike

Answer:

Mike,

Congrats on the first potential park.  As far as the park owned homes and getting them sold, it would make a difference on what they are worth on how I would approach it.  Typically, what I would do is convert them from rental to sales.  I like the idea of increasing the rent on the lots and selling at a discount (whether it is a dollar or $100 for 2 years).  Most people would jump on that if it meant their payment would stay the same or decrease. 

Example:  on a home that is rented at $500 per month and the lot rent for the rest of the park is $200.  If the home is worth $2,500 then I would raise the rent to $250 per month on the lot and then drop the payment to $450 per month with the other $200 going towards the $2,500 value of the home.  After 12 1/2 payments they own the home and just pay the $250 per month. 

At that time, I would just leave the rent at $250 instead of dropping it to what the rest of the lots are paying.  You can go to the rest of the lots at that time and raise there rent to $250 and claim something to the effect that other people are already paying the higher rent.

As far as filling lots, unfortunately right now it is hard to get people to move homes into the park.  You can try ads in the paper, flyers at the dealers, etc but to set the process in motion in most areas, you have to buy new or used homes to fill up the park.  You will probably have to finance these home sales to your buyers unless you can find a local bank that will make the loans (maybe with a guarantee by you). 

On the meters, first check the local and state laws.  I would add the meters as soon as you can as they have a quick payback period.  The last meters I put in in Nebraska cost about $90 and I had a plumber install them for $85 each.  I have paid as little as $125 and as much as $250 in the past but it should be in that range to have them purchased and installed.  Whether or not you should lower the lot rent will depend on where your park is with the market.  If it is at the top of the market then you probably should lower the rent.  You might lower it about 50% of the average anticipated water/sewer bill.  So, if the average bill in the area is $40, you might lower the rent by $20. 

A lot will depend on your goals with the park.  If you want to increase occupancy then devote your time and resources into buying homes to fill lots.  If it is short term cash flow, then I would do the meters first.

Thanks,

Dave

---

 

---

We are in the process of preparing our largest mailing ever to Mobile Home Park Owners nationwide.

We will be mailing to over 40,000 mobile home parks.

To make this mailing beneficial to park owners and other industry professionals we have decided to make this an all encompassing mailing which will not only promote MobileHomeParkStore.com and our Products and Services, but also will benefit those with listings on the site.

This will bring more visitors to the site looking for information. If you have a listing on the site, now would be a good time to make sure that it is up-to-date so you will not miss any inquiries and potential customers.

For the first time ever, we are going to allow other companies and individuals an opportunity to get involved with this massive mailing. Many companies are not able to afford to send such a large mailing on their own when you consider the minimum postage of 41 cents per piece for a standard letter. We are going to make it possible for these companies to get their message out at reduced prices.

We have a couple of different options:

1. Full color brochure or letter inserted in each mailing - 10 cents each for nationwide and 15 cents each for a certain state or states - includes free insertion on the flyer described on option 3 below.

2. Business card inserted in each mailing - 5 cents each for nationwide and 15 cents each for a certain state or states - includes free insertion on the flyer described on option 3 below.

3. In addition, we will be preparing a flyer which will be a directory of industry professionals and products. The cost to be included in this directory which will include up to 100 words describing your company and products will be $500.00 if your company services multiple states or a national market and $150.00 if you company services just one state.

The mailing will go to over 40,000 mobile home parks nationwide and will be sent via First Class Mail.

We will cover the mailing costs and all you need to do is list which states you wish to be included in and send us your mailing pieces.

The mailing will be broken into 2 segments - 20,000 between December 15th and December 20th and the balance of 20,000 between January 15th and January 20th.  The deadline will be December 15th for the first mailing and January 15th for the second mailing.

To view a list of the number of addresses in each state you can visit the following link:

Mobile Home Park National Directory

Who can be included in this mailing? Any individual or company that would like to get their information in front of Park Owners and Manager.

If you have any questions or would like to take part in this mailing please email dave@mhps.com or give Dave or Perry a call at 1-800-950-1364.
 

The Frank & Dave Show - Mobile Home Park Investor TeleConvention
 

The Quick Mobile Home Park Deal Evaluation - New

How to Buy a Mobile Home Park - 7 CD set

How to Sell a Mobile Home Park - 5 CD set

How to Operate a Mobile Home Park - 6 CD set

How to Turnaround a Mobile Home Park - 6 CD set

Mobile Home Park Investing

Learn how to Buy, Sell, and Evaluate a Mobile Home Park!

The Mobile Home Park 10/20 Investment System

The only Proven way to make Big Money in Mobile Home Parks!

Mobile Home Park Owners Guide

Powerful ways to increase profits and reduce expenses for your Mobile Home Park!

Mobile Home Park Consulting

*Due Diligence
*Improve Cash Flow
*MHP Turnaround

FREE CONSULTATION