This issue of the MobileHomePark

One question we frequently get from individuals and companies that are listing their mobile home park for sale on our site is "How much information should I include in my listing to be posted"?

We have always taken the stance that you can place as little or as much information on the site and will continue to do so. However, based on my experience with selling my own parks on the site I have found that the following formula works the best:

1. Include a description of the park - number of spaces, occupied spaces, monthly rents, acreage, size of spaces, whether the streets are paved or gravel, and type of utilities and who pays what.

2. Include a description of the area - population, major employers, surrounding structures, and other important demographics.

3. Financing and Terms, if any. If there is not owner or assumable financing you may want to talk to some finance companies before listing the park to see what the potential loan and terms may look like for a qualified buyer.

4. Income and Expense Statement - I typically include Projected income based on current occupancy and Actual expenses from the previous year with adjustments for any differences. By including fictitious statements or those that are missing important information, the credibility of the seller will be compromised. If the income and expense statement looks bad, then either don't include it in the listing or else explain why it looks so bad and how it can be improved on.

5. If you do not want your manager or residents to know the park is for sale then for the location make sure that you make it General (like Colorado or Southern California). You are not required to list the park name and address.

6. A description of any park owned homes and notes. If possible I would recommend you separate the income and expenses from the park owned homes out from the lot rent portion.

7. Pictures - that is often the first question you will receive. If you don't have a way to scan these or email them to us to post them in the listing, then you can always snail mail them to us and we will scan them on. Like the saying goes... a picture is worth a thousand words.

As a general rule, the more information you post the better qualified the leads will be that you receive and the less information you post the more inquiries but the less qualified the leads will be.

If you have any other questions feel free to contact us.

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Our $495.00 consulting package is the best investment you'll make this year and it includes a 100% money back guarantee. Let us help you make your park more profitable!

For more information, visit the following link: Mobile Home Park Consulting

Affiliate Program:

Are you interested in selling some of our books and other services on your website or to your customers? If so, we have a generous commission structure and all you need to do is put some simple code on your website or email campaigns and we will do the rest.

Best of all it is FREE to join it only takes a few minutes to sign up.

Find out more at our Mobile Home Park Affiliate Program

Don't forget 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.

Find out more

Terri,

We have sold the park. This site was very helpful. We received dozens of calls and are still receiving calls.

Thank you,

Shelley (September 24, 2007- 8 days after posting)

TERRI,

MANY THANKS TO YOU, DAVE AND DIANE...BUSINESS IS GOOD AND LOTS OF TIMES IT STARTS AT MHP STORE!!

THANKS AGAIN,
BARRY HENSON, EQUITABLE MANAGEMENT COMPANY.
PHONE 770-579-6777 ext 108 (September 18, 2007)

Hello Terri,

Please remove the accepting back up offers from the ad. It appears that this one will close. Thank You Soooooo much for your help. You and your company are great to work with.

Best Regards,

Scott Poush
Owner/Agent
Ed Gilbert & Associates
Realty Company

Phone 870-424-4545
Ext. #240
Cell:870-656-5503
spoush@edgilbert.com (September 8, 2007)

Terri,

Remove 9 Space Park In Texas. Sold After 1 Week!

Carl (September 1, 2007)

Hi Terri,

The Mobile Home Park at 1113 S Central in TIfton, GA has been sold thanks to your website! Can you please mark it as sold and let me know any other info you need.

Thanks, Barbara (September 24, 2007)

MHPCollege.com

This is the most complete series ever done on investing and operating mobile home parks and is now available on 24 CD's! You don't have to spend $1,000.00 or more on airfare, meals, and hotel. We bring the experience into your living room, office, or boring commute.

Find out more about MHPCollege.com

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 about selling your mobile home park!

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:

Dear Dave (From Stella)

1) How much time do (should) you give the seller to accept your offer with the contract before it's void?

In most cases I will give the seller 3-5 days to accept my offer.

2) Who can you contact or learn more about starting individualized the water meters? Can I do that myself and where do I start to educate myself?

First of all you need to contact the State and City to see what the laws are regarding billing back utilities. You want to make sure you are in compliance with the laws or it could open up potential fines and lawsuits.

The next step is to decide on which type of water meters to install and find out who will be responsible for reading these meters. In some cases, if you install the meters up to the city codes they will take over the reading and billing. You may have to use meters sold by the city and they will be more expensive but this is the optimal route to follow as you are now out of the water and sewer business. Another option is to hire a third party to read the meters and send out the billing (Edison Utilities comes to mind).

If the city will not take over the reading and billing (most cases) then you can purchase the meters from many sources. Here is a link to a list of companies that have meters. Mobile Home Park Water Meters. I typically use U.S. Meters at 1-888-651-1130.

You have to decide whether you want meters with or without remote reads. Remote reads allow you to place a little remote connected to the meter on the side of the home and then read the meters from a centralized location. If you buy the meters without the remote reads, you will save money but then have to physically read each meter every month.

Meters without remote reads are around $50.00 and with remote reads are about $80.00. I usually go with the meters without the remote reads not because of the cost savings but because I like to have my manager physically look at each meter every month so that he can see and hear potential water leaks.

One last item is to decide on who will install the meters. I typically use a local plumber or the park handyman (if I trust him and he knows what he is doing). Again, this may vary due to state laws and the options you select. A plumber will charge around $75-$150 per meter.

Thanks,

Dave

Question:

Hi Dave,

I have read through the material and listened to the first couple of seminars. I live in the San Francisco Bay Area. I was hoping to find deals out of state and have them managed on site. I am guessing that if the park does not need to be turned around and has good management in place, it can be run from a distance? Let me know if you think it is a good idea for my first park.

Thank you, Tony

Answers:

Tony,

You are correct in your thinking. If the park is more of a stable park, you can pretty much buy it and run it anywhere. The key is to have a good manager on site and implement a good system of checks and balances. Most of my parks have been out of state and I would not hesitate to recommend following that path.

As a sidenote, people often ask me how often I visit the parks that I own. While each park is different, I would estimate that I (or someone in my office) will visit each park 2-3 times per year. I have had some parks I needed to visit every couple of months but that is not the typical case. If you have a good manager and stay in constant contact via email and phone the manager should be able to run the park while you oversee the manager from a distance.

Thanks,

Dave

Question:

Dave,

As a follow up to the information I have received from MHP College, I just wanted to let you know that the information is great. I have been trying to buy a park now for almost a year and a half. The 70 mobile home park deals book is especially helpful.

Currently I am in a negotiation to purchase a 70 pad park with expandibility. One of this issues I am running into is that the sewage and water treatment plant will need to be replaced in the near future. For a 70 pad park, do you have a ballpark idea of what that costs?

Thanks,

Trent, PA

Answer:

Trent,

Thanks for your comments on our MHPCollege Resources. I appreciate it.

I would estimate that a new sewage plant with engineering and removal of the current one will run in the $100-150k range. I overspent for the one I put in and it cost about $175K for 66 lots.

Thanks,

Dave

Mobile Home Income in Park Valuation

Many mobile home park investors often ask why lenders typically do not use the total cash-flow from a property with park-owned homes. The answer is that the majority of these mobile homes are considered personal property. As lenders are collateralizing their loans with real estate only, any personal property or chattel property is not considered in the value. The lender does not take title to these homes and is not interested in doing so.

Local banks are typically the only option if a park investor would like to apply a value to the chattel park-owned homes and be able to borrow against them. These banks will take into account the income generated from these homes along with pad rents and make a lending decision based on the cash-flow, strength of the investor, and any banking relationship they may have in place.

We have seen a number of deals lately where the park-owned mobile homes are taxed as real estate and permanently affixed to the site(no wheels, axels, hitches removed, and are tied down). In this scenario, we are able to use both the pad rents and the rents on the park-owned homes in the appraisal. We will instruct the appraiser to apply the total rents in the income approach to value and make any adjustments to the sales comparison value as well. As most mobile home park appraisals are driven by the income approach, this can make a significant difference in value.

We recently funded a small mobile home park in Tennessee where the initial value came in at $190,000 based on pad rent only. As these homes were taxed as real estate, the owner removed any existing hitches and we had the appraiser re-value the property. His updated value came back at $340,000 on a $299,000 purchase price. We funded 90% of the purchase price and amortized the loan over 30 years. The CAP rate the appraiser used was 12.50% and the actual CAP rate the investor will be able to achieve was closer to 16%.

One of the first questions I ask of an investor when presented with a property with park-owned homes is whether they are taxed as real estate. (They are almost always permanently affixed and any hitches can be easily removed to meet our requirements.) The investor does not always know the answer to this question and it can sometimes be confusing. With the abundance of information now on the internet, we can usually look up the property on the county’s GIS information in the assessor’s office and see if the tax records are including the mobile homes. If it is not easily understood by the record card, a quick phone call to the assessor’s office will let us know right away. Some states may show the mobile homes broken down with values, but they may be personal property as well. This has been the case in Texas.

CAP rates on parks with a high density of mobile homes tend to run higher than pad-only parks. The investor must deal with the maintenance of these homes and a higher tenant turn-over rate. When we finance at 90% LTV, it is almost always on a property with park-owned homes. The additional cash-flow from these homes off-sets the higher leverage and interest rate. These can be great opportunities for the investor willing to deal with the additional demands of this type of park.

When the park-owned homes are considered personal property and the appraisal is lower than the total purchase price, the seller will typically hold financing on these without affecting our combined loan-to-value. We have closed a great deal of parks with this situation. The investors plan to satisfy the note on the homes from cash-flow or refinancing the park based on an increased value over a five to seven year period.

Gathering as much information up-front on a park will solve a lot of problems down the road. We want to structure financing to meet the needs of our clients and try to be as creative as possible. Parks are a great investment and the demand for low-income housing continues to increase.

Article by Steve Murden, Star Capital - Find out More!

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Until Next Time!

Dave Reynolds
MobileHomeParkStore.com
18923 Highway 65
Cedaredge, CO 81413
PH: 800-950-1364
FX: 970-856-4883