Encouraging Signs From a Younger Demographic By Frank Rolfe

The other day I was driving through one of our communities in Illinois and I noticed a nicely dressed young couple on the deck of a new Clayton home we had brought in. I’m
seeing more and more of that these days, and it’s great news for the industry, as we seem to be attracting a more upscale, youthful crowd all of a sudden. Is this a fad or a permanent trend?

Attraction to smaller living spaces

It’s no surprise to anyone who watches the “Tiny Homes” show on HGTV that young people are willing to live in spaces much smaller than other age groups. Some say that Millennials are the next “Greatest Generation” and, if that’s true, then they are
definitely on the right path regarding housing expectations. Of course, manufactured homes are perfect for those who are seeking small square footage in a detached dwelling. Unlike Baby Boomers – who often have bathrooms as big as some
manufactured homes – Millennials are not that in tune with the concept that bigger is better.

Focus on relationships

About a year ago I was given a private tour of Airstream Village, the manufactured home community that was built by Tony Hsieh, the billionaire founder of Zappos.com. He chose to live in this property over a penthouse condo he owned nearby. The
attraction was the concept of living shoulder-to-shoulder with a group of about 60 people in a very confined environment. All of the units in Airstream Village are either tiny homes or Airstream travel trailers – with no unit over 30’ in length. There’s a giant stage in the middle, as well as a converted cargo container structure for a business center and another for a laundry. So why did he want to live like that? The answer is that Millennials are huge believers in the power of relationships. Studies have shown that relationships are one of the top goals of this younger crowd both in business and their personal life. Manufactured home communities are perfect for this goal of building relationships, as the social interaction of residents is well known (just look at Time magazine’s article “The Home of the Future” for their take on this).

More respectful of their budget

Millennials seem to be much better at keeping their expenses in check that other age sectors (the reverse of Baby Boomers). Since they value relationships over materialism, they don’t need a lot of stuff to be happy. In this manner, manufactured homes offer one of the least expensive methods of having a detached dwelling with privacy and a yard. And millennials are huge into getting good deals, as they were born of the internet
shopping age where everything is a commodity and seeking the lowest price becomes a sport. With most manufactured homes costing around $1,000 per month less than a traditional apartment, the price attraction for Millennials is huge.

Everything old is new again

Everything in life seems to cycle over time from hot to cold and back again. Furniture from the 1950’s (“Mid-Century Modern”) is extremely collectible and valued by young people today because it’s different and interesting to them. And manufactured homes are also a big part of 1950s and 1960s culture which, frankly, makes them “cool” again. If you never had any prior exposure to our product’s design, you would find it unusual and intriguing – kind of like the first time you see “Viva Las Vegas” or a film in which Elvis lives in a “trailer park”. Every decade has its time to shine in this perpetual design circle of life, and the current era is the time of the manufactured home. Up to bat next,
I imagine, is a return to appreciation of the ranch house.

Lower negative stigma

Let’s be honest, our industry has a really bad stigma. There’s no denying this. The good news is that the Millennials missed out on all the television and movie programming that built that stereotype. “8-Mile”, “Trailer Park Boys” and other offerings were produced either before the Millennials were born or when they were in kindergarten. As a result, they do not harbor the same negative thoughts that other age groups do. This allows
Millennials to give our product an unbiased, fresh perspective.

RVs are leading the way

One of the main reasons that Millennials are attracted to the manufactured housing product is because of the extremely positive marketing and efforts of our cousin, the recreational vehicle industry. Just as we have done such a lousy job of putting our best foot forward with American consumers, the RV industry has hit home run after home run. Their sales are the highest in U.S. history, each and every year! They have created the perfect blend of product design and price point, and then coupled that with one of the best public relations efforts I’ve ever seen. I see the “Go RVing” in many of America’s most upscale publications such as Town & Country magazine, and then on TV during such events as the X-Games. They’ve snuck RVs into everything from the Neiman’s catalogue to Hot Wheels. And, in so doing, our close relative has opened the
door to a higher opinion of our product. It should be noted that young people are the second strongest segment buying RVs behind Baby Boomers.

Conclusion

I expect Millennials to be a significant part of the manufactured home community business going forward. Our product matches well with their goals and lifestyle choices. It’s affordable and “cool”. But let’s all try to be more like the RV industry in promoting to this age group – this is our chance to finally put the negative stigma to rest.

Calculating Repair and Maintenance on a Manufactured Home Community By Dave Reynolds

Of all the expense categories to get a handle on when buying or operating a manufactured home community, perhaps the hardest is “repair and maintenance”.
In over twenty years of pouring over budgets for various properties, I’ve discovered many facts and assumptions that I use today when tackling this difficult calculation.

Inaccuracy of seller data

Seller numbers on repair and maintenance are notoriously wrong. They either don’t even report these costs (as they often do the labor themselves) or they do so incorrectly. Let’s take, for example, a repair to the main water line. If you called
a normal plumber to come out and fix it, the bill would be $1,500. But the mom & pop seller used their own back-hoe to dig the hole and then bought some parts for $20 and installed the patch (even though the repair is not done correctly) and, as a result, the repair cost $20 on the owner’s books. Is that accurate? Only if your intention is to keep on fixing leaks that way yourself, and you value your own time at zero.

Too many variables

And then what happens when the patch fails and the water is leaking again two weeks later? Should you count that as a real additional repair cost, or is that still part of the original problem? And then what if the backhoe breaks while your digging it and costs $3,000 to fix? As you can see, there are many variables that make trusting mom & pop’s numbers somewhat risky. And, unlike the water, sewer, electrical, insurance and every other line item cost on the budget, the repair and maintenance number has no source for the information but the seller.

Capital expense vs. repair cost

Another problem is that many sellers get confused on the accounting issue of “capitalizing” vs. “expensing” the cost. A “capitalized” cost is one that is based on adding permanent value (like pouring a new concrete pad for a home to sit on)
and a repair “expense” is one that is just a one-time cost to keep something working. “Capitalized” costs go on your General Ledger as an asset which can be depreciated, while an expense goes on your profit and loss statement. I’ve seen sellers capitalize repair expenses and vice-versa. I’ve even seen sellers buy new cars and put them in as repair costs. These are huge issues when trying to provide accurate estimates.

Using an estimate for “older” properties

So if it’s nearly impossible to track down the real repair costs for most properties, how do you budget going forward? I have found the answer to be using a “plug” number that is reflective of past experiences. The industry “plug” number for repair on older properties is $100 to $175 per lot per year. In a 100-space property, that would equate to $10,000 to $17,500.  Is that 100% accurate? No, it’s a best guess. It may be that your property only has $6,000 in repairs that first year, and then $14,000 in year two, so my general experience has been that it’s pretty darn close. And what is an “older property”? That would be one that has older utility lines, such as galvanized metal water lines and clay-tile sewer line construction.

An estimate for “newer” properties

The industry defines “newer” properties as ones that have modern PVC water and sewer lines. And on these properties most operators use a “plug” number of $50 to $100 per year per lot. The reason that it is substantially lower is that PVC garners only a fraction of the water line leaks and sewer blockages/cave-ins as the communities with the older lines. That being said, you are still going to have many of the same issues as the older communities – people driving over water risers on vacant lots and cooking with lots of grease that blocks the lines and requires roto-rooter. While the repair costs may be lower, they are never going to go completely away regardless of how your property is constructed.

Being patient

Most manufactured home communities we buy have been around for over a half-century and will be here for centuries to come. Repair costs go up and down and you have to see your performance over a long timeline. Just because your older community has only $2,000 in repairs for the first two years, don’t mark your budget down to $2,000 for year three, as that year you might be at $20,000. It’s all in normalizing numbers over the long term, and you may need ten years of operations to truly see what this property’s repair numbers should be. If you use my “plug” numbers, don’t mistake being lucky for having uniquely low repair issues. Give it time.

Conclusion

Calculating proper repair and maintenance expense estimates requires a leap of faith, as you really can’t take past performance, as reported from mom & pop, as accurate.
Consider using a “plug” number based on past experience, and you’ll be miles ahead in formulating an accurate budget

 

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

Why Cap Rates Can Sometimes Be Misleading By Dave Reynolds

Cap rates are the generally accepted method of comparing different properties and sorting piles of listings into the “make offer” and “don’t bother to make offer” stacks. But cap rates can be misleading in some cases – especially when you are buying properties from non-professional owners who have not been operating theproperty to its full potential.

Going-in cap rates are often based on flawed operating numbers

You would typically expect a seller to maximize net income before placing a property on the market — but that’s not always the case. Often the seller has failed to perform market rent analysis annually, and has set their rent at low levels that are not warranted. They may also have piles of vacant community owned homes as the result of a general lack of marketing effort or willingness to renovate them. And in some cases the property labors under the weight of expenses that could be reduced substantially with no ill effect on the property or its operation.

Many properties offer significant rent increases or utility bill backs in the near term
If target properties are not being operated correctly, then the near-term performance is subject to immediate improvement if you simply fix what’s broken. Typically, that is a combination of raising rents, making residents responsible for their own utility costs, filling vacant community-owned homes, and cutting unnecessary costs. Some of these changes can be staggering in net effect. We purchased a property in Austin that had $250 lot rents in a $500 market. We acquired a property that was burning $5,000 per month in water leaks. These items can boost your cap rate up two to four points
within 90 days of purchase – and take that 5% cap rate to a 8% cap rate as a result.

But be careful when you include factors you don’t control

Raising rents, metering utilities, filling homes and cutting costs are very achievable as there is nothing to hamper you from successful completion. These are completely within
your control, assuming there are no laws or ordinances to preclude them. However, not all methods to increase net income are as simple. Filling lots can be capital intensive and you have to really understand your potential customer base and fine tune to get the right fit, which can be time intensive – so you would not want to make any wild assumptions on the speed in which you can fill vacant spaces and the impact on cap rate. Similarly, filling RV lots in some markets requires getting just the right marketing effort in position, and you can never predict how long it will take, or if it will work at all.

And don’t make assumptions that are not based on scientific fact

If you do the lot rent comps in a market and find that $240 per month is the standard rent, then don’t use the assumption that you can raise your rent to $300 day one. If it will take you two weeks per vacant home to renovate, show it and sell it, then don’t assume you can knock out six in two weeks. Remember that you cannot alter the facts to meet your own goals. Being conservative in your estimates is always prudent and will save you from embarrassment when your performance misses your estimates. Try to be a scientist in a white lab coat when it comes to planning your budgets on how you will turn the property around and do not let emotion play any part.

Case study: a recent Texas acquisition

We recently purchased a property in Texas that is a good illustration of how the seller’s cap rate can often be deceiving. The property is 94% occupied in a metro of nearly
7,000,000 people, where the median home price is a healthy $150,000+ and the three-bedroom apartment rent is nearly $1,300 per month. The market lot rent is $400 per month net of utilities. Despite these facts, the seller’s lot rent is currently $325 per month including all utilities, which yields a going in cap rate of roughly 8%. While that’s not bad by itself, installing sub-meters and making the residents pay for their own utilities (which is the norm in this market) increases the cap rate to around 10% — and that can be accomplished in roughly 120 days. In the following two to three years, the
lot rent can be increased to the market norm of $400 per month, which yields a 12% cap rate. So in two steps, fully within our control and supported by scientific market data, we can increase the cap rate from 8% to 12%, and the deal goes from being good to spectacular.

Conclusion
Sellers mean well, but their estimate of potential net income is often far off the mark when professional property management skills are employed. Always make sure to
review the seller’s assumptions that support their announced cap rate, as there is frequently room to increase net income substantially. It would be a shame to miss out on a great deal  just because the seller’s cap rate appears unappealing, when actually you can push that cap rate way above your normal buying threshold!

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

 

The Importance of Population Size in Market Selection

One of the most important elements of any manufactured home community is location. On the micro level that includes the surrounding neighborhood and such items as the proximity to schools and shopping. But on a macro scale, one of the most important components is the physical size of the metro market. Selecting the right metro market is an essential step in ensuring that your manufactured home community acquisition is a success.

Understanding how a “metropolitan statistical area” is derived
Webster’s defines a metropolitan area as “a region consisting of a densely populated urban core and its less-populated surrounding territories, sharing industry, infrastructure, and housing”. However, these areas are not subject to speculation.
MSAs are defined by the Office of Management and Budget (OMB) of the U.S. Government and used by the Census Bureau and other federal government agencies for statistical purposes. Since you have no input in what the metro area of a property is, you must make sure that you get the correct information. One of the best sources of the metro area for any zip code is www.bestplaces.net.

Making sense of how a large metro differs from a smaller metro
In my 20+ years of experience in this industry – buying and selling over 300 properties – I have learned that there is relatively little performance difference in a metro area of
100,000 and a metro of 1,000,000+. If you look at the map of any large metro, you will see that it is basically formed from abutting smaller metros. Dallas, for example, hits a metro population of over 7,000,000 by adding in many cities of 100,000 or so, such as Grand Prairie, Arlington, Plano, Allen,etc. Basically, once you exceed 100,000 in metro population, it’s overkill. In a metro of 100,000 or so, you will have a very strong Chamber of Commerce, a very capable City Hall, solid infrastructure with reliable water and sewer, a dependable school district, every big box retailer and franchise, and adiverse blend of employers – everything you need for a successful acquisition.

Housing dynamics and employment sectors are more important than sheer size

I would much prefer a smaller metro with a median home price of $160,000 and an average three-bedroom apartment rent of $1,200 per month to a much larger metro with half those housing stats. Since we are all in the affordable housing business, you have to have high prices to even need affordable housing. High housing prices makes your phone ring off the hook and customer retention rates extremely favorable. Another key driver is the construction of the economy. We  have found that the most important employment sectors in any metro area are 1) education 2) healthcare and 3)
government. Markets that have high levels of these types of employment are what we call “recession-resistant” since you can’t really make staff reductions in these sectors regardless of the direction of the national economy. For example, we have a high level of holdings in Champaign-Urbana, Illinois. Even when the U.S. hit the Great Recession in 2007, this market had low unemployment thanks to the fact that it’s the home of the giant University of Illinois, as well as related healthcare centers. While Champaign-Urbana is not a giant metro – 238,984 in total metro population – I would stack it up against any metro ten times larger in terms of a successful market for manufactured housing.

An example of a small metro being more desirable than a large one

Let’s look at two different metro areas: Durango, Colorado and Jackson, Mississippi. Durango has a metro population of 54,688, and Jackson has a metro of 578,777 – over ten times larger. Durango has a median home price of $341,200, a three-bedroom apartment rent of $1,453 per month, and an unemployment rate of 3.6%. Meanwhile, Jackson has a median home price of $131,700, a three-bedroom apartment rent of $1,029, and an unemployment rate of 5.8%. Despite the fact that Jackson is the State Capital of Mississippi, I would still choose Durango any day over Jackson. The moral is that size isn’t everything when it comes to successful metro areas to buy manufactured home communities in. It’s one piece of the puzzle – an important one for sure – but by no means the sole ingredient to success.

Conclusion

Understanding metro areas is an important part of any manufactured home community buyer’s arsenal of analytics.  It’s very hard to do well unless you can select good metro
areas that can deliver the type of environments in which manufactured home communities flourish.

 

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

Why I’d Rather Own a Property in Nebraska Than One in Nevada

There seems to be confusion on what makes for a good manufactured home community market. Investors who migrate in from the apartment and retail backgrounds
are focused on sexy regions that have high levels of population growth and flashy run-ups in housing prices (typically followed by an equally impressive collapse). Personally, I’d much rather own a manufactured home community in Lincoln, Nebraska than
Las Vegas, Nevada. Why? For a number of reasons.

Affordable housing supply vs. demand
A recent article in the Washington Post focused on the fact that the demand in Nebraska for affordable housing is so large that employers are unable to hire workers because they can’t find suitable housing https://www.washingtonpost.
com/news/wonk/wp/2018/06/06/we-try-to-solve-the-greatnebraska-mobile-home-mystery/?noredirect=on&utm_term=.4e6c0519df1f . While Nevada also shares a need for affordable housing, it’s no where near that hot. The housing vacancy rate, according to BestPlaces.net. is 5% in Lincoln but 14.33% in Las Vegas. That means that Lincoln housing has 70% less vacancy, and that means demand far exceeds supply compared to Las Vegas. This one statistic alone would make me favor Lincoln over Las Vegas. But there’s still much more.

Steady economy
Turn to the unemployment rate section of BestPlaces.net. The unemployment rate in Lincoln is 3% while Las Vegas is 7.2%. That’s a 100% difference. Why is Lincoln so much stronger economically? It’s the way that the economy is constructed (and this is true of virtually all parts of Nebraska). The top ten employers in Lincoln are 1) State of Nebraska 2) public school system 3) University of Nebraska 4) Bryan Health 5) the
Federal Government 6) City of Lincoln 7) St. Elizabeth Hospital 8) Burlington Northern Railroad 9) Madonna Hospital and 10) Duncan Aviation. This exactly fits with our ideal employment base, with the majority of jobs coming from the recession-resistant
industries of government, education and healthcare. Meanwhile, Las Vegas is built around tourism and gambling, which collapse at every recession. While the shows are better in Vegas than Lincoln, the folks in Nebraska are better suited to pay for the tickets.

Few peaks equal few valleys
There is no question that median home prices in Las Vegas are higher than Lincoln. The Las Vegas median is $201,000 and the Lincoln median is $154,200. And I would be the first to bet that Las Vegas homes will hit $300,000 before Lincoln ever will, But I also remember when, during the Great Recession, those same home prices fell by 50% in Vegas while they didn’t budge much in Lincoln. Just as a rocket plunges back to earth after liftoff, I prefer markets that are known for stability over fireworks.

Less Competition
Although I love watching a close NBA finals, I don’t appreciate competition in my business. Very few people ever think about investing in Lincoln, while few people don’t think about Las Vegas. One of the key reasons that Las Vegas has insanely high levels of competition is simple geography: Nevada is very near to California, which is where more real estate investors come from than any other state. At the same time, Nebraska is thought of as only having one investor: Warren Buffett. The cap rates are much lower in Las Vegas as a result – around 20%+ lower than in Lincoln. This translates to much
higher deal prices in the land of the Las Vegas strip.

More stable residents
And let’s not forget one of the big differences between manufactured home communities in Lincoln versus those of Las Vegas. We’ve owned both, and the residents are much
more transient in nature in Las Vegas. There are many possible causes for this. Lincoln is all about steady jobs in government, education, healthcare and basic industries like agriculture and manufacturing. In Las Vegas, on the other hand, here’s the list of top ten employers 1) MGM Resorts with 54,250 2) Caesar’s with 27,860 3) Station Casinos with 13,000 4) Wynn with 11,729 5) Boyd Gaming with 9,350 6) Sands Casino with 8,630 7) Walmart with 6,475 8) Cosmopolitan with 5,330 9) Valley Health System with 5,267 and 10) Supervalu with 4,024. That means that the Las Vegas economy is all about nothing more than tourism and gaming. Since the longevity of our customers is the hallmark of low operating costs and high levels of pride-of-ownership, then Lincoln beats Las Vegas on this point hands-down.

Conclusion
While it may seem odd to many, I would much prefer to own a manufactured home community in Lincoln, Nebraska over one in Las Vegas, Nevada. The market and residents are more stable, and the law of supply and demand is much more in your favor. While Rod Stewart may never do a show there, you can more than afford to buy a Vegas weekend from your higher Lincoln profits.

 

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

 

Thoughts on Mandatory Market Population Levels

In over 20 years of buying and operating manufactured home communities, I’ve been able to determine some important points on market selection. And one of the big ones is the necessity and complexity of proper population levels. Here
are my fndings.

Quantity
While giant markets sound great, the truth is that all you have to hit is around 100,000 population to have it all: an active Chamber of Commerce, a robust jobs market, big box retail, every franchise known to man, and plenty of demand for affordable housing. If you really think about it, those huge populations of 1,000,0000 and more are really nothing more than a bunch of 100,000 communities that abut. So while big
markets may sound exciting, they are completely unnecessary.

What happens as you get smaller
As markets decline in size lower than 100,000, certain things change. It’s similar to what happens with aircraft. Big planes have multiple back-up systems in the event of a problem. Engine goes out? No problem, they can keep flying on the other two. But smaller markets are like private airplanes. They can still fly fine but they have more limited defenses against problems. So you have to be more careful about markets as
size declines. That doesn’t mean that you can’t do great in a market of 25,000 – only that you have to be more careful in your selection.

Quality
Market size is not everything. There is also the issue of the “quality” of the market. A smaller market in Colorado, statistically, is infinitely better than a larger market in
Mississippi. It all revolves around the science of the housing market itself. In a Colorado market with median home prices of $300,000, the demand for affordable housing – and the potential for higher rents – is infinitely higher than a market in Louisiana where the median home price is $60,000. That’s why we have invested in so many smaller markets where there are high home prices.

Positive and negative growth observations
Don’t be overly swayed by past and future rates of population increase or decline. There is an unusual phenomenon in the U.S.: in many markets there is very little population growth for the simple reason that there are few children being born.
While this is extremely important in many industries, such as the restaurant trade where their revenue is based on total number of meals served, out industry is more reliant on filled housing units, not on how many people are in each home. We get the same lot rent whether the home as five residents or one. Watch for vacant housing rates that are in-line or lower than the U.S. average of 12.45% as shown on Bestplaces.net.

The example of a cup with a hole in it
One reason that many investors from the apartment and selfstorage industries panic around smaller markets is that they have been trained to fear markets in which the population is not growing at enormous rates. That’s why they congregate in the Southwest, where high birth rates give rise to high levels of population growth. But here’s the problem with that concept.  You can’t build any new manufactured home communities.  So you don’t have to have a constant rise in population to keep the existing ones full. With apartments and self-storage, there is a never-ending supply of new developments opening constantly, and you have to have enough new people coming on-line to have a prayer of occupying all of the new product and old product. It’s like a cup with a hole in the bottom, and if you don’t have the tap on full blast, there’s no way to get a drink. But when supply is shut down – as it is in our industry – there’s no hole in the bottom and you can fourish with zero new entrants into the market. It’s kind of like Warren Buffett’s concept of a “moat” on steroids.

Conclusion
I am very comfortable with smaller markets, and not that impressed with giant ones. There is more to great markets than sheer numbers alone. That being said, you have to do terrific due diligence on any market to make sure it has the raw material you need to succeed. But manufactured home communities can thrive in markets that apartments and selfstorage would fail miserably in, so keep an open mind and stick with science and not urban legend.

 

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

STAR gives local mobile home communities an upgrade.

Riding the current trend1 and touting the tagline, “Improving neighborhoods one house at a time,” Second Time Around Realty Inc. (STAR)2 has brought its proven methodology for breathing life into neglected and under-served communities into central Wisconsin’s mobile and manufactured home communities (MHC).

 “We’re on a mission!” says Mark Roeker, the managing partner and creative genius behind STAR. “We believe that everyone deserves a peaceful, safe and well-maintained home at an affordable cost. That’s what a manufactured home and these communities are all about.”

Handling the demands of an entire community, however, requires skills and abilities beyond those of managing the single-family homes and duplexes that STAR has been overseeing in Milwaukee for nearly a decade.  For example, after acquiring Sunshine Estates (now Maizefield MHC)3 outside of Mosinee, WI in early 2017, an immediate cleanup was needed to remove 17 dumpsters of household waste, over 500 used tires and 30 overgrown trees. Other challenges involved working with a variety of contractors to repave roads, renovate eight homes and install a state-of-the-art water filtration system4 for the community before the bitter cold of winter set in. What couldn’t be foreseen was the existing underground plumbing system for the park going down that winter. When that happened, STAR employees and contractors responded quickly to find solutions and provide advanced levels of customer service to the residents. Managing the repair process included negotiating partnerships with various businesses as well as the alignment of the local municipality, the Fire Department, the WI Department of Safety Services and also the WI Department of Natural Resources.5 Completing the repairs at Maizefield MHC quickly, correctly and for the long-term benefit of its residents has led to a safe and consistent level of water quality unlike the community has ever experienced. It has also earned STAR praise and appreciation from several of its longstanding tenants6 and the agencies involved.

Maizefield MHC is one of several communities that STAR manages.  Others are located near Plover, Wisconsin Rapids, Chilton and Marquette. Each community is undergoing renovations of its own to bring it up to STAR standards. Lyndsey Wilson, Tenant Relations Manager for the MHC Department, says “Our communities are being designed as a perfect choice for budget-conscious individuals, or families, that want a fresh start or an opportunity to build credit. They’re also great for retirees living on a fixed income.”

Navigating the complex demands of mobile and manufactured home communities to encourage and promote a sense of safety, privacy, community and ownership is not easy. Second Time Around Realty Inc. is demonstrating that they are in it for the long-haul and this makes them a welcome addition to the Central Wisconsin area.

  1. https://www.realtor.com/news/trends/mobile-homes-next-prefab-affordablhousing-trend/

         http://time.com/4710619/the-home-of-the-future/

  1. https://www.starpropertymgmt.com/
  2. Website – http://maizefield-mhc.com/
  3. Video – https://www.dropbox.com/s/dwx0xybxfmwha5g/Maizefield%20Advertising.mp4?dl=0
  1. http://waterpurification.pentair.com/en-US/product/fleck/2510/

US Water – https://www.uswater.com/

  1. Joe’s Home Improvement

France Sales and Service – http://www.francesalesandservice.com/

PGA, Inc. – https://www.pgainc.net/

Ferguson – http://www.fergusonbrothersexcavating.com/

Town of Knowlton Fire Department, Tim Meiser

City of Mosinee, Mosinee High School

Menard’s

WI Department of Natural Resources – https://dnr.wi.gov/about/divisions/EM/

  1. Testimonials – http://maizefield-mhc.com/for-rent

 

Article Author: David Bertnick

Company Contact: Mark Roeker

 

Second Time Around Realty Inc.

3121 W WISCONSIN AVE STE 3

MILWAUKEE WI 53208

(414) 539-6255 Office

(414) 755-0792 Facsimile

info@starpropertymgmt.com

 

STAR’s Mission Statement

At Second Time Around Realty Inc. we are proud to work as a team to achieve a return on investment for our partners by providing quality residences for our tenants at a fair price while improving neighborhoods, being leaders in the housing / rental industry, and being responsive to the needs of the community.

Which Alternative Property Sectors Hold the Most Promise for Investors?

In the first quarter of 2018, the manufactured housing, self-storage and industrial sectors were the stars of the REIT show, as real estate investment firm PGIM Real Estate noted in a market review.

NREI: What’s behind the strong performance of the manufactured housing sector, and what do you think will happen with manufactured housing REITs going forward?

Marc Halle: It’s a really great sector and has been in the public markets for 20-plus years. Over the past few years, it’s really become more institutionally acceptable. These are just cash cows that tend to be recession-resilient; they’ve got bond-like income with good growth. It’s not been institutionally acceptable for many years because of the lack of a “sexy” factor. You didn’t want to put a manufactured home community on the cover of your investor report.

It’s difficult to build manufactured home communities, it’s difficult to create competition, it’s one of the biggest NIMBY sectors, and it’s an industry with very limited supply and good demand. These are no longer the mobile home parks of a TV sitcom. These are professionally run communities where the landlords develop the land, they put in the utilities, the tenants bring the homes in and they pay rent, and they pay rent on time with very low unpaid receivables….

Read the complete article here.

The Top Ten Ways to Boost Your Community’s Resident Retention Dave Reynolds

“Benjamin Franklin once said “an ounce of prevention is worth a pound of cure.”

Although he never owned a manufactured home community, Franklin had the right idea. When you think about the cost of replacing a resident in your community, you quickly realize that every owner’s job #1 should be to make sure that nobody ever leaves. So how can you boost your community’s rate of retention? Here are my top ten suggestions.

Make your entry impressive

Everybody likes to live in a nice place. Yet too many communities have lousy drive-up appeal. When you don’t have a nice entry, it’s a continual reminder to residents that they don’t live in the best they can afford, and they are always comparing their home to surrounding communities that have nicer appeal. You need to make sure that every single resident is proud of their residence and the entry creates – or destroys – that first impression.

Keep your common areas admirable

It’s very hard to create an atmosphere of pride-of-ownership when your community has none. You should always make sure that all common area buildings are well-painted and all grass well-mowed and edged. One important feature that many community owners miss out on is the interior signage. Rip out all of the old rusted poles and faded signs and replace them with white vinyl posts and caps, and install new, clean signs. It’s cheap and unbelievably attractive.

Create a sense of community

Time magazine wrote an impressively favorable article on the industry last year in which the writer described our properties
as “gated communities”. What the writer meant was that the resident gets much more than just a lot when they live in our
sector. They get an important support and social network. I lived in a community in Hondo while I was turning it around
following a tornado, and I was amazed at the level of help the community showed all residents. They had ride sharing before Uber as well as daycare and meals on wheels. How do you encourage this? Create areas that they can socialize and meet each other – things like playgrounds and simple picnic tables and outdoor grills.

Publish a monthly newsletter

We started doing this about two years ago, and it’s been extremely successful. Sure, it’s extra work, but the dividend is
an actively engaged community that stays informed and feels united in their choice of residence. If you break the newsletter
down into bite-sized pieces, you’ll see that producing it is not really that difficult and you might even enjoy it. The normal sections are yard of the month and other awards, other community news, suggestions on preventative measures for homes (such as change air filters and smoke detector batteries), a recipe, etc.

Hire the right manager

Great managers create high-levels of retention. People like and respect leaders that are fair and have good people-skills.
If your manager is not favored by the residents, it will be a daily turn-off to living there. Don’t settle – hire a manager and is a positive force in your community.

Establish an (800) help line

How do you know that your manager is doing the right thing and keeping your residents happy? How can you be sure that all repairs are quickly addressed and successfully completed? The answer is to establish an (800) help line that all residents
can call when things are not going well. You can have this line answered by a virtual assistant 24 hours a day, and the
information you garner is priceless.

Reinforce the value at every rent increase

We all know that the lot rents in manufactured home communities are ridiculously low nationwide. But don’t just raise them without giving visual support for the raise. Send your residents a bar graph showing the median home price and average apartment rent vs. your lot rent with all increases, and it will be obvious to residents what a great deal they’re getting.

Fairly enforce collections

It’s simply not fair for some residents to pay their rent promptlyand others to skip it altogether. Some managers pick their
favorites and the whole community knows that they can get away with making partial payments. The only fair way to enforce
collections is with a “no pay/no stay” policy that treats all residents the same and makes them feel secure in their treatment.

Maintain reliable rules

Is it fair for the owner of the home that is in perfect cosmetic condition with the well-mowed yard and waxed car to look out the window onto a home that is falling apart with grass a foot high and a car that is non-running (and don’t forget the dog tied on a chain in the yard)? Certainly not. To have high resident retention, you have to ensure that all residents make good neighbors. This all harkens back to the “gated community” nature that Time magazine described.

Create positive public relations in the greater community

One thing we have excelled at recently is positioning our communities with positive public relations in the greater city. We support school sports teams, donate to fire and police departments, and provide assistance in home repair to veterans, elderly and people in need. This reverberates through the greater community and creates a sense of local pride. And proud residents stay put.

Conclusion

Every community owner has the ability to massively improve resident retention if they will make the effort. Here are ten
great ideas, but feel free to add your own. You hold the powerto make everyone in your community a happy customer.

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

Why Being 1,000 Miles Away From Your Community May Be a Good Thing

The distance between my house and my first manufactured home community was only 15 minutes of drive time. Even worse, I decided to office out of that property for the first year, to learn the business first-hand. What a colossal mistake that was! What I learned from being that close to my community was that perhaps the best thing when you own a property is to be 1,000 miles away from it, or farther. Why?

No value-add

Contrary to what you may try to convince yourself, your physical presence at the manufactured home community you purchased has absolutely no value-add. This is not that type of business. Sure, the owner of the Italian restaurant you enjoy so much goes table-to-table to make sure that every diner is 100% happy, and it wouldn’t be the same without him. He gets there at 5 AM to make sure the freshest food is purchased, oversees that the sauces are perfect, makes sure the waiters are dressed impeccably, and then watches for any problems until closing time. But you have no such contribution. You rent land to the resident, and make sure the common areas are mowed and the utilities working. That business model does not need you to help out. The sooner you acknowledge your lack of importance, the better.

Familiarity breeds contempt

When the owner hangs around the property too much, the typical end result is that many residents hit them up for personal loans, or to let them not fully obey the rules. And many owners, given that pressure from near-professional systems users, will give in. That gets communicated throughout the property and next thing you know nobody is paying rent on time or following minimum standards. Unless you can say “no” without a second thought, and stay aloof from your residents’ constant attempts to loop your into their woes, then it’s best you stay 1,000 miles away.

Too much attention to meaningless items

In my first community, I was there every day from 9 to 5. After a couple weeks, I was completely bored. So I started overthinking everything that I did. I decided the laundry buildings would look better if they were painted green and not tan.
As a result I painted them. Then I decided I didn’t like that particular shade of green, so I had them re-painted again. Did
anyone care? Not in the least. The residents were perfectly happy when the buildings were tan, and thought I lost my mind when I changed the green out that second time – and they were right.

Greater focus on the systems

When you are 1,000 miles away, you have to focus on working your systems. And that’s what is really important for your success. Any owner would be better off focusing simply on the five gauges of the successful owner’s dashboard – collections, occupancy, property condition, water usage, and budget/actual/difference – rather than the trivial items that fog your visibility when you’re too close to the property. With no distractions, you can really give quality time to your property from 1,000 miles away, while the owner that lives nearby often gets too distracted and that only hurts the returns.

The quality of the deal is far more important the geographic proximity

This is one of the biggest reasons why you are best off being 1,000 miles away from your property: it allows you to cast a
bigger net. Setting the requirement that you will only buy a manufactured home community that is near your home is extremely limiting. As a result, you’ll miss out on a ton of better opportunities that are farther away. Any owner is better off with
a community that has a great location, strong infrastructure and good economics that is 1,000 miles away rather than one that is lacking in these areas but is located 15 minutes away. Finding the right property is a volume business, and you simply get more volume of deals to look at when you draw a circle 1,000 miles from your home versus one that’s only 10.

Conclusion

It’s actually easier to succeed with a manufactured home community that is 1,000 miles away than one that is close to home. Being physically separated requires you to focus on the key profit drivers and allows you to avoid petty distractions. And when you throw in the fact that you can cast a much bigger net in finding that perfect property, the evidence is overwhelming that distance and success are not correlated.

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.