August 2008

This issue of the and Newsletter includes:

  1. Seller Financed Mobile Home Notes – Outline on Creating them for Salability – Mark Faulkner, Creative Financial
  2. Lessons from the Olympics – By Frank Rolfe
  3. August Newsletter from Joanne Stevens – NAI Iowa Realty Commercial
  4. What Will You Tell Your Grandchildren?  – By Frank Rolfe
  5. Mobile Home Park Bootcamp in September – Only 7 Spots Left!
  7. Questions and Answers with Dave
  8. Tell us what you think and send us your articles! Continue reading

Joanne Stevens August Newsletter

August 2008

From the Office of Joanne Stevens

Real Estate Broker and Consultant for parks and communities throughout the United States



What each thinks is important:

Do you want to manage your real estate asset for maximum value? Here are a few ideas to help you make more money when you sell, or to at least better understand the marketplace for parks and communities.


What Sellers Think:

Owners sometimes think buyers want the rent to be below market so that the buyer can increase it. Likewise, owners oftentimes think their occupancy is stronger than the competition because their rent is less. The theory is that residents move their homes to different communities because of lower rent. The truth is, it is rare that a resident moves due to higher rent. And, a move by a resident to another community within the same market is very rare. There’s usually more to a move than just rent increases. Rather, it’s things like having difficult neighbors, poor relations with management and real or perceived crime on the premises. An example is one in which a very large portfolio owner of parks and communities, regardless of the local economy, occupancy or any other factors, raises the rent $10 to $20 annually. When that owner purchases a park or community, residents are told their rent will go up every year. Residents don’t move out. They are motivated to ‘stay put’ because they like their neighbors, like the location and feel good about calling the community “home”. This portfolio owner’s parks and communities are $80 to $100 per month higher than their competition. Some sellers think below market rents make a favorable impression on the buyer. It does, but read What Buyers Think.

 What Buyers Think:

Buyers like parks and communities with below market rent because of the up-side potential. But, they won’t pay for the up-side potential. Buyers base what they’re willing to pay on actual income.


What Sellers Think:

Sellers think financing is an easy, no-brainer proposition, that capital is plentiful, interest rates are low and terms are easy.

What Buyers Think:

“The only way you can get a loan is if you don’t need a loan,” said a very experienced, financially strong investor recently on obtaining financing in today’s market. This community owner has been investing in parks and communities for decades and said that he has never seen financing as difficult to obtain as it is today. Banks are nervous and the market that was awash in capital is no more.  Buyers know that obtaining financing today is much harder and more expensive than even a year ago. Higher capital requirements are negatively impacting buyers’ yields. There is still capital and lenders wanting to make loans; it’s just that interest rates are higher, the amortization is shorter, and the down payments are in the range of 25% to 40%, not the 10% to 20% range of a year ago. All of these factors lower the yield so the buyer can’t pay as much. Additionally, banks are scrutinizing the actual property much more than in the recent past. For example: Fannie Mae (government-backed lender) now requires at least 50% of the park and community sites be large enough for sectional homes.


What Sellers Think:

Vacant sites are a plus because of the upside potential profit from selling homes on vacant home sites as well as the upside potential for increased rental income from filling and renting vacant sites.

What Buyers Think:

Vacant sites are a minus because of the capital required to purchase and finance homes, as well as the talent and knowledge needed to market, show, sell, close, and warrant, not to mention the myriad of other details needed to sell homes. There are more buyers willing to sell homes in communities than in the past. The community business is trending toward a new business model (which is really the original business model of the1950’s to 1970’s) where the park or community owner is also the retailer for the homes, both new and pre-owned.

There was a time in the 1990’s when vacant sites actually had value because investors could easily connect with a multitude of local retailers, all vying for vacant sites for their home-buying customers. Although that day is gone, it is re-emerging because the sub prime housing problem is causing consumers to look at lower cost housing options that also offer liberal seller financing. Today, community owners will finance buyers that have been foreclosed on. The community owners view these buyers as good buyers that got some bad advice in the heady, no down payment days of the housing bubble.


What Sellers Think:

Selling homes on-site will be easy for the new owner. Park and community owners feel investors have more time, money and expertise to sell homes. Owners that don’t sell homes on-site think selling homes is “like shooting fish in a barrel”. (That’s a quote from an owner who never sold homes.)

What Buyers Think:

Selling homes on-site takes a lot of resources. Who will sell the homes? Is it realistic that a manager can manage a property as well as sell homes and still be affective at both? Where will the homes come from and what models will sell? Who will do the customer walk-through of new homes and provide service? If the buyer rents a home, who will do repairs and maintenance? Yes, there is profit potential, but the investor is going to weigh the upside against other alternative investments and buy the one with the least risk and the least drain on resources. For many investors there are easier ways to turn a buck than by selling homes. Still, some park and community investors have made it their business to not only become skilled at selling homes, but have also geared their organization to doing exactly that. They know full well the pitfalls and the costs of selling homes. They view the so-called upside of selling homes as strictly that – Upside. It is only through their own capital, time and talent that any homes will get sold. Therefore, selling homes doesn’t add value to the present owner.


What Sellers Think:

Sellers spruce-up their park or community when a sale of the property is being contemplated and often believe that new paint and shrubs will make them money.

What Buyers Think:

Buyers expect things to be in good repair and in working condition. They are not looking for perfection. Paint, landscaping and signage won’t register with buyers because they figure that’s how things should look anyway. But, if the property has a run-down appearance, the buyer is apt to think the property has problems that they cannot see.


In our country, home ownership is promoted as the ‘American Dream’. Home ownership over time does add to the household’s net worth, and government policy favors home ownership, as the tradition in the U.S. has been that home ownership is the fastest, most efficient way to lift people into the middle class. Manufactured housing in communities counts as home ownership. With the housing sub prime debacle, now is a good time to examine housing needs.

According to Nicholas Retsinas, Director of the Joint Center for Housing Studies at Harvard University, “in recent years we have been obsessed with creating new homeowners; we have been less concerned about sustaining home ownership. We are seeing an increasing number of foreclosures that are forcing people to vacate their homes and undermining the neighborhoods the homes are located in.  The fastest growing populations are foreign-born households and people of color. Minority households will constitute two-thirds of the net new households over the next 20 years we’re going to have to revisit the role of high-density housing. We’ve got to find a way for the housing market to address the diverse needs of a very diverse population.” (from Developer Magazine, March/April, 2008). It looks like there will be some opportunities for community owners. In addition to the foreign-born and minority households are the blue collar baby boomers that will be retiring in droves (they started turning 60 in 2007) and are worried about their finances. They will be seeking less expensive housing in which to live out their golden years.


To make your property more valuable, keep good records and use good property management software.

Today there is fabulous, user friendly software. (If you are having trouble finding software, give me a call at 319.378.6786).  Good records and software will not only make your life as a manager and owner more efficient, but it will also make you money when you go to sell. When owners don’t have good, accurate financial information, the buyer and the lender will err on the conservative side, thus discounting income and/or bumping up expenses. This makes your property worth less.


Thank you to all that have contacted me about the recent flooding in Cedar Rapids. Your messages and thoughtfulness meant a great deal. Our downtown office location was flooded and it will be 6 months or more before we can move back in. We have set up shop in a temporary location. It’s estimated that 3,800 homes were lost to flooding. Cedar Rapids Mayor Kay Halloran, at a FEMA press conference, announced she didn’t want any ‘FEMA trailers’ in Cedar Rapids and that the citizens deserved better. At the next city council meeting, quite a few citizens who lost homes to the flood let the Mayor know they would be glad to have a FEMA trailer. FEMA mobile homes have begun arriving and are being sited in manufactured home communities in the area. They are late-model, 14’x64′ manufactured (HUD) code homes. Interestingly, they are not putting in foundations or piers in their sites. The local media, city and county officials, as well as flood victims have been very positive about the homes.

And one more thing – no parks or communities were flooded.


NAI Iowa Realty Commercial
Joanne Stevens, CCIM, ALC
Broker Associate


116 Third Street SE
Cedar Rapids, IA 52401
Phone   319-378-6818
Direct  319-378-6786
Fax     319-365-9833

NAI is the largest commercial real estate organization in the world. Headquartered in Princeton, New Jersey, we serve real estate owners, investors and tenants through our nearly 230 firms with over 3,500 real estate professionals in more than 300 offices nationwide.

Joanne M. Stevens Park & Community Specialist

A specialist in consulting and brokering for mobile home parks and land lease communities throughout the U.S., Joanne’s experience in the Manufactured Housing Industry includes:

  • Real Estate Agent since 1981
  • Real Estate Broker since 1983
  • Member of the National Association of Realtors
  • Member of CIREI (Commercial Investment Real Estate Institute)
  • CCIM (Certified Commercial Investment Member) designee since 1994
  • Urban Land Institute member