May 2008
Newsletter
This issue of the MobileHomeParkStore.com and MHBay.com Newsletter includes:
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The owner of this doublewide called my park managers and asked if we had space for a nice doublewide home. He said yes and we were glad to hear we had a home moving in. However, my manager drove by the house and here is a picture of the so-called nice doublewide.Anyone have a vacant space for it? Needless to say we are glad it never made it to our park. 
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SELLING THE LAND LEASE CONCEPT TO POTENTIAL RESIDENTS (What happens in Vegas doesn’t stay in Vegas) Joanne M. Stevens For the third time in as many years, in conjunction with the annual Manufactured Housing Institute Congress in Las Vegas, the National Communities Council of MHI held a one-day forum for community management and operations. This year’s theme was “Maximizing Profitability in Parks and Communities”. Many tools to succeed, grow and prosper were presented. (For information and dates regarding next year’s Congress as well as other items of interest, see www.manufacturedhousing.org.) Community owners tend to believe that residents or prospective residents of parks and communities think about and understand the benefits of leasing rather than owning land. Many owners haven’t thought through the process of “Why does someone lease versus own land?”, and even fewer home sales people are equipped to competently explain the advantages and can make the case for leasing versus owning. Fact is, many sales people will end up agreeing with the prospective residents that it is better to own rather than lease land. Most sales people have never received any explanation or training as to why the land lease is an excellent concept. Joe Adams, PHC owner of the Housing Marketplace, Inc. gave an impressive and enlightening presentation on how to market, communicate and reinforce the advantages and benefits of leasing land versus owning. A little bit about Joe. During his career, Joe has been a manufacturer and retailer. As a retailer, he directed sales and marketing at 15 communities in Florida where sales of homes exceeded 180 per month. That is a lot of home sales by anyone’s standards! To learn more about Joe Adams and his sales training business go to: www.TheHousingMarketPlace.com or phone: 828-891-3911. To order the complete “Selling the Benefits of Leased Land” training program with slides and synchronized audio go to the website or call Joe. BASIC PREMISE Consumers today are worried about a great many things. For you in the community business, this means:
Understanding these premises is key to effectively making the case to the consumer for leasing land in a park or community. Community owners and managers are in the position of needing to be very proactive in addressing the consumers’ fears, especially their unspoken fears. In making the “sale” of the land lease or the home and land lease, the successful community operator will anticipate and prepare for what is on consumers’ minds. It is time for us to stop telling prospects what we want to talk about and anticipate and engage the prospect in a way that helps them make a good decision about housing. SHOPPERS FEARS What are consumers worried about today? Sadly, the list is long and includes everything from the economy with job layoffs, the weak American dollar, the sub-prime fallout and rising gas and food prices to the war, global warming and natural disasters. The Baby Boomers who are starting to retire worry that Social Security won’t be available to them and that their health care costs will spin out of control. Knowing that your customer is carrying a heavy load and preparing them with solid information regarding their home-buying decision is an important service. As they relate to the park or community, the consumers’ fears are that:
Maybe it’s time for us to think more about what the consumer is worried about and how our communities and homes will help make their life better. BELIEF THAT OWNING LAND IS RIGHT In this country we are acculturated from birth that it is better to own than to rent. As with many beliefs, we don’t always question or analyze them to see if they are right for us and our situation. That is why we in the community business need to present compelling information and logic if we expect the prospect to understand the benefits of leasing land. THE BENEFITS OF LEASED LAND So, how do you explain the benefits of leased land to the consumer? Joe offered the following insights:
As you can see, it will take time and research to prepare the facts for a customer. And while Joe didn’t say it, you get the sense that we in the community business have been winging it for a long time. One of the highlights of Joe’s presentation was his use of customer/resident testimonials. Joe uses a wider range of advertising and marketing than the average business and most community owners don’t have unlimited ad dollars. But these testimonials work very effectively on community websites, direct mail, brochures, newsletters, etc. Resident quotes for sales and marketing:
“Why tie up my money in land when other investments could supplement my monthly income?” “I use the monthly cash from my investments to offset my living expenses.” “By having the cash, we have the freedom to invest where we want.”
“I cannot control the rate of return on land.” ”Owning the land offers no financial security unless we sell it or borrow against it.” Joe had some good ideas for obtaining testimonials, but he believes the best way is to have a third party tape a 10 to 15 minute conversation with a resident about the community, owning vs. leasing, etc. Maybe only one or two sentences will be used, but that is all that is needed for a testimonial. Be sure to have the customer’s prior permission for you to use anything said in the conversation for your marketing. USE CHARTS AND ILLUSTRATIONS As a park/community owner, you need to develop charts and illustrations demonstrating the customers’ savings by not investing in land but rather investing those same dollars into a CD or similar vehicle with compounding interest. Find the actual lot costs in your market and use average rates of return on investments like CDs. Design a Microsoft Excel (or similar) spreadsheet to enter various lot costs, interest rates and number of years to show the return on their money. Your customer needs to be well-armed with this information when he gets negative feedback from well-meaning friends, family and co-workers about moving into a park or community. Develop charts and illustrations to compare monthly living expenses and savings on leasing the land vs. owning. Include savings on making interest payments on the land, real estate taxes vs. personal property taxes, assessments to improve the land, utilities included in the site rent , lower utility bills of energy efficient manufactured homes. BE PREPARED WITH THE RIGHT QUESTIONS TO ENGAGE THE CONSUMER Examples: Why do so many people live on leased land? Are homes in leased land communities a good investment? What are some of the differences in leased land versus deeded land? Do homes hold their value in leased land communities? What services are included in the lease fee? Finally Joe reminds us that stating the services included in the monthly site rent is not the same as RELAYING THE BENEFITS. It has to be communicated in a way that the customer can clearly see what is in it for him. Remember - people rarely change their opinion about anything without an overabundance of information. Joanne M. Stevens – Park & Community Specialist 116 Third Street SE Cedar Rapids, IA 52401 Phone 319-378-6818 Direct 319-378-6786 Fax 319-365-9833 www.JoanneMStevens.com www.iowacommercial.com 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:
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HOW TO SPOT CRIME IN A MOBILE HOME PARK By Frank Rolfe Unless you have spent time in law enforcement, there are certain signs of crime that you would never notice as a result of your sheltered existence. However, there are important crime signals that every park owner should know, but that nobody will tell you due to political correctness. So here they are: Shoes don’t grow on power lines. Have you ever noticed a pair of tennis shoes hanging from a power line? That is the universal sign for “drugs sold here”. When someone is wanting to buy drugs in the mobile home park, they look for the hanging tennis shoes. In really bad parks, you will see tennis shoes hanging from power lines on every street in the park. Real tears don’t have dark blue outlines. Have you ever seen a tenant with teardrop tattoos coming out of their eyes and going down their face? Those are jail-house tattoos, and every tear drop represents a family member who died while they were serving time in prison. A guy with ten teardrops means he was probably in jail for murder, since 10 family members died while he was in there. Or maybe he was in jail ten times and one family member died during each term. Any way you cut it, teardrop tattoos are bad news for tenant quality. You should be very wary around this type of clientele. Real tattoo parlors have some type of quality control. Have you seen folks with incredibly amateurish tattoos covering there entire backs, necks, arms and chests. These are jail-house tattoos. With nothing else to do, they give each other tattoos. Think the artwork is bad? Check out the verbage. They need to teach more grammar courses in jail. Tenants standing out in front of their homes are seldom admiring them. In parks with a lot of drug activity, you will see tenants milling about in the street in front of their homes. Sometimes, they will just be standing there with their hands in their pockets for hours. They are selling drugs to cars that pass by. Those weren’t star maps they were exchanging for cash. Those bright lights beaming out of the shed are not a Mickey Rooney drama production. Often, driving through a park at night, you will see very bright lights beaming out of the cracks around doors and windows (there’s aluminum foil over the windows). What’s that all about? It’s called a “grow-lab”. They grow marijuana in sheds (and sometimes homes) using lights so bright they replicate the sun. These homes will have incredibly high electric usage – and it’s not from the A/C. Nobody can be that popular. Do you have a tenant that has an endless line of cars driving to his house and then quickly leaving? No, he is not just a party animal – he’s dealing drugs. Real teeth don’t look like toothpicks. Have you ever met a tenant with teeth that look like little slivers? That’s a side effect of someone taking “crank”, a very strong, illegal drug. When you meet a tenant who has teeth that look like toothpicks, and is very fidgety, you have met a crank addict. That smell is not from cooking – not exactly, anyway. Have you ever encountered a really bad smell in a mobile home park, but you’re sure it’s not from a rotting body or a sewer leak? That may be the smell of a drug lab manufacturing meth. It has a nasty, burnt trash smell. Maybe I’m wrong – maybe they just burned the turkey while basting it in gasoline. With some tenants, the answer is “all of the above”. When you find a tenant or home has one of the above attributes, you will often notice that many more apply. You see the tennis shoes on the power line. Then later that day, you smell a terrible smell coming from the house, and notice the tenant hanging out in the street. He has tear-drop tattoos on his face, and lousy tattoos on his back. And when he smiles, you notice that his teeth look like jail bars. Yep, you’ve got a crime problem on your hands. Conclusion It’s not fair to profile people. But there are certain signs of past bad behavior, and current bad behavior, that you have to be vigilant over. When you experience some of the items mentioned above, it might just be coincidence. Or maybe they have served their time and are now respectable members of society. Or just maybe you are the landlord to the next John Dillinger. |
5-23-08Excellent Advertisement!. It was amazing that we received such a large volume of responses during a sluggish real estate market. We could have sold this fixer upper and emptied mobile home park several times over. Thanks again, Gary W. -------------------------------------------------- 5-22-08 Thank you for your help with running my ad. I need you to please remove the ad completely from your website because I have 14 potential buyers at this time. I will keep you up to date as to how the sale finalizes. Mike H. -------------------------------------------------- 5-22-08 We have a contract on our MHP Thank you..your site really works. Karen P. -------------------------------------------------- 5-14-08 Please cancel the ad, We closed on the sale today. Our buyer came from our ad on your site. Thanks so much, Connie ------------------------------------------------ 5-7-08 (3 days after posting on the site) I have over 20 inquires so far and I am totally Impressed! Thanks! Shel Call Shelley to List your Idaho Park For Sale! Shelley Telleria, REALTOR Rocky Mountain Real Estate Brokerage 530 Oneida/Hwy 24, Rupert, ID 83350 http://shel.point2agent.com www.RockyMountain-RealEstate.net 208-436-9429 office 208-436-1526 fax 208-431-4584 cell ------------------------------------------------ 5-7-08 Good Morning, Terri I've had 5 inquires from 5/3/08 - 5/6/08. It's been GREAT response. Thanks for all your help. Brenda M ------------------------------------------------ 5-5-08 Thanks Terri, I got it under contract right after you put it up on your site from somebody looking at your site. That was quick. Thanks, Stewart Phillips The James Company 423-544-0002 |
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Q&A with DaveQuestion:Hi Guys I have found a newer park about 7 years old 15 double wides. Permits up to 60 pads all underground utilites. Park sewer and water, paved roads. I am a residential appraiser and am having trouble to determine the value of the 45 permitted vacant sites. Currant owner will not allow children and has had a long illness. I am very interested to purchase the park but those vacant pads are holding me back. Do you have any words of wisdom to this condition? Thanks Dan Answer: Dan, I would not put much value on the permitted sites. It is hard to fill up home sites in most markets right now and it is expensive to maintain these vacant sites. The most I would pay would be about 25% on vacant sites ready for a home and if the sites need developed that number would be down in the 5%-10% range. On another note, you will have a hard time finding a bank that will put much value on this vacant land (and that is how they look at it). So, without owner financing you will have to increase your down to make it work. You have to evaluate the park based on the current income and then if it works based on current income or is just shy, then you might proceed with the extra bonus of the permitted sites. Thanks, Dave ------------------------------------------------ Question: Hi. I am currently looking to purchase a mobile home park-anywhere from 2 trailers to 50+. The properties I have contacted so far say they'll do owner financing. They will agree to a land contract with 20% down. I have brought up a lease option but none of them are agreeing to it. I'd like to know whether I am approaching the sellers the right way or if I just have to play the odds-1 in a 100 say yes to l/o. I don't have 20% down payment lying around at this point since I'm a newbie. Thank You. Hannah Answer: Hannah, I think that the odds are a little better than that - maybe 1 in 20 right now. The key is to make them understand the benefits they would have doing a lease option versus a sale and carry the note. There are also some tax advantages for the lease option or seller carry over a sale for cash. Here is a link to an article that goes into this in more detail. http://www.mobilehomeparkstore.com/articles/mobile-home-park-lease-options.htm Thanks and best of success! Dave ------------------------------------------------ Question: Sir, I have read your article, and i have a few concerns. My father currently owns a mobile home park in Aiken SC. it has 14 units all park owned, with room for 17. he is getting older (although he refuses to admit it) it is in dire need of many repairs and perhaps replacement of newer homes. What do you feel would be the best way to go about making this a more profitable way of making income producing property for him. to the best of my knowledge he still allows people to rent from him on a "handshake" with no viable lease. people are constantly taking advantage of his kindness. he wont allow section 8 tenants in, due to the fact that he believes they will ruin the homes. i tell him they ruin them anyway at least section 8 will hold them accountable. he owes approximately $90,000 on the land. with the tenants paying approximately $365-375 per month. any information would be greatly appreciated. best regards, David Answer: David, If this were my park, I would immediately sell the homes off to the renters thereby creating a lot rental park. They can continue paying rent until the home is paid in full. Then the residents will own the homes and pay lot rent only. If your father would do this and create a lot rent of somewhere in the $175 per month range he will be out of the repair business and the renters will be owners and would be more likely to take care of the homes and pay the rent. Creating more stability. Hope this helps. Dave ------------------------------------------------ Question: Hi Guys, I have been a regular visitor to your web site and have not only found interesting information but also what I saw as some good deals. I am fromSouth Africa for information purposes. I found such "Bargains" on your website that I was one a flight over here in a flash. However after havingspent a month here in the United States and having visited some 7 parks, I am still not any closer to getting the park I want or the permission to get it. I hope that there is someone that is also an avid fan of your site as I am that can possibly assist me. The problem is that according to the variousimmigration lawyers I have spoken to I would need to invest $1000000.00 and create 10 jobs, the million is fine the 10 jobs would be a bit of a push. The second option is that I register a company here and run it in conjunction with my company back home. This is fine expect for the fact that I own a security company and I do not know how to run a mobile home park as a security company. After all the time I spent on your site listening to your various advice pieces, I am shocked that I have fallen into the same trap you guys mention so often and made some of the same mistakes you warn about. I have been looking at various parks, however the ones that did interest me the most are both in Georgia one is valued at $975000.00 and the otherat $185000.00 However I am willing to fly back here and look at other options, if someone can tell me the correct procedures for getting my legal right to purchase a property and stay here. Thanks for any assistance in advance Neville Answer: Neville, I appreciate your comments on our website and am sorry you are having issues with the legality of buying a park and making it work for you with the various permissions you need. I am afraid I can't help you much with that as I have never dealt with it before. However, I would think that it is possible if structured right. Is there a problem with starting a new business in your country that has the main focus of investing in mobile home parks in the U.S.? There are numerous investors from other countries that own mobile home parks and other real estate so there must be a way to make it work. I would suggest contacting others in your country that are doing this. I will also pose your question in my upcoming newsletter and see if we get any responses. As far as buying a park, Frank and I are the experts and we would be glad to assist you in making a wise investment that meets our criteria. I think the parks in Georgia you mentioned may have some potential but are not necessarily ones that I would term as good deals without looking into them further. Thanks and I wish you success in your predicament. Dave |
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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 |