We are investors that are looking to transition into Mobile Home Parks. Wanted to get some information on how we should plan to pay for property management and if anyone knows any good ones in Indiana. We are looking at 31 lot park that is currently at 65% occupancy. The pads are currently going for ~$185 each, but the market is more in the $225-$240 range. Can someone help explain how management should work for a park like this? I know some people have on-site mgmt and some people use property mgmt. Would like to better understand how we should be projecting costs and what would be realistic for a park like this. Thank you.

@Rico Nasol

The property management fee is not dependent on how much the pads go for, rather 1) how many pads are there in total & 2) how much work is there overall. If you have fewer pads, it doesn't make sense to have an o-site property manager as you will only need them p/t.  Shop around by calling various local agencies to see how much they charge. Prices do differ geographically. 

Thanks @Alina Trigub . I know some folks have mentioned that they pay $10/unit for medium to large size parks. I've been looking at secondary markets and hoping we can have a tenant do on-site mgmt. Do you know how to properly estimate taxes on a MHP?
 

Rico,


Property taxes may be calculated based on the cost or income method, or even sales comparison one. You should check with your local tax assessor’s office to find out exactly how property taxes are assessed in your area.


Originally posted by @Rico Nasol :

Thanks @Alina Trigub. I know some folks have mentioned that they pay $10/unit for medium to large size parks. I've been looking at secondary markets and hoping we can have a tenant do on-site mgmt. Do you know how to properly estimate taxes on a MHP?
 

Hey @Rico Nasol - with a park that size, your best bet is to find a current resident to take on management. Find the home that is the most well taken care of in the park, and offer them free lot rent + some incentive to manage the park. They shouldn't be physically collecting rent in 2019, so it will be keeping up with vendors, maintaining park standards, interviewing new residents, etc....

At some point professional community management makes sense, but generally not at 31 pads.

My question is: If the lot rent is that much under market rate, why are there so many empty pads? That would have me concerned.

@John Teachout good question. Haven't looked into due diligence yet, but have these general questions before I go deeper. Want to know how to go about analyzing the deal.

Originally posted by @Andrew Davis :

Hey @Rico Nasol - with a park that size, your best bet is to find a current resident to take on management. Find the home that is the most well taken care of in the park, and offer them free lot rent + some incentive to manage the park. They shouldn't be physically collecting rent in 2019, so it will be keeping up with vendors, maintaining park standards, interviewing new residents, etc....

At some point professional community management makes sense, but generally not at 31 pads.

 Thank you @andrew super helpful. What size parks do you go after?

Hey @Rico Nasol - sure thing! Looking at 100 pads or less right now.

@Rico Nasol you will want to consider options for both onsite and offsite management as you consider the strategy for a park. 

As it relates to the onsite manager, the generic strategy is to interview the existing tenants to find a capable, trustworthy, willing person to be your manager.  That will be an okay strategy if the park is nearby and you can oversee it. However, don't expect to get much more than a person who collects rent, interacts with the other tenants, and watches over the park.  This strategy will work for smaller parks or a park that is full of tenant-owned homes and doesn't need much work. I would not suggest this generic strategy for a larger park or parks that need a lot of work. 

For value-add parks with vacant park owned homes, vacant spaces, and one that may have been previously poorly managed and in need of a lot of work, the generic strategy above will not allow you to move the needle much.  The alternative is to hire a full time onsite manager capable of performing all the duties of management, home sales, managing maintenance and repairs, and the implementation of software systems and processes that will eventually have the park running like a Swiss watch. This kind of manager will cost more money, of course, so a smaller park may not be capable of affording that kind of horsepower.  Usually, the break even point tends to be about 40 lots before a full time manager is warranted. If you can afford a great onsite manager, particularly one who has experience turning parks around, they will make your life a LOT easier and will be well worth your money. 

As it relates to offsite management (3rd party management) we have found that this solution only works if you have a a park that is already stabilized and running at or close to efficiency.  Also, if you choose to go this direction, make sure to find a company who specializes in parks and is familiar with all the state regulations. Hiring a PM without intimate knowledge of parks is a recipe for brain damage. If you have a park that requires heavy lifting to fill spaces, sell homes, complete major capital improvements, etc, I would not recommend a 3rd party.  They just don't have the ability to move the needle at the park, nor will they care as much as you do as the owner, so you will be left disappointed with the lack of performance.  

If your focus is to acquire value-add parks that require a lot of work, I would suggest YOU become the expert and take the role of offsite manager, overseeing the onsite manager.  That will allow you to stay engaged with the property, move the needle, and give you the freedom to acquire more parks.  Take the time to learn all the ins-and-outs of parks, to include filling up spaces, renovating homes, selling homes (along with licensing requirements), carrying paper, crafting the correct leases and notices, establishing the right park rules, proper tenant communication, metering of utilities, and the list goes on... You can gain that experience through education, mentorship, and running a park yourself of course,  but the goal is to become the expert at determining and executing the right strategy for a park.  

As it relates to management, just remember that your ability to move the needle will be directly related to the quality of the onsite manager and your ability to provide the proper leadership, goals for the park, and resources/support to achieve them. 

@Jack Martin thank you for the insightful response. We're trying to ramp as much as possible. This is helpful. We're definitely looking out if state and around the 30-40 pad size. Might look a bit larger to support a legit on-site mgr.