I am in the hunt for my first MH purchase. I have driven around 8 parks in my area, and I noticed a few things that I wanted a second opinion on. I was surprised by the large spectrum of quality in the parks.
- What would you consider the most important aspects of the park to be?
- Besides the besides the basic questions pertaining to lot rent, pet and tenant restrictions, and type of park (family vs 55+), what other questions do you ask park managers?
- What is the smallest park you would invest in? biggest?
- Do school districts matter for family parks?
Thanks in advance,
Your number one to do is to talk to the park management. Ask if they allow investors to own mobiles in their park. Around Atlanta as the parks where bought up by Sun and other mega corp owners, they locked out, kicked out investors. Lonnie dealers evaporated and I bet some lost a bunch as the parks made it impossible to rent yet the lonnie dealer was on the hook for lot rent.
I doubt a park manager would put into writing that you will be allowed to buy and rent or buy and re-sell homes. If a park lets you work their park it'll be just verbal and the corp owner or next manager can shut you out.
We did the same as you here in Atlanta. Drove parks, talked to managers who pretty much kicked us out of the park.
We moved to buying double wides titled on their own land. Same gig: rent to own, owner finance. 3 per yr per me, my wife, IRAs, using a licensed mortgage loan originator, qualifying to 43% DTI,,, all dodd frank compliant. No body can shut down our business like lonnie deals in parks.
You might find your area to be friendly to lonnie dealers. Not corporatized parks around Atlanta.
@Curt Smith - thanks, Curt. That is extremely helpful to know.
Would you say most corporate - owned parks are opposed to investors?
Jeffferson owns a bunch of parks and can offer his view.
My talking to parks finds that yes corporate owned are most likely to not let investors to work their parks. But it's park owner and manager dependant. You have to develop a relationship with the manager at the least so they have a favorable view of you and how you run your home business.
Sounds like you are just trying to get your feet wet in real estate? I recommend you study the techniques for low to no cash investing. Josh (BP) has a new podcast and book out on this topic. Look in the podcast area. We like buying doublewides on land, a bit more cash but you control the whole deal. You can do yellow letter campaign and wholesale the deals for just the cash to do the yellow letter mailing. Lots of easier ways to make money in real estate than being a lonnie dealer/ mobile home rental manager.
Some mobile home investors who rent them out make a few hundred a month on their $3k to $10k investment but some find that after making $200/mo x 12 x 2 (guessed number of years till you get a jerk who totally wrecks your place). = $4800 - a total rehab of about $2k to $4k, now you can see you've about broke even. Some lonnie dealers make good money but they've figured out unique park situation where the demand is high and quality of renter is high.
Park owners or more specifically, appraisers, banks and folks bidding on parks add in zero from the home rent into their offers. Just lot rent. It's that bad in the industry that renting homes is a break even business. Owners say it's a great business and invite everyone to buy their park. Just to find out that owner just wanted to retire from the home rental business. :)
Correct, corporate owners are less flexible than small fries like me.
That said, if I were you, I'd not invest in 'just' the mobile home. Owning the land is much more profitable. We only own homes because they enable such great returns into our land.
You should look for a small MHP to buy. Perhaps you'll need to partner with another investor to come up with the money. But start there - with an entire park - not with just the homes if you can do it that way. Think creatively.
You really should come to the MHP Bootcamp offered by the guys at MobileHomeUniversity.com. It'll be the best money you ever invested ($2,000 or $3,000 for two).
@Curt Smith - thanks for your input. I'm more interested in holding the note for mobile homes instead of renting it. From my understanding, the people who are putting money down to purchase the home are less likely to wreck their own investment.
@Jefferson Lilly - Thanks for the advice. It's funny because that is my ultimate goal. I listened to your interview with Kevin Bupp last week, and I would like to get into the business as soon as possible. I strongly believe that driving around and learning the business from either a park or home perspective is well spent because they work interdependently. My goal is to hold several notes on houses and then scale up to a park within a year.
@Ian Tudor Ian I agree with you in isolation from the regulatory environment re lending to owner occupants. I wouldn't touch a mobile home note if it was given to me. You are getting a bunch of serious fine/prosecution risk. Search here on titles like: "has dodd frank wrecked lonnie deals", "dodd frank mobile homes" etc.
The summary is: it's a dead business model. I tried to list why and just deleted it all.. Read the excruciatingly long discussions about 6-9mo ago.
For everyone looking into "Lonnie Deals Dodd Frank Safe Act" see http://www.biggerpockets.com/search?utf8=%E2%9C%93...
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