Some help for a newbie to MHC

[Simcha Davidman]

Thanks for reading!

I'm currently a multifamily (workforce housing) investor but I'm looking to buy a small portfolio of parks. And I've run into some issues I need to address.

1. I ran a test ad for a rent to own mobile home and after 3 days got no responses (in the 100+ lots, there are 9 TOH homes, so I'm trying to see if there's demand to be able to convert the resident base over). Does anyone have test ad text they would be willing to share with me please? Do you put pictures in your ad? If yes, do you take stock photos, or pictures of homes already in your parks (I obviously don't have this option yet)? Any other hints and tricks of the trade would be greatly appreciated.

2. Any tips of converting/adapting my apartment complex underwriting model to one more appropriate for MHCs?

3. Along the same lines, I have a strong grasp of what my budget will be on an apartment complex. But how does that convert to MHC? If they are all POH, will it be similar (plus the added utility and road maintenance)? On the other extreme, if it's all TOH, how much lower will expenses be? Are there averages/rules of thumbs people use for budgeting payroll, R&M, etc?

Thank you very much for all your help!

[Brenden Mitchum]

Hey @Simcha Davidman

1. Zero responses is definitely not an ideal start. It is probably not due to the ad itself but perhaps the location of the ad. Did you try several different places? Typically, facebook and craigslist are the two big ones. If those don't pull, then you can try the local newspaper or throw up some bandit signs. If you still get nothing, it's either a pricing issue or a demand issue. 

2. I've done exactly this with the Michale Blank analyzer. It's not very difficult if you understand how the original analyzer works and how to properly analyze MHP. So, my advice here would just be to make sure you are solid on MHP analysis. The MHP Tribe facebook group has a zoom call series on deal analysis that I highly recommend watching. In the series, there is a spreadsheet being used that is available to members of the group if you want to just use this rather than trying to alter a spreadsheet meant for a different asset class. 

3. There is a big difference in expenses with all TOHs vs all POHs. You can be looking at as high as 70-80% for POHs and as low as 30% for TOHs. You will always want to separate lot rent income and associated expenses from additional rental income and associated POH expenses. Again, I'd recommend studying up on MHP deal analysis. It sounds like you are pretty series and want to fully understand this asset class so I'd even recommend taking the MHU Bootcamp. It's a three day virtual course right now and a great bang for your buck if you can focus throughout its entirety. 

Hope this helps a bit! Please feel free to reach out anytime if you have other questions or just want to chat MHP!