Some help for a newbie to MHC

Mobile Home Park Investing
5yFollow

Some help for a newbie to MHC

Simcha Davidman
Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes

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!

    0Reply
    19 views

    Most Popular Reply

    Brenden MitchumBusiness Member
    Rental Property Investor · Atlanta, GA · Member since 2019 · 1k+ posts · 872 votes
    5y

    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!

    [email protected]404-737-0018
    2Reply
    See this reply in the discussion

    9 Replies

    Jump to latestLatest
    • Brenden MitchumBusiness Member
      Rental Property Investor · Atlanta, GA · Member since 2019 · 1k+ posts · 872 votes
      5y

      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!

      [email protected]404-737-0018
      2Reply
    • Simcha Davidman
      OP
      Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
      5y

      @Brenden Mitchum Thanks for your insight!

      I put the ad on craigslist. Apparently, it got flagged and pulled - not sure why :)

      When underwriting a deal, do you use any rules of thumb for expenses, for example $400/pad/year for payroll expense or $600/pad/year for R&M (these amounts are just examples of course)?

      I'll be sure to check out the FB group.

      I've been mulling over the boot camp. Aside from the networking (which I do not mean to downplay; I understand its significance), is it that much more information than the home study course? That looks very robust by itself.

      0Reply
    • Jeremy Blevins
      Folsom, CA · Member since 2018 · 134 posts · 100 votes
      5y

      @Simcha Davidman I think you could get all the info you need from the home study course, at least enough to get started. It’s nice to be able to ask questions, but you can always take the in-person class later after you’ve purchased a park. Frank is also fairly available, as well as his staff, so I’m sure if you needed any clarification on course content they could clear it up for you.

      My wife and I took the course just before Covid hit and and the info has been very useful in evaluating parks etc.

      1Reply
    • Simcha Davidman
      OP
      Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
      5y

      @Jeremy Blevins Thanks so much for the feedback! Did you also go through the home study course?

      Good luck getting that first park (assuming you have not yet :) ) !

      0Reply
    • Brenden MitchumBusiness Member
      Rental Property Investor · Atlanta, GA · Member since 2019 · 1k+ posts · 872 votes
      5y

      Hey @Simcha Davidman

      I wouldn't say there is really a rule of thumb for payroll since it depends on the size of the park and number of employees. However I've seen a number of different rules of thumb for R&M. 5% gross lot rent is what I use. 

      I do felt like I learned a lot more from the bootcamp and it's much more current than the home study course. That being said, the home study course is a great primer for the bootcamp and gives you access to discounted bootcamps. IMO, it's a no-brainer to do the home study course then the bootcamp.

      [email protected]404-737-0018
      1Reply
    • Simcha Davidman
      OP
      Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
      5y

      Thanks @Brenden Mitchum again!

      If you don't mind, please - I've heard management will be somewhere between $5-15/pad/month, at least for a resident manager. Between that and R&M, do you typically see a separate payroll expense? I imagine this may depend on how many POH there are.

      Are these the types of issues the boot camp goes into in detail (in addition to sourcing, due diligence, etc)?

      @Jeremy Blevins I'll also tag you for your opinion on these questions, since you were already nice enough to chime in :)

      Thank you gentlemen!

      0Reply
    • Jeremy Blevins
      Folsom, CA · Member since 2018 · 134 posts · 100 votes
      5y
      Originally posted by @Simcha Davidman:

      Thanks @Brenden Mitchum again!

      If you don't mind, please - I've heard management will be somewhere between $5-15/pad/month, at least for a resident manager. Between that and R&M, do you typically see a separate payroll expense? I imagine this may depend on how many POH there are.

      Are these the types of issues the boot camp goes into in detail (in addition to sourcing, due diligence, etc)?

      @Jeremy Blevins I'll also tag you for your opinion on these questions, since you were already nice enough to chime in :)

      Thank you gentlemen!

      In the course they are big advocates of finding the nicest, most manicured home and lot, and approaching those tenants to see if they would be interested in managing. Typically you would offer free lot rent and maybe even a few hundred dollars extra per month depending on how many duties you need the manager to carry out. 

      As far as the price per pad for management I’m not too sure about that. Are you looking to hire a professional management company?

      1Reply
    • Brenden MitchumBusiness Member
      Rental Property Investor · Atlanta, GA · Member since 2019 · 1k+ posts · 872 votes
      5y

      @Simcha Davidman

      Just as @Jeremy Blevins said, the property management cost will depend on the size of the park and number of POHs. Also, since you are looking at a portfolio of parks, this means you will have a higher property management cost. You'll either need to pay an offsite manager a decent salary or have a resident manager in each park. Either way, it will definitely be more than $15/pad. 

      Property management, R&M and payroll are three separate line items. Payroll would be anyone on a legitimate salary (or an hourly maintenance guy), other than the property manager. I'm sure you could lump these together if you want. It really does not matter. The important thing is that it's being included in your expenses. 

      Oh yeah, the bootcamp really dives into all this stuff (as does the home study course). In fact, I bet I could go into my notes from the course and answer your questions with exactly what they said on the matter.

      [email protected]404-737-0018
      1Reply
    • Simcha Davidman
      OP
      Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
      5y

      @Jeremy Blevins and @Brenden Mitchum thank you very much!

      1Reply
    Join the conversationCreate a free account to reply, vote on answers and follow this thread.
    Log InJoin for Free