MHP management options?

Question

I have been doing a lot of reading on investing in MHP's and think that it is the investing route I would like pursue. Obviously, there is a lot that I do not know so any advice is welcome. However, my specific question at the moment is how does your park management work? Do property management companies manage mobile home parks? Is it better to hire your own on site management? How do you handle out of state investments?

Thanks in advance for any advice!

Travis

Thanks in advance for any advice!

Travis

Jack Martin · Answer

@Travis Nolen you will want to consider your options for both onsite and offsite management.  Onsite usually lives at the park and manages the day-to-day. Offsite is referred to as 3rd party management who oversees the onsite and you can do that yourself if you want.

As it relates to an onsite manager, one strategy is to interview the existing tenants to find a capable, trustworthy, willing person to be your manager. That strategy works best if the park is too small for a serious onsite team and you have the ability to watch over the manager. However, don't expect to get much more than a person who collects rent, interacts with the other tenants, and puts eyes and ears on the park. I would not suggest this strategy for a larger park, parks with a lot of park owned homes, 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 strategy above will not allow you to move the needle much. A better approach is to hire a full time onsite management team 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 management team 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 spaces 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 park that is already stabilized and running at or close to efficiency. However, 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 3rd party PM company 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 their lack of performance.

If your focus is to acquire multiple 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. This will require you to learn all the ins-and-outs of parks, to include filling up spaces, renovating homes, selling homes (along with licensing requirements), creating and carrying paper in accordance with current regulations, 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 help your onsite staff achieve them.

All the best,

Jack