All Forum Posts by: Logan M.

*Disclaimer, each state has different laws, so check those for the state you are investing in.

Many investors run from mobile home parks with too many park-owned homes. 

Banks are not crazy about parks like this because of the perceived risk with stabilization and for good reason. POHs are more expensive and have higher turnover than a community with tenant-owned homes.

Here are the ways that I turn POHs into TOHs:

1. Seller Financing: Be the bank to those wanting to buy homes in your communities, especially good tenants. I try to make a little more than their current rent and I will do a long term. You can collect a down payment in many cases.

2. Lease Options: This is better than a typical lease because there is an expectation that they will buy and in many cases, you can make the tenant responsible for some of the maintenance and also you get some option money.

3. Outright sale: Cash buyers, because the price point is lower this is very common.

4. Bank Loan: Many lenders will finance homes in your community. They typically want it to be 1976 or newer when HUD regulations went into place. A few companies that will lend are 21st Mortgage, Performance Equity Partners, Inc., and a few others. Many of them have caps to what you can sell the homes for so beware of this.

Agreed, I think CAP Rates make inexperienced investors feel experienced until they get in trouble.

 This is a great question, I will write a post on it right now because it is a bigger answer.

 Amen brother, I agree. There is just too much room for deception!

CAP Rates can be a beautiful thing, they allow an investor to get a quick comparison of properties without digging too deep into the deal.

When using CAP rates on MHPs I want to give a few warnings because there are additional variables to consider. Your CAP rate will be dangerously inaccurate if you calculate expenses incorrectly so let's break those down.

Utility Set-up- As an overview you need to know the difference  between city-provided utilities and onsite such as Septic Tanks with Leech fields, lagoons, Wells, Etc

Getting more specific what utilities are maintained by the community, paid by the community vs the tenants.

I will give you a quick example, I own a park with a bunch of multifamily manufactured units of which I pay the electricity bill. During the Winter months because they are all electric I am paying a fortune in electricity like $2,500. There are many cases where seller don't make these facts clear before purchase and you will find out the hard way later.

Park Owned Homes vs. Tenants Owned Homes- I will keep this simple, POHs are infinitely more costly to maintain than TOHs. We are just talking about dollars but they also suck way more time in management.

Infrastructure- Apart from the utility infrastructure I want you to think of amenities like improved roads, pools, clubhouses etc 

Delinquent Tenants and Poor Management- It is not unusual to purchase communities where the owners have not been completely forthright with their rent collection. You can try to use their taxes for verification but it is still difficult, CAP rates will not reflect tenants that need to be evicted.

Hopefully, this has been helpful in providing some additional aspects that are unique to CAP Rates and Mobile Home Parks. 

 The biggest way for an agent to add value for an investor is by bringing the deals. It is a lot of work but it's the only way to build something that can't just be copied. 

If you bring the deals you will never have a problem providing value to investors.

 I am not doing any mailers but I am cold calling (Just not as aggressively as I should). My biggest issue right now is capital for purchases and not finding communities. I guess I could prospect harder for seller financing deals but in my mind I would hate to be in a spot where I can't move on something right away which is where I am now.

@Joe Mills be extremely careful on the values of the homes in the total value. If they are not willing to seller finance or if you don't have a bank that won't lend to you just based on the land I would probably pass. Don't get caught in a bad spot.

 I do 30 days on mine and I don't raise rents more than once per year.

I don't think the government should get more involved in property management. 

I am pretty sure under our current governance we have gone backwards by about 30,000 housing units and it is only getting worse. It is time for our legislators to get out of the way and let us build homes without all the strings they're tying to different incentives.

• -Researching Market Trends: Analyzing current market trends and identifying potential areas for investment.
• a. This would first be a macro view of markets then zooming into more micro trends.
• b. When looking at states to invest I would look at their governing policies and how landlord friendly they are or are not.
• c. I also believe in strong growing metros. I am considering branching outside of Utah for some apartment complex purchases and this is a major factor in my location criteria. If you have a strong Metro it can make up for a lot of other less appealing factors.
• -Setting Criteria: Defining specific criteria such as location, property type, Financing Options (Including Seller financing), and comfort level to narrow down options.
• a. We talked about location above but what I will add is that as a community owner, you have to know how you are going to manage your property and location is a major factor in this.
• b. When I say property type I am specifically referring to knowing the size of the park you want, what utility configurations you are willing to deal with, TOHs vs POHs etc.
• c. Your risk tolerance is going to be huge, I have had a few projects that were uncomfortable for me to work through and I would have gone about them differently knowing what I know now.
• -Networking: Building connections with real estate agents, property developers, and other industry professionals for insider information.
• a. If you build a database of other investors you will find parks. Especially, if you are talking to other owners, we know each other.
• -Online Platforms: Exploring online platforms, real estate websites, and social media for property listings.
• a. Every day I do a quick search on the MLS, Loopnet, KSL (Like CraigsList), Mobile Home Park Store, and Facebook Marketplace. The image below is the Google Task I have set up. I like doing hyperlinks it allows me to review the different sources in about 3 minutes a day=
  
• b. I have found parks in many different ways but so far I have bought 2 from the MLS.
• c. The most creative way I have found a park was by calling all of the owners who were mentioned as comparables on an appraisal I had done.
• Shout out to @Michael Smythe for the question.