All Forum Posts by: Dave Rav

Also sounds like a "side dish" of the inherited tenant on top of them being a handyman.  Some tenants (not all) from the prior ownership can be a challenge.  And out of the ones who are a challenge, the longer they've been there the more challenging they can be.  Yes, this handyman's expectations appear to be based off his experience with the prior owner.  Not always a good thing.

We had a tenant who used to get a reduction in their lot rent (from prior ownership) in exchange for filling pot holes in the Park's gravel road.  When we took over, we quickly discontinued that "arrangement" as we foresaw all kinds of scenarios.  This included: not performing the work, having to fight with them over what is acceptable job completion, and overall having to babysit the whole thing.  Not worth it.  So, we opted out.  

@Tyler Mellor wondering how the transaction with Vanderbilt went?  I know they loan on individual homes; wasn’t aware they loan on MHPs.  Can you tell us more?

Further, I see @Marty Johnston commented.  Though I’ve never done a deal with Marty, we did vett a deal or two together and he is awesome.  Very responsive, informative, and great to work with.  I recommend him.

@Joshua Christensen we do not.  Maybe Logan has some advice here?

@Logan M. I think you hit 3 important points.  Especially with #2.

If I may add:

(to build onto Logan's point #1, regarding rent collection) - the larger point here is overall management burden.  This asset class seems to require more touches with management than other classes.  Be it rent collection (ours actually is nicely automated and not really problematic), getting tenants to follow rules, maintenance, etc.

"Sticky" tenants - moving a mobile home is a big deal, and a substantial cost.  Generally speaking, tenants shy away from doing this.  Therefore, tenants will more likely remain in your park.  Of course, there are always exceptions (they use their tax return $$ for the move, another park offers to pay for the move, etc)

Location is DEFINITELY a consideration. I would think SAC area would command much higher lot rents, primarily based off prices of conventional real estate.

Glad it is working out.  Were you able to pick up the property at a significant discount or in good terms?  I’m curious to hear how you purchased.

My main issues with that low of occupancy is the 

1) minimal initial income producing ability early on.

2) lender limits regarding “stabilization” of the property (many like 80% occupancy, though a few will consider lending at less occ). This comes into play both at purchase or during any early-term refinance attempts.

@Roger D Jones great.  Sounds like a well-oiled machine.  

We too have owned POHs, though none in the portfolio at the moment.  It definitely pays (pun-intended) to keep them maintained.  As you know, MHs are not built to last.  Couple that with certain tenants who "live hard" in the units, and you're primed for significant maintenance.  

Over the years we've learned how to mitigate each of these to a degree.  For example stringent tenant screening standards are particularly beneficial.

Best!

Cliff,

Sure thing.  Send me a DM and we can discuss further.  Thanks!

@Cliff Benner Going great.  It's all about managing expectations, and setting up systems.  Screening tenants also is helpful (averts heavy-management scenarios).

We visit our MF properties monthly at minimum.  Driveby only.  Process takes 45-60 minutes, if not less.  Includes drive time.  Interior inspections would be at significantly less frequent intervals (maybe annually).  Off-site bookkeeping etc is maybe 3 hours per month.  Some months it's less, some more.

Our record for "no touches" on a property (that includes visits and phone calls) is 13-months.  Thats over a year of income that was 100% passive.  Ended up being the result of a very good, mature and responsible tenant who took great care of our property.  (oh pardon me, we may have gotten 2 texts from her in that time frame.. took no more than 5 minutes of our time)

On the flip side, we've had scenarios where we've had middle of the night emergencies.  About 12 years ago, had a tenant with plumbing issue (the proverbial "toilet" issue you hear about).  But that was only ONE incident, and was when we were very green.  Now, we have systems and arrangements in place where this never happens.  We've not had an after-hours call in almost 10 years; we are contacted the next day on the rare event something emergent occurs.

Once your tenants understand how you do business, it's significantly more hands-off. But laying down ground rules as well as expectations on the front end is so important.

Sean, thank you.  Our primary issue on both previous CPAs was lack of engagement/enthusiasm in their work.  Response times began to lag as well.  One CPA got rude on more than 1 occasion, for us merely asking a simple question.  I'm sorry, I dont pay you to be rude!

All our data was well-organized and cleanly presented (no dropping off boxes of unorganized documents in their lap).  I'm not sure we could have made it any easier!  I spent several man-hours organizing our data for easy interpretation.  At their request, we uploaded docs via dropbox.