All Forum Posts by: Derek Robinson

I've got three parks that I own solo and have experience turning around old parks.  I'm looking at starting a separate entity that buys parks with investor funds and split up the profits quarterly.  I'd be doing all the work (finding parks, hiring and oversite of property management, tax forms, etc.)  I'm thinking of putting 0% of my own funds into the deals, but retaining a 25% ownership of the property, and profiting 25% of proceeds of income.

Does this sound fair?  I'm thought about different options, but this way seems fair to the investors and fair to me.  My attorney suggested that I pay myself a 'salary' for management, but giving myself ownership seems better for the investor (the better I manage the park, the more profit and motivation I have).

Thoughts?

welcome! I'm in Asheville​ as well. I have buy and holds here, but have recently​ started to invest​ in other markets due to Asheville's high prices. Let me know if you have any questions about a deal or the area, I'd be happy to help!

@Jim Johnson Wow, Jim, that is quite the price hike!  I have a hard time balancing between raising to market rents immediately to capitalize on the investment and feeling bad for the tenants.  That's for sure the largest increase in price I've seen without fallout, but like you say, it's too expensive for most of these folks to move their homes.  It's also still cheaper than they could rent apartments for in the area by half.

Seems like a lot of people in this post have experience and examples of crazy markets.  My market is one where most long term park owners are in their 60's and 70's and haven't raised rents in 20 years.  Raising rents from $150 to $200 or $225 isn't going to break the bank for anyone.  I'm not in California where lot rents are between the $500 and $800 range.

I read an article somewhere pushing for lot increases for the benefit of the tenants.  The main thrust to the article was that owners than don't raise the rents are creating a piece of dirt that has no value to a new buyer once the current one retires.  If you have an acre with 10 trailers getting $80 per lot, that's only $9,600/yr.  Once this owner decides to unload, chances are it will be sold to a developer that can make much more money building something else, be it houses, hotels, commercial building, etc. that will net a greater return.  Sure the old owner 'helped' the tenants by never raising rents, but ultimately they are getting kicked out of their parks when the owner is done managing his investment.  I've seen this in Asheville, a trashy old park in a booming area was sold.  The new developer paid each tenant like $3,000 for the hassle.  Most trailers where too old to be moved.  Now these people are going from spending $150 for lot rent to looking for an apartment at $850/month.

@Jason Burr Sure, sounds good.  I'll hit you up when I'm in Spartanburg again.  Not sure when that will be at the moment.

Thanks for the replies everybody! Very helpful

I saw that park and am talking to the seller today, but no, I'm closing on a different park.  Owner did a horrible job of advertising and it's been for sale for 4 or 5 month now.  I've been looking at it but had to wait to sell another property to have the funds to purchase.  It's an 8 pad, 4 dirt only rentals, one park owned rented, one park owned vacant (needs rehab), and two empty lots.

The one from the tax sale is ROUGH.  All units have compromised roofs, missing windows, rot everywhere, junk stored in most trailers.  None of them are fixable.  It's an interesting little property, but would take a lot of work and money to get it into a decent shape.

@Jason Burr  close to the Methodist college in Spartanburg

Hello all!

I'm closing on a 8 pad park in South Carolina next month.  Current lot rents are $150 and haven't been raised in years, like over 15 years.  Market lot rent for the area is at minimum $225.  How much do you think I should raise them?

My initial thought is to raise it by $25 to $175, but I'm wondering if I could even go to 190 or 200.  All tenants own their trailers with no payments and all work for a living, so there is no situation of living off welfare or social security.

@Kenneth Mooney can you share any details of their plans?  How much are they investing in the area? Single family only? Etc...  My inspector didn't know much beyond hearing about it.

I've become financial independent in about 6 years. 6 years ago I built a cabin on the back lot of my primary residence to rent long term from an existing structure, so I was only about $3k invested. Then I built a second with a 401k loan. Then I borrowed 25k from a relative for a down payment on a new house for our primary residence. then we got a HELOC from this house to put down payments on two more. At this point the wife and I were both working so my rental income built so I could put a down payment on yet another. I did all this part-time working nights and weekends to do rehab. Last year I brokered a deal with a church where I lease space from them, rehabbed the space, then sublease to a video production company. At the end of last year, I decided to go full time in real estate and have since purchased a small mobile home park, two SFHs in another state, and a small apt building. I will say that we personally have no debt other than our home. We drive modest cars that we paid cash for. We live in Asheville, NC, which isn't cheap, on 35k/yr. My wife quit work 3 years ago when our daughter was born, so the 401k loan was paid off from her job. So we are not taking extravagant vacations, driving BMW's, and living in a 4,000 sqft house, but we are happy and have free time to pick up and go as we please to visit new cities, see extended family, and live by our definition of 'comfortable'.