All Forum Posts by: Daniel Smithson

Hi everyone! Just wanted to post the link to the full event schedule. The event starts next week with over 400 registrations already. This will be a great opportunity for community owners and future owners to meet (virtually of course) many of the movers and shakers in the business. Hope to see you there!

SECO '20 Full Schedule

Hi @Nick Russo!  What you're looking to do is to surrender the title, permanently attach the home to the land and then be able to sell it as real property. It can be done, but the rules around it vary by state and even lender. Most of the time you'll have to encase the full perimeter of the home in a code-compliant block foundation to have the lender recognize it as "attached." I'm not sure what the local state laws would be. Contacting the manufactured home association in the state where the home is located is likely the fastest route to that answer.

All that said, it's likely not necessary and can be quite expensive to pull off. Chattel lending can be, with the right buyer, very competitive still. Especially if the home and land are being sold together, a lender will be able to underwrite the deal with both the real property collateral and home title. Buyers can also qualify for a Title 1 FHA loan on a home, lot, or both combined so you can pretty easily tap the first time home buyer crowd.

Best bet there is to talk to a local real estate agent to see what they suggest and find out what is selling quickly in the market. Then you cater your MH purchase to what's selling and I bet the rest will fall in place quickly.

Even if you were to get the home recognized legally as real property, you'll still have an uphill battle with the stigma that end buyers will put on the home for being manufactured. However, without that added expense, you may still be able to hit a price point that they'll overlook that aspect.

Best of luck!

From my experience in TN:

Our used homes usually end up costing about $15 - 20k before they're sales-ready. Some of that is pad development (power poles, driveways, etc), but even purchasing them for $3500 a piece, once you move and set ($4k), add HVAC (it's always gone bad, $2k), new skirting ($1k installed), decks (anywhere from $500 - $1500), plumbing hookups, electric hookups, any rehab needed.... you see where that's going. The best I've done to date was about $12k without any rehab.

Now, to @Chris Ebert's point, with a dealer's license and the CASH program, I could set 2 new rental/lease option homes for the out of pocket cost of the one used home. Or sell them in place through 21st without any out of pocket expense. Yes, you may give up some profit in the homes themselves, but if you want to move at scale it's the only way to go. We're going that direction in the future.

Most of the items on your list you'll need to get bids for as they can vary wildly depending on what you're looking for and the scope of the project.

200 Amp power pedestals cost us about $1200 installed and we've been quoted as high as $1700.

Submeters aren't too bad if you use Metron or a similar company. They'll give you a few options with varying upfront/monthly costs that you can (likely) pass back to the residents. The install usually costs more than the up-front on the meter themselves. If the water isn't being abused, you may look into the legality of just doing a RUBS type setup instead of meters. You'll get 100% cost recovery (you'll never get that with meters) and all without the overhead.

Best of luck!

Welcome @Lazarous Williams!

I've been lurking on BP for a long time, but the MHP space is where we threw our hat into the ring as well. There are a ton of industry events and boot camps that will help with networking as well - all great people who are eager to teach. Wish you the best of luck!

@Paul Moore is on point. What you're looking to do is known in the industry as being a Lonnie Dealer and it's full of caveats to be aware of before jumping into the water. Back when this strategy was more popular, the big play was to buy the homes cheaply, possibly rehab them some, and then sell them on terms (then owner financing, now I'd steer you towards a lease option style agreement).  Unless the MH has depreciated out, you've also got to factor in depreciation over the period that you own it - they just don't hold their value since they're not tied to real property.

My advice would be to talk to the park owner/manager first to make sure they're even open to investors buying in their park. Some, like us, welcome investors (but with a cap on # of homes in one property they can buy) and others avoid it altogether. Also know that the park owner is going to have a lot of say-so in who you allow to live in your MH and they'll come to you to enforce their rules on your tenant.

The 55+ designation would be a red flag to me as well. You've essentially cut off over half of your renter pool (likely more based on renter demographics) so vacancy may be higher. Look really hard to see if you can drum up some leads before purchase.

A strategy to consider: If the park has a lot of infill going on, you may be able to partner with the park owner to provide short term rentals for their customers. Having a rental home as a "try before you buy" or as a temporary layover place while new homes are set may be a good win/win for you and the park owner. You might even get a discount on the lot rent.

If you really want to get serious in this space though, owning the land/community is where it's at here. I would highly recommend Frank's MHU and attending an industry event online like the SECO conference. And don't throw out using your capital along with some leverage to buy a bigger/better asset. You'll likely get better returns that way.

Best of luck and keep us in the loop!

Sure thing and I hear you completely! I think we could all use a few more hours in the day.

For anyone with a site manager (or if you manage your own park), the topics and speakers have been finalized for the Manager Monday event:

Manager Monday Topics and Speakers:

Finding the Humanity During the Insanity of COVID-19
Speaker: Maria Horton, Newport Pacific

Insanely Fun Changes You Need to Make Now!
Speaker: Ken Corbin, CallKenCorbin.com

Kick Back and Relax with Receivables Automation
Speaker: Lindsey Urs, Rent Manager

Where’s the Money, Honey? Collections and Evictions During COVID-19
Speaker: Ryan Fishman, Fishman Group, P.C.

11 Easy ways to Make Your Sales Listing POP
Speaker: Dawn Highhouse, MHVillage

Plus ample time for networking and exploring the SECO20 virtual exhibit hall and home show!

You may be able to find a local bank that's willing to underwrite the deal with the right proposal. That's the single biggest barrier to purchase with small parks like this. Just be prepared to talk to a lot of banks and hear a lot of "no's" upfront. Also, make sure to write in a financing contingency in your offer. 

If you bring back a list of 20 banks who all shot you down based on the condition of the park (financial or physical), the owner may realize that they're going to have to get creative to get a decent sales price. I'm trying this currently with a 100 space park with an amazing 8% financial occupancy. Ha! No guarantee it will work, but it can at least help re-ground the seller's expectations. 

On the plus side for your bank argument, MHPs have one of the lowest, if not the lowest, default rates of any commercial real estate asset class. Just make sure you are solid on due diligence and making sure the demand is there - it sounds like it could be a good opportunity!

Just wanted to add the following info that came out today. The early registration pricing is coming out for two more days - VIP access (and recordings) for the standard ticket price.

@Rachel H. is spot on. They won't want to give a conclusive answer, but they will have it filed away somewhere regarding how many approved lots, water/sewer taps, etc that the park has in place. 

Remember that it's the lot that's grandfathered, not the home itself. The park is literally just a parking lot with long-term parking. Of course, if it's worth fighting the battle with them is up to you. If you do move forward, I would suggest getting in touch with a local municipal lawyer for their opinion as well. I'm not aware of any city that has won that battle against a park owner who has stood their ground. HUD may also get involved as well since the city is actively discriminating against low-income individuals.

Just make sure that you position yourself with the city as wanting to improve the property, bring in newer (more traditional looking) homes and improve the perception of the property. Going toe-to-toe with city inspectors and code enforcement is never a good idea.

@Dave Rav I am a MH dealer in TN, but my license does not allow me to represent or broker homes with land (real property). Your state may be different. Just be aware that you may not have the same protections as you would with a RE agent. 

MH's with land sell together all the time. Over 6% of all homes in the US are manufactured homes. The process to sell them is very similar to a traditional home except that you will transfer separate title/deeds for the land and home. Any residential RE agent should be able to facilitate the sale. 

By your numbers, with the margin you've got on this one, you should be able to sell it quickly and make a nice payday! Congrats!