All Forum Posts by: Jefferson Lilly

I own 6 MHPs.  I just bought one like this in December.  We paid an 11% cap.  Small-ish parks like this just don't command the high prices that 75+ pad parks do.  I'd offer an 11% cap rate, maybe go down to a 10% cap in negotiations.

But before you get into this business you need to study!  Frank & Dave's bootcamp is a must.  It'll answer questions you did not even know you had.  Mobile home parks are quite unlike any other real estate niche.

My podcast on MHP investing can be downloaded here: http://www.biggerpockets.com/renewsblog/2015/02/26...

Get educated before jumping in.

My 2 cents worth,

-jl-

Shameless plug for my BP podcast on MHP investing:

http://www.biggerpockets.com/renewsblog/2015/02/26...

I did not address specifically why you should not start a park from scratch.  But if you follow what I am saying about how great up-and-running MHPs are, it should be apparent why starting one from scratch is a huge headache.  I'd only consider it in a really major metro, and there basically are not any provisioned vacant pieces of land truly 'in' a major metro left.

My 2 cents worth,

-jl-

Don't ever build a MHP from scratch.  Here's why:

http://www.mobilehomeuniversity.com/articles/why-y...

You must attend Bootcamp prior to investing a dime in this business.

Good luck,

-jl-

We tend to stay away from parks with master-metered electric and gas. They are rare, but they are out there. You might want to contact the electric and gas companies to verify that the park is master-metered, and if so, ask them what it would take for them to take over responsibility for the lines. You run a big risk that the gas lines go bad and the park has to be re-piped. That's a big CAPEX. (My be cheaper to help residents swap out their gas hot water heaters and stoves to electric ones.)

Run your test ads.  Don't touch a park that does not yield at least 20 responses/week off CraigsList.  

It'll be nearly impossible to find mobile home owners to move in their own homes and infill your park.  We only own one MHP that is infilling with people moving in their own homes; our CL ad pulled 68 responses/week.  So you'll most likely have to buy MHs yourself and move them in.  Older ones are indeed much cheaper.  They also attract a much, much rougher tenant - especially in the south.  You may want to consider buying ~15 year-old homes for ~$10k - $15k.

Really you need to attend Frank and Dave's Bootcamp before investing a dime in the MHP business.  There is just so, so much to learn.  I could write all day here on BP and still only scratch the surface.

To your continued education,

-jl-

P.S. My BP podcast on MHP investing:

http://www.biggerpockets.com/renewsblog/2015/02/26...

Shameless plug for my mobile home park investing podcast here on BP:

http://www.biggerpockets.com/renewsblog/2015/02/26...

You don't actually want to own just the mobile homes.  It is much more profitable to own the land underneath, and have a mobile home park.  That said, if you really want to own just the homes, I have about 3 dozen available for sale in my parks in OK, KS, and IN from $6k - $30k. Contact me directly, let's talk.

As regards finding MHs for sale, CraigsList is a great way, as is contacting the MH finance companies directly to get on their weekly email list for wholesale homes (21st Mortgage, Vanderbilt, GreenTree). 

To your continued success,

-Jefferson-

I'm the MHP Podcast guy.  Glad you found it insightful.  : )

Education is critical in real estate.  I'd suggest you:

1. Attend the MobileHomeUniversity.com Bootcamps.  Tell Brandon and Frank I sent you.

2. Attend a seminar by Pete Fortunato and Dyches Boddiford.  They teach together a few times a year.

A weekend both places will teach you everything you need to know about both MHPs and asset protection.  You must know both.  Neither of the above seminars teaches what the other does, so you really need to attend both.

To your continued success,

-Jefferson-

@Janene Tompkins 

Your timing is impeccable.  I just did BP's first-ever Podcast on mobile home parks yesterday (BP Podcast #111). There was not time to cover it all, but you'll get an overview of why MHPs are better than any other asset class if you listen to it.

Find it on iTunes, or take a listen here:

http://www.biggerpockets.com/renewsblog/2015/02/26...

To your continued success,

-Jefferson-

@Gina Dovel 

Buy a mobile home park.  Find one in a 'medium' or better market that needs fix-up of some of the homes, has upside in rents, needs water meters to be installed to encourage conservation and cut costs, and comes with seller financing.  You'll be able to hit your 31% cash-on-cash goal and keep the money coming in without having to to find another deal or two every year to 're use' your capital.  One and done.

I just did BP's first-ever Podcast on mobile home parks. There was not time to cover it all, but you'll get an overview of why MHPs are better than any other asset class if you listen to it.

Find it on iTunes, or take a listen here:

http://www.biggerpockets.com/renewsblog/2015/02/26...

To your continued success,

-Jefferson-

@Mark Gibbs 

I just did BP's first-ever Podcast on mobile home parks.  There was not time to cover it all, but you'll get an overview of why investing in 'the whole enchilada' (mobile home park) is so much better than just investing in the mobile home:

Find it on iTunes, or take a listen here:

http://www.biggerpockets.com/renewsblog/2015/02/26...

To your continued success,

-Jefferson-

@Ryan Cauzza 

Whatever you do, don't 'follow the herd' (pun intended) and do what everyone else is doing.  Given that your family is in an unusual asset class and obviously takes the very long view when it comes to investing, I don't think there is much risk of that.  Congratulations. 

I'd stay away from SFH, Apartments, Retail, Office, or any real estate with four walls you have to maintain. Roofs, walls, toilets, heaters, etc. are all just way too expensive to repair, and renters disrespect them.

You should buy a mobile home park.  MHPs are 'parking lots' for better-than-average multifamily tenants (e.g. better than apartment renters because they have stepped up to owning a home - although not the land).  It is not expensive to own and maintain land.  Also, it is now effectively illegal to construct any more MHPs in America.  The supply curve is fixed (actually shrinking as existing MHPs get put to higher and better uses).  No other real estate asset class has shrinking supply.  Demand continues to grow - there is no shortage of families living on $35,000/year or less, and supplying them with homeownership opportunities is honorable work.  You also have the optionality of future development of the land.

I've been investing my own capital in MHPs for 8 years now.  My partner and I are closing on a MHP in 2 weeks with an investor in the exact same situation as you.  He had $800,000 to invest through a 1031.  We helped him identify the property within his deadline, and have structured a partnership whereby we will operate the real estate for him, protect all his tax benefits, and provide him double-digit cash flow returns ($80,000/year) plus appreciation.  Additionally, he will learn the business alongside us so he understands what we are doing with his money, and, frankly, he will be able to go purchase a MHP on his own if he so chooses with his next 1031.

I'd be happy to chat with you if you'd like to learn more.  Also, take a listen to my Bigger Pockets Podcast on MHP investing that just aired today.  It is Podcast number 111.  Find it on iTunes, or listen here: http://www.biggerpockets.com/renewsblog/2015/02/26...

All the best,

-Jefferson-