All Forum Posts by: Jefferson Lilly

And yet the one study on crime rates in MHPs vs. 'regular' neighborhoods documents "...no significant difference in population-weighted crime rates between blocks with mobile home communities and other types of residential blocks."

http://www.huduser.org/portal/periodicals/cityscpe...

As a buyer of MHPs, I'm benefited by the fact other investors irrationally view MHPs as being 'dangerous' and don't compete with me for properties.

-jl-

My understanding is that all of us are allowed to sell one residential dwelling per year without becoming an RMLO.  If this is your only deal this year, then I think you are fine.

Also, it is not clear that rent-to-own agreements are regulated by Dodd-Frank & the SAFE Act. This matter has never been tried in court. It may be regulated, it may not. RTO agreements are options, not obligations. And HR1779 (making it's way through congress) would amend Dodd/SAFE and clarify that they are not.

But we just don't know. So if you RTO the home, rather than 'selling' it and carrying-back a mortgage, then you may well also be exempt from the needless regulations. We actually do Rent Credit rather than RTO. RC is like RTO-ing, but the resident can cash-in their credits on any mobile home we have for sale. The credits program is like the greenstamp programs grocery stores used to offer. RC paperwork does not attach to any asset at all, and, thus, is even farther away from being considered a 'mortgage.'

Here is why you should never build a mobile home park from scratch:

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

Best,

-Jefferson-

Don't build a MHP on the land.  Here is why:

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

-Jefferson-

At least 15%, probably 20%. 1. There is not much demand for such small properties 2. If you buy 'far away' from home, then just one unanticipated trip to the property (flights, hotel, car) will greatly reduce your profits 3. Most banks won't finance such a small property in such a quirky niche of real estate (so you'll need to rely upon seller financing) Good luck, -Jefferson-

www.mobilehomeuniveristy.com has by far the most extensive forum on the topic of MHP investing.

-jl-

Bootcamp is $2,000 ($3,000 for two).  Buying a small park to 'experiment' with could be .... 'priceless...' expensive.

-jl-

www.lillyandcompany.net

Typo here, sorry.  How does one delete a posting from BP?

I'm a Californian who manages/invests in the greater midwest.  Distance is not an issue, if you get educated first.   The key issues I see are:

1. You are not yet educated in the ways of mobile home parks.  They are quirky.  Managing from a distance is no issue after you've put in the time to get educated.

2. The SE is a particularly bad place to own any sort of residential property, especially MHPs.  The economy there is perennially weak (unless you are right in Atlanta or Nashville or one of the other large cities).

3. The price is not great.  Small parks trade at a discount (higher cap rate) to larger properties precisely because so few people want to 'mess' with a small park and that financing is difficult to come by.  My gut would tell me that $100k would be more fair value, and perhaps as little as $60k.  (It'll all depend on location and infrastructure).

Good luck,

-Jefferson-

That sounds like a fair valuation.  Small parks are relatively illiquid and do not appeal to larger buyers, so they trade at high cap rates (15%+).

But you have a hundred+ hours of learning to do.  I like the course materials offered at MobileHomeUniversity.com - especially their 3-day long weekend bootcamp.

The key things you are going to need to focus on are:

1. Is this park on city water and city sewer?  If it has well or septic, I'd drop it - there is simply too much 'big expense' risk, unless you are fairly flush with cash.

2. Is it in a major metro (50,000+)

3. How many of those mobile homes will you own?  They are a pain and a real expense to manage.

4. Does the P&L show at least a 30% expense load on the lot rents alone?  (The P&L for the mobile homes may well operate at/below break-even - a good reason to get out of the mobile home business and focus on the land).  Many sellers under-report expenses - especially their time spent managing (at least 5% of revenues) and repairing (at least another 5% - 10% of revenues), and doing accounting (figure $1/lot/month).  Also, your property taxes will likely rise, unless you are purchasing the property for less than it's current assessed value (I've only managed to do this once).  So make sure you are not using a tax figure based on the current value of the park, which is likely based on the seller's acquisition price from a decade ago or more.

5. How are you going to finance this? This deal is too small/unusual even for most local banks (still, call them). If the seller is offering reasonable seller financing (say, 75% LTV, 5% fixed for 5+ years on a 20 yr. am.), then your financing problems are solved.