All Forum Posts by: Jim Johnson

I have hear from some M&M agents in the past- but the properties were not what I was looking for. Most of the great deals are pocket listings, or listings that are not listed correctly. One park I have was listed on the residential MLS as a multi family apartment, and then they corrected the listing in the comments saying it was really a mobile home park. T hat said- I will work with anyone with a lead on a property.

First- I know if this law in Indiana because I own a park there. In the states I operate in, Colorado, Texas, Nebraska and Indiana- this is the only one with the specific law. I recommend park owners read the statute, and then figure what is the best type of radio to supply. The type and instillation goes to legal advise. If your going to supply them, you might call Midland and see if they can give you some guidance. I would not just buy a weather radio and think you are now in compliance. There is also in the IDEM code, a guideline as to when you are to remind the tenants to check the batteries etc... I would combine that notice with something else you send out yearly- for us the winter is coming, check your heat tape, drip faucets, button up skirting etc. Our standard fall notice.

Here is the law-

http://www.gpo.gov/fdsys/pkg/CRPT-110hrpt415/pdf/C...

in short it says homes that are new, and newly set up in a mobile home park after the date in 2007. I figure- supply every home with one and call it a day. If something happened, you did your part and there would be no one that could come after you saying otherwise. 

That is a park that rents the homes, not just the land. Park Owned Units. 

Indiana has seasoning rules on rules and regs. They have some special rules if they are posted in addition to being delivered. Also- if your turning over homes- there is a 'weather radio' law as well... just fyi

I do not do the park owned thing. The operations on a space rent only park is very easy. Park owned parks for me is not worth the headaches. For a few bucks a month, I will just buy another park. I would venture to guess it takes 3 times the energy to operate a park owned community. 

That depends on the market, age of homes, turnover rate etc. So that number varies vastly. In an average market, with older homes and 20% yearly turnover the additional income from the rental is pretty close to a long term wash. There is probably a little income, but way more management and upkeep. It is sort of like owning a depreciating, flat apartment complex.  Except there are furnaces for every unit, and water heaters for every unit etc... 

That was long winded and not very helpful but background never the less. I take the market space rent and value the community on that number. So if market space rent is $200, and the park rents a home for $400- about $175 of that is probably added to the park operations expenses. So figure about 50% of the space rent if you pay water, sewer and trash. The higher ratio is the added management and maintenance labor. So $100 of the pad rent and $175 of the rental. I know- it sounds high. When a unit turns over it might cost 2,500 - 4,000 to turn it over. Some units will turn over every year- which is very costly in lost revenue and the time and cost to do repairs and the make ready. 

There are some markets, like oil and gas markets for instance that might cash flow like a shedding money tree. I am talking about a regular park, in a regular town. 

I think owning the parks is a vary, very good long term return. That said- The Cash on Cash return generated off my mobile home deals is very hard to beat. On the bottom end I was at 40%, and well over 100% on the top side. The overall return was off the chart. If there was a downside it was you always needed to bring more online to replace the ones that were paying off. In general, they are both great investments. 

So the only number you use to CAP the property is the space rent. The rest of the income is counted, but not capped. The utilities is an offset to expenses- or you hope that is all it is. I have looked at parks where where an owner was charging like $30 / month for gas charges, and the actual cost per unit was only $10. That- is a huge problem for lots of reasons. So your best off using an APOD / Cash on Cash / and IRR spreadsheet to calculate the return if you can not do it shorthand. If I am putting together a report for use in my internal meetings, or to present a property to a person that wants to partner with me, I use the program at rentalsoftware dot com. It is easy to use, and you can just crunch numbers or doll it up with photos, maps etc...

Expense ratios will vary depending on the size of the property, location and infrastructure. You can be anywhere between 25% for a really, really easy property, to 60% for a complex property that has no utility bill backs and private utilities. And that is if they are well run. I find parks all the time that operate between 70 and 100% income - expense. They need lots of expertise and/or cash to turn around.

As a rule- we always say yes to service animals. A very, very good recourse for this is your insurance provider. Ours, Mobile Insurance Agency has a link to forms used in mobile home park operations. They have one that is dedicated to this subject. 

mobileagency dot com