All Forum Posts by: Joe Smith

What about a situation where you have a true resident manager who gets a salary + Free Rent?

Do you still have to include the phantom rent (i.e., what you would normally charge him) as part of his/her income?

The "15 days OO only" is mostly a Fannie/Homepath thing...and Homepath DOES offer a rehab product.

I have seen some parks with a SFR on the premisis, probably where the original owner lived. Are these valued differently?

Looking to invest in MH parks in OH, PA, and maybe WV and MI (within a 3 hour drive of Akron, OH)...

1. Is there a size range that tends to have the most upside potential from the perspective of cashflow and resale value?

It seems the REALLY small parks, under 20 spaces, are difficult to finance (aside from owner financing) and it takes a lot of them to make the cash...if one were 3 miles away, I might do it, but across the country doesn't seem as worth it.

Over 200 spaces or so seems to have lower cap rates, probably due to the fact that once you hit that size, you start getting into the Institutional Investor crow. However, a low-occupancy park of this size could be a great turnaround project to resell to an institutional investor...

My gut says 50 - 100 spaces is the "sweet spot" but am I wrong?

2. What are the pros/cons of "Over 55" parks? Do they tend to have higher or lower cap rates? Are they more or less management-intensive? I'd assume you have to keep your grounds better and have more on-site amenities, but, at the same time, since seniors are less likely to let auto parts build up outside, or throw parties, they may actually require less direct management...

Just looking for feedback.

Thanks!

I'd definitely prefer to set up an automatic withdrawal for rent...maybe even offer $5/mo off rent as an incentive to set it up...has anyone else done that?

My preferred method of collecting rent would be:

1. Auto-draft either from checking or maybe a credit card?

2. Mail directly to my PO Box

3. If they insist on giving to manager, I can have the manager instructed to just stick in an envelope and mail to me (I will provide postage)

4. MAYBE for collections/delinquencies only, the manager could get involved, or, my wife and myself can handle those ones if they are within local travelling distance.

By the way, how does one set up the ability to autodraft a rent payment? Should I just ask my bank about it?

Well, since sales and marketing is "my thing" (and what I do in my "day job") I can handle the lion's share of that with my wife's help...she is a stay at home mom and now that the kids are in school during the day, she gets antsy once the kids are off and the housework is done. She offered to help me with this...she's more gung ho than me in fact...

Here's some more questions/observations:

1. It's rare, but I have seen on loopnet where sellers have a portfolio of a couple or three parks that are geographically close to one another, in some cases just a few miles between them. Would it be possible to hire a single manager for 2 or 3 parks? I'm sure I'd have to pay him/her more than to manage one, but since its generally a rather low-level type of management (when compared to an apartment anyway), it might be possible, and for my wife and I, having a single manager to deal with on multiple parks seems cheaper and easier than two or three managers in two or three parks, for example. While technically not a "resident" manager in all parks (just the one they actually live in), they could be at any problem site within a few minutes...

2. When looking at expense ratios, I've found that low isn't always good and high isn't always bad...if it's low, it *might* be that the park is running smoothly and profitably, or, it might just mean current owners/managers don't do a damn thing, so it's cheap, but has $100,000 in deferred maintenance! High could mean either it's overmanaged, poorly managed (not rebilling water, etc), or just at too low of an occupancy. In fact, I'd think a 100 space park at 60% occupancy, all else being equal, would have higher expense ratios than the same park at 95% occupancy, since, you have the same infrastructre and same plot of acreage to take care of no matter who lives there...am I on the right track here?

3. One day I look at it seems that MH Parks are a good, profitable, if not glamorous, investment...the next day, it looks like that once I pay someone to manage it, I'm flat broke in the end...aargh!! In all honestly, I could see taking a poorly maintained park with a 40% expense ratio and 60% occupancy over a 5 to 10 year period (buying to hold not resell) to a well maintained park with 95% occupancy and a 35% expense ratio, and make a nice windfall eventually...but in the meantime, with marketing expense and repairs, I'll have a very high expense ratio/low NOI for some time to make that happen...

4. As far as paying managers, here was one idea I came up with...set a smallish base (15k - 30k/yr plus free lot rent depending on size of park) then a $1000 bonus for any new resident they bring in to the park...as a sales commission type thing...is that way off base or does it make sense?

Ideally, I would like to find one with a manager in place that is included in current cap rate calculations...but thats probably asking too much, esp.if I want a park with good upside potential.

Except on "Flip That House"...SO many of those deals, I knew up front that they were doing the project in hope and faith...that the expected margin was so narrow that when the inevitable SNAFU showed up, they were screwed. Usually on those shows, they bought too high to start with, put way too much high-end stuff in, and, had an unrealistic selling price at the end.

Here's a thought to increase occupancy...has anyone tried this?

Offer an incentive plan. Buy the park and say "OK, due to some long overdue maintenance I am doing, I will be increasing your lot rents from $190 per month to $205 per month.

However, I am making an offer to all of you as well. Anyone who can get a friend, family member, coworker, etc. to move in here and bring their home to one of our empty pads, gets a free months lot rent when they move in, and another free month if they're here a year."

Spending $400 to get a probable long-term temant seems worth it to me...right?

Would this even work?

Is there a size level where a MH Park investor should hire a resident manager?

If I still work a full time job, one where I can't really just leave anytime someone's water line breaks, or complains about a loud neighbor, I think I need some "boots on the ground" if I end up investing in a park or two.

Questions:

1. From a legal/compliance standpoint, how much do I pay them, and, can free lot rent go towards that?

2. I don't want to pay too little, but I also don't want to pay a guy $30,000 a year plus FICA if I own a smaller park that's only at $1500/mo positive cash flow to start with.

3. I imagine for most parks, except those that are very large (250 spaces or more) would be served fine with a part-time guy that works 10 hrs a week at most on actual duties, since about the only things most parks need that aren't the responsibility of the owner are leaking/nonfunctional/disprepair of roads, infrastructure, water and sewer, tenant disputes, and people that don't pay their rent...

Any info/advice?

How far do people usually take it? Do the managers usually do bank runs for rent deposits, or, stick to only "problem tenants" and let others mail in or set up auto-debit for their payments?

I keep thinkinng the best option would be to see if one already exists in a park I am considering, and go from there...or, ask the current owner how intensive of a job managing the park is/can be...and maybe it turns out that I pay the guy in free lot rent plus 10 hrs a week at $10/hr, and have him let me know if he works more...