All Forum Posts by: Ken Rishel

 On a park that size, there are many banks that would be interested. While I recommend Clayton Bank for many things, this would not be one of them. Wells Fargo would be the first one I would talk to and not the local branch but rather Tony Petosa in Carlsbad, CA now that Creighton Weber has retired. I would also talk to a very dear friend of mine, Luis Vela of Q 10 Capitol. I am hampered here because the rules state I can't put phone numbers or email addresses here. There would be a number of others I would recommend as well.

You might also want to talk to Sunstone Manufactured Housing Consultants ( Chicago) and talk to Kolman Bubis, who is also a friend. They can not only help put together financing, but can also offer astute advice on some of your other questions.

 It does not need to go through a title company. It is handled the same way as cars are handled in 49 states.

Rent increases are always difficult. The better you explain it, the less trouble you will have and the explanation needs to contain reasons why the rent increase is beneficial to the resident. I'm not sure I fully agree with John's statement that people won't leave because of the expense of moving them.

In 1998, I was partnered with a family in a park of 1000 sites. We were at 96% occupancy. We sold the park for almost $40,000,000.00 to another operator. The park, in our mind, was worth 12-4 which is why we sold. Our lot rent at the time was $217 for about 40% of the community and $375 for the rest.

The new owner to meet his debt payments started raising the rents immediately. By 2010, he was at $675. When bankruptcy was his only out, the park was at 41% occupancy. By the time the bankruptcy operator gave up, it was at 32%. Most people just walked away from their homes because they could not afford the payments and because they had a very bad taste in their mouth about land lease communities.

One of our clients bought it for $12,000,000.00, lowered the lot rents to $375 throughout and is now filling it up again. 

 Sure.

First add your contact information to your profile - phone numbers, email, website.

Second, add to your profile by fully describing what you are looking for from others and what exactly your company does. It is insufficient to say you are a lender without describing what type of lending you do and the perimeters of that lending. For example:

• Are you lending money to community owners to buy communities?
  • As an equity partner?
    • Do you expect a seat on the Board?
    • or, are you interested in passive investments?
  • As a straight lender?
  • Are these institutional loans or private money loans
  • What are your guidelines?
    • How small a community will you invest in?
    • How large a community will you invest in?
• Are you lending money to consumers to buy homes?
  • Are you going to work through communities and retailers to secure borrowers?
  • What credit levels and what amounts and terms fit your appetite?
• Are you lending money to floorpan homes? 
  • Will you lend to a community just until they sell a home?
  • or, will you lend in a format where they can rent or lease the home to consumers?

  Perhaps this will help you. 

 I'm confused. Are you looking for information or offering to supply it?

I don't know about the "great honor" as there are a few others that post here from time to time that are also very knowledgeable, that are also donating their time to try to help new people understand and get into this business. 

The size of the lots is going to depend on:

• The size of homes you select
• Local or state laws regarding set backs, etc.

As to what homes to buy, you are into another area altogether. One of my pet peeves, and I have many, is that even experienced operators undervalue the importance of doing market research on what will sell best in their particular area and in their particular community. Doing proper market research is critical to achieving the highest level of success your opportunity presents you. (If you need help with this, email me and I will email you a free white paper on how to do this research.)

I cannot count the times I have been told, " I can only sell x number of houses a year so how can you sell as many as you do?" by people who have not done any serious market research. The size and price range of the homes you select, and by extension the size of your lots, should be determined only after this market research has been done.

Example:

I finished a one year project last year to buy a small community, remove the existing homes, downsize the number of lots from 73 to 52, and sell and finance those 52 homes in that same year. The homes I selected were 16'x 60' with a built in front porch on the hitch end for $40K. Down the road 5 miles there is another community doing nothing but high end 32'x80' with attached garages that sells around 20 homes a year for $135K.

Part of the difference is the second community is capital restrained from building out faster, but they still have a very sound operation I would love to own if I were younger. I was able to accomplish what we did, because I was not capital restrained, and because I knew exactly who the prospective buyers would be and how many of them I could count on to buy a home in that redone community.

As a general rule, our company never recommends anything narrower than a 16' wide, even in shorter configurations, unless it is a smaller multi section like Titan builds for lots that have width but not length. The exception to this rule is normally in California along the coast or in the Florida Keys.

As a wild, and unsubstantiated guess, given your general area, the smallest might be a 16'x80' that I would be comfortable with, but again, do the research. 

The Illinois Manufactured Housing Association is currently fighting two bills in Illinois that would allow rent control law and regulations. We have stalled both bills temporarily.

We will be putting on a Lobby Day on March 14th in Springfield, Illinois where community owners will be given position papers and guided to a meeting with their state representative and senators. That evening we will be hosting our first ever Legislator Reception. Our Board of Directors will meet on March 15th which everyone is welcome to attend.

If you are interested in attending, register at the IMHA website or call Frank Bowman at the IMHA office for more information.

Look. A new development, large or small, is tough but it can be done and there is money in doing so, if you do it correctly. 

If it were me, I would get the necessary zoning for those 30 acres first. If you are saying you own part of the land but not all of it, I would get an option on the land I did not own contingent of being able to obtain the proper zoning. I would then, after the market research, buy the type of homes that make sense based on the results of that research. I would buy them in the numbers I could handle based on my construction and sales capacity for the construction season with consideration of available capital. In addition to the home I would (in your area) budget $30K to develop each lot. I would sell the homes for placement in my new land lease community and collect the lot rent.

There will be much to learn and a number of legal and licensing issues to be overcome. It might be worth considering bringing in a partner who is experienced and competent in community development. 30 acres means you should have enough land to develop the lower end of an investment grade community that is well worth doing.

You should know that many husband and wife teams started with very little, borrowed a lot of money, worked smart, and very hard, and five years later found themselves millionaires doing just what I think you are considering doing.

I'm not sure that cap rates should be your main focus. That said, you may want to get in touch with JLT Market Reports for the kind of information you may be looking for. (They are a division of Data Comp and can be found on Data Comp's website.) GMA Management out of Indianapolis would also be a source of information you may want.

Don Westphal from Rochester Hills, MI runs the leading site planning and landscape architecture firm in the manufactured housing industry that almost every land lease manufactured housing community developer uses when doing new development or major expansion work. You should be talking to him sooner than later if you are serious about development as he has a wealth of knowledge and expertise you will need.

Manufactured Housing Resources Group of Littleton, CO can help you with financing your project and supply you with considerable knowledge. Their President, Roderick Knoll, is extremely knowledgeable about development financing in the manufactured housing industry.

You may use my name with all of them if you wish. The only thing I ask, is don't bother them unless you are serious about moving ahead if it makes sense. All of them charge for their expertise, but they are worth whatever they ask. I have done business with all of them as have every major community operator in the country, along with many newer and smaller groups that are serious about success.

There is no question in my mind, and in the mind of many others, that manufactured housing land lease communities are one of the best, if not the best, commercial real estate available for investment. I can't imagine investing in a strip mall or apartment complexes, and can barely imagine investing in a hotel/motel, but MH has proven itself to me over and over again. I know over 100 people who started with nothing or very little and by working hard and working smart, have become very affluent. The book, Millionaire Next Door identifies manufactured housing community ownership as the number one way self made millionaires use to do so.

So, what is the problem?

The number one issue, as I have written here before, is that people don't know what they don't know and they are unable or unwilling to expend the time and money to learn enough before they invest. People often post to BP similar to this, " I've saved a little money and I want to buy a community next week so what should I do?" without even knowing enough to post basic starting points for people to give them real answers. 

Sometimes they will post, "I want to sell homes and do seller finance so I can make a pot of money but I don't want to mess with the SAFE Act or Dodd-Frank so tell me how to get around those laws." without realizing there are 20+ other federal statutes they have to deal with if they intend to avoid becoming a criminal.

The trouble is, there are very real resources out there they should know about that could begin to help them learn at least part of what they don't know that they should be availing themselves of. Every state that has any real investment opportunity in MH has a state trade association they could join, and often for very little money. George Allen has written books available on Amazon or directly from GFA Management that launched several MH empires, including ELS. The MH/RV Hall of Fame in Elkhart, Indiana has a huge library of historic and current information available to read and sometimes copy for the price of admission. Those that don't learn from history are doomed to repeat it. There are other good books out there as well. Both George and Rishel Consulting Group publish monthly newsletters as well that are full of information valuable to anyone in the industry.

If your goal is to become a community owner you should consider the Boot Camps and educational material available from Frank Rolfe and Dave Reynolds as a starting place after reading the books mentioned above. Not every successful operator will agree with everything they teach, but, their materials and Boot Camp are the bargain of the century for getting a starting place. Then seek out knowledgeable people like Joanne Stevens who likes helping newbies acquire their first communities  and whose website has years of back newsletters packed with knowledge for community owners.

If you get far enough along that you know you need a seller finance operation you can talk to my company, Rishel Consulting Group. We have helped over 75% of the industry with their seller finance problems and we are now helping them navigate the newly treacherous waters of Fair Housing as well. If you need help training or motivating sales personnel, people like Ken Corbin or John Underwood can help with that and Rainmaker Consulting can help with the necessary sales related software and accounting software. Don Westphal can help with zoning issues or planning issues and can solve all kinds of problems relating to design and layout of the community. If you have tax problems or need to structure tax situations, John Hyre is not only a community owner, but also a CPA and tax attorney who advises many other community groups - including mine.

The resources are there. The opportunities are there. Getting there isn't as easy as some would have you believe. But, if it were easy everyone would do it. Who are you? The dreamer who never quite makes it happen, or the doer who will someday be in the Hall of Fame?