All Forum Posts by: Roger D Jones

@Steven M.  Good work... you seem to be handling this like a pro.  

Sam,
Your comments regarding Frank Rolfe are fascinating and from my view spot on.  As a new MHP owner I certainly learned a lot from his MHU Forum.  Not necessarily from him but from those who contribute to the forum.  

Just to 'let it out' I find him hateful and contemptuous of anyone who disagrees with him (small park owners, government officials, State regulators and of course any journalist who would dare attempt to report any news regarding MHP ownership.  He simply wears me out with his contempt.  And as you stated it has become more and more obvious to me that everything he proffers is to drive his own personal agenda of bias, greed and acquisition.  

 Samuel,

Here is the podcast.  I don't always agree with Mr. Rolfe on some of his positions but many people take his word as MHP gospel.  I don't think he represents small MHP investors well with his anti POH rental positions and his often derogatory and demeaning views of MHP residents.  

The New Park Building Boom That Never Was - Mobile Home University

 It's the water running down the exterior walls that does the most damage over time.  

Decks, porches and skirting will be significant.  Not sure if you have it included elsewhere.

Have you listened to Frank Rolfe's webinar on new park development?  Pretty insightful.

Emory... 

That is pretty much how I came to the number but please remember this is a real quickie rough estimate.  There are a lot of things to fine tune it as you do your due diligence.

Rog

Emory-
The 70k valuation is a very, very rough estimate.  Took the annual income from those two trailers less $50 for water each and applied a 35% expense ratio.  Then capped it at 8%.  Alot of intangibles to consider on the expense side but it is just a thumbnail estimate.  

Rog

Emory

Yes- you want to separate the two investments and add the two values together for an offer price. But a word of caution- mobile home park investors buy parks not only for the initial return but for the increased resale value as you improve the CAP rates down the road. The house is going to dampen the value of the park as a singular investment and subsequently the park is going to dampen the value of the house. You will have a difficult time selling the park with the house attached down the road even after you fill it up and improve the CAP.

And a second word of caution since I am sitting here spewing advice... those two vacant TOH homes depending on condition and the 6 vacant spaces should have zero value in establishing the park's value.  Don't listen to proforma numbers on things that the prior owner couldn't do and you shouldn't pay the seller for your future efforts and hard work.  Don't pay for a park's future potential if you are the one who will be doing all the work.

The $70k the two TOH rentals are worth at an 8 CAP probably doesn't cover the drawdown the house value will have sitting in a half vacant mobile home park.

Just my thoughts...

Jaime
As for point #2 you are understanding me correctly.  Tenants know there is maintenance so if you sell them the home the total payment they have to take on (mortgage payment + pad rental) has to be significantly less than what they are currently paying for total rent.  They should be able to see the financial upside immediately.  

And with point 4 yes 18 months is a short window but much of my opinion is based on these being older, 70s and 80s homes (big assumption on my part).  If these are newer more valuable homes than the discussion would have to change a bit.  Either way... you have to give them an immediate financial upside for buying the home.  All goes back to my point 5-  they are not stupid... they will understand what they are investing in.  

Money is transactional... it comes and goes.   Assuming you did not spend a huge fortune in your purchase for those homes- that money is gone.  What you are doing now is changing the nature of your business model and that costs money.  Like replacing remodeling a restaurant you purchase with new interior, grills, fryers and coolers... you are investing in the long term of your business.  

Jaime

What is your financial pain threshold on this?  My point being what is so much is dependent on the age of the homes, what they are worth on the open at a fire sale discount and what are they worth to you?  Personally I am not a fan of sitting on a lot of POH homes for sale at the same time.  Get em sold for what you can as quickly as you can.  Your 'profit' will come when you own and eventually sell an all TOH park.

Here are some additional bullet points that I follow for your consideration.
1- The best buyer is the one currently living in the home.  You don't want to have to do a rehab on a vacant home to sell it.  Consider that when you make an offer to your existing tenants.

2- The price has to be very very attractive to your in park buyers.  They need to see it pencil significantly in their favor to make to buy the home outright. Total cost significantly below their current monthly rent.

3- If you have to 'give them' to the current tenant to get them off your books then do if it makes sense long term.  

4- Don't do purchase contracts longer than 18   months.  You don't want to take ownership of these things down the road if tenant flakes out.  

5- PEOPLE WHO LIVE IN MOBILE HOME PARKS ARE NOT STUPID.  Don't think you can trick them.
6- Some may not want to buy their homes for a lot of very good reasons.  Don't force them out just to sell the home.  Be patient as they will eventually move and you can transition then. 

7- Play the long game and don't step over dimes to save a penny.

Best of luck... just my opinions>

Rog