All Forum Posts by: Roger D Jones

Kesha,

I would let go developing a mobile home park from scratch.  I could list a lot of reasons why from my perspective but Frank Rolfe with Mobile Home University tells the story the best in this podcast.  He revisits the topic often in his newsletters and his explanation stays the same.
https://www.mobilehomeuniversity.com/mhp-mastery/the-new-par...

Where I have seen some impressive development in my neck of the woods is in long term RV park development.  Larger gravel spaces, concrete pads with picnic tables, small storage sheds included in each lot.  Guy in my town built one last year with 30 spaces or so- packed full today.  I have one currently and it is very successful.  I think this is the next wave of the future for "mobile" home park investing. 

Do some digging in that town nearby.  How many RV parks and how full?  What is monthly rate if they have it? What is the apartment/rental market like... you know the drill.
Good luck.  Exciting...

Roger

Quote from @Don Konipol:

Quote from @Roger D Jones:

Quote from @JD Martin:

Quote from @Don Konipol:

Isn’t owning a MHP where you own the mobile homes and lease them out just the same as owning an apartment complex but with the greater problems of maintenance, low end tenants, etc.?  Isn’t the advantage of MHP ownership the fact that you own the land (pad sites), have limited maintenance and limited management, and that tenants tend to be long term because mobile homes are costly to move? 

 I would never own a park where I owned the trailers unless I had a good plan to sell the trailers. All I would want is the lot rent. That said, I know a few MHP operators that make some pretty tremendous money on the trailers, mostly by renting to people who need to pay in cash and have someone not ask a lot of questions - illegal/undocumented immigrants, transients, probably some criminals for sure, sometimes people (mostly women) hiding from domestic abusers, etc. People like this generally want to rent until they want to leave, which might just be week to week, and don't want any paper trail. But it is a lot of work and the ones I know also make sure to have a firearm when they are collecting rent in their parks. 

JD
I don't know if I would paint POH residents with such a broad brush.  We have great long term residents in our POH rentals and do very well financially with them.  The key to this though is you to maintain your properties.  Mobile homes are like baby chick eggs... easy to damage but also easy to repair.  We stay way out in front of our maintenance and yes it pushes up our costs but our NOI is 30% higher than if we were all TOH.  

The root problem with POHs is that many park owners become greedy and lazy in their management which then allows these homes to fall into complete and utter disrepair.  They then decide one day to sell and throw these ridiculously low maintanance costs out on their proformas not understanding how they sucked the life out of their assets.  I get to work with a lot of heavy equipment and power tools in my current job.  We do monthly maintenance on every single piece of equipment every month- whether it needs it or not.  I jump in a pickup truck- it starts, skid steer- it starts, chain saw- one pull it starts.  

Everyone loves the TOH parks- but they are becoming increasingly hard to find.  POH are a part of our industry whether you keep them, sell them or tear them down.  With equity fund groups buying up all the TOH parks we as private investors will have to learn how to be cautiously successful in the POH park opportunity.  

Are MHP with no park owned homes a PASSIVE investment, while a MHP with park owned homes an ACTIVE investment? 

@Don Konipol
I think that is a fair statement. I only own MHPs- one all TOH, another mixed park with 13 POHs and an RV park. Certainly the mixed park requires more engagement but the NOI is substantially better. My wife is an accountant and she has several clients who own apartments, shopping centers, hotels, motels- all very successful and none of them are 'passive' with their investments. They are all very engaged and involved so I guess it all boils down to if you want passive invest in T-bills... if you want to earn better- get in the fight.

Quote from @Jay Hinrichs:

Quote from @Don Konipol:

Quote from @Roger D Jones:

Quote from @JD Martin:

Quote from @Don Konipol:

Isn’t owning a MHP where you own the mobile homes and lease them out just the same as owning an apartment complex but with the greater problems of maintenance, low end tenants, etc.?  Isn’t the advantage of MHP ownership the fact that you own the land (pad sites), have limited maintenance and limited management, and that tenants tend to be long term because mobile homes are costly to move? 

 I would never own a park where I owned the trailers unless I had a good plan to sell the trailers. All I would want is the lot rent. That said, I know a few MHP operators that make some pretty tremendous money on the trailers, mostly by renting to people who need to pay in cash and have someone not ask a lot of questions - illegal/undocumented immigrants, transients, probably some criminals for sure, sometimes people (mostly women) hiding from domestic abusers, etc. People like this generally want to rent until they want to leave, which might just be week to week, and don't want any paper trail. But it is a lot of work and the ones I know also make sure to have a firearm when they are collecting rent in their parks. 

JD
I don't know if I would paint POH residents with such a broad brush.  We have great long term residents in our POH rentals and do very well financially with them.  The key to this though is you to maintain your properties.  Mobile homes are like baby chick eggs... easy to damage but also easy to repair.  We stay way out in front of our maintenance and yes it pushes up our costs but our NOI is 30% higher than if we were all TOH.  

The root problem with POHs is that many park owners become greedy and lazy in their management which then allows these homes to fall into complete and utter disrepair.  They then decide one day to sell and throw these ridiculously low maintanance costs out on their proformas not understanding how they sucked the life out of their assets.  I get to work with a lot of heavy equipment and power tools in my current job.  We do monthly maintenance on every single piece of equipment every month- whether it needs it or not.  I jump in a pickup truck- it starts, skid steer- it starts, chain saw- one pull it starts.  

Everyone loves the TOH parks- but they are becoming increasingly hard to find.  POH are a part of our industry whether you keep them, sell them or tear them down.  With equity fund groups buying up all the TOH parks we as private investors will have to learn how to be cautiously successful in the POH park opportunity.  

Are MHP with no park owned homes a PASSIVE investment, while a MHP with park owned homes an ACTIVE investment? 

Don in my experience with the 3 parks we owned.. owning the park homes was a huge time suck most of them are old and have tons of differed maintenance and parts are not available as easy.
Only way i would do it is to have enough of them to have a full time on site handyman who knew how to fix those things. but thats just me.

 Jay
We have a 24 hour per week maintenance manager at our park with 13 park owned homes.  Website with tab for maintenance requests which forwards direct to him and cc's me... life is good.

All I can offer is do it right.  Lots of mobiles out there with 'add on' rooms but they have to be done to code to actually be added into the square footage.  Flooring, walls, roof, electrical, egress with windows and I think there is something about having a door that exits the home... not just into the home.  Not sure about that and it may just be a Washington State thing.  

I would really try to get a sharp pencil to the numbers before adding on to a mobile home to increase value.  May work... just be careful.

Quote from @JD Martin:

Quote from @Don Konipol:

Isn’t owning a MHP where you own the mobile homes and lease them out just the same as owning an apartment complex but with the greater problems of maintenance, low end tenants, etc.?  Isn’t the advantage of MHP ownership the fact that you own the land (pad sites), have limited maintenance and limited management, and that tenants tend to be long term because mobile homes are costly to move? 

 I would never own a park where I owned the trailers unless I had a good plan to sell the trailers. All I would want is the lot rent. That said, I know a few MHP operators that make some pretty tremendous money on the trailers, mostly by renting to people who need to pay in cash and have someone not ask a lot of questions - illegal/undocumented immigrants, transients, probably some criminals for sure, sometimes people (mostly women) hiding from domestic abusers, etc. People like this generally want to rent until they want to leave, which might just be week to week, and don't want any paper trail. But it is a lot of work and the ones I know also make sure to have a firearm when they are collecting rent in their parks. 

JD
I don't know if I would paint POH residents with such a broad brush.  We have great long term residents in our POH rentals and do very well financially with them.  The key to this though is you to maintain your properties.  Mobile homes are like baby chick eggs... easy to damage but also easy to repair.  We stay way out in front of our maintenance and yes it pushes up our costs but our NOI is 30% higher than if we were all TOH.  

The root problem with POHs is that many park owners become greedy and lazy in their management which then allows these homes to fall into complete and utter disrepair.  They then decide one day to sell and throw these ridiculously low maintanance costs out on their proformas not understanding how they sucked the life out of their assets.  I get to work with a lot of heavy equipment and power tools in my current job.  We do monthly maintenance on every single piece of equipment every month- whether it needs it or not.  I jump in a pickup truck- it starts, skid steer- it starts, chain saw- one pull it starts.  

Everyone loves the TOH parks- but they are becoming increasingly hard to find.  POH are a part of our industry whether you keep them, sell them or tear them down.  With equity fund groups buying up all the TOH parks we as private investors will have to learn how to be cautiously successful in the POH park opportunity.  

I am no banker and there are people here that will certainly address your question better than I... but it appears you are blending real property and personal property and trying to bundle together into an LLC. It's like buying a house and wanting to throw in a jet boat and 'bundle' it. You will probably have to buy the property on it's own as an LLC and then take out a second business or personal loan on the RV. You might then be able to transfer that RV in title into your LLC.

There is probably other ways to solve this and the bankers on here will be of help.

@Dave Rav @Kara Johnson
I have done a couple 1031s and they are tricky lil devils.  Once you sell you get 45 days to identify a replacement like property and then 135 days to close.  These are hard target deadlines and we had a third 1031 exchange company handle the transactions.  We had both sides of the transaction lined up prior so it went smoothly.  
One thing I read somewhere though and you should do some research is I don't think you can have multiple 1031s going at the same time.  If you are trying to centralize all your investment assets into one asset class ie MHPs you may want to ask a few probative questions. 

Lot going on here so I would try to slow things down a bit and take smaller bites of the apple.  First thing I would do is get a set local that you want to work within.  Set your travel boundries first... local, regional, state wide, multi state, etc.  Think about air travel and how you can get from A to B.  Airports matter.

I would also give up on the whole VA or CRM approach to finding opportunities. Now many younger more tech savvy investors here may disagree but I am old which makes me old school. MobileHomeParkStore, Craiglist, Crexi, local realtors who focus on MHPs and TaxSifter if you want to try cold calls. I get multiple CRM and VA calls per week on two of my parks though and I just hang up... if you can't pronounce my home town correctly I know your just cranking phone numbers.

Take Frank Rolfe's MHP investing boot camp.

Stick with local smaller banks for funding.  You need a relationship with your bank for MHP funding and the big banks aren't interested in your life plan- despite their commercials.

We own one and as I reflect back we got lucky.  There are two things that give me pause in trying to recreate our original success.

1- Location, location, location... and how that translates into occupancy.  I see a lot of RV parks for sale that say things like 'always full in August' or 'great hunters destination'.  I would want a park that would be mostly full year round... but those probably aren't for sale too often.

2- Accuracy of the financials.  I know a few RV park owners who 'pocket' a good percentage of their revenues in cash to keep taxes lowered.  Unfortunately that creates uncertainty in their financials.    What are the true numbers on the park?

Aideen

Certainly, there are many on this site who can assist you as you venture into MHP investing- myself included.  I would also encourage you to go to MobileHomeUniversity.com and visit the forum page.  Thousands of questions have been covered and discussed in this forum that you can read casually or do deep dive topic searches on.  They also offer a "Mobile Home University Boot Camp" that will provide you a wealth of information.  Great place to start as an investor.  

Furthermore I would encourage you to ponder what type of investor you want to be.  Do you want to be more hands off with just a TOH (Tenant Owned Homes) park or are willing to get in the weeds a bit more with POH (Park Owned Homes ie rentals) park or even maybe a mix of both.  MHU will proffer only the TOH type of park (less hassles, easier to manage, etc) but there is potentially bigger returns if you are willing to deal with POH rentals.  

Lastly large private equity investment groups both national and regional have been gobbling up all the 100% TOH parks so to get in now it is a bit tougher and you may have to be willing to bite into some POH or Mixed parks.  

Good Luck and let us know if you have any questions.

Roger