Kurt D. Kelley
President
Mobile Insurance
25775 Oak Ridge Drive, Suite 110
The Woodlands, TX 77380
(281) 367-9266, ext. 17
(281) 292-7429 fax
email Kurt@mobileagency.com
www.MobileAgency.com
Member of the American Insurance Alliance

By popular request of our friends from Texas, Oklahoma, Louisiana, Arkansas and surrounding areas, we are taking the Boot Camp on the road to Dallas on April 30^th to May 2^nd.

If you have been waiting until the Boot Camp got closer to home to save on travel cost, here’s your opportunity.

We’ve also made the Boot Camp more affordable than ever. We’ve changed some things around, and got the price down to $1997 for one person. And you can put that on a 0% payment plan spread over five months.

The Boot Camp is the best learning experience we have at the site, and attendees have the highest historical track-record of successfully buying mobile home parks.

My friend introduced me to the idea of Mobile Home Parks about 13 months ago. I read every book on the subject and every internet site I could find. Nothing compares to the information I got from Dave and Franks courses. I read every book they have and listened to every audio program. I attended the bootcamp in July 09. Now just 8 months after I attended Dave and Franks bootcamp I closed on my first park. Using the information I received I bought a fantastic park with great cash flow and tremendous upside.  

The day AFTER we closed a tenant had a sewer issue. I got a few bids to get it fixed. From $4500 to $6500. I was thinking this was a crappy first day. BUT I remembered a few things I learned from the bootcamp. One was not to panic when this kind of stuff happens. So I thought about it overnight and by the morning had another plan. We rerouted a line and just bypassed that old pipe. Total cost. Less than $450

So my bootcamp price and all my books paid off on the first day. I can’t imagine doing this without Dave and Franks info. They arm you with the knowledge you need to go in confident that you will succeed.  Every dime I spent I saved my FIRST day owning the park. I’m confident that the other skills I learned will save me many headaches and thousands of dollars and literally increase the value of the park.

T Conlin

If you are serious about buying a mobile home park, then you do not want to miss this event.

Seats are limited, so don’t procrastinate to avoid disappointment. We may not be back to Dallas for a while (it’s been almost two years since we did the last event in Dallas).

You can sign up on line at www.mobilehomeparkstore.com or call (800) 950-1364. ]]> http://www.mhweekly.com/the-mobilehomepark-investors-boot-camp-is-coming-to-dallas/feed/ 0 http://www.mhweekly.com/mobile-home-and-mobile-home-park-lender-contest/ http://www.mhweekly.com/mobile-home-and-mobile-home-park-lender-contest/#comments Thu, 11 Feb 2010 08:19:46 +0000 Dave Reynolds http://www.mhweekly.com/mobile-home-and-mobile-home-park-lender-contest/ We all know how hard it is to find a lender in today’s economy for mobile homes and mobile home parks. This month’s contest will entail a search for all local, regional, and national lenders that will loan on mobile homes and/or mobile home parks. We will put together a list of all the submissions that we get and send a copy of this list to all those who send in at least one suggestion. Please send the lender’s company name, contact name, phone, and email to dave@mhps.com and I will put together the list.

Also, as part of the contest, we will draw one name at the end of February for a free copy of our Mobile Home Park Home Study Course.

When I got in the mobile home park business, many of the sellers I bought from called the mobile homes “coaches” and “trailers”. Roger Miller even wrote a hit song with the lyrics “trailers for sale or rent”. But manufacturers and dealers thought the business needed an upgrade, so they changed the name to “mobile home”. Of course, the name was misleading, because mobile homes are far from mobile. Some can’t survive any movement at all, and moving one can cost $3,000 or more. And I guess they stuck the word “home” on there to make it sound reassuing or folksy (as opposed to saying “mobile unit”), or to give you greater direction on what you were supposed to do with the thing. But I embraced the new moniker, and so did everybody else.

The mobile home is a fine symbol of affordable housing. It represents the collective efforts of manufacturers and the government to build the cheapest detached housing unit in the world. Although it is not always appealing to the eye, and has been a notorious incubator for some of the wildest living conditions in mankind, it is cheap. Sometimes, real cheap. I have seen used mobile homes sell for $1,000 – that’s 94 cents per square foot. That’s about 100 times cheaper than a comparable stick-built house.

Mobile homes were inhabited by people who didn’t earn much – but they were at least inhabited. Nobody expected much besides four walls and a roof, and they were seldom disappointed. If you didn’t have much money, you always felt safe that there would be a mobile home in a park to fit any budget.

But then in the 1990s they decided to re-invent the industry again, this time under the moniker “manufactured home”. Out with the concept of “mobile” and in with the concept of building a thing in a factory. First off, I’m not so sure that you want to beat the customer over the head with the idea that their housing unit was built in a factory. That’s not exactly a crowd-pleaser or reason to boast at a cocktail party “my house was built just like my car”. Most things built in a factory are impersonal, cheaply made and often prone to breaking. Wait a minute – maybe that is a pretty accurate impression.

With the new “classy” name came new pricing for the homes – about two to three times what mobile homes cost. But they still sold O.K. due to impossibly low standards by lenders such as Greentree. Suddenly, mobile homes that cost $10,000 now cost $40,000 as manufactured homes. And therein lies the problem.

Manufactured housing has lost its roots as affordable housing. Now it wants to pretend that it is something more than it is – and make the consumer join in the fun. I think the American public has voted with its pocketbook. Sales of manufactured homes have fallen about 75% since 2000. The sad truth is that nobody wants an expensive manufactured home. They want cheap mobile homes.

There is talk that the industry wants to change the name again. Perhaps “executive mansions on the go” is on the table. I would urge the industry, instead, to go back to the “mobile home business”. Everyone knew what it meant – affordable housing – and they could afford it. Homes sold briskly and parks were full. That demand has not gone anywhere, but nobody can afford, or wants to buy, affordable housing for $40,000. Instead of straining to find out how to build and sell the most expensive manufactured home, let’s refocus the industry on how to build the least expensive. I know it’s not as profitable, but you can make it up in volume.

“Coaches”, “trailers” and “mobile homes” are where the demand is. “Manufactured homes”? Nobody’s interested. And forget any new names – you’ve already embarrassed yourselves enough.

Some mobile home park buyers have this erroneous idea that the goal is to buy a great looking asset. They even rate the parks they look at based on physical appearance. The star system is a good example. Most people think a five-star park is always superior to a one star park. However, the only real star system they should consider is which park is a superstar on cash flow. Because at the end of the day, all that really matters when you own a mobile home park is making money. Parks that make money are great, no matter how ugly they are, and parks that lose money are dogs, despite how cute their entry may be. And, as a general rule, the prettier the park, the uglier the cash flow.

So why do pretty parks often not make money?

ïThey cost too much to buy. Pretty parks sell at the lowest cap rates. Normally one digit, and a low one digit at that. 5% , 6% and 7% cap rates are great for sellers, but can be complete failures for buyers. It is quite difficult to make any money buying parks at 6% returns.

ïThey are normally at full market rent, so you have no room to push rents. Pretty parks normally have lot rents that are at the top of the market. So the best a buyer can hope for is to gradually nudge the rents up a tiny bit each year or so.

ïThey are normally fully occupied, so you have no occupancy upside. Tenants are drawn to the park’s aesthetics, and the vacancy factor is normally 5% or less. So there is no way to significantly increase operating income through filling lots.

ïThey cost too much to maintain. The landscaping alone on one of these parks is higher than a one star park may spend on total management. It requires a constant outlay of cash to keep a park to the highest standard. When you feel you must re-pave instead of patch roads, and plant seasonal color at your entry, you are going down the path to lower margins.

ïThey have plenty of amenities, and they all cost money to run. Pools, clubhouses, jogging tracks, playgrounds – they all sound great, but cost a lot to maintain and insure. While they are staples of five-star parks, they are causes of poor cash flow.

Are all pretty parks bad? No, not if you bought them cheaply twenty years ago. The only guy getting rich off these parks today are the current sellers. As for the buyers, that’s a lot of work for a CD style yield. Personally, I’d rather buy a down and dirty, ugly park that makes real money. But I wouldn’t want to live in one!

2.It is typically accepted that the average operating expenses for a mobile home park are usually around 35-40% of the gross income as compared to apartments which have in the 50-60% expense ratio. One of the biggest advantages of mobile home park ownership is not only this decreased operating expense margin but the reasoning behind it.

Mobile Home Parks in which you rent the land to the home owners have a much lower turnover ratio as compared to apartments. In most cases, once the home is moved into your park, that home will stay in there for 25+ years and when people are ready to move they will just resell the home in the park and you will have a new homeowner.

The biggest reason for the low home turnover is that it costs so much to break down, move, and set up a home. In most cases this is going to cost at a minimum of $2,000 for a singlewide and $4,000 for a doublewide. In an apartment, your renters can pack up and leave in the middle of the night.

In most cases a mobile home will not move out in the middle of the night (especially legally). There are those cases where someone will hire someone to come in and move a home in the middle of the night but it is rare.

I actually had someone who was a few months late on rent, decide to hook up to their 14 x 70 home with their æ ton pickup in an attempt to move it down the road a few miles to a different park. They made it out of the park with the home but about a mile down the road the mobile home separated from the truck and they not only flipped the home but destroyed a truck. All of this to avoid about $800 in lot rent.

3.When you raise the rent by $10, $15, $20 or more in a mobile home park, it is less justifiable for a renter to spend several thousand dollars to move their home to save $10 or $20 per month. In addition there is no guarantee that the mobile home park that they move their home to will not follow suit with a rent increase of their own.

4.Another reason for the lower operating expense ratio for mobile home parks is that you are not responsible for painting, cleaning carpets, fixing windows, and all the fun jobs of the apartment maintenance personnel. You are typically only responsible up to where the home connects to your utilities and the maintenance of the common areas.

5.As far as depreciation, apartments have a large value attributable to the building itself and the building portion is generally required to be depreciated over 27.5 years However, for mobile home parks, the depreciable costs are typically the roads, water lines, sewer lines, electric poles and so on. These are considered land improvements and are typically depreciated over a period of 15 years. This increased depreciation over the first 15 years is a major tax benefit for many investors.

6.Another hidden benefit of mobile home parks are the barriers to entry for competition. In most areas of the country, it is difficult to get the proper zoning, meet all the requirements to build a new community and actually make a profit. Face it, once you get all the permits and licenses and have the curbs, roads, driveways, utilities, pads and everything else built out, you will have a carrying cost until you actually get enough homes into the project to break even, let alone start making a profit.

Mobile Home Parks are in limited supply and the barriers to entry as far as costs, regulations and government restrictions make developing new parks unfeasible in most areas. State and local governments restrict new mobile home park developments for many reasons, including: bad reputation, existing owners allowing parks to deteriorate, less property tax base to fund schools, police, fire, and other government services.

7.Another benefit of mobile home parks is that in most cases you have individuals that own their own homes and will tend to take care of the home as well as their lot. Since you are renting basically the land and the utility connections, there is not near as many things that your renters can do to cost you major repairs. Sure they may flush things down the sewer and let the water run, but they will not be putting holes in the walls and floors or spilling things on the carpet as they will in your apartment rentals. You rent the land and do not have to fix leaky kitchen faucets or toilets.

8.Another benefit of owning mobile home parks is that you are often in a good position to buy and sell new and used mobile homes. You can often buy homes that people sell in your park, in nearby parks, repos, or even new homes from the manufacturers and place them in your park and sell them at a profit.

Depending on the situation, you may be able to sell them for cash, on terms, or with new financing. As the park owner, every time you sell a home and fill a vacant lot in your park you have just increased the monthly lot rent income as well as the value of the park.

If each occupied lot is worth an additional $10,000 then in addition to the profit from the home sale itself you have just made an extra 10k in equity.

A mobile home dealer makes money on the spread between the purchase and sale price and thus needs to have good profit margin to stay in business. As the park owner you can live on a much smaller or even a break even on the home sales and thus save your buyers thousands of dollars.

Excerpt from Mobile Home Park Investing E-book!

By Dave Reynolds

All manufactured home communities need a respectable name. If your property does not currently have one, please consider an immediate renaming. You are embarrassing the rest of us.

Here’s how to successfully name a manufactured home community:

What is your community’s greatest asset?

See if you can find a name that includes this benefit. That way, every time you say the name to a customer or dealer you will be subliminally selling the property. For example, if your property has beautiful oak trees, include “Oak Tree” in the name. If it is in the prestigious Norman school district, include “Norman” in the name. Surely, every property has at least one big selling point. Out in a rural area? How about “Country Vista”? Can’t think of even one selling point on your community? Call me, I’m sure we can come up with something.

Can you spell the word “Estates”?

Good. Then slam this word on the end of the name or phrase above. For example “Oak Tree Estates”, or “Norman Estates”. Or reverse it and think “The Estates of Norman”. Sound classy? That’s the whole point. If you look at the name of all new subdivisions in your market, you will see that they all contain the word “estates”. Maybe it has way too much overexposure, but it just gives customers the feeling that they are living in a place that has some degree of desirability and respectability.

Why should you bother?

If you haven’t noticed, even the worst apartment complexes in the world have classy names. Why? Because the name helps sell the tenant on moving in. Would you rather live in “Pine Tree Estates” or “Big Wheel”? Well, so would your customer. Why do you think it is acceptable to stick an embarrassing moniker on their fragile self confidence? Would you like to be a kid going to school, telling your friends you live at “Grandpa’s Shack”?

There are many financial reasons that are compelling. First of all, the prouder tenants are of where they live, the more likely they are to keep their homes and yards looking good. This “pride of ownership” will impress current and future tenants and help keep your tenant retention high. In addition, a good name will help impress bankers looking to refinance your property, as well as future buyers. It’s hard to put an exact figure on how valuable a name is, but it’s a safe bet that it could be worth hundreds of thousands of dollars in the right applications. It certainly can’t help but to make any property more valuable.

It’s Free.

It costs no more to have a nice, attractive name than to have a horrible, repellant one. Sure, you will have to redo the sign out front – but isn’t that sign ready for a facelift anyway? And telling the retailers you’ve changed your name is only going to elicit cheers – particularly if they have been embarrassed saying it to customers. You would be amazed at what a new name can do for you. If your property has long been associated with drugs and crime, a new name can give it a new lease on life. Nothing can change your image faster than pretending it’s not the same property that has the bad reputation.

When you look at all of the improvements you can do to your manufactured home community – paving roads, building parks, planting flowers, re-plastering the pool – nothing has more bang for the buck than changing the name. If there is only one change you could make to increase value with the lowest cost, changing the name should be on the top of your list.

So how do you do it?

Once you have decided upon the ideal name, there are several simple steps to make it a reality.

ïChange all of your marketing materials to reflect the new name. This includes your advertising, brochures at dealers, stationary – everything. Anything that has the old name on it should be thrown away, so that someone does not make a mistake and use it.

ïMeet with the city your property is located in and make them aware of the change. You will want to tell every department, from planning and zoning to code enforcement. Even the Chamber of Commerce.

ïInform 911 of the change. You do not want a problem with a tenant calling 911 and the responders getting confused as to the location of the call.

ïChange the signage for the property. Many times, new signage is needed anyway. Those parks that have a 4′x8′ sheet of plywood for a sign should consider spending a few extra bucks for a better quality, longer-lasting option. Routed PVC is terrific, but even vinyl on aluminum (as found at most Fast Sign shops) is superior to paint on plywood.

ïSend a letter to the tenants informing of the change. They will normally be delighted at the sudden attention they are getting, and thrilled that the old, nasty name is gone.

Conclusion

There is no better investment in both time and money than renaming your manufactured home community. The process is simple, the cost low, and the results substantial.

So unless you have a great name, and a great reputation behind it, you should immediately give thought to a new one. “Out with the old, in with the new” may need to be your motto for your property. If the name you currently have is not helping, but rather hurting, your business, then don’t hold back from fixing that problem. It’s probably going to be the best money you ever spent.