We cap the enrollment at just 20 people, and only have a couple tickets left.

This is the last time that we will be holding the event in Dallas in 2010, so if you are convenient to the D/FW Metroplex, this is the event you want to hit to save on travel expense!

For more information call (800) 950-1364 or go to www.Mobilehomeparkstore.com.

What makes this event so exciting is that almost half of it is held in the field – in actual mobile home parks. You will walk around everything from no-star to 5-star parks and learn how they work and learn the difference between a good deal and a bad deal.

“We really like doing this event in Dallas, as Frank and I have owned so many mobile home parks over the years here and really know this market well” said Dave Reynolds. Some of the parks that will be toured are ones they have formerly owned, as well as ones that they currently own.

For more information go to www.mobilehomeparkstore.com, or call (800) 950-1364.
Frank & Dave’s Opinion of This Story:

If you buy a mobile home park without attending this Boot Camp, you have made a serious mistake. This event will pay for itself many, many times over. We have actually had people who took the Boot Camp and turned around and dropped the deal they had under contract before they showed up, in order to pursue better deals that we showed them how to find. Others have found great deals immediately following the boot camp, using the principals we taught them.

The type of park you’ll need

To make an immediate $100,000 in cash flow with a mobile home park, you’ll need to find a park that has around 80 lots. A park with 80 lots is going to cost around $800,000 and will require about $160,000 down (although in select cases, you may be able to get away with $80,000 down).

The park will need to have city water and city sewer services, and be in a market of at least 100,000 population.

How the deal must be structured

You will need to buy the park with seller financing. You’ll want to put between 10% and 20% down, and the note should be non-recourse. Try and get a note length of at least 7 years, so that you have plenty of time to refinance it before the loan comes due. If you are unable to seller finance it, you will be burdened with two things: 1) a larger down payment, as banks right now want around 25% down and 2) banks will only give you recourse debt.

How to create the $100,000 of cash flow

Your goal is to create an additional $100 per month of cash flow per pad. You basically have two components to this 1) raise revenue and 2) cut costs. Let’s go over raising revenue first.

Mobile home park residents are at a great disadvantage when it comes to raising rents. It costs them $3,000 to move their home. So unless they have $3,000 in cash burning a whole in their pocket, they really have no way to move out if they don’t like the new rent amount.

Most parks you can find for sale are under-market in their rent. So you’ll need to find one that is $50 per month under market – which is not that hard to do. That $50 rent increase is going to get you half way to your $100,000 per year goal.

In some parks, you will also find vacant park-owned mobile homes. Getting these back in service may also be a critical path to getting the rent up at least $50 per pad.

Now let’s look at the expenses. The single largest cost in any mobile home park is the water and sewer. In most parks it equals 10% of the total revenue. So this is your first stop in trying to get the costs down. Often you can accomplish this with finding and fixing leaks in the system, or leaks in mobile homes. Other times, you will need to separately sub-meter each space to make sure that the tenant conserves. And in many cases, you’ll want to bill the customer for their own service.

The second big area to attack is the management cost. In many parks, the manager that is getting paid $30,000 per year can be replaced for 1/3 of that. That one step alone can often get you $20 per pad per month in savings.

Here’s the score card.

Getting that $100,000 of cash flow is predicated on raising rents and lowering costs an average of $100 per month per lot. If you can get that done, then you will have 80 lots x $100 per month = $96,000 of cash flow per year. But that’s not all. You also have to factor in your cash-on-cash return on the money you put down. That will push you over the $100,000 mark.

Next steps.

As the mobile home park industry is an extremely odd niche, it will definitely be in your favor to learn more about it, by taking a course on mobile home park investing. You can also find thousands of parks for sale without even leaving your house, by visiting such sites as Mobilehomeparkstore.com and Loopnet.com.

The economy isn’t wasting any time falling apart. Should you be wasting time not getting started?

Here’s our weather forecast on the great mobile home park storm, and what the impact will be:

New home sales

Mobile home sales have been in a continual decline since 2000. From a peak of almost 400,000 units sold per year then, sales are down to under 100,000 today. And most of those sales are units that do not end up in parks. The good news is that, unlike the single family home industry, bad new home sales have been in every park owner’s and bank’s budgets for almost a decade. There is no collapse to worry about — it’s already been dead for a decade. And no sellers are trying to use numbers based on good sales that are not really there anymore, nor do you have to guess when the rebound will occur. This whole side of the industry has been dead and buried since before Bush was President.

Financing

Few banks want to make loans on mobile home parks. There were only about 20 that did it with any regularity, and that number has dwindled down to about 5. At the same time, there has been a “flight to quality” on the part of all banks when it comes to making loans. The net result is that only credit-worthy borrowers with 20% down can get a bank loan. This is a sharp contrast to the past decade when anyone who could fog a mirror and had 10% down was able to get credit. The effect will be a buyer’s market for those who qualify.

Equally important, the death of financing will set in motion even greater seller financing availability. One of the attractive parts of mobile home park purchasing has been the existence of seller carry. Now, you should see even more of it. Most seller carry offers below market down payments [giving you greater leverage], as well as below-market interest rates and, perhaps most importantly, non-recourse.

Cap rates

This is where the opportunity goes from Category 1 to Category 5. Only a few years ago, cap rates on parks were around 6% to 8%. Due to the lack of qualified buyers, those rates have skyrocketed almost overnight to 8% to 12% or more. And that’s not even the whole story. Back when financing was easy, sellers get comfortable capping income that wasn’t really there. The home that just got pulled out, the asphalt repair that was capitalized and hidden from the actual profit and loss statement – they were never really scrutinized. Today, with greater scrutiny, the income and expenses are a lot more accurate and capable of being banked on. Even if the buyer is an unaware, the bank normally lends a second, conservative opinion and reduces down the price or kills the deal.

Quantity of deals

There have never, in the 12 year history of www.mobilehomeparkstore.com, been so many mobile home parks for sale at one time. This enormous supply/demand disaster has rendered many terrified sellers into a panic mode. Sellers are stating on their parks “make offer”, “must sell”, and “seller will carry”. This is the quintessential “buyer’s market”.

It’s not as bad as it looks

This is the key part of the perfect storm. Although sellers are freaking out and reducing prices, and banks are shriveling up and blowing away, the mobile home park business has not really been much affected. Sales of new homes have been terrible for a decade, and every park owner has already adjusted their business.

Occupancy has remained stable at most parks for at least the last five years (many parks had a significant drop in occupancy at the start of the melt-down on new homes in about 2001). There is no reason to believe significant declines in occupancy lie ahead.

Operating costs, although feeling constant minor upticks in water and tax rates, remain very predictable and not out of control. There is no 800 pound gorilla in the expense closet.

And bank foreclosures on parks remain among the lowest of all classes of real estate. The decline in bank loans has not been due to problems with the mobile home park business model – only guilt by association with the rest of commercial real estate market.

Once in a lifetime opportunity

The perfect storm of this magnitude may not come around again. Or it may come back in a cycle twenty years from now. But if you are trying to invest and get a maximum return, the time is now.

Put on your raincoat and hat, and head out into the storm, because it may not be this dark for long.