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 citations stemmed from continuous violations that had been reported since the 1980s. Of these violations, the most damaging was an outside storage tank that leaked oil into a nearby stream. That violation has additional damages pending, as the EPA is putting together a plan for environmental remediation that is expected to cost $150,000. That cost will also be passed on to Sentry for reimbursement.

Frank & Dave’s Opinion of This Story:

What was the owner thinking? If you refuse to clean up your property for 30 straight years, you are definitely asking for trouble. In this case, the failure of the owner to address a leaking barrel of oil, which could have been removed for probably $100, has resulted in $150,000 in fines – if that even covers it. You can’t blame this on anybody but the park owner. We see this type of thing with mom and pop owners all the time, and all we can do is scratch our head and wonder how they can sleep at night.

Specific examples are the Burdick & Burdick Trailer Park that increased its rent 63.52% since 2005, from $196 per month to $321 per month.

Cozy Meadows shows an increase of 31.25% during this same period. Royal Pine Villa showed a 25% increase in lot rent.

The county with the most parks has 28, while the county with the lease number of parks has two.

Frank & Dave’s Opinion of This Article:
This is an interesting article, because you don’t hear a lot about parks in Vermont. But it looks like Vermont park owners are doing a good job of increasing their rents. As we’ve said a thousand times, the best way to increase the yield on a mobile home park is to raise the rents. It is 100% profit, and takes no more effort than sending a letter announcing the increase (unless you are in a state that has laws on rent increases). Think about the increase in value on the Burdick & Burdick Trailer Park just by the simple act of raising the rent over 4 years from $196 to $321.

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?

However, the Brick Township Council has voted to make the Laurelton Mobile Home Park a “redevelopment area”. Under this designation, the city has broad powers, including forcing the current owner to sell to a developer. But the council is not approaching re-development as an opportunity to get rid of the park. On the contrary, they are trying to find a way to keep the park. “We want the developer to balance the needs of all three parties – the developer, the residents and the town” said Council President Anthony Matthews.

One proposal includes re-zoning the front of the park to commercial and allowing a retail center to be built there, with a redevelopment of the park as part of the agreement. All of the proposals include putting in new water and sewer lines to the park. The city is starting the process of cleaning up the park by delivering roll-off dumpsters to the park within the next few weeks, so that tenants can begin to move the junk out of their yards and into the dumpsters.

Frank & Dave’s Analysis of This Story:

The new-found love for mobile home parks has been a continuing theme in city hall recently. When faced with the necessity of affordable housing, more and more cities are looking on mobile home parks as a much more satisfactory housing type than apartments. Why is that? Maybe it’s because the tenants are home-owners rather than renters. Or maybe it’s because mobile home parks are easier to redevelop way down the road, since they have no structures to worry about. In any event, we’re just glad they’ve had a change of attitude.

The trailer on lot #29 is listed at $495,000.

Frank & Dave’s Analysis of This Story:
Can you imagine reading this article if you were they guy who let this thing go back to the bank in 1976? Assuming the average lot, without ocean frontage, sells for $200,000, then this park would be worth $40,000,000! In 1976, it probably had a note of $400,000 or so. It’s still not the most valuable mobile home park in the U.S., which honor arguably goes to Paradise Cove Mobile Home Park in Malibu, California.

By Dave Reynolds, MobileHomeParkstore.com

1. Raise Rents: A $10 per month rent increase at a valuation using a 10% capitalization rate, can increase the per lot value of $1,200.

2. Submeter Water and Sewer and Trash: By installing water meters and billing the residents back for water and sewer and trash you are in effect increasing your bottom line. I often think this is one of the most equitable ways of to pass on expenses to the residents as they only pay for what they use. In my experience when meters have been installed the master water and sewer bill is reduced by 30-40% as your residents become conscious about the amount of water going through the faucets. Leaky faucets are fixed, toilets no longer run continually, cars are not washed every day, etc.

3. Enforce Rules and Leases: By enforcing reasonable rules and regulations your community will be regarded as a safe and comfortable environment. Get rid of problem tenants. If you are worried about losing the rent from one or two problem residents, consider that you may lose even more good residents and potential residents by keeping those that are causing problems and not obeying the rules.

4. Reduce your Property Tax Expense: Contact a company that specializes in going to bat for you with your county tax assessor to get your valuation and taxes reduced. Many states and counties base the assessed value on the purchase price. However, most mobile home parks should have a business value component that should not be taxed as property tax. These companies often work for a % of the reduced taxes thus no money out of pocket.

5. Reduced other ongoing expenses: Get multiple insurance quotes, evaluate telephone costs and extras, negotiate with plumbers and electricians to get a lower hourly rate, etc.

6. Fill vacant lots: How much is a vacant lot worth? In many cases, a vacant lot is actually costing you money to keep the grass mowed, the lot clean, and so on. If your lot rent is $200 per month and based on a simple formula that a lot is worth 60 times the monthly rent, then an occupied lot is worth $12,000. Would it make financial sense to spend $2,000 to cover the home moving costs of a potential resident? I believe it does. Other incentives I have used include, free or reduced rent for the first year or two, free installation of new skirting, free steps and decks, and the list goes on. Be creative and stay ahead of your competitors. It is much more effective to come up with 50 ways to market to one customer rather than 1 way to market to 50 customers.

7. Buy homes for Resale or Rental. Buying used homes and placing them in your community for resale or rental is another way to drastically increase the value of your community. As mentioned before, each time you fill a vacant space, the value of your park increases. As a community owner you have an advantage over most mobile home retailers in that you do not need to make a profit on the sale of new and used homes. If you profit by $12,000 per space in equity each time you add a new home, you can sell the homes at breakeven and be way ahead.

8. Increase the Curb Appeal: Encourage residents to clean up their yards and property. Hold clean up days on a monthly basis. Have new and attractive signs installed at the entrances. Repair roads and maintain adequate street lighting. Have monthly rent discount incentives to the residents for things such as: Property of the month, most improved property, etc. Additionally, financing for your residents such things as new skirting, paint, wood siding, and other outside improvements can get the homes looking better as well.

9. Add additional income sources: If you have some vacant land, consider adding some mini storage units, or fence it off and offer storage for RV’s, Boats, and extra automobiles. If you have highway frontage, look into placing billboards or selling easements to billboard companies. Look into getting Cable TV or Wi-Fi for the entire park and in doing so, your residents will get a break on these costs and you should be able to profit as well.

10. Dedicate streets and utilities to the city. Although is not too common for established communities, if you can talk your city into making this happen, you just reduced your exposure to street repairs, utility repairs and metering.