Where are all the Mobile Home Park Investors?

[Major]

Hey guys, been a little while since I have been active on this forum. This a great site. Have learned alot from many members on this forum.

Just finished closing on my third mobile home park purchase and am loving it. Have 6 more in the pipeline coming up.

This journey started five years ago when I was a real estate broker working two other jobs just to make the bills. Showing commercial properties by day, bouncer at a local bars at night. That crap got old.....quick!

Granted, in 2012, being a new commercial RE broker in one of the worst real estate markets since the 1980's RE recession, was extremely tough. But, still managed to just get by with a house flip here and there on the side along with bouncing. Then decided to put up or shut up with the advise I was preaching to clients. I didn't want to be another statistic of the saying " those who can't, teach". Enough was a enough and it was time to get a seat at the big boys table. But there was one big problem, I had no real sum of money to invest....What to do?

It was at this exact time I came across a book called, " Deals on Wheels" by the late Lonnie Scruggs. This book ironically was among a large stack of books on my fathers bookshelf. Originally printed in, I believe 1992, it was small, large print, and had pictures. Figured I would give it a shot. While reading, I noticed the prices and costs for investment in the transaction of these homes. But, I knew the book was outdated and the prices must be considerably higher and out of reach for my modest budget since 20 years have passed since its publishing. However, I could not stop thinking about it and figured I would check out a mobile home park I pass by on the highway on the way to the office everyday. To my amazement, the mobile homes were still at reasonable prices. It was time to do a little digging and see what I could get. Looked around the park and spoke to the park manager. Found a home, 3 bed 2 bath with price of $6,000 but needed a little fix up. Now the teachings of the book became real....This could actually work.

Why take the risk myself? I had a coworker who was also younger and wanting to get some sort of cash flow in a commission based industry. Talked him into going in on the home 50-50. This achieved two things, allowed me to only put up $3,000 of my money and learn a valuable lesson in partnerships (that is another story). Besides, worst case scenario I lose $3,000 which I could get back in a few months if I picked up an extra shift or two at the bar. No bank would lend to me so I had nothing to lose.

Bought the home, got the title, and became a mobile home investor (with a partner). Now I had a home that needed a little fixing up and no money to fix it up. After thinking about it in the car before I left the sellers home, I went back in to speak with he and his family. It was March, the seller stated he would not be moving until at least June because he did not want to move with only four months left in the school year with two children. I asked where would he go until the school year ended? He stated he would go to a local hotel or something. "Well why not just stay here, save yourself the move, and rent this home until you want to leave?" I asked. After a short negotiation, he agreed to stay at the home for a rent of $400 a month on a six month lease. I did the adding and it came to a total rent of $2,400. To my amazement he gave me back $2,400 of the $6,000 I just gave him. Wow..what a deal I thought. I am now have only $3,600 invested into the mobile home with six months to get some rehabbing money for when he moves out.

Five months later the family moved and gave me possession of home. They did not get an money back for the last month as they were breaking the lease and agreed to the terms. I managed to save up $2,000, that my partner matched for a total of $4,000 to fix up the home. Installed new hvac, heat pump, paint, new carpet, and two scratch and dent appliances within two weeks. We are not invested into the home a total of $7,800. Put the home on market with a sign in the window and an add on craigslist. We had a buyer for $18,000 in four days. Buyer put $6,000 and agreed to a $450 payment for 4 years with 9% interest. My partner and I split the down payment 50-50.

I had seen the light. Two days later the park manager called me to come to his office. The park manager, very pleased with work I had done, approached me with an offer for two homes they had just received possession of. I bought one home for $1,000 (3bed 1bth) and a second for $1,400 (large 2bed 1bth). My partner had not interest in flipping other homes, so I purchased these with the $3,000 down payment I received just two days before. Long story short, a month later, I sold both on a rent to own (now a rent credit program) with total down payments of $7,000 and total monthly payments of $925. With the previous home sold with my partner, I was getting a total rental payment of $1,150 a month. This opened my eyes and allowed me to purchase and flip an additional 4 homes that summer for a total of seven flips in eight months with a monthly rental income of $2,400 a month.

With this monthly income and a small commission made on a sale of dentist office, I had $25,000 available to invest by the end of September. After this new found niche and wealth of first hand experience in mobile home flipping (mostly of what not to do), I did the math. The park I had purchased homes in was one of the biggest in the state. It had over 500 rented lots. With a $450 monthly lot rent and that many lots, the park had the potential to make $225,000 a month!! Get me a piece of that!! Let's take this elevator to the next floor, I thought to myself.

I read everything I could online about mobile home park investing. Time was ticking, I had found the love of my life during this journey and wanted to get her hitched before she realized what she was doing with me. However, I made a promise to myself that I would never get into the position I was in only nine months earlier. I had to make X income before I would get engaged. That October I found a mobile home park for sale in a market I knew very well form executing a few leases in the area. I was able to meet with the owners, talk them down on price, and gained enough of their trust to seller finance the mobile home park. We closed on the property 30 days later. The park contained 10 mobile homes on 10 lots and a 3bed 2bth house. They agreed to a price of $215,000 and would take $25,000 as a down payment.....Perfect. The park had a low lot rent of $300 a month, two vacant mobile homes, and a vacant house for a total monthly rental income of $2,400 a month. My installment payment was $1,050 a month and tax/insurance of $550 a month for a total debt service of $1,600 a month plus water/sewer bill. Two months later, I had filled the vacant homes and house with paying tenants with lot leases and promissory note monthly payments. I also increased lot rent to $450 a month (area average). Within sixty days of closing, the park was had a monthly NOI of $3,800 a month.

This park, along with the cash flowing previous mobile homes, allowed me quit two of my three jobs...yay!! Came across a killer deal on a 20 unit apartment complex near my home. I was able to assume the note on this property and give the owner a decent amount of walking away money.... FINALLY!!! I had the income and confidence to quit my job as a broker the day we closed. Two days later I purchased a ring and proposed when she got home.

I never stopped expanding and strictly invest in mobile home parks. This year is the best yet so far. I don't understand why more people do not know about this industry. I love it.... The people are interesting to say the least but very appreciative that someone, like myself, would give them the opportunity to own their home. This niche has provided me with opportunity to completely change my life and gain my financial freedom. I am a huge advocate for mobile homes and see it as a means to the low income housing epidemic.

Hope to hear from you guys and share advice/stories of this great industry. P.S. I just purchased a camera to take video and pics of what I do and think it could be a great value to provide up and coming investors an inside look. Let me know what you think. Thanks

 

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[Major]

Hey everyone!

Wow I am really excited to see so many people interested in this thread and having an interest. I just got back to civilization with wifi from being at the lake house this past week (reason for delay). We are fixing that issue this week.

The first post I typed out like a madman. Because that day, after what seemed like an eternity, I finally felt freedom. The kind of freedom explained in MJ's two outstanding books. I was so happy in the hotel room I could not sit still and wanted to pass along this feeling to others. Others whom are the ledge and wondering if they will hit the bottom or make it to the other side. My path, though different from others, was created and started through the use of mobile homes.

I wanted to follow up my original post with some explanation between the two business models involved with mobile home parks as well as some additional sources of information. Keep in mind I live in Virginia and my landlord tenant laws are different than other states.

The way in which you invest in mobile homes and mobile home parks is much different. In-fact, investing in mobile homes or mobile home parks is very different than all the other fields of real estate. I will point out, each investor has his or her own strategy when it come to investing in real estate. As an investor over the course of multiple deals, court hearings, tenant turnover, renovations, property closings, other experiences, mortgages, management and ext.. your strategy will evolve to what best suits you.

My strategy for mobile home investing was simple: "What is the fastest way I can get back my initial cash investment while not giving up possession of the home in a short term". You see, in a perfect world people buy things they can pay for. They make their payments each month on time. They keep their homes clean to the point where a cockroach is mythical creature only told in old wives tails about the old hard times. In a perfect world you would just sit back and collect checks. Well, I can tell you that sounds great, but there is lost opportunity in the perfect world. In the real world people will just randomly stop making payments. In the real world, people are not the cleanest species on the planet. However, in the real world comes real opportunity if you know where to look.

After I purchased my first apartment complex, I learned one very important rule which governs all my real estate strategies. I DO NOT RENT..Unless I have a park manager living within the home (more on this next post). After two long miserable years (this past Feb), I finally wised up and hire a manager to oversee this apartment complex (with mostly sec. 8 tenants at the time), and it has made a night and day difference on my business. I noticed something very important during this time. My time is more valuable than unclogging a sink to save $125 from a plumber or replacing a leaky $29 faucet from Home Depot. The worst expense came in the amount of my time of having to do inspecitons, applications, walk through s, and of course all the repairs/finding a contractor worth anything to get the job done right without getting cleaned out on the way to the bank. And you can bet Malinda will be calling with clogged sink drain on every Thanksgiving, Christmas, and Mothers Day while her whole family is at the house when the grease wizard pays a visit (because Malinda would never pour grease down a kitchen sink).

I also noticed something else during this time. The mobile homes I had purchased were still paying each month and never called me. In-fact, I remember more than a few times that the tenants in these homes became very nervous each time I called. The conversation would go like this, " Hey Brian how is everything going?" "Ummm great why Major.....we mailed you the payment on the 2nd, I have my money order receipt, we used the envelope you provided us, and .....and...." Me, "Wooh Brian, I was just calling around to check on things and remind you this weekend it is going to get really cold so keep a small drip in your faucets to prevent pipe freezing." Brian, " Oh ok, you know we pay ontime, we dont want any trouble, we really like the house...and...and..." Me, "Thats great Brian! Hey, while I have you on the phone, I have another mobile home coming up for sale a few streets over. Do you know anyone who may be interested? If you do and that person moves in, I will give you a $250 gift card to X.." Brian, " Oh yeah, I know about 6 people you can call, infact my cousin, mother in law, and brother are looking for home like this one....."

Yes, other than the pipes freezing, that was a normal conversation. It very common to multiple people from one family reside next to each other within a park.

Back to the point. The tenants who purchasing the home did not bother me with fixing nonsense because they knew that they themselves were responsible for fixing it. They took pride in owning their home. This mindset lead to fewer evictions, leading to fewer turnovers, leading to little to no renovations.Unlike rentals, where it is the everyday god given right of that tenant to have the Opra, Dr. Phill, or Family Fued blasting from the TV 24/7 while finding things to complain about or break in order to complain about it. Each call ending with a threat to call the health department over a loose toilet paper holder.....(don't worry they never call)

Yes you will still have turnover when selling the mobile home with financing. But here lies the opportunity in the real world as mentioned earlier. YOU CAN SELL THIS UNIT AGAIN, AND AGAIN, AND AGAIN. As stated above, the tenant purchasing the home, will have taken much better care of the home. Which leads to less repair when tenant is evicted or moved out. Which leads to less money out of pocket. Which leads to faster time to market and little to no down time. Which leads to yet another sale within days if your system and buyer waiting list is setup. This is the magic. This is the secret sauce.. You can sell a mobile home many times within its lifetime. For example, I sold one home (the third one I purchased originally) three times in one year. First time sold it for $16,000 with $4,000 down and payments of $450. They left in the middle of night, randomly, three months later before court with only one paid month. A little paint and clean the carpet (I eventually learned you are throwing money away if you buy carpet) and it sold within two weeks, prior to the end of the third month. This time sold it for $16,000 with $3,250 down with $450 month payment. After down payment they moved in and did not pay rent again. Found out they brought bed bugs into the home. They were evicted within 90 days of moving in. So, after eviction threw out the carpet, go the home fumigated ($400) and replaced the flooring with the thick stick on vinyl flooring (life saver in mobile homes), paint, and new stove. Around $2,200 total renovation. Sold it within three weeks later to a couple, who actually lived there when they first met years ago and wanted to move back in. They purchased it for $14,000 with a $6,000 down payment and monthly payments of $350.

So if we do the numbers this trailer generated a total of $13,250 down payment and a total of $3,250 in monthly payments (8 months total at $350 and one month at $450). For a gross of $16,500. Take away insurance and turnover expenses ($4,200). This trailer net $12,300 for the year. Had it been a perfect world the first purchaser would have stayed and paid for a total year earnings of $8,950. So you see, turnover can be quite profitable in mobile homes.

As far as possession goes (you as owner of the mobile home), even with installment sale, do not give nor forfeit any percentage of ownership or beneficial interest of the property until the note (installment sale) is paid for in full by note maker (tenant) to note holder (you). This statement is true as well for residential property, however with residential property you must foreclose on the home and go through a very lengthy and expensive court process. Thus leaving you (the property owner and note holder) to eat the insurance, utility, and mortgage costs each month until foreclosure is finalized and you have possession. With mobile homes, there is only a title and nothing is recorded with the local courthouse or through the use of an attorney allowing you to retain and have full ownership until that title has changed owner and new one is printed by DMV. DMV is the supreme court when it comes to mobile homes. He who holds title, holds the power. So when it comes to selling and retaining control of the mobile, time and interest are your best friend. Your goal is to get as much money for a down payment as possible while making the monthly income you want over the longest period of time possible. Everything a bank does except we want a much money as possible upfront.

I appreciate your interest in this forum and will continue onto mobile home parks later this week. I look forward to your comments and messages.

 

[SteveO]

I had a friend from the golf course that started as a backhoe operator. He installed the underground plumbing and electrical on a number of mobile home park developments. They gave him part ownership instead of cash. He retired at 38 and never worked again.

 

[MidwestLandlord]

Nice work!

Scrugg's book is how I got my start too. Got away from mobiles after some time, but flipping mobiles gave me the war chest to do what I do now.

I've tried on several occasions to buy parks, but the prices here are outrageous. (I watched a 15 slot park go for $550,000 last year, with lot rents of $399 [area average])

There is so much money to be made in mobile homes, tons of NEED, and most people avoid it because it's not "sexy"

But really, what's not sexy about someone paying you monthly on the home note AND paying you monthly for the lot rent?!

AND they are happy to do it because they get to own their own home, and it's affordable. It's a win-win!

Again, good work!

Have you bought other parks besides the first one?

 

[Jon L]

I fixed up mobile homes for a guy back in the late 90's who bought and sold them. He typically doubled or tripled his money on them. Back then, he bought them for $5-$7k from the bank, and sold them for $15-25k or so. Typical fixing-up expenses were a few thousand. Sometimes, he would move the units to a different park to get better space rent or other perks.

Typical things we'd have to do to fix up a mobile home:

• clean out the previous resident's stuff (usually left-over stuff that wasn't moved.) Also included full refrigerators that had been turned off. (wear a gas mask so you don't smell the fumes)
• Repaired the particle-board subfloor around the washing machine and sometimes dishwasher
• installed new flooring in the kitchen - typically vinyl tiles
• repaired the skirts around the unit
• Paint the inside and outside
• do minor landscaping
• install earthquake mounts underneath
• Move and then re-level the units after the move was complete

He would also sometimes carry the paper or rent out the units after we finished the repairs. Loans on a mobile homes have much higher interest rates than standard mortgages.

If you don't mind getting your hands dirty, its some good money.

 

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[Major]

Nice work!

Scrugg's book is how I got my start too. Got away from mobiles after some time, but flipping mobiles gave me the war chest to do what I do now.

I've tried on several occasions to buy parks, but the prices here are outrageous. (I watched a 15 slot park go for $550,000 last year, with lot rents of $399 [area average])

There is so much money to be made in mobile homes, tons of NEED, and most people avoid it because it's not "sexy"

But really, what's not sexy about someone paying you monthly on the home note AND paying you monthly for the lot rent?!

AND they are happy to do it because they get to own their own home, and it's affordable. It's a win-win!

Again, good work!

Have you bought other parks besides the first one?

Thanks for the comment. The best deal are off market, like in any business. I agree, once a broker get his/her hands on a mobile home park listing the price skyrockets. However, the cash on cash returns and low overhead are unmatched in any other form of real estate (except maybe for NNN land lease).

Yes!! I have purchased two additional parks. I actually wrote the article and this reply in the hotel room near the park I just closed on 18 days ago (55 unit). I currently have contracts on 3 other parks to close (hopefully 3 for 3). I became really active and aggressive 8 months ago when the election had ended and banks had finally opened up their vaults of money to lend at crazy low interest rates. It wasn't but 10 months ago you were lucky to get a bank to lend on a 60% LTV on a mobile home park with plus prime interest rates. Now I am getting rates up to 85% LTV!!

Thanks again for the comment. I will be continuing the article and give out as much info I can for fellow investors. Want to pay it forward for all the help I had along the way from other investors.

 

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[Major]

So after buying the mobile home, would it be smarter to rent it out for longer cashflow or sell it since people will still be making monthly payments for a couple years?

I'm currently working on a "sexy" business idea and would love to have something like this on the backend creating some cashflow.
Followup question, do you have any experience with finding a buyer before purchasing the MH if the owner doesn't agree to give you 1-3 months of free lot rent?

For example, you find a MH listed for sale privately with not much exposure and so you talk to the seller to make sure everything is legit and then advertise the sale to secure a buyer BEFORE you even buy. Seems like a few things would have to align perfectly for this to happen but if it works then there's 0 risk on your end. Thoughts?

I live by one rule moving forward in my real estate carrier.........I DO NOT RENT ANYTHING....(unless it is strategic). Renting puts your pocket to the exposure of retinue maintenance and higher tenant turnover. The best way to display the difference between a renting tenant vs a purchasing tenant is as follows:
"Mobile homes and cars have a lot in common. Both have titles, both are made of metal, and both have owners making payments on them. Now think back to the last time you rented a car or barrowed one from a friend. Now think of the car you own or are making payments on in your driveway. Did you treat both cars the same?" This should answer your questions.

Believe me, you will have more money and time if you do not rent the mobile homes.

 

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[Major]

Great post. My only question is what about the POA dues or lot lease payments?

From what I understand, when you purchase a mobile home in a mobile home park, you're only purchasing the building and not the land that it sits on, which you have to lease. So I take it the key to this strategy is being able to flip the homes quickly in order to minimize your holding period correct?

That is a great point. Yes in the beginning I flipped my mobile homes within mobile home park communities. This was due to two reasons. Management and low cost to entry. You are correct. When purchasing a mobile home within a park, you are effectively purchasing a the improvement (via the mobile home) of which is placed upon the land. You will have to lease the lot from which the mobile home sits on from the mobile home park. The key is to flip these homes as fast as possible. The fastest way to achieve this is to offer a rent to own or some type of installment sale in which the monthly installment payment from the tenant covers both the monthly lot lease payment from the park, and the amount you feel is necessary to obtain each month to go through with the sale.

The trade off with purchasing the mobile home within a park vs. purchasing a home on its own lot is.....wait for it........ your upfront investment!..yay. I do not want my money to held hostage by father time on an installment sale, no longer then I have to. Due to the low cost of only purchasing a mobile home and renting the lot vs purchasing a home and locating it to or purchasing the lot in which it stands, I was able to flip multiple units on a tight budget producing multiple sources of monthly income there for lessoning my amount of risk to break even each month. This is due to having multiple units of production and spreading my breakeven over all units allowing for a productive unit to pick up the slack if I had a non-productive unit. This is impossible to due if I were to put all my eggs in one basket with just one unit with one lot. Also, with the lower costs on just purchasing the mobile home, recouping your upfront investment is much faster allowing you to re-invest in other units with not additional cash out of pocket.

Thanks for the posts! I do appreciate it.

 

[WJK]

@WJK - aren't mobile homes your gig?

Thank you for noticing. Yes, I own a mobile park. Yes, I own almost all the mobile homes in my park. I have low to moderate income tenants -- the only collection of affordable housing in my community. Yes, I also have the only self-service Laundromat in my community -- it is used by my tenants and the whole community. Yes, I designed it and built it -- it is handicapped accessible. Yes, I have a several full hook-up RV spots -- the only ones in my community.

Yes, I'm a very busy girl. It's not strictly 'fastlane,' but most of it is passive income. It's all nitch marketing moves.

 

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[SteveO]

That October I found a mobile home park for sale in a market I knew very well form executing a few leases in the area. I was able to meet with the owners, talk them down on price, and gained enough of their trust to seller finance the mobile home park. We closed on the property 30 days later. The park contained 10 mobile homes on 10 lots and a 3bed 2bth house. They agreed to a price of $215,000 and would take $25,000 as a down payment.....Perfect. The park had a low lot rent of $300 a month, two vacant mobile homes, and a vacant house for a total monthly rental income of $2,400 a month. My installment payment was $1,050 a month and tax/insurance of $550 a month for a total debt service of $1,600 a month plus water/sewer bill. Two months later, I had filled the vacant homes and house with paying tenants with lot leases and promissory note monthly payments. I also increased lot rent to $450 a month (area average). Within sixty days of closing, the park was had a monthly NOI of $3,800 a month.

Way to be a deal maker!!!!!!!!

 

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[Major]

Great thread about something I've been interested in for a long time. I looked into Lonnie scruggs' method quite a bit but from what I understand it's now pretty much impossible to do because of the SAFE act. I'm curious how you dealt with that potential issue. Also if you don't mind me asking, if you didn't go through commercial brokers to find your deals on the parks, how did you find them?

I use a rent credit program. Essentially the same thing as a rent to own however there is no interest therefore by passing the act. Also, any individual or company is legally able to conduct up to ten installment sales a year without having to be Dodd Frank compliant. Ask your attorney if you are still concerned about it.

I have used brokers both commercial and residential, cold calls, mailings, dropby's, and any other thing you can imagine to get infront of any mobile home park owner I find.

 

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[WJK]

You can as an individual conduct up to and no more than 10 installment sales. After 10 you must be certified. The way around it is a lease purchase (rent to own) or as the I learned from Frank and Dave, is a rent credit. Rent credit meaning you give a percentage of the rent as a credit toward the purchase of the home on an agreed upfront price. Make sure you put i in, on an form of agreement between you and tenant in bold, upon default and/or non payment " tenant/note maker willing gives landlord/note holder mission upon default and/or breach of contract". This will save you alot of time and heart ache with judges whom are unfamiliar with mobile home (due to it classified as personal property and the liberal judges who want to protect tenants from us evil landlords).

@WJK you have a MHP in Alaska? Would love to hear about that and how you deal with the heat and snow. I visited Juno and Anchorage earlier this year and it was beautiful.

The number of installment sales depends on the state where the property is located. The laws here are based on the number of sales per year. That's easy for me. I buy owner carried trust deeds on the side.
Yes, my mother sold off some of our mobile homes on contract sales when she was alive. (I was in Los Angeles still working at my career.) Yes, I had to repossess almost all of them through a lawsuit. It's a good thing I went to law school.
And I'm in a rural area where I appear before the same couple of judges, who have watched me for years. One judge was pretty pro-tenant when she came on the bench, but after all these years, she has changed her tune when it comes to me and my cases. She watched me help a lot of people over the years and be kind even when I don't have to.
I rent my mobile homes. Here in Alaska they've changed the eviction rules for mobile home parks concerning homes owned by individuals which are located in parks. Evicting a mobile home along with their owner is almost impossible now. So I own all except for 2 of the homes in my park.

YOUR QUESTION ABOUT THE COLD...
We work all summer to get ready for winter. Painting and staining wood is a really big deal. Things rot here in 3 or 4 years that would take 20 years in the Lower 48.

All of our pipes are insulated and heat taped. Each unit has a switch inside the unit for that heat tape that we make sure is turned on when it gets down to 0.

Our skirting is critical. Every fall we inspect every mobile home for any damages. A pinhole can let in enough cold air to freeze up a unit. We use PEX for our plumbing. Other types of plumbing can freeze up and turn brittle. Opening a skirting in the winter is almost impossible some years, depending on how much snow we get and the how cold the winter is.

I own a small community water system that services the park, and our water pipes are 10' underground. We're very careful to make sure that we protect that system.

Over the last few years, we have replaced just about every window in every unit. Standard mobile home windows don't get it here. I have spent about 100K wholesale on double pane; argon filled windows.

Almost all of our units have arctic entries -- enclosed unheated porches -- as a buffer for the winter's cold.

My tenants are all low to moderate income people, so I include the utilities in my rents. I have the only "bank" of affordable housing in my community -- I have 40 rentals (besides the senior center which has only 6 senior units), the only self-service Laundromat and the only full hook-up RV spaces.

I can tell you more... if you are interested.

 

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[MidwestLandlord]

Here in Toronto a 550k condo nets you 18-2200 in rent tops.

Lol, big cities are a hoot.

Went to my local MLS listings...

First house listed at $550,000 is 4 bed, 3 full bath, 1 half bath, 5,640 sqft, a theater, a billiard room, an attached green house, 2 laundry rooms, and 18' ceilings in the main hall...on 4.86 acres.

But yeah, a 15 slot park full of 8' wide homes at that price is steep for the area. The county won't allow new parks, so the prices went crazy.

 

[Under-Dog]

First house listed at $550,000 is 4 bed, 3 full bath, 1 half bath, 5,640 sqft, a theater, a billiard room, an attached green house, 2 laundry rooms, and 18' ceilings in the main hall...on 4.86 acres.

Wowzers! $550,000 in the LA area gets you a carton

 

[MidwestLandlord]

Great post. My only question is what about the POA dues or lot lease payments?

From what I understand, when you purchase a mobile home in a mobile home park, you're only purchasing the building and not the land that it sits on, which you have to lease. So I take it the key to this strategy is being able to flip the homes quickly in order to minimize your holding period correct?

I never paid lot rent, only utilities.

The managers were happy to give 1-3 months of free lot rent if it meant I put a home owner in there that would likely pay them for years to come.

 

[Runum]

Buying mobile homes to RENT in a mobile home park you don't own is a tough strategy. This is a triangle and you have the most to lose. The renter has two landlords to keep happy, you and the park manager. The park manager can be a nice guy or a jerk. You become the middle man between them when the renter and the park manager don't get along. You get to hear the he said, she said crap. I did it many times, and some times the renter was the one that was right.

Buying mobile homes in MHP to sell is much better because you are not the landlord but the seller. Good luck.

 

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[fastbo]

Hey everyone!

I DO NOT RENT..Unless I have a park manager living within the home (more on this next post). After two long miserable years (this past Feb), I finally wised up and hire a manager to oversee this apartment complex (with mostly sec. 8 tenants at the time), and it has made a night and day difference on my business.

Back to the point. The tenants who purchasing the home did not bother me with fixing nonsense because they knew that they themselves were responsible for fixing it. They took pride in owning their home.

+1. You stumbled onto an important concept in real estate. Renting sucks. You need to have an organization/people system beneath you to manage any scale of rentals. That's an achievement in itself. Otherwise you won't scale past 20 doors and you'll be working 80 hours a week fixing other people's problems.
If you want true passive income, you need to be on the financial side of real estate. Seller finance, lending money to rehabbers, buying existing mortgages, etc. You want to be the guy selling shovels to the gold miners. Built up your active wealth and put it into passive income.

 

[BRichard]

@Major Fellow MHP investor here! Just closed on my first park this month, and targeting a few more within driving distance, hope to have 3 parks under ownership by mid 2018.
I've been thinking if MHP ownership fits within the C.E.N.T.S. framework? So far it seems to obey the commandments, and can be tailored to a passive ownership model (with quality property management in place).

 

[WJK]

Update... It's been a hard week. A guest of one of my tenants tried to burn down my trailer where they lived -- with their son in it -- who was her ex and not my tenant. She loudly stated that she was trying to kill him. She took videos, with selfies, as she danced and screamed in front of the fire. No one was hurt. The Trooper came out and arrested the arsonist. She slipped out of her handcuffs and disabled their camera in the back seat of their car. They put her into a van. Then she slipped out of the second pair of handcuffs, took off her clothes and set them on fire. The trailer has $30,000 worth of damage that I'll have to cover. It will take months to get it ready to rent again. At least no one was injured, and they have her in jail. They are taking her to the mental hospital for evaluation. I've got to write a book about all of this. It would be a best seller. And the beat goes on, and the beat goes on...

 

[Bigguns50]

Good post and good work @Major !

I lived in a park for several years. It was a middle of the road type....not trashy, not great. I thought and still think, it's a good market to get into. I watched the management work and man, I wouldn't want their jobs.

Do you manage the parks or do hire management ?

 

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[Tapp001]

Than you for sharing! This is some amazing stuff. I've always been intrigued by non-sexy, practical businesses. Everyone wants to write an app, or get into Etherium, or write a book that finances world travel, but I love reading about business adventures in areas like mobile home investing, document storage, etc. The backbone businesses of the economy on which all the sexy stuff is based.

 

[Major]

Good post and good work @Major !

I lived in a park for several years. It was a middle of the road type....not trashy, not great. I thought and still think, it's a good market to get into. I watched the management work and man, I wouldn't want their jobs.

Do you manage the parks or do hire management ?

It really depends on how many lots there are to manage and my tenant turnover. For my smaller parks I manage them by mail and larger parks (40 occupied lots or more) I hire a manager to do the daily duties of upkeep and hounding tenants for rule violations/late payments.

 

[BrandonS85]

+1. You stumbled onto an important concept in real estate. Renting sucks. You need to have an organization/people system beneath you to manage any scale of rentals. That's an achievement in itself. Otherwise you won't scale past 20 doors and you'll be working 80 hours a week fixing other people's problems.
If you want true passive income, you need to be on the financial side of real estate. Seller finance, lending money to rehabbers, buying existing mortgages, etc. You want to be the guy selling shovels to the gold miners. Built up your active wealth and put it into passive income.

I'm at 71 rentals, spend about 20hrs a week directly managing.

Shouldn't 100 before I look at hiring anyone to help manage. I outsource all my labor. My hourly income isn't bad at all. Can step away whenever I need to and the company doesn't fall apart (I can remote about 80% of what I do to run the company).

 

[Major]

@MHP368 Do yourself the favor of attending the 3 day boot camp, it is worth every penny! I worked with Fedro and found after going to the boot camp that Fedro's advice was pretty scammy and he actually advises individuals to engage in acts that violate Dodd Frank / SAFE, so i decided to not pursue his methods or recommendations.
Regardless, you are on the right track, but the industry appears it will begin consolidation in the next 10 years or so, so don't wait too long to start buying

Hey everyone. Sorry for the delay. I really appreciate everyone's feedback and positive views. I am answering questions this week. Feel free to send me a private message.

I have been extremely busy the past few months (no excuse I know). Recently closed on a 185 unit park and currently turning it around (have quite a few good stories turning around this one). Also, I am putting just about everything I have on the market and have been renovating.

YES!! Take the Mobile Home University course. I took the course after working the industry for 2 years. I then found the Bootcamp course hosted by Frank and Dave. Wish I would have taken the course first. Learned a heck of a lot. The course is worth every penny and would have saved me a ton of heart acke and money prior to the purchase of my first park.

It has become increasingly hard to pick up a park for the normal rate of return I expect. Parks are exploding in value right now as the industry is now becoming more normalized and the stigma of MH is changing. Will post a link following this on a couple of US Today and other reports/newspaper articles.

Get in NOW.. You will not regret it.

 

[Major]

Definitely unsexy but what seems like some good ROI.

Just for the hell of it, I searched close to me and this one popped up?
Mobile Home Park for Sale in Rome, GA: College Corner Community

180K for 10 lots that rent for 300/each per month. That seems like a good deal, no?

Here's another: Mobile Home Park for Sale in Henagar, AL: Northeast Alabama Park

$5600/month in cash flow on 210K investment. That seems to be crazy good, assuming you can do a 20% down loan.

Obviously, I am missing something.

Yes, I see these type of deals all the time. I passed on a park, a little while back, in Rural VA for a 72 lot park, with 67 occupied lots (lots with a rental unit) for $800,000 with lot rents of $225. So the math is $11,900+ per occupied lot with a gross rent of $180,900 annually. After vacancy and operating expenses, comes to about $65,124 NOI. With a down payment of $160,000, this park would show a cash on cash return of 40%.

Sounds great right? However, the park is in the middle of nowhere, the utilities are private with no way to expand or connect to city service. The local economy and job market is heavily driven in manufacturing with a MSA of only 12,000 people. The issue was the location, area economic factors, and inabililty to fill vacant homes in a less than thriving job market and and even smaller population.

It takes the same amount of time to manage a 10 unit park in your back yard as it takes to operate and manage a park 5 states away. I stay away from AL, LS, MISS, FL, CA, for economic or landlord/tenant policies (something else to take into consideration).

Why not look in a better economic area?

 

[CareCPA]

When you say "mobile home park," are these the stereotypical ones on TV where the tenants always have car parts in the driveway? Are these nicer ones where people take care of their homes? Or is it a mix?
Are you putting new homes on the pads and renting the whole thing, or are you just collecting the lot rent? I couldn't quite tell from your post.
Do you discount for a caretaker, or just hire out the grounds maintenance to an unrelated company?
Have you looking into the over 55 communities as well? I imagine these are lower returns, but fewer issues.

I've seriously considered this in addition to my more "traditional" rental properties, just haven't gotten the funds together to give it serious consideration.

 

[minivanman]

This is one of the only things I've talked about and never done. Not sure why I haven't done it but just never have. I used to talk about it so much that some of my friends still bring it up sometimes and ask if I'm ever going to buy a trailer park.

 

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[SteveO]

I had a friend from the golf course that started as a backhoe operator. He installed the underground plumbing and electrical on a number of mobile home park developments. They gave him part ownership instead of cash. He retired at 38 and never worked again.

I say "had" because he just passed away from lung cancer. He trapped gophers on the golf course for fun and caught somewhere around 2000 of them over the past few years. Last year, him and I trapped them as a team. We marked our locations with blue flags and coordinated our plans daily. We displayed a memorial for him in the clubhouse thanking him for his help and dedication to the course.

 

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[Major]

This is one of the only things I've talked about and never done. Not sure why I haven't done it but just never have. I used to talk about it so much that some of my friends still bring it up sometimes and ask if I'm ever going to buy a trailer park.

Come to the dark side. It is really a rewarding industry...

 

[MidwestLandlord]

Be careful that you don't need a real estate license for this in your state.

Or an automotive dealers license.

In my state it must be on a lot or it's a "vehicle"...if it's not on a lot, you can sell 5 a year without an auto dealer license. If it's on property being sold with it, it's real estate.

There's restrictions on what kind of footings qualify as "on a lot" and it must be skirted and hooked to utilities as well...or it's a car lol.

 

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