Guidance For Entrepreneur/RE Investor That's New To MHP Investing


#1

Hi All-

New to MHP investing but have previous experience owning retail shopping centers and office buildings. After seeing how much of your returns can be taken away due to the high costs of tenant and capital improvements in the retail and office sector, i have been pouring into learning about MHPs the past 3 months.

I make a pretty significant income from non-real estate related businesses that run without much day-to-day involvement from me and dont take up too much of my time. But i’m looking to diversify my income streams into MHPs through my own capital as well as client’s capital… and really have a passion and interest in real estate investing.

My question is: where would you start if you were in my shoes? I definitely believe in scale and wanting to grow something significant. What i dont want to do is get involved in something that creates far more work for far little return (small deals in which cash flow is miniscule with no real upside). What types of deals would you be willing to consider if you were me? I was looking at a 100 lot park close to home but almost 90% of the homes are parked owned. I am also close to one that is 2 hours way but is only 29 lots (all tenant owned) and i’m wondering if it’s too small to deal with. Lastly, i’ve been looking at a lot of out-of-state deals but wasnt sure if there was a minimum lot size i should consider starting out if the deals are out of state or what else i should be considering if going to invest out-of-state (i understand the #'s pretty well - talking more about the things that i’m not considering when dealing out-of-state
) Definitely want to stay with public utilities for now.

Any help/guidance would be greatly appreciated! I plan on going to an upcoming MH University Boot Camp but can’t make the one in October…

Thanks…


#2

I believe that step one is definatly to attend the boot camp. Without that portion of the education process it will be difficult to integrate advice you receive here in a fully meaningful way. Keep in mind the owners on here represent a broad spectrum of investors so you need to concentrate on those that are already scaled to your target market.
My opinion is the bigger the better keeping in mind there is a steep learning curve. I would not consider POHs but understand that may be unavoidable. Priority after purchase would be to off load the POHs.
My preference is senior/retirement. Anything to do with aging today is money in the bank, seniors make the best quality tenant base, and you avoid the more difficult welfare tenants. I personally have no interest what so ever in dealing with affordable housing clients but they are a cliental that you can, if you wish, simply cash the checks.


#3

You have a profile like many other investors, both institutional and nonprofessional. You are going to pay top dollar and want top quality. That’s who is buying now.

Every deal has warts. Knowing what warts are significant and which you can fix is key. The boot camp is for sure well worth it, but what is never stressed is that it’s work. It’s not money growing on trees.

You will have a business and situations will arise that require money or time or judgement or prediction and if you’re hiring professional tradesmen frequently that eats into your budget. And there’s no guarantee they will do what you expect.

There is risk in everything. Is the return worth it?

I would suggest that demand is the key. Demand can cure a lot of problems. What kind of traffic and what conversion rate can the market sustain will dictate your success.


#4

You don’t say what you have to invest. Personally, I likely wouldn’t look at a park under 50 units as the cost of an on-site manager is too high as a percentage of income. If it was purely local, I might consider 35 spaces, but I doubt it. If I couldn’t drive to the park in a couple hours, I would likely want around 100 spaces so that my travel costs are spread over more spaces. 50-150 spaces seems to be a sweet spot. If I couldn’t afford such a “large” park, I would likely wait until I had investors who could help me fund the deal, rather than settle for a smaller park I could afford.