How long does it take to turn a bad one around

just bought a turnaround park. 97 pads, city water and sewer, we are in the process of sub metering. there are 73 sites occupied, 14 homes are junk and need torn out and the balance are park owned rentals with 16 being section 8. We have begun signing new leases (the old ones were a joke), and lease optioning the homes out. We tell the tenants up front we keep absolutely no “rental” homes. The section 8 we will be slowly phasing out. This park has several alleged amateur pharmaceutical salesman, so we terminated all the leases and are in the process of getting them gone. The park is in a great location, close to wal mart, dollar stores, and withing walking distance of downtown, its in a nice little college town. Once the bad people are out what is all of your experience with how long it takes to clean up the reputation? Even in the poor condition it is in now i am still getting 4-5 calls per day for people wanting homes. Thanks in advance for any info!

Our experience has been that 30 - 40 calls/week translates into being able to infill 2 - 3 MHs/month of your own renovated homes (assuming you have reasonable ‘no hardened criminal’ standards for your tenants, which it sounds like you already have. We have one park that receives around 70 calls/week when we advertise, and is in an excellent economy and excellent school district. In that park, people have been moving-in their own mobile homes at the rate of .66/month (we infilled 4 vacant pads in 6 months with ROHs). We found no need to get into the housing business ourselves in that park.

Are you sure Section 8 is a bad thing? The quality of the tenants vary widely throughout the country. In Oklahoma the program is administered correctly (e.g. participants are kicked out if they trash their residence), so our S8 tenants in OK are among our best. Just be sure you are in an area where S8 is poorly administered before you kick out those folks just because they are on public assistance. We’d not kick anyone out for being on public assistance; however we’d kick out any tenant abusing the home we provide them.

One final thought: Are you sure you want to tear out the 14 junker homes? We generally keep/rehab homes unless they are burnouts or have been really badly abused. Even if they are ‘tear outs’ - you may be able to sell them as ‘hunting cabins’ for a few thousand dollars to people who will remove them at their expense.

My 2 cents worth,

-Jefferson-

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Thanks for the info! Would you still rehab the homes even if they are old 12 wides? Our primary motivation for getting rid of section 8 is that is where most of our hardened criminals are coming from and the homes have had no maintenance at all. Do you do monthly inspections on your sectikn 8 homes or how often are you in them to check on condition?
Thanks
Matt

I bought a 32 pad MHP with 27 homes in it about a year and a half ago. It was my first jump into MHPs. I have had about 15 house rentals for 10 years. It has been a longer, more difficult and much more expensive than I ever planned. The previous owner kept about 12 park owned homes and the plan was to buy them off him slowly. We ended up buying almost all of them off him quickly because of high turn over. So we ended up doing about 10 rehabs at the same time. It was very expensive and so much work. We were sure when we did nice rehabs, renters would love us. It is still taking time to fill the last couple and start making back the rehab investments. We have done so much clean up and getting rid of problem tenants. This has been way way more management intensive than my single family houses, but I’m expecting the returns to be much better someday. We have kept them all as rentals after nice rehabs because we are scared about financing them with the Dodd Act out there. I feel like we are the only ones that seem to care about that. So it’s been a long road but hopefully worth it in the end. The first investment into a new asset class is always a learning experience. I have purchased 3 RV campgrounds since then and have a contract to take over a 230 spot campground on Jan 1. I also became a broker specializing in helping people buy and sell MHPs and Campgrounds in Indiana since I’m an owner. I just joined the forum a few minutes ago. Lol. I hope my honest experience helps.

And thanks for all the posts Jefferson. I think you called about one of my listings in Indiana awhile back. I’m not sure. I remember checking out your website. Either way, thanks for being so active here. I hope I can contribute valuable info and my experiences here too.

12 wides need to have a good floor plan. I had 2 in one of my small parks. One was a 2 bedroom with an open kitchen/living room area. That home always would rent. But the 2nd one was a 3 bedroom. That home had very small bedrooms, and a bad floor plan. I never could make money with that old thing. Finally I got it back one time and had it hauled to the dump.

You want to remember when your choosing to keep or dump a home that moving cost alone for a new one can be $3,000-$4,000 easily. That gives the home that’s already on your lot $4,000 to put into rehab. Not to mention you’ve got to pay for the new move in. If you do enough of them, you’ll learn that tipping point as to how much rehab is too much.

I once put 12k into a 12 wide. It started out I was going to put 7k. Once I had put 7k in it, several things went wrong, and we kept finding more things. I ended up putting new windows, new flooring throughout, a deck, water heater, furnace ect. I should have hauled it to the dump. But once I put 7k in it, I was committed! So look them over good before committing!

I would get rid of all section 8s. If that is the source of your drug problems you might as well get rid of them all and not allow any further section 8s. This is easier in the long run that trying to screen for good section 8s.
If the 12 wide’s need rehab I would get rid of them. If you are upgrading your tenant base 12’ will be lower end units liable to attract less desirable residents. Either advertise to have tenants bring in quality homes to fill lots or bring in your own. If you bring in and sell homes do not offer financing. This will result in higher quality applicants.
Inspect all your homes at least 3-4 times per year until they are all resident owned.
It is difficult to say how long it will take to clear the communities reputation and will depend on how high you set the standards for new applicants. If it is a family community as opposed to adult only the turn around will take longer as you will probably need to reject a greater number of applicants. Family communities are generally of a lower standard as young families usually spend less time and money toward upkeep of their lots and homes than those without the responsibilities of children. Family communities are difficult to raise to high appearance standards.

The other option you could try is offering the 12’ to a rehabber/flipper. Try one by setting the standards of rehab, do not allow them to reside in the home, and see if the end result is high enough to maybe attract a pensioner. The key is to push the resale of the home to a level that will attract better quality applicants. Strict guidelines for the rehabber, quality of work, extent of rehab, time lines ,etc. are essential.

Shoen4u1, we agree with Trent:
“It has been a longer, more difficult and much more expensive than I ever planned.”

Almost three years ago my Husband and I purchased our first MHP. This MHP was all Lot Rent only and in wonderful shape with the water bills directly mailed to the Tenants from the Utility Company. This MHP was relatively easy to manage.

Then one and a half years ago my Husband and I purchased our second MHP from an Estate that was in rough condition (turn around).

Our second MHP has taken a lot longer and a lot more money to turn around.

Thus far we have done the following:

  • Condemned Homes - Condemned Before Purchase Of MHP - 12 - Removed By Us: Before we purchased the MHP there were 12 Mobile Homes that the City had officially condemned. We had all 12 Condemned Mobile Homes removed (some torn down on site and some hauled away to the dump).
  • Condemned Homes - Condemned After Purchase Of MHP - 2 - Partially Removed By MH Owners: After we purchased the MHP the City Officials came in and condemned 2 more Mobile Homes that people were actually living in. The Owners of the Mobile Homes had the Homes removed on-site. However, we ended up paying to have the jobs completed.
  • Mobile Homes - POHs - Totally Renovated: All of our Park Owned Homes were rented when we purchased the MHP. However, once the Tenants moved out we went in and totally renovated the MHs. We have totally renovated 5 Park Owned Homes. We have rented out all these POHs.
  • Mobile Homes - Newer Ones - Brought In: We have purchased 3 newer singlewide MHs and have brought them into our MHP. We have rented out all three MHs.
  • Trees - Trimmed: We have about 12 acres with 65 lots. We have lots and lots of trees. We have trimmed and trimmed our trees.
  • Mobile Home - Abandoned - Took Ownership Through The Magistrate Courts: We have received Title to a MH that was abandoned in our MHP. We are now in the process of renovating this MH.
  • Mobile Home - Lonnie Dealers - Not For Us: When we first purchased the MHP, we met a Lonnie Dealer. We tried the avenue of having a Lonnie Dealer in our MHP. Since the Lonnie Dealer’s standard of Tenant was one that he found at the Bail Bondsman’s Office, this process did not work for us.

I am a huge advocate of education and learning from others.

Frank’s “Mobile Home Park Boot Camp” is wonderful.

However, you also learn a lot from doing. Thus, once you actually own a MHP you learn that everything is not as simple nor quick as you might like it to be.

Turning around a MHP is like the saying:
“How do you eat an elephant? One bite at a time.”

We wish you the very best!

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From experience buying the turn around parks is a money and time consumer and found money spent on well-operated properties without the old homes, drugs, and late payers is very wise and why do we want to be part of the tax-payers subsidized government housing programs–do we need money that bad or like to own such properties. I thought park owners tended to be independent self-reliant investors that did not need the government to be successful. The government looks at first to be a helping hand but its socialist tentacles invited in will control and regulate and finally suffocate what it is suppose to help–socialism always ends when it runs out of other people’s money. Government does not create wealth, we do. For example 3 years ago the capital gains tax was 15%, presently it is over 23% now and the pres. wants OVER 38%. So when you work your butt-off and sell your nice park they take over 23% of what you already paid taxes on and if your make over $100,000 net receiving SS, 80% of your SS check will go back to the government for taxes. Yes we use 1031"s but at some time we will cash out–just food for thought. It is not how much you make, it how much YOU keep.

I could not agree more on the section 8. Our other park we accept no section 8 and had no problem keeping it full. I am assuming after this one is cleaned up it will be the same way. This park is actually in a better market. Thanks for all the great info, its always good to see someone elses fresh perspective!

Pretty sure the only way you can accept sect 8 is with park owned homes anyway. You can’t RTO with sect 8

Have to agree with Trent and Carl. Turning a loser park around will take seemingly forever and the results may very well not be worth it. Way better, IMHO, to buy a decent park and save yourself years of hassle and expense. I would never do something like a turnaround again and already working my way back into SFRs. I made good money with these and never had the problems I have now.

We have been terminating a lot of leases since we started and throwing them out. It has been two weeks since we closed and we are starting to see a difference already in tenants attitudes. The good ones are being very receptive to the changes and the bad ones we are working through the process to get them gone. I can clean the park up, my biggest fear is cleaning up the reputation. I fear that will be the longest and most difficult part. The park was bought at a good enough price to justify cleaning it out. Infrastructure is good and location is prime. If this park had been more expensive or further from my home i would have never attempted it. Thanks for the input Rolf!

Hey Rolf. Thanks for sharing. It is tough to turn a park around. I talk to lots of tired owners that have given up and just want out. I really want to find a solution to the POHs that need major work problem in the industry. It’s just a mess trying to fix the places up. It’s impossible to know what is “good enough” and rehabbing to a decent standard is expensive and exhausting. SFRs have always been amazing to me, but I bought most of them in 2007-2009 when they were half price. They don’t make financial sense any more. I agree with you that most people (especially out of town or state investors) should build up their down payment money and buy a park that is already decent. It may cost a lot more and the competition for these parks is high, but turning around a park is a big unknown and may even break your spirit for the business. There are discussions I want to have on this forum at some point around rehabs, the value of POHs depending on their condition and the opportunities in Seasonal MHPs. Talk for another time, but it really does impact whether the MHP investment is a good one or your last one.

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Hi Shoen4u1… painting older metal homes will make an amazing difference in park appearance. And nice skirting. I’d start on the exteriors - rusty roofs and any weeds and overgrown landscaping to really make the place more appealing to new people. What is you POH situation there?

57 park owned total. 14 will be demoed immediately. Most of the 14 are already partially stripped. We started putting new skirting on this week and had several people who live in neighboring sfr stopping and commenting how nice they looked. We want to start painting homes soon. My first priority was getting new leases signed on all residents we were not evicting. I have a few homes i bought for a different park but before we could get them in that one we sold it, so they will go into this park. As soon as the felons and drug dealers are gone i think this will be an enjoyable project.

Wow… thanks for the real story. When I took over my park, we hired an off duty police office for $20 an “hour” and he would drive through the park maybe 10 or more times a day. It was $600 a month, but we needed a strong hand to trespass people and make sure there weren’t any drugs, fights or any more fires! I really hope you will keep us updated on your journey. I’m so curious to stalk your progress. What state are you in? Anything you want to share about prices and financials details would be great, but only what you are comfortable with. I hope we can learn from each other!

Section 8 is at odds with the mobile home park business model, as there is no ownership allowed under Section 8, and we only want people who desire to be owners/stakeholders living in our park.

The best way to change the image of a park is to re-name it. Choose the top selling feature of the park (school district, big trees, etc.) and put that into the name. If your biggest draw is being in the Redbud School District then name it “Redbud Estates” and if it’s the giant trees than “Big Oak Estates”, etc.

Sounds like you are on the right path by getting all of the bad folks out on the front end. Some park owners let the problem go on for ages because they don’t want to take the occupancy hit on day one. We’ve found that good people will not live shoulder-to-shoulder with bad ones, and that we are better off biting the bullet and getting everyone who is bad for the community out on the front end before we rehab and re-populate it.

I have a park where Section 8 pays a portion of the resident’s space rent. Yes, the residents own their home.

how are you doing that and what state are you in? We are in pennsylvania and they tell me no way.