How would you recover financially if your park was hit by a tornado?


#1

I believe it’s important to have a plan to recover from the worst case scenarios. I’m not sure what options there are for tornado damage, and I don’t remember what Dave did. If I remember correctly, he ended up getting a lot of new homes in there so I think it was somewhat of a blessing for him. What options would you consider to recover from a tornado?

Thanks everyone.


#2

I don’t remember exactly how much “loss of rent” insurance costs, but believe it can give you breathing room to rebuild. A while back I looked into FEMA programs (post hurricane Harvey down south here) and think they had something for mobile home park owners with situations like yours. As many people that get displaced it could be a way to infill.


#3

Well, we experienced a flood that destroyed 80% of our income, took 3 years to recover and SOLD.
Never again a property in a flood plain or even 100 year one. Been through 2 hurricanes suffer major clean up expensive like $40,000-$100,000. Live in Tornado alley and give it no thought since the last one in Joplin, Mo. the other parks were mostly full before the tragedy and FEMA filled with their NICE homes! We have much more concern over hurricanes since there is a very large area affected places like Fl., TX., Ms., I have a great concern since we use to have parks there and one could be a year before your property is back to normal for rents.


#4

One of the logics is that FEMA will come in , furnish residents with $$, they buy new houses, bring them into the park . I believe @Jefferson Recently had a park of theirs flood , one of the local agencies or governments was providing funding to members of the community - not sure how that has played out ( I hope its ok to mention this as I believe it was stated publicly at an event - if not advise and I will redact my post) .

With hurricanes, I know if you are with a certain provider, you can insure up to a year on business income . Im not sure if thats extended or you can get extended over that (depending on the park , specifics, etc) . But the risk is, all tenant owned homes, what do you do after a year? Year and a half? Your going to have to have a plan to fill back up… Now , the logic is also that there will be a housing shortage and a possibility greater demand, FEMA homes etc.

The other thing I consider ( I’m in hurricane zone) is that we are a really strong market. Look at a lot of places in FL , same thing, risk but some of those markets are great. You really have to have an understanding of your risk, how you will recover etc, Same would go for California wildfires etc. While we can never predict the markets future forever, some markets probably would be considered generally strong and some weak. By only operating in great markets, you are essentially hedging always with uncertainty because of your exposure to demand . If I was in NOWHERE MIDWEST with 45k house prices , had a full park on private utilities, and got a wipe out, I don’t think id be able to sleep… If I was in some awesome coastal spot in Florida , people would probably come back .

You also want to make sure you have demo insured for, utility poles , signage, fences , well houses , whatever…

Have a park with all POH ? Have them all insured and then work on replacing them if a devastation occurs.

For the record, we bought a park and had FEMA contacting us on our parks post Harvey. The bought park , FEMA contacted previous owner was interested in filling it up so they signed an agreement ( which was just permission for everyone to talk about it hypothetically. )

Nothing has materialized out of it but we were told they wanted to operate them more as rentals, and we are working to convert to a community where we have owners … Then on another park , got a vacancy and couldn’t get connoted to get a home . I also really wanted to stay away from creating a "FEMA " park. Later, I am talking with a dealer who had FEMA that instead of doing FEMA houses, they were going to buy regular houses and place them, but nothing has materialized out of that ( yet) . So its kind of a crapshoot whatever happens . We also on this park we are turning around , permitted for RVs, so feel we are further hedged on a quick turnaround should we have a complete loss of revenue , we can refill relatively quickly should there be a lack of capital .

Lastly, say there are a handful of homes you seller financed, they are TOH but if you are a lender requiring the resident to carry insurance and you are a lien holder, you may be able to work the resident to get that refilled with insurance proceeds and that resident etc.

So I don’t have any exact answer but some things you can think you can think on for this topic. You are smart to get a clearer picture and have a better understanding of your exposure.