Idea: Ex-Con customers + Bleeding Edge Surveillance Tech + MHP = highest possible profits?


#1

I am coming up on the one year mark of an exercise Frank Rolfe engaged in himself - spending a year living in his own trailer park. Worthwhile? Waste? For me it’s been worthwhile and I’ve learned a few things. My park was run for years by a drug manufacturing and dealing pair of managers cheating their clueless out of state owner. As you can imagine it’s required some riff-raff cleanup (what an exercise that has been). BUT - it has also shown me that there are a lot of people who are ex-cons with felonies on their records who hold jobs, don’t make noise, keep clean & quiet households & yards - and are really damn grateful to have a home of their own because nobody else will take them.

When we came in and cracked the behavioral whip - most folks (yes even the cons - probably half the park has a felony) fell in line and have stayed in line. Ex-cons with violent records, twice my physical size, covered in facial tattoos are deathly afraid of me - skinny white college boy from out of town who has never thrown a punch in his life. I have the power to make them homeless if they get out of line. By this I mean: they don’t bump their music, they stopped speeding, they pay fully and on time and don’t complain, and they behave so we do not have a constant stream of police calls. In fact I believe we have cut police activity over 70% in one year with the same residents in place. I simply take no sh*t and I cheat nobody - two practices I have found that felons deeply respect.

What does this show me? My conclusion is that in a housing market which is anything but a “free market” for folks with felony records - strict behavior rules will in fact keep most of them in line.

I’ve heard tale after tale from ex-con customers that all amount to “Yeah the old managers robbed us blind and I’m glad you are not cheating us - but at least they let me in. I applied to 32 other apartment complexes and parks and this is the only one which accepted me. I made bad decisions in life and now I’m paying for it.”

I’m beginning to think these are possibly the most profitable of any customer - not only is the MHP product affordable - creating high demand in and of itself - but to the customer who is also a criminal - even most other affordable housing (other MHP’s) is off-limits.

This creates a dynamic in which you can charge prices well above market - that can offset the cost of high tech monitoring technology and staffing costs to enforce behavioral codes.

In another thread recently on technology I posted some of the consumer-level tech that is making property monitoring possible in ways that never were before.

Yet my old instincts die hard! I find myself wanting no felons - or, rather, no more felons. “My” felons are okay in my mind lol - aka the felons who never would have made it past my own screens but are here simply as a historical accident due to the prior managers. This of course merely proves my own point - that these customers are probably the most profitable ever. If market is $350 lot rent and an economy is gangbusters then you could probably charge $550 and still stay full if you’ll take felons. In a 100 lot park - $20,000 extra revenue per month will pay for a helluva lot of security cameras and a remote assistant in India monitoring cameras, keeping a database of faces, names, visitor patterns, etc. and mailing out certified letter violation notices like machine gun fire to anyone who gets out of line. This kind of extra revenue will certainly pay for a flotilla of the latest $2,500 4K weatherproof cameras from Sony & Panasonic, security gates at your entrance, automatic license plate scanners, extra lighting everywhere, microphones to conduct outdoor audio surveillance (with resident permission of course) to scan for altercations, noise disturbances, etc.

What are you thoughts?


#2

@Ivan_ilych , as per your post:

  • “I am coming up on the one year mark of an exercise Frank Rolfe engaged in himself - spending a year living in his own trailer park.”

I think that is wonderful that you spent a year living in your own Mobile Home Park.

As per your post:

  • “BUT - it has also shown me that there are a lot of people who are ex-cons with felonies on their records who hold jobs, don’t make noise, keep clean & quiet households & yards - and are really damn grateful to have a home of their own because nobody else will take them.”

It all comes down to:

  • Supply & Demand

If the Supply is low (hard to be approved at other MHPs and Apartments) and the Demand is high (Reformed Ex-Cons), then you are able to charge more Monthly Rent.

It seems like a Business Niche (Reformed Ex-Cons) similar to the Business Niche (Convicted Sexual Offenders in Orlando Florida…that Frank speaks about).

Business Niches are great.

You will probably just have to experiment with your Monthly Rates. Going from $350 to $550 might be a bit much, but you were the person who lived and breathed the MHP for the past year.

Thus, you would know the best how high you could go on the rent.

All the High Tech Surveillance sounds great. If they know you are watching, they will behave (or they will start behaving after they receive their Certified Letter Violation :slight_smile: ).

We wish you the very best!


#3

If you add razorwire to your fences, a couple security guards with assault rifles, and three squares a day they will feel like they are back in the clink! :slight_smile:

I would probably pilot the expensive functionality in one or two key areas to see what sort of utilization they get before rolling it out park-wide. You may not need a gold plated solution for monitoring, but if you do it sounds like you’ve got a great niche to financially support it.

Have you also considered counseling programs being brought in? Gotta think about preventative stuff along with detective…


#4

I would love counseling programs. At heart I’m a California liberal who views drug use as a psychiatric problem, a public health problem and also a natural response to poverty (Carl Hart of Columbia is one of my heroes). I’m not sure where/how to start with that - it’s crossed my mind several times. Got to be careful of not stepping into the “great savior” stereotype when I have absolutely no basis for beginning to understand the lives/perspectives of my customers. I’ve lived among them for a year but I am still an “alien.” At first many tried to socialize with me and invite me into their lives (dinner, holidays etc.) but I told everyone I have to avoid socializing to avoid the appearance of favoritism. So they stopped. The financial and cultural gulf is soooooo huge. Example: folks complain about crime and/or suspicious activity. So the park (me) offered to finance 12 months interest-free some security items: Arlo camera systems and motion sensing lights.

Guess how many takers? Yep - ZERO. I’m left scratching my head why I get reports of XYZ - then offer to help folks acquire tools to combat XYZ and suddenly they just go quiet and stop mentioning crime.


#5

Excellent post. Thanks for the valuable and interesting information.


#6

Is your park in California?


#7

Hell no lol. California is a unique market. I’m from California but I sure don’t buy parks there.


#8

You are basically operating a for profit half way house for ex cons.
No thanks.
Obviously inherited tenants leave limited options and if no one but criminals are applying to rent you have no choice. If you have options accepting more criminals is illogical and you should be transitioning away from criminals if non criminal applicants qualify.
Bottom line you are defying logic and taking on unnecessary risk. A social worker I would understand but not a business man.
One bad apple will spoil the barrel.


#9

@Greg - I have millions of people who want to live here - the last ones I admitted have literally 750 FICO scores, sterling job history and not so much as a speeding ticket. However - they can go anywhere at the drop of a hat, obviously. Their demand will not be as price elastic as someone with fewer options. Then stack in some behavior finance theory and screen out certain types of felons (go for ones 7 years old for example - stats show recidivism rates are statistically no different than the general population if they haven’t re-offended for 7 years) - yet there is a strong prejudice against them.

What is unique is that felons can get jobs easily - because it’s easier to fire than to evict. So they have money - but few housing options. If you think they are not more profitable in the long run then explain what it is about supply and demand that you disagree with. What is logical is that the market would price in an additional “felony premium” very similar to Frank’s “stigma premium” for mobile home parks in general. You also see the “family park premium” when comparing cap rates to senior parks. A felony premium would be even higher.

If you don’t think markets price this in and give you higher long term ROI for handling clients with more elasticity of demand then you need to explain your logic.

@frankrolfe what are your thoughts on this? I have even gone so far as to imagine a “felon park” - so you could charge higher than market rates and gradually attract only difficult clients - and thus avoid any kind of fair housing discrimination claims - folks with clean records would simply leave. I’m not talking about taking residents recently evicted - or with horrible references. But people with somewhat recent felonies - and then simply price accordingly.


#10

This might be a good cash flow strategy but what about your exit strategy? By having a nearly all felon park and advertising as such, I imagine your pool of potential buyers down the road shrinks considerably. I would also say that you’ll likely get the attention of the city as well. Just through a change in reputation, you can almost always expect the city to respond accordingly. Just food for thought.

Potential impacts on the exit and the city paying more attention to you are surely not the only possible negative outcomes but I think they are a pretty good place to start. Even if you’re able to figure out a way to have very well behaved clients in this situation, you still have the felon park. It’s kind of like that park in FL where only sex offenders live. That will be your brand and it’s not a very appealing brand in my opinion.


#11

Some of my tenants are felons and they are my best ones as they have the most to lose if they get evicted. We don’t advertise that we accept them (e.g. the sign doesn’t say “Shady Acres - A Felon’s Community”), but if it pops up on the background check and they can demonstrate they have turned their life around, haven’t had any issues or jail time in 5+ years prior and have references - they are reformed and we accept that application all day long. After screening a felon that passes the sniff test they’re typically more desirable than my other tenants.

We don’t accept sex offenders. I don’t know how the city or a buyer would find out unless they were to perform new background checks on every tenant as part of the acquisition, which I guess some of you do when there are no leases in place. On paper they just look like another long term home owner that pays on time every month.

I don’t focus on getting felons, but I also don’t broadly discriminate against them either.


#12

I also accept felons on occasion (I think 7-10 years is my threshold). I tend to put a lot more trust in my managers than the average operator so if a manager comes to me and says, “John here is a great guy, has a good job, and I feel good about John… but, John stole a car 8 years ago when he was 20 years old” I give them the latitude to bend the “no felons” rule. My people make great decisions and I can tell a difference with operations from when I made every decision for them to when I decided to empower them to do their jobs.

Aside from that, I’d never feel comfortable accepting only felons on the basis that my managers like taking pride in their communities. If every time they mentioned the park out in town people equated it to the felon park, then I don’t think I’d be accomplishing my own personal mission or doing them great service as their boss.


#13

@CharlesD - of course you would never “advertise” that you’re a felon park. You simply price high - the customers will filter themselves. You are screening out customers with clean records - and ALSO doing a careful screen to keep out people with obvious signs of recent major issues (evictions, recent violent felonies, etc.). You advertise it no differently than any other park.