It's a whole new world

mobile home university
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out there folks. I have had several months to ponder on the challenges facing mobile investors today and I realized some things that seem important to me personally. One of the main things I have discovered is that there are 2 kinds of investors out there right now in my circle of peeps.

  1. The type that is in complete denial. Everything is peachy keen and couldn’t be better. The next thing I read in my local paper is that they filed for Chapter 11. I don’t understand this type of investor. They made a decision to buy that Park, mobile, Note and it made perfect sense at the time…in other words a great deal. As things changed and it became a loser thru leverage, balloons,inability tor efinance, etc they keep quiet as if there is some shame attached to a truly once in a lifetime finacial meltdown that affects us all. They quietly file Bk and you never hear from them again.

  2. The type that calls other investors and tirelessly looks for ways to make sense and some dough out of this mess. An investor from this Board called me last week and he is trying to make some gold out of this landscape.

These are trying times. We have had to really trim back our lifestyles here in florida. Our retail lot is closed and inventory is slowly being sold off. I had 17 paying Notes a year ago and I now have 2. The rest are converted to rentals and will remain there until financing is available.

These are trying times. We have had to lower ents to the point we can no longer insure homes. We mhave blanket liability only and we have tenants sign a form that they are aware we have no fire, wind etc insurance and we push them to get renters ins which is affordable. If we lower further, we will not be able to capital improvements (a/c repacements, roofs, sewers, wells) and refurbs. We figure we can last 2 years at these rates before this lack of maintenace starts bringing down these rental units.

These are trying times. TJs yacht, my 4 wheeler,a lot of my toys were sold for debt consolidation. my credit score went from 760 to 540 and I am really ok with that. Chase bumped me fromn 8.9 to 23+ interest and I respectfully stopped paying them. 17K balance settled for 1800 dollars payable at 180 per month for 10 months. I live EXACTLY the same without the high score.

Has anyone out there had any speedbumps in their model or is everything about the Same? I spent a month in Indiana and that area is hurting but not like florida. We have property tax crisis, financing crisis, insurance crisis here…just lucky I guess.

I know I am out there 10 hours most days trying to make a buck and maintain what I own.

I would like to hear some ideas on how we can profit in these trying times. Cole’s idea and practice is very cool and will work here. Simple and inexpensive to implement…another tool for my NEW toolbox.

I’m not gloom and doomin’ but the reality is not great here right now and I talk to folks every day that are mentally throwing up their hands and giving up…I refuse to do this.

Any ideas? Comments?

We need to update blogs here also…last update was 18 months ago…what’s up with that??

Greg

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Greg,

20 months ago I bought 28 mobile homes, with quite a few of them empty. It’s taken waaaay too long to get them filled (not filled yet), which has put a serious crimp in my business, but I am grateful to be keeping my head above water, and still enjoying the job.

What has helped me is 1) deciding to rent when I couldn’t sell, and 2) reducing the rental prices to ridiculously low amounts when I had a large number of vacants. I’ve currently got an adorable 2 bedroom with laminate floors and a very large covered deck that I’m trying to rent for $375/month, including lot rent.

I have had better luck filling larger homes, and all of my rents went up in January, probably just temporarily.

I have worked hard to keep residents in place. One of my residents who is always home, but always pays late has become my “welcoming committee”. Instead of paying late fees she bakes cookies for all new residents and gives them her phone number in case they need someone to call when I’m not around. A nice added value to the park that costs me nothing. I also give her a key to show whichever home is ready to rent/sell and when the house fills, she gets $100, even if I find the tenant. This gives me some flexibility to show homes when I’m not there.

Other unemployed residents have some excellent skills, I’ve got a pair of brothers who are fantastically talented painters. They will paint an entire house inside for $200 plus paint. That includes ceilings. Another resident will clean houses stem to stern for $50.

Finally, I’ve gotten as much info as possible about local organizations that help tenants and buyers stay in their homes. There is actually quite a bit of money out there, and every little bit helps. There’s also money for renters to make their homes more energy efficient at no cost to the landlord (esp nice in North Dakota). Here in GA, the Salvation Army is handling federal stimulus money to keep tenants (not buyers) in homes. Check them out.

Like you, we’ve cut way back on spending. I spent $3K in November to totally upgrade my 16 year old car: brakes, tires, etc., etc. Totally worth it. I’d love to get my hair cut, but that can wait.

Take care, Greg. Always good to hear from you.

Anne

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Good to hear from you Greg. Yes, you hit the nail on the head about the two types of investors. Too many have fallen away wondering what went wrong. The rest of us are busting our humps trying to find new techniques that will adapt to the craziness rampant in today

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a keeper or two for me in there. I love your free “welcome wagon” lady idea. My community also has a “always home” lady and she knows EVERYTHING that happens in the Park…I’m going to ask her to welcome new tenants, she is 81 years old and sharp as a tack and this will give her something to do.

You have a wonderful community Anne and I am sure you will be full soon. We have found that lowering rents can have UC (unintended consequences). One, we get more bottom feeders that peruse the want ads looking for cheapest homes…waiving deposits exacerbates this problem. Two, by lowering rents for new tenants we almost HAVE to lower rents for existing. good luck getting new tenants to be quiet about what they payu in rent. They can’t wait to share the great deal they got. Third, we get to that point of diminishing return where there is not the money available to have healthy prudent rfeserves AND do needed proactive maintenance…this eventually will catch up to us and we are only too aware of this fact. Lastly, and this is hard to quantify is we are positive we are losing potential calls BECAUSE of the lower rent tag. We hear all the time,“We almost didn’t call on your ad cuz the rent was so cheap we figured it was a POC home”.

Like you Anne, I like homes full. An occupied home has fewer appliance repairs, vandls don’t target these homes and I have people mowing lawns and keeping utilities on at THEIR expense to keep mold and mildew down and pipes not frozen. An empty home still costs approx 60 in electricity and at one time last summer we had 14 homes empty.

I used to believe that some rent was better than no rent. Turnover last year killed us. folks would move in for two months, wreck the place and move out leaving a house full of trash and trashy furniture and we had to do a 2200 refurb to get home rent ready again…that treadmill almost ruined us. we have a new motto" Better empty than wrong"

Regards,

Greg

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working long hours to make ends meet. I figure we are lucky to have viable income streams. Without rentals we would be broke or worse.

I like the faces on the blogs but I was hoping all would update if they can find time.

I’m glad you are moving ahead on your infill projects. It must be a real challenge to find qualified tenants or buyers but I’m sure costs are less now in all construction trades.

This is a perfect forum for sharing ideas that can save monet and retain tenants and I hope more people will jump in.

Regards,

Greg

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Hey Greg, Steve, Anne and everyone else on the forum-

I believe I have met most of you in previous years at some of the various events. I have been following this and other similar forums for years now. (Generally in the shadows, sorry to say I have not contributed much in the past) That said, this theme is absolutley showing up in all the venues I following and I completely agree with this thread in terms of your assesment of the 2 types of postions folks are taking.

I’m with you guys trying to work thru the many challenges and find solutions. It does not seem appropriate to use sayings like, “when the going gets tough the tough get going”. That seems to minimize the severity of the situation, and while it may sum up what we are all trying to accomplish it does little to help provide practical techniques or strategies that we could all use to try to make it thru.

My situation may be a bit unique in that I just closed on my biggest project to date in the middle of all the fallout. I closed 3 Parks (752 spaces) from Feb thru Nov in 2009. I was obviously aware of and was forced to deal with all of the difficulties of these times. I did this with my eyes wide open, knowing that the next several years don’t look to be any easier. I still believe that those of us who endeavor to struggle thru will reap the rewards. My current situation may address nearly all of the challenges that anyone related to this industry could possibly face. I have more than 200 vacant lots, more than 25 vacant homes, I’m dealing with a relatively high amount of leverage, face relatively short maturity dates, have significant competetion within my marketplace. Unfortunately I’m not a wealthy individual, so I don’t have piles of money to sit on while everything works itself out. I must find a way to succeed, a way to overcome all of these challenges and many others not listed.

Truth be told, in spite of everything I just listed, I consider myself extermely lucky to have the OPPORTUNITY to solve the problems and someday benefit from the effort that I’m willing to put forth, an effort that others can’t, aren’t etc. I’m not trying to minimize how difficult these times are, my life has also changed drastically. This is a choice that some of us are making out of either obligation, internal commitment/fortitued or simple survival. I know from all who’ve posted to this thread so far that I’m not unique in my willingness to do this and again I believe that we will ultimately be glad we did.

Rather than just post generic postive chants and cheerlead those who are fighting the good fight. I’m willing, and in a postion, to post specifics about myself, my project, successes, failures, challenges etc. As well as post the REAL day to day life ups and downs in this business at this time. My goal would be to help provide usable info that others may benefit from. I think it may help me better connect with those of you still “in it”. In addition my hope is that going thru the exercise of reducing to writing the issues I wrestle with daily I may see solutions I don’t when they are only floating around in my head, and hopefully get your feedback and suggestions on my experiences and ways you may tackle them. I have no idea how to create a Blog, Greg if you Steve or Rick think this may be worthwhile please contact me and let me know how to proceed. I truely have been the beneficary of these forums and hope to be able to help anyone else that I can.

Thanks,

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Greg, it is good to read your post. It is thought provoking as usual. I have out of necessity always relied somewhat on rentals in my MHP; these are realities of small market MHP operations. A mixture of renters and homeowners can work out or it can be a disaster. In my view an MHP that is predominately homeowner occupied has a lot to lose when shifting to a base of mostly home rentals. But as you have aptly pointed out many of us are adapting to the new market conditions.

What it really comes down to is contained in your phrase

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Ben

Where have you been hiding or should I say from the sound of your post working so hard. I believe you are in CO. You would be a great person to do blogs. I hope Steve reads your post this morning and gets you set up.

Like you and several others I am constantly looking at ways to improve my business model in order to fill 65 more lots with homes and paying tenants. In this economy with the banking/lender problems and the general dome and gloom attitude it is a daily adventure.

I look forward to hearing from you.

Rick Ewens

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Shawn

How you screen your potential tenants is how we found our park manager 3 years ago and she is awesome. In regards to the link of above posts I can say we have tried several of the techniques such as deposits paid over time, reduced deposits, exceptions of character and to keep this short the decisions cost us lots of money. I would rather have a vacant home than one that is filled with bad tenants.

Rick

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Post Edited (04-14-11 20:53)

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ideas an screening tenants. We are 60% occupied in our Park right now with 3 new sets of folks moving in on the first.

One of your ideas we use daily…we demand to meet EVERYONE planning to move in…we’ve actually had people hang up on us when we insist. We also demand to meet any pets moving in and good pet lovers are usually only too happy to have us meet their “furry kids”.

several years ago Anne posted as a wonderful post on a special niche she had found in ND…pet owners. We have found it to be our best paying and cleanest niche in our Park. We actually fenced a 24 X 50 area so pet owners can let their dogs off leads and let them do their business in a secure, safe area.

Shawn, you and most posters here know I post the good, the bad and the ugly here. Like steve and most folks here I believe there will always be a need for clean, safe, affordable housing. my challenge is to hang on until the overbuilt housing is absorbed and we get back to stable housing demographics

All of the seminars I attended (and hosted) are paying dividends now.I know that every lease,agreement, contract, price is negotiable. I know that the impossible can be done and that every no brings me closer to that one yes that can spell financial freedom for life.

In the slow year I’ve had I found time to reread Deals on Wheels and I realize that Lonnie is a great thinker and a wonderful author. what he penned all those years ago is as germane today as the day he wrote it perhaps even more so. Anyone who reads this post needs to read rhis book even if they don’t plan to do a single deal!

Thanks to all that responded to this post.

Greg

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News from our little frigid corner of the world.

We have a really nice 3/2 in a 4 lot all rental park (all homes are super nice no pets) It’s been vacant and advertised since october with one nibble. We have tried a free months rent etc with no takers. We have had several calls from pet owners (who obviously can’t read NO PETS in the ad) We are considering allowing small pets. But we will have to change policy for all tenants. Current tenants are mostly clean and tidy. Should we just throw in the towel and allow pets?

Giving away homes! We purchased a 12 lot park with 7 old 10+12 wide rental homes. I spent the last year taking care of deferred maintenance on all of them. doors, roofs, showers, plumbing, etc. When we added it up we spent 75% of the home rent portion just on materials and mileage. Not including my hours. So we notified the tenants that the company has changed it’s business model and is exiting the home rental business and they are giving the tenant the home for free on Dec 31st 2009! If they choose not to accept they had to be out by July 1st 2010 Their rents went down average $115 a month. Lot rent went up $35. Most were happy with the deal, some were indifferent but all took the offer. I had 1 eviction in Dec and had a solid taker for the home the next day with broken pipes (gave them 1 months rent free). Only time will tell if it was a wise move. But the peace of mind is priceless right now.

Don & Karen

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Some of you may know me from my first post a few months back about starting a new park. Well, we’re still moving forward and our interest payment is due tomorrow ($86,000! Ouch!) and we’ll have to work out a deal going forward with the bank to keep going. The good news is this has given us a lot of options for the property. It will either be a long-term MHP we build from start to finish, or bankruptcy, whichver comes first! Or, we are seriously looking into selling the lots in land/home packages right now. Several local experts are telling us pricing under $100,000 total will help sell it rather quickly. Our third option, which just popped up today, is that a major national manufacturer may want to come look at the property to buy it outright and use for their homes.

So, getting around to the original thread and the two types of investors, I can say this; coming on this forum has been invaluable for me. Rick has been extremely helpful and I went to GA and met Steve and gleaned a lot of information from that time there. I have no qualms about letting someone know where I stand, as the bank will learn first hand tomorrow! It is what it is and all we can do is wake up and keep trying until the climate is so bad we’re not allowed to anymore. And I mean that last comment. If it gets that bad, I’ll look for a tropical climate where freedom still means something.

Best of luck to all in 2010. We’ll get through this.

Mike

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Greg, like you I have found an indifference to acceptance of reality in this niche by most folks, at least online. I can understand that folks want to see hope and promise of easier success but all too often it seems that what anyone wants is a button marked “press for success.”

I have written several posts over the past few months at CRE seeking input from investors and requesting that we acknowledge the elephant in the room and put our heads together to find ways through these changing times. The responses were next to nothing. Shawn and a couple others were willing to respond but others just painted more frosting on their perceived cake.

The rest ignored it. At least we don’t get the hate mail as much any more for suggesting that times are hard. Remember back during the election when we as a country were not allowed to say we are in a “recession?” They called it “an economic slow down.” Shorty after the election the braintrusts decided we had actually been in a recession for over a year. Go figure.

I have met with investors we all know well who are struggling to stay alive financially. Others have gone bankrupt or just abandoned their portfolios.

I have yanked shirt collars, given tough love reality face to face and online but few seem to want to learn from others. Folks, if we can only learn from our own experiences we may not have time to make it through this “economic downturn.”

My energy for fighting to discuss this is all but gone. I have never been a doom and gloomer. I have always been optimistic, believing in abundance. I have always believed that in all economies there are opportunities and still understand these to be realities but I have to admit that I have to actively remind myself of these beliefs. I have fallen into a scarcity mentality of sorts I guess. Although this is more extreme than I feel, I do not quite know how to describe the sense I feel for these times.

Striving to sustain and maintain is close but not accurate. Although my rent rolls are currently maintaining I do not believe this will continue without great effort and even then I expect to see some decreases and like Greg mentioned, an unwanted but necessary change in how we remodel and maintain our properties.

Sustaining and maintaining is a goal rather than a method for many I have spoken with who are suffering right now.

Apathy is a constant battle for them and for many of us. As odd as it sounds, when the most needs to be done, apathy can prevent us from putting one foot in front of the other, not allowing us to do anything. Fight this folks and fight it hard.

There will be tough decisions ahead for many of us. I say this from a perspective of one who is doing ok at the moment and better than many but one who prefers to face the reality and not expect an ease of continuance in my business.

Tony Colella

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Tony, I firmly believe that we can position ourselves far better by utilizing some of the tools of creative finance. I know of no better guide of what tools are available and how to use them than right here on this site.

The archives (on this site and the CRE site)are rich with instruction and application of such methods, and of the books and courses for sale; I don

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I am relatively new to Mobile Home Parks. There seems to be deals all around in the space. However, after reading some of these posts it makes me a bit leary about investing in this niche. I realize times are hard all around but given 22% underemployed I have to believe that those with lesser means represent a larger proportion. Sounds like this is definitely effecting the collection of rents/mtg payments.

My goal this year is to buy a park. Since this will be my first I am just a little nervous and want to do my diligence by asking those in the know. I look forward to your responses

Kindly

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Depending on your personal investment business model you may not want to get in this business. If you want to own a park within 50 miles of your home and you live in a train wreck of a demographic area future problems are almost guaranteed.

Know your market, gain all the knowledge you can in this asset class, analyze the property you are considering in a black and white manner (no square pegs in round holes), perform your due diligence correctly, and follow your personal investment rules period and you should be fine. Always remember the #1 rule of acquisition -You make your money buying and cash out selling.

You can always post what you think is a deal and I am sure you will get plenty of feed back from this forum.

Successful Investing To You

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That is the type of copy, print and save post I enjoy. Nice work Rick and thanks.

Tony Colella

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I can’t explain this seeming indifference either. I had a real near death experience last year and it taught me 2 important lessons. it made me VERY impatient with folks that beat around the bush. It is what it is and until we fully identify the problems confronting us we don’t have a chance to suceed or even survive. This industry is in major trouble in my State and our politicians keep on kicking us it seems.

I haven’t had to give back any properties but I am veryhonest about the razor thin profit margins we are all living on here. These thin margins will eventually break us if we can’t raise rents to a sustainable level…just a matter of time.

Several of my highly leveraged investors are totally broke and some of them shared exit strategies that showed character and honor. Investors were paid as fully as could be done and properties were deeded back to investors. Which seems fair…they were happy with the many years of 18% returns so that takes the sting out of much lower or even slightly negative returns for a year or two.

I will continue to post as things are for me in my small area of Florida and hope these posts help others…and I am also still looking to buy another Park.

Greg