Market dynamics


#1

Hey guys, I’m slowly but surely analyzing mhps on the various websites, crossreferencing them with sold deals, and just doing my homework to come up with MHP valuations. I’ve heard it mentioned more than once, but couldn’t seem to find anything in the forums in regards to Market Dynamics.

What market dynamics do you look for when researcing MHPs? What do you all look for in regards to Population, Median Income, Home Price, Unemployment Rate, etc? I know you can pull this info off of bestplaces.net and that there is no one size fits all answer, but what is your sweetspot when it comes to Market dynamics??

Thank you for your time.


#2

@gsi16386 Like most real estate an increasing population and population over say 100,000, a landlord friendly state versus not. A Walmart within 5 miles of the target park. Median household income above $40K/year, Average home price about $120K to name just a few. You can start with these and go from there.
Hope that helps


#3

Thanks for the response PG. I think where I was running into issues is with the population because at a 100,000 population, that has to be a big town. When looking at cities’ populations, I noticed that sometimes the populations were small per the town, but the larger picture was that there were a ton of people there. I just took Marietta, GA for example, it’s a suburb of Atlanta. It says the population there is 59k, which means that based upon my 100k prerequisite I should have ruled this “town” out, but in all reality Marietta is a big city. How do I go about accessing towns such as these without immediately ruling them out?

Other dynamics I have found are a median home price of $100k, vacant housing rate of <12% (which I’m unsure where to find this data if someone can help me out), median rental rate of >$1,000 for a two bedroom, and that’s about it that I have found.
thanks


#4

Everyone is going to be chasing similar metro stats based on the Frank & Dave course recommendations. To find some of the best deals and have a smaller group of buyers you are competing against, I tend to recommend looking at the quality of the park and be flexible on the metro stats. There are a lot of home run parks out there that don’t fit the mold and might be priced at 200+bps higher than one 30 minutes. For many, the additional risk might be worth it


#5

@gsi16386 That is a great question. Here is what I did, I took the stats that I stated like the 100K population and then I said how much below that am I willing to go-your “True” floor level. In your example of Marietta, GA that is a city we market to because it is part of a larger MSA (Atlanta) and is above a certain population. You are going to have to set what that lower limit will be for you, I use 10K as a lower level, but there has to be a larger MSA near by. Also, Atlanta just seems to be growing daily so going below the 100K should work.
Hope that helps.


#6

On the Frank and Dave model you are looking for a target Metro of 100k and the the city size becomes irrelevant.

Based on what you are referring to Marietta shows at 59k , but if you click on the link to the purple arrow, it brings you to the next screen with the red arrow and gives you your metro population of 5M plus. So even it Marietta was a town of 3,000 it would still be good because of the metro it is located in while the other metrics appear sound with average house price etc. If you found a town of 500 in that same metro with the rest of the metrics checking out, it would pass the sniff test.


#7

Correct, from frank and dave the mantra is 50 plus lots , metro 100k plus, lot rents below market , city utilities. No POH When you as a buyer differentiate yourself saying , i will take a septic, or i will take a smaller park, etc you may be able to pick up some deals that others won’t giving yourself a potential competitive advantage.

I think though if you are going to dabble outside the metro , you have to be very cautious and have a good understanding of what drives the area ,demand, how to handle vacancy, dealing with vendors when the only person who will come out is mike the plumber… I def think you need to be compensated with a higher return on this but really understanding does a higher return truly justify the risk as well as exit.

Test ads will be your friend here. I tried to by a park that was so cheap one time out of a metro but it was highly dependent on one employer , test ad generated crickets… but i still felt i would buy it. Ultimately it ended up with title problems ( the person who was selling it may not have had a right to sell it ) so title co wouldn’t close this deal.

Dabbling in some markets that dont have velocity would probably make me sick so im happy that one didn’t work out. You take a lot of stuff for granted once you are used to a better market. Jim the electrician stiffed you? Go leave him a nasty review and call stanley, he will be out right away.

I would take a crappy park in a good metro versus a prime park in a crappy metro any day of the week but i do think its worth looking at properties that might veer out of the frank and dave model if you understand the components of it.

There have also been a deals that have fallen into a metro but really they show no health of any of the benefits of the metro as well, so do keep that in mind as well.


#8

I think this is exactly what I was looking for. This makes it crystal clear, thank you! Again, I’m just getting around to looking at park financials and fundamentals that would make some of these parks good investments. I’ve listened to all of Frank’s podcasts and have taken notes to help me with my analysis, which has been great.

When looking at various websites that offer parks, I’m looking at the following: mobilehomeparkinfo.com
mobilehomeparkstore.com
loopnet.com
cimls.com
birchrealty.com
rmls.com

I noticed that birchrealty is the only real site that is willing to offer you rent roll and income statements that will allow me to comb through some of these deals with a fine tooth comb. I then utilize Frank’s valuation method to come up with a rough estimate of what I think the park should be valued at. Are you aware of any other sites that might offer the same thing?

Looking through the forums, I also see a few valuation exercises that provide me with some homework and explanations as to why they are valued certain ways. Does Frank have a book out that provides sample valuation exercises?

Thanks for all your help guys, it’s much appreciated


#9

I’m not sure about a stand alone book, but through their other offerings, bootcamp etc. they give students valuation tools.

You might add CREXI.COM to your list of search tools as well. Its like Loopnet but with a specific asset category for MHPs, its not lumped in with multi-family. Since you brought it up, do you find any value in paying for the subscription to mobilehomeparkinfo.com? or is it mainly the same listings found on other sites?


#10

Stay away from Birch Realty. They have gotten some very bad reviews on this Forum.


#11

I have a saying, “Demand cures a lot of ills.” The converse is also true – poor demand means a very difficult business to run. You can change a lot of things, but you can’t fix your location and you can’t control your local economic scene single-handedly.

Demand depends on your price point, of course. If you lower the rent enough, at some point, the phone will ring.


#12

I will echo the same on Birch


#13

Hey Todd, sorry, I shouldn’t have included that one, it was on a list of sources that I created by way of a book I read (which I’m sure 90% of this forum has read “The New Investor’s Guide to Owning a Mobile Home Park”). I never paid for that subscription as I’m sure the other sites offer the same thing…that is unless someone else on this forum has found it worthwhile.

I too have read the bad reviews in regards to Birch, but they offer Income Statements and Rent rolls that allow me to practice my numbers to come up with valuations. But duly noted on Birch realty and i appreciate everyone’s input…


#14

To find some of the best deals and have a smaller group of buyers you are competing against, I tend to recommend looking at the quality of the park and be flexible on the metro stats.