Mobile home park funds


#1

Has anyone invested in a mobile home park fund. If so, what is the minimum investment and what type of returns can I expect ? Thanks !!!


#2

Expect at least 20% IRR AFTER all fees. Sometimes they don’t factor in their fees when listing their projected IRR which can have a significant impact on your actual return.

Feel free to DM me and we can talk further


#3

It depends on the fund. Some start at 8% and go up to 20%+. It may require you to be an accredited investor as well.


#4

I’ve posted this elsewhere, but I’m invested in all 3: Frank and Dave’s, Jefferson Lilly’s Park Street Partners, and Kevin Bupp’s Sunrise Capital Investors Fund 1. All pay an 8% preferred return and take 50% of the cash flow, refinance proceeds, and sales proceeds (which I now feel is high). Frank and Dave communicate with investors every week or two. The other guys are lacking in communication: Expect something quarterly.

Not sure I buy the 20% IRR mentioned above. I am expecting more like 15%, but I hope I’m wrong.


#5

Thanks to all that responded, much appreciated. Marc, these are some of the funds I’ve been looking at so far. Do you happen to know the minimum i can invest ? Also, do you know anyone else who has invested with them in the past who was happy with there returns. Thanks


#6

I believe you also have to be an accredited investor. Perhaps someone can say if that is not true.


#7

I am an investor in F&D’s funds from when they were smaller and accepted non-accredited investors. They do not do so now. You must be accredited. I am very pleased with the performance of my capital.

Minimums are in the range of $10-50k. Note that there are funds that are"closed" and others that are open to new investment and past performance does not guarantee future results.

A little nit picking - my understanding is as follows: the funds pay a preferred return on your invested capital, which is returned to you if there is “excess” cash. So after that is returned, only the remainder of your investment is earning the preferred return. Example: you invested $80k and got $2000 quarterly or maybe not timely but after 10 quarters you get a total (non compounded) of $40k. That’s your preferred return of 10% of $80k for 2.5 years ($20k) plus an additional $20k of your capital back. So now you only get $1,500 per quarter because it’s 10% of $60k preferred.

Then once all preferred returns are caught up and the capital is paid back to investors, all future distributions (including sales proceeds or refinances) are paid out 50/50 with the sponsors until liquidation of the fund.

But all of that cash to investors comes out after fund management takes fees e.g. 1% for acquisition, disposition, loan guarantees, etc.

Nevertheless I would have invested more if I could have. I expect the total gain, without reinvesting the dividends, to be 100% over 5? years which compares favorably to alternative investments with that time horizon and risk.


#9

Thanks Randy, Brandon, and Tony for your input, i will definitely look into this further.


#10

I have invested in both Frank & Dave as well as Park Street partners fund. I completely agree with the comment about communication. Happy with the Frank & Dave’s fund and their communication. It is easy to talk to the managing partners. In my experience, Park Street Partner’s investor communication has been very poor and there are no signs of improving. The experience and track record matters a lot!


#11

Jefferson here with Park Street Partners and now launching my new fund - Park Avenue Partners (www.parkavenuepartners.com).

I wanted to mention that I agree with the criticism that our reporting has been poor historically. And it still has room to improve before it’s ‘perfect.’ But I want to update this thread to indicate that we our reporting has improved since this thread was last updated.

Specifically:

  1. We’ve produced a year-end recording of our deals and their progress and challenges, and posted that to our website for our existing LPs
  2. All P&Ls have always been made available
  3. Brad and I are also only a phone or email away from our LPs, and we do answer questions in a timely manner from our LPs
  4. We are working on more detailed written reporting as well

Also, my new fund will have full accounting support from ‘day 1’ which will improve reporting (Brad and I did the accounting ourselves initially at Park Street). And I will remain just a phone call or email away from all LPs with questions.

I’ve learned from my growing pains, and appreciate the continued support of my LPs - many of whom have now come into my new fund. (Quick plug - my new fund has no fees whatsoever. 100% alignment with investors. Estimated 15% IRR if the industry does not consolidate and there are no portfolio premiums at exit.)

Onward, upward,

-Jefferson-


#12

Jefferson - would you updating us on total $ raised thus far for new fund and what amount you are personally investing?

Any pipeline commentary would also be appreciated.


#13

$3.5mm raised as of this morning from 24 investors.

I’m investing $10k - $20k in the fund. My real skin in the game is not my investment (I’m just not liquid enough to write a $1mm check); my skin in the game is:

  1. I take no fees whatsoever. (Other MHP funds will take up to 12.5% of your investment right off the top for their fees)
  2. I personally guarantee the bank debt with my home, two cars, and modest stock portfolio
  3. LPs receive all 100% of capital transactions (sale, refinance) to get all their capital back before I participate

Please join me on one of my webinars to learn more (or we can hop on a call if the webinar schedule does not work for you). The schedule and a recorded webinar to watch at your leisure are here:
www.parkavenuepartners.com/webinar

Thank you,

-jl-


#14

I have invested in both the Sunrise Capital Fund as well as Park Street Partners. PSP has paid 7.93% over the most recent year and Sunrise has paid the promised minimum of 8.0%. There is a huge difference in reporting. I have a lot of respect for Jefferson Lilly, greatly appreciate his podcast, but was surprised by his comments in response to the post by Andrew. I am one of the investors that has complained for two years about their reporting. It’s a 2 on a scale from 1 to 10 (10 being best). Jefferson was correct that they provide a P&L, but it is very basic and does not include planned vs actuals for expenses or revenue. The investor has no idea if he/she is on a sinking ship or a well-oiled machine, they simply don’t provide any meaningful information. No way to tell how much money has been invested in total let alone each park in the fund, and certainly not any means to determine cash on cash returns or ROI. It is simply a basic P&L out of there accounting system that looks like something from 20 years ago. And it comes six weeks after the close of the quarter. Sunrise comes within ten days of the close. We received the PSP commentary for Q4 2018 about a week ago (Received Feb. 12, 2019) with the team wishing everyone a Merry Christmas……

They may be making money, but we sure don’t know as investors in the fund. Much better reporting by Sunrise Capital. I was reluctant to make this post, but simply don’t know what to do to light a fire under PSP with regard to investor reporting.


#15

I have a bone to pick claiming “no fees” when you’re taking a 50% promote, regardless of what’s market.

And also find it very strange that someone that’s been in the industry so long is putting “$10-20k” - that’s as good as 0 in my mind and inspires the same amount of confidence.

Most sponsors typically contribute 5-10% of the raise or equity in a one-off deal.


#16

Well this one offers no pref to the Class A investors, so does that still technically count as a “promote” :blush: Jokes aside, I disagree regarding the need for co-investment of 5-10%. 10% of the capital on a $5mm raise equates to $500k. Hard to count other people’s money.

I’d be more bothered by the lack of pref than the lack of co-investment. To me, that instills a lack of confidence. If you’re forecasting 30% gross IRRs, surely you can afford to pay your investors an 8% pref. But I guess that’s what the Class B shares are for, and my guess is it’s the more popular option.


#17

It depends on the fund.


#18

Park Street is improving it’s reporting, and I’ve put in place different systems with my new Park Avenue Partners fund to provide all the detailed cash flow figures requested above. We’ll also be doing quarterly reporting with investor Q&A.

(One point of clarification - our newest fund (2017) is indeed paying the 8%; our earlier and more mature fund from 2015 is paying 12%, and our earliest deal from 2014 is paying 14%.)

I’d also respectfully ask folks to run the numbers on what fees they are paying to other deal sponsors of other funds. Many charge a 2% acquisition fee (e.g. 8% of your equity once they lever it up to acquire a property), a 1.5% debt origination fee (e.g. 4.5% of your equity levered up), ongoing management fees, and may also be taking additional fees by running their captive management companies as for-profit entities. The net-net is that only around 87.5% of your investment may actually be buying real estate, and your deal sponsor is taking a preferred return too in the form of those disclosed fees - and perhaps undisclosed profits from their management company.

I’ve also seen large private equity funds have closer to a 2% GP co-invest, rather than 5% - 10% (indeed, smaller funds may be different). And those GPs take significant guaranteed fees for at least 5 years, and thus get back their entire 2% investment in their funds in 2 years or less. Many GPs who invest in their funds actually have nothing to loose by virtue of their fee structure. And they don’t personally guarantee any of the debt.

I’d be interested to hear from anyone who has analyzed the fees of other MHP funds this way. I’m not trying to start a contentious thread here, but would be interested to have greater visibility into the balance other funds strike between investor preferred returns and deal sponsor fees.

Thank you all!