Another great newsletter – thanks.
Question: You state it costs about $4k to renovate a MH. Is that your normal make ready costs?
Yes, that’s our normal rate on average. However, that’s completely based on the park in question. We may have some homes that only need to be cleaned and others that might cost $10,000 to rehab. We grade our vacant POHs in a park we are purchasing on a scale of A, B, C, D and F. An “A” home just needs cleaning (maybe $100). A “B” home just needs some light aesthetic repair (like kitchen cabinet doors, holes in walls, etc. that might cost $1,000 total), a “C” home needs some major rehab such as A/C, furnace, significant floor damage, etc. that averages $2,000 parts and $2,000 labor, and a “D” home needs extensive renovation (this might even be a stripped home that is otherwise solid, and might cost $8,000 to $10,000). All “F” homes are scrapped. Obviously, if you buy a park with nothing but “A” and “B” homes, you will spend much less on average, and a park with only “D” homes will spend much more. We typically mark the grades with white shoe polish in the corner of the window, so we don’t make any mistake on the fact that the homes have been rated and which ones are to be scrapped. We typically triage the easy homes first, completing the A’s, then B’s, etc.
This is why we all need to get out of the home rental business. One move out will wipe out the annual net revenue of quite a few other rental homes. We have capital locked up in the POH which does us no good; in my case it is a negative – in the last 12 months my POH P&L shows a $10,078 loss.
I am changing the signage on my parks. I am not going to use “Mobile Home Park” on them (why insult everyone’s intelligence) but instead “A Community of Owners”, which is a statement of pride as well as being my next business goal.
Is there a way of posting photos on this forum? I would like to share the sign design I came up with that I believe has a high end community entrance look with out the pricey price tag.
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@Randy_CA I like the phrase "a community of owners. I think I will have to steal that from you at some point if its ok. I just made a sign and that would have been great to put on as we have no POH in there as of yesterday.
I prefer to simply have the name of the community, without any reference to park, mobile, manufactured or anything else.
It is my preference to not single out anything special or different from any other subdivision.
I live in a stick built subdivision called Amherstview and that is all it says on the sign.
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