Someone pulled out a mobile home!


#1

Hi guys; I am having a Dickens of a time here.
I contracted for a very small 10-lot park that was oh so cheap… I could not pass it up! It had all the right parts… city utilities direct billed everything, NO PO homes.
As we are heading to the closing, I discover that the park just lost one of the homes… the owner just hooked up a farm tractor to it and drove it to the country.
The City has a 20-year restriction for replacements… finding a good home, moving it, and setting up is about $15000… the rents are only $125 for each lot (I’d rather not manage rentals this far away… 10 hours)
So, I passed on the purchase. (another buyer is in the wings already). I am just TOO far away to deal with this kind of effort.
Tiny town, BTW, with poor economics…

So, here is my question: If I should I find another park that has the TO homes, HOW can I be fairly secure that they won;t leave suddenly?
thanks


#2

I’m sure people will have all kinds of interesting answers for this, but from my perspective, if it’s in a good market I’m not stressing out about someone pulling up and leaving. My park is 100% occupied and I have a wait list to move in. I lose zero sleep about someone leaving unannounced. So long story short, a great market cures a lot of problems.


#3

Near impossible to prevent moving out of homes but one condition of my community rules is that all tongues and axils be removed and that nothing is permitted to be stored under the homes. With no place to put them the home owners are forced to get rid of them. Makes it more difficult and more expensive for home owners to move.


#4

Have you filled a lot?

There’s a difference between moving someone in a new home and filing a lot.


#5

Not sure why that matters, but yes.


#6

It’s about 50x more time consuming, and capital intensive, so it definitely matters. Especially if you already have or are trying to achieve scale over multiple properties. Time is precious, and although capital is readily available, there are better uses, like deals.


#7

Alrighty then! How about educating me on this novel concept. I’m not familiar with these differences. I thought ‘filling a lot’ and ‘moving someone in’ were similar?
I must be mistaken… please help me out?


#8

If someone were to physically move their home from my park it would be very capital intensive to bring a new home in.

It’s extremely rare that a home owner would move a home at their own cost. I know about a dozen park owners and none have ever had someone do this.

If others wouldn’t mind this then their parks and markets must be much different than mine.


#9

Gee, what I hear you saying is that is it difficult to ‘buy, restore and bring in a vacant home for resale’.
And it seems you are saying that the other option; finding a tenant to bring in his own home at his expense is rare.

So, what is the solution?

I am visiting a park outside Atlanta, that we have under contact. There are 7 vacant lots. I am hopeful the strong market there will solve these vacancies.


#10

I’ve owned my three parks for four years now. I have had three park residents move their homes out of my park, one of which was a real junker, which could not be worth the cost of the move. I had a buyer move a really nice home out of the park to move it to his farm.

I also have had homes move into my parks. There was one from a park that was being shut down and three from other parks that have been too aggressive with the rent raises and bill backs. I did not pay their moving expenses.

What is working for me in filling vacant lots is to pay my managers a healthy finder’s fee for used homes that I buy and move into my parks. I find I am typically out $17,000, to $20,000 by the time I have a home renovated and ready to go. I sell them with financing with two plans; Plan A, $2k down, $700/month (lot rent + loan payment) 0% interest, or Plan B, $2k down, $650/month (lot rent + loan payment) 5% interest. I use a MLO where possible. With this system, I recover the money I am out in about 2 years after it is sold. I have done and am in the middle of 6 such deals in the last 3 months. I have sold the houses with a $2k to $4k markup, but I would be ahead if I had to sell them at a $2k to $4k loss.


#11

That’s a great plan.
For me, it might be too costly, as it requires cash-up-front for the purchases and renovations?
$20,000 each for 7 lots is $140,000 that I don’t have lying around.
Are there other options?

I know the best way is to have tenants bring their own homes at no cost to me.
Second, I could pay for the moves (cheaper than buying)
Third… buy and re-sell the homes on notes?

While Frank claims that there is no value in a used mobile home in a park… it’s beginning to seem that the lack of that home is rather costly as well.
Is it best then, to buy a full park, paying a premium for that benefit?


#12

If you don’t have the cash, I would recommend getting a line of credit so you can handle such things. And also, being very aggressive in building up your working capital. You have to have reserves or you will drown when things go wrong, which they will.

That there is no value to a used mobile home in a park is a nutty idea.


#13

If you have lots and lots of money and just want to make monthly income from that money, buying a full park that is stabilized makes sense.

But if you want to build your net worth and build your income, as near I can tell, MHPs offer two main avenues for doing that – filling lots and raising rents.