Especially with one with older homes.
Especially with one with older homes.
beautiful example of what can be done. I love this! WTG!
No way is that the same park. Look at trees in background. Also utility poles
The only way to add curb appeal to the first park would be to bulldoze the homes and start over.
Sorry the pics were confusing. I just meant them as visual extremes.
Okay - answer me this - what’s the remodel budget per home? To answer that question you need to answer another - how much will customers spend? To answer that question you must ask another - how much money do your customers have to spend (assuming you price just low enough to achieve 100% occupancy)? To answer THAT question you need economic data such as:
Median home price, apartment rents, time on market, prices rising or falling? income data etc.
Minimal park remodel:
1 - Paint and new skirting on all homes in park. Make sure paint jobs are decent quality and the color schemes make sense aka are modern (ie get professional advice before painting)
2 - Seal coat the roads if they look oxidized and old.
3 - Clean up the landscaping
4 - Clean fence in front.
5 - STYLE. Style has been democratized to everywhere in our country except affordable housing - which is WAYYYYYY behind the times. Our customers go to Target and can buy gorgeous pieces of high design furniture at the $100 mark, sometimes less. They come to our parks and purchase or rent long rectangles with beige siding and black shutters - all in row. Makes anyone with the slightest sense of visual design want to vomit. Somebody will figure this out and start producing decent looking mobile homes - I am amazed it hasn’t happened yet to be honest. The Tiny House movement has it figured out - modern horizontal cedar toned wood siding, metal roofs and dark framed windows. Those things look like a million bucks, would be at home in Architectural Digest, and could be mass produced on the cheap at the same prices we pay for the disgusting homes we inflict on the landscape currently.
It sounds like you have a business plan for a possibly improved product.
Tiny home produces are a joke designed for a knish market. Not practical and over priced high maintenance.
Ideally what you want is MHs upgraded to the appearance of standard stick built homes. Pastel coloured vinyl siding, white vinyl windows, white metal skirting and peaked roofs. Standard basic home exterior design controlled by the community owners.
Totally understand and it was clear they were two extremes of what could be done. It’s true though, you can go from a very very worn down dirty park to something amazing. A little work, and a little buy in from the residents. Easy peasy.
The hard part is the buy in from the residents. Never going to happen universally. They will have to be forced to upgrade by changing the community rules.
To a point, and you have to concede to being patient. Once you have buy in on a couple long timers, you will gain buy in on the others. I can’t speak for all parks but my buy in has taken, on one set of parks for complete buy in about 11 months, with continual monthly follow up and kudos from my office and all the other positive reinforcement I can do legally and cheaply. On another park, it took 18 months to get the first to buy in and the others followed suit with help from my staff doing things like removing broken down lot fences and de-grubbing areas. Of course with the 18 monthers I also had to have my residents sign a document saying they were in agreement with the changes even though it was in their rental agreements that what they had on their lots were not allowed, and that they had to be removed anyway -whether by them or by us.
BarbraM have you noticed parks with low pride of ownership to be priced cheaper than more aesthetically appealing parks? I haven’t notice that correlation, but maybe I haven’t looked at enough deals. I normally look at typical P&L’s or rent vs expenses. This may be difficult to notice because of how terribly inaccurate sellers tend to price their parks, but I can see how an ugly park could draw more tenant interest while allowing higher rents from the better product or experience.
In my neck of the woods, the trends I have been seeing on parks for sale have only been reduced priced for distressed properties. Not necessarily that the homes are distressed but the owner is having a distressing situation, much like single family sales. Make sense? Sellers price to what they think its worth and what they need for their next move, I think its a marketable guess, not always based on the NOI and other multipliers. Here is my thought on the whole pricing vs aesthetics thing. When you buy, what is your budget, what is your interest on cleaning it up, and how much do you like a challenge? You also have to think about if its in one of the… what is it 9 landlord friendly states? If not, you are in for a bigger uphill fight with your tenants.
Ugly parks do not draw more tenant interest around where I live, people everywhere want safe and clean homes. People all want to feel safe where they live, its a paramount need on Maslow’s Heirarchy. But they also want to be able to afford it. I cannot speak for park buyer interest as the market is always crazy here in WA.
Where we are are people that own and run mobile home parks, we have an ethical responsibility to make those ugly parks into pretty parks that are also safe, instead of just using them as a stream of income that happens to come with lower income tenants. Once you purchase an ugly park, start improving it on the capital improvement side as well as the rule enforcement side, but just like on Roadhouse… be like Patrick Swayze - “whatever you do, be nice.” The residents that are comfortable in dirt, will naturally move along, some will need persuasion by being diligent with rule enforcement, some will leave because the park is no longer fitting their needs of slovenliness. Others will start to gravitate towards your park when they can see and feel the atmosphere has improved to be less trashy and it will increase your market substantially.
Does that answer your question?
I guess I mainly look at the income production of the property. I agree it feels nice to provide a nice and valuable place for tenants. Part of why I like mhps is because I think the product is a great value for tenants. I bet having a more aesthetic park will increase tenant satisfaction which leads to easier operation, and even higher rent increases long term.
Distressed meaning high vacancy or high collections? From what I see, I think a lot of sellers that have been on loopnet for >year are likely not motivated and looking to get a homerun by selling to an “idiot buyer.” I bet seller homeruns happen occasionally.
What we find when a community begins to turn around is that the quality of the tenant base naturally improves, The community owner can be more selective in choosing from better applicants. Home values increase and as the community transitions from trailer park to a community you move away from “affordable housing” into residence by choice. Rather than tenants that live there because they have no other options you attract tenants that choose to live there. You can move from section 8 into working class and those looking to down size prior to or after retirement. It is also not a bad idea to move from family to adult only if your area supports it.
With this transition also comes increased lot rents. Nicer community, nicer homes, pride of home ownership, higher quality residents all lead to higher profits through both lower expenses and higher lot rents. By improving your tenant base you naturally will improve your bottom line.
Of course you have to look at the income production, its a business not a charity. It is a great value. The aesthetics with clean upkept streets and working street lights, a good solid code compliant bunch of amenities… all important. The tenant satisfaction DRIVES YOUR INCOME AND EASE OF MANAGEMENT. If the tenants are happy and your park is clean and well maintained not only do you really not have to market much so you save on advertising expense, but you can quickly gather a waiting list for people to move in, you can raise market rent to be the leader of your area year after year (assumptive that your amenities are top quality, fully safe, and completely top of the class maintained… Shine that penny and you will reap the rewards both in your pocket book and your karma book
Forgot a part, the distressed… when I see a really aesthetically ugly park, I see distressed because when the parks are ugly, the managers and owners no longer care. Why does that matter? We make our money off of our residents. Period. We have to care a little bit. Not trying to be on a soapbox but we all have a bit of conscience in our souls. Humans have an intrinsic requirement that is to help each other, a little or a lot is each persons choice. I have seen many facets of distressed - I never see high vacancy as a distressed property, I see high vacancy as opportunity. High vacancy is an amazing and wonderful gift to make something your own with better newer homes. I would rather fill an old park full of new homes than leave an old park with 1970s magic through it. Now, high collections… You know the trick with collections? Talk to the people! If you face to face talk, it gives you money, and your residents respect you. Also, not a distress issue. I have a credit on my books every month because people want to pay early. No other park in my portfolio has that. I work with them, to a point, and keep them in their homes (as long as they aren’t defaulting on purpose, and you can tell). Kind of like, one free pass if they work at getting caught up on my legal teams recommended terms. Otherwise out they go !
I don’t know where some of the folks figure out their numbers. I think that the 10 years times the average current annual gross rent is a good model to figure out what the price should be. Some are way off. I dunno if they are looking for home runs or if they are looking to get a certain number. All people have a number they need. Sometimes it just doesn’t match up with reality. Unfortunately, some people don’t see that their price is too high, they don’t see they are off base, sucks because they can’t get paid out as soon as they could.
Investors must be realistic in getting into a turn around community. There will be some residents that will resist change and investors must be prepared to evict for the benefit of the community as a whole.
During and after transition the demographics of the resident base of a turn around community will be changed.
absolutely. That is completely true Greg, you have to, because if you don’t evict some, the neighborhood won’t repair and improve. Usually the bad eggs will move on their own I have found however, its just the fail to pays that get weeded first then the trashy ones. Just my experience.