I see everyone talk about replacing all homes older than 1990 or so. But if the homes are older, say 1970’s and in reasonably good looking condition is that really so bad as long as they can still be filled?
I would say no. That 1970’s home can’t be pulled out once you sell the home to your tenant. It’s not a bad idea to upgrade older homes that need to go, but not all 1990’s model homes need to go in most communities.
As long as your only concern is filling the homes with renters the age matters little beyond the level of rent you can ultimately receive although there will be more work involved with lower class residents.
The older the homes the lower their value and therefor the lower the quality of residence. The purpose of upgrading the homes is in order to upgrade the quality of your residents and your community.
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The ancient homes generally draw problems and we have yet to own parks with rental homes. We desire that residents own their own homes and are invested in their care. Why do parks need rentals or have vacancies in the first place if the area is highly desirable and the job market is good. Park owners owning a large percentage of homes in their parks dilute their TIME and MONEY to own multiple properties or be involved in other investments. Putting money into depreciating property is like putting a new engine into a rusted out Falcon 4 door sedan (car from the 60’s) I am noticing most parks highlighted on the Park Store have many park owned homes–generally indicating there are some problems with the area, poor operator, poor job market, drugs, questionable schools, and many more situations etc. Yes there are parks with rentals that COULD be great turn around properties but an owner selling junky trashy homes needs to have some believable reasons that is occurring and has not fixes the problems if it is so easy!!!
Carl, I’m not talking about park owned homes, not sure where you got that.
Greg, I agree with what you say, but is it worth investing over 1.5 million dollars to replace perfectly good homes? I know your park is good in that your tenants have to get their own mortgages, but not all parks are in areas that can pull that off.
@Coach62 , as per your question:
“But if the homes are older, say 1970’s and in reasonably good looking condition is that really so bad as long as they can still be filled?”
If your Business Model is to “Provide affordable housing”, a 1970’s Mobile Home in good looking condition is perfectly acceptable.
If your Business Model is to “Provide the newest and most updated housing”, a 1970’s Mobile Home in good looking condition is not acceptable.
You have to sit down and decide what your Business Model.
Decide the following:
- Mobile Homes: Singlewides Only /Or/ Doublewides If They Fit On The Lot?
- Mobile Homes: Age Of Mobile Homes Brought Into The Community?
- Mobile Homes: What Sizes Will Fit On Each Of Your Lots?
- MHP Type: “Affordable Housing” /Or/ “Senior Citizens Only”
- Owners Of MHs: Owner Occupied Only /Or/ Landlords /Or/ Lonnie Dealers
When we purchased our one MHP, multiple, older, singlewides came with the deal.
For our Business Model we have selected to renovate these singlewides and to rent them out (eventually selling them when we get our license).
However, for our Business Model we have specifically decided NOT to bring in (ourselves) NOR allow others to bring in singlewide Mobile Homes older than 1995. We prefer 2000 or newer. However, we found a deal on a 1999 that we could not pass up.
We have received calls from others that want to bring in doublewides or older singlewides. We tell them that the mobile homes have to be a certain age and that we only accept singlewides.
You need to decide what is best for you, for your area and for your existing Tenant Base.
Tenants in an “Affordable Housing” MHP can be as wonderful as Tenants in a “Newest & Most Updated” MHP.
Tenants in an “Affordable Housing” MHP can be hard-working, law abiding individuals that take pride in their Mobile Homes. Just because they might earn less money per hour does not mean that they cannot be wonderful Tenants.
We wish you the very best!
I would not replace perfectly good homes but I would purchase the worst in the community when they come up for sale and at the very least renovate, especially the exterior, before reselling. A few thousand goes a long way to improve the appearance of a community and thus the quality of applicants. At the very least I figure as the community owner I owe that to the residents that are putting their money and effort into improving their own homes. My business standards regarding making a profit are required to be balanced with my overall responsibility for the residents of my community
I chose to purchase a community that did have residents with high levels of community standards but that did not come about by accident. Previous owners enforced very strict community standards on the residents and only chose those applicants that they felt would respected those standards.
Within a few miles of my community three other MHCs were started at the same time as mine that are today trailer parks. Run down dumps, unkempt homes and lots, and a tenant base of low life’s and welfarians. They take in the applicants I reject. The credit for the condition of my community does not come from the area it is in but rather the decissions of previous management. I have been given the temporary responsibility of maintaining that standard for the residents to insure this does not also deteriorate into a trailer park.
Had I chosen to purchase a trailer park I would not bother being concerned about the aesthetics or the quality of the tenant base and simply collect the rent without making any attempt to upgrade.
As I have mentioned many times if my family would be safe and comfortable living in the park that is a starting point for potential ownership. mention Flint, or Detroit, Mi. forget it. From experience we bought a decent park we tried to upgrade and wasted 3 years in the process but sold for a good profit. Buyers are much more willing to pay a good cap rate if the park is from the street very appealing and homes are well maintained without rentals, excellent streets, and trees trimmed etc. We recently sold a park in a rural area with septic and well for less than an eight cap rate simply because it was very, very, nice although the new owner is getting complaints for letting the property become unkempt but wanting high dollar for space rent. We choose what we own and that is a personal decision. Again putting a new engine in a rusted out 4 door sedan Falcon is very questionable, especially if you plan to own the property long term–if you are flipping another story.
In 1976 HUD requirements changed mobile home building standards to make them less flammable. I’m not technical enough to know whether this makes a huge difference in safety or survivability of inhabitants, but for my own piece of mind/my way of encouraging people to be safe, I will not allow homes before 1976.
Especially in more expensive areas, I’ve seen very attractive 70s and 80s homes that have been kept up or renovated very nicely. I think a lot of people, even tenants, are not able to look at a well-maintained and/or well-landscaped home and know the age or value.
We have had much better maintenance result with out 1977 and 1978 mobile homes than our mid 90’s homes. Better construction. Just built better with better materials.
We did a Boot Camp tour once of a 150 space park, which had about 30% vacancy. The manager was telling everyone that the reason the park had so much vacancy is that he had made the conscious decision to get rid of the old homes and bring in new homes to upgrade the “image”. I saw a framed photo on the wall of the park, circa about 1985, showing 100% occupancy. So I asked the guy what the point was in ripping out the old homes, instead of just staying 100% occupied, and what the “image” enhancement did exactly for the park’s value. The manager proceeded to tell how the new homes made the park more attractive to residents, and that it enhanced the community in ways that can’t be measured financially. Suddenly the owner, who was in the audience, stood up and stopped the manager from talking. He said to everyone “it was a terrible, terrible mistake to have removed those old homes. We accomplished nothing and have wasted thousands of dollars for no net benefit at all. Nobody should ever do what we did.” When we went back to the park the next year for Boot Camp, the manager was gone.
Parks are valued on net income. They are not valued on number of new homes. An old home, with pride of ownership, looks just as good as a new home. And even better, if the homes are old and paid for, the tenant finds paying the rent easier and higher lot rents more palatable.
The only time we even consider removing an old home from a park is when it is located right at our entrance and we need to do something drastic to improve the drive-up appeal from the road. We did that in our park in Decatur, Illinois, and the walk-in traffic is superior as a result of the new homes and signage on the main street. But every home in that park, except the ones right at the entrance are 1980s or older. And nobody cares.
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Thanks Frank, that about says it all and was pretty much what I was thinking.
What I can’t help wonder is why would any owner give a manager that much decision making power in a park? Wow.
It was the owners decision not the managers. “We accomplished nothing” reads he, the owner, accomplished nothing.
I understand that, but it sounds like the manager talked the owner into it. At least that’s my read on the story.
I think that they are both guilty. However, the owner is the one who had to really pay for the mistake, so he definitely should have been more critical of the concept and demand more proof of the benefit.
we bought a turnaround park full of 70’s homes that were really really bad. The cost to rehab those homes was going to be far far more than replacing them with used homes. I do agree that if the homes are fixable there is more economic value in leaving them, but we could not make it work to fix ours. Cleaning up gave us a lot of good will in the community and far more “good” prospective tenants calling. Our market is very strong with regards to used homes, as soon as they are in and ready to go they typically RTO within a week or so.