Everyone agrees that the boot camps are very informative, but I have been told by people who have attended, as much as 1/3 of the information doesn’t apply to parks in California.Is this true?I would assume average rent (higher in California), rate of return(lower in California), and a tenants legal rights (ridiculous in California) are all unique to California. What else makes California different, from an investment standpoint?
I live in the middle of California. I would like to have my properties close by so I can keep an eye on things. But when I bought my 3 parks, I bought them in the Midwest after investigating all the parks on the market in California.The higher average rent is not a problem. It is the crazy prices for even trashy properties that turned me away.
Oh, I should say, I did see some deals that did not look too bad based on the numbers, but they were so remote in the mountains of Northern California, or in the middle of the deserts of South Eastern California, I just did not want to risk it. I worried if you ever lost a tenant, it could be a loooong time till another one came a knock’n.
Having lived in CA for 40 yrs and owned lots of different properties, I agree with Randy. There is a premium attached to CA property and it varies widely with zip codes. If you bought an MHP in a county area you’d be better off than in a city. Most counties are busy with flood control plans and emergency mgmt issues, my take on it, so they’re not looking too close at MHPs to control the rents or whatever.
However, as the boomers retire, they tend to move out of CA or trade down or both. If a given CA MHP owner could target boomers that are retiring they may be successful in filling their park and getting good returns. Many of these people got beat up in the Great Recession so they’re carrying way more mortgage on their house than can be reasonably supported by SS and retirement income. This is based on what I see at work and on my own street and my own friends. I seriously doubt that I’d buy an MHP here, but am looking other places like AZ or NV.
i have spoken with a couple of individuals who invest mainly in california. i was surprised they target a 10 % cash on cash return. other investment opportunities I have looked into that invest in midwest and middle america target 15% cash on cash return and often will see returns of greater than 20%.
Thanks Dean, maybe I will look at a couple of parks in So Cal. If nothing else, I’ll learn something and get a feel for what folks here are doing and see what general layouts and so forth parks have.
Although I do not own a MHP in California, I have had a few consulting clients in California that are owner/investors. California is just an exceptionally hostile environment to property rights and conducting business. Case in point: California has set up a bureaucracy separate from the DMV to process MH titles. That should be cause for pause right there. Housing and Community Development processes MH titles in this state. HCD has refused to process MH titles because the signature was in one color ink, and the date was written in another color ink (all forms were properly notarized, dated, filed on time, etc.)So imagine what it is like trying to do business in California where the government abuses the citizens to that extent. HCD is just one of the dozen or more bureaucracies you’ll have to please. Most all the California bureaucracies treat citizens like that - zoning, taxation, mobile home moving and setup, construction permits, lot layout, setback rules, lot grading and prep., waterways, etc.I choose to live in California, but my properties are in the midwest.Your mileage may vary,-jl-
Jefferson,With that being said - when you started - how often were you visiting?I’ve read, lurked and posted enough to understand once the investor is “seasoned”; it can be managed from afar with the proper items in place. However, when you started your MHP adventure, did you feel pressure to visit?To stay on topic, I live in CA also (Nor Cal) and am grappling with investing “a plane ride away”. I understand it’s fear and needs to be overcame but I’m hoping to learn more from your insight.Thanks again,Sean
Sean -Don’t fear the plane!My first park was in the Oklahoma City metro. At the time I purchased it (2007) there were not even direct flights from San Francisco to OKC. So - gasp - I had to take two plane flights to get there. Of course, that inconvenience probably turned-off other would-be California bidders.When I purchased the park I owned none of the homes; they were all ROHs. I flew out there the week after we closed just to make sure the property was still there and that it was not all a mirage. It was still there. I gave my manager a bit more direction on how to mange the park, had some great BBQ, and flew home. It was largely a waste of money, but it calmed my nerves, and - hey - it was my first property.I did not visit again for over a year. When I did return, it was because I had left my day job and decided to focus full-time on the mobile home park business. So I was the General Contractor / Asset Manager who oversaw the buying, moving, setting, rehabbing, and renting of the two dozen POHs that I purchased and brought in to fill the property. I was living on-site 1/3rd time for six months straight (1 out of every 3 weeks in one of my vacant trailers). The other two weeks I was back in San Francisco managing from afar and purchasing more used homes to bring in. (BTW - now I work smarter [or so I keep telling myself] and have a local Oklahoma GC / AM do this work for me.)My advice to you (other than, of course, attending the next Bootcamp) is to make a few trips to your property at first if you are doing a lot of infilling/rehabbing. But on one of those trips you should hire a retired former tradesman or retired investor (say, someone who has owned SFHs), to be your GC/AM on-site. They will oversee the work and send you photos of the homes and progress. With internet and iPhones with FaceTime and texting capabilities (and an on-site person who knows how to use them) there is no reason to have any geographic limits on where you are willing to purchase a mobile home park.I’ve even looked at a few mobile home parks in Europe. They call them ‘static caravan parks’ over there. Lousy BBQ in Europe, though.To your continued success,-Jefferson-
How do you compensate your GC? Some kind of hourly rate? Technology makes it easy to manage a park from afar, but “managing” someone paid an hourly rate seems like it’d be somewhat difficult, especially since there will be some variance in the amount of time he spends per home (some will go very quickly and easily, some not so much). Also if you don’t mind revealing, what is the average total cost of the GC per home brought into the park?
We pay our GC $35/hr. He is experienced with other SFH investments and understands how to get competing bids. Your GC adds more value than your manager; you should expect to pay him/her more.We do not track GC costs by home. Just figure how many hours it would take you to coordinate the inspection, move, rehab, etc. and multiply by $35. Now figure what your time is worth (presumably more). You get that time back in your life to go buy another park, rather than be tied-down to your existing park.Best,-jl-