I am curious as to your experiences with MHPs that need a turn around. We are in process of acquiring a 125 pad park, that was mismanaged for about 2 decades. Think - tenants with aggressive breed dogs running loose, junk in their yards, rough home appearances, way under market rents, etc… I think you get the idea.
We have a plan in place for how to approach turning around the park, but I am curious if anyone here has had a situation where they had turned around a park and what their two cents are. Appreciate any input. Thank you!
I did this exact thing with a 20 space park in 2015. Mountains of trash, terrible tenants, drugs, non-payers, leaking water pipes, compromised sewer system, etc. my advice is go into that deal with a TON of extra money and try to do the turn around as soon as possible as opposed to trying to cash flow it with the rental revenue.
What is the surrounding neighborhood like?? Being the best in a failing neighbor is wasteful of time and money and resale will prove the point. We tried with ONE fix up park park and in a never happened before flood plain (never bought another one since the needihood was failing). Buy the best, pay a little more and will have time and money for another nice park. At 26 bought our first park with 250 spaces with $40,000 down with a seller given a life lease on a house. Had NO experience but could work smart and full of energy being raised on a DAIRY farm in Mi. If our family would be unhappy to live on the property we will not buy—period!!! Owning a few great parks can built your wealth quickly and buyers are anxious to buy those properties for the sale reason.
I agree with @MikeO comments about the neighborhood. I’ve done two park turn arounds on smaller parks and am working on a third currently. It always seems to cost significantly more than expected… having a lot of cash on hand is helpful. Evicting bad tenants and non payers immediately is important. Selling park owned homes asap also is helpful as you can waste a ton of money repairing deferred maintenance on POH’s for crappy tenants. And you can’t evict tenants generally until you have resolved their maintenance complaints.
If all the homes are tenant owned, it makes it a little easier.
We purchased a park in Ohio in a very similar manner with upside potential. I would say you should expect evictions, dealing with the township and a lot of infrastructure improvements. Items will pop up that you aren’t aware of. We removed a bunch of trailers, massive trees removal project , knocked down an old garage, rehabbing units, new signage, new fencing, redid all the leases and park rules. Limit dog breeds and get a handle of aggressive breeds.
We purchase our park as a result of the location and a strong metro. We almost walked away as it was over priced due to the condition. Whole saler was trying to get a “grand slam”, but at the end of the day it was a fair deal. It takes time to turn the park around.
Realize that there are 3 things that need to be turned around, each with their own challenges: 1) The park’s physical infrastructure… roads, trees, utilities, etc., (relatively easy but can be expensive); 2) the homes- both park-owned and tenant owned + homes brought in to fill vacant or soon to be vacant lots and 3) Tenants - tenants that are happy living in a run-down park with no management often do not want to or cannot live under a set of community rules or where they actually have responsibilities.
Aside from money your biggest issue will be the tenants. Begin immediatly to clean out the dead beats and combative tenants. Anyone not on board with improving the community has to go, it will be a mistake to give any tenant a second chance in a turnaround. People rarley change so it is best to expect a lot of evictions initially once your new park rules are in place.
Compassion will not help in a turn around situation, tenants will only see it as weakness and take advantage.
You will need to have very thick skin.
Great comments. Patience and commitment. I had a park almost turned around and then more surprises. It’s been cash flow positive from the start but that’s because we got what was a smokin deal. We first self managed, then hired a PM who literally ruined all the progress. Then a bad attorney. There have been a lot of cloudy days andI have to remember that we wanted an out of state park to get better a long distance management!
My advice if you see the big picture is to keep going. If not, cut your losses and start again.