Future Investor

Hey everyone,My name is Josh, I’m 22 years old. My goal for 2015-2016 is to attend Frank’s 2 day course, and to purchase his at home course as well. My grandmother is terminally ill, and has been informed that she has 6 months or less to live. The inheritance has been left to my brother and I, and we both plan to put her earnings to good use by investing in parks.First and foremost, forgive me, and please don’t hesitate to correct me if my information is incorrect. From what I’ve heard, most financing from banks require 15% down on a park. If this is true, I will have enough to finance a park at a maximum value of around $650,000. However, I don’t think taking on a large park early on is in my best interest, and should probably finance a park at about half that value. My first question is this: As far as managing a park, would I have enough time on my hands to pursue a career as a police officer while building a MHP Portfolio, or would it be wise to invest my time solely with investing and managing?Secondly, hypothetically speaking, when one acquires multiple parks, say… 50 parks, do you hire people to manage them? And if so, is their salary included in your operating expenses? Which I’ve heard to be up to around 35% each year. Also, what is an average salary for hiring a person to manage a park? I welcome any and all advice, tips, questions, concerns, pointers, you name it. I’m all ears! I sincerely thank whoever takes the time to read this and answer my questions.

Financing from banks will require 20%-30% down. Your biggest hurdle in this plan will not be the downpayment or deal size though.  You’re biggest hurdle will from lack of credit history, assets, and experience.  All of these things will prevent you from getting a loan done on a MHP through most banks.The good news is that you and your brother don’t need to go at it alone.  In fact, if you tried to do it alone, you’re extremely unlikely to ever reach the portfolio size you are talking about.  If you look around at some of the larger operators on this forum, you’ll notice that all of them have numerous partners.  They partner with people within their company who have skills they want access to.  They also partner with people on the equity side to have the capital to achieve 50+ parks.  If you look a F&D, Frank is the primary guy for raising capital and Dave is the primary guy on acquisitions.  This is a perfect example of a partnership.  Each partner does the thing they are strongest at and they leverage each other’s time and talents for the greater good of their company.Your main takeaway from the bootcamp should be networking and learning.  Especially focus on networking though.  When you go out and start looking at deals, you will want to have a rolodex of people you can partner with in situations that are appropriate.  On some deals, you may need capital or may need the experience of someone who has raised capital.  On others you may need someone to guarantee the loan.  There might be others where you want to leverage just the experience of a seasoned operator for a major turn-around.What I’m saying is that you shouldn’t focus on how far your personal capital will get you.  That will limit you to looking at only deals in a certain box.  Instead, you should just look for deals.  When you find them, if you’ve done your networking properly, you’ll already have the answer for how you’ll take them down.I’ll let the experts answer the management questions.

Thank you for your speedy reply!So what I’m taking from what you’ve said, is that I should assemble a team in order to reach my goals, correct? With that being said, should I find a team to build my entire portfolio with, or just find someone who will front the capital for each park until I pay them off, afterwards, the park being mine entirely.

Also, were you an attendee of Franks 2 day course?

When someone fronts the capital (equity partner), they are still in the deal even if you pay them back.  It’s a complicated structure, but I would just focus on building relationships with people who can help you get started in the business.  You don’t need to worry about finding someone to help you build a 50 property portfolio right now, you need to find someone to help you get the first deal done.  I did go to the course a few years ago and I can tell you that it’s a bargain.

Would you say that MHP’s are one of the best ways to invest your money?

Get the home study course first. Read it twice and listen to the CDs to get a grasp of the info so you’ll be up to speed when you go to a boot camp. Working as a police officer will be a good job while you let your investments grow. I’m a fire fighter, and that’s a great vehicle as well. I plan on retiring from the FD in another 10 years(I’ll be 45)and invest full time.

MHPs are one way to invest. Determining the best way is subjective.  

JWagner92, first of all I am sorry to hear about your Grandmother’s terminal illness.  May you and your Brother be able to create special memories with her now.Secondly, I love all your goals.  It is important to have goals.  Write down your goals with dates that you will achieve them and the process of how to achieve them.Thirdly, I would suggest starting small and going from there.Search for and buy a Mobile Home Park which is physically close to you and that you can either Owner Finance or pay entirely with Cash.  Get to know your MHP.  Be there everyday to at least drive around and know what is going on.  Get your hands dirty.  Go for a strict ‘No Pay, No Stay’ strategy.  Do not allow any illegal activity or any trouble makers.  Put everyone on 30 Day Month-To-Month Leases and be ready to evict when needed. Frank’s 2 Day Course is wonderful.  Both my Husband and I previously attended it.  It will give you a lot of wonderful information.However, the devil is always in the details.  Thus, it is important that you find a great MHP, buy it and then immerse yourself in all the details.I agree with Charles D that your age, credit history, assets and lack of experience will be a big deterrent to receiving a Loan from a Bank.However, as I tell my boys…If at first you do not succeed…try, try again.Before you even find a MHP to purchase go to all your Local Banks and introduce yourself to the Commerical Bankers.  Have your goals written down.  Show them what you desire to do.  See what their response is in terms of Loaning you money on a MHP.  You never know until you try.  However, make sure that you go to the Local Banks.  National Banks just do not typically desire to loan on MHPs. Personally, I am of the mindset of keeping your assets strictly your own.  I would even suggest that you find your own MHP and your brother find his own MHP.  I have seen too many Partnerships go badly.  A lot of control is lost when going into a Partnership.Frank and Dave have and are successful at their Partnership.  However, it is my understanding that they started out independently and it was only later in their course of investment that they pooled their resources.Really learn the MHP business first…Learn by doing on a small MHP or a couple of Mobile Homes on acreage that you own.Yes, you will lose the ‘Economies of Scale’ on a small MHP.  However, you will not lose your shirt (nor your Brother’s shirt) in the process.We wish you the very best!

Thanks everyone! So would you guys say that it’s just not possible for my brother and I to acquire a large portfolio by ourselves? Obviously we will need equity partner(s) to get started, however, if we form a small portfolio, couldn’t we go at it by ourselves so long as we can afford the parks with our income?

OPM my friend.  Other People’s Money.  The biggest mistake I made when I got into this business was to think of myself as a ‘property owner’ and not as an ‘investment broker.’  Raise money from others, acquire more properties, and grow beyond your limited capital.  You can always ‘downsize’ later by selling off your improved properties at a gain, pocketing your portion of the proceeds, and then acquire parks on your own without partners.My 2 cents worth,-jl-

Never thought of it like that. That’s actually pretty brilliant to just get your feet on the ground, sell the parks you partnered up to buy, and buy others 100% yours free and clear. Thanks for the input, that was really helpful!