and we have airlines charging for carry on luggage. Every businees I know (mine included) is trying to cut expenses and increase non-traditional revenue. I just bought a new Gravely zero turn lawnmower and am offering lawn cutting as a part time add on to our business.
Our crews cut all rental property lawns as an add on of around 40 per month. made a deal if they can sell other yards in the same 'hood, they get 1/2 of the additional money and I pay gas and oil. This past week I made 310 and this pays 1/2 the wage of one person and all the gas for this week. Lawn crew is thrilled and I am getting SOMETHING back to offset these costs.
Tony posted a great article on CRE and I am seeing this “downturn” is possibly nationwide. I get so wrapped up in local stuff I sometimes lose the big picture.
In my area, there is still money to be made. We have to try new things to hold status quo or increase sales. I am actively looking for another Park.
The typical LD model is still viable. Something I see a lot of here in Florida is small parks are doing this themselves and this stifles competition as well it should. A park Owner has the absolute right to curtail LDing in their park. I own a small Park and I would have no prob with a dealer guaranteeing lot rent, but I seem to be the exception here in my area.
Florida seems to be ahead of the curve in mobile investing…I made noise about the changing climate 2 years ago…
I have been following this post and could never figure out where to jump in. Crisis Equals Opportunity got my attention and now I am jumping. One of my richest friends told me he has made most of his money and many people happy in times of crisis. They smile and shake hands when they pass each other in the hall of opportunity. Of course one is smiling from relief and other from making a great deal. There has been lots of stupid money out in the investment world over the last 6 - 8 years and with that a lot of stupid investments were made by people who thought they were smart just because they could get their hands on cash or financing. The perfect storm is occuring and the stupid investment bomb has been detinated. This environment we are entering is an investors dream. We wait years for this kind of opportunity. I dont think these great opportunites are going to come knocking on our door though. We still need knowledge combined with an action plan to capitalize. I have been looking at some big corporate owned MHPs for the last year that are going down hill fast. Their easy money suit and tie management model is failing. I have seen one park lose 10-15 tenants in 6 months ( one of their philosophies is if you lose tenants just raise the rent for the rest to keep the bottom line looking good and the corporate boys happy until the next quarter). I have bought repo homes right out from under their noses, but when I call to ask if they want to sell the park they say no all is well. Denial by one party is the start of a great opportunity for another. I feel we are entering one of the greatest times for the MHP business. There are plenty of great MHP deals to be had out there. Just look for the worst looking poorly managed MHP, start your demographic - due diligence home work and plan your attack. Affordable housing as mentioned before is the business we are in. Figure out how to keep homes affordable and success is yours. You would have a hard time convincing me the sky is falling when we are on target to sell 40 homes in our first 24 months of MHP ownership. I have a grand total of 18 months of turn around park ownership under my belt and could not be happier.
From 1995 to 2002 managing our park with around 5% rentals was done by a gal that lived on the property and worked off site from 9 a.m to 2.30 p.m. every day. Things were very quiet and uneventful and the park stayed full. She discourage us from buying any more rentals (too much work for her husband who had a full time job) and so a lot of homes were pulled out but she was able to re-rent the empty space very quickly as mobile home owners lined up to take the space.
But that all changed in late 2002 to the present. Dealers and buyers in town started buying our homes and pulling them out and no one lined up to rent the space so we had to take a hard look at the way we were doing business. Solution: Buy all the repo homes that were for sale in our own park and buy other repo homes in other parks to fill our vacancies. This we did so as today we have over 40% rentals and two vacant spaces.
Managing a park that has 40% rentals is nightmarish and could lead to insanity for whoever has to do it. (We
Blood In The Water
My last post was not an appeal for the sharks to send me an email about buying the park although it may of seemed that way. I was just being honest about the condition of our park how things have changed over the years and know we just have to wait it out for better times. Selling at the bottom of a bad market does not seem smart.
Thanks.
Mike, that’s a good post outlining what the changes in MH industry has meant to you and your operation. The thought that jumps out at me is that in spite of it all, your MHP is still able to attract new residents - although not by the same methods as in the past. As I understand it in the past you wouldn’t have bought these homes, but now you do to so keep your lots full. I have a feeling from your post that resales and rentals will be a profitable addition to your MHP operation once you get your hands around it.
Hi Mike,
Thanks for being so candid with the group. I’m curious - how long a lease do you require? It’s hard for someone to move out a home when they are encumbered by a lease - especially one with an acceleration clause. Just wondering if this might be the missing link you are looking for.
Thanks,
Karl
Post Edited (07-03-08 16:02)
We have brought over a dozen homes into our park, as well as buying EVERY home that came up for repo sale within the park since we have been here; another four homes. Only two of these homes came out of other parks - all the rest came off private land.
If we look at a repo in a park, we always talk to park management and find out if they want to buy the home. Many of them will buy it only for unreasonably low amounts of money, so you can be sure someone else will take the the home out of there. Others don’t want to buy the home at all; waiting, I guess for banks to start lending again for homes to be moved in. We think they will have a long wait.
Today is the 4th of July, and our mover had his crew in the park setting the home he brought in late Wednesday. He told us they have to work today because they are so busy. They move for one of the sales lots in the area as well as for us and then private people. It currently takes them 3 weeks to get a home moved after we notify them. He was lucky with this one; he took half a doublewide for the sales lot to the area where our home was located and was able to bring ours back on the same day rather than running around with an empty toter! (We supplied them with hamburgers and hotdogs since they were here on the holiday!)
We currently have two homes getting ready to be sold in the park - one from Greentree and one Vanderbilt. You can be sure that we will do everything in our power to keep these two homes. They are already here, and the sewer lines and water lines are hooked in. That in itself means we should be able to bid more on these homes than anyone else can possibly bid. The inside condition is the same for all, but moving and setup is a big portion of what we figure into buying a home. Sure, we will have to re-skirt them, but in perspective that is very cheap and we would have to skirt others coming in to fill their spots.
We currently have a few homes available for sale, but that is only because we have been very aggressive at buying and filling the park. We are also making it a good place to live, which is really the key to getting it filled. We go through each home upon arrival and fix all the things that need fixing as well as making sure it is really clean. Even though it might not stay that way, everyone initially pictures themselves living in this nice, fresh home with lightbulbs in every socket…
Wow, a great thread from some very smart people and I’m glad that a few of them used the word, “opportunity”. I believe we are entering a period similar to the RTC days a couple of decades ago.
Here’s my opinion on how things will play out. First of all, once the REIT shareholders have had enough of the insanity from their corporate officers, they will start to scream for their money, i.e. cash back. We saw a small taste of this a few years ago when ARC attempted a mass disposal of their communities through one of the most messed up multiple property auctions in history. Once this happens, investors who have access to cash and financing will pick up some great, larger communities for a song. How long will this take to develop? I wouldn’t be surprised if it happens before the year ends.
Why will the properties sell for a very low price? It’s simple, there are very few operators in today’s market who have access to enough capital to infil 200 plus homes in a community. Even if they do have the money, many investors aren’t too excited about working for 7, 10 or even more years to bring it to maturity.
The smart operators will develop solid relationships with reputable Lonnie dealers to help infil the park. I do this with most of my parks and it has been mutually beneficial. As a park owner, my cash flow and equity buildup is in the dirt. The home is a way to accomplish the means. Since we mostly have late model and new homes, we make very little from the home sales.
One last comment has to do with the manufacturers. They are beginning to realize that working with park owners may be a key to keeping their doors open during this industry downturn. I just recently began purchasing new homes from Clayton as a “Community Developer”. Basically, I’m getting their lowest wholesale prices for new homes. I’ve checked and my prices are the same as the Clayton sales centers wholesale cost. New home sales to park operators has been virtually non-existent for years, but I foresee that changing in the near future.
Affordable housing will always have a place in America and the manufactured home will be the only alternative for many people who desire home ownership.
Like Rick, I’m excited about the future of this business.
Steve
Steve, regarding lonnie dealers selling in your parks. In your view what are the critical agreements that must be made between dealer and Park to asuure a mutually beneficial relationship.
Shawn, it must be a mutually beneficial situation. We actually sell the homes for the Lonnie dealers and charge a $250 fee after the down payment has been collected. Of course, the Lonnie dealer approves the buyer.
In some cases, we even collect the payments for the LD since we bill everything out through our centralized office in Macon. Residents have been mailing in lot rent and house payments on all of the parks now for about 6 months.
If a home goes empty, we don’t charge the LD lot rent. However, he has to take an active role in getting the home ready for sale again.
Overall, it’s worked well…even though we’ve only had two people do this in our parks now.
Steve
Steve,
That sounds like a great arrangement to me. Why don’t you buy a park in Kansas City. I’ll sign on with that program!
Michael(KCMO)
P.S.
Actually, right now I am working on the purchase of a package of lots in a MH subdiv. I’ll let you know how that turns out!