I’m considering taking the MHU Boot camp. I would love to hear about everyone’s experience. I’m waiting for the book to come in the mail and will get started as soon as it arrives.
Worth the $ without a doubt. Learn as much as you can and take the class before you buy your first park.
I had a fantastic experience at the boot camp. I’m hoping I can go again in person and network as well. (I did it virtually). You’ll learn all you need to know about buying a park and the risks. You’ll also get access to the document library which is invaluable. Plus, the financial model which will be very helpful.
I haven’t been to the bootcamp in years, but back when I went last I thought it was fantastic.
In my personal opinion though, it doesn’t come close to making you a skilled and knowledgeable operator. The information is good and Frank is a great presenter, but buying and operating parks is complicated, and a couple of days of instruction is just scratching the surface.
If you’re serious about this space though the bootcamp is the best place to start.
I definitely plan to participate. Just wanted to hear a about people’s experiences. I’m committed to participate in whatever that will increase my chance for success. What would you say is complicated about this industry?
Sales. Management. Rehab/flipping MH that inevitably you must do. Dealing with vacancy. Huge capex (streets, water systems, electrical systems). Client base that is unreliable and doesn’t have much ability to absorb increase.
Bank inspectors. Civil inspectors. People who tell you what you want to hear but it’s probably illegal. People who screw you while they tell you it’s “right” but it’s really wrong e.g. city charging water sewer monthly fees on vacant lots.
Explaining to everyone what’s different about this industry.
Here’s one more thing to keep in mind: Everyone on this Forum gleefully expresses their confidence in F&D’s 30-40% expense ratio. I’ve opined before on the “kick the can down the road” of CapEx. But also those numbers assume perfection in operations.
And let me tell you, if you do not pay your managers and other employees enough, you will make sure your operation does not run perfectly AT ALL. But you can’t pay premium wages for premium employees running a perfect machine in a LOT of markets. You’ll have to settle for average employees (you hope) and, on average, you’d better save money for capex.
To put it bluntly, you’ll pay for management and all your learning mistakes one way or another.
Quick reminder on capex: if purchase price is $X per lot, based on Y cap rate, you are going to have to think that over 30-50 years, you’ll be rebuilding that lot no doubt at least once. And it probably costs more to rebuild than you paid. So, you probably oughta better save $X/30 or $X/50 or similar about 2-3% of purchase price PER YEAR for capex.
At a 8 cap, 2% of the purchase price is 25% of your profit!!
At a 6.66% cap rate, a 30-year expectation of spending the purchase price again on maintenance/capex is 3.33% per year or 50% of your profit.
Your leverage (70% @ 5%, interest only) is also going to claim a big chunk (3.5% of 6.66 or 6 or 8 or whatever.
So that’s a ROI of ‘Y’ minus 5-7%, ON AVERAGE.
Your margins are pretty narrow to avoid going under (or going into a self fulfilling death spiral)
Thanks for the thorough feedback and analysis. Definitely something to consider. It Sounds a lot like operations in the healthcare industry. If this is the case then how does existing operators make a profit? There’s still a good amount. If done correctly and carefully the numbers must add up.
Excellent info so far. To add onto another point, the highlight of bootcamp for me (which was virtual) was Frank’s excellence in answering questions. During bootcamp he made sure to answer all questions before proceeding with the material, including “dumb” or “difficult” questions.
Participating, I believe, also gives you investors club access. Which is an amazing perk to me. The best one includes having Frank’s number which is insane to me. I’ve emailed him on a random weekend at 8 pm, guy tells me to call him, and he proceeds to give me his undivided attention for an hour or two on a weekend. I cannot compare that level of service, commitment and transparency with his knowledge to anything else.
I can recommend the course wholeheartedly, just be aware that it is not an easy business and it sounds easier when you have professionals like Frank run you through it. There are bumps and crazy things does happen. This comes from an owner who woke up this week to several trees falling all over one of my parks and having electricity shut off and having to do emergency fixes for a tenant on air. Stuff happens.
Currently dealing with this in two parks. One city charges about $20 per lot on base fees (more than water and sewer fees!) and another one charges almost $60!!! - in both scenarios I pass through fees and tell people to complain to the city. They both charge me for any vacant lots which to me is robbery. Any luck battling that?
So your telling me the park I am looking at (true story) where the seller gave me handwritten “financials” on a piece of printer paper stating a 13% expense ratio is not legitimate??!!
My experience with the park I own is also higher expense ratios than the 30-40% range. Something I learned is that if your park is not close to fully occupied and/or is a small park jack that expense ratio way up.
I also agree with the tolerating or making due with below average park manager talent. What I would give to live near my park. Things would be so much better and easier.
I went to boot camp in 2015 and I am glad I did. Would highly recommend.
Brandon, very good advice/reminder for those involved with MHP ownership. I used a variation of a “Reserve Study” common in condominium HOA’s (and required by law in many states). After plugging in expected life and costs for buildings, roads, water lines, etc., I came up with $32/site per month for the reserve fund in my parks. When I compared to your estimate of 2-3 percent of the park purchase price it came out very close.
It’s easy to ignore this somewhat hidden cost but it’s lurking out there for all of us. Anyway, thanks for the insightful post.
Brandon and Mick, Great insights. This is very helpful for a interested newbie like myself. Difficulties don’t deter me. It helps knowing the realties current operators have encountered.
Too true. You see all the time some “pro forma” that has taxes, utilities, insurance, maybe some but not nearly enough payroll,and hardly anything spent elsewhere. If the financial statements look good, there’s probably a lot of deferred maintenance. No free lunch.
That’s $384 per lot per year. The lending bank (in my experience) typically escrows $50, maybe $100 at the most.
That extra $300+/- really matters and it had better be in the financial statements or there wasn’t enough of it.
It’s the only-original MHP boot camp, there are a few knock off talks or programs but they are created for other intentions. Going to MHP boot camp is how most folks start and I send anyone there that asks me the rookie questions - ALL the rookie questions and more will be covered at MHU. They should charge 10K for it at least since it’s a lot of business management principles that apply for any business.
@Ms_hawk…I purchased F&D’s CD’s back in 2006, and then attended his class in person sometime shortly after that, and I echo everyone’s positive responses. There is NO substitute for F&D’s boot camp!
If you want other industry data points there is a great industry conference running from 09/27-10/01 that I have attended for the past eight (8) years called SECO or www.secoconference.com. Last year and this year I am also one of over twenty plus volunteers helping SECO as SECO is not only community owners helping community owners, but it is also a non-profit for veterans. F&D have regularly spoken at SECO in the past, and this year Frank is a scheduled speaker this year as well. You can receive a $25 discount by typing MHU in the discount code when registering.
Due to current events, SECO20 and SECO21 are virtual, and while we all would prefer in-person SECO20 was a great event with over almost 500 attendees, and we anticipate SECO21 will far surpass last year.
Lastly, I regularly participate in a free “Newbie” group hosted by Ekaterina (also goes by ‘E,’ Kat, Katerina) Stepenova at her MHP Tribe or MHP Tribe HUB. The weekly MHP Tribe meetings are attended by both seasoned MHP investors as well as newbie still looking and learning.
Please keep in mind that F&D’s bootcamp gives you a foundation and a major head start and everything else I mentioned is in addition to the boot camp. As @Brandon detailed, there is a lot to learn, but once you get your first investment you will be hooked - maybe!
I am very encouraged with the feedback and resources everyone has shared. I plan to tap into each one with time. As suggested I will be taking the camp in the coming months to developed a good foundation of industry knowledge. Thank you again for the support!
Buy at a purchase price that makes sense in reality instead of a hypothetical best-case scenario.
I am thinking about signing up for the Boot Camp class. I was curious about the “the nearly complete list of the 44,000 mobile home parks in the U.S” that they advertise. Did anyone take the class? How good/ accurate was this list?