if a park has 28 of the 29 lots rented, why would someone buy the property? There would be the immediate 25 lot increase supported by local comps, and small increases going forward. There is land for additional spaces, zoned appropriately, included.is the additional land, which would require some capital as only city sewer/water is present, ample upside to support a deal. have upped my offer to a 10 cap, and continue to stay in touch to see what it will take for a deal. do some of you but full parks to hold just for the profits offered by a stable, performing park?

If you plan on investing in income properties to flip then short term upside is important. 
Income properties are intended for long term cash flow with the potential of realizing profits at time of sale through mortgage pay down and equity growth.

As Warren Buffett says you never sell a money maker. With that in mind we only buy successful parks with a track record and own only LONG TERM 15 years or more. When buying we think why would the next buyer owe this property. Trying to fill half empty parks or parks with POH is a business model that I avoid because your success may be no better than the former in filling sites and second I refuse to waste my time rehabbing junky homes that I would not live in. There are some exception parks that have great track records and show PRIDE OF OWNERSHIP. Why buy a Yugo when you can own a BMW and have in the final analysis a desirable property that tenants love and you make a profit from DAY ONE!!! In the process of selling my property the majority of muti-park owner have a model they use that gives little credit to exceptional properties like no rentals, sites full, retires, no evictions, or late payments–since there two goals (???) is how much they can increase the rent and how many sites they can fill even thought if you have empty sites they have no value at time of sale. I am looking for an owner operator that likes exceptional properties and likes to make a profit from day one and enjoys people.

carl … the beauty is in the eyes of the beholder  i agree your approach probably involves less risk, and offers immediate, consistent returns. However this all comes at a price and I suspect most do not have the capital to enter this market on the front end. Some may never be able to enter these market, unless they have a willing partner ???i also see the benefits of middle of the road models. I believe it may be cheaper to enter this market, however additional capital will be needed for improvement purposes. And these properties normally offer a higher upside, although maybe a little riskier. Good management goes along way in making a park successful. 

There are many business models in this industry, and many different rate-of-return goals. There is no correct answer. It all just depends on what you’re trying to do.

frank … i would love to hear your comments about buying a nearly full park, 1 empty spot, with any expansion requiring capital investment. however, the park operates and shows excellent, and the rent is due for a 25 dollar increase. other than sharpening the pencil on expenses, there is limited upside.My plan would be to buy and hold years to reap the cash flow, not sure about an exit strategy at present. thanks

We have bought fully occupied parks, in which there is no expansion possibility. How good or bad a deal it is is based on two facts: 1) what’s the price and 2) how much can we push the rents (including utility billbacks). We buy at a 10% cap rate and endeavor to push it to at least 20%. If the deal meets that profile, then we’re interested. If not, then not. That’s our basic business model (that’s why our book is called the “10/20 System”.As far as keeping it forever or selling it, again that’s a personal decision. We are not long-term holders because we can make more money selling and buying another turnaround property. But there’s no law against holding. I would suggest that, even if you hold it, you always keep your eye out for selling it, just so you don’t miss a once-in-a-lifetime opportunity. I hate it when a MH seller tells me “I’m never going to sell at any price” – that’s a crazy business model. Every piece of real estate has a prime moment to sell, whether it’s the Plaza Hotel or Grauman’s Chinese Theater.

I have learned to never argue with people more successful than myself like Mr. Buffett. Why does he still own Coke-Cola, it makes a great return and it will 20 years from now partly because it has a steady customer base and high return per cost of production. I would rather flip homes than parks since parks have citizens that deserve more than money changers and if I was the tenant having a new owner ever 2 or 3 years with different guidelines or management that means constant uneasiness. Who gives voice to the tenants? We need to be careful about the rush to always look at ways to make money on the back of tenants or uniformed sellers since in ten years most buying and selling will only be with multi-park owners and the turf war might be interesting to watch how they sell parks among themselves. Will in the future the big park owners own over a thousand parks vr. now a hundred parks now or maybe most parks over 100 sites will be owned by less than 50 companies or maybe just 10? I am sure the Wal-Mart thinking is at the door!!!

thanks for the comments  … my initial plan is to but a good, performing park where I can cut my teeth. and since it will be flowing very positively after debt, i do plan to hold for the long term. I cannot see any immediate hugh risks that would prevent this from being a sought after park for the next 10-15 years. My plan would be to sell at that time, but I will always listen to any offers that come around. If it makes sense, I would sell for my price.there are certainly different models out there, the key is the buyer must be confident and successful in their approach. me i am still trying to close  that “first” deal

Here are some interesting thoughts Warren Buffet has on income properties:http://blogs.marketwatch.com/thetell/2014/02/25/i-had-a-farm-in-omaha-warren-buffett-dishes-out-investment-advice/He’s not known for his real estate investing prowess, but has done a pretty good job in stocks, I guess.

Thank you, Frank that is one story published about 3 months ago. He has a son in Illinois that farms and owns about 600 acres that if on the market would fetch between $15.000 to $20,000 per acre. My wives family from Omaha shopped at his fathers family operated grocery store plus Warren I understand asked my mother in law out for a date since my mothers mother side went back for 4 generations that were doctors in Omaha and of course members in good standing of an exclusive country club that Warren’s parents were part of also. The good old days when people’s word was there bond and lawyers and contracts were not highly important. In the next 10-15 years will the Wal-Mart style come full throttle to the park business???

The Walmart style is already coming full-throttle to the park business. We get probably a call a week from a private equity group doing research for an industry “roll-up” of mom & pop parks. However, this is a good thing for the industry as a whole. We are the most fragmented sector of American real estate, with roughly 50,000 parks and only around 4,000 owned by institutional owners. A more cohesive industry will lead to more attractive cap rates and financing, similar to the apartment industry. However, you are correct that certain factors will change. I have had nothing but positive relationships with the mom & pop sellers I have worked with, and will undoubtedly have no such happy memories of working with institutional owners. But even though Walmart changed the world of retail and destroyed many old-line proprietors, it did bring about lower prices for everyone (I shop at Walmart as much as anyone else). The world is always changing, and for every change there are benefits and disadvantages. And there’s also that next surprising change around the corner. Have you been to a dollar store? That’s hurting Walmart, and making products even more affordable (and I’m a huge fan myself).

Yes, a Dollar General just opened next door and most their customers were from our park since you could count the golf carts and yes they will take a big bite out of WM since their ability for quick change is difficult and with that in mind might be an obstacle for hedge funds and MLP, Blackstone has enter the site built housing market since the market was undervalued and had excessive capital to invest. Excessive capital is looking for new areas to invest maybe we can all tell them to jump in and we can find another adventure.

Frank,The PE firms only really focus on larger, primarily lifestyle parks though correct? So those operating in smaller affordable housing parks - like 30-100 lots - will be largely ignored. It’s hard to imagine a firm with billions under management actually targeting properties with a price of a million or two at most, but perhaps I’m wrong.

Edit: double post

Initially, yes. Then some will begin to venture into the arena of smaller turnaround parks, as they cannot find enough stabilized product. I think the barriers on 'lifestyle" are already breaking down, and you’ll see more groups focused on affordable housing, as it has much higher returns and a more logical story (the decline of the U.S. economy vs. that odd character that wants to live in a mobile home over a condo).