Random Thoughts...

Mowing my own grass this morning (for a change) I thought a little about the unusual business model post below and i would like to share some thoughts about it. In 6 years i have completed over 85 L/H pacs and we were able to place 35 properties free and clear into our individual portfolios. My half were done as Notes with 10K down and 8-10% interest 10-15 year term. my partner sold some and rented some. My 17 Notes have become 10 and in January I will have 9 performing Notes. 2 were cashed out (Thanks Wachovia) 5 were foreclosed. This is with 10K down…average age at foreclosure 25 months. I am not even trying to resell, these foreclosures are now rentals. So I basically got 30% of my homes back within 2 years time. In my L/D’s this number was almost 50% in one year’s time. Talking to others in the infill process this number is fairly constant (some very much higher) in Parks. I understand that these can be resold etc but it takes time and money to get them show ready again.

I question if this idea of “gifting” homes is a very viable one. In my limited experience, folks are much more likely to walk away from something they have zero dollars of their own invested in than something they scrimped and saved to come up with down money. Anyone else have ideas on this?

The other big problem I have with this is control. I want to be the one to pick tenants for my Park. The minute an Owner gifts this home to a charitable provider, they give up some control of the screening process. I know there has to be established criteria for the Agency’s placement of folks but my problem is probably subjective.

I’m not an ogre but there are professional tenants that know the system and every crack in it. We had some new tenants move in the first of last month and the 25th they had us fill out a 3 day notice for them to give to Brother’s Keeper for rental assistance. The young girl knows exactl how much they can gross each month to qualify and her boss adjusts her hours to keep them within the paramaeters. They also get food stamps, and make weekly jaunts to the 9 local food banks for their groceries. I have some real problems with this lady and I don’t believe these programs are designed for a maintenance approach rather a one -time emergency approach. My buddy kyle kills a beef every year and I always get roped into helping him kill, skin, hang the thing and transpo to Interfaith Agency for disbursement to needy families. A very good man and he tells me it is the same families year after year lining up for free beef. I believe in sharing the wealth, but the thought of having an Agency (any Agency) controlling who would get a free home from my checkbook is more than I can stand…it won’t EVER happen.

I know this is not a perfect analogy, but I can guarantee I can give my 2008 Tundra away for free in one hour today. What would impress me more is to get someone to sell this truck for all cash for the 29K I bought it for in June…or even 20K. See where i am going with this? I don’t care how strict the requirements are for this program, the homes will be coming back in record numbers with zero down money. Every bit of experience tells me this. Am I wrong? Folks are not shy about telling me when I mess up. Giving anything away for free just does not set well with me…ever.

A much more appropriate dynamic is to infill using private money, creating good, strong Note, seasoning the Notes and selling the Notes, rinse, repeat. This has been done (and is being done as i type) to great effect all over this country.

I didn’t want to write abook on the subject, but this approach just does not set well with me for several reasons. i like each deal I do to stand on it’s own…we have several dozen infill specialists on this forum.

What do y’all think?




Great Post. I have a problem with giving up the control also. I have a couple of professional tenants that work the system and I dont want anymore. I dont do fill and flip either. I want lots of long term $$$ cash flow period.

Hello Greg,

To a degree I agree with you. And I don’t think that this model will work for me since I plan to buy and hold (I want long term cash flow).

But I think in order to understand whether this approach works or not, it is best to put yourself outside of the model. In other words, I was looking at it from my perspective and it just doesn’t work. But if I put myself in another person’s shoes, it looks pretty attractive.

Here’s some points that I see you looking at it from your perspective: the model only works if your goal is to buy and then sell the small park as soon as you fill it. The goal of the strategy is not to fill and hold, it is to fill and sell. You end up selling a park that is 100% or close to it, with no rentals or park owned homes.

Second point, he does say that he does make sure to run criminal checks and credit checks before he gives a home away to anyone. So I don’t think he abrogates his pre-qualification duties at all to the agency.

Here’s how I think this would work. You buy a 30 unit small park that has a 50% or better vacancy. You use this model to fill it up in under a year and sell it at 100% occupancy. That should make you a tidy profit.

How that leaves the new buyer is another question of moral responsibility. I wonder if he discloses to the new buyer how he filled the park and who his tenants are. I’m sure that would affect the buyers position.

Interesting to hear new ideas though. They keep the brain active!

“We had some new tenants move in the first of last month and the 25th they had us fill out a 3 day notice for them to give to Brother’s Keeper for rental assistance”.

Greg, Was the girl really 3 days behind or just wanted to get a free months rent?

I also have a real “problem” with people who work the system.

The good thing is when you lay your head down at night you can take comfort that YOU are taking care of your family. And when she lays her head down at night she (through her own actions) really has nothing to call her own.

Greg I agree with the control issues and potential problems with tenant conflict… However I’ve found the opposite to be true to a very large extent with low-cost housing which is in essence what this guy is creatively providing.

Going on 3 years ago market rents slipped here by about $125 per month in a months time frame, in order to fill units I was forced to drop rents just like everyone else, landlords were stabbing each other in the pocket book to get tenants. ANY TENANTS! The side effect was people at market were moving to cheaper housing leaving vacancies that had to be lowered in order to fill them… That nasty circle lasted for about 3 months all in before rents started recovering.

I filled 6 units that I can remember during that time at anywhere from $75-150 below market. I still have 2 of those tenants today and 3 others lasted well over 18 months in regular lower end rentals.

It was one of those “we’ve got a smoking deal and we know it” type things, they knew they had a great deal going and never complained or paid late in fear that I’d correct the rent rates.

I’m pessimistically curious about the way this is set up, how the money rolls, and the hidden problems that it could create. The biggest thing I see is that by giving the homes away you create a tax break in the RETAIL value of the home, not what you have invested (Think NADA) that would offset and shield a good portion of the capital gains if timed correctly.

I’m trying to keep an open mind with a lot of the same concerns you have expressed… I wanna hear more before I judge the outcome.

Best wishes,

Ryan Needler

IMHO this scheme

I think most of the aforementioned posts nailed this subject - especially Greg’s.

My biggest problem is finding enough cash for 60 homes and once I solve that I am not worried about selling everything, I’m looking to do it again. I am doing exactly what Greg has done with homes, downpayments, financing, etc. I just don’t think I will EVER rent again… and I’m not sure why you have rented the ones you received back Greg. I’m sure you have your reasons but why wouldn’t you want another down payment to “secure” somebody in there and when - for whatever reasons - they leave, all repairs are covered and the vacancy factor also while you find another qualified buyer? Maybe your market conditions are such that drives you that way for now??

But I totally agree when something is given away it will be “given” right back in some form pretty quickly. I want people who want to be live here for a while and with the 10 land/home packages I’ve done I’ve had no turnover - yet. But I probably had 100 tenants in my 23 apartments I USED TO HAVE in about 3 years. I’m the same person managing. My point is I think selling with owner-financing kind of manages itself more so than renting.

I also agree this give away program would work better with smaller parks but whomever buys it will soon start the cycle again of needing to fill vacancies and we’re back to square one with a different owner.

The beauty of all of your posts is that you ALL own Parks. In trying to feel my way through different infill scenarios I absolutely LOVE the idea that i have the resources from actual MHP owners. Do you have any idea how valuable that is to me? Average Joe on the street would think I was deranged talking about infill, creatin and seasoning Note, selling discounted Notes, etc. as a valuable investment strategy.

I keep searching for a fast, cheap,easy infill dynamic. The reason isn’t because i am cheap (even though I am) it is because I am getting old and it takes a LOT of energy and time to infill a large park.

Probably the most effective models I have seen are Coreys, Steves, Fred’s, Ellen and Jim Brenn, Daph and johns, David Protiva approach. I know that this process works because I have seen it work with my own eyes.

It makes sense to me to explore new possibilities and approach them with a neutral mind set. This model is probabaly not for me…I’m kinda a hold kind of guy when I aquire a property I really like.

Ryan, they moved in with full deposit and 1/2 month rent. They were behind when I typed the letter.

Shawn, the train HAS left the station Brother LOL! Great analogy, and i agree with your conclusion.

Thanks all,


Two points:

  1. I want to re-emphasize that you do not lose control, as the tenants have to be approved by the park.

  2. OK, how about a 1/2 way approach? There are lots of agencies that will provide grants to help rehab, etc. I agree that people who get things for nothing are prone to throw what they got away (which is why I love buying from heirs…and figured “down payments” from “charitable organizations” to be anything but REAL down payments). But I also think there are opportunities to use non-profits to add value without spoiling the tenant/owner. In fact, we are likely going to set up a non-profit to do just that…for example, receive MH as charitable donations and sell them like a thrift store sells clothes - cheap, but not free. I have the good fortune to be dining with a non-profit/grant specialist tonight and mean to pick her brains on exactly these items.

John Hyre


One thing I would like to point out is that it is probably not safe to compare the tenant that puts down a small deposit agaisnt the tenant that pays the same amount or even less to own a home free and clear (Although I agree with what you say about minimal investment = easy to walk away). The tenant that owns the home outright only has to pull together the lot rent (say $200) each month. The note buyer still has to pay maybe double or 3 times that much each month. That is a big difference for these folks on fixed income. The free and clear residents have no other options for housing for the price of lot rent. The note buyers still have a committment to pay $400-$500 a month to stay put. There are other options at that range so they walk for something they consider better.

I think it really boils down to not how much they have put down or invested by what other housing options they have at their current price range. If they are just paying lot rent there are no other housing options for them at that price. At least not in my neck of the woods. So they become long term tenants of the park for lack of choice.

Just my experience,


Post Edited (10-06-08 20:13)

I’ve been watching this thread with some interest. The point that a resident can more easily afford lot rent only vs. note and lot rent is very valid! Additionally, someone earlier stated that investors from this board would probably not be interested in a filled park with these types of tenants - I totally disagree. One important component during DD is to know how many homes are free and clear, which ones are leveraged, and who owns the notes. Free and clear homes are the most stable forms of collateral - homes with notes (especially over-leveraged institutional chattel mortgages) are subject to another party keeping the homes on the lot if that note should go bad. A park with leveraged homes should always be valued less then a park with free and clear homes because the collateral and the ability for the tenant to pay all their financial obligations is simply less stable.

All infill programs are expensive cash hogs. Many of my DD clients initially take this way too lightly ~ many times they are barely liquid enough to purchase the park let alone raise the money for such large injections of cash (throw in some infrastructure pitfalls and that’s a quick recipe for financial disaster).

This infill idea has a number of benefits each offset by the LARGE sum of money it takes to purchase and set up “free” homes. If someone has the money, wants to (potentially) fill the community quicker then it should take to sell homes, and has a banking relationship that allows a cash refi in a short period of time, or simply likes the business model of buying, fixing and flipping (plus the chance of some “good news” media sizzle) this is certainly a viable infill program.

I remember a conversation with Ernest Tew where he was musing that a good criteria for a park is when the numbers would support simply giving the homes away in order to fill vacancies. This only happens when lot rents are high enough to make the return on a FREE home “good enough”. Break out your financial calculator and run the numbers - if you can put in a home for $5,000 and get a net income of $250 per month by renting the lot, then assuming 2 months vacancy every year that home will still deliver a 50% return - year after year. Now, if you have the ability to refinance or raise some new debt financing on your newly filled park (yes filled parks get better rates and terms then turn around parks), that $5,000 cash would have an interest expense of only $42 per month @ 10% (you pick your amortization and add that to the interest expense in order to retire the debt - say you want the debt retired in 60 months, then pay $106 per month). Run the #'s on your own park to see the relationship between dirt and homes (and assuming you are well capitalized this strategy may be for you). By refinancing a filled park I see no reason why the investor would have to sell the cash flow in order to recoup the infill investment.

My last point is that this is simply another way to “skin the cat.” Knowledge is power, Ernest and I mused about this idea years ago, but during good times none of us would ever think of giving something away that is so easy to sell at a handsome profit Lonnie style. Now brush off that financial calculator and tell us what this really means to your community!


PS - some might argue that these homes can move out just as easy as they move in, especially since they are debt free. I encourage everyone with free and clear homes to have long term leases in place with buy out clauses. If you are giving a home away, there is no reason that you can’t stipulate terms in the lease or on the title of the MH to protect your gift/park. Same thing with an eventual resale - I’d “debt/title restrict” a resale in order to keep tenants from moving in and then quickly reselling the free and clear home for a quick CASH payday.

All my experience to this point has taught me that when homes are given to people for free, the likelihood of having a good, stable, long term tenant is quite low. I’ve been trying to explain this to a park owner for a couple years now, yet, he continues to give away homes to reduce vacancy.

But those experiences are typically with low end homes that require some cosmetic repair. These aren’t dream homes. So I ask myself, do people skip out because the homes aren’t very nice and they don’t have the means to make them nice, or is it just because they’re bad tenants who are moving on to look for the next free lunch?

Re: control… rather than give the home away for free, why not sell the home for $50, and require the tenant to pre-pay lot rent for 3 years (or some other long period of time). Then, since they don’t have cash, finance the package of prepaid lot rent and the $50 home purchase and secure it by a lien on the home. This ensures they can’t move the home out, at least, not without paying you a whole bunch of money (that they don’t have) first. The net effect is that you get your lot rent (plus interest), little or nothing for the home, and a bit more security/control than you’d have otherwise.


I love this forum. The abundance of free education we can gain is overwhelming. Karl everything you said in your post is awesome, but I am still stuck on getting the extra $1,000,000 plus it would take to buy homes, set them up and give them away in my park. I dont have $5000 homes to purchase. The homes cost more like $15000 set up and ready for sale. The quality of a $5000 home in Burlington NC would be a frightening site and most certainly not improve the quality of my park. Thank God I have a bank that has no problem with chattel lending and I am filling my park up with note paying tenants. The average payout on the notes is 8 years. As I approach the payoff in the future and if I decided to sell the park I guess I could give the homes away to make the financials look better for a new buyer to take to his bank. I would just have a 1st and 2nd trust deed to payoff. I realize this is a case by case region by region situation with this give away mobile home business model and I have no doubt it would work in some parks. Thanks for the great ideas about adding the language to our leases to protect ourselves from tenants removing homes after the give away.

Rick Ewens

Karl, with all due respect to your knowledge regarding MHPs, all free and clear homes are not like grains of sand, and you should not value them the same. My MH dealer experience showed me beyond any doubt that A free and clear home that has been paid for, by the resident, makes for a very stable resident. A “buy-for” is extremely unstable. I have also seen the same thing repeated in my MHP. Now, I am not saying that discounting in-park homes sales (perhaps drastically) during infill is a bad strategy, just that people who have nothing invested in their home will seldom behave as those who have toiled and sacrificed. IMHO those with no skin in the game will have little if any regard for park rules, will be unlikely to maintain their home, or keep up other associated obligations(lot fees), because they have nothing invested. The fact this free home provides the lowest cost housing available does not change my opinion, think of all the free housing units provided in inner-cities and Indian reservations that were quickly unlivable and later leveled. People are hard to help.

it is not a new idea. The problems for me are manifold. Firstly and probably most importantly is cost of units. On Greentrees list today, there is one 1999 14 X 70 3/2 for my cost 8K. to breakdown, transpo and reset in my park (at my cost) is 3100 plus 700 permitting. Plus skirting, decks, drive, etc or a net cost BEFORE rehab of around 13K. throw in paint, carpet, etc and a round realiistic number is 15K.

I have lot rent pegged at $400 per month in my Park so giving away the home would in round numbers take several years to recoup in a perfect world. We both know it would take longer with portion of expenses.

On resale of MHP at 10 CAPthis will bring in 40K increase that makes sense if I have the money to bring in 15 of these in one year, gift them immediately and find a cash 10 CAP buyer immediately. This can be done but it is not by any means a done deal.

These are all free and clear owners of mobiles, a real plus using your criteria. That they were gifted the home is possibly a neutral, but in my experience they would probably walk in large numbers.

I like the idea of giving people a hand up and not a hand out. That these folks are working with an aid agency is for me good and bad. Bad, they got in trouble at some point, good, they realized it and got some help. The thing I really resist is having to only fill units with the Agencies people. I know there is a good argument for folks learning a lesson and being grateful for a chance, blah, blah, but the bottom line for me is risking this kind of capital for a future possible payoff. 10 CAP buyers of parks are getting scarce. I feel there was an artificial value given to Parks with the REIT purchases in the nineties, and if current valuations are any indication few are selling at this price now. In fact, I’m not sure alot of MHP’s are selling at all right now. Looking at:

there are over 40 Price Reduced tags on the first page alone. A 102 space park here in Citrus County for sale 1 year ago for 1.2M is now selling for 760K and will go much lower before ir sells IMHO.

I think this model is slightly outdated. It is not a new idea. Several Owners here in Florida will do nothing down $150 per month 0 interest L/O for decent homes. We all realize the end goal is to fill the park and rent the dirt…how we do this is what makes this thread very interesting for me.

I’ve watched you bring BEAUTIFUL homes into your community in Florida Karl and I know your MHP is a hybrid, but I like your model better than this free one and it more fits my personal goal of upgrading homes AND tenants.

This thread was not begun to tear down another’s model. If this works for him, I applaud his efforts. I’m just not convinced that is widely viable or for me…



The person who gave this talk said he has a clause in the lease agreement that forbids moving the home for the first 3 years of ownership.

As for me, my manager and I are talking to a church group that helps people get housing after they have lost everything to a fire. Can you possibly think of a better group of people to have as applicants? You can easily check their payment history and where else can they go for a very long while as they try to rebuild their lives?


Wheat Hill MHC



I agree with all your points. Rick, in my 5 star park it would not work for me either - my wholesale including government extortion fees is $45K for a 400 per month lot rent. Take that times 50 and you have 2.25M. But, if you had a LOC set up you could give away 1/2 of the wholesale price as an incentive. Say, you make the first x payments on time and in full and earn a 7,000 credit in 48 months (or however the #'s work out).

Shawn, I’m with you that not all free and clear homes are the same. But my final collateral on a deadbeat tenant is always their home. We can all benefit by free and clear homes as collateral since the eventual sale of the home will likely pay the back lot rent, attorneys fees, and a handsome profit. Homes with liens come with another party to deal with that has their skin in the game. If it is a bank they will likely pull the home or expect you to buy it from them - either way it is worse then free and clear. Free to some is not the same as free to others - I believe with proper screening and no other better housing competition for the money that most of us could pick good tenants from the tenant pool.

Greg, I’m with you man - just love throwing the OLD HP into motion and exercising the brain a little :slight_smile: I just talk to and see a lot of people trying to do business like its 2004 when it’s 2008 and 09 and 10 have a good chance at being reeeaaalllly hard on lots of people. Yes many of us will prosper but it is changing times to be sure.

Anyway, this idea may be “good enough” to do once a year just to get some good PR and free TV advertising - that is, if my calculator says I can still make 30% by filling a lot for “free”.



Is it the sound of minds snapping shut?

Since none of you have done this and this guy, apparently successfully, has, perhaps we should try really hard to get him to come to MOM and explain how he does it. I have told him a couple of times of the interest (controversy? disbelief?) his business model has generated and I really hope he comes. Why not listen to what he has to say first before you pick the method apart?

For those of you who would like more info, his name is John Flask and his e-mail is jflask@jaflegal.com.


Wheat Hill MHC

was a very respectful discussion about a kind of business model that has been around for 7 years that I know of.

Reading your original post on “unusual business model” what interested me was the simplicity of it all. I have heard numerous times of MHP Owners giving huge discounts for mh’s in parks to increase occupancy. Also “sweat equity” for down, etc. This infill dichotomy has been around for awhile and I think it will be even more important in the near future as liquidity tightens. It’s a fairly simple HP problem…for some folks filling and flipping it is very cool. For fill and holders it is maybe not a good fit. Although a Speaker slot is not open, he is welcome to come to MOM and I’m sure there are folks(me included) that would like to hear his plan and meet him. An IRS agent that becomes an entrepreneur…gotta love this!

I’ve liked the very positive feedback these threads have created. We can all agree to respectfully disagree without ruffling feathers. Like my HP my mind gets dusty too if not exercised, I’ve enjoyed this discussion, perhaps ask John to join in? He might find it interesting…after all it is HIS presentation that started the ball rolling.

This John seems like an interesting guy…I have emailed him to ask some questions about his model. He should be very glad that this plan of his has generated this type of interest. One question I didn’t get an answer to is does John do seminars and courses for a fee? Or is his material free to any interested people? Like me?

Thanks Rolf,