Realities of being an absentee landlord?

Hi all,

I’ve been considering purchasing a small MHP for a while now, but I’m concerned that my physical distance will be a negative factor that will open me up to all sorts of vulnerabilities.

I live in New York City, and I’ve read that New York as a state is unfavorable due the courts generally strong pro-tenant attitudes (this is definitely true for NYC), and MHPs for sale in the surrounding states seem few and far between, and the ones that do pop up are often out of my price range.

I’m looking mostly in the $150k price range and lower, and I’ve come across a few that look good on paper. They’re generally under 20 spaces, high occupancy, all tenant owned homes (that’s one absolute requirement that I have), and one even has all the units sub metered.

The problem is that these are located mostly in the Midwest, often 1,000 or more miles from me. Due to the costs and time involved with making a trip out there, I’d like to make no more than one visit in person during the purchase process.

Once acquired, since there are no POHs, I imagine the day to day management and upkeep would be fairly minimal, but I’m not sure that’s enough. I imagine scenarios like a problem rule breaking tenant that winds up requiring an eviction or something else requiring me to go through the court process, which could be difficult if I’m having to make trips in person.

I suppose I could hire one of the residents as a manager to take care of the upkeep of the common areas and rule enforcement, but unless the current owner is already using one they can recommend, I wouldn’t know how to choose one.

I’m aware there are management companies that will take care of a lot of the hassle for me, but I’m not sure I’d be worth their time given how small the parks I’m looking at are, or if they’d be worth their fees, considering they’re basically only managing a small common area and some concrete slabs.

Anyway, I’d appreciate any input or personal experiences you guys have in this matter!

I have a couple parks and both are about 4 hours drive time away from my home. During the winter it is difficult to get through the mountains. When go I usually stay the night as the drive home can be dangerous after a long day. I think your answer lies with the park and what it looks like and what kind of maintenance or support staff you have available to you in the park. Usually there is one tenant who will act as your representative and keep you informed. Maybe they get a break in the rent or something. I personally have very strong leases that are very specific on expectations. I also enforce late fees on rent. If a property is not kept up (notified through my ‘sources’) they get a warning letter. If not fixed… I have a landscaper go in and clean up and tenant is responsible. I even have a trip charge of $300 if I have to personally come over to resolve any on-going issues.

Yeah… it may take some time to set it up… few trips out there initially… then a trip once a year or so. But it can work and if you get it set up right you can really do well.

All of the concerns you have expressed are legitimate. For those reasons I would not purchase a community I could not drive back and forth to in a single day. There is much more hands on involvement required in owning a community than is generally understood by first time buyers.

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Febtober, I agree with Greg:
“All of the concerns you have expressed are legitimate.”

My Husband and I own 2 Mobile Home Parks. One MHP is 30 minutes away from our house and the other is 1 hour and 30 minutes away.

Personally, we would not purchase a MHP that is more than 2 hours from our house as we manage the MHPs and we are very involved.

It really depends on your selection of management and your investment strategy.

Yes, Frank & Dave are very successful owning and managing MHPs that are physically states away from where they live.

Yes, there are others who are also successful in this strategy.

However, no one will manage nor care about your investments more than you will care about them.

Basically, it comes down to your personal business/investment strategy and your comfort level.

We wish you the very best!

I own 2 parks one is 30 minutes from my house and the other is 1000 miles away.
I work from the close park so I’m there daily. This is both good and bad. The good is I’m often available to lead my managers to solve problems in a fast and efficient way, the bad, Tenants seem to want to talk to me first. I’m 80% good about sending them to the manager first but sometimes she is at lunch etc.

For the park that is 1000 miles away. I fly up there once or twice a year and check in on things. I normally do a surprise visit so I get to see how the park is actually maintained. I make sure to call my manager 2-3 times a week. That way we don’t only talk when there is a problem. One key is that both parks are in the same time Zone. My family ones a park in Ohio and we live in CA. The 6:00 am calls about water leaks get old fast. I definitely think it’s an advantage having both parks in the same time zone.

Here’s a trick you can use, if you don’t have time/money to visit the park often then hire a local Real Estate Agent to stop by and take a few photos. If the manager lets you know that space #8 is being a pain then you know where to send the agent. Also if the Tenants and the manager know that someone local is checking up on them it will make your life easier.

AW

@Febtober here is interview with Tony Ferris. He owns 12 parks as absentee landlord.

http://www.mobilehomeuniversity.com/emails-and-events/interviews/tony-f/follow-up-recording.php

My thought is that if the park isn’t big enough to make money even after your travel expense you have to pass

Save up more money and buy a bigger park. Even if you had a 20% return the dollar amount might be too small to make it worth your while.

I live in Florida and owned a park in Nebraska.

The biggest problem is that the airlines are not reliable. I had many problems with cancelled flights so I sold the property.

As far as the day to day operations, as long as you have a half decent or quarter decent manager you can manage the park from anywhere.

Assuming you have managed a community yourself or have some form of first had experience to know how and what to manage.

The biggest problem you will have is finding a manager that can be trusted to do the job properly and understanding you could be replacing managers every 6 months until you find the right one. Good luck doing that from away.

My first park was 15 minutes from my house. I kept buying farther and farther away until I was at 8 hours (Springfield, Missouri). The park that I managed the best during that period was, without question, Springfield. Because it was so far away, I worked the systems and didn’t interfere like I did in the parks that were closer by. I would go out every 6 months and find the park was exactly as I had expected, based on what the “meters” on my dashboard were telling me – the “meters” being 1) collections 2) occupancy 3) property condition (demonstrated with photos) and 4) water billing. For most owners, visiting your parks is not a “value add” but simply you expressing your nervousness that it’s not running right. But if you look at what you accomplish on those missions, what’s the real net effect – saying the grass is too high on lot #46 and the banner is sagging at the entrance? Nothing that makes any money, that’s for sure. The only way most people can use the systems to manage rather than micro-manage is to be physically distant from the park.

That being said, you have to buy the right type of park to be a happy absentee owner. That would be 1) few park-owned homes 2) plenty of demand 3) nice, safe area 4) no private utilities and 5) no extreme weather events. If my park in Springfield had been on lagoon in Biloxi, Mississippi prior to Katrina (which I looked at just such a park back then) then it would have been a much different scenario.

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We have experienced both situations and presently have 2 parks within 2 miles of our home and are all waterfront with niche markets. As you get older the long trips and being away from home can be questionable but still some like traveling and interacting with new deals. How much money is enough needs to be explored since two or three owner-operated 100 space plus parks can easily allow you to be a multi-millionaire within twenty years without partners. If we were starting over the way Frank R. is utilizing his ELEVATION GROUP to buy and sell parks might be our possible route. What has changed in the last 30 years is the INFORMATION and DISCUSSION we now have and even make creditable offers on parks without a visit–the information highway is amazing!!!

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