should i consider the state when choosing a mhp. i know many do not like the some of the southern states, and i cannot disagree due to what i see in the area. in these markets, the challenge seems to be the tenant base.should i also consider the state’s regulation environment when deciding. for instance, i would think illinois would be a very tenant friendly state, does this make it more difficult to manage the tenants?
Illinois is not a tenant friendly state. The tenant friendly states at California, Florida and New York. To truly be a tenant friendly state you have to have rent control laws or other unique statutes designed specifically to benefit the tenant at the expense of the park owner. Illinois has a lot of park laws, but they are not skewed in favor of the tenant. For example, we can evict a tenant quick in Illinois, whereas it can take a year in California.The bigger reason to look at certain states is based on their past macro performance and future potential. Some states have better performance in real estate than others, and have more potential economically. For example, Nebraska has only $37 million in TOTAL debt. They are super strong financially, and are gaining in strength due to the demand for agriculture. Nebraska ranks second in the U.S. in meat production, and is gaining ground rapidly as Texas’ drought kills off its cattle business. Omaha, home of Warren Buffet, is booming in high tech, and almost all of the cities are strong there.By comparison, Mississippi has the poorest economy in the U.S., and has little projected job formation going forward. The state’s performance has a huge part in your park’s performance. Stick with strong states.
Does anyone have any follow up to the states to avoid? I’m new to this niche market and living in the South (Arkansas), this is one of the risks I’m trying to access. Bad states and why? In another conversation Frank mentioned some southern states have fewer highly populated markets, sketchy demographics, and tougher financing opportunities.
Avoid/be careful around Louisiana, Mississippi, Alabama and Georgia. No REITs or large park owners (including ourselves) have any holdings in these states. There are 1,000 reasons why. But the primary ones are 1) no economy 2) low SF prices 3) low apartment rents 4) low lot rents 5) no bank financing 6) no exit strategy demand. You can still buy parks there, but you have to know what you’re doing and be in those few markets that actually work.All the other states are great, except Hawaii, which has no parks.
Do you not consider Arkansas in the same category as LA, MS, GA, and AL?
Arkansas is saved from inclusion because of the strength of Little Rock, Bentonville, and Fayetteville. It is not considered a “deep south” state in most people’s minds. But you still have to be careful there, as the general state economy is not strong (however, Walmart has improved it a ton).
Hi to AllInterestingly enough just what I was thinking on my own as a perfect subject, was opened by FrankI want to chip in with my observation and question.Why is Illinois (according to my observation) the best cap rate state?Thanks to All
In general, the economy and quality of resident improve as you go north. Wisconsin is known for having respectful residents that don’t trash mobile homes when they move out. Oklahoma is the opposite.You’ll do better to buy in the greater midwest, and specifically towards the middle/north (oil boom areas in TX, OK not withstanding). Look for all-city utilities and $250+ lot rents. Run from anything in the SE with $150 lot rents, where that price includes water, sewer and garbage.Good luck,-jl-
After being invested in many states Oklahoma is awesome in certain areas particularly around nice lakes where rents are over $300 per month… The problem is the parks with high number of rentals are really just slums and park owners tend to buy and flip. Every state has desirable area but some be can be very tenant favored. Our park has been operating for 35 years and I am the 2nd owners with NO RENTALS WITH OVER 136 SITES near a town with 7.000 people with million dollar homes on the lake. Being from Mi. there are parks around Flint, Mi. I would not even look at. For the multi-park owners little do they consider that WE NEVER FILL OUR PARKS WITH THE LOCAL POPULATION since our draw is nationwide and we are not a cookie cutter park or operation. Yes the internet has changed our operations and yes I am retiring and selling
I know this is an old thread but I’m from lake Charles Louisiana and we are about to be underway for quite a big boom (google sasol expansion) of about 80 billion all together with all the other plant refinery projects,do u all think things will get better far as mobile park investing and is it even profitable here?
How do people feel about Nashville and TN due to its recent boomtown status?
I will chip in here as well. I vacationed some years ago around Bentonville, Rogers, N Little Rock, and Beaver Lake in AR and was totally impressed. People were friendly, service was good, folks drove the speed limit, the scenery was great, the biking was good, the running was great, the hiking was wonderful; in short, there wasn’t anything to not like. So AR, a moderate and temperate place, seems to me like a good state in which to invest.As for CA where I have lived for a long time, the future doesn’t look especially bright, clearly not as bright as 40-50 years ago. My own wonderful wife is talking about moving out. What? The regulations are ridiculous, the drought may destroy us, and the slippery slope of socialism has crept into most of the gov’t. And, it seems that large parts or even most of CA will revert to a 2 class society. The agricultural areas, some of which are already suffering heavily under the drought depending on their individual water rights, largely are now 2 class areas. I would also point out that one of the things that lead to the phenomenal growth in southern CA during the mid 20th century was the importation of water from the Colorado River and the Owens Valley. No water, no growth; that’s the elephant in the room that no one is talking about.The bottom line is, Dean, due your homework, aka due diligence.
Oops, forgot a couple of things. The CA state gov’t is projecting an increase in population here of, I don’t remember the exact numbers, some 20 M people over the next 30 years. Of course, that begs the questions: one, what are those people going to do for jobs and two, where will they live?To be clear, I don’t own an MHP but have many other irons in the fire, so to speak. Do your homework, as with any investment, and you’ll be ok. And update this forum with whatever you do so we can all learn.Jim Allen
Hi Frank and Other MHP Peeps, (Great Vegas class this weekend, Frank). I thought I remembered hearing someone mention that Ohio or some other state had some sort of case ruling against rent credits. Am I misremembering?
For F and T, 6 years ago the greater Bentonville, Rogers area was 300,000 population if has just passed a half million with NEW housing in all directions. Most parks I have seen in Arkansas I have no interest in but certain real estate is where the money is.