I’m self employed. I work full time finding and investing my money and OPM in real estate backed assets. My focus since 2008
Has been interim hard money lending to investors who purchase, rehab and sell SFH’s. During this time I also began buying and servicing discounted seller financed
notes. In 2012 I shifted from HM Lending and began employing my capital directly in SFH purchase/rehab projects.
Currently I am completing my final SFH rehab project and shifting my focus back to purchasing distressed performing and non-performing promissory notes for myself and other interested investors. Note Space Universities present compelling evidence that Fannie, Freddie, big banks and some hedge funds are going to have to continue heavily discounting and selling off this asset class for the next few years.
Finally…My question that I would like your opinion about?
Recently I listened to Jefferson Lilly’s podcast on BP about investment opportunities in the MHP asset class. I was hooked! I have not stopped reading, researching and learning about the MHP investment space since listening to that podcast.
I want to invest time and money to acquire the experience and knowledge I need to become a serious player in the MHP world.
I am trying to decide between buying the total MHP home study course or signing up for the MHP boot camp in Chicago in June (if there is still space available).
In the opinion of all you experienced MHP folks is there a big difference in home study vs. boot camp?
In advance…Thanks so much for reading and/or responding to this new discussion!
Dmayfield,As a former boot camp student, I highly recommend the boot camp. You can interact with other students, listen to other people’s questions, ask Frank, Brandon any questions you might have regarding MHP business. You also have access to their library on all the forms/contracts they use. Might I also recommend that stay at the same hotel where the boot camp is, and hang with everyone. I would also recommend you to read the Home Study Course before the boot camp and write down all the questions you might have as you read it. I learned a lot from this boot camp and it is well worth it.Best Wishes!Shan
I have a question for you.If you are now considering being a landlord why in all the time you were involved with SFHs did you not consider hold and rent for long term wealth growth. Although the cap rate on renting homes is lower the long term equity growth (tenants paying off mortgage) would surpass that of parks.
Great question Greg. I did consider the SFH buy, hold, rent and manage route. I visited with several people who had made that their primary investment strategy. As a rule of thumb it seemed those SFH buy and hold investors had to acquire 15 or more homes before they could finacially justify hiring a property manager. I did not want to go through that labor intensive phase self managing the properties while scaling the business. Even if the homes are in the same city or metro area a property manager and his/her trades have to go to those different locations individually vs. one location. The cost? More time equals more money equals thinner bottom line.
I am new to the MHP investment space. I’m still in the tire kicking research phase. However the longer I listen, read and learn about the MHP business the more convinced I am that this real estate asset class is a jewel being mined by some investors yet overlooked by many!
I am partially leaving the MHP business and going into apartments, farms and stocks like Blackstone. The MHP business is being picked over first by the people creating these sites (LoopNet etc and then their selling programs for beginners which is fine but is creating a lower cap rate on parks like apartments. The big investors have connections with banks on foreclosures, parks in trouble that a small operator will never know about so keep in mind when you want to have the ten park category or more you choice of great quality high cap rate parks with be thin picking. The big investors are flying all over the USA looking for the next bargain and their presence in so many market areas give an first shot at many properties which is great but remember the beginner will never have the opportunities we had 20 years ago. I have not received ONE
David,I can relate. My first venture into real estate was fixing and flipping SFH’s in my local market. I didn’t like the prospect of trying to manage 15 or more houses myself and couldn’t justify hiring a property manager to oversee. I stumbled into the mobile home park industry and the more I learned the more I was convinced of how great this asset class is. I now have multiple parks and am working to purchase a few more in the next couple years. Its not without challenges for sure, but it has been a very rewarding business. I’m not convinced that quality parks / quality deals are scarce or that they are being “picked over” by large investors. Get educated and begin analyzing deals out there. Then make some offers! I’ve read all of F&D’s materials and attended the boot camp a few years ago in Dallas, TX. It’s absolutely money well spent - especially if you decide to take the plunge and purchase your first mobile home park.Wish you the best…Robbie M.
While I wish that we had a tactical advantage by owning 170 parks already, that is not the case. Our primary sellers (90% of the parks we buy) are moms and pops, not banks in foreclosure or failing operators. We call them, send postcards to them, prowl the internet for them, talk to brokers about them, just like everybody else. If we have an advantage it’s that we have two people that do that process full time for us, so we have more volume than most people. But moms and pops could care less about how big you are and, in many cases, that’s actually a negative as they prefer to sell to smaller buyers who they feel will give them more consideration and control in the process. The stats are that there are roughly 44,000 parks in the U.S. and less than 4,000 that are professionally owned (that includes all REITs and all top 100 players all the way down to those that own three parks or more). There are way more sellers than buyers for parks. However, at the highest end of the spectrum – the four and five star parks with 200+ lots – there are very few parks that meet that criteria and it is definitely a seller’s market. But how many people are looking for 200+ lot parks that cost $6 million + at a 6% cap rate? Not many outside of the REITs and largest private equity groups. In addition, most want to buy only parks that are stabilized and in good order, and we prefer to buy the stuff that is screwed up at a cheap price, and then fix it.As for SFH, I looked at those before I started buying mobile home parks. I never understood the concept. The caps and cash flow are not appealing, the management is a nightmare as they are spread out all over the place, and the whole business model is based on the homes appreciating in value, which has not proven too smart an assumption since 2007. Blackstone may buy SFH, but they also buy other things that have not panned out well. The top real estate investor in the U.S. is Sam Zell – the only guy to ever be the largest owner of office space and apartments in the U.S. He owns zero SFH (besides the one he lives in) and is the largest mobile home park owner instead. I can’t name anyone who has made any real money in SFH (other than on paper) but I have sure met a ton of people who have gone bankrupt with that business model!
Frank, SFH is problematic from the management side and the issues of efficiency of varying locations. Blackstone bought properties 20% and more under value and has other divarication that presently return over 15%. Frank when the mom and pops properties are gone what next… Every type of business entities have pluses and minuses but when the general pubic is entering the area in large numbers I start to want to sell more than to own. We have stayed in niche markets like retirees and middle class second homes parks and believe like Sun Homes and Zell their is great potential with rents much higher than inflation.
Carl,I am finally responding to your April 22nd post.Thanks for sharing your honest opinion and observations about what you see happening in the MHP Industry. I have a few questions if you do not mind elaborating. How long have you been looking for a mobile home park investment opportunity? How many parks have you identified as prospects worth investigating and gone thru the due diligence process to some degree to see if they fit your investment parameters? Approximately how much time and money have you invested so far searching the MHP market and still not found one opportunity?You may be right about Blackstone. Maybe they did acquire the bulk of their SFH’s at the discounts you mentioned. I could be wrong, but I think their are some other pretty big hedge funds out there that heavily invested OPM in the same asset class as Blackstone that were over zealous and over paid. I am curious how their returns will pan out over the longer haul.
I have found none to do DD for over 2 years. Blackstone if I am correct has a plus 20% return for investors last year plus they still are buying bargains according to their news and are the top dogs for smart investing with SFH’s. Their 5 years returns are over 10%, sorry I missed that deal. If I am invested money for a park with a 9 cap and still must be careful watching management and utilities, dead beat tenants etc, I just as well own farm land with a 6% plus return with the full amount of the rent in 1 check at spring planting with NO PROBLEMS plus the property increases in value more than inflation. Presently looked at two parks in Florida with 7 cap but with a nightmare of management responsibilities and wow what happened the next time they have a major hurricane!! In the rustbelt you find parks loaded with rent to own homes and or high vanicanies and where are the people themselves bringing in NEW HOMES??? Yes their are pluses and minuses to the park business but It pays to have ones eyes wide open and have a menu of income sources.