Do mobile home park owners need to hire Property Management Companies?

Question

I was driving for dollars last week. Approximately 50 parks were visited during my trip. 10 of the parks were managed by property management companies. All those 10 parks were 50% or less occupied. All those 10 parks were in terrible condition. Most of them looked like they were abounded.

I do not invest in mobile home parks yet. However, I have couple questions out of my curiosity.

• 1.Do property management companies care about occupancy rate?
• 2.Do property management companies care about mobile home park condition?
• 3.Are there any good property management companies for mobile home parks?
• 4.Do the park owners care about occupancy and condition of their parks?

I wish somebody who knows how to manage MH parks to buy those parks and improve them.

Curt Smith · Answer

Owners are really the only ones who care.  Sounds like the owners don't care.

Buy a run down park.  Convert the park owned rentals into rent to own via Sun's rent credits program (which is closest to being Dodd Frank compliant that I;ve seen in the MHP business).

Hire one of the park occupants to be a greeter and your eyes for 1/2 off rent.  They might direct contractors to a rehab but you can't expect much out of a greeter getting $100/$200/mo other than to call you when they see something.

A park of 100% occupant owned homes almost self manages when you've solved lot rent payment via one of the systems that work via the local Dollar store..  Some times problems happen and you want the greeter to call you.

Manage alot of the rehab yourself...

Jefferson Lilly · Answer

Sun (NYSE:SUI) has a RTO program, but the monthly rent payments are good for any mobile home.  The program is very similar to airlines' frequent flyer programs.  The airlines give their customers credits they can redeem on any flight.  Similarly Sun's program gives their customers credits they can redeem on any home.  Thus the paperwork does not attach to any specific collateral.  It is even farther from a 'mortgage' than just a regular RTO program, which is itself an option to buy a house, not an obligation.  Rent Credit (RC) programs are, SUN and many of the rest of us in the business believes, exempt from Dodd Frank.  But not even RTO agreements have ever been tried in court.  So nobody knows for certain.

As regards managing a MHP, you need to get to MHU's Bootcamp and learn about the business.  Property management companies are notoriously awful MHP managers.  Stay away.  You want to hire a resident in your MHP to manage it - whomever in has the nicest house.  Their nice house indicates they care and are responsible people and are more likely to work out well as your manager.

To your continued success,

-Jefferson-

Jay Hinrichs · Answer

@Andriy Boychuk

if the MHP comes with the trailers... buy it cheap enough so you can give the trailers away.  Then raise rents on the pads... that is how you create value for a MHP.. Lenders on parks give NO value for park owned units.

Russ Wallace · Answer

Gert, Google "pay rent at 7-11", "pay rent at Wal-Mart", or "paylease".

Andriy Boychuk · Answer

@Jay Hinrichs I see. All these are very good advice. Thank you.

Andriy Boychuk · Answer

@Jefferson Lilly thank you explanation

@Fred Heller  and @John Arendsen thank you for answers.

John Arendsen · Answer

If the MH park is clearly in the path of progress and there appears to be upward mobility (pun intended) then it might be worth exploring further. However, there are literally thousands of MH rent/lease parks that are in socio economic areas that are not desirable to live in let along invest in.

Unfortuantely many if not most of these parks will only continue to deteriorate until eventual economic eviction strangles the entire park and there's no choice but to close it and try to rezone it for a higher and better use more conducive to the area.

If the area is in a geographically undesireable area or blighted neighborhood that is slowly declining which many communities in the Country are it may not be a very good investment. I'd proceed with extreme caution.

Fred Heller · Answer

1. Yes PM companies care about occupancy rate. If the occupancy rate is low, the owner will most likely be unhappy and that means lost business.

2. Yes PM companies care about mobile home park condition, but their ability to act is a direct result of the owner's concern and his willingness to invest in the property. I would turn down any contract with a MHP owner who was not interested in keeping the property in good repair.

3. I am not aware of any PM companies which specialize in MHP's. I would imagine it wouldn't be much different than managing a condo association. The owner of the park is responsible for maintenance of common areas, while the mobile home owner is responsible for any repairs and maintenance of their unit.

4. That's the $64,000 question. They should. But I've seen some pretty heinous looking trailer parks in my day. On the other hand, there are some areas of the country, like California, which have very elaborate mobile home parks. When I lived in the Bay Area, I knew of several where the lot rent ran at $1000+ a month. And they had swimming pools and clubhouses and manned security gates.

Curt Smith · Answer

Jefferson mention's mobilehomeuniversity dot com bootcamp which I've been to and is excellent and worth every penny.

Do mobile home park owners need to hire Property Management Companies?

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