How to make money with Mobile Home Parks (with pictures!)

Question

My wife and I own and operate mobile home parks. We have two large parks under contract. One that we currently manage is up for sale. I thought I'd share a story of the park that we have up for sale in Dayton, Ohio.

The park manager is Barb. Her grandmother was the first manager when the park was built in the 60s. We took over a few years ago, the park was in receivership (post foreclosure), and was a mess. It looked like nothing nice had been done for the park since Barb's grandmother stopped working there.

We rehabbed 12 vacant homes. Paved the potholes. Replaced all the electrical lines, poles, and boxes (we own the electrical system in the park). We removed about half of the residents because of drugs and rule violations. We've gone through probably 50 different families to arrive at what is now an 80% occupied quiet clean park.

We bought this park for $299k. We spent $150k rehabbing. The park has 55 spaces. We'll sell it for just over $1M.

This is one way to make money in the park business. Buy a park that is under 75 lots and make sure you buy it at a LOW price. Attend a Frank Rolfe seminar. Use Appfolio property management software. Find a park mentor and follow their advice. Hire a great manager that also knows how to fix things or has a relative that does. Bring in cheap used homes, fix them up, and sell them on a rent credit contract. Hire somebody on Upwork to help you 5 hours per week with the small stuff. Don't have the park manager handle bill collections, instead setup the residents to pay online or directly at the bank.

It's a lot of work, but you can make good money this way and start to develop a track record. We've done it five times now and will buy 4 more parks next year. This is a good business, but it's not for the faint of heart. Your residents will be very poor and your heart strings will be pulled. Know when to be tough and when to be compassionate. Some people deserve a second chance and some will waste your time and leave you out to dry.

Go out and buy a small park.

William Hayes Noel

William Noel · Answer

@Rick Chatwin Thanks. It's not quite the dream of margaritas on sunny beaches but it does feel good. It's mostly sitting in front of a computer, which is too bad. I'd like to get out into the construction sites more often like the good ole days. 1. Yes. Look for parks for sale on MobileHomeParkStore. Call the owners. They will have horror stories you can learn from.2. Both. Cash for little parks and leverage for larger parks. Actually, that's not true, we leveraged a small park this year. Use the bank if you can and you don't mind signing a personal guarantee. Most people starting out will sign guarantees, most seasoned vets do not because they have seen recessions and have a lot to lose. 3. Frank is the best and there is no way to cover everything in three days. You have to learn from the forums, mentors, and experience. Or join a team!4. Yes, we do it all from a San Francisco living room. It's difficult and is a full time job. There are things that make it easier being far away. A) Have a great manager and maintenance person that you have built rapport with. B) Don't have the manager handle money. Residents pay directly to bank or online. C) Video drive through the park every now and again with the manager on FaceTime or whatever video chat you use. D) Get your feet under you and then grow quickly. Scaling the business allows you to hire help.Best of luck Rick!

Mike Krieg · Answer

Thank you @William Noel for sharing your story. I love it! I'm not a park operator, but have found a great private fund that owns several parks to invest in. I'm happy to own this asset class as the cash flow and value add opportunity is huge! Your story is proof of that. I'm not sure that I'll be running a park myself. It's nice to be in a Fund for now, but I love hearing these stories. Keep up the good work and I wish you all the best on your next 4 acquisitions!!

William Noel · Answer

@Joshua Diaz There are a number of ways to fill lots. We're learning about more people who are willing to help finance homes and take over rehabs everyday. The old fashioned way that we do it, we're buying homes for ~$2k, moving for $2k, putting $7k into them, and selling then for $300 a month over lot rent on a 5 year contract. We get our money back eventually and fill another lot in the park. This way of filling parks is slow but steady. It seems like a few Clayton dealerships will help fill parks as well if you give them a kick back for referring people to you. There are lots of changes going on now, reverting back to the old days when homes were financeable and lonnie dealers more prevalent. We will have to see how that progresses but for now, if you have the capital and a trusty handyman and demand in your park, buy a few cheap homes and renovate them. Will

Jay Hinrichs · Answer

I only bought one park in the mid west and that was in Indiana.. never saw it and flipped it for a quick 100k profit.. never touched it.But I did have a rat invested ghetto park in contract in South Carolina ( North Charleston) I wanted to remove all the units and build new construction as I had already built about 10 homes around it all in the 300 to 400k price points and this park was a pretty big deterrent for my future stuff I wanted to build there.. so to get rid of the MH's I was willing to give them away.. it appeared that you could haul the junkers on the road.. and there were other park owners who were willing to come in and take that junk off my hands.. just not anything I wanted to deal with 25 YO single wides that well you know lets just say they don't look so hot. and the tenant base is a tad sketchy so bottom line I think it will be easier out that way than on the west coast and you could pick those old dogs up for free or 1 to 5k each

Jay Hinrichs · Answer

@Mike G. Appfolio is a landlord software system.. just like buildium and others out there. subscription based and quite popular. its for rent collections.I like turning parks over and all the parks i bought were exactly like the above.. owner operator now elderly park fallen apart and just want out.. takes a lot of cash as you usually cant finance them.. but then you get them stable and they can be very easy to sell. Key is like above Do NOT own the units..one issue you have these days is finding used MH at least on the west coast.. like in oregon were i have done 2 of these you can haul older homes on the highway.. so your very limited in finding old junker to move in.. and the ones that are beyond help U cant haul out you have to crunch them up and haul them away in a dumpster.. so local laws are important to know about.. But a properly run park is a very nice asset.and the last two i did in Oregon the cities actually have made an about face it used to be they wanted those things shut down because of the high crime and mini ghettos they become if not manage with an iron fist.but now they look at them as solving the affordable housing issue which is very relevant on the west coast.. not so much back east were you can still buy homes for 20 to 100k that are livable.

Lynn T. · Answer

@William Noel Inspiring. Always wanted to get in MHP space. :) Love to connect with you.

Rick Chatwin · Answer

William - great stuff. Thank you!

Rick Chatwin · Answer

@William Noel You’re the man! Living my dream. I’ve always been excited about MHPs. A few questions: 1. Any tips for finding a mentor in this space for fix ups like this? 2. Do you pay cash or use leverage? If leverage, can you give some specifics on the Ohio park you discuss above? 3. Looking back, do Frank Rolfe events not cover any crucial aspects of what you’re doing to fix up parks? 4. Looks like you’re fixing up parks at a distance, correct? How difficult has that been? Any advice? Thanks for sharing!

Mike Parlante · Answer

@William Noel Thanks for sharing!

Rudy Avila · Answer

@William Noel Great job thanks for sharing!