Mobile home park updates impact on tenants

[LaShanda Friedrich]

Hello everyone. My husband and I are new to mobile home park investing. We are under contract for one and in talks to buy another one in a few weeks. This question below is for our park-owned homes. 

The properties that we looked at have older trailers with long-time residents. I wanted to put up a new sign, landscaping and a fence (like Frank Rolfe does), but have been discouraged from doing so. I felt almost sorry for the residents and wanted to give them something. My dad (who invests in mobile homes not in parks) and another investor said they are happy the way they live and coming in and quickly overhauling their way of life is not advisable. The property manager said if they want something, they will let us know. For example, I saw one trailer with the skirting completely ripped away. I asked my dad if they wanted that fixed and my dad says they use that space as storage and they would tear it off as soon as I left. He said he saw a lawnmower and other stuff under the house. It seems like it is a live and let live situation, which kind of goes against Mobile Home University's teachings. They pay on time and keep the grounds neat, which is worth something. Please keep in mind these are not Frank Rolfe-esque mobile home communities with new homes.

So, how do I balance my desire for park restoration while being sensitive to residents? Should we enlist the property manager for responses? For my seasoned mobile home park investors, how have you conducted your mobile home park turnaround? Any advice for us?

[Frank Rolfe]

As a park owner, you have an inherent duty to make it the best it can be -- and you get paid for it. A good looking property will get you the following benefits: 

1) A lower cap rate (and higher price) on your appraisal for either selling or refinancing the park.

2) Less issues from city hall, who will respect you for doing a good job.

3) Less issues from neighboring property owners who will not be mad at you.

4) Higher rents from those will feel you are providing a higher value for their dollar.

5) Greater resident retention so higher occupancy.

6) Greater attraction from new customers, which also leads to higher occupancy.

All that being said, you don't want to get carried away. A park owner can always find something more to do, and that can lead to excessive capital cost. So do the important things and remember that you don't want to go overboard.

The correct answer is "sensible moderation" and a budgeted focus based on improving the big things and holding back on the minor items.