My dad owns a smaller mobile home park that can hold 10-12 units depending on how tightly he wants them in there. At one time he had 10 units in there but is down to 4. He hasn't had the time to manage it like he should and it is now more of a hassle for him than a benefit. He does not own any of the units, just the land and collects lot rents from the tenants. He was looking to sell the property but I told him that I would take a stab at advertising and trying to get some new units in there for 6-12 months and then we can see where things are. I am brand new to real estate but have heard of Biggerpockets from a few friends and thought I'd start here for some advice. I have read some threads around mobile home parks and getting units moved in but some are out dated and I just wanted to circle back. I have a couple main questions:
1) Are newspapers and craigslist still effective for finding new tenants? Any other websites or resources that are better or have worked for anyone?
2) Has anybody ran Facebook ads or marketed on Facebook? If so, how did that work for you?
3) When contacting dealers, do you work in a commission for the dealer if they refer a client to you?
4) Have you paid people to move their units in? If so how much? I was thinking a $500 bonus would suffice?
I have not managed any property but I have worked in sales and can communicate with people at ease which makes me feel like I can help my dad get this park turned around and be more profitable. Any advice you have in and around locating and prospecting for clients would be greatly appreciated. Thank you!
@Joe Johnson It's definitely going to take time and money to turn around the park. Just be sure you've done your market research and have a solid plan before you do anything. If you and your dad are up in the air about the park, you may want to look into listing it while you figure out if you even want to turn the park around.
Write down your goals as well as your dad's. And see, if they align with what it takes to turn around a mobile home park and how much time it will take you to do it. In reality, it takes a lot of effort, time, and money to turn one around. If you're up for the job (which it is), it could be worth it if you're in it for the long haul.
Though, if you have different goals and aren't in a place in your life where you want to and/or have the time to tackle a project like this you may be better off selling and getting out of it all together. Honestly, making money from an asset you have to turn around doesen't happen over night. A lot of things can go wrong (which they usually will) from now until the moment you can turn around the park.
You may also want to check out a few books on the subject, read, and listen to podcasts before you start doing anything. So that you know what's involved and what steps you need to take to turn the park around.
@Joe Johnson the advice above from @Rachel H. is good advice. Turning around a mobile home park that is trending in the wrong direction is a difficult task and if this will be your first foray into the space, taking the time to consider her advice will be smart.
With that said, if you are seeking to learn the business and are not afraid of some frustration and a lot of hard work, then this could be a great opportunity for you. Let's share some realities and ideas with you, should you choose to take this on.
First of all, you should perform a demand study, just as if you were going to consider buying the park. This will tell you what you are up against. It's one thing if the deterioration of the park was due to your dad ignoring it, but it's a whole different story if the market simply won't support it.
Anytime you will be filling vacant spaces or selling homes, the most important task to perform is a thorough market demand study. DEMAND is paramount, so don't shortcut the process. It is not that difficult if you are diligent. Here are some simple steps to uncover the reality about demand in your market:
Start with the apartments in the area. Call them and ask how much a 2 bedroom apartment is. It should be at least double the lot rent at a mobile home park in the same neighborhood. Then ask how many vacant units there are to choose from. If you find that the apartments have a low vacancy, that is a good sign. If you find high vacancy, that is another red flag for the market and you should be cautious. You should always consider apartments as an option for your prospective tenant, because if it costs them more to make payments on the mobile home, plus pay the lot rent, they might just rent an apartment instead. Most people might miss this little nugget, but it is a quick way to determine the lack of demand and where lot rent amount should be in the market.
Next, call the mobile home parks within 5-10 miles that are similar parks. Ask them what their current lot rent is and what else is included/excluded? Ask if they have any rentals in the park and how much those rent for. Ask them if they have any homes for sale in the park and what the details are, and how many homes have sold recently. Do they finance? How much do they require down? What kind of credit do they require? Ask them if there are any vacant spaces in the park and what incentives would they offer if you brought your own home into the park. From those calls, you will have learned what your competition is related to lot rent, the sale of homes, how many POH they have, and what incentives you may have to offer as you sell homes. You might also ask them if they ever sell new homes with the participation of a dealer, since you mentioned that as a strategy. Asking that question will tell you if that is even possible.
Next, you can advertise a home for sale yourself as a "test ad". Place ads on every platform you can where home buyers could be looking for an inexpensive home. The goal of these test ads are simply to find out how much interest there is in the market for the homes you will be selling once you purchase the park. Make sure to advertise in all the available channels you can find so you can perform a true test. (craigslist, FSBO, zillow, facebook marketplace, etc. as well as placing signs on the street corners in the area) You should be receiving a high volume of calls if you expect to fill a high amount of vacancy at a park. Any less than that could be another red flag.
If you get positive signs from all those efforts, then it's likely you will be able to fill up the park. Remember, filling vacant spaces and selling homes is all about market demand. Make sure it is there or you'll end up wishing you had never rolled up your sleeves.
A few more notes to consider: If the park is older with older vintage homes on it, new homes may not be appropriate, so you may need to find used homes, bring them in, set them up, renovate them, and then put them for sale. You may have to obtain a license to sell the homes (check with your state MHCA) or retain the services of a licensed agent to assist you. You may have to carry paper, wherein you should be working with a licensed loan officer who can address all the compliance issues related to that process.
I know this sounds like a lot, but it is best to go into it with your eyes wide open. Love to see someone get excited about this amazing asset class, but it's not all sunshine and rainbows. I prefer to share all the potential challenges so you know what you could be facing.