All Forum Posts by: Derek Robinson

Welcome! I'm a fulltime investor and I wish I had started in MHPs. I've just gotten into MHPs in the last few years and have three parks. ROI is SO much better than my single family and apartment investments with SO much less maintenance.

I don't know what kind of capital you are working with, but I'd start trying to find small mom and pop parks and maybe try to work out some owner financing.  Most of the mom and pop parks haven't raised rents in so long so there is a lot of room to grow your cashflow.  Plus, getting started with a small park can help get your feet wet and see if it's for you (it's not for everyone!)

Let me know if you have any questions, or I'd be glad to help analize any deal you are looking at.

I like to follow Frank Wolfe and Dave Reynolds at mobilehomeuniversity.com.  They do a boot camp that people rave about (I've never been).  If you sign up for their emails they will send you some very informative newsletters and links to podcasts and interviews that are super helpful.  They wrote a book, which the informative part is kind of short, but the back of the book (like 75% of the pages) is them working through a ton of their own deals, pros/cons, what they should have done differently, how much they paid and what they sold for (if they sold).  These guys are the 5th largest owner of MHPs and are strong advocates for substanable and low income housing.

@Account Closed This is the way my attorney told me to set it up. I could do everything in LLC's, but the protection of myself and investors was safer to set it up this way. I can't remember exactly why...it's in my notes somewhere.

Each individual park get's it's own entity for protection reasons.  If I had one big entity that owned 10 parks and one tenant tried to sue me, they could go after the one entity.  Since they are split into a separate entity for each park, if a tenant tried to sue, they could only go after the one entity and not touch the other parks without 'breaking the corporate vail"

I've seen where other companies do this as well.  I believe Frank Wolfe and David Reynolds do this as well.  They have a managing entity that handles day to day business of all their parks, but each park has it's own name and entity.

You guys are making me feel bad now!

I had tenants lined up and they were aware of this when they submitted their offer.  As a courtesy to them, I left it vacant.  I had no obligation to do this and they were going to proceed regardless, but really pushed that they wanted it vacant.  When it came time to get their repair request in before due diligence was up, they waited to the last possible minute, a negotiating tactic.  Their list of items was unreasonable and put me in a situation of either escrowing funds for their repairs, or they would walk away.

So I felt like I was being the nice guy up front, then I was taken advantage of.  Now that their lender issue has come up, they have been completely silent.  All we've heard from their agent is that they are looking for ways to find a breech of contract just in case.  They won't even return correspondence from my extension offer.

Maybe I am double dipping.  I feel like at least I'd be due utilities, a month's lost rent, and interest on the additional mortgage payment.

I'll say this much...I much prefer working without agents.  I have a much better experience dealing directly with buyers/sellers.  You can get a much better read on people when you actually meet them.

Its held in a trust account with the closing attorney. Buyer doesn't have to sign anything for it to be released.

I just read over the contract, it states that they do need to obtain financing, but no where does it state that the contract is contingent upon it.  There is also nothing about vacancy or tenants.

I'm fine working with these buyers and seeing through for 30 more days and I think my offer to increase the price is fair.  I think they are offended at it and are looking for ways to find a contract breech so they can get out if needed, or they are looking for leverage to negotiate keeping the price the same.

I thought it was contingent on financing, but apparently it is not.  My realtor is 100% certain that if they fail to close by Monday and I don't agree to extend, they will lose their earnest money.  The buyer realizes this too, which is why they are trying to find a way to show a breech of contract.

There is no verbage about me leaving the units empty.  I did this simply as a courtesy to the buyer.  Now that they can not close on time, I'm simply asking them to compensate for that courtesy, since the amount of cash lose on my end is double as a result of their error.

I recently started a private equity firm, focused mainly on mobile home park investing.  I spent considerable time (and money) with a real estate and business attorney to learn the best way to set this up.  It gets a little confusing:

I start an LLC, let's call it MHP Equity

Each park I buy goes into a Partnership entity.  So say I buy a park in Florida with investor A,B, and C.  I create the "Florida Estates Partnership".  MHP Equity is the managing partner, investors A,B, and C are passive partners.  MHP Equity has 25% ownership of the park (earned through finding the deal, management, etc.)  Investors A, B, and C split the remaining 75% dependent upon how much money they put into the deal.

The next park you buy, say in Georgia, goes into a brand new Partnership entity.  MHP Equity has 25% ownership of this as well and is the managing partner...and so on.

Putting each park in it's own entity gives you more legal security.  If someone tries to sue, they first have to sue the partnership, then MHP Equity, then you....three levels of protection.

If you decide to put any of your own money in, you'd be and investor separate from MHP Equity.

Hope that helps and isn't too confusing.

1. What should I check buying MHP, taking into account that 100% homes are park owned?

I like to stay away from parks that have private wells and septic tanks.  City water and sewer is they way to go, especially if you are new to MHP investing.  If it's city water, it is ideal that the units are separately metered.  You'd be surprised in how much more water people will use if it's free to them. 

If homes are park owned, I'd want to make sure the current owners have titles.  When I buy a park, my longterm plan is to sell off all park owned homes.  If you don't have titles, this can be a big challenge.  This is another can of worms, but ideally you don't want to own the homes yourself, you just want to own the dirt under them.  Fixing trailers, especially old ones, can get pricey, as they are built cheaply.

A further can of worms, if you go the route of selling off the homes, they have little value (around $1,500 to $2,500) unless you are willing to owner finance them.  You can sell them for $10,000 or more if you are willing to carry the note.  Lonnie Scruggs was the king of this.  Google his name and order his book "Deals on Wheels"

I know that all homes are built before 1976. They have been remodeled. Do these homes worth anything?

See above.  In this income bracket, you'll have a hard time finding anyone to come up with much cash to purchase these homes, but if you are willing to owner finance them, you can sell them for quite a bit.  Lower income tenants care more about they monthly payment and less about purchase price.  I'm not saying to take advantage by any means.  Owner financing trailers gives them the opportunity of home ownership that they wouldn't have otherwise.  Plus, owners will tend to take better care of the park and their home.  Win Win.

Is it important to know materials the pipes are made of?

I've never run into a problem.  If it's an old park and their haven't' been any issues, then I wouldn't worry.

What else should I know?

I think owning a MHP from a distance will be challenging, especially if it's your first and you own all the trailers.

2. What kind of specialists should be hired? Is experienced MH inspector the only one person who can prevent me from making mistakes? Should I hire anyone else, e.g. RE agent?

Depending on the size of the park, you might need an onsite manager. If it's small enough, you can find a property manager that will handle it for you. I wouldn't get a real estate agent if it's not listed on the MLS, it's much easier in most cases to talk with the owner directly. If it is listed, get your own agent to represent you and your interests. You might have a hard time finding an agent with MHP experience though

I own three parks, buying more.  I've talked with a lot of investors in the space and done a ton of research.  I'm happy to help any way I can :-)