All Forum Posts by: Daniel Ryu

@Anthony Dadlani

Hi Anthony!

Thank you for the feedback.

I’ll work on putting together a list to share with you.

Also you can check out my YouTube channel in my bio for video updates on the industry.

Happy MHP hunting!

@Brian Burke

Looking forward to reading the book - I still remember about 5 years ago listening to you on a BP podcast (or reading an article) and then diagramming the ownership structure you recommended on a piece of paper. Always gain insights from your content.

As far as the mobile home park space, the news about rent collections has been good - UMH (3rd largest publicly-traded MHP focused REIT) reported 86.6% April collections through the first week of April. Sun Communities (largest REIT and owner / operator in the space) reported 98% April collections as of April 22 - although their seasonal RV business took a big hit. Frank Rolfe & Dave Reynolds, 5th largest owner / operator, reported April collections, year over year were on par with last year and last month.

However, Frank also mentioned that a Las Vegas owner was struggling with 10% collections.

(For those interested in the mobile home park industry specifically, I've been compiling and reporting on some of the latest MHP news and posting on YouTube. You can find the channel in my bio if you're interested.)

As buyers, when we're looking at specific properties, we'll have to a good job of distinguishing between Noise and Signal:

Noise: Rent collections

Signal: Unemployment rates of the immediate area and affect on residents

Noise: Purchase Cap Rate
Signal: Area employment prospects going forward

Noise: When will business reopen?
Signal: How does consumer and job demand look for those businesses reopening?

(The Signal and the Noise is a book by political forecaster Nate Silver in which he talks about finding relevant data when we're drowning in info)

@David Frasz Frank Rolfe is the 5th largest mobile home park owner in the industry (along with his partner Dave Reynolds). They manage 26,000 units.

Some observations about MHP resiliency during the COVID 19 Crisis: 

RENT COLLECTIONS

* UMH (3rd Largest Public REIT focused on MHPs), Sun Communities (largest REIT and owner / operator), & Frank Rolfe (5th largest private equity owner) have all reported near normal collections level.

- UMH: Through first week of April (86.6%)

- Sun: April Collections 98% as of April 22

- Frank Rolfe: Year over Year - same collections rates for April (after the first week)

TRANSACTIONAL VOLUME

* Marcus and Millichap: March Closings ($800m) / April Listings ($160m) - 5x drop. Brokers have been holding onto listings.

* Northmarq: Only MHP Listings (according to their report): Closed deals in March - $127m. Closed deals in April - $51m

As you can see, quite a drop off as broker's hold back listings and wait for prices to readjust.

FUTURE PRICING EXPECTATIONS

* Northmarq survey of MH owners: 47% stated between a 10-25% decrease in pricing. The next largest group 32% said no change in pricing

* Costar estimated a 20% drop in apartments through next year, according to John Affleck, VP of market analytics

These are all topics I've covered in a weekly show - Mobile Home Park Desktop - that I've been producing for the mobile home park market - you can see the channel info in my bio if you're interested. 

@Scott McDonald

I've been in the MHP industry for the last 4 years - Frank's been in it forever! He's got a podcast and also a website - mobile home park university that has many resources.

I have a weekly show I do called the MHP Desktop - you can check out my youtube channel if you're interested in keeping up with some industry news.

I think there are certain rules about posting links, etc, on a BP thread, but if you want to reach out, I can direct you to some forums and resources that might help. 

@Anthony Dadlani

A 22 cap is very atypical!

Most deals known deals are trading between a 5-8 cap

@Samuel S.

Is the $325-475 / mo include lot rents + home rent? It's the total the residents pay for living in a POH? If so, you need to divide out the income to get a more accurate in place cap rate. 

@Sergio Rios

Howdy - I think @Kai Hodge said it well.

I have friends that wholesale houses - they'll build relationships with the community owners and when they find a potential MH, they'll text make model condition to the owner. If the owner is willing to buy, they'll offer based on the owners price minus their mark up. And yes, the owner will be responsible for the move. 

@Jack Martin As Jack brought up - make sure it can be moved!

@Jack Martin

That's good info to know.

@William Thorn

Notes and Home valuation - Sellers will tell you all sorts of things but I'd focus on your business model. All investments are priced on future cashflows. 

If the homes are on a note then the homes should be priced based on the remaining cashflows that the note generate - so not sure where the owner is getting $10K per home from? And yes, typically, those note are discounted. 

Generally, a cap rate to me is just a starting point. Ultimately I'm projecting based on an IRR with all projected cash inflows and outflows. If you set up an Excel model, you can then do different scenarios (either with goal seek) or just by manually changing your inputs to see how the returns look overall.

Since you're in the pre-contract stage, you can ask the Seller - 'what's your expense ratio?' If he tells you 30% then let him know, "that's what I'm offering based off." If you find out during Due Diligence that he lied, then that's a potentially a retradeable issue depending on the what you find with expenses.

Lastly with re: COVID 19 - how does future unemployment look in this area and for this park?

Just some thoughts - I hope they help. 

I also have a Youtube Channel where I talk about industry news - won't be anything specific to your questions, but there might be topics that be of interest. 

Best of luck!

@Robert Strohmeyer

10-12% caps are possible but not as likely in this market. If you're buying at those cap rates, then typically there less desirable for some reason (smaller, private utilities, more rural). Frank will tell you that in today's environment, the general market is around 6-8% caps. I did a future pricing expectations episode (episode 3) on my youtube channel - the owner's surveyed said they were expecting most deals to transact between 5-9% cap and that's fairly consistent with what I've seen in the marketplace.

Also, this is an extremely broad metric (meaning that it could differ greatly depending on region and how COVID 19 has affected the area), the owners surveyed were anticipating a 15-25% price drop as a result of everything going on.

I haven't actually heard prices dropping yet from the broker /owner / industry convos I've had - but it's something to think about as you try to price future purchases.

@Craig Salzer

I've used them - they were extremely professional and their reports were well done. I've met Steve on a few occasions as well and he's the real deal. The biggest challenge we faced is booking them since they were pretty busy.

@Colette Albright

I left Korea in 2016. I am a US citizen so that wasn't a problem.

If you're not a US Citizen, then you'll probably want to set up some type of entity in order to invest (LLC, etc).

You'll want to think through tax implications for both your country and the US

Thanks Lee

I reached out through YELP and got a few responses.. but not quite what I'm looking for. Will continue to look ^^