All Forum Posts by: Daniel Ryu

@Davis Evans

I'd give Glenn a call - he's friendly broker and willing to work with people of all experience levels. He's been in the industry for 30 or 40 years. 

I haven't come across a lot of parks that were forced to redevelop. Maybe 1 out of 200-300 listed deals I look at, as an average? I can't recall specifically, but just a feeling that they come up around at that frequency.

@Logan M.

1. Look to cut expenses. Each dollar saved goes straight to your NOI. I did an analysis for a portfolio of MHPs - the plan was to do aggressive lease up. However, through the audit process, I discovered that fixing water / sewer leaks and rebilling at 80% rate would improve NOI more than the lease up projections would.

2. Pass on utilities - this can go hand in hand with a conservation message. It might cost you $50 / unit in W/S because the tenants aren't trying to conserve (they're not paying it). But when you pass it back to them, they might cut that to $30. Now you don't have to increase rents by $50 to recapture that money. Let's say you increased rents by $20. The $30 they're paying plus the $20 you increased ends up being a net loss to them of -$50. But it's a net gain to you of +$70 (removing $50 expense and adding $20 in rent increase). So the pain is less for them and the gain is greater for you.

Typically anytime you can wrap an increase in some type of improvement, it'll go by smoother.

Best of luck!

@Sergio Rios

• Have you check Craigslist / Facebook market place for other listings / comps?
• Also you could try running a test ad?
• As a rental, what are you factoring for other expenses?

@Justin Tahilramani

• Is your strategy to buy and rent MHs that are on its own land? Permanently affixed?

@Albert Williams III

I've worked with wholesalers before - If you want to get into that game, #1 - know how to evaluate the deals well.
MHU is a great resource for finding out more - and I'll be posting videos this week on how to evaluate park valuations. Check out my youtube channel if you're interested (in my bio)

@Jimmy Toussaint

Logic is sound but as Frank mentions, will be hard to execute.

It's unlikely you'll get 5% financing - 21st is usually going to be 7% or above. They'll want to see 10% down payment too - which is many markets, is a big issue for your home buyers.

Another factor that would sweeten this deal for you - the land is valued by the lot rents. So if you could execute your plan and get all your money back from the sale of homes, you could also refi out the land:

For 15 space park - just guessing but 9-10% Cap for valuation

65-70% LTV / 20 year AM / Not sure the rate since it's a smaller park. Would likely be a local bank.

You'd be able to pull out this capital as well.

Your definitely thinking the right way in re to selling off the homes. During your diligence period, try to find out if there's demand for people to buy. Typically, when a park is largely renters, it's because residents either don't want to buy our can't.

@Jimmy Toussaint

Most listed deals trade somewhere between a 5.5-9% cap rate on Lot Rent income. If you're getting a high cap rate, check out:

• What's the cap rate for a large institutional deal in the area? (Try looking up national brokers like Marcus / Millichap, Northmarq, Colliers) to see if they have reports on the area. Datacomp also has JLT reports that contain cap rates for different markets. 
• What's the cap rate for MF of similar size that you're looking at? If the cap rates are the same, then there's no discount - it's just a high cap rate area, and yes, while it's possible to find great off-market discounts, most of the sellers of bigger parks have enough people giving them advice that they're able to price at market level.
• Are they capping POH rents as well as lot rents?
• How big is the city / MSA? 
• What type of infrastructure? City Water / Sewer? Wells? Septic?
• How much deferred maintenance?
• Does it have paved roads?
• Are the expenses realistic? If the expenses are less than 30% most likely they've left out a bunch. (30% is on the lower bound - expect higher) Or mom and pop are doing the work themselves and not counting it.

Cap rate can be the siren's song inviting you to doom since the story it tells is sometimes incomplete.

Check out what your Year 1 Yield on Capital is (so you factor in all deferred maintenance and cap ex - all your equity, not just the 'price'). In the negotiating phase, you don't need to bring this all up and spook your seller, but it's good to at least ask the seller, "How much do you estimate in costs for deferred maintenance / cap ex repairs?" 

If you go in and do your due diligence and find out the seller's were wrong, then you can tell them that you based your proforma on their numbers and their numbers were wrong, so you'll need to retrade (without calling them liars! ^^)

I underwrote a nice clean park in an area that sub $1m for 140+ lots - great deal on paper. But upon further investigation, turned out the lots needed major prep to bring on homes - and the seller knew it because he was a MH installer. 

Another owner I know, they bought a park at basis of about $9,000 / lot. Turns out there's major underground electrical needed to bring in new homes - that's going to increase their basis by $10,000 per lot, and that's on top of a pretty heavy cap ex budget and massive water leaks that's costing them $10K+ each month. In the end, there's probably enough upside for them to make a profit, but due diligence is key!

Hope your deals are all great and well-priced! Just some things to be aware of though.

And if it turns out that there's nothing wrong with your deal - you've just found some great deals at great prices - congrats!! (and please, share some with me in the future : )

@Account Closed

There's a BP forum for Mobile Home / Mobile Home Park Investing:

https://www.biggerpockets.com/forums/30-mobile-homes-mobile-home-park-investing

Plenty of resources - some good ones mentioned above.

I also have a Youtube Channel focused on covering the MHP industry and investing. Link in my bio, if you're interested.

I worked in private equity for several years, overseeing purchase of 20 mobile home parks as Director of Acquisitions. 

Looked at quite a few deals in Utah, but never found the right deal. Would love to own in the area. 

I have a friend - Johnny McCune - he's based in Utah and very interested in the space.

I'll see if he's on BP and invite him to this thread.

@Barbie Steele

Good insights as far as tenant laws. 

• At 8' wide, are you allowed to have permanent year round occupancy in a Tiny Home on Wheels?
• Since the Tiny Home on Wheels aren't built in a factory, are they built onsite then?
• In CA, do you know what code governs their construction?

Thanks for adding to the discussion - I'm learning a lot!

@John Dean

Great execution! Discipline and consistency are so valuable in execution.

Q: Do you currently have any lot renters? Have they still been more prone to delinquencies / eviction risk than MH renters? Or has cycling through bad tenants and replacing w better ones improved the situation?