All Forum Posts by: JC K.

@Kyle Mitchell Let's say moving a mobile home costs some $4K.  This amount is a lot of money for the average mobile home dweller.  Thus, MH owners aren't too inclined to move a MH from park A, to park B, to save a few dollars in lot rent.  On the other hand, $4K isn't necessarily a lot of money for a MHP investor, especially one that has budgeted for such situations. 

For new investors, it may be best to avoid turnaround parks (needing to fill lots). Among other things, these parks demand capital that may not always be easy to obtain financing for.  

I think it is pretty obvious sub-metering utilities is one way to significantly increase a park's profitability.  It seems to me most investors here know that and work toward that goal.  So I was expecting more participation on this subject.  Maybe this will help: 

I don't have much to share yet, except that I reached out to most of the companies @Gulliver R. shared above.  The only company that got back to me so far is Southern Water Management.  It seems this may be because most companies want to deal with bigger parks.  Southern WM can either provide a submetering service or sell meters.  If you only buy the meters they charge an additional 25%.  If you go with a submetering contract there is a standard 3 year contract, but you can also get out of the contract earlier with a buy-out fee of $1,500 during year one, $1,000 during year two, and $500 during year three.   Here is some preliminary information I received (I don't think anyone would mind me sharing this):  

"Our current RF meter prices (only offered to our submetering service partners) are $65 for interior application and $95 for exterior applications. There is a one time billing cloud set up fee of $200. Our monthly R/B/C service is $5 per unit billed to the resident/tenant. So after the initial cost there is no ongoing cost to the owner."

However, for the monthly R/B/C service there is a $150 minimum.  The $65 or $95 is for the purchase of the meter itself.  I understand installation of the meters is easy and should take less than an hour per unit.  The complete service is sounding more appealing to me.  Among other things, Southern would handle dealing with tenants and the billing, which would mirror the City's complicated billing methods.

In my case, lot rents are $300/month and are inclusive of water, sewer and garbage.  My conclusion is a water conscious tenant would spend about $65/month in water and sewer, though I know of at least a couple of tenants I estimate were costing the park up to $165/moth.  Overall, I am considering lowering lot rents to $250/month to limit the net increase to only $15/month for now.  

If you have some experience on this subject, please share.

Thanks!

@Gulliver R. thanks for the response.  I reached out to those companies and I am waiting for their responses.  If you don't mind, please share more info as you make a decision.

Does anyone else have recommendations?  

Thanks!

@Russ Wallace thanks for replying to the various posts.  Most other people asking this question disappear without sharing what ever happened to their vision of developing a MHP.  I think you make a great point about the benefits of manufactured homes.  People will start realizing  manufactured homes can be of superb quality and exceptional price.  It is just a matter of time before houses are built like Legos.  Cross Laminated Timber is just getting started in the US and it could change the residential construction industry (http://weberthompson.com/blog/wp-content/uploads/2...   ).  However, I am sure you agree manufacturing quality is just a small element of what goes into the decision process of developing a MHP.

It seems from your responses you believe developing a MHP can be a profitable under some circumstances.  Can you share more about when developing a MHP make or does not make sense?  In particular, can you share your views on the financing side of things.  It is hard for me to see the numbers working out on return on cash and/or financing.    

Would developing a MHP only make sense in:

1. Hot real estate markets, where home prices are high?
2. Large parks (i.e. over 150 lots)?
3. 55+ Communities?
4. When const to develop pads is _____ $/Lot?

Last, if the point is to make the best return on your investment, why not utilize bank financing and develop a self-storage facility instead?  This is a proven model and from what I gather, the returns are very good.

Please continue sharing.

Could some of you provide water meter brand and model recommendations?  

I am looking to sub-meter water in a MHP that has 30 lots.  The meter connections would be located under the home so I would need a remote reader.  I understand this could be a wireless reader or a data reading device that plugs to a data extension cord.  I am open to exploring either option.

Thanks!

Following.

For now, I am asking an attorney to help me draft some language I can use for situations like this.

@Russ Wallace, I suppose there may be a situation/market where developing a new MHP would make sense.  Generally speaking, wouldn't it be best to buy an existing park with homes and paying tenants for say $20K per lot?  I speculate developing a park will cost some $15K to $20K per lot and at that point you only have empty spaces.  This doesn't even account for the cost of the land.

This subject comes up every two weeks or so in this forum.  Most folks bringing this up happen to have land available they'd like to utilize.  It's been suggested that perhaps other land uses may be more attractive, like constructing self-storage facilities.  It would likely be easier to get financing from a lender to develop a self-storage facility, than to develop a new MHP.    

Please keep us posted.  

Looks good to me. I am of the opinion that some rural parks have good potential, despite being in small cities.  

I recommend calling other parks, apartment complexes, etc to get a feel for housing demand and rates. I also recommend doing some research on city demographics. I would want to know what the unemployment rate is. Definitely look at CL, Zillow, etc to get a feel for the market. Talk to the park manager. 

Keep us posted. 

@Michael Plante great info.  Any guesses as to what percentage of MH tenants are willing/able to setup automatic payments?  

It seems to me a large percentage of our tenants are older folks who don't trust automatic payments.  I also wonder how popular automatic payments are with low income folks. 

Expenses look way too low. Expense ratios on small parks are often over 50% of gross income. There are lots of factors that can swing the ratio either way.  Get a copy of tax returns.