All Forum Posts by: Frank Rolfe

The big issue you're going to run into is the fact that a 100% POH park is not really a "park" (which is slang for parking lot) but a "detached apartment complex". Lenders and buyers hate those, so you'll be going a route with little available financing or liquidity. That being said, many people have taken this route and done well with it -- it's just not part of the mainstream industry.

If you go the "detached apartment" model, you'll need to make sure you have properly accounted for the repair and maintenance cost of the homes. Based on the age, you're probably looking at around $200 per month per home, and that's assuming you're going to act as the general contractor and watch over the repairs. You also have to budget for a more active manager who has to keep the units rented. Finally, you need to make sure you don't get in a financing trap whereby the loan comes due and you can't find a replacement lender.

Make sure to run a test ad to make sure the demand is there, as a regular mobile home owner stays around 14 years and a renter stays only about a year, so there is significantly greater turnover.

You will also benefit from comping all the other POH's surrounding you, as you will be competing with those people as much as you will be with single-family and multi-family rates.

You will probably never find the "model" unless you are lucky enough to find a label somewhere on the inside or outside of the home -- most manufacturers did not put the model on the home at all. Same goes for the manufacturer. Remember that prior to 1976 there were literally hundreds of manufacturers building mobile homes and nobody knows who they all were.

But on the serial number, that you should be able to find in one of these five locations:

IN THE FRAMING IN THE FRONT DOOR. I know it sounds weird but some manufacturers put it stamped on an aluminum plate in the door jam.

IN THE FURNACE AREA. Look with a flashlight throughout the furnace enclosure in the hallway.

UNDER THE SINK IN THE KITCHEN. This was another popular place to put the serial number prior to 1976. Look throughout the cabinet with flashlight.

IN THE HOT WATER TANK ENCLOSURE. Take your flashlight and look at every inch of the walls in the hot water tank enclosure.

ETCHED INTO THE FRAME UNDER THE HOUSE. This is the grossest option -- grab your flashlight and pull back a piece of skirting and climb under the house with spiders everywhere. They often etched the number into the frame. But unfortunately often the frame is so rusted that you can no longer read it even if you find it.

Most states have a methodology to get a new serial number by filing a form with the state -- but not all of them have this ability.

Before you invest a penny you need to devote at least 50 hours to learning how the business works. There is a huge amount of content out there, both free and for sale. Buying a mobile home park is as complicated as flying an airplane, and you can't get even 1/1000000000th of the information you need on a forum. In short, there are five drivers to a good park: 1) infrastructure 2) density 3) economics 4) age of homes and 5) location. Until you know all of these things backwards and forwards, I would not risk any capital in any deal.

There are five attributes to any mobile home park deal:

1) Infrastructure

2) density

3) economics

4) age of homes

5) location

Until you understand the impact of each of these on mobile home park values and operations, then don't risk your money.

You can find the answers to these five topics at Mobile Home University. 

Your numbers are way off. You are not going to be able to rent the doublewide in an RV park for $1,500 per month and you will not be able to build RV sites for $2,000 to $3,000. What you are really buying is 8 acres of land with 10 income producing RV lots and a doublewide and don't use the other items as part of your decision.

You cannot pay a mortgage on a $400,000 RV park with only 10 units at $450 per month plus a doublewide at maybe $800 rent net realistic costs.

The seller may be asking too much for this deal based on these numbers. You need to put on the brakes for a moment and derive three possible outcomes; 1) your "best case" which is what you put in this post 2) your "worst case" which is that you have a 10-apce RV park and a doublewide and nothing more and 3) your "realistic case" which is adding on some additional RV lots at a more accurate cost (you need actual bids) and with a safe amount of vacancy expectations plus renting the doublewide for maybe $800 per month.

If you can survive the "worst case", are happy with the 'realistic case" and ecstatic with the "best case" then go forward.

Their initial requirement is that your park has at least 50 lots and at least 10 vacant. While not set in stone, they rarely vary much from this size metric.

We were there when the program began -- being one of the test groups in the pilot program. The CASH program has evolved over the years to the benefit of community owners and is the best way possible to fill vacant lots in any mobile home park that qualifies.

That being said, you need to reach out to 21st to see if your property qualifies to get into the program.

My first mobile home park was built in 1951. I bought it from the mom and pop owner and it was a complete dump that needed emergency surgery to keep it alive. It was half vacant and was filled with the worst clientele you can imagine. I bought it for $400,000 with $10,000 down and they carried the balance. I self-managed the property while I turned it around, with the office in a small old trailer. I had everything from rental mobile homes to rental lots to RVs, plus a couple laundry buildings.

Shortly after I took over I got a repair call from a resident who was renting a mobile home in my park. They told me the toilet didn't flush. I called a plumber and they went down to the trailer and came back and told me to come look at the problem. They pulled back the skirting and showed me that the toilet was not even connected to the sewer line at all. For all those years the sewage had just been falling on the ground under the mobile home. It had finally built a pyramid of poop that was 14' x 14' x 3' high and had capped itself off with that final flush. We always thought that the terrible smell near that trailer came from the creek beside it. However, over a period of months all of these terrible issues were solved and things became peaceful. And I ultimately filled the park up and sold it for around $1 million more than I had paid.

The moral is that you have to stay alert when you buy an old worn-out mobile home park -- there are decades of deferred maintenance that you have to deal with. Some of it can be pretty gross. But the good news is that you can make a ton of money if you have the guts to bring old parks back to life. 

New homes in Illinois are coming in at $60,000 to $80,000 including delivery, lot preparation, set-up, decks, etc. There's probably no way that's going to work in southern Illinois. We've found that the test of whether it works or not in your market is to look at realtor.com and see what a 1,000 sq. ft. old beat up frame house are priced at. If they're $150,000 or so, then that might work. If they're $80,000 (like most of southern Illinois) then it won't work normally.

Instead you should renovate the homes you already have or buy, bring in and renovate used homes. Unless you have 50 lots and 10 vacant you can't normally get in the CASH program at 21st Mortgage. But you might be able to get in the home financing program with Performance Equity Partners (PEP) who are actually based out of Illinois and finance both new and used homes.

We own a number of parks in Illinois and are pretty familiar with selling homes there.

The "park" in "mobile home park" stands for parking lot -- that's what the name means. You want to stick with that axiom. When you own the land and not the structures magical things happen. Like little R&M, low management duties, and your customers are stakeholders in your business because they own the homes and you own the land. When you own the homes you ruin the business model. On top of that, no decent bank or appraiser will count anything beyond the lot rent, so nobody is going to back you up on your home rental business and there's zero liquidity.

When I bought my first park in 1996 I knew nothing about renting mobile homes -- I was totally clueless. In only one year I learned that I would rather light myself on fire and jump off the Empire State Building than to do that business model any more. One reason that many moms and pops sell their parks is that the rental homes have burned them out.

Owning a park lot is where it's at. Stick with that model.

The formula is the same if the tenant owns the home or the park owns the home -- because you can only count the lot rent. Only the lot rent is "real property" income and the home rent (if any) is "personal property" income which is not something you can apply a cap rate to. If the park owns the home you would follow my formula but you might be able to add the value of the home if you were to sell it. But unless the home is from 1990 or newer you should not count any value on the home, as you will spend $5,000 in renovations to sell the home for $5,000.