All Forum Posts by: Frank Rolfe

The only program that is remotely similar is one from Performance Equity Partners (PEP).

Some of the manufacturers also offer home financing programs (although it applies to only homes they manufacture whereas 21st and PEP does not) and that includes the Revive program from CAVCO and another from Legacy Homes in Texas.

The only markets where that works are ones like Austin or Los Angeles -- places where the demand is so high that there are a few customers who have the cash and credit to buy new homes to place on lots in mobile home parks. 

In the scenario you are describing, the standard playbook strategy is to sell or give away the homes to the current residents, lower their monthly cost of owning over renting by $100 per month, and raising the lot rent to the highest level that you can explain. For example if the home was renting for $600 per month, give the home away and set the lot rent at $500 per month. Since the lot rent can be leveraged with banks and buyers, that's the only income that counts when a mobile home is rented.

Virtually all mobile home park deals are for the land and improvements, and moms and pops always seem to include a few park-owned homes, as well. Banks are very familiar with mobile home parks and how to structure loans.

The top sources of mobile home park lending are:

1) Seller financing by the moms and pops.

2) Bank loans (typically smaller banks in the town the park is located in).

3) CMBS Conduit lenders (on deals where the loan is $1 million and more).

4) Fannie Mae/Freddie Mac "agency" debt (on loans of $2 million and more).

You rarely hear of a mobile home park deal that can't get financing today because banks love the industry and it's incredibly small default rates.

I assume you are trying to collect on your rent judgements from former tenants. If that's the case, you should know that the collections rate on these type of judgements is incredibly low -- like virtually zero percent. So don't waste a lot of time and effort on this avenue as it will probably produce zero revenue for you.

You are missing all the key data to make even a ballpark estimate of value. You need the following:

1) total number of lots

2) total number of lots occupied.

3) lot rent (NOT home rent but only the land rent portion).

4) Private or public water or sewer.

5) Who pays for it.

6) Master-metered or direct billed electric or gas.

7) Roads paved or not.

8) Are there parking pads for each lot.

9) Metro population of the zip code

10) For that metro the a) median home price b) three-bedroom apartment rent and c) housing vacancy rate

11) age of the homes in the park (old 1970s vs. newer versions)

1% earnest money is standard industry practice, but like anything it's completely negotiable. However, remember that all earnest money is at risk regardless of what your contract says (all it takes is for the seller to file litigation and it will be frozen in the account until the lawsuit is settled, even if that takes years) so put up more earnest money than you can afford to lose and still be a happy person.

So now you need to know two additional pieces of information to calculate an initial value:

1) What is the market lot rent?

2) What are the ages of the homes (1960s, 1970s, 1980s, 1990, 2000s, etc.)?

I'm not sure what part of Georgia we're talking about, but $537 per month in lot rent is extremely high for that state. The U.S. average lot rent is around $280 per month and the only way I see this lot rent as being accurate is if you're in a hot suburb of Atlanta. Are you sure these are not 35 park-owned homes renting (including the lots) for $537 per month?

If that truly is the lot rent, then you should put that under contract immediately as the seller's price is way too low for that.

Any contract you submit should have the standard due diligence and financing contingencies in it. The earnest money should not exceed 1% of the total price.

While buying homes and bringing them in to fill vacant lots is the traditional -- and fastest -- method to fill vacant lots, there are several other options that can work if you work them aggressively:

1) Bring in seniors with RVs who are retiring and want to live in their RV full time. This is a growing trend nationwide. To do this you'll have to advertise for RVs with signage and on the internet, and have good on-line ratings.

2) Have dealers bring in old, used homes (typically 1980s and early 1990s) and sell them already set up in your park.

3) Have "Lonnie" dealers (people who buy and rent out old mobile homes) bring their homes into your park.

4) Get "organic" moves into your park in which people move their trailer out of a competitive park and into yours (you'll have to pay for the move).

In the interim you can rent all the vacant lots to the nearest neighbor so they can have a larger yard. That will at least spare you the mowing cost.

You should call the Louisiana Manufactured Housing Association and see who they recommend -- they should know the insurance carriers in their state. They are located in Baton Rouge. Louisiana and easily found on Google.