All Forum Posts by: John Jacobus

We have found homes to buy through regional Facebook groups, Facebook Marketplace, Craigslist, and our network of park owner/operators.  We could use help from others who search our local markets consistently for good opportunities.

PayLease and PayNearMe are great options that allow tenants to pay their rent with cash at major retail locations.  Everyone wins:  residents get to continue paying cash while owners don’t have to deal with cash collections.  While both services are similar, we select the service based on the proximity of the service’s retail network to our park.

For example, PayLease has Walmart in its payment network whereas PayNearMe has CVS and 7-Eleven in its network.  There is little overlap in payment networks so we select the service to support our park based on how close the nearest location is to our park.  We find that our collections are best when the nearest payment location is within walking distance to our park.  

Keep in mind that RentManager integrates tightly with Paylease whereas PayNearMe integrates tightly with AppFolio.

Thanks @Dan Handford.  

@Josh Taylor If the home and land are quality, I’d look into financing offered to buyers by 21st Mortgage or Vanderbilt.  Both have loan programs to finance used mobile homes for new buyers.  

@Dustin Maxwell, we have closed 3 MHP’s that include seller financing.  It’s fairly common on smaller parks.  We are in the process of closing a park in Milner, GA as we speak.  Send me a DM and we can discuss details.  

While it’s reasonable to ask for all titles to abandoned homes prior to closing, I’ve found that there are always 1-2 that are problematic.  Obtaining title to abandoned homes is cumbersome in NC, as it is in most states.  The process is governed by the NC DMV and requires a waiting period and several steps.  I wouldn’t allow this point  to kill your deal because it is so common and can be resolved through a bit of soul crushing bureaucratic process endurance on your part.  I don’t think it’s shady; rather, it’s probably a sign of laziness or lack of awareness on the part of the seller.  Most mom & pop owners we’ve encountered don’t bother to go through the process of obtaining the title because the title holders rarely resurface and they typically disappear for a reason.  Some don’t know that there’s a process they must go through.  Welcome to the industry!

To keep your deal alive, you can 

a) negotiate a discount to the price that’s equivalent to the value of the abandoned homes and then you deal with obtaining the titles; or

b) push the closing date to a point when the seller can obtain the titles; or

c) have the seller agree to deposit a portion of the sales proceeds as a credit in escrow to be released to the seller if a) you’re able to successful obtain the titles within x days or b) to be released to you if you’re unable to obtain the titles within x days.

@Brad Mooney We are looking in that area and would be interested in considering a purchase.  We are not afraid of park owned homes.

I recommend MHU as it is actively supported and the instructor is accessible during and after the course.  From what I understand, despite having good content, MHA has transitioned to a virtual-only course and is not actively supported by live instructors.  It’s no longer the “live academy” like it was a few years ago.  

If you enjoy live conferences, I recommend MHU.  The content and networking are solid.

@Eben Rohling I agree with your thinking

Thank you @Frank Rolfe.  Very helpful.  We appreciate all that you do!

Assuming $200/month lot rents (the tenant owned home currently pays $200 so it seems like a decent bogey to use for your TOH’s) you have the following rough valuation:

• 1. Gross Lot Rent:  $200/month lot rent x 15 lots x 12 months = $36,000
• 2. Estimated Expense Ratio:  50% ($18,000).  Note that I recommend a higher expense ratio than a traditional 30%-40% for MHP’s due to the small size of the park and the fact that the park pays for utilities as opposed to the tenants.
• 3. Estimated NOI From Lot Rent: $18,000

You can capitalize NOI from Lot Rent and add the additional items (1-shell value of park owned homes and 2-discounted value of single family home) to arrive at a rough valuation:

+ shell value of older park owned homes = $500 to $1,000 x 14 homes = $7,000 to $14,000

+ market value of single family home = ?? (Apply a 30% Discount to a comparable home in the area due to the fact that the home is located in a MHP and typically cannot be sold for true market value because of the negative stigma associated with its presence in a MHP.)

With the above in mind, and the value of the single family home omitted from this analysis, the estimated valuation range seems to be:

@10% Cap Rate:  ($18,000/10%) = $180,000 + Shell value of 14 POH‘s ($7,000 to $14,000) = $187,000 to $194,000

@9% Cap Rate: ($18,000/9%) = $200,000 + Shell value of 14 POH‘s ($7,000 to $14,000) = $207,000 - $214,00

To finalize this estimate, you need to:

• a) determine the appropriate market cap rate to use when capitalizing the NOI. The examples above (10% and 9%) were used at random because it made the math easy. Talk to other MHP brokers to determine the cap rate at which other parks are trading in your area. For guidance, parks in larger metros (100k+ population) and in decent condition trade at lower cap rates whereas parks in small metros (<50k population) trade at higher cap rates. Small changes in cap rates drive major swings in estimated value so be conservative and skew towards using higher cap rates in your estimates.
• b) determine the appropriate value of the single family home in the park

I hope the analysis above sheds light on the factors to consider in the valuation estimate.