All Forum Posts by: John Jacobus

@Frank Rolfe In the situation John Brinkos described above, it seems like he has two very different properties:  

1. 1. one park that is a strong performer with seeming low complexity (due to low POH %); and 
2. 2. one park that is a weak performer.

In your experience, have you found that banks and/or agency lenders and/or conduit lenders are willing to lend on a portfolio of 2-3 MHP’s even though they vary widely in their characteristics and operating results?  We have a few parks that we are turning around and are considering a path whereby we pursue a portfolio loan of ~$2mm in a year to extract equity while posting 2-3 very different, but performing, parks as collateral.  They differ in geography (Major metro in TX; small town near Florence, SC; and mid/large metro in NC) and profile (all TOH park, 25%/75% POH/TOH, and 100% POH) but they all are 80%+ occupied, collections are strong, and financial results are solid.

I’m curious if you’ve been through this before and can share any considerations that lenders keep in mind when determining whether to lend on a heterogenous mix of MHP’s.

P.S. I listened to your recent interview, Episode #339 of the BiggerPockets Real Estate Podcast, and it was excellent.  Thanks for being so generous with your knowledge. 

@Jim Tassoni We have a few parks in our pipeline and are looking for active JV partners with capital to invest.

Aside from interacting on this board and reaching out to prospective operating partners here, I recommend doing the same in the MHU boards and reaching out to smaller MHP operators.  There are also a few Facebook groups (“Mobile Home Park Mastermind” and “Mobile Home Park Owner’s Forum”) that are good places to find what you seek. 

I welcome a chance to discuss your thoughts on working together and can also introduce you to at least one other operator who seeks partners similar to what you describe.

@Dominic Mazzarella We own and operate MHP's in the southeast and southwest with a particular focus on heavy turnaround and expansion opportunities in the Carolinas and Texas. Feel free to reach out any time. You can find out more about us (Upward Communities, LLC) on our Media and Portfolio page at UpwardCommunities dot com.

Right, this is a key detail that isn’t well understood.  So, assume that you bring in a few new homes into your park and intend to sell them.  As a result, you’ll move the homes and set them up and apply for reimbursement of these costs from 21st Mortgage.  You’ll have 12 months to sell the homes.  If at any point you decide to transition them from homes for sale to rentals, you’ll be required to pay back the moving and setup costs back to 21st Mortgage.  That can be a huge capital hit to you.

Let me know if you’d like to talk through the details after your call today.  We had to go through 2 calls with 21st Mortgage (Candice Doolan) in order to adequately under the details.

@Jim Tassoni Keep in mind that the CASH Program will only reimburse the cost to move and setup the home IF YOU SELL IT to a resident.  If you use the home as a rental (out of necessity because the homes won’t sell or by design), the cost to move and setup the home is the responsibility of the community owner.  As a result, make sure there’s demand for new home sales in your area if you don’t have the capital to move in and setup homes in volume.

My suggestions:

12.  Do the homes have skirting?  If yes, what condition?

13.  Is the hitch still attached to the home?

14.  Interior condition (if you can enter the vacant homes): check floors and ceilings for signs of water damage.  Check kitchen and bathroom condition.

A very common scenario.  Push for seller financing as it’ll be difficult to finance an acquisition that small with limited records.  We own a park in NE SATX and would be happy to weigh in on this if you want feedback.

@Charlotte Dunford I look for a ~$200 gap between the housing product offered in the park and the next best alternative outside the park.  Generally speaking, look for markets where average single family home prices are $100k+ and 2-bed apartment rents are $800+.

I am OK with water wells but agree that rural areas and lagoons are deal breakers.

I would add “lack of sufficient affordability gap” to the list of deal breakers.  For example, there needs to be a decent gap between the cost of alternative forms of housing and the product offered at the mobile home park.  If you put yourself in the rational consumer’s shoes, you would consider the total cost of each of the following housing options:

A) a monthly mortgage payment + utilities + insurance + taxes on a single family home that you buy

B) a monthly rental payment + utilities on a 3 bedroom single family home that you rent 

C) a monthly rental payment + lot rent + utilities on a 3 bedroom mobile home rental that you rent 

D) a monthly mortgage payment + lot rent + utilities + insurance + taxes on a 3 bedroom mobile home that you own (own the home and rent the land)

A deal breaker for me is a situation where there’s <$200 spread between options A/B and C/D.  Effectively, I run away from markets where alternative housing options (owning or renting stick built homes or renting an apartment) are the same cost or moderately more expensive than mobile home options.  To ensure sufficient demand, there needs to be a decent spread between alternative housing options and options in the MHP.  This is the affordable housing business so the product actually needs to be affordable in the market relative to alternative options.

@Adam Serdula I sent you a DM.  We have a park nearby that we’re looking to fill with used homes like the one you describe.  Let me know how much you’re looking to sell it for.  We can move quickly.