Creating a Network of People to Help You Find Deals

How to create a network to ensure a consistent feed of mobile home park deals…

Investors that are serious about profiting from the mobile home park sector will find that having a network of different sources feeding them deals can optimize their time and deliver more choices. So how do you set that up?

5 Ways to Source Mobile Home Park Deals

The scarcity of mobile home parks in comparison to other types of investments makes establishing consistent sources of potential park deals important. Some of these options may include…

  1. Professional network
  2. Hired staff
  3. Property scouts
  4. Friends and family
  5. Real estate listing platforms

Investors can recruit a variety of individuals officially or unofficially to bring them leads on potential mobile home park acquisitions. Check with your attorney to ensure you are on the right side of the law with any compensation you plan to offer.

Various real estate listing platforms offer search options, and often the ability to set up automatic email alerts when new properties are put up for sale.

These are all great ways to augment your search. However, since they can also be inconsistent, or may not offer the early advantage that referrals do, let’s hone in on building and using a network of professionals to help…

Building a Professional Network

A network of professional can be a great source of referrals to mobile home park deals before they hit the open market and prices are bid up.

Professionals to Add to Your Network include:

  • Real estate agents
  • Bankers
  • Mortgage brokers
  • Financial planners
  • Attorneys
  • Accountants
  • Fund managers

Where to Find Them:

  • White pages
  • Google search
  • Chambers of commerce
  • Industry events
  • Investor clubs and groups
  • Local businesses
  • LinkedIn

How to Connect

The majority of these professionals are already looking to expand their own professional networks. They want to expand the network of professionals that will bring them referrals, increase their own revenues, and often need other professionals to serve their clients. So always go in with how you can help them.

For example; will referring you deals help them complete another transaction and increase their income? Will it help them better serve their clients by liquidating an asset at a critical moment (such as a divorce or probate proceedings)?

Pro Tip: Have an elevator pitch prepared that gives you a quick introduction and highlights your value to them. Let them know that if they know of anyone selling a park, to please make an introduction.

Don’t rely on them remembering you and your contact information. Ask for theirs. Log it into a database in the cloud where it won’t be lost.

Follow Up

Like any relationship investors need to nurture these relationships with regular contact too (this is a long-term play). So set up a system to follow up with phone calls, send cards, and do lunches together. Don’t be a time drain, but do build the relationship. Whenever possible look for opportunities to refer them business first.

Mobile Home Parks And Long Term Tenants

Long term tenants are highly prized by buy and hold income investors. Mobile home park tenants are known for some of the best longevity in the industry. So why do these clients stay so long? What are the benefits for investors? How can you spur more of this trend?

Long Term Tenants

Investors and financial analysts are increasingly recognizing the importance and value of long term tenants. Longer term tenants are deemed to be more profitable for landlords. Lower turnover rates mean lower costs for property owners. This eliminates the need for constant updates, the cost of marketing for new tenants and screening them. It also means reducing risk of vacancy. Remember once units go vacant there are little guarantees. And if units go vacant at the wrong time it could potentially mean needing to offer incentives or even lower rents. The consistency and higher income long term tenants also elevates property value and resale potential.

Fortunately, mobile home parks are known for delivering on longer term tenants compared to apartments and single family residences.

Why Mobile Home Parks are a Magnet for Long Term Tenants

Mobility

It may be sad; it is true that is can be very hard to move up for many. It’s also much easier to downsize, and ultimately many will end up downsizing during their senior years.

Owners vs. Renters

Recent data shows that renters often stay less than one year on average, versus property owners which are more likely to stay seven years. What’s unique about mobile home park tenants is that they normally own their units, and simply rent the lot. This definitely extends the life of ‘renters’, especially since it can be so expensive to relocate units.

Community

Mobile home parks offer a sense of community. Some park owners and managers curate communities better than others. Yet, all have the ability to build community, and that can develop tenant loyalty far beyond price. Done right this can turn residents into raving fans which become your best marketers, and will bring in their friends and family too.

Locking in Affordability

One of the chief concerns out there today is the ability to lock into affordable housing. Renters know that they simply can’t afford to keep paying higher rents on condos and single family homes. Even owners with adjustable rate mortgages and HELOCs can already be feeling the pinch of rising interest rates. Mobile homes offer the most affordable option. Once residents lock in this level of affordability, most are not going to want to give it up.

Summary

All of the above are reasons individuals, couples, and families are drawn to mobile home park living. It’s affordable, it offers a great community living experience, and a chance at ownership.

In turn this makes mobile home parks a great investment. Long term tenants that really don’t want to leave, and help to build the community are not just easier to manage, but more profitable in many ways. While this may just be one of the reasons to invest in the sector, it is an important one which sophisticated investors are really just getting a handle on.

What Investment Offers The Highest Return?

It seems like everyone has an opinion about what you should invest in. As soon as you have a bit of extra income or an excellent return on another venture, other people are eager to spend it for you. But you already know that your highest return won’t happen on stocks, bonds, or funds. And you might be surprised to learn that it won’t even happen on the single family rental properties you hold in your portfolio? So what is your best investment when you’re looking for the highest return?

Let’s talk about cash-on-cash returns. That’s the ratio of annual pre-tax cash flow compared with the total amount of cash you’ve invested. While not the only factor to consider when analyzing investment opportunities, your cash-on-cash return is an excellent metric to determine if an investment is profitable.

Cash-on-cash is valuable in situations where cash flow is the goal.

Here’s an example of how to calculate cash on cash returns:

Consider a 10 unit property is purchased for $1,000,000, and you put up a down payment of $200,000. Assume your monthly net cash flow is $8,000; or $96,000 annually. Now, debt repayments are factored in. Assuming that you’re paying $6,000 per month ($72,000 annually). The cash-on-cash figure is then calculated as 96,000 minus 72,000 (24,000), then divided by your original investment of $200,000. That’s 12%.

So how does that affect your decision?

Comparing Asset Classes

Stocks: According to brilliant investors like Warren Buffett, seven percent is a good return annually from stocks. Assuming a balanced portfolio invested long-term, that is. Short term investments are too volatile to be factored in, and investing in a single product is also too risky to consider as well.

Seven percent isn’t bad. It’s respectable, and thousands of regular investors would be happy to see seven percent increases year over year. But that’s not where the best return for your cash investment lies.

Single family homes: Rental properties are popular. Vacancy rates are at an incredibly low point currently at around the seven percent mark. It seems if you have a single family home that you want to rent out, there is a tenant who wants to live in it. Rental homes are relatively steady investment, but what about if you have a vacancy? The biggest risk lies in the possibility of zero income in any months where you do not have a tenant.

How do single family properties perform as far as cash-on cash return is concerned? Well, an industry average seems to be around the ten percent mark, which is a fairly steady return for a modest investor.

But how do you determine if the benefits outweigh the risks? The key there is in the question itself. If you have to ask, is it really the investment that is going to give you the highest return? Probably not.

Mobile Home Parks: First, consider the asset itself. Mobile home parks are very stable. Even if you have a vacancy rate of seven percent that means your mobile home park is still 93 percent full. It’s not an all-or-nothing game like a single family home. Your cash flow is usually positive.

Next, take into account the structure of a mobile home park. Essentially, as a landlord, you rent out parcels of land to the tenant. It’s only a plot with the infrastructure for the tenant to connect to. You are not responsible for home maintenance and repairs unlike a rental home. Your annual maintenance costs are incredibly low as it’s only the infrastructure you are responsible to maintain.

Also factor in the low rent cost for the tenant. As a low-cost option for housing, mobile home parks provide an in-demand service to very stable tenants – tenants who are proud to own their own home and want to stay in the park.

How Do Mobile Home Parks Perform?

Get ready for the big news… mobile home parks are an outstanding investment. Conservative numbers suggest that investors can expect a projected cash on cash return of 15 percent all the way up, even as much as 40 percent! There is no other asset class that provides the financial security and cash flow that mobile home parks provides.

What does that mean for you? Well, that means everything. Safety. Security. Confidence. Early retirement. That means for every dollar you invest is paying you up 15 percent and even up to 40 percent in returns annually. Imagine the freedom such a cash flow could bring.

You could invest your money in a stock and be satisfied with seven percent… if you get that return in a volatile market. You could invest your money in the popular single family residence market and expect a reward of ten percent… if you have a tenant and keep your maintenance costs down. Or, you could invest your capital into an asset that outclasses all others. Invest in Mobile Home Parks, and be rewarded with a cash-on-cash returns that are unmatched.

What Kind Of Entity Structure Should You Use To Invest In Mobile Home Parks?

Different Types of Entity Structures for Acquiring Real Estate

What are the different types of legal entities for acquiring and holding mobile home park investments?

There are a variety of corporate and legal structures for mobile home park investors to take advantage of. Each investor’s situation and goals are unique. So before deciding which to use it is important to consult your attorney and accountant in order to receive professional legal and financial guidance on the right match for your needs and goals. This overview is purely designed for informational purposes.

4 Types of Entities to Choose From

LLC

A limited liability company (LLC). A LLC is a type of hybrid entity; combining features of corporations and partnerships. While each jurisdiction is different LLC’s can generally select how they want to be classified for tax purposes, including passing through income to be taxed as individuals, not corporately.

LLCs have gained significant traction and credibility. A review of Propertyshark data on prime Manhattan real estate transactions shows high profile investors and funds almost exclusively using LLCs as their preferred entity for multimillion dollar deals. When Mark Zuckerberg recently announced he would be giving away $45 billion (99% of his wealth) for good, he chose an LLC to do it.

LP

Limited partnerships (LP) are commonly used in real estate, film production, and private equity ventures. The world’s largest alternative investment firm Blackstone operates as an LP. This can be a frequent choice when different partners are bringing different assets to the venture. For example; labor and expertise from one partner, and capital from others. Wikipedia traces the roots of the limited partnership back to the Roman Empire, Islamic law, and the Napoleonic Code.

S Corp.

An S Corporation is often considered a hybrid of a corporation and partnership. These small business corporations can pass through their gains and losses to individual shareholders for tax purposes. Some jurisdictions may charge additional franchise taxes. An S corporation cannot have more than 100 shareholders. Note that there can be a window of opportunity for owners to switch status between S Corp. and C Corp. status.

C Corp.

A C corporation is most notable different in that it is taxed separately from the owners under corporate tax rates. Although this may be the most commonly known legal structure for businesses, for taxation reasons it may be reserved for larger operations with more shareholders.

Misc. Options and Variations

Beyond the above there may be other subsets of these entities depending on where you are incorporating, and how many owners there are. Then there are various trusts, domestic and foreign entities which may have their own pros and cons. Make sure you know the limitations, freedom, and taxation rates as they apply to you, and your real estate endeavors in your specific areas before making a decision.

Again, this is a choice as unique as your individual goals and strategy.

This is not meant as legal or tax advice. Consult your own legal and tax professionals to make the right choice for you.

The Retirement Crisis: Good Investments, Bad Advice & Ugly Data

America is in a retirement crisis. The latest data is ugly. Investment advice has been bad. So how can individuals find good investments that will deliver on their financial needs?

A new report shows that America’s pending retirement crisis is far worse than previously thought. Beyond the failure of 401ks and savings initiatives, America is battling big questions about social security, transparency and fairness in financial advisory services, and of course the mechanics of politics. So just how ugly is it out there? How can individuals turn the game around for a bright financial future?

“Truly Scary” Retirement Savings Figures

A Business Insider report, with data from online news platform Slate, Census Bureau, National Institute on Retirement Security, employer consultant Willis Towers Watson, the Economic Policy Institute, and a Survey of Consumer Finances paints a dismal picture of retirement finances in America.

Key Points Based on Data from 2000 to 2013:

  • Less than half of families between the ages of 32 and 61 have any meaningful savings
  • The median family in this age group has just $5,000 in retirement savings
  • Families with a head of household who graduated college were 33% more likely to have “something” put aside for retiring
  • The top 1% averages more than $1M in tax protected retirement accounts
  • 76% of working Americans are pessimistic about their fate in retirement
  • Around 30% believe they will run out of money within 15 years of quitting work
  • The Obama Administration believes conflicts of interest are costing Americans $17B per year at their financial advisors’ hands

Even though some will be quick to point out that the 2008 crisis happened during this period, the truth is that this data also incorporates two of the most prosperous and fastest periods of growth in our history. That means the problems are far more deeply rooted than just a temporary market phase.

Social Security Benefits & Politics

Neither politics, national economics, nor social security are easy to manage. Business Insider’s report dances with the stances 2016 presidential candidates. Adjustments to social security benefits are not easy to make. Raising them means money has to be raised somewhere else, and few want to pay more in taxes. Many financial analysts would also argue that social security has been juggles, twisted, and used as a tool of fear, and self-promotion for political candidates for decades.

Still, what we do know is that right now the Social Security Administration has sent out letters admitting that doesn’t expect to be able to fulfill its benefit promises, regardless of the fact that individuals have paid in for decades, and are still being asked to pay in. Yet, many individuals (almost 50%) appear to be betting their whole retirement and survival on collecting it.

Whether the money paid in should be returned to tax payers, and the system disbanded is a big argument. What everyone should be able to agree on is that all Americans need to have their own independent retirement plan in place to protect themselves.

The Fiduciary Fight

The battle over regulation, transparency, and fiduciary responsibility between financial advisers and services and their customers is shaping up to be a big one. It is an area ripe for major innovation, and we are starting to see some progress. However, Business Insider points out that the lobbying arm of the mutual fund industry, the Investment Company Institute often claims Americans will be just fine in retirement, which many might call a ludicrous claim given the data.

The struggle is that there is little transparency in marketing and reporting, and often little alignment between investors’ interests and what makes the most money for advisers and financial firms. And the fees are too darn high. In fairness; some firms and leaders in this space are changing these dynamics. Yet, millions aren’t really aware how badly they are being served, or where to find anything that may be better.

How to Change the Game

The first step in getting on track and ahead of the game for individuals and families is gaining the right perspective, and developing a sufficiently appropriate sense of urgency. It is all too easy to put off your needs in 5, 10, or 30 years from now, in favor of instant gratification now. Do you want that delicious coffee, new Benz, new Hermes bag, and a bigger house now? Or do you want an extra game of golf or day on the beach in 30 years, if you even live that long?

This situation won’t change unless individuals and families feel the real urgency, take their survival seriously, and plan for it.

The Hunt for Better Investments

To get ahead, and save themselves from a personal retirement crisis individuals need better investments.

Based on the above that could be defined as investments that;

  • Have low fees
  • Are diversified
  • Provide control
  • Have great tax advantages
  • Can provide compounding gains
  • Offer passive income

Mobile home park investments may be a great example of this. Investors that add them to their portfolios now can enjoy years of compounding growth, with protection from taxes. They can even start gaining monthly income from them which can be reinvested or spent if retirement is close. Mobile home park investments even provide great ability to control the own future value and performance of your investments. Perhaps that’s why one percenters like Warren Buffett and Sam Zell have used them to grow their billions.

The 10 Best Ways To Find Mobile Home Parks For Sale (Checklist)

How can investors find more mobile home parks to buy?

There are a variety of ways for MHP investors to source and acquire new parks. Try out these ten ideas…

#1. Cold Call Park Owners

Cold calling is one of the easiest and fastest ways to directly get in touch with owners. Data from the National Association of Realtors shows that cold calling is still a highly productive and profitable way to source properties for sale. However, your net returns will certainly vary depending on your skill at closing those you connect with. Investors can do this themselves, or commission professional call scripts and deploy call center teams on their behalf.

#2. Direct Mail

It’s not always possible to reach mobile home park owners by phone or email today, and sales leaders remind us that it can sometimes can an average of ‘7 touches’ to close a deal. So an affordable, consistent, direct mail campaign can be a good tool to throw into the mix. This may be regular postcards, handwritten letters, or over the top, oversized items that will really grab attention.

#3. Loopnet

Loopnet is a highly popular commercial real estate listing platform. Realtor.com and other real estate agent powered sites may also provide regular alerts to mobile home parks which are actively for sale. This may also be used to track mobile home parks which don’t sell, and which may have motivated sellers eager to do something.

#4. Real Estate Brokers

Real estate brokers themselves can be handy to wield in your search for mobile home park deals. While it is true that they may add commission to the deal, they also bear the upfront marketing costs and time involved in sourcing deals. They may go out of their way, on their dollar to market directly to park owners and put deals together. Not all park owners will work with agents, but it is an extra channel to have working for you.

#5. Drive-By

A great way to find direct deals on mobile home parks is to simply drive by them. You can do this locally, as well as on any trips you decide to take. If you can find an area with a high saturation of mobile homes then it may be worth a trip out there. You can even double it up as a romantic getaway or family vacation and get the whole team involved. This also provides the opportunity to conduct more early reconnaissance. You can talk to locals, park tenants, and perhaps even managers, or catch the owner, while getting a good feel for the current status and potential, as well as possible issues.

#6. Craigslist

Despite being one of the ugliest websites ever Craigslist offers a variety of ways to source real estate deals. Utilize as many categories as you can. You may simply surf real estate for sale and rental sections. You can also post wanted ads in these sections as well as services, and discussion forums. For the most part this is free, and highly trafficked. It can often also yield various referrals sources that may be willing to go out and hunt desirable deals on your behalf.

#7. Post Ads

There are a huge variety of advertising options. What makes sense for you may depend on your budget, deal volume, and the density of mobile home parks in a given area. This can be both on and offline. It could range from cheap signs to billboards, to Google ads, to Facebook, or full page advertorials in national newspapers and industry magazines.

#8. Lists

Investors can leverage a variety of lists for targeted marketing campaigns. Custom lead lists can be bought, rented, and exchanged. These may be used for the above mentioned direct mail or cold calling campaigns, or for email and social media campaigns. In some cases knocking on doors might be worth it.

#9. Build a Website

For those seeking to buy, manage, and sell mobile home parks on a regular basis there is a lot of reason to launch your own website and blog. This can add credibility, act as a magnet for sellers, and be your online HQ for everything else you do, including leasing. This does not have to be incredibly expensive or time consuming.

#10. Investor Groups

Investment clubs and groups can be a great place to find deals, meet financiers, get extra tips, and even find future buyers for your mobile home parks.

 

Profile Of Sam Zell, Mobile Home Park Investor

Sam Zell is one of, if not the world’s largest investor in mobile home parks. How has this served him? What is his approach? What does the investing legend see ahead for the market?

Sam Zell

Founder of Equity Lifestyle Properties (ELS), Sam Zell is recognized as leading the most significant manufactured home community operator, as well as the largest apartment REIT, and a leading office REIT. According to Forbes, Zell is one of the world’s richest individuals with a net worth of almost $5B as of March 2015. Zell is a well-known philanthropist, and former owner of the Chicago Cubs, and several other companies, including Equity Office Properties which sold for a record $39B to Blackstone.

Zell on Real Estate Investing

In mid-December 2015 Sam Zell appeared on Bloomberg to discuss global economic trends, and investing. On his success in the manufactured home arena Zell honed in on the fixed supply factor, saying it’s very simple. We are not building any more manufactured housing communities. Not in my backyard.” and “therefore demand is increasing, the supply is limited.” Due to this equation Zell adds “I don’t know of any stock or any company that I’m involved with that has a better prospect than Equity LifeStyle.”

The Future for Mobile Home Park Investors

Additional factors that Zell brought up which should continue to boost the profitability of this asset class include the new Fed rate hike, foreign currency and economic issues, and the potential for a new recession ahead.

So far Zell’s ELS has been in the business for over 30 years, and has grown its portfolio to over 370 communities strong, with nearly 140,000 sites under management. Equity Lifestyle credits its success with effective management, elevating the reputation of manufactured housing, and providing better service to residents.

Multibillionaire Warren Buffett is also one of the world’s most notable mobile home investors who also engages the industry from the manufacturing and lending side. Buffett shows no signs of letting go of his portfolio, and has only increased Berkshire Hathaway’s and his own personal real estate investments over the last few years.

Summary

While often overlooked, mobile home park investing clearly appears to have played a major role in creating some of the biggest fortunes and wealthiest individuals in America, and the world. These investors remain bullish on these assets and their future potential. Current conditions appear to be attractive for individual investors to move into this niche. Their future success may be augmented by adopting some of the best practices of their billionaire predecessors such as; focusing on superior management, and better customer service.

 

 

 

Staying Sane While Investing in Mobile Home Parks from a Distance

Out of area mobile home park investing can be incredibly rewarding, but that doesn’t mean it without its own unique set of challenges. How can investors maximize the upside, and stay sane?

The 3 Biggest Challenges of Investing at a Distance

  1. Accurate due diligence
  2. Effective local property management
  3. Falling into the road warrior trap

Do not allow the distance to take away from the enhanced returns out of area properties can offer, or the peace of mind, and lifestyle they can deliver on.

Learn to Master Virtual Management

From due diligence through long term annual property management those that learn to build, and effectively direct and monitor teams remotely will have a significant advantage. It cannot only bring cost efficiency, and the resulting boost to net profits, but can also improve effectiveness, and deliver on a superior lifestyle.

Get the edge here by learning and implementing:

  • Outsourced staffing platforms like Upwork
  • Cloud based project management software like Basecamp and Trello
  • Property management tools and apps like appfolio and InfoTycoon
  • Internal social tools like Salesforce’s Chatter or Google tools for business

Pick Parks that Match Your Lifestyle

Get a solid head start to your goals by picking mobile home parks that can best deliver on your lifestyle and financial goals. If you are investing at a distance and it’s difficult to find affordable professional management locally; look for a park that isn’t going to be as management intensive. If you want the freedom to travel the globe and just check in on your bank deposits every couple of months; find the easiest turnkey properties. If you are settling into an area where you plan to stay, and don’t mind being hands on, or may even enjoy it, then take the parks with the best profit potential.

Travel Smarter

With a good team and tools in place, and depending on your park, you might want to go and checkup once a quarter, or once a year. It depends on what you’re doing in your park, how work intensive the turnaround is, what the performance is like, and if you have anyone else that can go for you. Make sure to take this into account upfront, and when planning additional acquisitions.

Make this easier by choosing parks that are close to an airport. That way, you don’t burn a day flying into an airport and traveling to your park, and then another day on your way home. Perhaps you can group several close together in clusters. Perhaps you’ll specifically target mobile home parks in areas you visit annually on vacation anyway. Maybe you can get a better air miles credit card and join rewards programs to earn free flights and hotel stays to take care of this. Don’t forget to keep all of your receipts and records for the tax deductions.

Planned well this can actually be one of the most fun and exciting parts of investing. Just make sure you put technology and good people on your side early.

Discover America’s Secret Cash Flowing Asset: Mobile Home Parks

Ask most investors where the best investment returns are and they’d have no idea. Real estate investors believe they know they answer: residential real estate. Not only are the returns superior to Wall Street investments, they’re cash flowing returns instead of appreciation returns and that’s a huge difference.

Among real estate investors, this is a given fact. But which real estate investment asset is the best choice for the highest cash flow opportunities? You might be surprised to discover that it’s a Mobile Home Park.

Among real estate investors, Mobile Home Parks (MHPs) are an overlooked asset class that few think about… and even among those who know about it, there are very few who understand the opportunity and why it offers the highest returns in real estate.

There are three characteristics that make this real estate asset class so compelling and lead to higher cash flows:

  • The deal structure
  • The laws of supply and demand
  • The urgency of sellers

Mobile Home Park Deal Structure

What makes Mobile Home Parks so attractive to investors is how the deal is structured compared to any other residential real estate.

With an apartment or multifamily building, the investor owns the property and rents it to tenants. Those tenants pay rent and may (or may not) stick around. The investor is also responsible for the maintenance and upkeep of the building itself (which can be very expensive).

But Mobile Home Park investments are structured differently: The investor owns the land only. The tenants own their own mobile homes and they rent the land those mobile homes sit on.

The result? Investors don’t have to pay for the maintenance and upkeep of mobile homes.

There’s an added bonus that few investors realize as well: homeowners are far more stable as tenants compared to renters. Homeowners are less likely to move (since they’d have to sell their mobile home or pay up to $7,000 to move it).

Mobile Home Park Laws Of Supply And Demand

There is a significant supply and demand imbalance in the Mobile Home Park asset class right now.

On the demand side, more than 20 million Americans (8% of the population) live in mobile homes. This number is huge and it’s expected to grow because:

  1. The American Dream of owning your own home is still alive and well, but people are redefining what that means (and even lowering their expectations) because…
  2. There is a steady trend of declining wages in America. More and more companies are employing their staff at minimum wage rates as low cost companies like Walmart take over.

As a result, millions of Americans need a place to live and want to own their own home instead of renting an apartment.

On the supply side, there are only 50,000 Mobile Home Park in the US and this number is declining everyday. Existing Mobile Home Parks were built quite a distance from cities on undesirable land but those cities have expanded and swallowed up parks and many developers are buying up parks to convert the land to a higher-value use. At the same time, there’s a “moat” around Mobile Home Park development and it’s actually very difficult to build a new Mobile Home Park.

As a result, we’re seeing fewer and fewer Mobile Home Parks throughout the US.

This supply/demand imbalance is favorable to investors because it means more tenants are vying for fewer Mobile Home Park spaces to live… and this imbalance tends to mean: consistent cash flow, higher occupancy, and an ability to raise rates steadily.

The Urgency Of Sellers

The last piece of the puzzle is the urgency of sellers: Most Mobile Home Parks were built between the 1960’s and the 1980’s and they are still owned by the original “mom and pop” owners. Those owners are ready to sell their Mobile Home Park so they can extract the value their park has built and retire on that money.

What makes this process difficult for them is:

  • These original owners are mom and pop owners, not professionals, so they haven’t always maintained the park or its occupancy rates
  • There are no simple channels through which to sell a Mobile Home Park
  • Retirement looms closer and closer and they’re simply not sure how to sell their park in the best way possible

As a result, sellers want to sell – and they want to sell soon! – but they don’t know how to go about it, and their park is undervalued because there is plenty of ignored “upside” that they haven’t leveraged.

The Most Compelling Asset

For these reasons, we believe that Mobile Home Parks are the most compelling real estate investing asset class right now and provide the highest cash flow returns in real estate.

First, the deal structure creates significant positive cash flow from lot rentals without the expensive of maintaining the structures that sit on that land. (Plus, there are several ways to increase cash flow simply by increasing occupancy but also through other strategies as well).

Second, cash flow is further influenced by the growing demand and shrinking supply of Mobile Home Parks. Simply put, there are more tenants but fewer places for them to live… and this trend is expected to continue for some time.

Third, cash flow is still further influenced by the ability to find these mom and pop Mobile Home Parks and create win/win deals (many come with seller financing) at an attractive price that you can grow.

Mobile Home Parks are overlooked, ignored, or misunderstood but they provide the highest cash flow opportunities in real estate investing today, and the underlying trends that create this opportunity will remain favorable through the foreseeable future.

What Investors Need To Know About The 2016 Recession

When is the next recession coming to America? How can mobile home parks help investors maintain their finances during the tough times which may be ahead?

The Financial Forecast for 2016

Billionaire mobile home park investor Sam Zell has predicted an imminent recession within the next 12 months. He is not alone.

While The Fiscal Times is a little more bullish than the rest of the crowd, many media outlets including the Huffington Post have suggested 2016 is going to see ‘Judgement Day’ for the US economy. Barrons says “It’s at least 2 to 1 that we’ll be in a recession at the end of 2016.” A December 2015 report from Citi Research puts “the probability of the US entering a new recession at 65 percent.”

All the data seems to back these predictions of a 2016 recession up too.

Recession Indicators

A recession is identified by two consecutive quarters of shrinking economic growth. MSNBC estimates the last recession ended in June 2009.

  • The average recovery lasts 39 months
  • Only 5 (out of 28) recoveries have lasted more than 60 months
  • As of December 2015 the US has been in recovery mode for 72 months

Investopedia reminds us that the S&P had risen 92% between 2010 and 2015 alone. Many point to financial issues in Europe and China as sizable dangers to the US economy. IBT points to Bureau of Labor Statistics data showing the lowest labor force participation rate in 15 years. The wage pains, and lack of pay check gains are no secret to anyone.

What Will a New Recession Mean?

While even the Federal Reserve Bank of San Francisco appears to struggle with differentiating a depression from a recession, there may be little need for all out panic.

Recessions as with other sector specific downturns are often self-fulfilling prophecies. Given the above analysts’ outspokenness and media coverage, the odds of a recession by the end of 2016 may be far closer to 90% than 65%. The fact that many individuals and businesses have locked in low interest rates, and there has been mountains of equity capital poured into markets over the last seven years suggests there is no need for a new foreclosure crisis or complete meltdown. On the other hand when things start sliding they often snowball. And this will be the perfect “I told you so” moment for many pessimists who have doubted the recovery.

What most commentators are most concerned about is that the Fed and central banks have little in the way of tools to work with to avoid a recession, or deal with one.

It may not be doom and gloom for everyone, but a fresh recession will put many in a bind just as they thought they saw some light at the end of the tunnel, and it will absolutely fuel a surge in conservative living.

The 2016 Recession & Mobile Home Parks

Sam Zell has said none of his businesses offer the promise of his mobile home park company. We all know Warren Buffett is one of the other biggest manufactured home investors, and remains incredibly bullish on US real estate. They know that mobile home parks are currently a fantastic investment, whether or not there is a recession.

If there isn’t a recession investors are still getting into an asset class which appears to offer the most value, room for growth, and protection from the downside. If there is a recession in 2016 and beyond there will only be an even larger surge in demand and need for mobile home park living, and investments.