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How To Hire An Onsite Manager For Your Mobile Home Park

Where can mobile home park investors find good property managers?

Great property management is key to unlocking the full potential of any real estate investment, and preserving the asset. So where and how can mobile home park investors secure good, affordable managers?

What to Look for in a Good Mobile Home Park Manager

Knowing what you want in a property manager can help narrow down where you look, and how.

Some of the factors that may be important or beneficial may include:

  • Already know the area
  • Experience
  • Known for quality and attention to detail
  • Likable by tenants
  • Easy to work with
  • Affordable, offer good value

Your criteria for hiring a property management is unique to you, and perhaps even the specific mobile home park you need management for at the time. For example; if you live down the street, and have a full park with long term tenants who all pay online; then you may just need a handyman to be on call for the odd emergency. In contrast; if you are purchasing a park on the other side of the country and know there will be a lot of early turnover, intense management, door knocking for rents, and potential security needs; you may want an on-site manager with a lot of proven experience.

When to Hire Property Manager for Your Mobile Home Park

One of the most important factors here is to hire your local team before closing on your mobile home park acquisitions. Interviewing and talking with local professionals, including potential property managers can provide great insight during the due diligence process. Having a team in the dugout ready to hit the field immediately on closing (and even before), can ensure a smooth transition, better experience for tenants, and helps avoid any hiccups with income and maintenance.

Head Hunting Potential Property Managers

Great ways to start looking for help include:

  • Looking for the best kept lots in this mobile home park
  • Looking for the best maintained lots and parks in the area
  • Strategic letters to residents asking for referrals
  • Local newspaper and Craigslist ads
  • Signs
  • Recruitment agencies

One of the great perks of hiring local onsite property managers can be the potential to bargain with free rent in exchange for management services provided. But there are other options too.

Hire a Professional Property Management Company

Some inexperienced investors may cringe at the idea of employing a professional third party property management firm to take care of their assets, just as some of these firms may first cringe at the idea of managing a ‘mobile home park’. Still; do the math for yourself before deciding. There may be more value there than you realize. The bottom line is all about the performance and net results, and ROI on what you invest in management. Ask for referrals from other local investors and real estate professionals and check Google for business listings.

Outsource It

While this may not yet be a common solution in the mobile home park space, remote property management has been working since at least 2005. It may not be right for every property, and investor, but it can certainly work. Between new smart home and real estate features, the internet, and outsourced professionals it is quite possible to handle 99% of property management needs from the cloud. It’s worth checking out those that offer it, and if it may be an affordable and efficient match for some of your mobile home park holdings.

Top Numbers A Mobile Home Park Investor Needs To Know

What numbers do you need to know to make great mobile home park investments?

There are many, many numbers thrown around in the real estate investment arena. Here are ten that mobile home park investors need to know for each potential investment.

  1. Cash on Cash Returns

Cash on cash returns are the most important number for mobile home park investors. While this figure may depend on many of the others below; it shows what you actual cash return is, and what you are really making. This figure can then be used to compare investment options. To find the cash on cash return divide you annual before tax income by the actual amount of cash you plan to invest.

  1. Cap Rate

Capitalization rate is commonly used to compare commercial real estate investment opportunities. The cap rate is derived by dividing the annual net operating income (NOI) by the value of the property. So a $1M property with a $100k annual NOI has a cap rate of 10%. This is the equivalent to price-to-earning ratios in the stock market. However, note that the true cap rate changes over time. The income ought to go up, and so should the property value. Investors often forget this. The result is a far poorer cap rate in the future do to substantial captive equity. For example; if your property value goes to $2M, and your income stays the same you now only have a 5% cap rate. Tap this equity and expand to keep you capital and investments performing better for you.

  1. Cash Flow

How much cash flow will this property actually throw off? Gross and net. There can be a big difference. Big gross numbers mean nothing if there is negative net cash flow. However, there can be advantages to high gross numbers. This can act as a nice float during the year.

  1. LTV

What loan to value can you borrow against this property? What LTV will you be able to refinance at? What LTV can future borrowers expect to achieve? How will that impact the resale buyer pool available or potential need to offer seller financing?

  1. Number of Units

How many units or lots are in a given mobile home park? This can impact consistency of income. Also consider if there is room to add more units.

  1. Per Unit Rent

How much is the rent and income per unit, door, or lot? How does this compare to other options in the area?

  1. Utilities

What utilities are to be provided? Who pays them? How much are they? This will impact your bottom line.

  1. Taxes

In terms of importance taxes are right up there with cash on cash returns. How much are the property taxes? How much are they likely to go up? What can you do to minimize property taxes? Then there are income taxes. How will the returns from this mobile home park impact your overall tax burden? How can you minimize that and turn it into a positive? How much will you really net after taxes?

  1. Local Unemployment

What a local unemployment rates like? How does this compare to other locations? Mobile home parks can benefit from serving lower income housing needs, but if people don’t have income it doesn’t matter how cheap the rent is.

  1. Local Vacancy Rates

What are local vacancy rates for rentals and other mobile home parks? How many units or lots are vacant or are going vacant in this park? Build this number in as an allowance to ensure you stay in positive cash flow territory.

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.

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.

How to Find Local Staffing And Management for Mobile Home Parks

How can mobile home park investors best find great managers and teams for their parks?

An investment opportunity is only as good as the execution and management. Poor management can ruin even the best investments in the most prime locations. Great teams can unlock and add incredible value and performance in even mediocre properties. The big question for mobile home park investors today is where to find the best talent to help preserve and maximize their assets.

How to Find Good Property Managers

There are two main choices for property management of mobile home parks. The first is hiring a local professional management company. Be sure to carefully vet these firms, evaluate their fee structures, and ensure their motivations are in alignment with yours. The second option is to simply find your own independent property manager and hire them.

There are several ways to accomplish this…

Advertise the Job Opening

This may include posting job listings on Craigslist, promoting the opportunity at local real estate investor groups and asking for referrals, posting the position on-site at your mobile home park, taking out ads in the local newspaper, and more.

Look for Well Maintained Properties

Are there other mobile home parks in the area which are well maintained where you may find managers to come and handle your units as well? How about looking for the best maintained lots in your park, and asking if that person would like the management position? Other park residents may have good leads on great managers too. If needed this search can be extended beyond parks to other property types.

Finding Great Contractors

Finding great and reliable contractors can be one of the biggest challenges for all real estate investors. You’ve got to find contractors that can best deliver on-time, on budget, quality work, and get out fast when you need them. Unfortunately this industry is notoriously littered with contractors that appear to check all the wrong boxes. Taking the trial and error approach of running down the list in the Yellow Pages can be time consuming and costly. The key to success is finding those with a proven track record.

4 Ways to Find Them:

  1. Use trusted review portals such as AngiesList
  2. Ask for referrals from other local real estate investors
  3. Go to suppliers and home improvement stores first thing in the morning to find the hard workers that are getting jobs and ask if they want more work
  4. Stop are construction sites and ask the crews while gaining a chance to see their work first hand

Finding Assistants and Miscellaneous Team Members

There can be great efficiency and savings to be found by utilizing virtual assistants for many tasks required of mobile home park investors. This may include bookkeepers, marketers, receptionists, etc. One of the best platforms for this is Upwork which is home to thousands of freelance remote workers.

Advisors & Asset Managers

All serious mobile home park investors can benefit from having professional advisors and asset managers in their corner. This will likely include a real estate attorney, accountant and tax professional, and even a real estate investment advisor. Look for those with experience specifically in the mobile home park arena.

Manufactured Housing Steals the Podium for Low Property Maintenance Costs

Mobile home parks offer extremely low maintenance for investors. This factor alone provides a superior advantage for delivering on more of what today’s property investors really want.

The Apex of Operational Profitability

It is common knowledge that many more experienced investors trend toward investing in apartment buildings for their lower cost per door, higher ROI on value add improvements, and lower property management burden per unit.

This infographic shows that at least three other property types boast even lower maintenance costs than multifamily property. There is student housing and self-storage. Then taking the gold for lowest maintenance cost is manufactured housing.

The manufactured housing we see in mobile home parks also offer an average cost per door of just one third of apartments, and when measured in number of doors the same capital can afford mobile home parks are way in the lead when it comes to ROI on improvements.

Why is this Metric so Important?

  1. The lower the maintenance costs, the less of a burden when repairs come up
  2. Lower maintenance needs, mean less intensive property management
  3. Lower maintenance expenses leave more profit margin

This translates to needing less capital reserves sitting idle, less manpower on staff to handle maintenance, and higher returns in terms of both cap rates and cash on cash.

Why Mobile Home Parks have such Low Maintenance Costs

Manufactured homes themselves seem to be notably less complicated than sit built structures, but what really turns the books in favor of mobile home park investors is the fact that the owner’s maintenance is really limited to the land.

In a single family home or condo rental you will notoriously have more insurances to juggle, more minor working parts to keep working and up to code, and when big things go wrong they can get insanely expensive. Try replacing a faulty glass enclosed shower with mosaic floor on the second floor; it could easily run you $10,000. Then there are monumental expenses like roofs, pool pumps, and foundations. And pesky minor ones which can cost a lot in labor; running the gamut from clogged plumbing to faulty outlets, and even burned out light bulbs and tenants who lock themselves out of their units.

Mobile home park investors normally simply rent the lot. The housing unit is typically 100% the responsibility of the tenant. Utilities may be public or private. In some cases park owners may find themselves with units left behind which they can rent. The higher rents from these units should offset any additional maintenance. The bottom line is that you are usually only renting a rectangle of land versus a habitable building.

The Benefits of a Low Maintenance Burden

In addition to the above investors will find at least 3 very valuable benefits of low maintenance properties…

Passive Income

Low maintenance investments mean income is more passive. Nothing is less passive than owning and self-managing a portfolio of single family homes. A mobile home park with a good manager, and few emergencies that require you to step in will allow you to both enjoy the lifestyle you crave, and have the income fuel you need to live it.

Predictable Returns

One of the biggest threats to single family home investments and even REITs is big unexpected expenses and maintenance crises. Lower maintenance requirements and costs reduce the risk of these items and in turn – more consistent and predictable returns.

Ease of Succession

Many investors are not just investing for themselves, they are building a legacy. They want to provide an income producing legacy for their spouses or next generation. High maintenance investments can be a nightmare for heirs. Or they may simply need to be liquidated before the estate is transferred. Mobile home parks can be much easier to pass on, and for heirs to enjoy the rewards of.

Summary

Maintenance is a significant part of the equation when evaluating investment opportunities. Beyond the income and ROI digits, maintenance burden can also impact how well investments deliver on income needs, lifestyle goals, and succession plans. The data shows that mobile home park investments boast the lowest maintenance costs for investors seeking the best overall opportunities in the real estate market.

 

How To Build A Team To Run Your Mobile Home Park Investments

Mobile home park investors that are serious about succeeding need a team. Where do you start with building a great one?

In order to go big, win the long game, and enjoy maximum freedom along the journey it takes a team. The truth is that it takes a small army of professionals just to tackle a single family home deal. The benefits that team provides only grows the bigger your aspirations are for investing in and profiting from mobile home parks. Who should be on that team? How do you pick them? How do you forge a team that will really maximize your success and asset performance?

Core Team

Every investor ought to have these professionals in their corner:

  • Real estate attorney
  • CPA

Most will find it helpful to round out their core team with a:

  • Bookkeeper
  • Mortgage-finance expert
  • General manager
  • Marketing expert
  • Customer service rep
  • Property scout
  • Real estate advisor

Note that these are not all mandatory, and some will only apply to those acquiring multiple parks. In most cases they do not need to be in-house staff who are on the payroll full time. Think of most of these team players as flexible and on-demand professional assistants.

Market Specific Teams

Investors will also need market specific teams to aid them in their quest. These professionals have assist with one or multiple properties in a given area.

  • Insurance agents
  • Inspectors
  • Property managers
  • Contractors

Recruiting Success

Each role may have specific priorities. In different cases speed, efficiency, or personality may play a more important role. But whatever role you are interviewing or recruiting for quality will be almost invariably be more important than price.

Even more importantly it is crucial to ensure synergy in vision and values.

Do not underestimate this. No matter how large or small you plan to go; your success will rely on having alignment among your team. This first requires you as the leader to have clarity on your goals and values. Then ensure this is a part of the hiring process. Make sure that all hires and professional partners and vendors are genuinely onboard with where you want to go, and how you want to get there. Savvy leaders and organizations don’t just have a stale and lifeless mission statement. They have a condensed, clear, and energizing document that is highly visible, actionable, and acts as a guide for regular decision making. Airbnb has its ‘one sheet’ and author John M. Bernard promotes the ‘Now Fundamentals Map’ and ‘Now Breakthrough Map’ as examples of simplifying, unifying, and driving traction toward the vision.

Scaling Success

Putting the right people in the right place creates a great foundation. Yet, all fluffiness aside there is a lot of value in building a strong community within your organization. Facilitate this with great communication, connectedness, occasional on-site visits, and rewards. Remind them what you are working to create, building unity as a team, and reward traction towards goals.

A part of this will certainly be creating systems, crafting a brand and generating business value as investments are scaled. The returns of this can go well beyond what the average real estate investor could expect to achieve.

Summary

There are many individuals and professionals that can help mobile home park investors in their ventures. Success lays in not only intelligent recruiting, but in fostering a collaboration that remains focused on your mission.

 

Man is pondering about whether to manage his own mobile home park

Self Management Versus Third Party Management Of Your Mobile Home Park

What’s the best way to manage your mobile home park investments?

3 Ways to Manage Mobile Home Parks

  1. DIY self-management
  2. Hire a private property manager
  3. Professional third party property management

Hiring a private independent individual to manage your properties can be a type of hybrid option which falls in the middle of the scale. However, the degree to which it leans toward DIY or professional management will rely a lot on that individual. Too often it ends up not being any more efficient than managing yourself; especially if you have to train, manage, supervise and step in for that individual. On the other end of the scale the cost of a superior manager may not offer enough savings compared to bringing in a professional and experienced property management company. It is an option. But for now let’s look at the biggest contrasts which lay between self-management and professional third party property management of mobile home parks.

The Pros & Cons of DIY Property Management

The pros of managing your own mobile home park include:

  • Hands on control of management
  • Accurate decision making on maintenance and improvements
  • Speed of delivering customer service
  • Non-financial rewards of being involved in your own project

The cons of managing your own park include:

  • Lack of freedom to travel or take time off
  • Location limitations when looking for park acquisitions
  • Limited ability to manage more investments
  • Low ROI on time and labor
  • Personal safety risks
  • Danger of emotional versus objective decision making
  • Financial liabilities

The Advantages of Professional Third Party Property Management

There can be serious issues if the wrong property management company is hired. If their interests are not your best interests there can be conflicts with occupancy rates, tenant retention, and net cash flow. It is not always easy to select a great property management company, but when one is found there can be great benefits for mobile home park owners.

These perks and pros include…

Protection from Liability

This is absolutely one of the most significant and most underestimated benefits of deploying professional third party management. Not only is property management a dangerous profession from a physical standpoint, it is rife with legal and financial liability. Our legal system has made a dramatic 180 degree turn from “innocent until proven guilty,” to guilty unless you can prove you are innocent. That can be virtually impossible when it is a tenant and their family’s word against yours. The bottom line is that it is just better if the owner is not the one collecting rent, interfacing with tenants, and out on the property conducting maintenance and repairs. Let a third party company with their own insurance and legal team provide a buffer and bear any related costs.

Savings

Some new investors, and even relatively experienced ones incorrectly believe that DIY management or even piecing together their own team is always the least expensive option. Do the math for yourself. Take into account everything from the investment in recruiting help, to your time spent training and managing, to wages and perks, for all positions you would need to fill from marketing for and screening tenants (including hard costs), to accounting, and customer service and payment processing, etc. Then compare that against the cost of hiring a company. The numbers ought to be close, if not firmly in favor of a 3rd party company, without even counting a fair wage for your own time.

ROI on Your Time & Effort

How much would you get paid as the property manager versus how much you can generate as a business owner or investor in multiple properties?

Turnkey

As the pure owner of a mobile home park you are able to simply collect the financial rewards. Let someone else deal with the headaches, stress, and time, so you can get on with what you love most while getting paid for it.

Summary

DIY property management may be right for some for a limited period of time. Be sure to do the complete math for yourself before making assumptions or hiring anyone. Most importantly; be clear about what you want out of this investment. Do you want another job or a true investment which fuels your financial freedom?

Real estate investors sit around and table and strategize their next mobile home park investment

Top Systems Mobile Home Park Investors Need To Set Up

Top Systems Mobile Home Park Investors Need to Set Up

What systems can help mobile home park investors get more out of their investments?

Systems are not only essential for maximizing the profitability of investments and minimizing risk, they also hold the power to make the entire process of acquiring and holding mobile home park investment less stressful, and more enjoyable. So in what areas can, and should real estate investors create systems?

Systems should be created, or tools adopted for every stage of investing in mobile home parks from acquisition, though daily property management, and exit. This may appear most critical for those investing out of state, but can be just as beneficial for those investing right down the street in their home towns.

Upfront Systems for Superior Acquisitions

Systems for Sourcing Properties

Technology and access to more information has made investing out of area easier than ever. However, having a full map of mobile home park investment opportunities also requires systems in order to hone in and qualify the best choices. Otherwise you may spend all of your time searching, and never actually invest. The search process can be automated by setting up listing alerts, developing referral partners, and recruiting property scouts. This also needs to include a screening process or set of criteria which only serves up the mobile home park opportunities which meet your investment criteria.

Preliminary Evaluation & Due Diligence

Before making offers, and certainly before closing on acquisitions investors need to conduct thorough due diligence. You don’t want to put deposits on the line, strain relationships with financiers, or burn your earnings with inspection flights out to properties that don’t end up being viable acquisitions. To avoid this get the right tools and put systems in place to vet potential mobile home park buys. This certainly includes a solid checklist, and maybe even a team member to work it. This phase should also include incorporating tools like automated valuation models (AVMs), and inspections which can deliver accurate details about the property remotely, and more.

Property Management

Property Inspections & Monitoring

Property inspections don’t end once you acquire a mobile home park. Today’s savviest real estate investors use a variety of tools and apps to constantly monitor their properties. Mobile property management apps can empower investors to make smart and accurate decisions with real time updates on property condition. Easy to read reports can help to instantly identify leaks and waste which cost money and could be causing other property damage.

Rent Collection

Rent collection is one of the most critical areas in which systems are needed. Door to door rent collection is not only costly in terms of labor, but fraught with risk and liability too. There is no reason that tenants can’t pay online today. This provides accuracy, efficiency, convenience, increased profitability, and decreases risk of loss.

This principle rolls over to all bookkeeping. If you have hired a professional third party property management company they will have good software and provide access to real time data, or at least simple to read reports. This maximizes monthly cash flow, identifies areas for improvement and can make a big difference at tax time.

Tenant Screening

Your mobile home park performance is going to be directly linked to your tenants. While the barriers to entry are normally extremely low for renting in a mobile home park, where legal, investors may want to have some boundaries and criteria for qualifying tenants. For example; ruling out sex offenders, and those with constantly recurring evictions.

Maintenance Work Flow

This should be self-explanatory. Having systems for processing maintenance needs and repair requests, can ensure efficient and effective processes, while eliminating waste, and adding great documentation for reducing liability.

Exit

Smart mobile home park investors should have systems in place for identifying the best moment to sale, and raise the rents. Don’t miss out. Also know how you’ll sell when the moment arises. Will you have your own marketing system, or have you identified and qualified a local Realtor who will handle your dispositions for you?