January 2009

We have a call in session tomorrow with David VerSluis, Jr., R.E.P.A.  Mr. VerSluis will be discussing Phase 1's and Environmental Concerns as well as Private Utility Systems and their operations.

Every Wednesday we have a call in session where you can listen to a presentation or join in the Q&A sessions.

The call in times are as follows: 

• 11 am Pacific
• 12 noon Mountain
• 1 pm Central
• 2 pm Eastern

Here is the January 2009 Link to listen to calls that you may have missed. http://www.mobilehomeparkstore.com/frank_and_dave/jan-2009-fdshow.htm

The New Mobile Home Park Forum

Our new forum is exploding with great information.  We have 7 moderators that are all contributing and if you can't make our call in shows (or in addition to the call in shows) make sure to register for free on the forum and become part of the MobileHomeParkStore Community.

 www.mobilehomeparkforum.com

SUMMIT HAS BEEN ANNOUNCED TO REVIEW IMPACT OF RECESSION ON MOBILE HOME PARK INDUSTRY - Press Release

Mobilehomeparkstore.com, the nation's largest website devoted to the mobile home park industry, has announced that it is hosting a summit, featuring about 15 speeches, to examine the impact of the recession on the U.S. mobile home park industry, and to review ways to harness this upheaval in the U.S. to acquire parks and make existing parks more profitable. Topics will range from asset protection strategies, to financing, to acquisition strategies. It will also feature one bonus day of focus on the mini-storage industry. The Summit is being held at Anaheim Convention Center in Anaheim, California, on February 20 to 22, 2009. To get your ticket, contact us at (800) 950-1364 or go to: www.mobilehomeparkstore.com/mobile-home-park-convention.htm If you can only make one event in 2009, this is it! There are only a few more days to take advantage of our discounted pricing on our Mobile Home Park and Self Storage Investing Seminar in Anaheim on Feb 20-22.  We hope to see you there! www.mobilehomeparkstore.com/mobile-home-park-convention.htm

Water Woes Facing MHC Owners, or Not

By Russell James

Prospective manufactured home community buyers have been lead to believe that all communities with private or in-community water (drinking) and wastewater (sewage) systems possess lower value. Further, some have wrongly concluded that MHC's located within the service area of municipal systems represent the best investment. Let's review some important factors, and as the well known radio show host Paul Harvey used to say, hear the ???real story??. There is a Price First, MHC's using municipal water & wastewater systems have the advantage of removing important operational issues for the community owner. Clearly, there are less headaches and regulatory scrutiny. Generally, your tenants are assured safe potable water and domestic sewage flows out of sight. It appears to be a no brainer, and it was in the not to distant past when water/sewer bills were low and your neighbors served on the Board or worked for the municipal authority. If you had any problems or needed a favor, you made a telephone call or met in the church parking lot. User rates were calculated to keep it all working while maintaining State/Federal compliance. Most importantly, it was a break even, non-profit operation that was developed to serve the water needs of the residents of each city, town and county. Today, many larger municipal and even smaller township sewer and water systems have been purchased and securitized by savvy groups of investors. Realize that monthly water and sewer bills represent a reliable cash flow stream, much like the one you may be lucky enough to obtain by purchasing a mobile home park that provides a respectable return on investment (ROI). Capital & Space Market Utility revenue, including water & sewer, represents a recession-proof, monopolized stream of revenue that offers little down side to investors who understand the market. As a result, many of the parks you may be looking to purchase may be serviced by publically traded for profitcompanies that, while well managed, may be faced with the repayment of highly leverage debt that was used to acquire the asset; your friendly neighborhood wastewater plant or drinking water system. The same Wall Street capital used for leveraged buyouts, sub-prime housing CMBS, credit default swaps, cable TV and many other manufacturing and service industries, now owns the water and sewage plant facilities you must use to run your mobile home park. It is possible that some equities may have paid excessive fees to purchase the coveted larger municipal systems in order to increase their holdings and attract investors. Leverage (debt) is great on the way up, precipitous on the way down. Expect large and frequent rate increases in water and sewage bills if your park(s) are serviced by securitized entities. Equity markets are predicated on the assumption of assumed growth (both actual and compound) and increased quarterly profit reports are necessary to stay in the game. Stagnation, or maintaining status quo, does not work on Wall Street. Likewise, debt-ridden municipal systems under state mandated upgrades will also face significant increases in commercial and residential user rate fee structures. Still want to buy a park on a municipal system? OE's drive ROI Recent articles in MH Weekly and other industry sources have stated that water expenses represent up to 30% or more of the operating costs (OE) for mobile home park owners. Be assured they will increase significantly within the next few years. Like highly leverage cable TV companies, many entities may be treading water until the next rate increase (and next, next) Park-Owned Water OE costs for water are typically much lower for park-owned water systems that are managed to service the residents and not perform as a profit center.  Likewise, improvements and expansions within the system can be cost effectively implemented within the smaller, park-owned facilities operated by private individuals and corporations. Further, mobile home park owners who operate private wastewater plants have the value-added component of controlling future real estate growth on adjacent lands. Regulatory agencies do not permit the building of piece-meal sewage treatment plants (STP) within a certain geographical location, but rather encourage the expansions of existing STP's with NPDES permits to service future sub-divisions and other sustainable real estate development. Summary New and existing mobile home park owners may be forced to forego totally justifiable and warranted future rent increases simply because your residents will not be able to afford the monthly water and sewer bills. Many MHC's are now having real problems with the added burden of utility costs and must use creative rent structures to soften the true monthly home site fee when courting prospective tenants. More than ever, due diligence mandates investigating water and sewer ownership and any scheduled rate structure increases. It may not be easy. But your ROI is in play by forces outside of your control. A future article will compare the costs of owning and managing a MHC on a municipal versus private wastewater system. Stay tuned Writer's footnote: Securitization has played an important role in building our economy and improving many aspects of our lives. Likewise, many municipal water systems are well run and properly capitalized. The purpose of this article is to provide additional input and strategic insight for potential mobile home park buyers. Remember, the NOI for each park will be a function of the Space Market.   Russell James is a consulting aquatic biologist who has worked with the influence of external factors on land development and real estate for over 25 years. Mr. James is a lake, pond, wetland expert, and has sited and monitored municipal wastewater systems based upon stream discharge requirements. He has also served on the Board of a Municipal Sewer Authority. Russell purchased two mobile home parks over a decade ago, and is in the process of buying a third. And yes, the next purchase has a park-owned water/wastewater system, as does his first MHC.  Russell considers community-owned water systems one of the best kept secrets of the dynamic MHC business. Contact Russell James at kingfishergroup@aol.com

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