February 2008

This issue of the MobileHomeParkStore.com and MHBay.com Newsletter includes: 

1. Updates and Other Announcements
2. Tank Tub Recording
3. Comments
4. Building a Rental Battleship, By Frank Rolfe
5. How to Make $60,000 a Year on a $100,000 Investment, By Frank Rolfe
6. Questions and Answers with Dave
7. Tell us what you think and send us your articles!

Updates & Other Announcements:Dave's Mistake of the Month: When you consider that we have written 4 books and recorded over 50 hours of cd's on buying and selling mobile home and rv parks, you would think that our parks should run like clockwork.  However, this is not always the case.  I found out last month that one of my manager and maintenance guys were skimming in one of my parks.  I violated some of my own basic rules and I guess that I deserved it for not practicing what I teach. 

1. Don't accept cash payments - manager was pocketing late fees and providing false receipts for petty cash - my normal policy is no cash accepted ever.
2. Stay on top of contractors - manager was making some extra money when he called a certain plumber - I won't make this mistake again.
3. Watch the maintenance personnel - about $500.00 in heat tape, a $400.00 water heater, and several other items are missing (probably sold).
4. Here is a new one - manager and maintenance guy were in cahoots in renting out extra land in the park for the storage of cars - the residents were supposed to get this for free!

There are probably a few other things that I will never know but I hope to learn from my mistakes...and not make them again. The Educational Side of MHPS.com: About a year ago I was talking with Frank Rolfe at a mobile home park investment seminar and although I had known him for years and had various conversations over that time I never imagined that we would team up and start our own educational series.  Right after he had given the same speech as he had done a couple times before we met for lunch and started discussing the venture. While Frank and I both like making money and helping people out we come from different backgrounds and you won't see us out playing golf or fishing together.  Frank has a public speaking background and is the type that can start and carry on a conversation with anyone.  On the other hand, I am quiet and more of a listener. With mobile home park investments I have always been more apt to buy, fix up, and sell in a year or two.  With Frank, his model was more of a longer term hold.  However, with very few exceptions, we agree on everything else.  We have had the same experiences with park owned homes, we agree on not over enforcing rules other than rent collections, we agree that vacant lots end up costing you money rather than making money, among other things. While we were at that seminar we both agreed and vowed to change one thing.  We did not like the fact that all these people were paying over a $1,000 for a ticket, travel, and lodging and not to mention being gone for 3-4 days.  While you do get some information from these seminars, you have alot of downtime and are constantly pitched product after product.  We vowed to change all of that by providing our books, cd's and teleseminars where you could get many more times the information for less than half of the cost and learn from home or while commuting. While we have succeeded in doing this we are constantly getting calls and emails from those that inquire about when we will do a seminar or bootcamp and some of the other traditional events.  I doubt that we will ever conduct the seminar model because to make that work the speakers have to pitch you products and services and we don't like sitting through 3 days ourselves. We are going to test some things out with upcoming bus tour in Dallas and will follow that up with a Reasonably Priced Bootcamp.  Other events may be upcoming as well.  Stay tuned for more information.  If you have any suggestions, we are all ears (at least I will be listening... Frank is probably talking to someone). Our Mobile Home Park Investing Books are now Available in Paperback

Announcing... The Mobile Home Park Bus Immersion

Join Frank and Dave in Dallas, Texas on Saturday April 12, 2008 and we will deliver an action packed day of:

• Visiting Mobile Home Parks
• Discussing Their Good and Bad Points
• Walking a Couple of Mobile Home Parks
• Answering your Questions until the wee hours of the night!

Limited to 50 people.

Does your Park or Home have unsightly or leaking heating oil tanks?

If so, listen to a free recording I did last month with Kevin of TankTub.com - His company has a great solution to hide the tanks and prevent costly cleanup problems

TankTub Recording

2-25-08

HI DAVE ,

THANK YOU SO MUCH FOR ALL YOUR HELP, INTEGRITY, AND PROFESSIONALISM CONCERNING MY SEARCH AND DUE DILIGENCE ON THE MOBILE HOME PARK IN NEVADA.   YOU REALLY DO NOT UNDERSTAND HOW MUCH OF AN ASSET YOU ARE TO ME.   PLEASE DO NOT BE BUMMED OUT ABOUT IT, YOU SAVED ME FROM A FATAL ERROR, IT IS GREAT TO HAVE YOU IN MY CORNER.   I WILL LOOK FORWARD TO WORKING WITH YOU IN THE FUTURE.

SINCERELY,

JAMES W.

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2-21-08

Hi Terri.

I am writing to ask you to remove our listing from your website. My wife and I have decided to keep the park, at least for a while. I must say I was very impressed with the response we received from the posting, and we actually had several offers, one of which was for nearly our full asking price in cash! (Very tempting, I must admit!) However, we got a new manager at the beginning of the year who has really turned the park around and we can see quite a bright future for the park, so we have decided to hold onto it for now.

As I said above, we were very impressed with the response we received to the ad and would recommend your site to anyone interesting in listing or purchasing a mobile home park.

Thank you so much for all your help, and good luck in the future with your website.

Zyg

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2-15-08

Terri,

After fielding a boat-load of inquiries from my MHPStore ad, I have accepted an offer on my MHP in PA. Would you kindly mark my ad, as “Under Agreement” beneath the “Southeastern Pennsylvania” link and “Thank you for your interest!

Thanks again for your service! I would have never imagined that I would get such an overwhelming response from the ad on Mobilehomeparkstore.com! I only need to hope for a smooth due diligence period, so we can close the sale and continue with our relocation plans.

I will write back after settlement to let you know that I no longer need my ad.

Regards,

Dan

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2-5-08

Park has been sold. Thanks, great site.

Bill - South Carolina

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1-30-08

Hi Dave and Terri,

Thanks for the `Reality-based’ vs. `fantasy-based’ instruction on being successful in the MHP industry. I completely trust your experience! I have used your suggestion about mailings to MHP owners to find several parks for sale, but not on the market. Your CD’s have helped me make more informed investment decisions.

Thanks,

Peter

BUILDING A RENTAL BATTLESHIP

 If you have to rent, at least put yourself in a position to win at it!

By Frank Rolfe

Renting mobile homes can be frustrating, risk-taking, managerially horrible and, in a few cases, profitable. If you want to be profitable at doing it, there are some important tricks that you must follow to have any chance at profitability at all. Remember that if you are trying to make big cash-flow from a park investment from day one, the only option may be to stuff some rentals into it. Putting a rental on a vacant lot and charging $500 per month for it, assuming you only spent $10,000 or less on the home, is a high-cash flow business – 10 homes = $60,000 per year. So how do you build a rental battleship, ready to go to war? 

• Replace the carpet with vinyl

Mobile home park carpet and padding was invented to absorb dog pee, or at least that’s how it seems. Take out the carpet, and you eliminate having to replace it after every tenant. They can buy their own area rug if they want. Be sure to use “sheet” vinyl and not “press-on” squares – they never stick to the particle board floors. 

• Don’t provide appliances 

They never appreciate them, anyway. You’ll get appliance repair calls constantly, and normally it’s their fault. Make them get their own at the “rent-a-center”. Then they can steal the “rent-a-center’s” when they run off, and not yours. 

• Remove all sliding closet doors

They’ll be calling you daily when the closet doors come off the tracks. So just take them off now, and save yourself the aggravation. Only leave the doors that have hinges and a doorknob. Sure, it’s not aesthetically pleasing, but neither is losing money. 

• Weld the furnace in, so they can’t steal it 

A mobile home furnace is a $2,000 item. Don’t let them rip it out and pawn it. It’s the first thing they’ll do if they can’t pay the rent, especially in summer. Make it impossible to get out, with a cage of steel, or a bunch of bolts. At least try to discourage them. 

• Weld the outside A/C in place so they can’t steal that 

Again, it’s too easy to steal and pawn. Bolt it to the ground, or weld it to something that attaches to the house. Don’t make it easy to take. 

• Only use one paint color on the interior 

Sure, using a ceiling white, and a different color in several rooms is more glamorous. But the reality is that the tenant will trash the joint, and you will have to always re-paint or touch up the interior before you can re-rent it. So make it easy on yourself, and use just one standard color. That way you never have to worry about matching paint. 

• Buy fiberglass stairs 

Wooden stairs are junk. They fall apart. They rot. They look bad. Here’s one upgrade for your tenant, that saves you money in the long run, too. Replace your old wood stairs with fiberglass with a metal railing. 

• Only buy metal – on- metal mobile homes for rentals 

Every other wall and roof surface goes bad quickly. Here’s one time in which the bottom of the product line is the best for your purposes. Metal lasts forever and is easy to maintain and repair. 

• Replace plastic hardware with metal 

Do you think they use plastic hardware in mobile homes because its better, or cheaper? If you guessed better, you need to go hang out at Home Depot for awhile. Bite the bullet and get rid of the plastic hardware (door knobs, hinges, etc.) early on, and replace with real metal hardware. 

• Only buy two bedroom homes for rentals 

It’s almost impossible to rent a one bedroom. Even a single guy wants one bedroom to sleep in and one bedroom to (choose one): 1) store his beer 2) store his kidnapped slave 3) store his gun collection 4) all of the above. 

• Make sure that at least one bedroom can hold a king size bed 

They are willing to let the kids sleep in a bureau drawer, but they want a king size bed for the master. Small master bedrooms are hard to rent. 

• Make them pay weekly, or at least twice per month. 

These folks are the bottom of  the food chain, and they can’t budget or save. Don’t make them. Get the rent weekly, as they get paid, and they don’t have to worry about saving one dime for next week. It really is better for both of you. If you are determined to be in the rental business, at least follow this advice to improve your chances of winning. If you follow this advice, and do the repairs yourself, you just might make big cash flow. And if you are trying to replace your day job with park income on day one, rentals are the only game in town.

HOW TO MAKE $60,000 A YEAR ON A $100,000 INVESTMENT

 If you already own a mobile home park

By Frank Rolfe

So you own a mobile home park. But it’s not making enough cash flow to meet your bills, and your wife just got laid off. What do you do? You might consider rentals. Mobile home park owners have been reverting to rentals to cover the bills during recessions since the origins of the industry. Although they are management nightmares and require you to do all of the repairs to make money, if you have no other choice, it’s a lot better plan than selling Mary Kay or multi-level marketing to get cash flow quick. There are, believe it or not, some advantages to renting mobile homes over selling them and carrying paper (the popular “Lonnie deal” concept): 

• RENTALS REQUIRE NO DEALER LICENSE

If you sell more than one home per year, in most states, you have to have a dealers license. This can require you to go to school, and post a bond, and observe a ton of regulations to make your life miserable.  Rental landlords escape this mess. 

• RENTALS DON’T REQUIRE A KNOWLEDGE OF CONTRACT LAW

A lot of folks are selling homes and not doing the paperwork correctly, or breaking usury laws – when you rent, you escape all this stuff. And best yet, instead of foreclosure, you get to evict the tenant, which is much faster, cheaper and easier. 

• IT IS ALWAYS EASIER TO RENT THAN TO SELL A HOME

Most people only buy a used mobile home as a last option. If you put an ad in the paper “for rent” it will get ten times more calls than “for sale”. 

• ON RENTALS, THE INCOME STREAM NEVER ENDS

When you sell a mobile home and carry the paper, you are not going to get that income stream for any longer than the life of the loan. Five or ten years later, it’s gone. When you rent, you get that income in perpetuity. 

• ON RENTALS, THE INCOME STREAM GOES UP OVER TIME

When you sell a house and carry paper, you only get that set amount for the life of the loan. When you rent, you can increase the rent at every lease anniversary. 

• WITH RENTALS, YOU CAN MAKE A HIGH CASH FLOW ON A SMALL PARK

A 10 space park with no rentals, at $200 per month lot rent, might make $12,000 per year. The same park with 10 rentals at $500 per month might make $50,000! 

• RENTAL CUSTOMERS ARE WILLING TO ACCEPT LOWER STANDARDS ON HOMES 

Since they don’t own it, they are willing to put up with smaller rooms, and yucky finishings throughout. They are a lot less discriminating than buyers. So if you have a park, and $100,000 in cash (assuming $10,000 per home total cost), it might be to your advantage to look into buying 10 rentals for your park –but only if you need the cash flow desperately and are willing to do the repairs and put up with the hassles of being a rental landlord. It’s tough work, but at least it pays the bills.