How to Rent Mobile Home Lots in a Down Economy
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You can't be a mobile home park owner and not realize that the good old days are over in filling up vacant mobile home park lots. Those of us who owned parks in the late 1990s became spoiled with how easy it was to fill up a mobile home park. Back then, all you had to do was to meet with a few dealers, drop off some flyers, and you would start bringing in a home a week.
Enough of the history lesson, you're saying. How do you rent mobile home park lots in this market? Well, it's a lot harder. But if you follow these steps, you'll find it can be done.
Don't Ignore the Dealers
Just because they are not selling like they used to, you cannot turn your back on your local dealers. They still sell homes occasionally. Make sure that you have a stack of flyers at every dealership, and call them once a month to make sure they have not forgot about you.
Offer Dealers This Deal
Every dealer has some "junk" homes at the back of their lot. Normally trade-ins that weren't of much value. Pitch the dealer on taking those junkers and bring them into your park. Throw some skirting on them and re-paint them, and sell them on location. You won't charge them any lot rent until the home is sold. I've had dealers bring in as many as ten homes under this program, and it works pretty well. There is a lot of pent-up demand for mobile homes that are already set up in parks, as long as the seller carries the paper, or the price is so low that the buyer can come up with the cash.
"Lonnie Deals" are Great As Long As They Are Not Yours
I don't think that buying and selling used mobile homes is that great a business but there are those who do. So let them bring in the homes into your park and you keep your money in the bank. You can find these folks by asking around, places like dealers and people who move mobile homes. You can also find them by driving through other parks and looking for similar signs and phone numbers on homes for sale. When you find one, offer them no lot rent until the home is sold.
Steal Thy Neighbor
If there is a park owner doing a lousy job in your market, consider offering his tenants the ability to move, free of charge, to your park. You can send a direct mail piece to his tenants, who hopefully are not very happy where they are. Make sure not to steal tenants who are still under lease with your competitor. That would break a law called "tortuous interference of business". And be very sure that your tenants like you more than him, because he may return the favor by sending a letter offering the same deal to your tenants. Only pick a park that is in real trouble, and cannot mount any effective attack on your tenants. Sure, the move will cost you about $2,000 or more, but it's a whole lot cheaper than the next option.
Bring in Homes and Sell or Rent Them
This is my least favorite option, since it costs a lot of money and creates lots of management problems. If I didn't have to do it, I wouldn't. The only gain is from filling a lot and getting the lot rent going. But as far as making money in selling or renting the homes forget it. Used mobile homes are money-pits with no upside. If you have no other way to fill lots, at least make sure that the value of the lot your rent (lot rent minus expenses x 12 x 10) equals or exceeds the cost of the home. For example, if your lot rent is $200 per month, with expenses of $60 per month, then the resulting $140 x twelve months x 10 equals a value at a 10% return level on the benefit of getting that lot occupied. If you spend less than this amount of value-add, you at least won't lose money if you bring in a home and give it away for $1 (which is sometimes where you end up).
Conclusion
Yes, you can still fill up your vacant lots. But it's a lot harder than just dropping off a stack of flyers at your local dealer. If you follow these suggestions aggressively, you should be able to create a positive fill rate and increase your cash flow and value substantially.