January 2008

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

1. Extra Question and Answer Session Every Week - FREE!
2. First Ever MobileHomeParkStore.com Live Event
3. FREE Audio Download with Dave and his MHP Managers
4. Questions and Answers with Dave
5. Updates and Other Announcements
6. Don't Hold Park Residents to a Higher Standard than their Subdivision Neighbors, By Frank Rolfe
7. Tell us what you think and send us your articles!

FREE Question and Answer Sessions

I have been receiving many questions via email every week and am having a difficult time getting to all of these.  I am going to set aside a couple of hours every month where you can call in and ask your questions. 

I will post the times and call in numbers on our Events page.  These sessions will be at different times so everyone can find a time that works for them.

Here is a link to the Events Page

Announcing... The 1st Ever 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.

1-22-08

Dave,

I just wanted to Thank You for your assistance in the due diligence of the Mobile Home Park. The spread sheet was very helpful in discovering the correct value of the park. Your information was very much appreciated and better yet am glad to have spoken with you. You have shown with your fast response time and information given you are concerned about the success of others. Thanks Again and I will Keep in touch with any future deals as I keep searching. (The offer was not accepted) Joe

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1-21-08

Hi Dave,

Thanks so much for the information. I place a very high value on customer service. As far as I'm concerned You, Terri and Frank are second to none in this business for providing great information with your complete and rapid response to orders, information requests and questions. I've attempted to contact several other program operators by e-mail and telephone to no avail. The level of customer service you provide is a rare thing these days and you should all be proud of the work that you do. Thanks again, Carsten

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PROPERTY IS SOLD ! Also thanks for your assistance on a great site to advertise our MHP/RV parks for sale. It works! Thanks,

Dan Lunetta, Heritage Pacific Realty, Inc. (January 23, 2008)

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Hello!

I am a former member of one of your educational competitors programs and I must say, I wish Dave and Frank would have started their program long ago...they really have it together. I have learned so much more from Frank and Dave's program than I could have ever learned from the other gentlemen. Dave and Frank really do know the business and their materials have helped me buy 5 parks (4 of them I found on your website) in the last year. I felt confident in the deal making and due diligence and I feel I have set the parks up to run in an efficient and profitable manner. I am contacting you to thank you ALL for your assistance and to wish you a Happy & Profitable New Year! Cheers, Rob R. (January 11, 2008)

DON’T HOLD PARK RESIDENTS TO A HIGHER STANDARD THAN THEIR SUBDIVISION NEIGHBORS

IT’S NOT GOOD FOR YOU OR THEM!

By Frank Rolfe

Most every mobile home park owner in the U.S. has a list of rules attached to their lease which is longer than the lease itself. While it’s always a good idea to cover your bases and address every possible behavior concern, it’s another to expect people to follow more rules than the local prison. More importantly, what’s in it for the park owner? It’s my theory that you should not expect to hold mobile home park residents to a higher standard than those of the folks who live in brick houses in the nearest subdivision. It would make sense that someone who lives in a mobile home is less likely to obey the rules than these stick built home occupants, so why are their park rules ten times longer? Take a drive around the subdivisions nearest your park. What do you see? I’m betting you see the same things you do in your park. High grass, junk in the yards, non running vehicles and the like. They are just better at hiding it because you can’t see into their back yards as easily, and the non running vehicle is up on blocks behind the house. Still, the general quality of violation looks a lot like your park. My point is that humans, regardless of demographics, violate certain rules as a regular part of their existence. It may not be aesthetic, or morally right, but trying to fight it is like trying to stop the Mississippi River, basically impossible. Does that mean that you should reduce the number of rules attached to your lease? No, you want to have every contingency covered. However, you may want to think again about what you enforce, and how hard you enforce it. For guidance on this concept, let’s look at a typical city government and what it asks of its residents and how they force compliance. 

• High grass: In most cities, having grass over a certain height, normally 8” is a violation of code. As a result, violators will generally get a warning and a deadline to comply and, if not completed, will get a fine and/or someone from the city will mow it and bill you for it. They don’t threaten to evict you, and they don’t set the rule at some ridiculously low level like 4”.
• Non running vehicles: If you don’t get rid of them, after receiving a warning, you will get a significant fine. If you don’t pay the fine, you will get arrested. Perhaps we can substitute “arrested” for “evicted” in the park rules theology.
• Junk in yards: Again, if you don’t clean out your yard, they will fine you and force you to pay. However, you have to have a lot of junk to trigger a code officer writing you up.
• Aesthetic issues: Painting your house for example. This is hardly even covered in most city ordinances, because they only deal with the absolute worst, most community damaging offenders. They don’t get involved in the small stuff, and maybe you shouldn’t either.
• Just about everything else: Loose dogs, loud music, etc. This is a police matter. It should be for your tenants too. You should not get involved in being the enforcer. That is what police are for.

I think that this is really about all you need to follow on rules enforcement. Some owners have built a career on rules. They spend every waking hour harassing tenants and sending threatening letters, but does it make them any money? Some might argue that it does in the form of making the park more desirable looking for new tenants, or park buyers or lenders. I would agree, but you can always “doll up” the park right before putting it on the market or refinancing it. As for new tenants coming in, let’s get serious, how many new homes are being sold and moved into parks in your area? That’s what I thought. As for resident retention, you are just as likely or more so to scare off existing tenants with a lot of rules and tough enforcement. If they wanted a beautiful, problem free environment, they shouldn’t have moved into a mobile home park in the first place. Further, I have found such demanding tenants never stick anyway, since they are always unhappy and end up moving out no matter what you do. In conclusion, try taking a more mellow, practical view to rules and their enforcement. Your life will improve, and so will your tenants. You can devote those “rule enforcer” hours to more productive uses, like making money.

Q&A with DaveQuestion: Hi Dave, Feel free to reply that you are not the Dear Abby for mobile home park investors. Otherwise, I would appreciate your sage advice, since I could not find these answers in your books. The appraisal came in low for the MHP I am buying and the seller is reluctant to carry. He is countering with a "wrap," which he describes as us paying him cash and then take over his loan payments. The loans are not assumable, so that's not an option. We would have one year to build up occupancy and take out a conventional loan then to pay him off. Our concern is that lender could call the loan once they find out that there is a new owner. They would learn that there is a new owner because we would receive the deed to the property and a new insurance policy would be taken out. The seller claims that this is a risk that "hardly ever happens," but it is a risk nevertheless. Have you encountered this situation yourself? Thanks and Happy New Year from beautiful and snowy Idaho! David Answer: David, Happy New Year from Snowy Colorado as well! This is a great question and I will elaborate on it in a future article or book update. Here is my 2 cents. I would absolutely positively not go with this arrangement. Your loan can be called and then you can have problems getting a new loan. The only way to work under an arrangement such as this is to use a lease option and only after you review the loan documents to make sure a lease option will not trigger the due on sale clause. Some loans don't allow lease options either. If the appraisal came in low, the options I would look at are: 1. Have the price reduced to the appraisal (best option and at least some price reduction is in order... the seller will have the same problem with another buyer unless they are paying cash.) 2. Have the seller finance the difference as a second 3. Get a new appraisal paid for by the seller 4. Possible lease option (if allowed by the loan) I have seen many loans called under this wrap situation and if I had to put a number on it, it would be somewhere in the 30% of the time range. I don't think it is a risk worth taking unless you can afford to pay the loan off if it is called. Thanks again for the question and Frank and I will elaborate more on this in the near future. Dave 

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Question: Dave, I live in Sacramento California and can't make heads or tales out of the DMV site. I need to know if I have to have a dealers license if I buy mobile homes, Leave them on the site and resell them and carrying the note myself. I plan on doing this10 to 20 times a year. Please help me find the answer. Bob & Karen Answer: Bob & Karen, Here is the website for the license information. If you want to sell mobile homes you have to be licensed in one of two ways. As a dealer ( $1,400.00 + exams & education), or be licensed under a dealer ( $250.00 + exams & education). All the information is on the site below and also you can call them if he you have further questions. http://www.hcd.ca.gov/codes/ol/ Thanks, Dave

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Question: Dave, we are set to purchase our first Mobile Home Park this month, and your website and information has been invaluable in this process. We are putting a large chunk of our savings down on this park, and will not have money left to purchase a second park, as we would like to do. How does an investor manage this, and purchase multiple properties (as you have)? The only way I know how to do this is to hopefully sell our park in a couple of years at a profit, and then use the profit to possible purchase 2 more, and then repeat. Is there something I'm missing? Thank you! Stacy Answer: Stacy, Thank you for your comments on the website and I wish you the best of success with your new mobile home park purchase. As for your question, I started off without any money in the bank when I bought my first park. I basically advanced credit cards to get started. Then I refinanced my first park, bought a second park, sold the second park for a nice profit and then was able to repeat the process. I am not promoting using credit card advances unless you find an incredible deal. I believe that if you find a good park to buy, you can find a way to do it (partners, private money, owner seconds, etc). I think the best way to acquire multiple properties is to get started with the first one (as you are doing) and then be on the lookout for other deals. When you find one that makes sense, then look at your options. You may be able to refi the first park after a year of ownership, take out a second mortgage using a hard money lender, find a partner, or tap into credit lines. Hopefully this provides some encouragement and I would love to hear about your successes! Dave

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Question: Dave, Thanks for responding to my email. Hope to meet you in the future. I did have one little issue that came up. My park has about 2/3 low income people and 1/3 weekenders who just come down for a desert retreat. They have money and some of them can be pushy. Two weeks ago one of these difficult guys had some electrical problem with one of his circuits and called an electrical without first talking with us. I happen to be there with my handyman who probably could have fixed the problem, a dirty connection behind the meter. Next my tenant deducts the electricians bill from the rent. He got billed at 2.5 hours @ $100 / hour . This same electrical works for me @ $65/ hr. I am temped to just pay the bill based on the rate I get and tell him he needs to talk with us next time. How would you handle that? PS. The park still does not have any rules, regulations, contracts, or agreements of any kind. I am working on that but now its like the wild west. Thanks for some enlightenment! Robert Answer: Robert, I look forward to meeting you as well.  As far as your question, I would work diligently on getting the new leases and rules to everyone in the park.  This issue would be addressed in the lease.  This resident and others may have been accustomed to calling out contractors in the past when there were similar problems and they may not been trying to go around you but were just assuming that was the proper way to do things.  Of course, this may not be the case.  I would talk to this resident and put it in writing that you will handle the repairs and calling in the contractors in the future.  otherwise, they will be responsible for the bill. Also, I would call the electrician and see if they will cut the rate down to the normal rate of $65 per hour and explain the issue. Hope this helps, Dave

Tell us what you think! We'd love to hear what you think of this issue!

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Until Next Time! Dave Reynolds MobileHomeParkStore.com 18923 Highway 65 Cedaredge, CO 81413 PH: 800-950-1364 FX: 970-856-4883