THEY ALL LAUGHED WHEN I SAID I WAS BUYING A MOBILE HOME PARK… BUT THEY SHUT UP WHEN I SOLD IT FOR A $1 MILLION PROFIT By Frank Rolfe

In 1996 I bought a mobile home park. Everybody told me it was a terrible idea and I would lose all my money. I couldn't really blame them as it was one of the nastiest mobile home parks in Dallas. But even then, I was impressed by a few factors:

• The zoning was very rare. If you look at zoning maps, you'll see that "MH" zoning is just about the hardest thing to find. That means that mobile home parks are scarce and scarcity equals value. I knew the theory of supply vs. demand and this was a major turn-on.
• The rents were absurdly low – even given how bad it was. Lot rent at this park back in 1996 was around $150 per month. That's $5 per day. I had no idea what the fair value was, but it seemed odd that the lot rent was less per day than lunch.
• My investment was backed by land fronting a major freeway. The Park had seven acres of land on a freeway. I liked that backstop. It meant that, if the park was a failure, I could just sell it for land value and get most or all of my money back.
• The terms that were offered were unbeatable. The seller agreed to carry the financing for thirty years with only $10,000 down – I had never even heard of financing like that.

Then, after I bought it, I learned a few more things that blew me away.

• The demand was phenomenal. The first time I ran an ad for a mobile home in this park my phone rang off the hook. I was getting like 20 calls a day. I had never seen so much demand for a product in my entire working life.
• The customers never left. Because the park was so cheap – and all other housing was so expensive – customers never left. I knew what my occupancy was going to be every day because it never changed. That gave me huge peace of mind.
• It did not take a lot of capital to fix things up. Mobile homes are all about painting and other low-cost methods to enhance their appearance. And the parks themselves are all about roto-rooter and simple fixes.

Fast forward about seven years and I sold the park for around a $1 million profit. The lessons learned were many.

• You can make a fortune filling lots and raising rents. By filling a couple dozen lots, raising rents to market levels and cutting wasteful spending I was able to make a million bucks.
• The customers like paying higher rents as long as you also increase their value. The woke narrative that raising rents is "evil" is pure nonsense. Customers have absolutely no problem paying higher rents as long as the park quality increases proportionally. If the woke folks were correct that all people car about is price then we would all shop exclusively at the dollar store and all other retail would collapse. And, in the same vein, we would all go to community colleges and regular universities would universally shut down.
• Staying aligned with what banks want is the key to success. Real estate is all about utilizing leverage as a tool to increase yields and, if you want to succeed, you need to stay strictly aligned with what the banks want. And that's a strict focus on being a "parking lot" for mobile homes. My one early goal with that first park was to make it what a bank would want it to be.
• Get rid of rental homes. Following up on the above statement, the worst thing you can do is to rent mobile homes. They are profitless money-pits and destroy the entire business model. When you buy a park that has them, sell the homes off as fast as possible.

If you want more information on mobile home park investing – including the science I learned from this deal and hundreds of others, then attend our next Mobile Home Park Investor's Boot Camp. You'll learn how to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate mobile home parks.

By Frank Rolfe

Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.