Archive for April 22nd, 2012

George Allen’s Blog Floggers Reply!

Sunday, April 22nd, 2012

George Allen’s Blog Floggers Reply; & ‘How to Make $1 Million’

Responses to Last Sunday’s Blog Posting re NCC Forum & MHCongress

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‘How I Made Almost $1 Million Profit On My First Mobile Home Park’
(No, not a GFA tale, but someone else ‘with their story to tell’, kinda…)

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Responses to Last Sunday’s Blog Posting re NCC Forum & MHCongress

“On one hand, ‘Congrats to MHI for putting on one of the best meetings I’ve attended in a long time!. The excellent program topics and keynote speakers attracted many interesting, experienced, and generally optimistic attendees.”

“On the other hand…how about some tables near the registration desk, or at the back of the main meeting room, where anyone can place handouts or copies of documents that attendees can peruse before the meeting and during breaks? “ SR Regarding this latter point, another blog flogger (reader) commented: “Great post!!! I will discuss your PAY THRICE comment, for sure, with MHI!” KL This has to do with MHI’s ‘newly enforced old policy’ outlawing handouts at its’ events – from anyone but event sponsors. As another blog flogger succinctly but sadly put it: “I found…MHI’s discrimination perfectly predictable.” NB

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Then this; “Despite the continuing ‘feel’ of the ‘good ol boys club’ that prevails at MHI events like this (i.e. major HUD Code manufacturer reps & largest property portfolio execs are speakers, lead panels, and garner most of the ‘manufacturer’ & ‘community’ of the year awards), I thought the one over – riding positive of this MHCongress was OPTIMISM. And I recognized at least five signs of positive things ahead: favorable demographics, continuing landlease community consolidation, financing for inventory, new chattel finance programs (Think 21st Mortgage Company’s new C.A.S.H. Program & give Lance Hull a call) for retail sales, and realty – secured mortgages for LLCommunities engaged in home sales and self – finance.” JR

Bottom line? ‘Some very GOOD with some NOT so very GOOD. Are you paying attention MHI? And onto this….

“Good to see you mention the fracking phenomenon. The (resulting) new home shipments are NOT insignificant, and certainly underscore this industries ability to quickly, and appropriately, address such housing boom needs!” DF However, as I attempted – albeit unsuccessfully – to warn, at the conclusion of the ‘manufacturers’ panel presentation’, let’s not get carried away by unbridled optimism about what might be, or could turn out to be, a relatively short – to – moderate length phantom housing market, before and if chattel finance finally returns to our industry and really rejuvenates it!

Finally. “NOT need a professional property manager on – site in landlease communities?!! Are you kidding? Without years of property management training, I would be such a failure to ownership and my residents. So glad now to be an MHM®!” VG This from an on – site property manager overseeing a 1,000 + rental homesite LLCommunity! Really. It was such a disappointment, to hear property management (‘PM’) executives from two of the ten largest portfolio owners/operators of landlease communities, publicly belittle any need for ‘professional property management training and certification’, that so many have espoused these past 20 years. In my opinion, there should be at least one Certified Property Manager® or CPM® member of the Institute of Real Estate Management ® in the COO or CEO position at each of our 20 largest firms! And every on – site and regional PM should be either a CPM® Candidate, a bona fide Accredited Community Manager® or ACM® (Meaning they’ve completed all three levels of the ACM® program, not just one or two) and or a Manufactured Housing Manager® or MHM® designee. Is your firm thus staffed? For the good of the industry and asset class, let’s hope so…

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‘How I Made Almost $1Million Profit On My First Mobile Home Park’

No, not me! GFA. Rather, this is the Attention – Getter, the ‘hook’ used by a couple well – known landlease community owners (They consistently use ‘mobile home park’ lingo) who routinely host Mobile Home Park Investors Boot Camps, for would – be investors in our unique income – producing property type. You likely read a monthly column, by one of them, in our industry’s last surviving, advertising – supported, trade publication. So, thought you’d like to see how our realty asset class – or what they call ‘mobile home park’ investment is ‘pitched’ these days….

“I bought my first mobile home park at the end of 1996. It was a total dump. And it was in the wrong part of town. Nobody would have ever imagined that it had any future. I only bought it – at that time – for three reasons: 1) It was cheap 2) the seller was carrying the paper and 3) there weren’t a lot of mobile home parks in Dallas so I figured there had to be some type of supply/demand shortage (if I could just figure out what the demand for this product type was).”

“I bought 83 spaces for $400,000 with $10,000 down and the seller carrying $390,000 for 15 years. Had I known how to do due diligence (I’d never heard of the term back then) then I’d known that this park had all kinds of serious flaws, such as a failing natural gas system and a troubled electrical system. But in the end I fought through all these problems with about #100,000 of additional capital spend and lot of terrifying moments.”

“Meanwhile, I unlocked one of the most powerful drivers in the mobile home park game: the enormous demand for affordable housing. The prior owner had a manager who was a crack addict, and did absolutely no advertising, so there were a pile of vacant, park – owned homes sitting there when I arrived. So job # 1 was to get those sold and income producing. When I got the first one cleaned and ready to sell, I ran a small newspaper advertisement in the Dallas Morning News. I didn’t expect much, maybe a few calls a week. So you can imagine my shock when I got around 20 calls in the first day, and sold the home by the second. I certainly had no idea that the demand to live in a junky trailer in the wrong part of town could be that strong.”

“But I learned over time that a family living on minimum wage only has two options: 1) a mobile home park or 2) a terrible apartment complex. Between the two options, the mobile home park is executive housing. Using just that one item – giant insatiable demand – I filled up all the vacant homes and started to bring in more to sell. Day after day, the phone would ring off the hook, and I could sell anything that humans could live in. I even brought in a few old RVs on the tiniest lots and those sold, as well.”

“Fast forward about 8 years, the park had every usable lot occupied. And my income had shot up due to twice the number of tenants, and twice the original monthly rent (I had been raising it up every year). So I sold the park to somebody else of $1,525,000 – about $1 million more than I had in it. And even then, it was a good deal, as the park was still under market on its rent, and the phone was still ringing off the hook. I heard through the grapevine that the person I sold it to was offered a good profit years later, but refused to sell because they like the monthly income and the park was easy to run. And, of course, the failure of the U.S. economy has only made the phone ring more.”

“If you are interested in these type of real estate deals, then you should consider attending the Mobile Home Park Investors Boot Camp. It’s a three day immersion event in which you learn how to locate, evaluate, negotiate, perform due diligence on, turn – around, and operate mobile home parks, both in a classroom setting and in the field in real mobile home parks.”

So, there you have it; an unvarnished, unedited (Who needs commas anyway?), firsthand description of how one self – proclaimed, successful landlease community owner’s views our real estate asset class. Yes, it’s penned to appeal to the natural greed characteristic of many, if not most, folk; particularly ‘wealth wannabees’. And along the way, it does misrepresent and ‘dis’ (as in disrespect) the vast majority of landlease communities across our country today, and certainly denigrates the owners/operators thereof. I’ll also wager these guys, like the execs described earlier in this particular blog posting, don’t advocate ‘professional property management training and certification’ either. So Sad. BUT, if you’ve read the previous six paragraphs, and find yourself drawn to a ‘need to attend’ a Mobile Home Park Investors Boot Camp, let me know, and I’ll provide the dates, location, and contact details – reluctantly.

There’s a postscript, of sorts, to this scheme. I understand many ‘would be investors’ have participated in past Mobile Home Park Investors Boot Camp events. And an indeterminate number have indeed acquired – or attempted to acquire, their first income – producing property in the recommended manner. But the end game for some, if not many – in my experience – has not been akin to that of the event promoter. Rather, they wind up finding their way to this industry observer, in my role as a property management consultant, seeking advice on how to save what remains of their inheritance, their spouse’s fortune, someone else’s investment capital, their pride and reputation, and the like. Unfortunately, by the time they contact me, there’s not much left that can be done, they don’t have the dollars to pay me, so they walk away Wiser but Poorer, and thoroughly Disillusioned with ‘mobile home parks’.

More on this sordid subject next week….

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George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156