#110 - AUGUST 2017
FREE, NO OBLIGATION. INFORMATION-ONLY
Our next MHP Investor Conference
Tuesday, August 22 at 6:00pm
in Oakdale CA
We put on two or three MHP Investor Conferences each year. With them, we aim at two distinct investors: 1. Those who already own MHPs; and 2. Those who want to own a MHP. Of interest to MHP Owners now, we share our hard-earned secrets about how to get the most from you MHP, how to problem-solve, how to turn it around, how to get it making more money, increasing its value, and much more. Of course, any would-be MHP Investor would benefit from the information above, but we go beyond that, by explaining the basics, how we find parks, how we judge them, conduct your due diligence, come up with an Operations Plan for it, and so on.
Please RSVP with me, Andy Tallone at (925) 323-2134 or email me.
Our audiences appreciate our simple talk, plain facts, and straight-forwardness. We don’t pull any punches, but at the same time, we keep it light and interesting. Many comment later on how they have been looking for someone who knew something about MHPs, but until then had been unsuccessful. Most are delighted to find that MHPs are all we do, and we’re very good at it. At present, we’re consulting on, buying, selling, managing, running, and in a few cases owning (yes, we own MHPs ourselves) on over 90 MHPs in 19 states, all in various stages of the process.
We get into Actual Hard Numbers on some of the MHP deals we’ve done recently and finished, along with some that we’re in the process of turning around now, and others that are done or nearly done (what might be referred to as “Turn Key”).
All in all, we try to wrap it up in about 2 hours, so we cover a lot of ground rather quickly. However, we open up for Q&A at the end, and we make ourselves available to
meet with you one-on-one for as long as you wish. There is NO COST OR OBLIGATION, this is meant purely as INFORMATION-ONLY. We want to show you what MHPs are all about, and how you can make money with them. We’d like to introduce ourselves, and what we do, and show you some real-world examples. And we’re going to show you some examples of the MHPs you can buy and make money on yourself.
Please RSVP with me, Andy Tallone at (925) 323-2134 or email me.
This next FREE MHP INVESTOR CONFERENCE will be held on Tuesday evening, August 22, 2017 in Oakdale CA (just east of Modesto). Why Oakdale? Our office is in Oakdale. We start promptly at 6:00pm, but seating is limited, with hors d'oeuvres at 5:00. Seating will be limited, so please plan to show up around 5:00. This will also give us more time to talk. You are more than welcome to bring a guest, just please RSVP with how many plan to attend. Please RSVP with me, Andy Tallone at (925) 323-2134 or email me. We have had such a response to these events in recent past that we don't give away the location anymore without talking with the people first. We don't allow walk-ins. Hope to see you there. Call me for your FREE RESERVATION to attend.
* SOME OF THE SUBJECTS TO BE COVERED:
* HOW TO FIND A GOOD MHP
* HOW TO TELL A GOOD MHP FROM A BAD ONE
* DUE DILIGENCE: WHAT TO LOOK FOR/LOOK OUT FOR
* DEVISING A WINNING OPERATIONAL PLAN FOR YOUR MHP
* MHP MANAGEMENT (including hiring an onsite Manager)
* CHECKS & BALANCES: KEEPING EVERYONE HONEST
* IMPROVING OUR RENT COLLECTIONS / EVICTIONS
* INCREASING THE NET INCOME
* INCREASING THE PROPERTY VALUE
CALL FOR YOUR FREE RESERVATION: (925) 323-2134
What's going on in the MHP Biz?
TENNESSEE MHP SELLS AT A 12.6%-CAP
And we bought it! We closed escrow on a very nice 50-space park on the outskirts of Memphis TN last month. We got it for $650,000 with seller financing (about half down, in this case). It included 33 Park-Owned Homes (POHs), which, if you know anything about us, we love! They were all rented too, and very nice units, as it turned out during my physical Due Diligence (DD) of the park. POHs sitting in your park ready-to-rent are worth around $15K each, on average. So, we paid $650K for the whole park, but it included $495K in rentable POHs, which were already rented.
After factoring in what it will cost us to run it (we'll have to hire a manager and pay normal maintenance costs, whereas the seller used to do all of that himself. This brought his expenses down, and this is a very important point, you won't be able to run it for that, because you'll have to hire an onsite manager, and probably an offsite
manager (you should), and all the maintenance and repairs that the seller used to do for free. Having run as many parks as we have, we have a very good idea of what things should cost, and what to look for, both on paper and at the park. And we build in plenty of cushion, just in case we missed something.
And with all that, it was still a 12.6% Cap Rate. And there's still plenty of upside. There are 7 vacant spaces in the park now that we are already in the process of filling. Please see the article below to fully understand the power of owning POHs. In my opinion, you can't afford not to. But it doesn't end there. In the county we're in in TN, we can add spaces as long as they conform to their standards. No permits required other than to finally hook up a MH to the electric meter, which must be done by a licensed electrician. That's it. That and $2500 for a water meter, around $1000 to install a power pole with the meter and hookup, run a sewer line,
and grade a pad. It's not very much, when you think about it, considering how much we'll make by adding all those POHs, ultimately. We estimate there is enough extra space in the park to add an additional 15 spaces. Now that's what I call upside.
I don't want to spoil you by talking about a deal like this, because most of them aren't this good. Some are, and this one happened to be. But, many of the deals we see in the South and the Midwest, that we would consider anyway (there are lots of crappy deals everywhere, but we don't look at those) start around an 8%-Cap with tons of upside, that in some cases exceeds 15% or more. Many, like this one, offer seller financing. We just spotted another one in TN where all the spaces are separate deeded parcels, meaning you can put a MH on one and sell it off, land and all. A local realtor tells us a singlewide on a lot should go for around $40K. Lots of possibilities here.
If you've been trying to find a way
to get into the MHP business, but you've been beating your head against the wall chasing the worthless junk you find online, then call me. I love talking MHPs and I'll take my time to talk to you. No selling, no pressure, just plain talk about making money with MHPs. Call Andy Tallone at (925) 323-2134, or email me at firstname.lastname@example.org.
BIG MONEY IN PARK-OWNED HOMES
I know, I know, I've heard it all before, and so have you: "Don't own the trailers, the maintenance will kill you." And they're right...if you don't have someone like us, with multiple overlapping systems of checks & balances, and all the resources in place to run MHPs right. We're currently running 94 parks in 19 states, with over 10,000 tenants total, of which around half live in Park-Owned Homes (POHs). So, I know of what I speak. The returns can be so high, and the cash flow so good, that you can't afford not to own some trailers. Maybe not in certain markets, like California and most of the Western states, and anywhere else where the space rent is approaching or exceeding $500/month.
But in most of the US, space rent is around $200/mo, but you can get maybe $500/mo for a POH if it were sitting on that space. We prefer to buy MHPs that have lots of vacant POHs already in the park that just need repair
to be made ready to rent. The first thing we do once we control is to send in one of our crews to fix all those home, starting with the easiest first. Our average cost for one of our crews to make a POH already sitting in a park rent-ready is around $4600. So, we figure $5000. We're going to rent that unit for $500/mo or $6,000/year. The big maintenance cost that everyone is so afraid of is around $1,000-per-year-per-POH. That's it! Now, can everyone do it for that? Probably not. But that's what we've been paying, on average, to repair, maintain and pay for any annual tags or tax on that unit. So, if we take that out of the rent, we end up netting after expenses, around $5,000 per year on our $5,000 repair job. That's a 100% return on that money! You'd be crazy not to do that, right?
We get them done and rented, then we start working on filling vacant spaces and we do it usually by buying used MHs which, in most of the South runs around
$15K or so, including buying the MH, moving it, setting it up, skirting & steps, hookup, permits, cleanup & repair. Same income model as above, so we should net around $5K/year on each POH we buy. $5K/year on $15K is a 33.3% return! What else can you invest in that will give you anywhere near 33%?
So, this is the part where some might say, "Yeah, but you can sell them instead of rent them". And that is true. But what these people haven't realized, because they haven't been through it like we have, is that the people people who would have rented it from them will be the same ones who will end up buying it, with the same move-in money and the same monthly budget. And you'll likely find (in the South and Midwest anyway) is that it's around $1,000 and $500/month. So, if they buy it, they give you $1,000 down, pay you $200/month space rent, and a trailer payment of $300/month. If you rent it to them, they'll give you first month's rent and a deposit
totaling $1,000, and they'll pay you unit rent of $500/month. So, all that money is the same.
But, the good tenants will pay their trailer off as agreed, maybe even early, and you'll go from making $500/month to just $200 space rent. The bad tenants will trash the trailer, stop paying rent, you'll have to evict them, and rebuild it before you can do anything with it again. Which shatters two myths:
MYTH #1: IF YOU SELL THEM, YOU CAN AVOID REPAIR COSTS
On the good half, yes, but on the bad half, they'll trash it badly enough to offset the good ones, and tie up the unit for months getting them out, then getting it ready again.
MYTH #2: YOU CAN TAKE THEM BACK & SELL THEM OVER & OVER AGAIN
That's actually true, you can. But it probably won't be a profitable, or enjoyable process. By using our system, we keep all the costs down to an average of $1,000/year. One bad tenant can to 10 times that much damage and keep you from
getting any income out of it for months. Another thing they "experts" don't tell you is that when you Lease-Option, Rent-to-Own, or sell and carry back a note, it complicates the eviction process and usually adds a minimum of 30 days to the timeline. It clouds the title and gives the tenant another opportunity to plead to the judge.
In the end, the only way you'll make big money in the MHP business is by buying parks with vacancies (be they vacant POHs, or vacant spaces) and filling them. If you refuse to own trailers, then you're stuck. You can't even buy a park with this kind of upside. Parks that are full of Tenant-Owned Homes (TOHs) are more rare and so your choices of parks to buy will be much narrower, and they generally don't make as much money. Sure, the maintenance costs may be less, but so is the income, by a bunch. Much more than the savings, usually. If you buy a park with vacant spaces, the only way you'll fill them is to buy trailers yourself.
Then it becomes a question of keeping them as rentals or selling them in some fashion or another. We always advocate keeping them as rentals. You'll likely make much more in the long run.
We buy a lot of POHs every year, and we repair so many that we hired our own crews. Like I said, used MHs run around $12K to $18K in most of the South and Midwest, and we can buy brand new 3-bedroom/2-bath 60-foot singlewides with central heat & air for $24,700, delivered and setup. It runs about another $3,000 or so to skirt them, build stairs for the front & back doors, hook it up, etc. So for around $28K you can get brand new homes in your park, which may bring in more rent, and should reduce those maintenance costs down to near-nothing for the first few years. Call me with your questions about POHs or anything to do with MHPs. I love talking about this stuff, and I don't mind taking my time to talk to you. Call me. Andy Tallone (925) 323-2134 or email me at email@example.com.
I JUST GOT BACK FROM HOT AUGUST NIGHTS
Even us old MHP Consultants need a break now and then. I'm a big-time classic car nut, in fact I have a website about them called American-Muscle-Cars.net. So going to Hot August Nights in Reno is an every-year thing for my wife and I. It's a weeklong celebration of American car culture. Every major hotel/casino has their own car show and cruise, all of downtown Reno is shut down for a non-stop week-long car show and a cruise every night of the week, there are drag races, burn-out contests, the world-record hula-hoop attempt, live entertainment and more. Tons more. And just about everything is free. The only thing I went to all week that had any sort of admission to it was the MAG Collector Car Auction. But since I had a Media Pass (I've got a website about cars, remember?), I got in for free.
I don't know if you're into cars at all, if not, you've probably
already stopped reading this article anyway. If you're into cars, Hot August Nights is one of those annual pilgrimages that you should consider making, at least once, like Monterey Car Week, or the Woodward Dream Cruise.
I invite you to visit my website and check out not only some photos of my week there, but also some cool videos we made. Please visit:
LET'S TALK MHPs
We’ve turned around and/or improved literally hundreds of Mobile Home Parks over the years, making their owners very happy and successful. Mobile Home Parks are all we do, it’s not just one small part of a broad range of real estate products. Most agents don’t specialize in this way. They may sell a MHP every few years, but they don’t know anymore about them than the duplexes and strip centers and self storage places they also sell. WE ONLY DO MOBILE HOME PARKS. We’re highly-specialized and uniquely-qualified, and now we’re willing to share this knowledge and experience with you. If you have any interest in MHPs, please fell free to call me anytime. I love talking about MHPs. Call Andy Tallone at (925) 323-2134 or email me at AndrewTallone@gmail.com. I look forward to talking with you soon.