If you’re reading this article for advice, then you’ve probably already gone through the necessary steps to investing in a mobile home park. At this point, you should be in the beginning stages of “owning” your mobile home park investment. Depending on the condition of the park before you bought it, you may have to make some sizeable investments and/or changes in management if you want to make a profit. Take these pieces of advice into consideration if you want to be a successful mobile home park buyer.
Don’t treat your mobile home park like a mobile home park
Even though there’s a negative stigma attached to mobile homes, the value of your park is ultimately what you make it. The same goes for how you treat your residents and your staff. Don’t lower the bar for resident behavior, land maintenance, or home repairs just because you’re in a mobile home park. Remember that you’re not only trying to please your residents – you’re also trying to appeal to potential buyers or even investors like yourself. Put good in and you’ll get good out!
Always look for ways to improve the value of the land (and homes)
It’s not enough to keep your mobile home park in working condition, as a smart investor you should always be looking for ways to increase the value of the land. One thing you should’ve considered before investing in the park is the amount of money you have in reserves. This money will be useful to make costly repairs that, down the road, will increase the park’s value and add appeal to potential investors.
You probably learned in your research as a mobile home park buyer that you aren’t responsible for making repairs to the home. This is true if you’re only renting out the land, though it doesn’t mean you should turn a blind eye to homes in disrepair – especially if those repairs need to be made to the outside. Once again, the value of your park will only go up if the homes within it look well-maintained from the outside. Try offering incentives to residents who add skirting or rake leaves off their lawn. If your budget allows it, you could even offer to have these services paid for by professionals. Keep in mind that you’ll have to spend money to make money.
Assemble a new management team if you have to
Maybe you bought a mobile home park in bad condition with plans to increase its value. If this is you, you should strongly consider assembling a new management team. There’s a reason the mobile home park was in rough shape, and it’s not because of the residents.
Mobile home park expert Frank Rolfe suggests that bringing in a whole new team is easier than retraining old employees. This decision is ultimately up to you. Take the time to assess the strengths and weaknesses of the current team and decide what changes need to be made.
If you do decide to fire people, Rolfe encourages you to avoid ending things on bad terms – and not just for the sake of being a good person. These people know the ins and outs of the park better than you do, so burning bridges now won’t do any good if you need their help later on. Ending such relationships would be like burning a map in the middle of the woods.
Avoid vacant lots at all costs
Vacant lots are obviously bad for business, not just because of a loss of revenue but also because it looks bad to visitors. Imagine having six or seven visibly empty lots and trying to negotiate a rental price – simply put, that person is not going to take you seriously. If you look desperate, people will treat you like you’re desperate.
There are creative steps you can take to filling a vacant lot. Don’t be afraid to offer a potential renter some extra incentives to move in. For example, you could promise the renter to pay for moving fees or even reduced rent over a designated period of time. You could also include additions to the home like skirting, stairs, or a back deck. Don’t be afraid to go above and beyond for the buyer so long as you’re not losing money in the process.
Incentivize on-time rent payments
Whether you’re managing traditional apartments, stick-built homes or mobile homes, there’s one thing you’ll always find: late payments. Even though you’re guaranteed to get late payments, there are a number of proven strategies you can make to minimizing them.
Mobile home park investor Dave Reynolds suggests implementing a rent discount program. An example of this would be to set the rent higher than you normally would and offer discounts for those who pay on time. Not only will you be receiving more rent payments on time, but you’ll also earn extra cash from the chronically-tardy.
Another proven method is to slap on fees for late rent payments. This is essentially the same as offering discounts to people for early payments, only this time renters are aware they’ll have to pay more. This method is preferred by some as it’s more transparent than offering a “discount” program – emphasis on the air quotes.
You should also make sure your park accepts credit and debit cards. This is especially important as cash is increasingly becoming the less popular option. Imagine going to a mattress store and being asked to pay $1,000 in cash. Obviously, you’re going to have a hard time coming up with that kind of money. Additionally, accepting credit and debit is beneficial as you can set up automatic rent payments with their bank account.
Don’t disengage yourself from the park
It can be easy to detach yourself from your residents as there’s a good chance you won’t be handling the day-to-day operations. What your residents lose sleep over may not even cross your mind. This is why it’s important you check in regularly with your park and get some much-needed face time with the residents.
Knowing your residents and understanding their needs will help you develop a community that they love living in. It might be worth organizing a monthly or even weekly meeting where residents can speak with you and the management team about issues important to them. You could also schedule events, parties, and celebrations where the neighbors can bond – think New Year’s celebrations or Halloween trick-or-treating.
Find other ways to increase cash flow
There are other ways to make money beyond just raising the rent or paying your staff less. For example, your residents may be willing to pay more each month for basic cable or an upgraded cable plan. You, as the owner, could possibly make extra off of this depending on what the cable company charges and what you ask your residents to pay.
Think outside the box on this one. Knowing the needs of the residents will help you. Consider investing in a small corner store within the park that sells basic necessities like toilet paper, bottled water, iPhone chargers, etc. A store like this will bring in profit and add value to your park.
Frank Rolfe also suggests renting out your vacant lots to RVs or storage units while you’re looking for a permanent resident. This ensures that you won’t be losing money, and gives you more time to find that perfect tenant.
Be a smart mobile home park buyer!
There’s so much you need to know as a mobile home park buyer. We could never fit it into one article. But don’t worry! We’ll keep posting more resources for you here, and we encourage you to continue researching. Talk to experts in the field and your residents to find a management style that works best for you. If you own any of the homes in your park, consider these upgrades to increase their value.