This is part 2 of the discussion on initial off-site diligence you can do prior to buying a mobile home park. Jefferson Lilly and Brad Johnson, with the Park Street Partners, continue their discussion from episode 4 (part 1), which covered due diligence you can do via desktop research and things to look for in financials. On this episode, they will advise on what to look for in the infrastructure of a park and how to handle a first call with the seller.
Key Takeaways:
[1:35] What is the most important aspect of a park's infrastructure?
[2:15] Determining if a park is on the public utilities system: city water & city sewer.
[4:46] A park that is on the septic system presents a high-risk investment.
[7:40] Park infrastructure: Master-metered gas and electric lines.
[9:36] What options do you have if you get a gas leak and have to shut down service?
[12:00] You can have someone check out the electric load of a park on-site.
[12:35] Understanding what is going on with the water infrastructure.
[13:40] Fixing a water leak on a mobile home park property.
[18:09] Park infrastructure: Roads.
[20:53] Park infrastructure: AMP boxes.
[23:21] Park infrastructure: Sewer pipe system.
[28:38] First call with a seller: Information to gather and types of open-ended questions to ask.
[33:55] A key open-ended question to ask the seller: Why would you sell your park?
[35:02] Another open-ended question to ask: How do you manage your property?
[37:00] Other things to discuss with the seller.
[39:59] Coming up on following podcasts.
Mentions:
LinkedIn Group: Mobile Home Park Investors
www.mobilehomeparkinvestors.net
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On part 1 of this two episode podcast, Jefferson Lilly and his partner Brad Johnson, with the Park Street Partners, will provide resources and advice on doing off-site diligence before deciding to buy a mobile home park. This is the part when you first get a deal and are beginning to decide if you want to pursue it, which can be a scary moment. Jefferson and Brad will outline how you can do a fair amount of diligence by doing desktop research and making phone calls. Part 2 (episode #5) will cover on-site diligence, which is done after you’ve got your property under contract.
Key Takeaways:
[02:13] Due diligence on a mobile home park in 30 seconds or less – The first 15 seconds
[04:37] The next 15 seconds of your diligence
[06:27] The 30 seconds of diligence – Summarized
[07:15] Researching if demographics support a successful park investment
[08:09] Demographics data – What to look for?
[09:48] Refer to multiple websites and verify the accuracy of the data
[11:08] Markets that meet demand for mobile home parks – Data on household income & housing vacancy
[12:08] Data to look for on rentometer.com?
[14:08] Contact local mobile home dealers. What types of open-ended questions to ask?
[16:33] Call the chamber of commerce and ask open-ended questions
[20:03] Is the park properly licenced? Certificates of occupancy and other Gov. Regulations
[20:58] Local zoning office – Legal vs. illegal uses of a park
[23:11] How to use Google Earth and Google Maps Images to do more diligence
[27:45] Financials – This is where mobile home parks get sexy!
[28:05] Pay attention to expense loads that greatly diverge from 30% to 40%
[32:38] Supplement these guidelines by verifying property owners’ bank statements
[37:31] Another key thing to verify when going through bank statements
[39:45] Request tax statements from your seller
[40:10] Another key diligence point for financials – The rent role
[41:04] Why a Lonnie dealer is a force to be reckoned with?
[41:55] Why the rent role is important?
[43:59] Part 1: Off-site diligence – Initial desktop research & what to look for in financials
[44:11] Coming up on part 2 (episode #5): On-site diligence – Infrastructure & first call with the seller
Mentions:
Deals on Wheels by Lonnie Scruggs
LinkedIn Group: Mobile Home Park Investors
www.mobilehomeparkinvestors.com
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On this podcast, Jefferson Lilly and his partner Brad Johnson will focus on answering the question, why someone would want to own a mobile home park now? In particular, they are going to talk about the demographics of their tenant base, the need for affordable housing they are trying to fill and helping others to do the same – who might be listening to this podcast and thinking about getting into the mobile home park business!
Key Takeaways:
[1:27] Baby boomers are coming into retirement and they need affordable housing!
[3:43] Our average price point per month matches many retirees’ budget for housing.
[4:26] The mobile home park industry can help folks in need, specially seniors, get into a house they're actually going to own.
[4:41] There is an affordable housing crisis in America.
[5:34] An affordable, safe community for those that don't have capacity in their budget to pay more for housing.
[5:53] Path to home ownership for lower income individuals, seniors, and younger people in their 20’s getting married and starting a family.
[7:00] The parks we are buying are a better product. We offer affordable housing with many other benefits.
[8:19] A strong demand from those typically making $2,500 and less per month and a business that meets a very clear and stable need.
[10:16] Brad talks about issues with the entitlement program in America.
[11:59] We are providing housing for a lot of American families that desperately need it.
[12:44] Brad expands on the entitlement issue that's not often being talked about.
[14:20] Jefferson summarizes why this is such a good and trend-favored business.
[15:25] We take pride in helping lower income and middle class American families secure housing at an affordable price.
[15:53] Thank you for listening. Please find more information on parkstreetpartners.net and on the LinkedIn group, Mobile Home Park Investors.
Mentions:
Join the LinkedIn group: Mobile Home Park Investors
www.mobilehomeparkinvestors.net
Joint Center for Housing Studies at Harvard
Please rate the podcast on iTunes or Stitcher
Please subscribe to our podcast
This is the second podcast, hosted by Jefferson Lilly, joined by his partner Brad Johnson. Last week, Jefferson and Brad talked about why mobile home parks are such a good business to be in. But unless you are really looking, you're not likely to just come across one of these properties. On this episode, Jefferson and Brad talk a bit on how you can find a mobile home park to purchase. They will also share their experiences of how they have looked in some unique and unusual places.
Key Takeaways:
[1:25] Jefferson found his first mobile home park property on eBay.
[4:17] You can find mobile home parks that are listed on eBay.
[6:07] Finding a mobile home park property online.
[06:32] How does Brad typically find many of the Park Street Partners’ deals?
[07:23] How do you get access to off-market or pocket listing deals?
[10:28] Brokers often have pocket listing deals that are not posted online.
[12:16] Reasons why a seller might not want to list a property publicly.
[12:49] Reach out to brokers for some interesting pocket listings and to get a deal flow.
[16:47] Jefferson talks about his second deal that he found on Craig's List.
[18:48] Jefferson talks about one of his more unusual findings.
[20:51] Brad talks about other strategy you can use.
[22:32] Things to keep in mind if you are going to use auction.com.
Mentioned in This Episode:
Join the LinkedIn group: Mobile Home Park Investors
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Welcome to the first official podcast, hosted by Jefferson Lilly, joined by his partner Brad Johnson. Today they will talk about why it is such a compelling business to be in the mobile home park industry – as they call it, the 'macro'. In subsequent podcasts, they will talk about how they actually operate parks by providing specific 'micro' examples. The purpose of this podcast is to cover why someone should consider investing in something as crazy as mobile home parks?
Key Takeaways:
[01:33] Investing in real estate – mobile home parks
[02:29] A key factor that makes mobile home parks better than investing in other types of real estate or asset classes
[03:14] The competitive advantage of investing in mobile home parks
[05:01] Supply is fixed and in fact shrinking ~ 1% a year
[06:18] Why shrinking supply is not indicative of a dead or dying business
[06:58] Tenants are typically sticky to their properties
[07:55] The tenants are not mobile – under 1% leave every year
[09:32] Lower tenant turnover + lower expenses = great combination
[11:10] Fixed low costs coupled with lower tenant turnover and low capital cost translates to very high cash on cash yields
[12:08] Another key element that makes mobile home parks a neat business
[13:40] 60-75 % of mobile home parks are owned by mom & pops
[14:00] What are the benefits of having sellers who are mom & pops?
[16:49] The higher depreciation rate associated with a mobile home park
[18:51] Jefferson and Brad are, on average, depreciating ~ 80% of their purchase price over 15 years
Mentioned in This Episode:
www.mobilehomeparkinvestors.net
To connect on LinkedIn, search for "mobile home park investors group"
Please rate the podcast on iTunes or Stitcher
Jefferson Lilly and his partner Brad Johnson, from Park Street Partners, are launching the first podcast dedicated to mobile home park investing. Each week, they will cover a range of topics relating to mobile home park investing, including the right way to buy, operate and profit from this highly profitable investment niche.
Jefferson and Brad hope to help people get into this business, purchase properties, run them better, and achieve some financial stability. They are also an investment partnership and are interested in joint venture deals with folks that either don't have the expertise or all the capital they need to run a park. You can learn more about Jefferson and Brad’s backgrounds through their website or on LinkedIn.
Mentioned in This Episode:
www.parkstreetpartners.com – includes a resources page, link to Jefferson and Brad’s fund and some of the investments they have made
www.mobilehomeparkinvestors.com
To connect on LinkedIn, search for "mobile home park investors group"