Park Analysis questions - Posted by Steve-WA

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by briton (IN) on October 09, 2007 at 07:51:16:

Hey Steve,

  1. I have a park that came with a home. I figured its worth in a standard way. Rent minus estimated annual cost. You have to think about what it is worth to you. Renting homes are so much more work than renting lots. Answering phone calls from idiots that can’t even figure out if they can afford the rental or not gets old!

  2. I have bought 2 parks with several people behind on rent. In both parks I have forgot the past and started fresh. If you are a good landlord like I know you are, it will not take long for them to realize you are serious about getting your money! In both situations I was able to get almost all the people to begin paying me quickly! The real issue is usually bad landlording.

When I bought my last park I talked about trying to get past rents. The reasons I decided not to were the following:
a)If I could not get the past rents from the tenant I would either have to evict the tenant even if they could pay current rent, or I would have to just forget it. Just forgetting the rent while trying to collect past rent from other tenants was not treating everyone the same and therefor not make sense. Not to mention that puts you off on the wrong foot by showing the tenants your a pushover. In this particular park there were 30 lots and several late payers. Now I get 30/30 rents every month. I am just being a better landlord then they were used to. Simple. :slight_smile:

b)Time. Why stir things up? If you stir things up make sure its worth your time. Don’t get rid of some tenants who have not paid because the landlord lets them not pay, when they would be more that willing to pay a stern landlord. Sure these people are not moral, but they can usually be trained. You have to decide if you are going to do more good than bad in future rent income and current time and labor.

I would take half the chronic late paying lots and consider them vacant for cash flow purposes. I would be willing to bet you could get most of them to start paying. I bet that you will make sure you get a pretty good deal on the park anyways. This should all pan itself out if you are stern from the beginning.

3)Water meters are annoying. They are most certainly needed when you have city water that you are paying alot for each month on one central park meter. However why bother having to read them once a month when all their leaky toilet may cost you is a little bit of electric. My electric bill for a 30 unit park on a well is about $60. I don’t think you will make any extra each month by putting meters in. One of my parks has meters and here is what I have to deal with.
a) I read the meters each month (uggh)
b) I send them bills every month costing paper, envelops and postage (uggh)
c) If the tenant lets their water line freeze up I have to get out there in the freezing weather and put a new meter in. Then I have to hear them gripe about how expensive that new $150 meter is. Then I have to collect the money for it. Then I have to go buy a new meter. (uggh)

If all your tenant is costing you is a few bucks a month in electric why bother with doing all of this? Meters are needed for city water, but unless your financial gain is going to be worth the hourly rate you are willing to work for why put meters in?
Just include the water in the rent and call it a day! If you want to get more income raise the rents. Trust me that is much easier. That being said I could imagine there would be a few times when meters in a well park would be needed. If for some reason the cost of running the well is high, or the sewage is city and is metered. Or mabye you have a shallow well and are worried it will dry up or something?? I have never ran into these things but I am sure they could happen. O did I mention having meters are a pain?

Hope you get the park Steve! Good luck,

Briton (IN)

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Park Analysis questions - Posted by Steve-WA

Posted by Steve-WA on October 07, 2007 at 19:02:56:

Also posted to the Commercial Board

Working on a park evaluation - coupla things pop up, and I’m curious how the experienced people address these issues:

  1. Sometimes, a park will include a stick-built, or more than one. How does one evaluate this into the value? I understand that MHs owned by the park could be assigned a wholesale value, and any rental homes’ rent income is disregarded, due to the risk of losing that. But a SFH could have a pretty high value, even wholesale, when compared to a MH. A value so much higher, that it could negatively impact the value of a park. Yet, it would have a lower value than a SFH in a regular neighborhood, 'cuz its in a trailer park. How have experienced people assigned a value, positive or negative, to these houses? (the park I’m evaluating has 3!)

  2. In viewing the rent roll, I see many people behind. I will take their rent out of the income calculation - but how far behind do most people consider a chronic, deductible, problem? At first I’m thinking $1K or more behind, but then I backpedal and figure that if I throw out people more than a month behnd, the seller will take action to correct that. What do y’all do?

  3. Park is on a well for water distribution. Residents can be billed flat rate, because of R&M, but what about metering, and billing more for excess usage above a standard? Also, as a method to determine problems?