By: David Rousher
Well this was a lesson in “Don’t Judge a Book by its Cover!”
The graphics on the front of the book are pretty rough. They’re pixelated and cheesy and not in a good way. The binding doesn’t have its title. All and all the cover is poorly executed.
The content inside is fantastic! There is so much knowledge distilled down for the layman to understand.
Here were my favorite takeaways:
Chapter 1: Mobile Home Park (MHP) Investing
Today there are approximately 50,000 MHPs across the US.
Affordable housing is moving out of reach of so many people nowadays. Owning a mobile home is a reasonably priced way for low income, downsizing seniors, or first time home buyers, to become a part of the American Dream – that of being a homeowner.
There may still be many “trailer parks” where the owners refuse to do anything by way of upgrading their property etc. because they just don’t care or are poor managers. But modern MHPs offer updated amenities like playgrounds, walking paths, parks, club houses, pools, Jacuzzis, tennis courts, and even golf courses.
Stick built houses are priced somewhere between $115-$250/SF, while a mobile home can cost between $35-$55/SF.
MHP community tenants, who own their own homes, lease the underlying land from the park owner. Pad rents can range from $200 to $800 per month depending on location and the market dynamics.
Turnover: Rental home tenants stay 6-12 months on average. Mobile home tenants stay an average of 5 years. This is partly due to the moving cost of a mobile home, somewhere around $5,000.
Chapter 2: MHP vs. Apartment
Expense Ratio: MHP 30-40%, Apartment 50-65%
Depreciation: Apartment structures are depreciated over a 27.5 year schedule. MHPs are depreciated over a 15 year schedule. With MHP you can typically use a 75/25 Improvement/Land allocation as well. All of which means you can accelerate the depreciation more in MHPs.
Chapter 7: Where Do I Begin?
- Current Cap Rates: 10-15%
- Cash Flow: 12-20% annual cash on cash
- Professional Management: 5% to 10% of the gross income.
Chapter 9: Find the Park of My Dreams
- Eliminate any place that has a population of less than 50,000.
- Once your city is identified, draw a circle around it. This circle should encompass no more than 5 miles outside the city limits.
- Next, divide your circle into four equal quadrants.
- Call the Chamber of Commerce to determine which quadrant is the most desirable.
- Check your map to determine where the most and least amount of crim is occurring and what kind it is.
- Check out the cost of living in the area. If the cost of living is lower in the city you have chosen you will have lower rents.
What to Stay Away From:
- Small population towns
- Cities where the population is on the decline.
- Military Towns
- Hurricanes, tornados, and snow; if possible.
- Parks with huge vacancies but are priced as if they are full
Chapter 11: How to Make Money
- Get rid of deadbeat tenants.
- Rehab or remove vacant homes.
- Bring in new homes and new tenants.
- Buy from a mom and pop.
- Fix deferred maintenance and clean up trash.
- Put in a new sign.
- Meter or sub-meter each unit’s water and sewer.
- Have tenants pay for their own trash.
- Charge for pets and guests.
- Always give annual rent increases.