Unpopular MHP Opinions
Sometimes you have to throw out the rulebook. These might go against “best mobile home park practices”, but what the hell, these feel right to us.
3 Bids is Often 2 Too Many
Who would’t want as many bids as possible. I’d love to have 3 bids for ever job big or small to keep costs down.
But have you ever tried to get 3 bids in small or even midsize city? Or perhaps in the middle of a snow storm with leaking pipes? If not, good luck. Sure, it’s possible, but it might take two weeks.
Speed kills in park operations. In a good way.
If you or your team can move quickly to fix issues or rehab homes, you can run a smooth operation the tenants will appreciate.
But if simple repairs take forever you’ve added some risk into operations. Tenants notice and act in kind. If management doesn’t take clean up items seriously they stop taking rent due dates and park rules seriously.
City officials start noticing and amp up their “big brother” oversight and might get trigger happy with violation notices.
Ok - obviously if it’s a $5K+ project, which you’ve never done before, you’ll probably want to get a few bids. But if you’ve done this kind of work before - speed might be more valuable that the $300 bucks you could save after chasing down and waiting for other contractors to get back to you.
Random Acts of Kindness
The sweet old lady on lot 1 has been there for 30 years and never missed a payment. She deserves a little grace. It’s ok to waive a rare late fee for your superstar tenants.
A one-off late fee waiver is not something tenants brag about to other tenants. It’s not going to cause a cascading issue with the whole parks. However, tenants definitely brag about not paying rent - that virus spreads, so best not to get carries away with generosity.
However, we still like to see a little humanity built into park operations. It also has the added benefit of being good for team morale. The team knows which tenants deserve some grace and which tenants are playing you. We believe they can be trusted with low level exceptions on random fees or late fee waivers.
You Don’t Have to Make Money on Home Sales
It’s best to keep a macro perspective when operating a park. Filled lots mean more cash flow - which equals more equity - which means drastically more equity value.
Sometimes when we’re stuck with an inventory of old homes, or homes we’ve spent too much renovating, we’ll lose some money on the home sale to get the lot occupied quickly.
Does it sting a little? You bet. But it feels even better to get a home off your books quickly vs. squeezing every last drop out of the sale.
Rough Parks in Small Markets Are Not Cash Cows
Sure there are exceptions, but if you truly factor in deferred maintenance (which most rookie buyers underestimate) and likely home repairs on turnover, you’re now looking at a mediocre deal.
Yes, you might be able to ignore, collect a lot of cash and sell to a ‘greater fool’. But at some point those infrastructure issues will surface and need to be addressed. Probably best not to assume it will be some other sucker.
It’s good to know the rules so you know when to break them.
Best of of luck in 2023!
Happy Trails,
MHP WEEKLY