Ep #65: Avoiding the Mistake of Not Understanding What Your Financing Options are Prior to Placing a Park Under Contract.

Podcast design v1Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 20 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

There are many different ways to obtain financing on a mobile home park. Everything from a master-lease with purchase option all the way to doing sophisticated CMBS loans, we cover it all. As an investor, you need to understand what these options are and when they are appropriate.

Certain parks you will run into throughout your search will simply need to be creatively financed based on how they are performing. Being able to recognize this immediately will allow you to become a better negotiator and will keep you from wasting your time with unrealistic sellers.

Our goal is to show you how to identify the most appropriate financing options for the park you are looking at. We will also give you strategies to help make the financing process easier and make you more effective at conveying your needs to a seller. In addition to this we will show you the proper ways to structure these creatively financed deals.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #65: Avoiding the Mistake of Not Understanding What Your Financing Options are Prior to Placing a Park Under Contract. appeared first on Mobile Home Park Academy.

Ep #64: The Dangers of Paying Face Value for Rent To Own Contracts

Podcast design v1Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 19 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

You’ll run across many parks during your search that have park owned units that are being sold on rent to own contracts or owner financing notes. In todays show Charles and I will discuss why you don’t want to pay face value for these notes.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #64: The Dangers of Paying Face Value for Rent To Own Contracts appeared first on Mobile Home Park Academy.

Ep #63: How To Avoid The Mistake of Buying a Park Without Having the Proper Amount of Operational Capital Left Over to Start Running Your New Business

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 18 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

One extremely common mistake that new investors find themselves making is that they don’t have enough capital to operate their assets after they buy them. Think of the following scenario. You are an investor who has $100,000 to invest. With this money, you conclude that the bank will match your down payment 4 to 1 and that you can afford a park that is $400,000. That’s great news! Time to get to work finding it right?

Maybe not! Let’s also think about some other things that could happen. Most parks need some form of capital repair on the front end. This may be in the form of resealing/resurfacing roads, putting up new signage, removing homes, getting rid of debris and junk, painting and/or renovating homes, etc. Where is your allowance for these items? How do you determine how high this amount should be?

As a general rule of thumb, you should set aside about 4% of your purchase price in order to establish an initial operating budget. Something else to consider is that normally your bank will want to see that you have some liquidity even after you purchase the asset and may require you still have up to 10% of the purchase price available in short term assets.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #63: How To Avoid The Mistake of Buying a Park Without Having the Proper Amount of Operational Capital Left Over to Start Running Your New Business appeared first on Mobile Home Park Academy.

Ep #62: How To Identify Unstable Income Sources on a Profit and Loss Statement and Avoid Overpaying for a Mobile Home Park

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 17 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

When you start looking at parks, you will begin to notice revenue items such as Late Fees, Application Fees, and Other Income. Brokers and sellers alike will try to tell you that it is appropriate to capitalize these income sources. I’m here to tell you that that is not necessarily the case!

One of the great things about owning mobile home parks is that your average lot renter is an extraordinarily stable tenant. So, how much money do you really think you’ll be getting from application fees year in and year out?

The same goes for late fees. It is true that you will receive late fee income through the year. However, this should not be a significant source of income for any park. If it is, you may need to ask yourself if this is truly a stable and reliable tenant base.

The “Other Income.” We’ve seen “other income” run as high as half the park’s revenue. Brokers and sellers will put whatever they can think of in this category. Single family homes, small apartments, self-storage, vending machines, laundry income, etc. For these items, we prefer to break out the separate income streams and evaluate the reliability of each separately. We also want to see the expenses broken out for each to determine if they are truly worth having. This gives us a complete picture of what we are buying rather than lumping it together in vagueness.

When looking at your next deal, add together these revenue items and multiply them by 10. The number you come up with is the amount you could potentially be overpaying if you don’t have a handle on these items.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #62: How To Identify Unstable Income Sources on a Profit and Loss Statement and Avoid Overpaying for a Mobile Home Park appeared first on Mobile Home Park Academy.

Ep #61: Purchasing a Park That Has a Large Number of Homes Owned by an Outside 3rd Party Investor and Why This Can Be a HUGE Risk

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 16 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

One of the great things about owning multifamily real estate is that it is just that, multi-family. On a 100-unit property, losing one tenant is relatively insignificant. What if that one tenant was an investor and they owned 10, 20, or 30 of the units in the park? This is something that we have seen time and time again in the mobile home park industry.

One might think, on the front end, that it would be nice to only have to collect one big check on those units. You may also like the idea of dealing with less tenants and having someone else handle tenant relations on those units. Where is the problem in this thinking? If this sounds like a nice arrangement, I would also like to pose the following potential problems:

  • What happens if your investor/tenant doesn’t screen their tenants properly?
  • What happens when your investor/tenant doesn’t like the recent rent raise or having utility costs passed along to them?
  • What happens when your investor/tenant doesn’t maintain their homes?
  • What happens when your investor/tenant moves these homes elsewhere?
  • What happens if your bank has the same concerns?

Having a third party investor in your park is not always a bad thing. It can sometimes be a good thing. However, you need to know how to remain in control of your park and protect your investment. We can show you how to maximize this arrangement and work with these investors properly.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #61: Purchasing a Park That Has a Large Number of Homes Owned by an Outside 3rd Party Investor and Why This Can Be a HUGE Risk appeared first on Mobile Home Park Academy.

Ep #60: The Risks Associated with Using an Owners Understated Expenses When Running Your Proforma

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 15 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

There are times when using the owner’s expenses can work in your favor and there are times where it can work against you. As with any business venture, there are certain expenses you have to take into account. Virtually every property we have pursued has had some of their expenses under reported or completely left off of the profit and loss statements. So how do you determine what you are buying and what the appropriate operating expenses should be?

Typically, we will start out assuming that any park the pays for water/sewer or has private utilities will have an expense load close to 45-55%. If the park is on city water/sewer and the residents are billed for the usage, we typically assume an expense load closer to 30-35%. This is usually a good rule of thumb on the “eye ball” test but each deal will require you to put a microscope on each expense in order to get a truly realistic budget.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #60: The Risks Associated with Using an Owners Understated Expenses When Running Your Proforma appeared first on Mobile Home Park Academy.

Ep #59: The Dangers of Not Creating the Proper Budgets for Capital Expenditures and How To Avoid Making This Critical and Often Very Costly Mistake

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 14 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

As you go out into the market place and look for deals, a common theme you’ll see is that virtually none of the marketing packages pitched by brokers have a yearly allowance for capital expenditures. You must budget for these large capital items down the road.

Every park will be different on this subject based on its unique characteristics. Parks with a large volume of park owned units will obviously require more frequent home repairs. Parks on private utilities will require you to save larger sums of money to deal with potential utility problems. Parks with dirt and gravel roads will need more frequent repairs to stay in good working order.

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #59: The Dangers of Not Creating the Proper Budgets for Capital Expenditures and How To Avoid Making This Critical and Often Very Costly Mistake appeared first on Mobile Home Park Academy.

Ep #58: How To Assess the Risk When Purchasing a Park That Has Very Small Lots and Cannot Accommodate New Homes.

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Welcome to the Mobile Home Park Academy podcast. In this episode, Charles and I will discuss mistake number 13 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

You can fix many things in a mobile home park, but the one thing you can’t fix is the size of your lots. There are many parks that were built many, many years ago when mobile homes were routinely 40-50’ in length with lots designed with that size of home in mind. The problem is that most newer post-HUD era homes are much larger (60’, 70’, and even 80’+ in length) and would never fit onto those smaller lots and there aren’t many options to purchase smaller homes should you need to replace on of these smaller 40 to 50’ homes.

It’s imperative that you understand what your backup plan is should you ever lose a home and need to reoccupy that empty lot. A lost home equals lost revenues and if that lot can never again be occupied due to it’s size then you might find yourself in a situation where you have a shrinking park on your hands. Know your options…

Recommended Resources:

  • Click Here to Grab a free copy of our latest book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them
  • Want to Learn How to Invest in The Lucrative Niche of Mobile Home Parks? Check out our Free Training that Will Teach You The Systems and Processes We Use To Find The Most Profitable Deals. Click Here to Learn More
  • Have An Interest In Partnering with a Team with a Proven Track Record in the Mobile Home Park Space? Click HERE to Learn More About Our Partnership Opportunities.

The post Ep #58: How To Assess the Risk When Purchasing a Park That Has Very Small Lots and Cannot Accommodate New Homes. appeared first on Mobile Home Park Academy.

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