MOBILE HOME PARK MANAGEMENT
BETTER MANAGEMENT = HIGHER VALUE
When it comes to Mobile Home Park Management, there is a saying: “As is the manager, so goes the park”. What does this mean? Simply put, a well-managed Mobile Home Park (MHP) will generally out-perform a poorly-managed one. We see it all the time. Our view is that a good park with a bad manager is far more likely to fail than a bad park with a good manager.
Mobile Home Park Management
GOOD PEOPLE
Mobile Home Park management involves many things and many people. Depending upon the size of the park (generally measured in number of spaces), it may require a full-time onsite staff which could include a Manager, Assistant Manager, Maintenance/Operations Manager and a Landscaper. Larger parks could require more than this. Conversely, smaller Mobile Home Parks may run quite nicely with just one Manager who also takes care of routine maintenance and lawn-mowing.
Getting good people to do this work for your MHP is critical. Again, a bad Manager, or even a bad Maintenance Person can run an otherwise-good MHP into the ground rather quickly. By the same token, the right Manager can completely turn around and revitalize an ailing MHP, IF they are properly led and supervised. That’s what we do.
Mobile Home Park Sales
THE CHALLENGES
But, Mobile Home Park Management goes well beyond the Manager or other onsite employees, they’re just the beginning. While most are good people, they are, after all, people, with all the strengths and weaknesses that that implies. In other words, they all need supervision. And not just part-time haphazard checking, or flurries of intense activity followed by weeks of inaction, or friendly phone calls to the Manager.
The mobile home park business is an ‘Operations-Dependent Business’. That means that the Operations of the park are actually more important than the park itself, that’s how important operations are. Getting operations right, and keeping it right, consistently, over time is what is necessary to be successful in this business. Anything less, and your mobile home park will start to experience more and more “slippage”, a term we use to describe a mobile home park where everything is performing poorly and getting worse (ie: delinquencies, rent collection, expenses running higher, tenants refusing to obey the rules, the park getting trashy, etc.).
We are presently working on, consulting on, and/or running in some fashion over 70 mobile home parks for ourselves and our clients. We’re often hired by mobile home park owners to identify the problems with their under-performing parks, and the problems are almost always to do with poor management, both onsite and offsite.
Onsite Managers in parks with 100 spaces or less, in most parts of the country are paid around $1,000 to $1,500 per month, plus provided a free Park-Owned MH in the park, to live in. Most need constant supervision, oversight, and leadership. Most will try their best to do a good job IF they are given specific instructions that they understand, it makes sense to them, and they know someone will be checking.
We have a full-time staff in our Oakdale CA office who are devoted to staying in constant touch with all our Onsite Managers all over the country, getting the Managers to fill out Reports, do Inspections, send pictures of various things, track the money as it’s collected and deposited, and randomly verify the information they provide. Without this level of vigilance, consistency and leadership, even a good Onsite Manager, left alone to his own devices maybe 2,000 miles away, will begin to “slip” into his own natural bad habits, whatever they may be, and that’s the “slippage” we’re talking about.
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WHY NOT JUST DO IT YOURSELF?
Many first-time MHP investors try to save money by doing the offsite management themselves. After all, how tough can it be, right? All you have to do is make sure your onsite manager collects all the rent and puts it in the bank, that sounds simple enough. Months later, these same people call us seeking our help to turn-around their mobile home park that the manager screwed up, or worse, regain control of their mobile home park after their manager essentially took it over and refuses to leave (we’ve seen it all).
The crux of the issue is intangible, emotional, and very personal. You see, this is your mobile home park, and it’s your money on the line, maybe your life’s savings; or maybe you’re relying on the Net Income to live on. This makes you very vulnerable to you Manager and your Tenants. If you’re in regular contact with them (which you would be if you were doing your own offsite management), they will very quickly ‘get your number’, meaning that they’ll figure out what you know or don’t know, what you’re checking, what you don’t check, what you care about, what you fear most, and they’ll use that against you, and ‘play you like a fiddle’. And those are the honest ones. The dishonest ones out there will find clever (and sometimes really stupid) ways to rip you off.
Most understand that the last thing an out-of-state mobile home park owner is going to want to face is having to fire the Manager then hire a new one. They know that you’ll do almost anything to avoid it, including ‘working it out with them’ or ‘giving them another chance’. Tenants do it too. They know that most owners don’t want to evict, it’s an intimidating process full of stress, so mobile home park owners tend to avoid them by taking the tenants’ word that they’ll have ‘all the money next month’, instead of serving them notice now and starting the clock on an eviction. In the end, the average mobile home park owner has other priorities with their lives, career, family, hobbies, you name it, and they simply don’t have the time or the attention to lavish on their mobile home park, not as diligently and consistently as it needs to be.
Net Operating Income (NOI) suffers (which you feel in your pocketbook each month), but since the Value of MHPs is directly tied to their NOI, the Value of the MHP also suffers (which impacts your potential profits, and your Net Worth). Think about this: If something that you do, or don’t do, causes your mobile home park to net just $833 per month less than it should, that adds up to $10,000 per year that your NOI is reduced. If you were to attempt to sell the MHP at a 9% Cap Rate, your park will be worth $111,111 LESS than before. That’s a lot of money lost, resulting from so little slippage.
In the end, not hiring the right highly-specialized professional to run your MHP for you will COST you money, not save you money. Generally speaking, our overseeing the Operations on your MHP for you will create more Net Income than our services will cost you. And your park will be worth more as a direct result. It’s sort of like doing your own dental work to try to save money…probably not going to be a net-gain, in the end.
Mobile Home Park Sales
WHAT WE DO
Here at CCI Investments, LLC, Mobile Home Park Consulting, our in-house Operations & Management team, is presently involved in over 90 parks. Our full-time professional staff performs a full range of services for our MHP Investor-Clients. These may include, but are not limited to:
* Drafting an OPERATIONAL PLAN & implementing the Plan ongoing
* SYSTEMATIZING everything that it takes to run your MHP right
* SETTING UP the Accounting Systems, Rent Rolls, Procedures, etc.
* HIRING, TRAINING & OVERSEEING the Onsite Manager & Staff
* COLLECTING RENTS, payroll & bills, collections & evictions (if needed)
* Provide MONTHLY STATEMENTS & usually Monthly Checks to the owners.
* Drafting & implementing a TURN-AROUND PLAN, which could include:
– Fill Vacancies, Raise Rents, Pass-thru Utilities, etc. |
Mobile Home Park Sales
PROPER MOBILE HOME PARK MANAGEMENT CONTRIBUTES TO RESALE AT A PROFIT
At some point, when the park is producing excellent POSITIVE CASH FLOW and HIGH RETURNS, many of our Investor-Clients choose to keep them and enjoy the income. Others elect to RESELL the park at it’s new, INCREASED VALUE for the profits. Many will reinvest these profits into yet another Mobile Home Park with great UPSIDE POTENTIAL, and they just keep doing it again and again. Some have worked with us for years and they have bought and sold numerous Mobile Home Parks over the years, with us taking care of the entire Operational-side, helping them build the kind of PASSIVE INCOME that most people only dream of. Some are rich today because of it. For a few examples of this, check out our Mobile Home Parks recently bought and sold (most at a profit).
You probably still have a lot of questions. Please feel free to call me anytime, about Mobile Home Park Management or anything else to do with MHPs, there is no cost or obligation to the call, and absolutely no pressure. Call Robert Merchant, CCI Investments at (209) 996-4075 or email me at rmccirealestate@aol.com.
The Nuts & Bolts of
Mobile Home Park Management
This is an incredibly complex subject filled with an infinite variety of circumstances and situations. It would be impossible to address every aspect of Mobile Home Park Management in the space we have here. However, we will do our best to give you ‘the basics’, the best of what we’ve learned through 13+ years of buying, selling, fixing, managing and turning-around literally hundreds Mobile Home Parks all over the country. In addition, we’ve owned Mobile Home Parks ourselves (and own now) and nothing teaches you more than being in the position of ownership. Through the years, we’ve seen it all and we’ve learned some valuable lessons.
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PERSONNEL / EMPLOYEES:
MANAGING SMALLER PARKS
As stated earlier, the size of the park generally determines the number and duties of employees. A small park with 30 spaces or less might only require a part-time Mobile Home Park Manager to collect rents and show empty units. Typically, they’re usually given free space rent and no cash compensation if the job is small enough. But there is every variation on this. This works especially well if there are empty sites anyway, because now you’re paying your manager with a site that would have otherwise been empty, making it almost free to you. Of course, it will be his job to fill up all those empties.
On a small park like this, any landscaping/maintenance is either done by an outside lawn care outfit for a flat monthly fee, or someone in the park does it for $100-150/month or so. The key with a small park (with all parks for that matter) is to keep expenses low, because there isn’t much income to work with and payroll is one of the biggies.
Some owners will be cheap and pay their part-time managers less than a month’s space rent. In the end, it all has to make sense and everyone has to be happy with the arrangement. If you bend your manager over too hard trying to save a little money, you could lose a good manager, or lose his enthusiasm for the job, anyway. Sometimes it’s worth paying a little more.
Mobile Home Park Sales
MANAGING LARGER PARKS
Larger Mobile Home Parks pose their own set of problems. Just managing 60 or 100 or more tenants, collecting that much rent at the first of the month, solving that many problems in the park, etc. demands a full-time onsite Mobile Home Park Manager who is more than capable of handling just about anything. Depending on the size of the park again, you may only need the one person doing Mobile Home Park Management, Maintenance and Landscape work for a 30- to 50-space park. But be careful not to overload or overwork him. If he gets hurt, or if he just burns out, you could lose a good manager.
On a larger park, 50+ spaces, you will probably need a part-time or full-time Maintenance person and possibly a Landscape person to help them with mowing the lawns, tree trimming, picking up leaves, etc. On larger parks, an Assistant Manager becomes necessary to replace the Manager 1 or 2 days a week for his days off. Some parks are larger still, or have other amenities that need to be maintained, such as swimming pools, spas and jacuzzis, clubhouses, laundry rooms, showers, rest rooms and more.
You need the right people for the job, people who are capable of doing it, will do it faithfully, are good with your other tenants, and above all are honest. Once again, it all comes down to Mobile Home Park Management, on many levels, both onsite and offsite. And that’s what we do.
Call me for more info, Robert Merchant, CCI Investments at (209) 996-4075 or email me at rmccirealestate@aol.com.
Mobile Home Park Management
WHERE DO YOU FIND GOOD PEOPLE?
We get asked this all the time. Managers leave, maintenance people don’t work out, cut backs must be made, but there always seems to be someone looking for a good person to work in their Mobile Home Park. Where do you go? We maintain a “Hot List” of dozens of people that we’ve worked with over the years that we can call in, permanently, or temporarily as a “pinch-hitter” until a permanent manager can be found.
They have a track record with us, and of course we do a thorough background check on every employee we hire in this capacity. But what can you do, if you don’t have a long list of trustworthy replacements? Here are a few pointers:
1.) LOOK WITHIN THE PARK
We often find the perfect Mobile Home Park Manager already living in the park. They already know everyone, are familiar with the park and hopefully have some feeling of pride in it. Often the ‘busy-body’ type work out well as managers, just make sure they have the people skills.
2.) RUN ADS ON CRAIGSLIST
It’s free so go for it. In fact run more than one, each emphasizing different features and using different keywords. This may attract different people. Keep running your ads every few days, as they get bumped farther down the list as new ads come on. You should get lots of calls, so be prepared with a list of questions and what you’re going to say and ask of them. Or, if you don’t want to make the calls, just have them email a resume, then you call them if you want to.
3.) HEADHUNT OTHER PARKS
Some Mobile Home Park owners look for other well-run parks where the Managers are being underpaid or are unhappy for some other reason. Then they try to recruit them to their park, with a better deal, or a better situation.
4.) WORD OF MOUTH
You’d be amazed at the good people your friends and family already know who would be perfect Managers for your park. Spread the word, tell everyone, chase down leads, make calls. Tell the pastor of your church, the people at your workplace, your friends on the golf course. You may get lucky.
Mobile Home Park Management
RULES OF HIRING
This is the best of what we’ve learned, having hired hundreds of employees over the years. We’ve had great Managers and terrible ones; highly-qualified Maintenance People and completely incompetent ones. Glean what you can from it:
1.) EVERYONE IS ON THEIR BEST BEHAVIOR ON THE JOB INTERVIEW
Don’t presume that everything they tell you is true, or that they are really as good or as nice as they say they are.
2.) CHECK EVERYTHING OUT
If they tell you they used to work somewhere, call the place and find out. Not just the stuff written on their application either, anything you can pick up in conversation. See if everything they tell you adds up.
3.) CHECK THEIR REFERENCES
But remember, past employers will often lie, just like past landlords, as a way to get rid of the person and dump them on you. It happened to me and I ended up with the worst of all management nightmares. Their friends and fellow workers will also lie for them. Its very hard to get to make sure you’re talking to real people. Get the names of past employers, then instead of using the phone numbers they provided you, look them up for yourself and call.
4.) ALWAYS DO A BACKGROUND CHECK
With Mobile Home Park Managers handling your money and your property, and representing YOU to the public, it’s a MUST! Don’t bypass this crucial step. Line up a place that can do it for you and get the form from them that the applicant will need to fill out and sign to authorize it. It’s also important with other employees, such as maintenance people, who are in your tenants yards and represent you in the park. This will tell you anything that is public record, like a criminal record, liens, judgements, evictions, etc. Depending on your concerns, you can also have them get a drug test. If so, insist on the type that tests the hair. This shows what has been the system for months, and can’t be wiped out by drinking chemicals that clean up a urine test.
5.) PAYROLL EVERYONE!
Don’t do any “under-the-table” deals, not even in exchange for the free rent. Unless they are clearly an Independent Contractor (which is very hard to make stick, these days), they need to be treated like any other Employee, with Payroll Taxes taken out, matched and paid by you, Unemployment Insurance, etc. Without it, when you let that person go and they apply for unemployment insurance, the Labor Board will quickly determine that none was paid for and an investigation of your business will be opened in favor of the employee. This can cost you a lot of money.
Mobile Home Park Management
WORKERS COMP FOR EVERYONE
If an employee (or someone you considered to be an Independent Contractor) gets hurt on the job, he’s going to try to file a Workers Comp claim to pay his medical bills. He’ll come to you for the info on who to contact. If you don’t have it, your best bet is to pay his medical bills out of your pocket to prevent him from going to the Labor Board. Then pray he doesn’t sue, ask for more, or threaten to go to the Labor Board anyway.
Get him to sign a release, if you can, but this is one of those employee rights that no contract can deny them of. Or, move quickly as soon as you hear of the injury, and sign up for Workers Comp the same day. A workers comp claim can pass right through a corporation and drop directly on you personally, and bankruptcy won’t stop it. There is no escaping it. Avoid all this by getting Workers Comp on everyone.
Mobile Home Park Management
GET A CONTRACT
Have a contract with everyone you hire. If they’re supposed to be an Independent Contractor, make sure they really are, according to the law, then draft an Independent Contractor Agreement for both of you to sign. If he’s going to be an Employee, then get an Employment Agreement signed. The law will generally side with the poor, down-trodden employee over the greedy employer every time, if there is no contract.
A WMA or a similar Mobile Home Park Owners’ Association can provide you with a good one, you can copy a good one from someone else, or do like I did and pay a high-priced labor law attorney to draft one for you. But get one! And use it every time. TIP: Make sure it contains the words “Employment at Will”. This means that it can be terminated by either party any time, without cause or notice. Without it, you could be required to keep that employee on for a lot longer than you wanted.
Mobile Home Park Management
DON’T GET KINKY!
It’s easy to get into a situation with your Manager that is less than “Kosher”. Paying him under the table, calling him an Independent Contractor when he’s really an employee, paying his wife so he can keep his disability, working them more than the law allows, or doing non-permitted construction, are all practices that can come back and bite you. When your Manager is on good terms with you he learns all the dark secrets of your business. Then, when you have to let him go and he hates your guts, he may try to use that knowledge against you.
Keep your nose clean with your managers and don’t confide too much to them about the inner workings, especially if there is anything you want to keep a secret. Proper Mobile Home Park Management is a broad-based, multi-faceted program that involves many things, all moving at once, all needing to be checked.
Call me for more info, Robert Merchant, CCI Investments at (209) 996-4075 or email me at rmccirealestate@aol.com.
Mobile Home Park Management
TENANTS & RENT COLLECTION
A LEAK-PROOF SYSTEM
When running MHPs from a distance (ie: you’re not there every day), one of the most crucial needs you will have is to make certain that all the rents get collected and deposited into the bank. This seems obvious and over-simple, but it’s not.
There are so many things that can happen and they often do. We’ve had managers who swore the money was stolen before they could deposit it. We’ve had managers who skillfully and systematically stole money from the park every month for 10+ years and never got caught (until we came in). We’ve caught managers red-handed, only to have them turn on us and sue or make some other kind of trouble. It’s all there, it happens, and it’s happened to us at one time or another.
This is important to know. We have the experience to spot it, hopefully before it happens again. We’ve come up with systems that prevent this sort of thing from happening in the future.
Mobile Home Park Management
HONESTY IS THE BEST POLICY
First and foremost, you need an honest Mobile Home Park Manager. Finding one through people you know, checking references and doing a background check are good ways to find an honest manager. But they are by no means guaranteed. Always remember that while most people are good, the bad ones won’t tell you they’re bad, and in fact will usually tell you they are very good, and be very convincing. Let’s face it: to be able to steal, they have to be able to lie, and if they’re good at it, you might not realize it. That’s the whole point!
Many MHP Owners who think they’ve hired a good one, or already have a manager in place and want to check them out, will “shop” their managers. They’ll send a friend in to rent a space for cash and see what happens. If the manager records and reports it right away, they pass. If the money doesn’t show up as it should, they fail. Shopping can also be done to check on your Managers’ effectiveness at taking calls, handling questions and renting spaces. Bottom line: An honest manager is crucial to your operation.
Mobile Home Park Management
SET UP GOOD SYSTEMS
Honest manager or not, every Mobile Home Park needs good Operating & Accounting Systems in place. It doesn’t have to be fancy, especially in smaller parks with only a few spaces, or parks with permanent tenants and no turn-over. It can be as simple as having a Rent Roll and an Income & Expense Statement at the end of each month.
On larger parks however, or parks with lots of turnover (like RV Parks), management is more involved and needs a more comprehensive system. There are several good accounting systems out there, online or as software, such as Quicken. If you like these and are already familiar with them, then you may choose to use them for the accounting. But they do nothing to address the ever-changing Rent Roll.
Programs like Rent Manager are specially designed for running MHPs and Apartment Complexes. But a system is only as good as the people using it. If it’s not being fully utilized, or if errors are made that go uncorrected, or information is left out, then the system is worthless.
The onsite Mobile Home Park Manager provides us with the raw information, then our staff inputs it in our CA office. Then we must constantly check and recheck to see that it’s being done and makes sense. We the manager once in a while with a question on it, both to sharpen his understanding of it, but also to let him know that you’re watching. Always, always check to make sure everything matches, rent roll vs. rents collected vs. bank deposits, at least twice per month.
Call me for more info, Robert Merchant, CCI Investments at (209) 996-4075 or email me at rmccirealestate@aol.com.
Mobile Home Park Management
MAKE A LIST
Sometimes the simplest solutions are the best. You need to design a program of Maintenance & Operations for your park, put it into a logical written format, then boil it down to checklists.
A checklist for the Mobile Home Park Manager might include Running Craigslist Ads every few days, collecting rents and keeping books current, collecting past due rents by a certain date, and other management duties. The Maintenance Manager’s list may include mowing the lawn twice a week, cleaning the showers and rest rooms daily, leaf blowing once a week and treating the pool once a month.
Whatever it takes to run that park on an ongoing basis must be systematized and made into a simple checklist that you give to your Manager and one for your Maintenance person, etc. If the park is looking good and running smoothly, stay on it consistently, or it could start to slip. But if things look good, tell them so. Genuine recognition goes a long way.
Mobile Home Park Management
KEEP IT CLEAN
Obviously, a clean park will look better than an untidy park. But it goes beyond that. First off, a nice, clean tenant, the kind we all want, may not move into a park which is unkempt. The untidy tenants never seem to mind though, so you end up with a park full of untidy tenants, making the situation far worse.
Keep the park clean. Mow the lawns, pull weeds, trim trees, haul away the junk and debris, clear old abandoned units, fix fences, sweep the gravel off the pavement once in awhile. If your Manager can’t handle all this, bring a second person in.
Depending on the size of the park and the size of the job, you may choose to hire someone within the park to do the needed work in exchange for all or part of their rent. Or you can hire an outside Yard Maintenance Company and/or tree company to do it, but it could be expensive this way. But whatever you do, make sure it’s legal and you’re not going to get yourself in trouble if they fall off a ladder.
Mobile Home Park Management
CLEAN-UP DAY
Often, a big part of the burden falls on your tenants. Many allow their trailers to get run down, let their yards get cluttered, have a non-running car or two, and use a funky lean-to made out of old doors for a patio cover. You need to get on them and make them clean up their sites.
It should be in your Rental Agreement and/or your Rules & Regulations to keep their sites clean. If it’s not, then draft a new one with a clause in it that addresses this, then have your Manager get everyone to sign the new one (always give the tenants a copy). One approach is to be hard-nosed and tell your tenants they have 14 days to clean up their homesite, or you’ll do it for them and charge them for it. You may need to do this with some of the more difficult cases.
Another, more friendly approach that works very well is to give all your tenants notice that you will be providing a special dumpster on a certain date for everyone to use to get rid of all their junk and clean up their yards. Anything left after that that is in violation of the Rules & Regs will cost them. WORD OF CAUTION: In many areas, word will quickly spread throughout the surrounding area that an empty dumpster has just shown up, and in the middle of the night, they’ll pour in from everywhere and fill up your dumpster. Place it well within the park.
Mobile Home Park Management
ONGOING MAINTENANCE
Some things just need to be maintained all the time, or at least sometimes and checked often. Many owners get cheap on this step, thinking they’re saving money. But in the long run, it often ends up costing them money. Every mechanical system in the park needs some sort of maintenance or at least monitoring. Don’t wait until it breaks!
Another key area is in the maintenance of any Park-Owned Units. Many parks include Mobile Homes or RVs which are owned by the Park and rented out to tenants, almost like apartments. These need to be inspected every 3 months, put it right into their lease agreement. Tell them it’s for their health and safety, and it is, (things like Smoke and CO Detectors) but it’s also to check for damage, water leaks, bad floors, roof leaks and of course…bad tenants. Make sure this vital step is taken on a quarterly basis or this is one maintenance issue that will cost you more money, in the long run.
By the way, we figure a rule-of-thumb of about $1,000 per year to maintain a Park-Owned Mobile Home, so if you have 6 of them, budget in $6,000 per year to maintain them, IF you keep up with this quarterly inspection process. More if you don’t.
CONTACT US FOR MORE INFO
Mobile Home Park Management is a huge undertaking, as you can see above, and this is by no means the whole story. It’s not possible to include everything you will need to know to manage your MHP properly. Or you can hire professionals to do it for you (and likely make even more). RLM MHP Consulting does this all day, every day. Call me with your Mobile Home Park Management questions, Robert Merchant, CCI Investments at (209) 996-4075 or email me at rmccirealestate@aol.com. There is no cost, obligation, or pressure. Call me, I love talking about MHPs.
