Tweet

Why Good Looking Mobile Home Parks Have Ugly Returns

Guest post by: Dave Reynolds

Article Overview: Some mobile home park buyers have this erroneous idea that the goal is to buy a great looking asset. They even rate the parks they look at based on physical appearance. The star system is a good example. Most people think a five-star park is always superior to a one star park. However, the only real star system they should consider is which park is a superstar on cash flow. Because at the end of the day, all that really matters when you own a mobile home park is making money. Parks that make money are great, no matter how ugly they are, and parks that lose money are dogs, despite how cute their entry may be. And, as a general rule, the prettier the park, the uglier the cash flow.

Why Good Looking Mobile Home Parks Have Ugly Returns

Some mobile home park buyers have this erroneous idea that the goal is to buy a great looking asset. They even rate the parks they look at based on physical appearance. The star system is a good example. Most people think a five-star park is always superior to a one star park. However, the only real star system they should consider is which park is a superstar on cash flow. Because at the end of the day, all that really matters when you own a mobile home park is making money. Parks that make money are great, no matter how ugly they are, and parks that lose money are dogs, despite how cute their entry may be. And, as a general rule, the prettier the park, the uglier the cash flow.

So why do pretty mobile home parks often not make money?

• They cost too much to buy. Pretty parks sell at the lowest cap rates. Normally one digit, and a low one digit at that. 5% , 6% and 7% cap rates are great for sellers, but can be complete failures for buyers. It is quite difficult to make any money buying parks at 6% returns.
• They are normally at full market rent, so you have no room to push rents. Pretty parks normally have lot rents that are at the top of the market. So the best a buyer can hope for is to gradually nudge the rents up a tiny bit each year or so.
• They are normally fully occupied, so you have no occupancy upside. Tenants are drawn to the mobile home park's aesthetics, and the vacancy factor is normally 5% or less. So there is no way to significantly increase operating income through filling lots.
• They cost too much to maintain. The landscaping alone on one of these parks is higher than a one star park may spend on total management. It requires a constant outlay of cash to keep a park to the highest standard. When you feel you must re-pave instead of patch roads, and plant seasonal color at your entry, you are going down the path to lower margins.
• They have plenty of amenities, and they all cost money to run. Pools, clubhouses, jogging tracks, playgrounds. They all sound great, but cost a lot to maintain and insure. While they are staples of five-star parks, they are causes of poor cash flow.

Are all pretty mobile home parks bad? No, not if you bought them cheaply twenty years ago. The only guy getting rich off these mobile home parks today are the current sellers. As for the buyers, that's a lot of work for a CD style yield. Personally, I'd rather buy a down and dirty, ugly park that makes real money. But I wouldn't want to live in one!

Related Articles
  How to Finance a Mobile Home Park: You Can Still Get Zero Down Financing
  How Mobile Home Parks Make More Money Than Single-Family Home Investing
  Mobile Home Park Investments - How To Make 10% To 20% On Your Money
  How to Really Make Money with Mobile Home Parks
  Mobile Home Tenants - Fixing Mobile Home Park Vacancy Problems
  Mobile Home Parks: The Perfect Storm is Building for the Best Deals in Decades
  Fixing Mobile Home Park Vacancy Problems
  Why Buy a Mobile Home Park as Compared to Apartments and Other Types of Commercial and Investment Real Estate?
  How to Retire on Just One Mobile Home Park
  How to Make Money in the Mobile Home Park Business
  The Effect of Litigation on the Mobile Home Park Business
  Finding and Evaluating Mobile Home Park Investments
  How to Rent a Mobile Home Park in a Tough Economy
  Mobile Home Parks - How to take Advantage of the Greatest Buying Opportunity in Decades
  Mobile Home Parks: How To Dispose of Ancillary Assets
  How to Properly Evaluate Mobile Home Park Investments
  Mobile Small Biz Opportunities
  Buy Mobile Home Parks - What Will You Tell Your Grandchildren if You Miss This Opportunity?
  Mobile Home Parks - How to Properly Enforce the Rules
  SEO Measures for Mobile Search

Article Tags: cash flow, making money, mobile home park, mobile home parks
Referred by: http://www.mrlaundromat.com/



Related Forum Posts
Re: The Mobile Marketing - Mobile Marketing involves communicating with the consumer via cellular (or mobile) device, either to send a simple marketing message, to introduce them to a new audience participation-based campaign or to allow them to visit a mobile website. Some of the tools of the trade and a few of the concepts that will be featured in this Mobile Marketing 101 series are: Multimedia Messaging Services (MMS) Unstructured Supplementary Service Data (USSD) Bluetooth, Wireless and Infrared Mobile Internet and Social Media Mobile Applications Mobile connectivity not only enables people to connect to the Internet via a cellular telephone, PDA or other gadget, but also consolidates the different communication channels in a simple, yet effective, medium. Cheaper than traditional means for both the consumer and the marketer - and easy enough for almost any age group to understand and engage with - Mobile Marketing really is a streamlined version of traditional eMarketing.
Home-based Business - signed my first 200 customers while I worked from home. You can make it work. Many small businesses do, i.e. interior designers, AC/Heating Companies, moving companies, Plumbing companies, painters, landscapers, web designers, Mobile car mechanics, Computer Techs, online retail businesses, Pool cleaners, Home Repair, Telemarketers, electricians, Artists, etc
Re: Mobile Marketing - Top 10 trends in the mobile application in 2012 What is most interesting to us mobile marketers is what lands at # 2 and # 3 spots on his list. "Mobile Search", "location-based services," and also, the place n. # 8 is our favorite of my "mobile advertising." last round after this morning's location based on 1020 funding Placecast poster supports the thesis that when it comes to phones, people expect to be able to discover things around them. That makes sense - after all, what good is a mobile device if you can not access the information you need right now? Gartner reports that location services will be "one of the most disturbing in the coming years." Gartner predicts that the LBS user base of 96 million global growth in 2009 to more than 526 million by 2012. "His value to the user high is the result of its ability to meet a variety of needs, ranging from productivity and fullfillment target social networking and entertainment." Mobile Search, which Gartner says is a fundamental purpose "to drive sales and marketing opportunities in the mobile phone," now just need the user experience. Once "the industry improves the user experience of mobile search to get people back again," Gartner predicts it will be the third most popular application in 2012. Getting to # 8, mobile advertising is no joke. Total spending on mobile advertising in 2008 was $ 530.2 million, which Gartner expects to grow to $ 7.5 billion in 2012. "Mobile advertising is an important way to monetize the mobile Internet content, applications and offering free services to end users. The mobile channel will be used as part of the largest advertising campaigns in various media, including television, radio, print and outdoor, "says Gartner. Here's the full top 10 types of future mobile applications, according to Gartner: 1. Money transfer 2. Location Based Services 3. Mobile Search 4. Mobile Browsing 5. Mobile health monitoring 6. Mobile Payment 7. Near field communication services 8. Mobile Advertising 9. Mobile Instant Messaging
Re: Those Annoying Telemarketers - Good one GT! My father has a similar one: "Hi leave a message and I won't call you back, thanks" Hi Matt, Caller ID is great, when you look at the phone screen. I don't bother holding the phone next to me. Mobile phones have the option to change the ringtone for different people, that's how I make the difference between, mom, dad, husband, friends and leeches.
Re: Hit or Miss: Dancejam - There certainly are a lot of these video exchange sites out there. There's another one I found out about just two weeks ago - probably because they paid big bucks to be on the TV show NCIS. Called...okay, I'm having a senior moment.... I Can Beat That .com or something similar. Rather than videos, people upload t heir best photos for Best Ugly Face, Best Air Guitar photo, and so on. I looked at it just to see if the NCIS guys were actually on it, and they are... but never bothered to go back as its not something that interests me...


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Winning Market Share in a Tough Economy

Life is a Balancing Act!

Secrets of Successful Business Partnering

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.