Re: My latest strategy to find MH Park deals… - Posted by ray@lcorn
Posted by ray@lcorn on March 02, 2001 at 17:43:28:
I commented on your strategy for MF properties over on the commercial news group. Since this post has some different details I’ve got some different comments here.
First let me say I admire your aggressiveness and your willingness to prepare yourself for the job at hand. One of the things I try to hammer home to seminar students and in my book(s) is that you must take the time to set your criteria before starting to search. You have begun that process, and it will pay big returns for having put forth the effort. I also want to thank you for sharing your thoughts and ideas with us here. It’s fun to watch the lights come on when people relize that real estate is the perfect place to apply the tools you are using. However you need some pointers to keep you from wasting time… and that’s the best feature of these forums here on CRE Online. You’re in the right place doing the right things, and good things will result from the effort.
On your MHP strategy: Again I like the approach, but will caution you about a couple of quirks you may not yet realize about MHPs.
First, as a general rule for all property types you will need to know on what basis the tax assessments are calculated. Formulae for tax assessments varies so widely from one jurisdiction to the other that you must be very careful to not use the values without knowing the methodology behind them. Here in the east we have jurisdictions using anywhere from 50% to 125% of appraised value for the “tax assessed” value. I don’t know which “Portland” you are in… but I will bet that you will find more than one way being used to calculate tax values, and unless you know that for each jurisdiction you are polling then you may be drawing incorrect conclusions for your criteria.
A second factor is that in some methods of tax valuation MHPs fall through the cracks. Some localities value only the land, and add only token improvement value for the space infrastructure. Mobile home parks generally do not have a lot of buildings, and I have seen space improvements valued as low as $500 per space. At the other extreme are those localities that include the value of mobile homes in the tax assessment. We went to court over the issue years ago and won in one state, lost in another. That can arbitrarily raise the value and make the park look more expensive than it is. Unless you know the particulars of the park, such as number of spaces, number and size of any buildings, and again the assessment methodology, you have no idea of what the number means. What if the park valued at $9M also has a small apartment building and maybe some storage warehouses on the property that also includes 100 spaces? How do you know? Could the property could be split? It cuts both ways… I’ve seen million dollar properties with a $300T assessed value, and vice versa.
Third, on zoning. It is a unique characteristic of MHPs that they are in fact a government protected franchise. I often ask the question in seminars “How many of you would want to walk into your local planning commission to get approval for a mobile home park?” The answer is usually a groan… MHPs are one of the hardest zoning approvals to get, second maybe to landfills. As a result, the older, grandfathered parks become worth even more because the government is restricting competition. Those parks also often never get the proper zoning, because the ordinance has been written to get rid of them if they ever close. And those are precisely the ones you are looking for. Limiting a search to properties zoned MHP will miss the very opportunities you are searching for. Stick with the yellow pages unless the title company is very adept at delivering results you can use.
Finally, Eric C’s point on the commercial board about names on titles I concur with. Many investors hold property personally, and many don’t. It has nothing to do with whether or not there may be a deal to be had. I understand your reasoning… trying to get the best bang for the effort. But in the words of W.E. Deming, father of the modern quality movement, “There is no such thing as instant pudding.” You gotta do the footwork.
I think the way I would use your yellow page list is for phone calls, and definitely property visits, as you mentioned above. There really is no substitute for direct contact.
Keep on trucking my friend, you’ve got the right idea!