Posted by Rolf Jacobs on November 02, 2008 at 13:15:03:
Gary,
This is a great idea and I will incorporate immediately. I thought
people only cared about money but you have given me a new
perspective and a way to implement it.
Thanks.
Rolf
Wheat Hill MHC
Need to fill vacancies…is this overkill ? - Posted by Darrell
Posted by Darrell on October 30, 2008 at 07:24:15:
Bought a 73 space park in Forks, Wa July 2007 with 43
vacancies.Most of my spare cash has gone to cleaning up the park physically and evicting the riff raff. ( My last drug dealer( I hope !!) left on their own accord 2 weeks ago.) I’m considering offering move in incentives both to Lonnie dealers and the public. I’m thinking about offering $1000 for a singlewide and $2000 doublewide…overkill or not enough ? ( Space rent for singles is $200 and $250 for doubles. ) I’ve only had one home moved into the park by the public.
Re: Need to fill vacancies…is this overkill ? - Posted by JHyre in Ohio
Posted by JHyre in Ohio on November 06, 2008 at 09:31:22:
I do not think that the ideas offered below are mutually exclusive. With that said, we tend to move homes in ourselves and sell them, per Anneâ??s comment. Why? We are able to buy very cheap and sell cheap. After all costs (buy, selective rehab or prehab, move, periodic re-rehab from move-out, financing via private investors, etc.), we tend to about break even, with our target price = $500 down, $195/month for 60 months. Added to lot rent of $200, we are looking at $395 for 1000 sq. ft. 3BR in decent shape, more for V/S 16x80â??s. Bottom line, we are looking to provide excellent value on the MHâ??s to fill the lots. Having Lonnie Dealers involved doesnâ??t really meet our goals, because their markup will increase the price, lengthen the term, or otherwise delay or inhibit accumulation of equity by the residents. I want my residents to have clear and fast equity to keep them on my lot.
We use IRA money, presently at 12% (we may drop that rate in the near future as demand for private avenues of investment increases) to finance the total cost of the home and have significant cushion between the amount financed and the amount coming in. There has been an abundance of money looking for a home, and that abundance is increasing now that more traditional investments are losing popularity. In short, determination and a bit of craft on creditability & salesmanship will go a long way. Our investors are quite pleased with the rates we are giving them and the mark-up on the homes to comp them still allows us to sell cheap, cheap,cheap.
I wonâ??t say Rolfâ??s method doesnâ??t work. I will say that my method fills the park far faster than paying a move-in bonus to residents, particularly if the move-in bonus is only $1k - $2k. I view a move-in bonus as a supplemental incentive plan for acquiring residents, but not as a replacement for our move-ins. Lonnie Dealers might be able to use the move-in bonus to fill the park as fast as I can (emphasis on might), but as mentioned, their prices will be higher (because we are pretty good at buying cheap and are not looking for much mark-up over our cost) and less attractive to residents. In addition, Lonnie Dealers add a set of moving parts in terms of screening, payments, etc, whereas I provide one-stop, simple service.
JMHO.
John Hyre
Very good thread… - Posted by Greg Meade
Posted by Greg Meade on November 05, 2008 at 09:42:42:
and very timely. Two of my friends lost parks this year by not having a comprehensive plan in place to fill their Parks.
In florida, it costs about 15K to bring in a 14X70 5 year old repo, rehab, market. The smart investor has this money or credit in place prior to purchase of park. The old dynamic of paying a local dealer a 1K spiff to direct buyers to your park are long gone. In my area, less than 15% of new mobiles are moved into parks and in my area these are usually waterfront or lake type MHPs. Amenities seem to drive the occupancy rate. 5 star waterfront Parks are mainly full, while in marion County florida non amenity parks are running an average 34% vacancy rate…not good.
Tons of info on different infill programs, but i agree with Anne, I would much rather bring in my homes and market with strong Notes. These can be sold or traded for more homes. Lonnie dealers in my area want free lot rent when vacant and the entire move in cost paid by owner. They are doing the park Owner a huge favor and the savvy ones know it. One owner I know has actually offered an equity stake in his park to the Lonnie Dealer bringing in 44 homes over 4 years. Win/Win.
My 2 cents and worth every penny!!
Greg
Re: Need to fill vacancies…is this overkill ? - Posted by Dave Fl.
Posted by Dave Fl. on November 02, 2008 at 05:35:24:
I have only two vacant lots which I intend to convert to RV pads because its so much cheaper, not the best solution but will do for now.
On a slightly different vacancy problem of how to fill homes that have been abandoned or otherwise donated to my park.
We are a 55+ park in Fl. but as you all know, we have the 20% rule we can work with which allows us to have people under age 55 live in the park.
In order to keep the park full I am leaning toward allowing underage people into the park if they buy a park owned home, partner says that’s wrong and probably illegal. Our rules say entry is at managers discretion. I don’t see where this would be discrimination but I have been wrong before.
Anybody have any experience in this scenario?
Thanks
Dave Fl.
Re: Need to fill vacancies…is this overkill ? - Posted by mike Barlow
Posted by mike Barlow on November 01, 2008 at 16:41:15:
Let me throw this out: What if you did not spend any money on
bringing homes in, just tried all the inexpensive suggestions offered
on this board to get owners, dealers, etc to move homes in, and raised
the rents each year where would you be in 10 years? At the national
average of $10 per year per space you would boost your income to
$3000 extra and save spending $80,000 to $120,000 trying to fill the
park.
Re: Need to fill vacancies…is this overkill ? - Posted by Mike Barlow
Posted by Mike Barlow on November 01, 2008 at 16:38:41:
Let me throw this out: What if you did not spend any money on
bringing homes in, just tried all the inexpensive suggestions offered
on this board to get owners, dealers, etc to move homes in, and raised
the rents each year where would you be in 10 years? At the national
average of $10 per year per space you would boost your income to
$3000 extra per month and save spending $80,000 to $120,000 trying
to fill the park.
The problem with cash - Posted by Keith (OH)
Posted by Keith (OH) on October 31, 2008 at 12:15:17:
Incentives will definitly peak some interest into moving homes in your park. But don’t limit yourself to just offering cash. Experiment a little to try and find out what your potential home buyers actually need ? Maybe a car, or new clothes, big screen, childcare, assisted living, bus pass for life; you get the picture. The nice thing about all of these incentives is you can negotiate the price it costs you, while the true value to the customer is a lot higher.
If you found a deal on a nice car that is worth 5K and bought it for 2K. And gave it to a customer for moving in their home, this would be much more inticing to them (especially if they dont have a working vehicle) but would cost you the same amount of money.
Another idea I like is focused toward senoirs who are looking for a park to move into. Ask one of your more responsible tenants if they would be interested in running errands twice a month for the prospective home buyer in exchange for a discount in their lot rent. Knock off $25 and this would cost you $300/year, but the value of this to a senoir customer and their extended family would be HUGE. Pitch it as “Free errand service for Senoirs”
The problem with exchanging cash is, the “value” is the same for both parties. You lose the advantage of perception.
Keith
Re: Need to fill vacancies…is this overkill ? - Posted by Ryan
Posted by Ryan on October 31, 2008 at 09:20:46:
Darrell,
I agree that getting others to fill your vacancies is a win/win. Offering a 2k incentive and free rent until the home sells (within reason) is a great way to get homes into the park. I would suggest though that you put something extra in for yourself. Increase the lot rent by $25 for each of these new homes. The extra income is straight profit & it makes it easier to raise the rents on the other tenants. Assuming you fill the park, this extra $25 per space effectively makes your park worth 200k+ more at a 10% cap. So spending 2k x 30 homes brought in is a small price to pay. If the 2k isn’t working bump it up by 500, etc. This benefit is of course on top of the $200-250 of the rented lot.
Ryan
Re: Need to fill vacancies…is this overkill ? - Posted by Shawn Sisco
Posted by Shawn Sisco on October 31, 2008 at 08:16:40:
Darrell, I think you are on the right track. My advice is to be flexible and creative with uses for your move-in spiffs. What seals the deal for one is of little value to another -not that they will refuse to take you up on it- just that the same amount of $$ in another area would truly entice someone to move in (I have paid spiffs to people who were moving in regardless, and have given away items, that were never used by recipient). With your local electric co. policy, it seems that you could pay for an all elec changeover and be money ahead. I still think you should bring in some houses and sell them-create some notes- sell notes- buy more houses-create more notes-sell notes…
Re: Need to fill vacancies…is this overkill ? - Posted by Gary
Posted by Gary on October 30, 2008 at 21:19:16:
How about free lot rent for a year? Or more? Whatever it takes? That would keep cash in your pocket and you would be giving what would have been an empty lot any way. Gary
Re: Need to fill vacancies…is this overkill ? - Posted by Rolf Jacobs
Posted by Rolf Jacobs on October 30, 2008 at 16:16:22:
Darrell,
I am attempting the same thing in NE Ohio and I have to disagree with
Anne. I offer $2K if they bring in a 14 x 70 and $2,500 if they bring in
a smaller home. This may not be enough but it has generated interest
and actually got one home moved in. I really think I have to go up a
little bit.
This method, if it works, is far cheaper than bringing in homes and I
would caution you to be leery of those who say it doesn’t work. Find
out if they have actually done this method first. Look at the numbers.
Suppose you spend $10 K to buy, move, set up a home you can sell for
$15K. Seems a lot easier to me to pay 2-3K each for someone to bring
in a home. Even if you pay $5K and get 2 homes in, that’s still way
better than just getting one.
There is a “sweet spot” somewhere and it’s a matter of finding it. I
think I may go up $500 on my offer in the spring and see what
happens.
Alright everyone, I have my Kevlar on so start slinging those arrows.
Rolf
Wheat Hill MHC
Re: Need to fill vacancies…is this overkill ? - Posted by Anne_ND
Posted by Anne_ND on October 30, 2008 at 12:34:24:
Not overkill, probably not enough.
You should be concentrating on buying repos, moving them in yourself and selling on notes, or renting.
Most park owners make the mistake of thinking they are doing Lonnie dealers a huge favor by giving them free lot rent or some cash to move in a home. Unless you plan to pay for the full move-in, no knowledgable Lonnie dealer would do it, and you could get a beginner who makes a huge mess of it, thinking they are getting a deal.
Truly, it’s cheaper to find the houses yourself and bring them in and sell them yourself rather than manage someone else doing this in your park. Maybe things are different in the northeast, but in GA that’s reality.
Anne
Re: Very good thread… - Posted by Louis
Posted by Louis on November 11, 2008 at 06:50:12:
Greg- In Marion County re: Vancancies: Q:Is the problem the economy or the sudden availability of low cost stick built houses? In other words are people ‘tapped out’ or have they found better options?
I’m just curious, I’m not a big operator or anything.
20% rule is not discrimination… - Posted by Steve_AZ
Posted by Steve_AZ on November 20, 2008 at 10:59:05:
in Arizona anyway. I work exclusivly in senior parks and most of them allow 40+ residents. Never been a problem as far as my experience goes.
I like the 20% rule, it makes it way easier to sell my homes.
Under 55 - Posted by Ben Siff
Posted by Ben Siff on November 02, 2008 at 09:59:26:
I think that rule is to allow for children and other family who live with the main person on the lease (that is over 55). I dont believe that it is meant to allow for direct leasing to people under 55.
Re: Need to fill vacancies…is this overkill ? - Posted by Rolf Jacobs
Posted by Rolf Jacobs on November 01, 2008 at 21:17:50:
Good question. I guess it really depends on the status of your
community and what your goals are. I’m moving in this direction
myself as I simply don’t have the money to bring in homes. I need
more people in my community so I will have to find alternative ways to
fill the place along with the on-going rent increases you mention.
Rofl
Wheat Hill MHC
Re: The problem with cash - Posted by Rolf Jacobs
Posted by Rolf Jacobs on October 31, 2008 at 19:24:31:
Keith,
It’s easy for me to advertise the incentive program I have but I have no
clue how you would advertise what you suggest. Not saying it won’t
work or is a bad idea. Just don’t know how to promote it.
Rolf
Wheat Hill
Re: Need to fill vacancies…is this overkill ? - Posted by Darrell
Posted by Darrell on October 31, 2008 at 06:34:46:
I tend to agree with you Gary. The resources I have in a descending order is…available monthly space…time…and finally money. I need to use the most abundant resource first to attack the vacancy problem. One of the challenges I face is that Clallam County PUD ( our local electric company) has a $2000
hookup charge for any home brought in from outside the county. If the home doesn’t use electric heat or is an “good cents” energy efficient home… no charge.
That $2000 charge is also reduced for low income…as low as $450. Any $$$ paid on the hook up is refunded for energy efficient home improvements e.g. double paned windows. I think this PUD program is typical of a lot of government programs…they frequently have unintended consequences. I think this program tends to perpetuate substandard housing. When faced with “the charge” many people opt to keep a home that really should be sitting in a landfill. I have some coping strategies for “the charge” but am curious how others have dealt with similar problems.
Re: Need to fill vacancies…is this overkill ? - Posted by Tony Colella
Posted by Tony Colella on October 30, 2008 at 17:20:03:
No arrows to sling as the whole solution seems self evident.
For park owners with large vacancies, time and money will not allow them to fill these lots themselves in the short term. Offering financial incentives to others to fill the lots is a no brainer. The non-vacant lots improve the value of the park exponentially and provides a huge return on the small incentive.
But the reality I here from most mid to large sized park owners is that they can no longer rely upon dealers to fill lots nor can they rely upon owners to fill all the lots. The incentive may help investors and owners fill some of those lots which is win/win.
I think we have all seen some non-mobilehome educated investors buy parks under theory of “build (or buy) it and they will come.” They soon find out that the “potential cashflow” remains in that category.
In this economic day we must do whatever it takes. If we need to offer higher incentives to get the investors and owners to move in then so be it, again a no brainer.
The credit crisis will likely limit homeowners the access they need to move homes in but if you get one or some then great. Investors will likely be the ones who can make these deals happen if the park plays fair in the long term and helps out with incentives up front.
The rest may be up the park owner to get more and more creative or put their own cash or credit to use.
Tony