Park approvals - Posted by Don (Tn)

Posted by Tony Colella on March 24, 2006 at 09:16:19:

Swimming up stream is something we run into every time we try something new and usually because we are trying it in the wrong location (be it parks or banks).

Keep in mind that it only takes ONE park to get started and in many cases only one or 2 parks to keep rolling.

I do not believe that all park owners have the same mentality, goals, financials (or access to cash), desire to work in their own parks, the understanding of working in their own parks or the energy (pre-burn out).

I suspect that what the speaker you heard may have been addressing was the fact that in years past, park tenants who needed affordable housing simply went to a dealer who sold and financed them a home to put on a lot in a local park.

I agree this happens less and less and anyone who has been on this site or read Lonnie’s book understands that this is one of the reasons Lonnie’s system works. We were always able to buy low, finance reasonable prices and make a great return on a spread.

The new mobile home dealers went nuts watching us buy and sell homes in their favorite parks. I had 2 of them complain to the park manager on separate occassions that I was selling home too FAST! They were convinced the park was diverting their prospects to me somehow. One of the dealers called and offered me a job. I declined of course but did tell him that I was owner financing my deals. He could not believe I would do that. Oh well, “you make your money your way, I’ll make it mine,” was my response.

Even back then I wondered, especially with larger parks with dozens of vacancies (or more), just how they could sit and wait in the hopes that new home buyers would fill their vacant lots. It is too long a process, especially after the reduction in the lenders willing to finance mobile homes without land after the bankruptcy of several of the largest mobile home lenders.

This combined with the low interest rate lending market that is willing to approve even a faint heartbeat for a mortgage on a stick built home, makes the expectation that dealer home buyers will fill empty lots for park owners, unreasonable in many cases.

So yes, it will be up to the park OR an Investor to do so. Karl Kleiner is a great example of just how this can work out for both the investor and the park owner.

Park owners (especially those of small to medium size parks) may not have the capital to fill their lots. Let’s a park has 20 vacant lots. These park owners are not often familiar with the Lonnie deal concept so they think of paying retail for “nice, new homes.” Even if they bought nice, wholesale, new homes, lets say they hammer the price down to $10,000 a piece (not including move, set up etc.). Just in home purchases, the park owner will need to come up with $200,000. Then they have the cost of move and set up, decks, skirting, utility hookup, which may add another $50,000 or more to the deal.

All of that just to get lots filled? See why an investor who is willing to use their cash to fill the lots offers a value to the park owner?

So yes, I agree that the parks will have to take on the responsibility of filling their own lots but this does not mean they can’t use investors, it just means that the new dealers may becoming less and less effective.


Park approvals - Posted by Don (Tn)

Posted by Don (Tn) on March 23, 2006 at 21:29:49:

A current post got me to thinking about the problems of doing Lonnie deals in picky approval parks. As a previous poster said, sometimes managers tones change when an actual renter is presented to them. It seems that they are really trying to throw a wrench in your deals for whatever reason.
Why should we worry about dealing with these managers when there are plenty of parks that really want to rent new spaces. Now I know that this is not the “Lonnie Way”, but why not just hitch up to them and take them where they will be loved? Perhaps the new park will offer to pay some of the moving costs in cash or in free rent. Of course you would have to have a written agreement with the new park as to their specific approval requirements so you would not be just moving into the same trouble.
You should be able to buy these homes really cheap because the current owners would have an almost impossible time seling under these circumstances. So if you can buy cheap enough, moving may be feasible. Perhaps if you do this enough you could get some really good discounts from home movers. But the best thing would be telling that snooty manager, after one of your buyers has just been shot dowm, i will be here with the movers in the morning.
You experts tell us what you think since I am just shooting from the hip.

Re: Park approvals - Posted by osupsycho (OK)

Posted by osupsycho (OK) on March 24, 2006 at 10:17:11:

This is no where near the first mention of this type of thing on this board. Here is a link to what John Hyre did when faced with this situation:

Re: Park approvals - Posted by Les (IN)

Posted by Les (IN) on March 24, 2006 at 07:32:33:

I just saw your thread, I am thinking like you, not the “Lonnie Way” hate the thought of the cost. Here’s my thoughts, sorry long.

I listened last night to a teleconfence that was around the financing of MHP’s and MH’s. Here is what I heard and my present experience and questions.

The future of filling present MHP’s is going to rest on the owners of these communities.
I am new to the business of MHP’s. I have bought and sold a couple of homes about 3 years ago, deals when well. I knew from the past that dealers apparently had a realtionship with MHP’s that was of mutual beneifit to both.
I only know the backgrounds of a few people on this forum, those I believe started in the business as Lonnie dealers and have gotten into park ownership. Having said that, is the mindset of the park owners that they are
going to take care of all financing needs in the parks as home owners want to buy or sell their home? If a home gets too old, is it going to just be banded from the park?
I have a reason for my questions. I am really trying to understand the climate of this business, it doesn’t seem to be the same business it was 5 -7 years ago! I think everyone knows that fact.
I have have been told by two big park owners this week that they will not allow anyone other than them buying or selling homes in their parks.
These parks have many empty lots and other homes for sale by owners.
I was contacted by telephone by the president of one of these parks that owns about 6 or more parks this two state area, that I could not do business in his parks! I had contacted one of the park managers about buy a home from someone that had it for sale. (normal Lonnie sop)
I didn’t take issue with this owner, just said fine, I always check up front before doing a deal.
I didn’t like his tone and really am puzzled by what I view as short sited view on his part, he has many open lots and I had no plan to move the home.
Sorry to be so long, can someone clear this picture for me.
I know the first answer, just move on to the next park. Well I don’t buy that answer, there seems to be a mindset in the parks I have visited that it
my playground and you can’t play.
My big question is what is the future for the small investor?
Buy your own playground or invest somewhere else.
I think this can be wonderful business, but as it probably shows I am growing tired of swimming up stream. I’m not wining, just stating my experience.
I have a much long story than just this week.

Les (IN)

Re: Park approvals - Posted by jp(sc)

Posted by jp(sc) on March 24, 2006 at 06:28:23:

That has been mentioned many times on this board, but it really depends on the area. In my market, every park has plenty of empty spaces and lot rent is really low ($115), so they will approve anyone who can fog a mirror. They HATE to see homes leave and will really work hard with you to keep them. There are other areas, however, where every park is pretty much full. In these cases, the owners are probably happy to see an older home go because they are anxious to bring in newer homes, thus improving the image of the park, thus allowing them to raise the lot rent. And you might be hard pressed to find a new spot in the same market, especially if the home is older. So I think it depends somewhat on your market conditions.