If you are new to the industry, you’ll want to look close to home. The closer to home, the better. I’d look within 50 miles of home to expand the number of opportunities, but hope you find a park much closer.
The best deals–with the most motivated sellers will be parks that have run down and are not operating optimally.
This will require you to physically work in the park to get the improvements started. You don’t want to drive 100 miles round trip every time you get a call, but it may be the price you pay to get into the investment.
Once you install new park rules, move along bad tenants and non-payers, and fill the vacancies, you can find an onsite manager that will take over 90% of your duties and eliminate those on-demand drives to the park. This will give you the time you need to find the next park.
To find deals within a 50-mile radius to home, try the following resources:
Classified Ads in Sunday Newspapers
This isn’t the best source, but it’s the obvious source. You’ll want to look under “Commercial Property,” “Mobile Homes For Sale” and “Mobile Homes For Rent” headings. The mobile home headings will be advertising individual homes, which gives you insight into the condition of the parks where those homes are located. Lots of vacancies or lots of homes for sale can indicate a burned-out landlord who may be willing to sell but hasn’t yet listed the property.
Visit with the most visible commercial property Realtors in your area and tell them what you are looking for. They often know of properties that aren’t yet listed or once were listed but are now inactive. They will also know of any parks actively on the market. If nothing is currently available, ask them to call you as soon as they hear of something.
Local Multiple Listing Services are often online for public access. Ask your Realtor for the web addresses, so you can do your own searches each week.
Local Real Estate Guides
Depending on city size, these are printed weekly, monthly, quarterly or annually. Get the latest edition from a Realtor or convenience store. Ask your Realtor to mail you the new one every time it is published.
Send Letters to Local Park Owners
Many properties change hands without ever being listed for sale. Send a letter to local park owners introducing yourself and ask them to contact you if they ever want to sell. Most owners will be flattered and at the least, save the letter for the future.
Speak to Local Bank Managers
Tell them you are looking to buy a mobile home park and would appreciate them telling you of any they know are available. Bankers know their customers and will know who is behind on payments, who has a park for sale, or who might want to retire. Use the meeting to build a relationship and discuss the bank’s commercial loan terms and qualifications. Then when a park does become available, you’ll know which banks are the best candidates for funding.
When Your Local Park Is Running Smoothly, You Can Look Outside Your Area
Once you are the established owner of a local park, have a good manager, and have all your forms and systems in place, then you can start looking for parks outside your area. You can run parks from afar with a good manager. Even worst-case scenarios are manageable once you have systems in place.
I recently had to change managers from 800 miles away and while it was a hassle, I was able to find a great person (existing tenant in that park) using just the telephone, fax, and email to get her trained.
It helped that we already knew her as a tenant. It REALLY helped that we had all the training materials and forms in computer files already written. We also know people outside the park who can drive through and give us visual reports of conditions. She’s doing a wonderful job.
To find profitable parks with motivated sellers outside your area try these sources:
Loopnet.com is used by serious commercial Realtors, buyers, and sellers nationwide. This site requires you to register (free) to access thousands of commercial properties all over the USA. They withhold some listings for their paid subscribers ($39.95 per month to get everything listed). I have used this service as both a free and paid member.
Try the free service to learn the lay of the land and upgrade when you get more serious. Tip: If a listing is “inactive” click the link under the listing to learn more about the property. This will provide details from when it WAS listed. This is great info to find motivated sellers as it reveals the old price, time on market, and ownership details.
State and City Commercial Property Websites
Just use Google to find these sites. For example, I found MontanaCommercialRealEstate.com by searching for “montana commercial property.” This great, free Montana site links to dozens of commercial property listings you might never find. Do the same for your state or city.
MobileHomeParkStore.com advertises both individual mobile homes and entire parks for sale. Just click the tab labeled “Mobile Home Parks For Sale.” You can select listings by individual states.
The listings often provide the park’s financial numbers, so you can pencil out parks immediately. The ballpark industry norm for mobile home park price is ten times Net Operating Income. Any park listed for that or less is a potential bargain.
Once you find a motivated seller, meet with them personally. Learn their reason for selling, their ownership problems, and what they need from the transaction. While they try to sell you their property, you are trying to convince them you’ll be an ideal buyer. If they trust and like you, they will be far more flexible with their terms.
Once you understand what they need from the deal, you can construct a fair offer that works for them, works for the bank, and works for you.