Unlocking the Secrets of Mobile Home Park Investment
Guest Speaker: Frank Rolfe, Co-Owner and Co-Founder of Mobile Home Park
In this episode, host Lance Edwards sits down with Frank Rolfe, co-owner of one of the largest mobile home park businesses in the country and co-founder of Mobile Home University. Rolfe shares his journey from billboard business owner to mobile home park investor, detailing his initial investment in an underperforming mobile home park and the lessons he learned.
Rolfe provides invaluable insights into the intricacies of mobile home park management, funding options, and essential tips for first-time investors. Additionally, Rolfe offers listeners a special $10,000 gift in the form of a transformative book on Conrad Hilton, emphasizing the importance of perseverance and volume in successful investing.
Highlights from the interview:
- First Mobile Home Park Purchase:
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- Frank’s entry into the business was somewhat accidental. He bought his first park, Glenhaven, in Dallas for $10,000 down with a seller-financed deal. Although he was initially more interested in the land value, this purchase marked his start in the mobile home park industry.
- Early Challenges and Lessons Learned:
- Frank learned early on that self-managing a mobile home park is challenging. He managed Glenhaven himself for a year, which taught him valuable lessons about customer needs and the importance of effective management systems.
- Shift in Investment Strategy: After his initial experience, Frank changed his strategy. He began targeting parks in better locations with more reliable infrastructure, avoiding properties with the issues he encountered in Glenhaven.
- Advice on Mobile Home Park Investments:
- Frank advises against buying parks with private utilities (like water wells or septic systems) unless you are financially prepared for potential repairs. He also cautions against master-metered electricity and gas systems due to the high risks and maintenance challenges.
- Frank’s Success:
- Despite the challenges, Frank turned his initial $10,000 investment into over $1 million when he sold Glenhaven, underscoring the potential profitability of mobile home parks when managed correctly.
- Unique Characteristics of Mobile Home Parks:
- Mobile home parks are scarce and unique assets since new parks haven’t been built since the 1970s due to restrictive zoning laws.
- The business benefits from a “locked-in” occupancy as moving a mobile home is expensive (around $10,000), making them less mobile than the name suggests.
- Ownership and Management:
- Park owners typically own the land and rent it out to mobile homeowners, similar to a parking lot model where the owner rents space without managing the vehicles.
- Expense ratios are relatively low at 30-40%, allowing owners to net 60-70 cents per dollar of revenue.
- Improving Financial Performance:
- The main strategies include raising rent, increasing occupancy, passing water and sewer costs to residents, and cutting other costs such as management expenses.
- Improving the park’s appearance can lead to a lower cap rate upon selling.
- Financing Options:
- Seller financing is often the best option, especially when buying from “mom and pop” owners.
- For parks costing under a million dollars, small-town banks are typical lenders.
- Fannie Mae and Freddie Mac offer attractive financing for parks above $1 million, including options for internal refinancing annually, making them highly competitive.
- Entry into the Market:
- First-time real estate investors can enter the mobile home park industry, but they must understand due diligence to avoid costly mistakes.
- New investors should start by searching for parks within a five-hour radius of their home and focus on dealing with “mom and pop” sellers.
- Educational Resources:
- Frank Rolfe and his partner Dave Reynolds developed Mobile Home University (MHU) to provide resources for aspiring mobile home park owners, including books, courses, and boot camps.
- MHU has become a valuable source of knowledge in an industry where professional knowledge was previously scarce.
- Inspirational Story of Conrad Hilton:
- Frank shared a story about finding a book on Conrad Hilton during a tough time in his billboard business, which re-energized him and gave him a new perspective on overcoming financial struggles. Hilton’s approach during the Great Depression—managing hotels he lost to foreclosure and later buying them back at a fraction of the cost—served as an inspiration for dealing with adversity.
Go to www.mobilehomeuniversity.com. It’s got every article, every book, everything we’ve ever done is all on that one site.
To receive a FREE copy of Lance’s best-selling book, How to Make Big Money in Small Apartments, visit www.FreeApartmentsBook.com