Mobile Home Parks: How to Find, Finance & Operate Deals From Afar with Jefferson Lilly!
- Jefferson is the founder of Park Street Partners
- He worked for 9 years for start ups in Silicon Valley.
- Jefferson is a self made millionaire, consultant and educator.
Unrelated to Real Estate:
- Jefferson has two children and would recommend having kids.
- It’s so much fun, you don’t know what you’re missing!
Jefferson is a self made millionaire who founded Park Street Partners in 2013 after moving out of Silicon Valley. He originally wanted to invest his money into multifamily homes however after a bit of careful research he realized that mobile home parks had a significantly higher CAP rate and therefore higher returns. Parks Street Partners is an investment firm for mobile home parks in the US. Many of the deals Jefferson handles are across the country and so he has become adept at looking after finances and operating deals from afar.
Find and operate deals from afar
Despite what we may think, it’s surprisingly simple to find deals across the country, Jefferson recommends using a variety of lead generators for example postcard mailers to mobile park owners, Lootnet and Brokers. Brokering in the mobile home park sector has been cornered by a couple of large firms, so that there are about 50 brokers that handle 90% of brokered mobile home parks in the country. Once you have a broker that you trust make sure you have access to his pocket listings, which are the listing that haven’t gone online yet. Jefferson recommends that you don’t treat finding a deal in this sector like you would for single or multiple family homes, so don’t buy places that are going to be big in a few years, instead but regardless of location. For your first park make sure you have all city utilities as you don’t want to be dealing with an onsite septic tank. The other most important location point is find a park within 5 miles of a Super Walmart. Walmart have a strict location strategy, so anywhere with a Super Walmart is going to be fairly financially stable.
Once you’ve found your deal the financing depends on the size of the debt; for larger deals over $1.5million then collateralized mortgages are good and Jefferson recommends CNBS financing. Alternatively for this size of load you can also use an agency, for example Fanny or Freddy. For smaller deals under $1million it’s possible to use regional banks or seller carrying. This is where the seller pus down 25% now and the rest over time, so effectively the seller provides the mortgage. (For more on seller carrying see episode xxx) It can be tricky to reach out of regional banks regarding financing for mobile homes because it’s a new and unknown sector. The receptivity really depends on region; and you can be lucky in one area and have to call 100 banks in another. Jefferson remarks that this is unusual because mobile home parks have one of the lowest default rates of any real estate option.
Managing from afar
Once you’ve bought your deal, how are you getting boots on the ground to make sure your deals are working properly and efficiently? Jefferson recommends that you shouldn’t actually own any of the mobile homes – only the sites they sit on. This way you don’t have to worry about leaky roofs or broken doors. If you have to buy a couple of homes with the original deal then put them on rent to buy. Jefferson reassures that it’s not as difficult to manage a mobile home park because everyone owns their homes theirs a buyers mentality so people look after the area and it’s much easier to collect the rent. By installing an onsite manager they can be there all the time to collect rent, post late notices and show available lots and you don’t have to fly across the country all the time. The managers should not be doing the maintenance or the financials, for this hire an asset manager who will manage bids for repairs and ensure you get the best price for lawn mowing etc.
Top investing tips:
- Most successful habit – Setting goals based on efficiency – how quickly are deals moving through pipeline
- Most influential tool in your RE business – Asana is fancy to do list app for teams where you can assign jobs.
- Most exciting project right now – First coastal deal, Jefferson hasn’t done a deal yet in a state that has beaches.
- Who is your most influential person – Warren Buffet
Contact – www.parkstreetpartners.net