Good Things Come To Those Who Wait. Or Not!

Over the years I have talked with many mobile home park residents seeking to purchase their park.  Sometimes it’s just one resident, sometimes it’s the purchase committee, sometimes it’s most of the residents in the park.  

And some groups succeed and some don’t succeed.  

But I have often felt that the saddest situation is when a group wants to buy their park, but their owner doesn’t know they want to buy it.  

Owners need to be convinced that the group is the BEST solution for the park sale.  
There are lots of reasons that owners don’t consider the group as a buyer:

• The owner does not know the group wants to buy it.

• The owner does not think they can pay his price.

• The owner does not know they are organized for the purchase.

• The owner does not think they can get financing.

• The owner does not think the group can deal with the infrastructure needs of the park.

• The owner does not think the group can handle the vacancies in the park.

• The owner does think the deal will take too long.

All those reasons are wrong, but the owner doesn’t know it unless you tell him.

I think that the manufactured housing industry offers an ‘implied contract’ to folks who purchase homes in parks.  The implied deal is that the residents want quiet enjoyment of the park lifestyle (albeit with rents increasing somewhat over time), including the amenities the park offers, along with reasonable maintenance.  The residents have made a big commitment by buying a home that really can’t easily be moved.

And there are lots of parks where that ‘implied contract’ works.

But as parks have become more attractive investments, more owners sell to new investors for very high prices.  The new investors seek to improve their return on their investment – they raise rents as high as they think they can get away with, and they cut back on maintenance.  They use accelerated depreciation to maximize the tax advantages and plan on ‘flipping’ the park after six or so years.  And by raising rents and reducing expenses, they believe they will also get a very high price upon sale.  

And the cycle continues.  

The residents have little choice except to pay the increased rents and tolerate the poor maintenance, or abandon their homes, either by walking away or selling for greatly reduced prices.

Sometimes the residents fight back.  If you go to the “In The News” section of this website or other previous blog entries, you can follow the fights about rent control, Failure To Maintain Lawsuits, lobbying their government leaders for protection, subdivision attempts to break rent control, etc.  But at its best, this is a lousy lifestyle.

One answer is to buy your park.  

And, yes, it is hard, takes group organization, and a PLAN.

But groups can do it, if they start NOW.

Resident groups never know what circumstances may cause a park owner to sell his park.  It might be a desire for a new investment.  He might be tired of the fight.  He might have failed in an attempt to subdivide his park.  He might be going through a divorce.  He might be dead, and his heirs want the cash.  

You cannot anticipate the events in his life.

So you need to start the resident park purchase process NOW.  

Send him a letter telling him you want to buy it.  Demonstrate creditability that you and your neighbors can do it.  Develop a PLAN.

It takes work and persistence.  But it is a whole lot better than fighting and a whole lot better than waiting for the next hammer to drop.

If you want to talk about how you do this, call me for a free consultation.  

Deane