Millionaire in the Making – Jim and Kathy Hughes

Thanks to Ron LeGrand’s training, especially in Commercial Property, my husband Jim and I purchased a Mobile Home Park with a total of 19 lots, two of which a doublewide occupies, leaving 18 currently available for cash flow. The 18 lots consist of five park owned rentals, one is being rehabbed to lease purchase (tenant was evicted the first month of our ownership). We have a contract on another for the current rental-tenant to lease purchase. One is a stick building rented out as a barber shop. There is one that is just a rental, and the last one needs a lot of work and may be used for storage. One tenant-owned trailer moved out the first week we bought the park leaving us with 4 vacant lots, however a new tenant-owned trailer moved into the park in the second month. We have purchased two used trailers that are moving into the park soon. They need a little work, but they will be park-owned and advertised as rent-to-own. Shortly we will have four park-owned lease purchase units, two strictly rentals, one storage unit and one empty lot to fill along with the filled ten lot only rentals.

The previous owner allowed the tenants to pay whenever they wanted during the month with no monetary penalties. We implemented the policy that the tenants pay rent directly to the bank checking account, and payments must be posted to the account by 5PM on the 5^th of the month or pay late fees. We are able to view who pays and when online. We worked out payment plans for two tenants who were always behind in payments in order for them to catch up on rent. Others that didn’t usually pay on time have caught up or will soon. We removed two dogs that had several complaints by other tenants. We have done an overall cleanup and required tenants to remove undesirable items from their property (one tenant had a car motor hanging in his yard). We offer tenants $100 referral fee if they are current with their rent with no late fees after someone they refer moves in and pays rent on time for 90 days. We also are planning to offer a yard-of-the-month award of $50 to the yard the tenants vote as the best and a drawing at the end of the year between all of the winners for $100 (maybe a gift card). There are very little common areas here. We are already talking to a tenant owner about keeping up the common areas and showing lease purchase units that become available and be the first point of contact for the tenants.

The following is a breakdown of Percentages of Occupancy, Tenants who paid on time and those who paid within the month from February (we settled on February 3 and was entitled to all rents) through April (this month).

We would not have considered doing any of this without the training and information we have received through Ron LeGrand. They have all opened our minds to what to look for in a deal, how to creatively negotiate the terms and purchase price and make it all a win-win for everyone involved in the process.

We are expecting to close on two other Mobile Home Parks within the next 30 days. Neither seller is full aware of the Occupancy rates of them nor income and expenses. One park is only ten lots, but we negotiated for an additional 3 acres to expand at no additional purchase price. They are also willing to do some owner financing.

The second park has 57 lots, 37 of which are park owned, but nine are empty and need some work. This park has been running at a loss most years due to the seller not being aware of expenses and vacant properties. The tenants pay whenever throughout the month with no monetary penalty. The seller is paying a resident couple $24,000 annually to manage the park. They have no computerized record keeping and just mail the paid rent receipts to the seller. The gentleman spends most of his time repairing the appliances in the park owned units, therefore has no time to rehab the empty rentals. The seller annually pays an additional $1,500 for lawn care, another $1,000 for an empty, unused propane tank and everyone’s water and trash. The park has its own water treatment facility, so someone will have to be responsible for testing and treating the water on a regular basis. The seller had a total deficit of $2,633 from January 2013 through February 2014.

The management couple wants to retire as soon as possible after we purchase the park, and the propane tank will be gone before settlement; the tenants have been advised that by May 1^st they will be paying $20 a month for water and trash (which is customary for the area). The tenants will pay rents directly to the bank with late fees imposed if applicable. The tenants will have an option to purchase the appliances from us or provide their own, making them responsible for all of the repairs of such. We will look into the possibility of providing a paid laundry facility for their and the public’s use. We will find a couple in the park who will be able to test and treat the water, do lawn care for the common areas only, show units as they become available for lease purchase and be the first point of contact for the other tenants. They will receive either reduced or free (lot) rent for their services. They will not collect any pay.

Within the first month of ownership, we should be able to reduce the current expenses at least $2,200 and increase income by $640 a month without raising any rents or adding any new trailers or tenants. This park has a net about $10,000 a month. Our first goal is to rehab as many units as quickly as possible while advertising the empty lots for rent. The park is located very near a military base gate.

All of these parks are about an hour and half to two hours from our home. We believe once we get everything in place, these parks will pretty much be self sufficient with little intervention on our part. We have already made quite a bit of difference in less than three months of ownership in the first park and are looking forward to improving the others. When these three are running well, we will look for more or sell one or more of these. Who knows what the future holds for us and Mobile Home Parks?

Jim and Kathy Hughes

Atlanta, GA