MOBILE HOME PARK FOR SALE
In this episode, we interview mobile home broker and used mobile home expert Levi Parham. We talked about market trends for used mobile homes and the benefits of such purchases to mobile home park owners. Then we touched on what’s happening in the industry of mobile home movers.
As always, this episode is hosted by Maxwell Baker, co-founder of The Mobile Home Park Broker, and brought to you by our proprietary Community Price Maximizer. With our system, we at MHP Broker guarantee you a higher price when you later sell your mobile home or RV community.
Here Are Some Show Highlights:
Want to know more about the business of buying and selling used mobile homes? Contact Levi Parham by dropping him a line at mobilehomes@themhpbroker.com or through MHP Broker at our 678-932-0200 number.
Power QuotesFrom Max and Levi Parham:
00:02
Hello and welcome to the mobile home park brokers tips and tricks. This is the podcast where we talk about mobile home park investing, because that’s what we’ve been involved in for the last decade. Let’s dive into today’s episode. Here’s your host, Maxwell Baker.
00:22 Maxwell Baker
Hey y’all thanks for joining us with the mobile home park brokers tips and tricks. This episode as always is brought to you by the community price Maximizer. This is a proprietary system we have coined here at the mobile home park broker that will guarantee you a higher price when you sell your mobile home park or RV park with us. It’s a four-step program. Give us a call 678-932-0200. Today I have a young gentleman who is close to my heart, very close, real close. I’m just messing with him. He’s actually a partner with us here at the MHP Broker ® and has carved out a very unique niche wholesaling individual used mobile homes, Levi Parham with Mobile Home Wholesalers, mobile home gone and usedmobilehome.com. Everything mobile home is your main man Levi Parham. Levi, welcome to the show.
01:19 Levi Parham
Thanks, buddy. Appreciate you having me on. Obviously, we’re good friends, but it’s still an honor to be interviewed by someone looked upon so highly in the industry. So, I appreciate you having me on.
01:29 Maxwell Baker
Yeah, man, it gets a little dirty in this industry. So, if you can meet people that have high integrity and can talk to you about stuff and not get offended easily that’s a good partnership and I feel like we have that. So, I’m very grateful for that and grateful that we have been growing this venture together. Really just seeing each other’s growth has been great. But enough of the love fest here. Let’s jump into the math of used mobile homes. I’ve been witnessing a lot of park owners out there turning down deals super cheap. I will be the first one to tell you that I did that with Levi and I was like, “Alright, I can’t do that anymore” because the market for us mobile homes is crazy right now. Levi, can you kind of go into a little bit of description after the last 24 months of just deal flow. You’ve been in the trenches here, kind of just your feedback of what’s happening to the market, what’s happening to the prices.
02:26 Levi Parham
I look at it as a trickledown effect. Everyone keeps hearing about all the changes in real estate, how everything’s going pricewise through the roof. That isn’t traditional real estate as far as residential housing. All those people went to buy new mobile homes; they ran out of that because of everything we hear about with labor shortages and material sources and all that. So, if you went to Clayton dealership today, you’ve got 12 to 18 months before you get a house. So, all the people then went to the used mobile home space. And so, these mobile home spaces used to be a great place, or still is a great place for park owners to get houses. But it was easier, way less competitive because the market for individuals who were searching out was not nearly as competitive, but when the residential market got so hot, there’s just a huge influx of buyers on the traditional side that have come in and raised those prices up. And park owners are just, we’re having to adjust really.
03:20 Maxwell Baker
Yeah, the adjustment has been a tough pill to swallow. Can you give us an example like mid-90s, early 2000s, 14 by 70, single-wide, 5years ago, what was it selling for? And today, what are they selling for now?
03:35 Levi Parham
It had to be five years ago. I mean, just because in the last year, an example that comes to my mind, we just talked before this about you driving to Dallas, Georgia yesterday. Dallas, Georgia, let’s call it two years ago, I sold a five bedroom, three bath, early 2000s model doublewide to a park owner of Atlanta, who had a large doublewide park with plenty of space for doublewides. I sold them that house for $25,000. It was a move-in ready, like I said, five bed three bath. And about six months ago, I swapped in a 1996, three bedroom, two bath singlewide within about 30 minutes of there for $27,000
04:12 Maxwell Baker
Geez.
04:13 Levi Parham
It’s just one of those things where like I said, there’s just such an influx of buyers that these higher quality houses that need very little repair, they’re getting hard to come by. You’re gonna have to be willing to compete and bring something new to the table that the traditional buyer can’t. A lot of park owners can do that. I always push park owners, if you’re going to search for a house, the biggest problem you have to think about everything just like if you’re buying apart from the sellers’ perspective. That is if a seller is looking to get a house removed from their property, how can you make that as easy as possible? So coming in being professional, truly having a piece of property that’s already set up and zoned for a mobile home and all those things are in your favor, and you have that as a negotiating power. But you have to understand that these $5,000, move in ready, 15 year old houses just aren’t available anymore.
04:59 Maxwell Baker
So, on a $300 lot rent community, let’s do the math. If you’ve got an empty lot, which once a month passes, that rents gone forever, you’re never going to get that month that just passed ever again in rent, it’s just gone. So, $300 lot rent times 12 is 3600.
05:19 Levi Parham
If we do a 40% Expense Ratio, even a lot rent to be conservative, that’s $2,160 a year.
05:28 Maxwell Baker
That’s right as NOI for that individual lot. Then we would divide that by the selling cap at eight, which puts us at $27,000 per occupied lot. So let’s back into that.
05:42 Levi Parham
So, say you’re looking for a pretty nice house in today’s market, let’s say late 90s, to mid to early 2000s, model singlewide. And you’re able to get a pretty good price on it. Those right now are going for around $15,000, for the most part. That’s kind of the price range you’re at and this is a three bedroom, two bath house. Let’s say you got another five and getting moved into your park. So now we’re at 20,000. And maybe you’ve got two in repairs, you’re in at 22. So already, the value your park has got $5,000 more than you spent, but you’re going to be a lot rent park in this example. And in today’s market, a house that you’ve got sitting on a lot is, like I said already worth $15,000. It might actually even be worth more inside your park. If you take care of your parking, you’ve got a good looking park, because like I said that $5,000 price to move a house is so hot. There are a lot of people who may have the $15,000 or $20,000 to buy the house, but not the $5000 to move it. If you bought it for $15,000, and you sell it for $15,000. Now you really own the house for $7,000 and the price of your park has gone up by $27,000. So it’s a $20,000 profit every time you bring it in on the value of your park, not to mention the monthly income that you’re going to get going forward your park looks better. If a tenant comes in your park and all you’ve got is a bunch of empty houses and empty spaces. The question of course is why are people not here, are people moving out, it just makes your park more attractive.
07:02 Maxwell Baker
Right now the demand is so high for affordable housing; it’s unbearable to even think you have an empty home in your park. But when you have park owners come at you, Levi and they’re like I’m not willing to pay $5,000 or a penny more than that, on this $15,000 home. How many other buyers are lined up behind him or her that are willing to pay above that or at 15 grand.
07:25 Levi Parham
So the last two weeks of November, we sold two houses to the public because park owners stuck their noses up Adam. One was a 99, four bedroom, two bath singlewide house in good shape, needed flooring and one bathroom. The other was a move in ready, three bedroom, two bath, 2000 models singlewide. One sold for $27,000 cash, the other ones sold for $30,000 cash to the public. The first one sold in about four days, the second one sold to the buyers who did not get the second one. I never even put the second one on market, the demand is so high that if you have homes inside your park, there’s really no reason they should not sell. So, as long as you can get a home in there, there’s no reason you should not get to get that lot rent. You should really be able to pick and choose great tenants as well, because the demand is so high that you’re able to choose cream of the crop tenants to bring into your park.
08:17 Maxwell Baker
So that’s kind of why, I was thinking that a lot of park owners are missing the boat. It’s simple math, pay the piper where the market is. Otherwise, you’re going to be sitting there losing lot rent, because you’re not willing to meet market. I don’t know how else to tell you all that. But I really need to pay attention to where the market is, and it might not be a good time for you to fill up the park and that’s all right, there’s nothing wrong with that. But you really need to know what’s going on and we have somebody who’s doing 100 mobile home trades in a year easily. He’s gonna know where the markets are going. So they tell you one thing, you might want to just take some consideration of where the market is. I’m not saying you’re not gonna be able to find the cheap home but time is value of money here. I mean, I’m willing to pay Levi more than what the home would sell for, probably just to not have to deal with it on the moving and managing all that stuff and you know that way you can focus on whatever it is you do for a living during your day job and Levi does this. That’s what he does for a living. So listen to the people that are out there that are in the trenches, because they’re going to know way more about the market than somebody who’s buying 1 to 3 deals a year.
09:23 Levi Parham
Outside of the infill, though, like Max just said in this market we are in right now if you have empty homes inside of your parks, that’s honestly just poor management at this point. If you’ve got a park that’s got five or six houses, if they have less than a few $1,000 in repair, it’s an absolute basic mobile home that is livable in most people’s minds. Then you should put on the market because like I said the demand out there is so high you will be able to find a tenant who’s willing to come into your park. You will more than likely be able to choose from 5, 10, 15, 20, 30 applications that choose the best one and they will go in and fill that. It’s just money wasted. Every month that it doesn’t sell is just park money wasted.
10:01 Maxwell Baker
And if you don’t want to do all that, send them to Levi.
10:04 Levi Parham
Leave them inside your park. Yeah, with what we do here, I mean, we’re obviously four park owners that’s MHP broker thing is we are all park owners. So, if you just need help with that infill; Facebook is the huge marketplace for mobile homes, our primary Facebook page for mobile home gone gets, at this point about 100,000 views every single month. I can sell your house, pretty much any state you’re in and just remove that whole burden of going through and verifying and all that stuff. We can do that for you and bring you a tenant in who wants to leave the home inside your park and you can actually start getting lot rent on a house that you’ve had sitting there empty.
10:38 Maxwell Baker
Yeah. Amen to that. So obviously, you can call our office at 678-932-0200. Ask for Levi they’ll patch you through or you can email him at mobilehomes@themhpbroker.com and ‘mobile homes’ is plural. So, mobilehomes@themhpbroker.com. Alright, so moving on to the moving industry. That’s been a huge variable we’ve been dealing with, mostly Levi because he’s the CEO of the company, and running the day to day. But let’s talk about the moving industry. Where do you see it? What’s happening to it? Where do you see it going in the next 10 years?
11:17 Levi Parham
Moving industries is an enormous opportunity. It’s incredible, really, like Max said, it’s a huge variable for us. We’ve learned how to market for homes, we know how to find them, and how to find homes at good prices and we know how to do all those things we buy. We get opportunities to buy houses every single day, multiple. The problem we often run into is these movers and the variable is, in the state of Georgia where Max and I are located. There are on paper who have permits, about 65 mobile home movers. Whereas if you looked on I don’t know, like Google to try to call yourself one, there’s maybe about 30 and even that some of those numbers are no longer good and things like that. It’s just it’s an industry that has fallen behind professionally. And supply and demand has not made them come up to par because I know for sure, like I said I think there’s about 75 mobile home movers in Georgia. I think there’s 170 dealerships, though. So, the demand from new home dealerships, the demand from us home dealerships, like me, man from the general public, from moving houses, has made it to where these guys get by with absolute robbery, as far as professionalism, and just following through and what they do. They’re great guys, a lot of them. But as far as just, if they tell you that you’re good, they’re gonna be on there on Monday, you know, you need to make sure you call and verify that it’s a problem that a lot of park owners have a lot of buyers have. But it’s also an opportunity that if you find the right mover, hold on to them tight, pay him well, and take advantage of what you have there.
12:42 Maxwell Baker
And don’t forget, tell him how pretty they are for sure, for sure.
12:45 Levi Parham
But as far as just the opportunity there. I mean, it is an enormous opportunity. I know that in the last probably six months, I have seen two or three new businesses come in and run them like a professional business. Those businesses in the six months are six figure businesses really easily. The profit margins are over two or three grand per deal per house that you move. If you get a good team, you can move a couple single-wides a day, I mean, six grand in profit every single day is a good business model to be in. Not only that, but it just gives you so much opportunity to buy cheap houses, find out about parks that are going up for sale and it’s really a great leverage point.
13:23 Maxwell Baker
Yeah, that was one thing I was going to mention is it costs about half a million dollars to buy the equipment, get the insurance, all that jazz. But from what I understand within the first 12 to 24 months, you get all your money plaque plus another 500 grand. The margins are excellent because there’s just no competition and the barrier to entry is the cost for one and be finding good help. We all know how finding good help is one of the hardest things in the industry because it’s just, you know, making sure your people don’t show up drunk or high is a big variable. When it comes to hiring people to set up mobile homes and whatnot a lot of it has to do with a lot of these guys that are aging out, unfortunately passing away. That’s been the squeeze on the entire industry. It’s just tough to find good ethical people that will come and work and make money. I mean, the work is out there. When you call a mover, they’re like, “Look, I’m backed up 60-90 days”. That’s crazy. So, there’s always a big opportunity there. I just wanted to share that with y’all. Last but not least, is the county ordinances and making sure that you can move your home into your county I’ve seen a lot of park owners; we as a company are always trying to figure that out on the front end. We kind of pride ourselves in our impeccable front end due diligence but from time to time a park owner will go into a county like Borrow or Bartow County here in Georgia and not realize that if the lot has been vacant for 12 months, they become disqualified, or they have some ridiculous roof pitch requirement. You know, it’s important to really understand that before you even think about moving a mobile home into your park or into the county, you check the rules and regs and the ordinances. That’s been a big variable. But Levi, do you have any insight on some of that stuff that you’ve seen? I know we’re working in mostly Georgia, but I know Tennessee is a little strict.
15:21 Levi Parham
For sure, like you said here, Bartow and Barrow County, sometimes they’re a little hard to keep apart, which ones which, but like you said, I know that. I think it’s Bartow 512 roof pitch is what they require for mobile homes.
15:33 Maxwell Baker
That’s right
15:34 Levi Parham
A double-wide, can’t have a 512 roof pitch. It’s not possible won’t fit underneath a bridge. 412 and 512 roof pitches don’t fit for moving. So you have to get a certain type of mobile home that is very rarely made with a roof that can be deconstructed and put back together and just things like that. But even like you said, do your due diligence before you buy a home. But before you buy the park, I mean what you don’t want to do is buy turnaround infill project that you can actually infill and that was never disclosed to you. Right?
15:59 Maxwell Baker
Yeah, I know a few brokers that have done that, but we won’t get into that.
16:03 Levi Parham
But when it comes to that, a lot of that’s just on the front end of working with the county and getting a good relationship with the county which is what you should do as a park owner anyway. Every county needs affordable housing and if you are taking care of your park and turning it around, and truly providing good, safe, clean, affordable housing, most counties are willing to work with you. It looks good on them, looks good on you and so just make sure you’re having that conversation. Mobile homes on private land are taxed at a much lower rate. So, if you’re actually pulling those homes out of the county into your park, sometimes if you’re willing to put in the work of fixing up a house, the county sees you as a benefit. You’re pulling these old single-wides out of the county and then Deer Park in what someone uses an old single-wide is there’s a lot of variables there. So you don’t know if the county views it 2005 single-wide as an old model when it would look great inside your park and still make you $27,000 in profit earned value.
16:52 Maxwell Baker
Inside your park a $300 lot rent. So yeah, make sure you build a relationship with the county sit down with the county commissioner. Sometimes they’ll give you a variance. I have seen in due diligence that the county said look, if you do A we will do B and B is, we will give you a variance. We won’t remove the ordinance. But we will make a special carve out for you in this park to save face in to help improve the community. This has happened in Spalding County, we successfully did that out there for a park owner. And like I said, sometimes we’ve had the idea of rallying all the park owners in one county and hiring an attorney and let them fight it out in court. But typically, sometimes they’ll just fold and say look, we’ll just give you the variance but we’ll keep it in place. In case you know we get some knucklehead in here that doesn’t do what they say they’re going to do. We don’t have very many of those in our industry, uh Levi.
17:44 Levi Parham
No, very few knuckleheads.
17:47 Maxwell Baker
Levi, do you have any last comments here before we wrap this up?
17:50 Levi Parham
I mean, at the end of the day, what I think about as the guy who does the home side of the industry is this is the mobile home park industry and without homes inside your park, it is just a bunch of dirt. It’s not making a profit. It’s just something that’s got utility sitting there. If your parks full of empty spaces, or full of rundown houses that you’re not taking care of, then you’re missing out an opportunity. Everyone knows the need for affordable housing. Everyone knows the market we’re in right now. So just make sure that you’re out there actively seeking to fill those houses up and just maximize the profit of your park you got in here for passive income. So you might as well make sure you’ve got it.
18:22 Maxwell Baker
That’s right. Amen to that. Like I said, if y’all want to reach out to Levi, call our office number here at 678-932-0200, or email him at mobile homes, remember that ‘s’ there, mobilehomes@themhpbroker.com and just happy to help out. Right now we’re specifically only working in Georgia. But we’ve got some big moonshot ideas that we are working on that we won’t talk about now, leave that for another podcast. Unless Levi, you want to talk about now you or you want do it later.
18:57 Levi Parham
No, we can wait on it, leave a little suspense.
18:59 Maxwell Baker
Yeah, very excited about it. As always, this episode is brought to you by the community price Maximizer. It is our proprietary system that will guarantee you a higher price when you sell your mobile home or RV community with us. It’s a four-step program. Levi is actually a part of that where he can do some infills for y’all here in Georgia. You might be able to come out and look at some other states. But for the most part, we are here in Georgia. We’re here to help out as much as we can. Feel free to give us a call again, that number is 678-932-0200. Thanks for listening. Y’all be well.
Levi Parham
Levi is a member of the MHP Broker team ®. He began his career out of college working in commercial real estate as a Mobile Home Park Broker at Sperry Van Ness. In order to get real industry experience, Levi was involved in a two star park turnaround project as a mobile home community turnaround project manager. This critical experience taught Levi the difficulty of executing a mobile home park infill and turnaround project.
Levi’s success made him see his true potential and he started his own Mobile Home Brokerage at the age of 23. This Brokerage focused on infilling Mobile Home Parks with individual houses. He helped sell more than 30 homes to MHP owners within the first year.
Levi brings value to the MHP Broker ® team by providing market background l, resources and knowledge on infill projects.
Outside of work, Levi enjoys spending time with family and friends, hiking in the mountains, and working out.
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