written by Chad Freeman:
Our Business Plan:
- We buy undervalued and neglected mobile home parks and bring them back to life, increasing the value of our investment tremendously. Rather than renting out homes, we aim to own and rent land. Due to the high demand for affordable housing, we are able to easily sell any home we acquire. In addition, we have removed bad residents who brought down the quality of the community, and we have enforced simple community rules.
- Our diligence process helps us build better relationships with city officials and law enforcement in order to enhance the reputation of our communities.
- We conduct very thorough due diligence and risk analysis. To ensure the stability and durability of our investments, we systematically target certain key markets and eliminate properties that do not fit our criteria.
- Margin of safety: We create a margin of safety by purchasing good properties at fair prices, as determined by the market and current CAP rates; we don’t overpay.
- Repairs are funded initially so that residents can see improvements and changes immediately upon transfer of ownership. To add value and maintain investments, the company reinvests a part of its free cash flow back into the community
- Budgets, monthly reports, and key performance indicators are monitored monthly, quarterly, and annually to ensure that the investment is operating within normal expectations. In addition, we always strive to improve efficiency and revenue and reduce costs.
- We are committed to improving communities and honoring our customers. We are proud to provide a safe and family-oriented community to low-income families. By promoting pride in ownership, a sense of community, and enforcing basic community rules, we are able to achieve this.
Based on our expectations that the industry will consolidate and cap rates will compress, we plan to maintain our parks for approximately 5-10 years, at which time we will reevaluate the industry and decide whether to sell or refinance and hold longer. Similarly, when it comes to financing terms, we want a 10-year term minimum. Although we anticipate industry consolidation, our business success is not dependent upon it.
Aiming for the future:
It is a very exciting time to invest in manufactured housing communities due to current asset turnover from aging mom and pop operators.
Several factors such as low competition, barriers to entry, diminishing supply, below fair market average lot rents, and huge demand for affordable housing make Mobile Home Parks one of the best real estate investments available today.
Taking advantage of this excellent opportunity is very exciting for us. Initially, we plan to raise $5M, with larger offers to follow. A limited number of accredited investors will have access to this.
Based on our knowledge and research, we are looking to expand to the midwest, along with a few other distant states as an additional option. These states offer what we believe are the best and most undervalued options for purchasing mobile home parks.