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Welcome to the Mobile Home Park Mastery Podcast where you will learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks! Your host is Frank Rolfe, the 5th largest mobile home park owner in the United State with his partner Dave Reynolds. Together, they also own and operate Mobile Home University, the leading educational website for both new and experienced mobile home park investors!
Walmart recently announced that they will be remodeling all of their stores in an attempt to get more of their new and fastest growing customer segment, and that is the affluent customer, households earning $100,000 a year or more. And then look at Dollar Tree. Dollar Tree redid the entire Dollar Tree business model. They brought in more expensive products. They now have not just the dollar store item, which wasn't really a dollar, it was $1.25, but they added in $5 items all the way up to $10 items. And they did this, they say, because they were also desirous of that 70,000-plus earning individual, which is the fastest growing portion of their business segment. And in a similar way, mobile home parks are also in search of the more affluent customer. This is Frank Rolfe, with the Mobile Home Park Mastery Podcast. We're gonna talk about why we don't really want to be in the affordable housing business. We wanna be something more. We want to attract and retain more affluent customers. Now, why would that be? Well, it is certainly true that our phone rings off the hook when you're in the affordable housing segment because there's really nothing out there in a modern America that is affordable when it comes to putting a roof over your head. But definitely there's some advantages to reaching that higher-toned customer.
Number one, obviously, the customer with a higher income can afford to pay higher lot rent, which is inevitable in all mobile home parks because mobile home park lot rents are so ridiculously cheap. Don't let the woke media try and tell you, "Oh no, mobile home park lot rents are really expensive." That is not true. In most markets, if you look at all the other housing options in that typical mobile home park housing market, single-family homes in America average 400,000, but even in the more downscale markets, they're over at least 200,000. And the average apartment rent in America right now is 2,000 a month, but even in smaller and lesser markets, it's still over 1,000 a month. Yet the average mobile home park lot rent we believe to be somewhere around $400 a month, $500 a month. That is less than half of the next lowest housing option. So can the mobile home park lot rent that's at 400 attain 500 in the future? Certainly it can. You might say, "But gosh, that's a 25% increase." Forget, scrap all of that talk of percentages. That's what the woke media tries to do because that's the only way they can try and paint mobile home park owners as being evil. I'm sorry, it's a hundred bucks. If you go and gas up your car right now, I bet the gas cost every two times you fill up your car will be more than $100. Your health insurance went up way more than 100. It went up hundreds, to some American households, thousands of dollars, since the ACA ended their subsidies in January.
So you can't say that mobile home park lot rents are expensive. We all know they're not expensive. But as they rise over time, clearly, the more income the customer has, the easier it will be for them to pay that. Also, when you have a more affluent customer, they can afford to buy more expensive mobile homes. And mobile home costs have basically doubled since COVID. So having the ability to buy that 70 or 80,000 or even $90,000 single-wide, that's important if you're trying to fill vacant lots. So the better I am at attracting more high-end customers, the better I'll be at selling homes to fill those vacant lots. Also, the more affluent customer has more money floating around to maintain their home and their yard, and they typically own nicer cars, which certainly elevates the look of the mobile home park when you drive through it. And clearly, when you have a more affluent customer base, you have much fewer collection problems.
In fact, you can't come up with one thing that's not good about having a more affluent customer base, which is exactly what Walmart and Dollar Tree have also decided. But if that's our goal, what do we do? Walmart's trying to repaint and remarket the stores, Dollar Tree's trying to change their inventory. But what can we do as mobile home park owners to attract a higher-end consumer? Well, the first thing would be to have a very, very attractive entry, because the entry to your mobile home park is maybe among the most important features if you want to attract a more affluent customer. Because if your park looks bad at the entrance, even if it's nice once you get into the property, the first impression will be very poor. People will pull up, and they're already sour on the mobile home park, sour on mobile homes, before they even basically get in the drive or get in the office. You've got to have a knockout entrance. Now, that's not saying you have to spend a fortune on it. Three-rail white vinyl fence and matching signage can often do the trick. But what many mom-and-pops have today is an old sheet of plywood sign with the letters falling off, or maybe the whole sign is plunged into the grass below. Weeds four feet tall, no orientation at all, no man-made features, nothing. You can't do that. You've got to have a nice entry. And then once you get in the entry, you have to streetscape every street in that property to bring them up to snuff. You've got to basically go in and paint those rusted roofs and fix the skirting where it's missing, paint decks, paint sheds, paint homes, add shutters. All of these things are so jarring to the eye in most mobile home parks. Just a single piece of missing skirting on a mobile home, it looks like a broken tooth, and your eye just keeps coming back to it.
So all those little items, those all have to be done. Don't forget J.W. Marriott's famous quote: "It's the little things that make the big things possible." You cannot have these annoying, unaesthetic features if, in fact, you're trying to attract a more affluent customer. You also have to have immaculate common areas. And that's such a misfire at many mobile home parks. Maybe the worst thing in some parks are the common areas. They'll have a playground, and one of the swings is hanging by just one chain. It's all rusted up. It looks atrocious. How is that possible, you might say? Because the mobile home park owner holds all the cards on that stuff. They don't have to try and cajole customers into improving their property. It's your property. There's no excuse for that. And when someone is looking at moving into your community, and they look at the common areas all in disarray, all looking terrible, what are they to think other than, "Gosh, this is really poorly managed. I don't think I wanna live in a property that's kind of like this one." You also have to give people a first-rate looking office or show home when they first come in the door. You're not gonna be able to get a higher-end customer going into the classic way it is at most mom-and-pops, where the office is the dining room at the kitchen table of one of the residents with three or four cats everywhere. That's not going to work.
A modern customer, a more affluent customer, they're gonna demand professionalism. You'll have to have a dedicated office, nicely decorated, nicely painted, or take the mobile home you're trying to sell and make it into a show home, but somewhere that people can come in and feel good about the product. You also have to have a professional manager with great people skills. That's the most important attribute today of a mobile home park manager is the ability to get along with people, to be presentable, to talk well, have good sales skills. You've gotta have that professional manager. Your manager is literally your goodwill ambassador. It's your mayor of the town. You are never going to attract a more affluent customer when that manager can't look you in the eye, can't shake their hands, cannot even start or carry on a conversation. It's never going to work.
And then finally, you have to remember that to get a more affluent customer base, they feed off other more affluent customers. So a lot of times, what we're gonna have to do is we're gonna have to jump-start this entire process. And you start it off by bringing in those initial more affluent residents, people who are willing to take the gamble. They maybe had a negative stigma on the mobile home product from decades of the media putting it down, but they're willing to take a gamble because they wanna have a detached house with a yard, and they cannot afford that three or four hundred thousand dollar single-family home up the street. And maybe it's a stepping stone. It's possible they're gonna live there for a while and then buy the $350,000 home, but then that's fine because they can sell that home to another person using it as a stepping stone. But once you can get in the door, the hardest more affluent customer you can get are those first few, because they then set the precedent for others to follow behind them. They're kind of the icebreakers in the community. The bottom line to it is that Walmart, Dollar Tree, pretty much every industry out there which has historically catered to less affluent customers is changing their level of play. As America descends into kind of an issue where it's so hard on an affordability basis to buy nearly anything, more affluent customers are starting to think about saving money. They're thinking about getting more for their dollar. And in this environment, it's an imperative moment for many mobile home park owners to seek that more affluent customer. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.