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!
Like any other business, Mobile Home Park owners have to navigate a sea of bureaucracy, federal, state, county, and city. And it's hard, particularly when you're starting out to know which group, which branch, which part of the bureaucracy you have to go to to get permission to do various tests that all Mobile Home Park owners must do on a regular basis. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. We're gonna explore who's in charge, who's the boss, who do you need permission from on many of these different things we all do. So let's start off with your actual license for your Mobile Home Park. Now it varies across the map on how this one function works. I've never heard of a park needing a federal permit. So most of the federal government's relationship with Mobile Home Park seems to center around HUD, HUD seals, fair housing, those type of issues.
But personally, I've not heard of a federal Mobile Home Park permit. Not to say that you don't need one, I can't guarantee that. I don't know the rules of every spot in America, but normally that's not who you go to. So then who else do you go to? Well, states often have a state permitting process. So if you're in a state with a state license, you'll have to get a license from your state. So in due diligence you'll go to the state and say, hi, am I required to have any kind of license or permit to operate my Mobile Home Park? And they may say, oh yeah, you do. We have an annual license and it's due on this date. And of course you'll check to make sure that it's currently fine. It's not come up and not been renewed. So the state level, that's one person you look to for your annual perimeter license.
And then you have your county, even if you're not in a city, even if you're out in a county. And I know counties typically have less bureaucracy, not always. You may have to have some kind of annual county license or permit. So you wanna check on that. And then we come down to the city. Some cities require them, some cities do not require them. Cities sometimes require a health and safety inspection. And then you go in and pay a fee and you get your permit for the next year. But not all cities do that. Some cities work off just a certificate of occupancy, which means you had a permit when the property was built, but it's not required to be renewed. So on that first issue, on the issue of where you get your licenses and such from that is gonna be probably a state, county or city type of issue.
And then you have home installation. So what's the story on home installation? Well, home installation stems typically from HUD's requirements outta the federal government. But it's pretty much been left to each state to enact. And that's probably a good thing. 'cause as we all know, there's no bureaucracy more terrifying and hard to navigate than the federal one. So at least on the state side, you can typically find out your state installation guidelines from a call to your state mobile home association, also known as an MHA. And it's very important that you know these installation guidelines, particularly for one big reason because those state installation guidelines are going to add a lot of cost to any home you bring into a Mobile Home Park. And in some states there's a loophole. You don't have to use those HUD installations on used homes. So make sure you know in your state, number one, is it required to use HUD installation guidelines?
And number two, do you have to use them unused homes and new homes alike? Or is there an exemption for used homes? And if they say, well yeah, no used homes, you don't have to, the next question should be, what's defined as a used home? 'cause not all states view the concept of a used home the same. Some will simply tell you that having a second name on a title makes it used and others may say it's based on age. So it's very important for you to understand those installation requirements. 'cause those may very much change the type of home you bring into your park and could have a huge impact on the price point of those homes that you bring in. Now, counties and cities may also have some thoughts as well in installation. So during due diligence, don't just stop with your state, talk to your county and city to see if they have any extra things they like to add into those installations.
Pretty rare, but I'm not gonna say it couldn't happen. There's a whole lot of groups out there on the county and city level, which have pretty much gone rogue. You find that very much when you file evictions on people and you do everything the state law requires. You go to the court and the judge tosses your case because he wants you to add an additional demand letter or some other minor feature. So you might wanna talk to your state, county, and city when it comes to installation. Then you have expansion permits. Let's say that you wanna go ahead and utilize some extra land that the park has. I wanna add a few lots on. Who do you go to there? Well, again, not really federal government, I don't think. And that was not really even a state one that I've ever seen that's gonna be a city or county issue.
But there's one loophole in all of that in some county areas called the extraterritorial jurisdiction, also known as the ETJ. Now, what in the world is an ETJ? An ETJ means that the city that's in close proximity to the property, even though it's not in the city limits, that it might be in the near future. So a lot of cities have power over land in the county up to a certain specified distance from the city's boundaries. They do that because in fast-growing areas, as the city annexes the land, they wanna have some degree over control. If you were a county and you boarded on the edge of a nice suburb and you gave someone a permit to put in a topless bar, more than likely the city wouldn't like that because they see the future growth in that area as being this high-end residential product.
So the ETJ allows them to at least exert some force over what happens. So when you're gonna build an expansion, you need to talk to the county, but you also may need to talk to the city or at least verify with the county officials that there is no ETJ that you have to contend with. Then you have your titles on the home. When you buy the home, there may be some homes that come from mom and pop, which may not have active titles or you may sell homes and wanna convey title. Who's in charge of titles? Well, that is typically a state issue. So again, we're back to the state mobile home association. Hey, how does titling work in the state and learn all about it. It's one of the messiest ugliest parts of the bureaucracy of the US that we've found is the titling of mobile homes.
I don't know what the problem is. It takes them forever to process them. I once bought a used mobile home at a tax sale in Illinois and part of the sale promised you would have title within three months. It took more like over a year to get it done. They have a real huge backlog and efficiency issue in many states regarding titles. But titling itself is typically a state issue. But again, I can't say for sure there's not a little county city in there. I would check with your state mobile home association. But normally that comes from the state. Then you have your tax assessment. Now, who assesses your taxes? Your county typically. So you'll need to go to the county on tax assessment. That's not really a federal or state issue, but it's a very important one because in some areas with high tax rates, the amount they value your Mobile Home Park at could have a huge impact if you buy it and there's a huge increase in that.
So that's gonna be typically a county tax assessor. You should in due diligence, go to the tax assessor and say, Hey, if I bought a commercial property at this price, what would my annual tax typically be? And that's a good number to plug into your budget. However, it's very rare that the tax official is going to set your new value to the amount that you're paying. In America typically, they're gonna go somewhere between where it used to be and what that new number would be, kinda maybe the midpoint of that. But not always that. And if you disagree with what the valuation is, you can go to a professional group like POP and ICAD in Texas who can try and get your values reduced using their mastery of how the taxing system works. But normally when it comes to property tax, that's gonna be a county issue.
And then you have your HUD seal. Now what in the world is a HUD seal? A HUD seal is a little tiny plate that goes on most mobile homes on the back left of each section. So a double wide would have two because it has two sections and a triple wide would have three of them. And this is the little plate that announces proudly to the world that your mobile home was built based on specifications approved by the United States government and further subject to a regular and consistent auditing of the manufacturing plant. So it's the seal of approval, much like the USDA put seals on meat, the federal government put seals on mobile homes as they're manufactured. And the problem with the HUD seal is if you don't have one on the mobile home, most cities and some counties will not allow you to bring it into that Mobile Home Park.
So who creates the seal? Who's in charge of the seal? That's typically the federal government through the HUD program that they exercise authority over to all the manufacturing plants. Now in reality though, it doesn't always work quite like that. Because there are some cities and counties that don't require the HUD seal either because they've been miseducated on the fact or because they just don't care. So you need to check both on a federal, state, county, and city basis on the HUD seal issue. I can't say for sure in any different particular spot that they're gonna for sure say you gotta have a HUD seal to bring a home into this Mobile Home Park. But I sure wanna know that as a buyer, I would definitely wanna make sure that I know before I put value in those lots that are currently vacant to fill them what the requirements are of bringing in homes.
Now, more than likely today, you're not going to wanna bring in a home without a HUD seal. It's simply gonna be too old. They started putting the seals on in 1976. So I dunno why you'd want one older that doesn't have a seal. But another issue that can pop up is when you have homes which are new, but people have ripped the seal off. That's unfortunately a bit of reality that violates the theory of the folks at HUD because they just put those seals on with four little screws. If you've got an old used home without a seal in the middle of the night, some would go over and take the seal off the new home and then screw it onto their old home and it would probably pass muster. 'cause most of the people who do the inspections don't know the difference between a pre HUD home and a post HUD home.
And then it would fall back on what your state, county, and city regulations are on those HUD seals and how to replace them. Most states, if you have a title showing the home was built after 1976, there's a methodology to get ultimately a new HUD seal or new permission proving the home was manufactured in accordance with HUD. It can be very tricky. The bottom line is like most things in America, we're drowning in bureaucracy. Maybe it will improve over time. We all hope that it will. But until the law of the land changes, you have to be very, very vigilant on everything you do as a park owner, that you've cleared it through the necessary channels that you know for a fact. You are in line in tandem with the rules both on the federal, state, county, and city level. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.