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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!
There's a lot we learned from COVID. We learned how to get through regular daily life wearing a stupid mask. We learned a whole lot about nature, 'cause we had to be outdoors and about being by ourselves as we socially quarantined, but many of the lessons from COVID are old news now, we don't really care. They're not important to us anymore, all of those boxes of masks are now clearly in the dumpster, and we have all moved on. But there were some things we learned in the mobile home park business that we don't wanna forget, that we need to embrace and realize that COVID kind of gave us a clue of some better ways of running the business. Some of those include how to sell mobile homes from afar using better technology. But one is the concept of Cash for Keys. This is Frank Rolfe with the Mobile Home Park Mastery podcast. We're gonna talk about the concept of paying people to leave your mobile home park. Now you might say, "Why would I do that? Somebody owes me money, why in the world would I give money to them when they already owe me money?" Well, let's look at the facts.
We've learned in a post-COVID world, our court system is completely shot, it just doesn't work anymore. It wasn't really working beforehand but now it's truly out of control. You can go to judges with perfectly legitimate evictions and yet they'll dismiss them for no other reason, they just don't like the idea of people being put out of their home. You have other judges that you go when you try and file the eviction, well, they're afraid of their own shadow. In a post-COVID world and a new kind of woke world, they're worried that someone there is going to capture on their iPhone a video of them saying, "Yes, that person is evicted," and somehow it's gonna cause 'em a social media uproar and they won't get re-elected. So judges today just don't play by their own rulebook. You can look at the laws of your state or the laws of the judge's court, but they just don't play fair anymore. They're kind of anti-landlord even in the red states, the judges have been definitely permanently impacted by the new America. So often you just can't get an eviction like you used to. And on top of that, the time required to get an eviction in the courts that will grant evictions today is massive compared to how it was in a pre-COVID world.
I don't know if all the court clerks just didn't come back to work. I don't know if the case load grew, I don't know if they're still working out of things from 2020, but an eviction in the old days might take you 30 days, now might take you 60 or 90. So a lot more time passes. So when you take these realities of how life works from a time perspective and the judge perspective, it tends to flavor your opinion of the concept of evicting a customer. You have to start saying, "Is there a better way?" And then you look at the cost of it all. To file an eviction, I've gotta go ahead and file with the court for the eviction. In many courts today, I have to use an attorney to show up at trial. Even if I use an evictions attorney, it might cost me $500 and then once I get the eviction, I have to wait around for them to potentially appeal it, which they never do. And then I have to file for rid of possession. And if you add all that together, where are you at? $1000, $1500. And then what about the lost time of lot rent? If it takes you 90 days to get the customers out and you're lot rent average is $500 a month, there's another $1500 down the drain.
Now we're $2500-$3000, literally out of your pocket either in cash or in lost time to get the customer down the highway. So really, if you can go to the customer then and get them out for less than $3000, theoretically, you're ahead. Now, when you look at doing Cash for Keys, most people aren't going to do it for just a dollar less than what they're ultimately losing, they obviously wanna get it done for the least amount of money they humanly can. And we found that many customers will go ahead and leave the property on a Cash for Keys arrangement, if you gave them somewhere between $500 and a $1000. It truly is a win-win for everybody. If I go to the customer and say, "Hey, here's the deal. If you can be out of that home by Monday and give me a bill of sale on the home, any rights you have done, a full release of everything, then I'll give you $1000." Well, that's a 1000 they weren't gonna get otherwise. They were gonna hole up in that home till the constable tosses them out, but I'm giving them 1000 that may get them into some other form of housing they can afford. Maybe that's the amount they need for a deposit, maybe a more affordable apartment. Maybe that's $1000 they need in transportation to get back to go live at grandma's for a while till they get their feet back on the ground.
But the bottom line is Cash for Keys is a perfectly good arrangement for both the customer and the mobile home park owner, because it allows you to kind of go around a broken justice system to speed up the process. There's other benefits such as often the home will come back to you in much better condition because they won't try and damage it as they leave just to show you who's boss. So Cash for Keys has proven to be a pretty good idea. And back when we had the evictions moratorium during COVID, of course we had no other option. For the longest time, I don't know, a year to two years under the evictions moratorium, you could not evict a customer. It was highly unfair. Of course, most everything during the COVID era was unfair, we don't know where the rules and regulations came from, and nobody much cared on those rules and regulations, even if they fit the law or even what the Supreme Court might say. So all landlords suffered through the evictions moratorium but we learned from it. And what we learned is there was another option, which was Cash for Keys. So if Cash for Keys really does work, which it does, then the next question would be, how do you get it done?
Well, the first thing you have to know about Cash for Keys is it's very hard to get it done in the absence of a face-to-face discussion. So this is where a good manager comes into play, and the best managers are those with great people skills. Someone who can go over and is just friendly and affable enough to talk to the customer to not put them off, not be all judgmental, but just go to the customer and say, "Hey, we've got an idea for you. I just wanna bounce it off you, what do you think about this idea?" It just works best when the manager delivers the message. But if the customer won't respond, will not open the door, will not talk to the manager no matter what they do, then option two is to put it in writing, but not in a judgmental negative way. In a positive way, "Hey, we have a solution. We think you'll like this solution," and get that over to the customer to again, see if they've thought about this option. Because most of your residents don't know there's any option in the form of an eviction other than embarrassment, other than being displaced.
So most of them have never even thought of this idea where you might pay them to leave. And some are actually thrilled by the idea that you can go ahead and give them the money they need to find something that's more suitable for their current economic circumstances. Now, you can't stop when you go to do Cash for Keys, you shouldn't stop until you actually get a definitive yes or no. So if the manager goes and talks to the customer and the customer says, "Well, I don't know, let me think about it." Don't give up. If the manager talks to them, but there's some lapse of time and they don't get back to the manager, that doesn't necessarily mean no. They're still probably pondering it.
So keep being persistent. In sales, it's essential that you work to try and get the close, and in this case, the close is to get them to agree that they'll go ahead and accept money to be out by a certain date. But I would much rather push them and have them say definitively, "No, I don't wanna do it." At least I know then where I stand, and the entire time that you're waiting for the Cash for Keys answer, in many cases, you should at least go ahead and file the eviction because it doesn't stop the clock. Don't let them think that by saying, "Well, let me think about it," it stops the clock on eviction because you don't wanna lose even more time. And often when the constable comes to serve them with the evictions papers, then they get much more serious about the dilemma that they're in.
Now, do I have a lot of good stories of Cash for Key situations? Oh, plenty. We had great success with that during the COVID era because there really was no other way to evict. So really landlords and residents had to work together to come up with an amiable solution, otherwise the customer would just stay in the home and not pay rent and not a thing you can do about it. But you need to make sure you don't now forget those skills. Some people have already now ditched the idea for Cash for Keys and they say, "Oh well, the evictions court is back in session. I don't need to do that anymore. I'm gonna go back to the old ways to do it." That is probably a foolish prophecy, because in most cases, if not all cases, you actually will be money ahead in every regard, if you can work with the resident to come up with a win-win solution in the form of Cash for Keys. This is Frank Rolfe, Mobile Home Park Mastery podcast. Hope you enjoyed this and talk to you again soon.