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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!
Even though my family is just a bunch of farmers out in Kansas, I'm a city person. I didn't grow up out in the country, didn't grow up on a farm. And all I knew about propane tanks is those were those weird looking oval things sitting out in fields as I drove down a country highway, typically painted silver. But I didn't know what they actually contained or what the purpose was. I knew nothing about propane. And that is until my very first mobile home park, Glen Haven Mobile Home Park down in Dallas, which had master-metered gas, which I lost sadly during winter. And I had to retrofit something to power those homes, to make the furnaces run, to make the ranges turn on, to provide hot water. And I rapidly learned that when it comes to heating and giving the ability to have hot water and cooking in a mobile home, propane is often the solution.
This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're gonna talk about propane. It's one of the three power sources for any mobile home. You've got standard electricity and then of course you have natural gas and then finally you have propane. Now what is propane? Propane is liquefied gas. And the first thing you learn about propane is it burns extremely hot, much hotter than natural gas. But the good news when it comes to propane is that virtually every natural gas fixture in a mobile home, whether it's the furnace or the range or the hot water heater, are built to handle either natural gas or propane. And that's a godsend if you've got a mobile home park that does not have natural gas and you bring in a mobile home that's a part gas home is that you can fuel that using propane. So hooray for propane. That's a great solution when you do not have any natural gas. And at the same time, you need to know some things about where natural gas is going. In most of your southern markets in the US, people are opting to have all-electric homes. So if you've got a mobile home park in Texas, more than likely you're not gonna provide natural gas or propane. Instead, just access to a 200-amp service and your customer will run the furnace and their heating and their hot water strictly off electricity.
But as you go north, it's very hard to make an all-electric home work because it costs a whole lot of money to heat a mobile home in a cold climate using just electricity. So you can't really get around the concept of gas, whether it's natural gas or propane, once you start getting to about the middle of America and going north from there. So going back to Glen Haven, which is where I learned one of the first lessons you need to know about propane is you can't always have propane. Many cities and towns in America do not allow you to have propane if there is natural gas accessible. In the case of Glen Haven, there was natural gas running right out there on the frontage to the highway. But the problem was all of my internal lines were shot, and it was gonna cost hundreds of thousands of dollars to retrofit them with new lines.
Fortunately, the propane company was able to go to the city and get it approved that even though I had access to natural gas, I could in fact have propane. So don't be thinking in due diligence that every mobile home park can use propane, because sometimes you can't. So you're gonna want to check to see whether or not propane is allowed in your property. And another thing you need to know about propane and propane tanks is there are certain radiuses that they have to be from other things, certain radiuses from other homes, from cars. These things are done from a safety perspective because, as I mentioned at the start, propane burns very hot, and therefore propane is also very explosive. And they do not want to have any risk of a of a propane tank exploding, which could happen theoretically. For example, if the propane tank was too close to a home and the home caught fire, it could theoretically cause an explosion. So even if you do have the ability to have propane in your mobile home park, you may not be able to bring in propane tanks because you don't have enough distance around where the tank is to go.
Now, the solution which you see in RV parks is those very, very small propane canisters, often as small as the ones that you probably have attached to your barbecue grill. But the problem is they don't hold a whole lot of propane. So the kind that we typically want in a mobile home park is a much larger tank, something that you don't have to refuel constantly. Speaking about refueling, the way propane tanks work are the customer has to call the propane company, have them come out much like a gas station arrangement. In fact, it looks kind of like a gas station nozzle, which they stick in the propane tank and turn it on and put in a measured amount of propane. And then the customer has to prepay that typically before they'll put it in the tank. So you as a park owner, completely out of the loop. So when you have a propane tank in a mobile home park, assuming you don't own the home, I hope you don't own the home, then what happens is the homeowner has to arrange to get their propane, and you're not in the loop. You don't have any affiliation with the whole process of keeping that propane tank full. And that's great. But there are some other things you need to know about propane.
Propane typically, you nor the tenant own the tank. So these tanks are leased. The propane company will come out and put in the tank, but then you have to connect the tank from the home. And typically that line that connects the tank to the home, that's your responsibility as the park owner. Everything after that is responsibility of the homeowner. So there's actually three parties in a propane deal, unlike a lot of the other utility arrangements. So you're responsible as the park owner, typically, for the line from the tank to the home. The propane company is responsible for the tank, and the tenant is responsible for everything after the connection to their home from the line that you own that comes out of the propane tank.
Now, propane is something, and typically in a mobile home park, when you're doing due diligence and you see propane in the park, there's really no credits that are negative against you for that. There's no demerits from having propane, because propane works really, really well. In fact, I've been in the business now for over three decades, and we've owned over 500 parks, and I've never had a problem with propane. Never had an issue, never had a fire, nothing at all. Closest to any problem I ever had with propane was back at Glen Haven, my first park, in which the propane company, when they were connecting the homes to propane on a home that was fortunately vacant, had not been put in service yet, they did not turn off the connection when they went to light the pilot light. The guy screwed up, and instead of turning it off when he connected the propane tank, it was on full blast. For some reason, he didn't smell it. He didn't sense there was a problem. He lit the pilot light, and there was a giant fireball. And fortunately, he was not seriously injured. It's a miracle. But the home completely burned to the ground, and it burned with such intensity that when the fire company went out and put it out, about an hour later, it reignited again because all the components were so incredibly hot.
That's the only story I have of a problem with propane, and that was not because of propane or propane tanks or customers' actions. That was just a screw-up by the propane company installing the tank. So I feel very comfortable with them, that they are in fact very, very, very safe. And there are propane tanks at single-family homes across America from one end of the country to the other and there's seemingly no problem with those either. The only disruption in service you ever have is if the customer forgets to put propane in the tank, which is easily solved by a simple call to the propane company to come and get a refill.
So when you're looking at a park and it's not served by natural gas and not served by standard electricity, that does not mean that that park is inferior because it has propane. Now, some people will say, "Well, but yeah, isn't propane a sign of a park that's very rural?" Well, not necessarily. It just depends on where the gas company has elected to put in their service lines. In areas that have a lot of geography, a lot of hills, a lot of rock, they may not extend very far out of the city limits. It's very possible you could have a mobile home park within the city limits that still does not have natural gas access. And as we all know, a lot of the growth in our industry today is in exurban and super-commuter markets, and those very, very frequently do not have natural gas access either. But no matter what happens with propane, never mistake those for the other ornery way that some people heat homes, which I did not even include on the list because it's so very rare, and that's fuel oil.
Fuel oil are those big tanks that stand up on stands that you'll see sometimes in the Northeast. Those things can be a real problem. Fuel tanks can often leak, they can rupture, they can spill their contents all over the ground, it can cause Phase I issues. Propane tanks are different. They don't typically ever have any environmental issue. I've never seen an environmental issue ever on a Phase I report regarding propane. And they seemingly last forever if well-maintained, and propane companies, from what I've seen, do an excellent job of what they do. So fear not propane. Propane's a perfectly nice fuel. It's a great way to fuel a mobile home. It always will be. So when you see propane, feel good about it. It's just fine. This is Frank Rolfe with the Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.