What You Can Learn About Residents From Their Cars

One item that we can only guess on as mobile home park buyers is what our prospective tenants are like. There’s no vetting process in due diligence and we typically only know their names and if they’ve paid their rent. But you can actually learn a lot about your customers based on the cars they drive. In this Mobile Home Park Mastery podcast we’re going to review what can be gleaned by the cars on those parking pads.

What is Mobile Home Park Mastery?

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!

Over the last 30 years, we've learned all the things you can find out during due diligence on a mobile home park. We've done due diligence on mobile home parks hundreds of times, and it's amazing how accurate you can be in predicting almost everything: the financials, the demand. You can nail virtually everything, but there's one category of items that none of us know when we buy a mobile home park, and that is what our existing residents are truly like. Because you don't, in due diligence, vet everyone in there. You don't look at their credit score, their income, all the things you would do if you were a lender making a loan on a home. So as a result, sometimes when you buy a mobile home park, the one nagging concern you have is, "I wonder what my tenants are really like. Can they pay the bills? Can they pay higher rent if the rent is too low?" But there is one way to tell something about your existing residents, and that's through their automobiles. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. We're gonna talk about all these things you can learn about your residents basically just from their cars.

So let's just jump into the things that you can learn about mobile home park tenancy based on the automobiles parked in those parking pads or going in and out of the driveway. So, the first thing you can tell a lot when it comes to cars and your tenants is their creditworthiness. Because most people like to drive a fairly decent car. They want a car that will not only start and stop, but they want something that's a little stylish, something that impresses the neighbors. And people who have good credit are able to buy better cars. I think that goes without saying. Now, I know there are anomalies. I know that if we were talking about American millionaires and billionaires, many of them prefer to buy cars that are a little more downscale because it just makes them feel more comfortable. But in the case of the average American, you're gonna buy about the most car that the lender will let you buy. And in a mobile home park where you have lots of newer car models and nicer cars, what that tells you is that these customers have good credit. Because if they didn't have good credit, they would not be able to obtain those car loans.

Now, if you look at a mobile home park and all the cars are really old, I'm talking sometimes '70s and '80s, beat to death, there are body panels that are the wrong color, there are windows knocked out with sheets of plastic duct-taped over them, you therefore know that that customer base probably doesn't have very good credit. Because if they had pretty good credit, they could go out and buy a better car. And why that might be important to you is if you have a lot of park-owned home rentals that you have to convert. Because I don't care which lender you use, whether it's PEP or 21st, they are going to want to do a credit report profile on this customer. And if they have terrible credit, it may be very hard for them to get a loan to buy the home. But I can tell a lot about creditworthiness, anyone can, by looking at the cars on those parking pads.

Also in the same vein, you can tell a lot about your ability to push rents. Because a customer who's got more discretionary income obviously will have a nicer car than a customer that doesn't. A customer with more cash flow is probably gonna go visit the car wash more frequently. They might even get one of those monthly car wash passes. So, once again, I will know, from how nice the cars are, probably if I can push the rents a whole lot. If the cars are all beat to death, held together with baling wire and duct tape, it's a pretty good bet that I will get a lot of grief every time I raise the rent, even in a very small way. And in some cases, it may be the straw that breaks the camel's back and may, in fact, result in tenants running off because they just can't afford that $50 increase, because at the end of the day, they just do not have that kind of cash flow.

Also, when you look at the cars in the mobile home park, it's always interesting to look at whether they are predominantly pickup trucks or cars. You can tell a lot about the customers based on whether they're driving pickup trucks or cars. Because people who drive pickup trucks, it's been my experience, typically work in some kind of a trade. They may be work at a plumbing place or an electrical place. They may be a roofer. A pickup truck with a ladder rack on it you know is somebody that does outdoor work, knows how to use tools and things like that. And why that's important is, that's the kind of customer who's going to be more inclined to do things like handyman specials. So if you've got a bunch of park-owned homes in there, which are old and beat up and in poor condition, and you don't want to renovate them and sell them off, and yet in your state it's legal to sell them in as-is condition, then having a propensity of pickup trucks is a good sign for that, because these are the kind of folks that can buy that old beat-up home, and they know exactly how to fix it and how to buy the parts. And they have friends who also probably know their own other trades. Someone who does roofing probably knows someone who's an electrician, for example. So once again, pickup trucks, a lot of them in a mobile home park, probably better odds you can get handyman specials done.

And then you have the length of tenancy, because a lot of people, particularly in workforce housing, have out-of-state license plates. So if you're looking around your mobile home park you're looking at buying and you see a huge number of the cars have license plates that are not domiciled in the state that your park is in, that may be a sign that there's some kind of project going on. Maybe it's the building of a bridge or a Walmart or something like that. But these people may not be putting down roots, because they may be leaving those cars based on the state they actually plan to return to. So looking at the license plates can have some impact.

And then, of course, you've got the size of household, because if people have a lot of four-door cars or minivans or station wagons, it's a pretty good guess you have a larger resident base than you do if it's nothing but two-door models. But of course, in most mobile home parks today, the only thing that would tell you is you're gonna have a lot more water and sewer use. And since you're probably going to push back water and sewer on the tenants regardless of what they're driving, then that one probably doesn't have a huge amount of importance to it.

Of course, you can tell the pride of ownership from the cars, because people who have nice cars typically keep everything up. You probably have noticed if a car is nicely washed and in good condition, buffed and polished, it's probably parked at a home which shares the same traits, as does the yard. So the condition they keep their cars is a good sign of their level of pride of ownership. And we all know that pride of ownership is a huge element to a good-looking park, a problem-free park. So that's a good thing.

And then, of course, you have the opposite side of that equation. When you have lots of non-running cars parked up in yards, it means that you have very, very low-class, low-income customers. Because in mobile home parks, the reason you see all those non-running cars piled everywhere in some properties is those are disposable cars. I did not realize that when I first got in the business. I just thought, well, they have bad luck. They drive the car until the engine blows and they blow. No, they buy cars where the engine is just about to blow to begin with.

In the underworld of cars, there are people out there who sell cars that have 200,000 or 300,000 miles that are smoking like crazy, where there's oil dripping out of the engine block, but they're cheap, 'cause they're just about to blow. So people buy those kinds of cars for a few hundred dollars, and they drive them until the engine blows, which they knew was gonna happen anyway. And then they leave them on the side of the highway. You see that all the time. There's old beat-up cars laying on the side of the highway with a big sticker that the highway department put on there saying, "Get this car out of here, or we're gonna tow it away." But if it makes it home and then won't start the next morning, they typically just end up in the yard at the mobile home park. And it's a very good indication that people have very low income. Income is so low that they put themselves in the bad position of being unable to get to work sometimes or home from work by having these really lousy disposable cars.

Also, when it comes to steady employment, I prefer to see cars over pickup trucks because those guys with the pickup trucks with the ladder racks, they typically work jobs that are sometimes more seasonal like roofing or jobs where it just kind of goes with the territory, you don't always have work or steady work. Whereas people who drive cars, nice cars in good condition, they typically work at jobs like a fast food restaurant, things like that, where they have very, very stable employment. I mean, if you work at a McDonald's or an Arby's and you can just show up on time and do your job, you're almost guaranteed to have a job every day of the week for the rest of your life. So having a lot of cars in a mobile home park is often a better thing than the pickup truck in as much it may indicate that you've got customers who have regular W-2 jobs, which will make it probably easier and safer for you to get your rent on time every month.

And then you have some parks that have almost no cars. That always comes as a shock. Those parks are generally senior parks, but they don't have to be senior. They can additionally be an all-age family park with seniors who live in the spaces. You don't have to be a senior park to be housed with a lot of seniors. And in those cases, what can you tell from there? Well, I can tell that there are probably a lot of seniors and I won't have any parking issues in that mobile home park and probably will have perhaps better quality of maintenance on the homes and mowing and all of those very, very much things. The bottom line is that you can learn about a lot about a mobile home park. You can really go into the soul of your tenants by just taking note when you're there of the kinds of cars they are driving. And that's one reason why when you're doing due diligence, it's always important to go by your park when the customers are home.

A lot of people, when they want to go out and look at a mobile home park, they go out right in the middle of the day. And what's missing? The cars are missing. They're all at work, hopefully. So it's always good in diligence to go back by that park at night or later in the day, after 5:00 or 6:00 when most of your customers are home, or on a Saturday and Sunday so you can actually see those cars yourself firsthand. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.