Converting Park Owned Homes To Tenant Owned Homes: Podcast Episode #10

 

Today’s episode features commentary from Archimedes Group founder’s Ian Tudor and Ryan Narus. They discuss their mobile home park journey, having managed various properties over time. Their experience includes park owned homes and tenant owned homes. The group compares and contrasts the two, providing firsthand insight on both. Let’s establish a clear understanding of both approaches.

Park owned homes

Home Park owners bear the brunt of the work in this version. They institute a rental fee and sometimes entertain sales. This means that owners claim the lion’s share of responsibilities. Custodial, infrastructural, and more. The benefit to owning comes in profits. Upkeep fees can sometimes even make breaking even difficult.

The Archimedes Group began exploring real estate in 2015, with MHP as top priority. They cite “the lower fragmentation [and] the lower amount of capital needed” for newbies. This perk wasn’t enough to keep the team in this trajectory. Their focus shifted to tenant owned homes.

Tenant owned homes

Tenant Owned Homes refer to individually owned units within a lot community. The group swears by this approach and its benefits. The largest support comes in financing. The “bank is only looking at land and improvement… Homes are personal property, which are a depreciating asset.” Tenant Owned Parks ease this. Each unit’s individual owner incurs maintenance responsibilities and lot rent. This opens up better interest rates on loans, and capitalization rates on pricing.

These considerations spell big profits for this approach. This comes with a substantial amount of grunt work. Owners must be a part of their community to truly build a thriving space. It takes putting boots on the ground, and embedding in the community to ensure success. “You need to have your fingers to the pulse of your community,” the group says. Tenants that own are more likely to stick around for longer periods. Nurturing and maintaining these relationships are necessary for a successful park.

Converting park owned or buying tenant owned?

Should you buy a tenant owned park outright or convert a park owned home to one? The group affirmed that buying one outright was less of a headache. If a park has renters without aspirations for owning, transitioning can be challenging. Purchasing outright means that the community is already on the same page. From there, it’s just a matter of elbow grease and good will! Worst case you can start converting your park owned homes to tenant owned today.

No license, no deal on park owned or tenant owned

Licensing is a major concern in all real estate. To put it bluntly: “Don’t Get Cute, Get A License.” The group warns of significant penalties for failure to get proper licensing. A previous client tried selling them an unlicensed home. “1st offense came with a fine and a warning… 2nd offense would be a $20,000 fine… 3rd offense, jail time, no questions asked.” Its imperative that you follow all federal and local guidelines to ensure legality.

The Archimedes Group is an example of homegrown efforts manifesting major successes. They are not risk averse either. They’ve had a lot of trial and error. This is the kind of failing forward that creates subject matter experts. Listen in full to their conversation with our own Jason Sirotin and Glenn Esterson above. For an even deeper exploration into entering the MHP space, listen here!

Podcast Transcript

Jason Sirotin:
Hello and welcome to the Mobile Home Expert Podcast. I’m Jason Sirotin, here as always with Glenn Esterson, and today we are graced with the presence of Ian Tudor and Ryan Narus. And they have a company called Archimedes Group. Did I say that right, guys?

Ryan Narus:
You nailed it.

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