What does it mean to be an out-of-state owner in mobile home parks? I should know. My first park was out of state. It wasn’t too far, about an hour away from where I lived. But still, it was enough of a different experience to draw a distinction. Had I been more reserved in buying things, I likely would’ve preferred something in state, even if it was a little further out.
First, it’s going to cost you about $1,000 a day to visit an out of state park that you have to fly to. This includes airfare, hotel, rentals, food, and much more. Plus, you’re out of your office and home base. This means you’re losing out on your day to day business being away from home.
Does your out of state park need management?
There’s lots of things to consider when being an out-of-state owner. As stated, you’re looking at $1,000 a day. And it’s most likely that you’ll be there more than one day. This is where management comes into play. They help you to not have to travel as much, being your eyes and boots on the ground. Be prepared to shell out a lot for this, though. Management costs money. Typically it will cost between 8-12% of the gross revenues plus any bonuses or commissions.
The bigger your park is, the more management help you’ll need. With this said, make sure that the deal is worth it. For example, if the park is only ten units, it may be a terrible idea to buy it from out of state. But if you have a 50 space park out of state with high rents, you can usually make sense of it. In this case, not having management in place makes it extremely hard to do an effective out of state deal.
Other factors when out of state
In the previous case, I had a 35 space park that was out of state. After many years running it myself, I finally decided to get a management team for it. It was very costly, but the park’s profits covered it. It proved to be beneficial, as it saved me a ton of headaches. But, management is only one of the considerations here. Travel costs, municipality compliance concerns, and more are just as much a factor.
Also, being an out of towner vs being a local has some impact in tertiary markets. In particular, this comes into play when dealing with municipalities, tenants and more. Some may not be as receptive prior to you establishing a solid rapport with them. Having a local manager makes life easier, but it doesn’t mean you won’t be successful otherwise. Use our guide here to determine your best first steps if using this approach.
The MHP Expert
We’ve only scratched the surface of considerations when it comes to the out of state parks. Don’t let this discourage you though. Sure, it may be a challenge. But with the right support, your concerns will be that much more manageable.Choose The MHP Expert to be your next advisor in the mobile home park industry. Our team of credentialed staff will help you find the best route to get you to your goals. Just head over to our contact page, and schedule a consultation today! We look forward to hearing from you.