Mobile home parks are a unique real estate asset that require specialized knowledge of operations and differ from all other real estate.
Prior to acquiring a new mobile home park investment, it is extremely critical to perform proper market analysis and due diligence to mitigate risk, but what happens after closing? Here is a proven roadmap our team at 52TEN follows to ensure stable cash flow, substantial appreciation, and protection from the chaos of market cycles.
Step 1: Establish a Vision for the Park
The mobile home park business is not one-size-fits-all, as each park’s intrinsic qualities can vary across a wide spectrum. Because of that, the right operating strategy must be thoughtfully crafted, and your vision should be individually tailored for each park to optimize performance.
A park’s vision should begin with where it is today, clearly articulate where it’s going, and lay out how you plan to get there. Establishing the vision begins by combining your pro forma with your goals for the park’s future. To understand where the park can go, start with some fundamental questions, and avoid the pitfall of simply following a template from a prior park:
- What unique value-add opportunities are present?
- What unique strengths or weaknesses are present?
- How will this park’s location impact strategy?
- How will market conditions impact strategy?
These kinds of questions will spotlight the opportunities as well as the challenges, and the answers should help guide the strategies that contribute to the vision for the park.
As the manager of a mobile home park fund, our team at 52TEN aims to be the best park operator, without exception. Based on the same philosophy that has fueled our business, we implement the EOS architecture at each park we acquire.
This means after we establish a 10-year vision for each mobile home park investment, we also establish a three-year picture, a one-year plan for the coming year, and quarterly goals that allow the long-term vision to be broken down into short 90-day bursts which are manageable and achievable. To avoid confusion and conflict, this vision should be shared with the entire team, so everyone is pulling in the same direction with a clear understanding of what they’re working toward.
We also take the time to establish a marketing strategy appropriate for the park and contemplate the issues we may have to deal with to reach the 10-year vision.
Overkill? Maybe. But we have found that establishing this level of vision for each park allows us to make better decisions about the strategy, the staff, our processes, and the residents that live in the park, all of which impact the performance of the investment.
Step 2: Install a Proven Operations Plan
An operations plan that has proven successful for the communities in 52TEN’s mobile home park fund involves hiring the right people; installing tried-and-true management processes; establishing the right metrics to measure along the way; and holding annual, quarterly, and weekly meetings that keep everyone focused on the vision.
THE RIGHT PEOPLE
Hiring the right people requires a patient approach to seek out staff that have the core values, skill set, and personality to fit the role. Finding the right team members is not easy, and one tool that has been extremely valuable for us is an assessment called the Culture Index survey, which can give you a much clearer view early in the interview process of how a candidate will fit into the role. If you surround yourself with great people and put them in the right seats, the likelihood of achieving the vision increases dramatically.
Once you have the right staff, the next steps are to install proven management processes at the new park and train the staff. Every park should have core processes that are consistently applied and refined. These are the “how-to” steps to be taken for all daily tasks, as well as instructions for all possible scenarios that can occur.
Having written processes keeps everyone on the same page, streamlines tasks, saves time, and delivers predictable results for both your team members and your tenants. Most importantly, defining and writing down processes allows you to think through how you want things done in advance, avoiding fire drills.
Once all your processes are in place, it’s time to establish the right metrics to measure. These are the items that will have the greatest impact on whether or not the vision for the park is reached. Each team member knows what is expected of them on a daily, weekly, and monthly basis. These expectations are measurable and quantified by a number that allows everyone to keep score.
When everyone delivers on their number, the long-range plan comes to life in a predictable way. And when something is off track, it is easy to notice and quickly remedy before it becomes a problem. This kind of real-time awareness leads to smart decisions.
REGULARLY SCHEDULED MEETINGS
After all that work is done, the plan to achieve the vision is now fully in action. The last piece of the puzzle is to hold regular meetings to keep everyone on track and maintain momentum.
These include an annual planning meeting where new targets are set for the year, quarterly meetings where new bite-sized goals are set, and weekly meetings that could be in person or virtual using a screenshare tool like Zoom.
During the weekly meetings, the on-site staff meet with the regional property manager to review the long-term vision, update progress on the quarterly goals, and share the score card. This is also the platform for identifying existing issues, discussing them, and solving them. From those meetings, short-term tasks can be assigned so nothing gets kicked down the road.
We recommend the use of an online task management tool (we use Basecamp) to organize goals, progress, tasks, and issues that come up. This kind of tool allows everyone to work together without interrupting each other.
Installing a proven operations plan will help ensure your 10-year vision for each park will be achieved. The execution works in the opposite direction from the planning done when the park was acquired. First the weekly tasks and metrics on the scorecard are met, which leads to the quarterly goals being completed. Those quarterly goals lead to the one-year plan being met, which leads to completion of the three-year picture, and ultimately the 10-year vision is realized.
Step 3. Enjoy Predictable Cash Flow
The primary reasons why we and our investors love the mobile home park investment strategy are the parks’ predictable cash flow and ability to perform through a recession. When you combine those favorable intrinsic qualities with a reliable plan for operations, not only does the likelihood for success increase, but it allows us to deliver the best experience to everyone involved. That includes the residents at each park and the on-site staff, our employees, and our investor partners.
A special thank you to Gino Wickman for his teachings on EOS. It is the most comprehensive approach to running a business, and we have found tremendous success in translating the architecture down to each park in our portfolio.
This content is the perspective of the author and is not intended to be relied upon as a forecast, recommendation or investment advice, and is not an offer or solicitation to buy any securities or to adopt any investment strategy. The information and opinions contained in this content are derived from experience, historic data, and other sources deemed to be reliable, are as of the date of this content, and may change as subsequent conditions vary.
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