Kangaroo Kronicles 19 – “It’s All About  Management”

By

Stu Silver / “Uncle Zally”

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This is the third blog in this series about managing a Mobile Home Park that is a long distance from your home.

If you looked at the title, you’ll see there are quotes around it. That’s because Steven G McKnight said it to me at the end of the Uncle Zally Walkabout that he so graciously joined us on.

My first thought was, “Yes, of course. Why didn’t I look at it that way?”

Real estate success is all about your management of the properties you own. Manage them well, and you’ll become wealthy. Manage them  poorly, and you’ll go broke … or sell before you do.

Then, like many of the things Steven G says, I think about them a long time afterwards. With further thought, I realized the reason I never put the accent on management was because my family managed all our properties ourselves, as a team. I took it for granted that our management was done well.

Then, after more thought, I decided there was more to success than just  good management.

Success is a three legged stool. The legs are:

1-   Management of your business

2-   Marketing your product

3-   Excellence in your product

And like a three legged stool, if one of the legs grows weak and breaks, the stool falls over.

Let’s apply this to investing long distance, in turn-key mobile home parks, that are land-lease (where you only lease the land under the mobile homes, and the residents own their own homes). When you do, the leg that is most important is management. Why?

Because you should not have to spend much money, or time, on the second leg of the success stool, marketing. The lots will be filled up, or at the very least, producing a 10% cash flow from the lots that are occupied. Turnover will be 10 – 20% of the residents each year, which is far less than the 50% you will experience in apartments. Rarely will residents pull out their mobile home, leaving you an empty lot to market. More common is they will sell their home, move away, leaving you a still rented lot.

The third leg of the stool, excellence in your product, means maintaining the park as an excellent place to live. That is the park manager’s job. Remember what I said before – your manager is the key to making your park run as profitably as possible, managed as smoothly as possible, and the infrastructure functions as well as possible, for the residents.

So the two most important of the three legs, in this particular case, have to do with management, and the third leg, marketing, is not really key. That is why it is so important that you choose your manager well when you are an absentee owner living a long distance away from your investment.

These are the qualities, in importance, you should look for in a manager:

1-   Pride of ownership

2-   Wanting respect and enjoy being in charge

3-   Trustworthy

4-   Calmly able to mediate disputes between people, not play favorites

5-   Hardworking

Now, you look at the number one trait, and you wonder if I have lost my mind. No, I haven’t. You want a manager who will treat the park like he or she owns it. I love it when my managers tell a resident, when a rule is broken, “You’re not doing that in MY park.”

The second trait, wanting the respect of being in charge, is extremely important. A manager in a park has working hours, but it is an all the time job. It’s best that the manager live in the park, and when that happens, residents knock on the manager’s door at all times, day, night and weekends, with some of the most nit-picky things. If the manager does not enjoy being in charge, he or she will get cranky, and then leave.

Trustworthy, the next trait, goes without saying. You can aid your manager in being trusted by not accepting cash from your residents, and not having transient rentals that come and go. You can also set up video security systems that send camera images through the Internet 24 hours a day. With this, you can monitor your park’s security, as well as the manager’s office and your maintenance people from 8,000 miles away.

Rudyard Kipling said, “If you can keep your head, while those about you are losing theirs, and blaming it on you … then you shall be a good manager, my son.” A park manager cannot play favorites among the residents, and must mediate disputes fairly and calmly. They will learn quickly that the residents that become their friends, will also bend the rules, and become a headache. A manager must maintain a professional distance from the residents of the park.

Hardworking? My partner, Crazy Gersh has a test for this. He walks around the park while interviewing a prospective manager. If the prospect walks fast, and stops to pick up trash, they have the potential of being a good manager. Gersh says he never saw anyone who walked fast that was lazy and picking up trash indicates pride of ownership.

How do you find a good new manager?

The answer to that is so street-wise it should impress you. Go around the park and look at the residents that keep their places the nicest looking. That’s pride of ownership. Then interview them for the next 4 traits.

What about the day to day financial management of the park? The manager will be making deposits into your checking account, and emailing you copies of the rent checks, and bank deposit slips, after he or she  scans them on the computer. I would recommend you pay your bills yourself, because there are not many – you can transfer the payments over the internet from your bank account, or pay by charge card.

For petty cash bills, we have our managers create a special checking account in their own name, with a balance of $200. Then the manager can write a check for small special needs that come up, and then we replenish the account.

We do not like keeping cash around to pay for things because the cash account always winds up short, and is very hard to track.

You may or may not have your manager update your management computer system by having one that is Internet based. We do not have our managers do this, preferring to keep track of it ourselves.

Your manager is your right hand at the park, and you should give them respect, and a salary commensurate with the size and responsibility of the park. For a full time manager, in a park of 50 or more units, a common compensation plan is $400 week, plus a free mobile home to live in, free lot rent, and perhaps some perks like health insurance, or paid utilities.

In the final blog of this particular series, I will discuss how you can find the  right park to fit your situation, how to finance it, and how to get help so you can learn how to do it safely, with as little risk and time as possible.

In other words, you will be shown how to hop aboard the Mobile Home Wealth train.

Until then …

Cheers, mate!

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