Kangaroo Kronicles 17 – Long Distance Mates

By

Stu Silver / “Uncle Zally” Zalman Velvel

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I have to say it right now – I have grown to love my mates and Sheilas from Oz.

 

No, Dorothy, I don’t mean the Wizard of Oz. “Oz” is slang for Australia. The people that live there are “Aussies.”

 

Their number one question to me is:

 

Can I safely invest in a mobile home park from 8,000 miles away?

 

For Americans who are reading this, the question is just as relevant to you. Just imagine investing in another state. Other than time zone differences (fourteen of them if you live in Melbourne and invest in Florida,) the question remains the same. Can you invest safely in a mobile home park that is a long distance from where you call home?

 

The answer is yes.

 

Well, thank you for tuning in again to my blog ….

 

Oh, you would like to hear HOW it can be done safely?

Before I discuss how, allow me to have some fun, digress, and explain why I have grown to love Aussies:

 

Because I am a writer, and Aussies actually like to read.

 

They curl up with a good book and are patient, and serious, about acquiring wisdom, knowing it takes time.

 

From my experience, their American counterparts do not like books, other than Harry Potter and Stephen King, which allow them to escape their lives, not make them richer and fuller.

 

Stephen Jobs, the genius of Apple Computer, said:

 

“Forty percent of the U.S. read one book or less last year.”

 

Americans like sound bites, snippets, pictures, and videos. They like their wisdom quick and visual, hopefully in 5 seconds or less, so it will not interrupt American Idol reruns. If Americans have to read or write, the total should be 140 characters or less (hence the success of Twitter.)

 

When Americans buy my books on investing, a total of 1,000 pages, I expect they are going to collect dust on their shelves. That’s unfortunate because my books don’t have dust jackets.

 

Aussies are refreshingly eager about investing “across the pond.” They love positive cash flow, which we have abundantly, and they know we’re at the bottom of our market, where those American cash flow dollars will be bundled with future price appreciation.

 

Many American real estate investors I meet are dispirited and negative about investing here. I understand, having gone through the same terrible cycle. However, Americans refuse to understand cycles, no matter how many times Warren Buffett explains it:

 

You’re supposed to buy when everyone is scared, and prices are low, and sell when everyone is greedy, and prices are high.

 

Aussies also have a world class sense of humor. You can interrupt almost any conversation, even one at a funeral parlor, with a joke. They always have time for a good laugh. God bless ‘em.

 

The American sense of humor is at an all time low. Comedy clubs are closing, and the few that remain, pay comedians $150 for a weekend, and that includes four shows. Americans would rather attend a funeral and cry, than go out for a drink and a laugh.

 

Now, I will stop digressing. I’ve had my fun. It’s okay for me to poke fun at my mates and Sheilas in America because I am one of them, and I love them, also. I am returning to the serious topic of investing over long distances. My American readers, be forewarned. This is going to take more than 140 characters, and 5 seconds. Please do yourself a favor and switch off American Idol, or at least, turn down the sound. (One last shot.)

 

Why is this an important topic? Because after Aussies read my books, or watch me on the DVD’s from PropertyInvesting.Com, they are eager to invest in mobile home parks over here. They like the idea they can make a million dollars on one good deal. Who wouldn’t? But is it safe, they ask?

 

First and foremost, if you are investing long distance, you should invest in a turn-key park. That means the park is cash flowing nicely, throwing off at least 10% per year in net income versus the price you paid (12% is even better.) There is little or no deferred maintenance or repairs, and the park has an experienced manager that knows the infrastructure and residents, and how to run the business smoothly on a daily basis. Buying a mobile home park is like buying a business, except there are plenty of “hard assets” and the price depends less on “good will.”

 

Can you make a million dollars on one mobile home park deal that is a turn-key situation? Perhaps if it is 3 – 4 million dollars to start, and you are patient.

 

Otherwise, mobile home parks will simply be a great investment that gives you double digit returns safely and easily, over a long period of time, perhaps continuing for generations. Yes, that’s right. Generations.

 

As proof of that statement, in the Bible it is stated there will always be people who do not have much money for the basic necessities of life, and you should not close your hand to them, or God will close His Hand to you. Running a mobile home park can be like “opening your hand.” (That doesn’t mean you can’t open one hand to those less fortunate, and guard your wallet with the other.)

 

If you are investing long distance, the mobile home park should also be a land lease community – in other words, the residents own their own mobile home, and they pay you for renting the land under it. Your responsibility is maintaining the infrastructure of the park (roads, electric, water, sewer, and gas lines, etc.) which allows tight control over expenses. When you are also responsible for the maintenance and repair of people’s homes, your costs escalate rapidly, and your control over them diminishes just as rapidly, when you are a good distance away. Not maintaining dwellings is a major benefit of mobile home parks over apartments and multi-family housing in long distance investments.  

 

Now let’s discuss the manager, which is the heart and soul of your control over your investment, and your sense of security. The good news is, the manager is dedicated to your park. That is the manager’s sole job. You don’t have to depend on a Realtor, or a professional property manager,  who is managing diverse properties for a slew of diverse investors.

 

And the manager is free.

 

Yes, that’s right. When you calculated the price of the park, you took off the manager’s salary and office costs as an expense, the same as real estate taxes and insurance, and then made sure the park was giving you at least a 10% return after expenses.

 

What if the manager dies or leaves?

 

First off, how often will this happen? Most of my managers have been with me eight years and more, and the ones I have replaced, did not take much time to find a better successor. Why better? Because after you own a park for a while, experience will guide you better on what qualities and responsibilities you will need from your next manager.

 

Replacing a manager will probably necessitate a trip to the park. You could hire someone over the internet, using Skype, but it’s probably better to be face to face. (See the movie “Up in The Air.”) I will discuss what qualities to look for in a manager in a future blog.

 

And for you “control freaks” out there, of whom I am a charter member of the club, if you like to “watch over” your park, you can install an inexpensive video camera security system that will send video to you over the internet 24 hours each day.

 

Last, and most important, the best way to safely invest over long distances is to do your due diligence well BEFORE you own it and write the check.

 

I will discuss due dilly in the next blog. Until then …

 

Cheers, mate!

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