Mobile Home Parks: Is It For You? With Frank Rolfe

MCFA 27 | Mobile Home Parks


As a real estate professional, have you ever thought of dabbling in mobile home parks instead of single or multifamily homes? If you’re unsure if that’s even possible, this episode is for you. Frank Rolfe sold his multimillion-dollar billboard business to invest in mobile home parks. He and his partner, Dave Reynolds, became the 5th largest owner of mobile home parks in the US with a portfolio of 28 parks. He sold all of those and started again. Now, he owns 300 parks, 32,000 lots, 4000 park-owned mobile homes and a $1 billion valuation. In this episode, he joins Athena Paquette Cormier to share his journey from starting up his business to his plans for the future. He also discusses both the good sides and the bad sides to owning a mobile home park as opposed to asset class properties. If you are interested in learning more, stay tuned to this episode.

Listen to the podcast here:

Mobile Home Parks: Is It For You? With Frank Rolfe

I’m super excited to have Frank Rolfe with me and with his partner, Dave Reynolds are the fifth-largest owners of mobile home parks in the United States. He sold his first 28-part portfolio at the top of the market in 2008 and somehow thought starting all over again was a good idea. He built a brand-new portfolio in the last years of 300 parks in 28 states, 32,000 lots and 4,000 mobile homes and an approximate valuation of $1 billion. Frank will be sharing his path through the different real estate investments or different investments that he made and what led him to mobile home parks. Does he still see growth potential in this market and how dangerous is it to own mobile home parks? I’ve attended his Mobile Home Boot Camp and his live go-see events in the preparation or learning for doing an exchange of my own California multifamily properties into the mobile home. I’ve been a student of Frank’s for a little bit and I listened to all his podcasts. I was super excited to have him share with you at this episode what his thoughts are on this part of the real estate industry. Welcome, Frank.

Athena, thanks for having me here.

Frank lives in a beautiful little town outside of St. Louis. Frank, why don’t you tell us a little bit about your personal background where you grew up, your siblings, educational background, and who you are.

I was born in Kansas City and lived in Dallas until I was roughly two. I went to a public school and a private school. I went to Stanford University out of lovely California and graduated a year early. I was going to go to business school, I’ll get an MBA as people did back then. To do that, you had to write the best essays to get into the best business schools were essays are businesses you had started. I had to start a business quickly and sell it or close it and write my resume or my essay for my application based on that. There were lots of weird ideas. One of those ideas was building billboards, so I thought, “That’s weird. I don’t even know what those are but it sounded doable for some reason.”

I have some business cards made while I was in a billboard company. I had no idea what I was doing. I went along for 6 to 8 months with no success at all. Who would rent a billboard location from me? I had no idea what I was doing. Suddenly I called on a guy and he said, “I’ll sign your lease.” I was amazed. In the past, everyone has always shot me down. He was like, “I’ll sign it.” Since he signed that lease and because I got his lease, I got his neighbor saying, “What’s up with that guy?” The neighbor said, “If he’s okay, you must be okay.” My third lease was the original guy’s dad and it organically grew. Years later, I never went to a business school and kept doing that. I was the largest private owner of billboards in Dallas and I sold that to a public company called Universal Outdoor which is now Clear Channel. I started buying mobile home parks and fast forward, here I am now. I’ve had two careers. I had billboards for fourteen years and I’ve had mobile home parks for 21 years roughly.

It’s not exactly what you think you’re going to do with that MBA, but that’s pretty impressive. Did you have any real estate experience during your billboard business? What was the beginning of real estate investing?

Billboards fall loosely under the sector known as real estate because you’re renting land, you’re building something on the land, and you’re paying land rent. I’ll be able to throw it in the big sector of real estate but it’s not the traditional real estate we all think of. The only legitimate real estate experience I had during that period was the condominium, the house that I owned, the little building that I own that the billboard company ran out of. Also watching other people own real estate and talking to them while the billboards were on their property and talking to them about lease renewals and things like that. I talked to many real estate owners as part of billboards. I had three different landowners. All of it is on land where I will be building the billboards out there. There are a lot of different viewpoints from people, a lot of stories from how they almost lost their land and how they got the land. That is my real estate experience. It was collectively 300 different people’s stories about real estate.

I would think you could write a book about that.

Perhaps. I’m not sure someone would read it, but you can do it.

In the billboard business, did you have any partners or it was all on you?

The billboard business was pretty much myself. I started from scratch off my coffee table and bootstrap my way into it. I had to be the youngest person ever because I was 21 years old. By the time I sold out, I was only 36. Most people start it in their 60s. It’s because of my weird construction. Most guys started right out of college and worked for billboard companies for a decade or more and started working for me. No one had ever had the audacity to do it straight like that. It’s a miracle that all worked out. It could have as equally been a complete catastrophe.

Did you start looking at mobile home parks as you own the billboards or was it finishing the billboards?

I built a billboard on mobile parks in Dallas called Glenhaven. I met the owner, Ron. He would call me up once a year or sometimes more than that to ask me to do weird things because he was in California and his mobile home park had gone crazy. He called me and said, “If you’re going to look at your billboards, can you stop by the manager’s house and ask them why they won’t call me back?” That was the number one and most common call he would give me. I go over knock on the guy’s door. The guy would always answer in his underwear and totally asleep. I would say, “Ron asked me to knock on your door. Why won’t you call Ron back?” He said, “I’ll call him.” That was it. Another year would pass and I get the same call again. Clearly, the manager was terrible.

The one thing that intrigued me on Glenhaven was when you build billboards. People don’t realize that, but it’s one of the few industries fully regulated by the government. You’re only allowed to build in the size of certain zones and certain spacings. All the time, you’re looking at zoning maps. I noticed that I never saw MH zoning. All the time I was building billboards on retail, industrial, all kinds of zonings. That fascinated me. I knew that the zoning classification was rare. I didn’t know if that meant it was viable or not. Enough that anyone wanted the stupid things but I didn’t know to a rare commodity. All I knew about mobile home parks was Glenhaven, the rarity of the zoning, the crazy residents, and the terrible managers.

Dealing with that first guy in underwear was the beginning of the experience.

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Needless to say, my early impression in this industry was poor.

You’re like, “I want to do this. How do you own one of these?”

What happened was when I sold the billboard company I called Ron. I said, “Ron, I sold the billboard company. I’m looking for a new career.” He said, “Buy my park.” I said, “I don’t know anything about the park, Ron.” He said, “I’ll give you a deal you can’t refuse now on the phone.” I was like, “What is it, Ron?” He’s like, “I sell it to you right now for $400,000 with $10,000 down. I’ll carry $390,000 for 30 years.” I said, “I know nothing about what you’re talking about but I’ll take it. Let me ask you, how much are you losing a month? You’re coming off desperate here.” He’s like, “I’m losing $2,000 a month with it.” The way I looked at it was I would put up $10,000. I figure I’d probably lose money six months or a year. I thought $1,000 was maybe $25,000 but maybe I can fix it and maybe be a great education. That’s all I did going in.

That was your first park. How long did it take you to buy the 28 other parks?

I bought Glenhaven in 1996 and I had the other parts all bought from about 2000 to 2001. That would bring it to about 4 or 5 parks a year. When I went to sell, the market was roaring in the mid-2000. Selling them was a lot easier than buying them. I put them on the mobile home park store as everyone did back and as soon as I put them on, I got the calls and I’d have a buyer and sold it. It’s a fluid market at that time.

Your partner Dave Reynolds is the one that started that mobile home park store.

Dave bought a mobile home park store from a minister back when the internet began. He was a broker back then and he was going to put his listings on it. He liked the mobile home park store and he found the owner of the site, which happened to be a minister who was not using it. He bought the site for the minister for maybe $1,000 and that was the end of it. There were no websites for mobile home parks.

You sold all your parks in 2008. Why did you do that?

The reason I sold out the parks was simple. They had a park in the market. The way my parts work is I would buy broken parts and fix them. In every park, we fix it at some point, you’re more scared of what can go wrong with it than what you can do to help it. It was hard. You restored a car and you’re afraid to drive the car because it might get nicked and dinged. It was the exact same problem. I put a park on the market that was pretty much done. I had a call from a guy and he wanted to come to look at it. He flew in and I showed him around the park. He said, “I don’t like this park. It’s not pretty or big enough and I don’t want it.” I said, “Fine.” I take him back to the airport. There was a huge lag between the flight, so I took him back to my office, which was inside a mobile home park in an old clubhouse with a pool. I’m in there and he’s in the reading magazine.

I’m in my office inside the mobile home park, he knocks on my door. I said, “What’s up?” He said, “I want to buy this park.” I said, “No. This part is not even for sale. You don’t want to buy this park. You want to buy a park that’s already ready to go.” He’s like, “I want to buy this one. What do you want for it?” I said, “Give me $3.6 million.” He said, “I’ll give you $3,445,000.” It was way more than it was worth so it made no sense. When we were done running the numbers, he was buying into the four caps. I was on the phone with this bank and the bank said, “You don’t want to buy this thing, this is at four caps. That’s crazy. You don’t want to do that.” He was like, “I do. I want to buy it. Whatever you guys will finance, I’ll put it in with cash.”

Suddenly, I thought, “If this guy will buy it four caps, there must be other people that want to pay at four caps.” I put everything on the market simultaneously. I thought there was a storm of craziness coming in so I threw it all out there trying to harvest the moments of it all. That’s what happened. I basically sold to the heighten insanity in the 2000s. I sold my last part about a year and a half years before the crash. It was that insanely close. It wasn’t that I saw the crash coming, I didn’t take out every person buy things at four caps again.

You decided to start over. It sounds like a lot of money if one park is $3 million and many parks as many $3 million. Why wouldn’t you retire?

It’s the same as Paul McCartney. Someone once asked Paul McCartney why he didn’t retire after The Beatles shut down? Why was he on the road with Wings? He said, “When you stop working, you start losing your self-respect.” I have to work. I’m a workaholic. I can’t not work. It’s impossible. I’m uncomfortable with the whole idea. I immediately jumped back into it again. There was a lag. I should know that back even differently. I didn’t buy any parks from 2003 to 2010. I dropped out as a buyer for about seven straight years. The reason for that was the cap rates were not compelling.

In 2010, something magically happened. We had the Great Recession, which shut a giant hole in the real estate and in banking. All these people who wanted to sell, all the moms and pops, you can no longer get buyers. The old cap 5% and 6%. They started to panic and go up to 10% and 12%. Meanwhile, interest rates were insanely low. Interest rates have gone down to near zero. We don’t know how long the spreads would last. That’s how I got back in it was that suddenly it was compelling to buy again. There’s a long period of time, probably a seven-year period. It wasn’t compelling to buy any real estate because it was all so jacked up. It didn’t make any sense to anyone.

How did you meet your partner Dave because a lot of investors would like to have a long-term partner that wants to build at a big scale? How do you find a guy like him?

MCFA 27 | Mobile Home Parks
Mobile Home Parks: Billboards fall loosely under the sector known as real estate because you’re renting land, building something on the land, and you’re paying land rent.


I was speaking at an industry convention back called Mobile Home Millions. They had paid me, my air ticket to my hotel and $500 or some deal to come in and tell people for 30 minutes my experiences in the industry. They did the same with Dave. Dave was there talking about the mobile home park store. We were not impressed in any way with the event, or the speeches but Dave and I went out to the subway and Dave said, “The speeches are terrible. Surely, there can be good content in this industry.” I said, “I totally agree. It’s embarrassing being here.”

Dave said, “I’ve got the website, Mobile Home Park Store. Why don’t you write a little book and I’ll write a little book and we’ll put them on the website?” We basically started writing a little book almost like pamphlets and sold on the website. That’s how I knew Dave through the mobile home park store and those two little books. I know of Dave before that because David and I competed on parks back when I was buying and later, he would buy parks from me. I knew Dave was an operator but I didn’t ever bond with Dave until the subway and writing the different books. We decided to start buying parks together in 2010. That’s a whole exciting story.

We’ve got to go to industry events that suck and find good partners.

Possibly. Most of our industry events do suck so that’s not hard to do. It’s finding partners that are more challenging. When you’re looking for partners, the only thing that David and I will tell people is if you want to find someone like you but the exact reverse. I’m more of a verbal person and Dave is more of a numbers person. That’s like Jobs and Wozniak. Those are the best partnerships. It’s people who have similar visions and values. In the case of Dave and I, we almost have identical lifestyles but we have different skillsets. If your skillsets are imprinted, you’re stronger together. That’s the best partnership. It’s when you have two people who are much better when they’re together. I’m sure in all industries, even in football when you have that magical combo of the quarterback and the wide receiver, without each other, the crew’s got nowhere to go. It’s the same deal. You always want to look for people who are the opposite of you, but they share the same vision.

You’re saying you started over in 2010 but that was years ago and you already own 300 parks. You’re buying 30 parks a year.

That’s an insane number of parks a year.

I don’t even know how you do the analysis on that fast enough.

We have a whole due diligence team. We have everything structured and we’ve been able to plow through it. The best part is Dave stays up 24 hours a day, doing all the budgets, all the calculations, and stuff so that also helps. The other part is that there have not been many deals that were good to buy during that period. You were never out of the clip back in the mid-2000s because there were not any good deals to buy. Things dramatically changed.

Can you tell me an overview of what your team looks like? The first thing people are saying is, “That’s a lot of management.” Can you give us an idea of your team?

We have about 750 employees. We have 300 parks. Every park has a site manager so there are 300, and many larger parks all have maintenance men. We have rehabbing crews, district managers, regional managers, site department, tiling departments, so it makes sense. Out of all our employees, there are probably 100 that are not inside of a park and everybody else is inside the parks. We’re not micromanaging but typically you’ll always have one manager per park. That’s how we blimped up like that.

What’s the average park size? How many units or lots?

On our portfolio, our average on exactly 100 spaces per park. We have 300 parks with 30,000 lots. Our biggest park, we have over 700 lots. The smallest is probably around twenty lots. We are diversity spread.

You’re in 28 states. Are there any states that you would say you would never go to? Don’t say California and break all our hearts but I know you will.

I’m not going to say California because California, if you bought in the heyday, it’s a good deal. It’s one of the best states. It’s also the largest state for mobile home parks. States we would probably not go to would be Louisiana because I’ve been there and I did terribly. I made a profit but it’s rough there so we’ve shied away from Louisiana and Mississippi. We have things in it over the years in Alabama. We’ve never done anything in Georgia. I would say Louisiana and Mississippi, are those ones you have to be careful around. You can’t buy there but be careful. There are a lot of insane pro-tenant laws in Massachusetts, so we keep us out of that state but most of the states are okay. There’s no area. What happens is people are comfortable where they live. Dave and I live in a great place in Midwest. That’s where we’re comfortable to buy because we understand that area. If you live in California, we buy in the west. If you live in Pittsburgh, we buy in the east. We happen to love in the middle of America.

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What states are you in?

There are so many states. I’ll show you where our biggest states are. We’re the biggest in Illinois. We’re big in Wisconsin. Texas is our biggest state. We have a lot in Iowa, Indiana, Kansas, Missouri, South and North Dakota. If you look at the American map, it’s Texas all the way to Canada and the middle-west to the right, that’s where we are. That’s the bulk of our portfolio. It’s probably in fifteen states.

A lot of the people who will read, they’re into real estate like flipping houses. We own multifamily buildings. What do you think are the advantages of having a mobile home park as opposed to an asset class like multifamily? They seem similar yet it sounds like you’re renting out the dirt. It sounds so easy, but it must not be.

One of the big attractions to the industry for many people is the fact that you in the best case are running out of the land. You’re not involved in their homes, their lives, their toilets overflowing, the window gets broken. That’s a huge plus. The bigger plus is when people buy it is it has higher yields and the other types. Also, you have this crazy advantage on volume. For example, if you have 100 space park and you raise the rent by $20, that’s $30,000 a year of increase to your ROI which at a ten cap would be $3,000 value enhancement.

You can’t do that on due diligence while you raise the rent by $20 you get $40. It doesn’t impact you that much. The crazy part is we have many zillions of little income units. The only kinds of things that have been of convenience are we have our self-storage and obviously, a successful hotel with 1,000 rooms at Caesars Palace. They’re in bankruptcy, they’re an example, but there are not many forms of retails that have a lot of tenants. Retail centers don’t and even though apartment complexes except for the larger ones. I don’t know anyone who owns a 700-unit apartment complex. I’m sure they’re out there but I don’t know that person. The big driver is money. Number two is the position. It’s the ease of operations.

People have a picture of what a mobile home park is and it’s probably for the most part, not a good one. It’s people hanging out.

I was the same person when I bought Glenhaven, so I know exactly what you’re talking about.

Is that what you own? What do you own exactly?

That does exist. We don’t want to own that. If you want to own it, it’s out there. The kind of park we want is of more subdivisions. We’re looking for things to have infrastructure typically pay streets, concrete curbs, larger lots, some new homes. Probably, our average age hub is one from the ‘80s. We’re trying to get a notch up from that. There’s one level of industry which is the Tiki Motor Court, where they pass on the freeway. It’s $19.95 a night. People are milling around all over the street. We want to be more like a Holiday Inn Express. We’re not going to be the Tiki and we’re not going to be the room across it. We’re trying to be the respectable middle thing.

In my intro, it says that you own 4,000 mobile homes yourselves in these parks. That’s a small percentage of 32,000 lots. Why wouldn’t you want to own more of those?

It’s because the homes are personal property. The problem is it goes back to the multiplier’s get paid on the real property income. The real property income will be capped at 7, 8, or 10 caps, but the personal property doesn’t even hardly get capped. The appraisers won’t even count it. Our goal with our 4,000 homes is on none of them. Hopefully, years from now, all you’ll say, “You have no homes.” I’ll say, “I have new homes.”

Another question that comes up a lot here is that these properties are in other states so you don’t see them too much. How do you handle owning property out of state?

In our business, it’s maybe easier than apartments because there’s a lot less that can go wrong. What we’ll basically do is we have about five items on our dashboard, we have collections, occupancy, water utility billing, property condition and then the actual difference. There are many other gauges and some we’re not monitoring how many people are in the house, what colors you paint your homes or if there’s a tire in the yard. That falls into property condition but there’s no money in that. We focused on where the money is. At the same time, if you’re going to do it right, you’ve got to be a little more laissez-faire like some operators do. Those people don’t like being micromanaged. We’re trying to go with more of a subdivision flavor. The last thing we want to do is lose residents who are unhappy because we’re all in their business. We don’t want to be in their business, to begin with. We’re not super strict.

You told us some of the good parts of the mobile home park business. What would be the downside? How could this go wrong?

Number one, if you buy the wrong park, it will most certainly go all wrong. The wrong park would be if you have private water, heavy sewer, master meter gas or electricity. Those are all your different types of utility systems that are notorious for blowing up in people’s faces and that they don’t have the capital to fix it if it’s a crisis. That’s one way it could go bad quickly. Another one is if you buy a bad market where everyone’s leaving, the big employers are striking and there’s no moving in. You won’t find anyone to live in your homes because they’re all leaving. That would be a disaster.

MCFA 27 | Mobile Home Parks
Mobile Home Parks: In choosing a place, you want a median home price of $100,000 and up, a three-bedroom apartment rental of $1,000 and up, and a vacant house rate of 12.45 or lower.


Another way you get in trouble is if you don’t budget effectively when you buy a thing. You fail to understand what the actual expense is. You thought it would be a 20% expense ratio but it’s actually 40%. Another thing, historically, one of the big ones is prosperity. That’s always been the industry’s number one enemy. It’s good times. If you look at the industry back when it was in its heyday, ‘50s and ‘60s would have killed it, it was when people owned all those trailers, even Elvis Presley in two different movies. They all became successful and they all left. That’s the problem. When everyone’s rich, they don’t live in mobile home parks. If you think prosperity is around the corner and America is about to launch into a new giant boom and try their own McMansion, the trailer parks were the last thing you want to invest in. If you think that America is screwed, and poverty is here to stay, that’s the place to go. It’s changed and contrarians. That’s how I describe it.

Back to a previous question that I want to do an add-on. Talking about being out of state, how do you decide what markets to be in? Do you have some matrix that you say, “This neighborhood or this city has to be this for us to even consider it?” What are those kinds of things?

I’ll give you simple terms. All the stats come from Number one, we want the metro of about 100,000 people and up. That’s not the size of the town. If you go to Best Places, put the zip code of the park, it will pop up below the screen and say Metro:. You click on that and what you want is a median home price of $100,000 up. We want a three-bedroom apartment for $1,000 and up. We want a vacant house and rate of 12.45% or lower, that’s the US average. Those are the key things.

We’re obviously going to favor a park in Illinois over a park in North Carolina because I have a park in there. Typically, what happens is, we like what we call recession-resistant economies which were based on education, healthcare, and government. Those businesses that you don’t have the ability to lay people off. When you’re out looking at markets, what happens sometimes is, you’ll find a market and say, “I had no idea that’s how it was constructed.” An example would be Kansas City. When we bought our first park in Kansas City called Glenbrook. Apart from being born there, I know nothing about the city at all. I go to these places and I see it’s got a population of two million, it meets our criteria. The median home was about $150,000 so that’s cool. You rent an apartment that rents $1,200, that’s fine. That makes Kansas City tick. I go to Wikipedia for the economy tab, here’s the breakdown of Kansas City and I come to find out that Kansas City has more government offices than any city outside of Washington, DC. That makes no sense.

If you read up on that the reason was when the Americans were expanding, Kansas was the cutoff point to the great Wild West. The Pony Express began in St. Joseph, which is north of Kansas City. Basically, that was the jumping-off parts of the entire western rest of the nation. The government’s satellite office, the western but the need was eastern. Most of the western edge of America and that was Kansas City. They put them there and they’re still there. The Federal Reserve has 140 government offices based out of Kansas City.

They’ve also got huge regional healthcare and huge regional education. You’ve got KU there and Lawrence next to it. There are a whole bunch of colleges. We thought, “The KC economy is so robust and strong and we had no idea.” We started buying more parks in KC and we own 5 or 10 parks there. That’s how it works. You find markets and you’re like, “I like this market.” Sometimes you like the market because their single-family home price is so high. Sometimes it’s the employment rate, it can be the vacant housing market rate. It’s all over the map. There are parks in Iowa where the vacant house rate is around 3% which means housing to this huge demand. You may favor another market where the unemployment rate is 2%. Typically, as you’re goofing around, look around and you’ll find certain markets that are better than other markets.

You said that one of the matrix is for the rental of a three two apartment should be $1,000 a month. Why would that be important? Why couldn’t it be $800 or $600?

It’s based on experience. The best markets we’ve had are ones where we have such profit with our apartments that the phone rings off the hook. When we said you couldn’t make that fly, it goes back to the Louisiana example. That’s one of the big failings of Louisiana when I owned parks there. Louisiana has no Napoleonic Law, which I don’t even fully understand what that means. Nobody wants to own any property there. All your apartment buildings and everybody they have spent it forever. The change came after Katrina because big companies went in to rebuild New Orleans.

They are institutional owners in New Orleans, but the long and short of it is all the apartments which would normally be owned by some big apartment developer are owned by moms and pops. Everyone’s a mom and pop in Louisiana. It has never been in consolidation. What happened to me would be I’d have a mobile home park going good and I see a giant bank open apartment complex with a move-in special one year for $350 a month. How do you compete with that? My lot rent is $300 and they get the whole unit. As soon as the banner goes up, I have a whole bunch of people who walk off and abandon the mobile home or don’t pay their rent. You always vanish in that picture. You want to be where the apartments are strong. It could be $1,000, $900 or $850, it doesn’t matter but you want the apartment to distribute strongly.

You want to have that competitive edge be the cheap deal in town.

I want my funding to be crazy. That’s exactly right.

What’s the average lot rent in the United States or maybe a range to give to people?

The industry has all these urban legends. It’s created and unknown as to where any of them came from. An urban legend is that our national average is $285 a month. I don’t believe that, not in a million years. I have no idea where that stat came from but it sounds about right because there are parks out there like Dallas is $5,000 and $6,000. California is $1,000 to $2,000. Mississippi, where rents are $75. If you figure California is offset by Mississippi. Florida is offset by Louisiana. New York is offset by Alabama. In the Midwest, great places, rents are normally in the dues and in $300, probably $285 is about right.

What is someone paid to finance their home because they’ve got the lot but they need to own their home? What, on average, would someone pay for one of those homes?

That again is one of the great mysteries of the industry. We would estimate that 80% of our customers own their homes free and clear. If you run with that assumption, that means when those people go to sell, those homes are sold at fairly low prices. Most of our parks I’m going to imagine the homes sell for $1,000 to $5,000. A nicer home maybe $10,000. If you buy a new one, the new ones are going to be about $30,000 to $35,000. The typical payments about $350 a month payment plus tax and insurance. If you model that, it’s $300 in rent, $350 in-home payment so it’s $650. They’re in those things, probably about $750 to $800 including taxes and insurance on a brand-new home.

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They’re owning for cheaper than they would be renting that $1,000 three-bedroom.

There are things that are not all financial because what we find in talking to residents is that a lot of them don’t love our park. They like having their own yard, having their privacy and no one knocking on their walls. They like the sense of community and they like having a little park by their door. It’s a hybrid product between an apartment and a house. You own the house, you don’t own the land. That sounds financially possible but a lot of people at the exact same price are going to go mobile home and not an apartment. A whole lot of people do not like the apartment. It’s true from across America from the northern edges of Michigan all the way down to the southern edge of Texas. There are people that like owning mobile homes instead of mobile home parks.

If people are owning their mobile homes, you probably don’t have a lot of turnovers. That’s a fear. A lot of apartment owners have a pretty big turnover. What turnover do you see in mobile home parks?

The economist Charles Becker is doing the study on to try and find the actual answer. The industry has its own myths. The myth is that the average mobile homeowner has a lifespan of fourteen years in the park. Is it true? Nobody knows. Is it based on what I’ve seen? Yes, I could see how you could claim that but I have no idea if that’s true or not. Think of it this way. If you own your three-bedroom, two-bath mobile home, which 80% of them are paid for. You only have a three-bedroom, two-bath with a little yard and you’re paying $285 a month. There’s nothing that can touch that. No one’s going to give that up. You figure they would stick there unless you go to assisted living or die or there’s some disaster like they get divorced or lose their job. It’s the stability of humans in general, not only trailer park people. I don’t know the actual quotient. Fourteen may be right. It may be longer than that, maybe it’s shorter.

Who is Charles Becker?

He’s an economist at Duke University. He’s studied the industry and written two papers so far.

If someone did want to leave one of your parks, what does it cost for someone to move their home because they’re not going to leave their home behind, they want to take their home with them?

They always leave their home behind. The assumption is 98% of the homes never move. You know for a fact that anything that’s older can’t move by law. Those who got HUD seal, they’re not grandfathered so that those can’t go anywhere. It’s tough. That’s from the ‘80s. It can’t move because if you stay and jack it up, it could likely break in half. The only step that would be true is the part that the ‘90s is newer. It will cost you $5,000 to move a mobile home. In many cases, the cost of the move is more than most parks. If they leave, they typically sell it where they are.

One of the most interesting things is, especially being in California is the cap rate. You said 7%, 8%, 9%, 10% cap rates? I’m like, “What? We’re getting 2% or 3% caps here.”

I’m aware of that. You can’t make anybody a 2% or 3% cap. Because of the negative stigma, mobile home parks have always traded at a higher rate than any other real estate that I’m aware of. In our industry, I would say 7% is the norm across the spectrum that includes all the way from the five-star senior park, which trades at fives up to the more family park that trades at 9% and 10%.

To give apartment people a sense, would that be an A building or a B plus?

In apartments, you’ve got to also define what an A building is. Let’s look at California, for example. Up until recent times, the most valuable mobile home park in all of California that has ever been installed was located in Huntington Beach. It’s not the beach. There’s a park and there’s a road and there’s Huntington Beach. That park, we would all agree is a great location. It’s sold for $50 million or $60 million. Here’s where the problem is, it’s an old park. It was built back in 1960. It’s infrastructure as a lift station. It has master meter utilities as all the things you don’t want in life. Is it Class A? Is it Class D? I don’t know. It means class location and Class D construction.

What does that average to? Do you see the problem? That’s why the industry gave up the star system because it didn’t make sense to anyone. I leave to drive a mobile home park. When I’m on the road driving down the road and it’s getting dark, I search 3 or 4-star hotels in the city of light. I know that I’m not going to get ripped off. I know if it’s a four-star hotel in Des Moines, Iowa is going to be a Hyatt or JW Marriott. It’s going to be something clean, safe, nice, and a marble bathroom. Our industry is so diverse. It doesn’t work because our locations are indifferent, lawn sizes, utilities, the way the homes look. It’s so variable that you can’t make it worse.

There was a guy called Woodalls which serves the RV industry. Up until the ‘80s, Woodalls did a star system for mobile home parks. They abandoned it in the ‘80s because you couldn’t make any sense of it. They were valuing in mobile homes parks rather than RV parks. If you were an RV park, you’ve got extra credit for having amenities and things like that in all three lots, but we don’t have any other stuff. We’re not set up to rate these things anymore. When they stopped, for a while park owners would do it but everyone would cheat. The guy would have an old dirt road park and he said it’s a five-star park. It’s because if it was in a hotel, it would police itself. There are no police in our industry so the star system has been abandoned.

Let’s approach it this way. A park that doesn’t need a whole lot of work that’s already cream puff or fix or whatever. In that park, what kind of cap rate are people seeing?

MCFA 27 | Mobile Home Parks
Mobile Home Parks: From the northern edges of Michigan all the way down to the southern edge of Texas, there are people who like owning mobile homes.


A park that is 80% occupied with everything solid is what people call Stabilized Asset. A stabilized park with no upside which should be totally full, you can’t raise numbers any more than they are. That kind of park reached quality. If a publicly-traded real estate investment trust where to buy that park, they might buy it stabilized at a 5% cap, and finance at three-point something cap. ELS which is the biggest read in our industry only pays a 3.6% dividend unless it’s changed. They can make this stuff fly on narrow margins because the normal person can’t. A normal person can’t even meet the lending requirements of coverage ratio with things that skinny. Most investors are looking for a three-point spread, so with rates at about 4% to 5%, you’re looking at 7% or 8% caps. That’s what they need to get a mortgage on it.

Do those parks exist now?

That’s what everyone is buying now because our industry still has that. Most Americans are afraid of our product. It’s like a restaurant with great food and nobody eats there because it looks bad from the outside. Years ago, there was a salmonella outbreak and the town said, “That place is too dangerous.” It doesn’t mean it’s not the best restaurant ever. A lot of people are afraid to go to our mobile home park restaurant because they’ve nothing but bad things from people who don’t know anything about the industry plus at the expense of it. The first thing I did was I rang up Ron and I thought, “What will I have to do if I am closing this deal?” I know I need a pistol. I went down to the gun store, bought a pistol. I said, “I need a concealed handgun license,” and they said, “We got a class, go to class.” The next thing you know I’ve got my concealed handgun license. I arrived at the park for the first time with a loaded pistol in my pocket because God knows that’s what the media said and that was the industry I was in. I would go and find an OK Corral business and it took me a while to realize that was stupid. Any American watching TV that has a positive idea in the industry, let’s not watch much TV.

If someone wanted to get great cap rates, let’s say, I like buying apartment buildings that beat up or mismanaged or whatever, I turn them around or raise the rents and I sell it. Is there something that’s in your industry, and if there is what kind of cap rate are you looking at?

The safest thing for people to do would be to buy a stabilized park with an upsize. A stabilized park 80% occupied and everything’s pretty much good but you still need to push the rents up. You start to believe you still have the ability to maybe push the water sewer back in the residence, maybe building slots. Those are the safest because you can’t screw them up. As long as the park pays its own way and everything you do additionally make it better, you basically pocket. That’s our favorite kind of park to buy. We’re trying to buy stuff this horrible but it’s not perfect.

What if the park is not 80% occupied? It’s a good park, but could it be 50% or 30% off? Do you see parks like that for some reason they’re empty?

If you’re buying a park that’s 50% occupied, question one is, is it bankable? Can you even get a loan? Most lenders don’t want to do a park that’s half empty. They want a park that stabilizes. We’re normally not 50% but we are buying things that are 70% or 60%. It’s close enough that the banks want to take a leap of faith, “You could fill the last few lots.” When you start buying stuff that’s 30%, that’s scary because you have no liquidity at all. If you had a car wreck the first week after you bought it, your family would have no ability to sell it because it’s not a liquid asset. We have bought parks like that. We have some that are 50% occupancy, one is even worse than that. We knew that on the front end. We got good prices on them but it’s always scary on those because between when you bought it and when you get to stabilized occupancy, you’re in no man’s land.

You probably ask yourself why it’s half empty. Are there reasons that are unacceptable?

It’s for the same reason. The problem is our residents had no access to credit and not had access to credit in years. The only way you can find a lot is you’ve got to buy the home and bring it into the lot and install it at the home yourself. Moms or pops don’t want that. We buy parks from guys with 100 vacant lots and the guy I told, “I don’t want to bring any homes in. It’s painful. You have to show and clean the home.” That’s why the ones that we buy are like that. However, there are also parks that are half happy, because there’s no reason the parks should even exist. There’s no market, no demand, and no employment. You’ve got to make sure you got the park where the demand is there. We do that by using test ads if people want to live there. You run test ads and for all you know, your park is half empty because no one wants there.

You have to figure that out before it’s on your dime. If you can’t get bank financing, how do you guys deal with that? Not everyone has a ton of cash.

If back finance is out of the picture, it falls back to seller financing. If a seller says, “No, I’m not going to finance it,” we would typically pass on it because I’m not going to pay all cash. The only times we ever paid all cash is at an auction situation where we have to pay all cash to get the deal closed and we refinance it. The problem is you pay all taxes your cash-on-cash returns the same as your cap rate.

Give people an idea of what is the price range of mobile home parks? What’s the cheapest one and the most expensive? On average, what do you see out there?

If you get a small screwed up park, I still see those deals and people call me to evaluate deals like that. We ourselves have bought deals like that for under $100,000. You can get a screwed up for a small park for $50,000 to $100,000. Find parks in listings that people don’t want to buy. They probably get started in the mid-twenties as far as the number of lots. Those are going to be priced anywhere about $250,000 to $500,000. A 100-space park typically will be $1 million and up. There are some parks out there that are all up to $80 million but there’s probably not someone who’s going to be buying the first part. It’s a pretty wide spectrum as a bottom line.

The other question that I’ve got here from one of the audiences is what kind of LTV or what kind of down payment is required on parks?

The banking industry norm is going to be 70% to 80% LTV. That’s basically pointing to 30% down. Sometimes a mom and pop you can get all the way to zero down if you’re a good negotiator if a mom and pop likes you a lot. Typically, I’m going to say they lend about 20% and it can vary all the way to 30%. I don’t know if anyone did more than 30%. I see sellers all the way down to zero. In that instance, it’s 10%, so the range is 10% to 30%.

If you're going to do mobile home parks right, you’ve got to be a little more laissez-faire because people don't like to be micromanaged. Click To Tweet

Is it similar to apartment building loans where it’s the short-term for 3, 5, 7-year?

If you’re doing your local bank, those things are often 3 to 5 years in term. Typically more five or sometimes seven. Sellers usually carry around ten. If you’re doing the step up from the bank, which is conduits and agency, those things go all the way out to ten years in conduits and twelve years on agencies.

The follow-up question they wanted to know is it similar to apartment buildings where there’s a certain debt coverage ratio required? What’s that buffer that banks look for?

It’s all over the map based on the lender. It’s 1 or 2.

You mentioned in one of the classes that Fannie Mae was looking at financing the actual mobile homes.

The initial is to begin in 2020. They haven’t done it since the ‘90s, so they’ve been absent for years doing that. I have no idea. We hope it will.

If someone is a beginner investor, what would you suggest their steps should be to get into a mobile home park?

The first thing you have to do is to know what you’re doing. I would graciously read everything you humanly can. You want to figure out what you’re looking for. The size, the location, what are your goals, and once you figured out what it is you want, the best thing to do is to pour as much raw material in that filter as you can to find the largest number of properties. It’s like a gold miner. As soon as you get a little screen to cash the gold and you know what gold looks like, the more mud you put on the screen than gold that you find. Initially, it’s a learning game and it becomes a volume game.

That’s a great analogy right there. The first time I met you or learned from you was you had a series about buying outdoor billboards. I bought your class on that but I did not buy a billboard, but it was interesting. You offer a class on mobile home parks as well though, right?

Correct. The billboard, I have a book and I shot some CDs to go with the book. The only actual live class we do is for mobile home parks.

How would someone learn about that?

You go to That’s what most people do, and you can follow the books and courses. You can click on that and you’ll find my partner, Dave, some branding. He’s in charge of all that.

I’m curious what your exit strategy is. Are you going to keep buying parks until you drop on the desk or do you have other goals?

We don’t have any set-in strategy. We’re big enough now that we could sell or potentially even go public. It’s anyone’s bet where all of this ends. I have no desire to ever end it. I’m never going to retire or stop. I’ll do this until I fall over dead literally but I’m not sure what the final end will be. That remains a mystery. Not only for me and different operators and any of the guys who are probably in the 50th largest amounts. No one knows because they’re still a closet mom and pop-ish. They’re not aligned with any private equity group. We all remain a mystery. We don’t know where consolidation will go.

Where do you see this industry going? Do you think there’s still enough meat on the bone for people? Do you see it fizzling out?

It’s getting more exciting, to be honest with you. What’s going on? We’ll always have people who need affordable housing. As a nation, we’ve done a terrible job as far as people creating anyone who can afford a bed and affordable housing. Our fastest growing industry is fast food, which is pretty bad and half of all the jobs created the great recession are $10 an hour under. We are faced with manufacturing people who don’t have a lot of money. The demand will always be there for what we do. At the same time, we’re on the cutting edge of maybe breaking out of our stigma a little bit. All the tiny home shows on HGTV, you’ve got all the eccentric people who are an elegant mobile home like Tony Hsieh from Zappos. It’s different stuff and it’s becoming a little bit chic with Millennials.

Bear in mind, the industry began with eighteen-year-olds. If you look at religious things in the ‘50s, it was all people in the war. There were all these World War II vets, the original guys that promoted the industry and the stuff from the ‘50s and the ‘60s. The future of the industry is what these Millennials do because Millennials are doing strange things people didn’t expect. Millennials, for example, are huge users of RVs. The RV industry is having the best sales of all time and everyone thinks it’s because of the Baby Boomers 10,000 they’re retiring. When looking at the actual numbers, it’s affiliated with the Baby Boomers, but you’ve got all these Millennials buying RVs. If you watch a lot of those Millennial-types of TV shows, you’ll see massive amounts of people in RVs. I saw one of those extreme sports videos and every ad in the entire thing was RV.

If you tell the RV industry that these are their customers, all these Generation X gamer people. Millennials like smaller spaces, they’re going back to basics and having low overhead. I’m wondering if the Millennials who don’t have a big stigma against the industry because they’re too young to ever have seen a mile and a lot of that. If they open the future maybe it won’t be overnight but at some point, the issue might become chic is what I’m wondering. We’re starting to see more young Millennial people in some of our parks. Edgy people that have nice jobs and decent cars. They like to be contrarian. All people want to be contrarian.

The industry looks a lot rosier than when I got in it. With the old saying of the industry was, “Newlywed and the nearly dead.” These are supposed to be depressing. What all the mom and pops would tell me is that the whole thing is depressing. It’s not depressing. The level of play is better, the customers are better. The product is way better. You’ve got Warren Buffett in the industry. It’s getting hip. People don’t run away when you say do costume parties anymore. Time Magazine has a positive article. They call the home of the future. To me, that’s all good stuff.

Why wouldn’t someone build a mobile home park?

It’s hard. They probably haven’t built a mobile home park which I guess the guy that has Tesla’s proven the promised building to car thing. If you have a mobile home park, the city won’t let you because they all hate them. He’s all American mobile home parks. You get to go away to a county where there’s no one to vote against you. The problem is in your county and you’ve got no city monitoring. Private water and sewers nobody wants to begin with and you have no customer base. You can build them. Anyone can build one go to the middle of the desert, but can you fill it? That’s the problem. Some cities are not so hostile you can’t build them. There are little niches out there. There was a guy a few years ago that built a park in Dallas because no one noticed the land parties coming from a mobile home. He snuck in and found this piece of land and built 100 spaces in the park. That’s rare. Most inside city limits have way more parks being torn down than being built. It’s hard to build at all.

Thank you much for joining me, Frank. Is there anything else you want to share?

If you had an open enough mind to read this, you should have an open mind to look into the asset class a little more because what you’re thinking mobile home park is all about has nothing to do with the actual industry. The industry gets a perennially bad shape from the entire world. Fake news began with the mobile home park industry being trounced every week with trailer park boys or cops or something or a replay of Eight Mile. Look at the industry. Go and google mobile home park or around wherever you live. For a change, drive-in and see what you thought, because many people go in the park and go, “That’s not what I thought.” Of course, that’s not what you thought because you’ve been force-fed this malarkey, dangerous and creepy and weird they are, but that’s not the industry at all.

Thank you so much, Frank. I look forward to seeing you again, hopefully in St. Louis, or maybe Colorado. Thank you all for joining us. If you’d like to join our mailing list, you have to text Mortgage Fun to 444999 and you’ll be automatically added to our mailing list. Thanks for joining us on this episode. Thanks again, Frank, for your precious time. It was a great talk.

Thank you.

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About Frank Rolfe

MCFA 27 | Mobile Home ParksFrank Rolfe has been an investor in mobile home parks for almost two decades, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with over 250 communities spread out over 25 states. But it all began with one mobile home park, Glenhaven, in Dallas, Texas. “When I bought Glenhaven, I had absolutely no idea what I was doing or how a mobile home park worked. If I had, I would have never bought that park, as it saddled me with a master-metered gas and electric system – two of the biggest challenges a mobile home park owner can face – and a tenant base that was straight out of COPs. We had carnival workers, hookers, the absolute dregs of society. It even had a wrestling ring in the back. A few years later, I had unbelievably turned that dump into a nice, quiet, family community, with a neighborhood feel and kids riding bicycles down the streets. Another five years later, the park was worth around $1 million more than I had paid for it.” With his success with Glenhaven, Frank continued to buy more mobile home parks, focusing on parks that had good locations, but were terribly managed.

Frank has always believed that mobile home parks are all about “affordable housing”. “Beginning with Glenhaven, I noticed that a mobile home park – when properly managed – offers a significantly better quality of life than a comparably priced apartment. Nobody likes to have neighbors banging on their walls and ceilings, or the lack of a yard or nearby parking – or just the lack of a neighborhood “feel”. It occurred to me that I could have my phone ringing off the hook if I could deliver an affordable detached dwelling with a yard that was safe, clean and respectable. That’s what I delivered at Glenhaven, and that’s what I’ve been doing ever since.”

Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate. “Dave and I have trained hundreds of investors on how to properly buy and operate a mobile home park, 100% based on our real-life experiences in the hundreds of parks we have owned and performed due diligence on. It gives us great satisfaction when people tell us about the mobile home park that they have purchased and how well it’s going. We really wished that someone had given us some direction when we began – it would have saved us a lot of money and stress. But I guess it all worked out pretty well in the end.”

Frank lives in a small town in Missouri with his wife and daughter. He is very active in community affairs, being a member of the Lions Club, the school board, and Chairman of the Landmarks Commission. He holds an A.B. in Economics from Stanford University.

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