A while back, I offered a reward of $200 to the person that could come up with a better name for the industry than “manufactured housing”. While searching for a better name, I came to the realization that the industry actually needed two different names. One was for the type of product that allows folks to live on a total payment of around $500 per month in mortgage and lot rent. I proclaimed that the correct name for this part of the industry was “affordable housing”, and have adopted that ourselves when describing what we do with the 5,000 lots we own.
However, there still was no appropriate name for the second industry segment. This is the niche that provides housing that often costs $1,000+ per month including mortgage and lot rent. Clearly, “affordable” is not appropriate. And the suggested names for this segment were very interesting. Apparently, judging by the mail received, there are many people who are unhappy with the “manufactured housing” label. And many people wanted to emphasize qualities that are perceived as a positive attribute of the product – such as “precision”-- as opposed to the negative stigma that “manufactured” seems to portray.
By far the best answer, in my opinion, came from George Porter. Here’s what he wrote:
Been reading your articles in the Journal and was reminded of a story that I heard about many years ago concerning Gloria Steinem, the famous women’s lib personality. She was asked if she would ever be satisfied when a woman was elected President of the United States? Her reply was “no, she would not be satisfied then and would remain unsatisfied until a woman was elected President and no one would really care that she was a woman; just a competent person … period.”
With this in mind, I propose that we name our houses …(are you ready?)…Houses!!!!
Now I realize that we have Italian Americans, Latin Americans, Afro Americans, etc. But really what we all are is Americans and that other is just a way to label someone, for no good reason I might add. Really, what difference does it make, anyway? You are what you are, and our houses are the same. It is just a house. In the past, we seem to want to make ourselves “different”. I don’t know why.
I like Ms. Steinem’s idea. We haven’t gotten very far until nobody cares that it was built in a factory – just that it’s a decent house.
Maybe George is right. Maybe, instead of trying to differentiate ourselves from the rest of single-family home building (which has done much better than we have), we should try harder just to blend into the spectrum of the stick-built industry. I’ve always thought we could get farther in promoting the similarities of our product -- framing, vinyl siding, shingled roof, carpet, appliances – than the fact that you can pull it down the highway. You can also pull a stick-built down the highway, for that matter (I’ve seen several stick-built homes moved in such a fashion). Maybe we should focus our efforts on being less expensive per square foot and faster to deliver a finished product to the job site, and not even talk about the fact that our product is built in a factory.
I live in rural Missouri, and people here do not even know the term “trailer”, “mobile home” or “manufactured home”. They are all considered houses – part of the same family as the brick custom home. As a result, there is no stigma to living in one, and the values are higher. A friend of my daughter lives in a doublewide on a farm. But I think I’m the only one who knows it, because to everybody else it’s just a house. I often feel guilty for even thinking that it’s a doublewide – as though I’m carrying a terrible secret. I think everyone else is right – it’s just a house and not a subject of discussion.
I also frequently drive by a factory that makes roof trusses for stick-built homes. And I always think “I wonder if those people who buy that house know the trusses were made in a factory, just like a manufactured home?” What’s the big difference? Who’s keeping score? What other things inside a stick-built home are built in a factory? Just about everything – carpet, mini-blinds, appliances – right?
I guess the moral is that we have in many ways created our own problem in marketing and public relations by being too loud about our differences, and too quiet about our similarities. We need to stop this practice, as it is not working at all.
I am very impressed with the way that Clayton has attempted to re-design their sales centers to look more upscale and mainstream – and more in line with stick-built builders. The sign out front is just the word “Clayton”. I do not see one mention of the words “manufactured homes” on these centers. However, I see plenty of retailers who have the words “mobile homes” and “manufactured homes” right on their sign. I have to imagine that Clayton executives are thinking the same as George Porter – that our future is based on being one of the crowd, not being some freak with a big arrow hanging over his head.
So the winner is … silence. That’s the best word to describe our upper-end product. It’s a house. Period.
For more information on all facets of commercial real estate, visit www.nicheinvestmentnetwork.com.
Wednesday, February 15, 2012
Monday, February 13, 2012
Like Us!
Niche Investment Network has been busy working on our Facebook page.
Head on over and 'like' the Niche Investment Network. Once we hit 200 likes- we'll be giving away an official article of clothing from Frank and Dave's Trailer Wear department!
See you there!
Head on over and 'like' the Niche Investment Network. Once we hit 200 likes- we'll be giving away an official article of clothing from Frank and Dave's Trailer Wear department!
See you there!
Tuesday, December 20, 2011
How to Make Money in Mobile Home Parks
We see all types of deals out there. Small parks. Large parks. RV parks. But the deals that make money all seem to share the same DNA. Here’s a short course in the basics of making money with mobile home parks – just in time for the New Year.
To make money, buy only parks that won’t lose money
I know it sounds elementary, but the first rule of making money is to make sure you buy a park that will not lose money. What this means is that the park in question already has a positive cash flow sufficient to cover the note payment and provide a return on capital. What does this eliminate? You got it – parks that sell at a price higher than a 10% cap rate, and parks that are vacant. If you buy a park at a 4% cap rate, then how are you going to make any money? Never buy into the concept of land appreciation. While that might sell well in California and Florida, that’s not the mobile home park business – that’s land speculation. We are in the income property business, and the only way values rise is when income rises. If you are starting out at a 4% cap rate, then it will take you a lifetime just to get the park in a position where it is worth what you paid for it. Don’t be a sucker.
Focus on parks that have upside that you can control
A good mobile home park will have upside in raising rents and cutting costs. These are variables that you can control. RVs and mobile homes moving in are things you can’t. Raising your rents is one of the best ways to make money – every dollar you bring in goes straight to the bottom line with no time, effort or risk on your part. Sub-metering water and billing it back to the customer is another great strategy. It costs money up front, but is a fast pay back. Cutting costs, such as replacing the manager with a less expensive alternative or appealing property taxes, are another great way to increase the net income, without a lot of effort and capital investment.
Buying a park at a 10% cap rate is great – but you need some additional upside, even if it’s only raising the rent annually.
Do terrific due diligence
If you do lousy due diligence – or none at all – you will probably never make any money with a mobile home park, unless it is through sheer luck. Due diligence is what allows you to confirm that the park is a good buy, and to detect a clunker and ditch it early on. When you do great due diligence, the odds that you will make money are huge, and that you will fail slight. When we talk to people who have done well with their park, they all share a propensity to do great diligence. When people call us who have parks that don’t work and won’t sell, you find that they have done no basic research at all prior to buying the park.
And be a decent operator
You don’t have to be a great manager to have a successful park. But you can’t be terrible. You have to know how to collect rent and stay on top of rules violations, and hold expenses down. You would be shocked at some of the income and expense statements we see on parks we do due diligence on. And the property condition is even worse. Even if you buy the greatest deal in the world, it’s not going anywhere if you don’t know how to run it.
Conclusion
The mobile home park industry is being fueled by the decline of the U.S. economy – and this is a huge market shift, not just a fad. There is plenty of money to be made in mobile home parks. But you have to go about it the right way.
To make money, buy only parks that won’t lose money
I know it sounds elementary, but the first rule of making money is to make sure you buy a park that will not lose money. What this means is that the park in question already has a positive cash flow sufficient to cover the note payment and provide a return on capital. What does this eliminate? You got it – parks that sell at a price higher than a 10% cap rate, and parks that are vacant. If you buy a park at a 4% cap rate, then how are you going to make any money? Never buy into the concept of land appreciation. While that might sell well in California and Florida, that’s not the mobile home park business – that’s land speculation. We are in the income property business, and the only way values rise is when income rises. If you are starting out at a 4% cap rate, then it will take you a lifetime just to get the park in a position where it is worth what you paid for it. Don’t be a sucker.
Focus on parks that have upside that you can control
A good mobile home park will have upside in raising rents and cutting costs. These are variables that you can control. RVs and mobile homes moving in are things you can’t. Raising your rents is one of the best ways to make money – every dollar you bring in goes straight to the bottom line with no time, effort or risk on your part. Sub-metering water and billing it back to the customer is another great strategy. It costs money up front, but is a fast pay back. Cutting costs, such as replacing the manager with a less expensive alternative or appealing property taxes, are another great way to increase the net income, without a lot of effort and capital investment.
Buying a park at a 10% cap rate is great – but you need some additional upside, even if it’s only raising the rent annually.
Do terrific due diligence
If you do lousy due diligence – or none at all – you will probably never make any money with a mobile home park, unless it is through sheer luck. Due diligence is what allows you to confirm that the park is a good buy, and to detect a clunker and ditch it early on. When you do great due diligence, the odds that you will make money are huge, and that you will fail slight. When we talk to people who have done well with their park, they all share a propensity to do great diligence. When people call us who have parks that don’t work and won’t sell, you find that they have done no basic research at all prior to buying the park.
And be a decent operator
You don’t have to be a great manager to have a successful park. But you can’t be terrible. You have to know how to collect rent and stay on top of rules violations, and hold expenses down. You would be shocked at some of the income and expense statements we see on parks we do due diligence on. And the property condition is even worse. Even if you buy the greatest deal in the world, it’s not going anywhere if you don’t know how to run it.
Conclusion
The mobile home park industry is being fueled by the decline of the U.S. economy – and this is a huge market shift, not just a fad. There is plenty of money to be made in mobile home parks. But you have to go about it the right way.
Monday, December 12, 2011
MHPS December Contest
We’re looking for the ugliest entry signage to a mobile home park. Have you driven into a really ugly one recently?
If so, we’d like to see what it looked like. Send us a photo. If it was so ugly that it broke the camera lens, then draw us a picture.
The winner of this month’s content will be whoever can provide us with a photo of the ugliest entry signage for a mobile home park in the U.S.
If you win, you’ll receive a custom mobile home park T-shirt from Frank & Dave’s Trailer Wear department. These shirts are so rare that you can’t buy them! So give it a shot, and send in, or email, your entry ASAP.
Rules:
-Must send it a picture of the ugliest signage you have ever seen to mhpscontest@gmail.com.
-Email must include contact details. (Email address and phone number) Please include how you would like to be contacted if you are one of the winners.
-Entries must be submitted to mhpscontest@gmail.com no later than December 31, 2011 at 11:59pm CST.
-After December 31, a creative team will narrow down entries and determine the top entry. The winner will then be contacted for their shipping address.
If so, we’d like to see what it looked like. Send us a photo. If it was so ugly that it broke the camera lens, then draw us a picture.
The winner of this month’s content will be whoever can provide us with a photo of the ugliest entry signage for a mobile home park in the U.S.
If you win, you’ll receive a custom mobile home park T-shirt from Frank & Dave’s Trailer Wear department. These shirts are so rare that you can’t buy them! So give it a shot, and send in, or email, your entry ASAP.
Rules:
-Must send it a picture of the ugliest signage you have ever seen to mhpscontest@gmail.com.
-Email must include contact details. (Email address and phone number) Please include how you would like to be contacted if you are one of the winners.
-Entries must be submitted to mhpscontest@gmail.com no later than December 31, 2011 at 11:59pm CST.
-After December 31, a creative team will narrow down entries and determine the top entry. The winner will then be contacted for their shipping address.
Monday, November 7, 2011
November Contest
What is the best or most funny excuse you have received for a tenant not paying their rent? We want to hear them all.
The top winner will be determined and awarded our new Mobile Home Park Store shirt.
Good Luck!!!
Rules:
-Must state in email your tenants best or most funny excuse to mhpscontest@gmail.com.
-Email must include contact details. (Email address and phone number. ) Please include how you would like to be contacted if you are one of the winners.
-Entries must be submitted to mhpscontest@gmail.com no later than November 30, 2011 at 11:59pm CST.
-After November 30, a creative team will narrow down entries and determine the top entry. The winner will then be contacted for their shipping address.
The top winner will be determined and awarded our new Mobile Home Park Store shirt.
Good Luck!!!
Rules:
-Must state in email your tenants best or most funny excuse to mhpscontest@gmail.com.
-Email must include contact details. (Email address and phone number. ) Please include how you would like to be contacted if you are one of the winners.
-Entries must be submitted to mhpscontest@gmail.com no later than November 30, 2011 at 11:59pm CST.
-After November 30, a creative team will narrow down entries and determine the top entry. The winner will then be contacted for their shipping address.
Monday, September 19, 2011
How to Make Money in the Self Storage Business
Most Americans have more stuff than they know what to do with. As a result, they need extra space to store their stuff in. This basic need is the back-bone of the self-storage industry. But just because the demand is there doesn’t mean that making money filling that void is simple and guaranteed. The self-storage industry is more complicated than it looks, and there are many important issues to understand and address.
The Right Type of Facility
There have been a number of different types of self-storage facilities built over the last four decades. However, the profitable ones are among the first variety – they are called “Generation One” or “Generation Two”. The important component is that they have all rentable units located on the ground floor, and in a manner that a car can drive right up to the roll-up door. Why is this? Studies have found that self-storage tenants want to be able to drive right up to their self-storage unit door, roll it up, throw their stuff into it (or pull it out of the it), close the door and drive off. What’s not in demand are units that are located on a second floor or higher, or that you can only reach on foot. Nobody wants to have to take an elevator to their unit, or walk down a hallway with their stuff in tow. There never really was a demand for these type of facilities – it was more a fabrication by self-storage developers trying to rationalize building facilities on more expensive land, which required a greater number of units on that “footprint”.
Just as multi-story facilities have proven to be a flop, so have “climate controlled” units. It appears that the items that most Americans store are not valuable enough to require heating and air-conditioning. If you go to most facilities today, you will find the bulk of the “climate controlled” space vacant. At the worst end of this spectrum are the California invention of “wine storage” units. I was in a facility recently that had only 20% occupancy in “wine storage”. The cheap wine refrigerator available at Costo and other retailers has replaced this concept for most people. And don’t forget that “climate controlled” areas are extremely expensive to operate.
The Right Kind of Location
It is extremely important in self-storage to have excellent street frontage and visibility. The most successful self-storage facilities in the U.S. all share this common trait. This is because many Americans rent space in facilities that they drive by all the time and have awareness of – kind of a “point of purchase” decision. When you have a self-storage facility with poor visibility and an out-of-the-way location, there is no way that anyone will “think” to rent from you, or even find you if they wanted to.
Don’t forget that self-storage is extremely competitive in most markets. Given this fact, it is important that your facility have the correct basic gifts to compete. We all enjoy the stories of underdogs who go on to victory – like the one-handed baseball player – but it is far easier to win when you don’t have a disadvantage from day one.
The Right Kind of Market
Self-storage requires a high density of potential customers. Not everyone needs it, and there are competitors who are also asking for their business. There is a general rule that there should be a population of at least 50,000 people within a three mile radius of the facility. While this is only a guideline, the key thought is that you need a heavy population density for a facility to be successful.
As important as population density, is the density of self-storage space in the market. An over-built market will have low rents and excessive vacancy. The general rule of thumb is that there should not be more than 6 square feet of storage space for every person in that market. For example, a market of 100,000 people should not have more than 600,000 square feet of self-storage capacity.
Demographics are also a key part of a healthy self-storage market. Markets with household income of $50,000+ per year are best. Why? Because the more money you make, the more stuff you buy – and the more stuff you need to store!
The Right Kind of Price and Terms
An essential part of any self-storage acquisition – probably the most important of all – is the price and terms of the deal. Even the best self-storage facility will be a loser if you over-pay for it. You should never buy a self-storage facility at less than around a 10% cap rate (return on the total price). In addition, you should be able to finance the deal with around 20% down, so that your cash-on-cash return is in the mid-teens.
The best buys in self-storage facilities are from “moms & pops” – individuals who own the property free and clear and do not provide very sophisticated management. You can normally buy from these moms & pops at very attractive prices, and they can seller-finance the purchase, avoiding the entire banking application and approval cycle.
Conclusion
Making money investing in self-storage facilities is a very attainable goal. But you need to make sure that you follow some basic guidelines to ensure that your purchase will be a good one.
The Right Type of Facility
There have been a number of different types of self-storage facilities built over the last four decades. However, the profitable ones are among the first variety – they are called “Generation One” or “Generation Two”. The important component is that they have all rentable units located on the ground floor, and in a manner that a car can drive right up to the roll-up door. Why is this? Studies have found that self-storage tenants want to be able to drive right up to their self-storage unit door, roll it up, throw their stuff into it (or pull it out of the it), close the door and drive off. What’s not in demand are units that are located on a second floor or higher, or that you can only reach on foot. Nobody wants to have to take an elevator to their unit, or walk down a hallway with their stuff in tow. There never really was a demand for these type of facilities – it was more a fabrication by self-storage developers trying to rationalize building facilities on more expensive land, which required a greater number of units on that “footprint”.
Just as multi-story facilities have proven to be a flop, so have “climate controlled” units. It appears that the items that most Americans store are not valuable enough to require heating and air-conditioning. If you go to most facilities today, you will find the bulk of the “climate controlled” space vacant. At the worst end of this spectrum are the California invention of “wine storage” units. I was in a facility recently that had only 20% occupancy in “wine storage”. The cheap wine refrigerator available at Costo and other retailers has replaced this concept for most people. And don’t forget that “climate controlled” areas are extremely expensive to operate.
The Right Kind of Location
It is extremely important in self-storage to have excellent street frontage and visibility. The most successful self-storage facilities in the U.S. all share this common trait. This is because many Americans rent space in facilities that they drive by all the time and have awareness of – kind of a “point of purchase” decision. When you have a self-storage facility with poor visibility and an out-of-the-way location, there is no way that anyone will “think” to rent from you, or even find you if they wanted to.
Don’t forget that self-storage is extremely competitive in most markets. Given this fact, it is important that your facility have the correct basic gifts to compete. We all enjoy the stories of underdogs who go on to victory – like the one-handed baseball player – but it is far easier to win when you don’t have a disadvantage from day one.
The Right Kind of Market
Self-storage requires a high density of potential customers. Not everyone needs it, and there are competitors who are also asking for their business. There is a general rule that there should be a population of at least 50,000 people within a three mile radius of the facility. While this is only a guideline, the key thought is that you need a heavy population density for a facility to be successful.
As important as population density, is the density of self-storage space in the market. An over-built market will have low rents and excessive vacancy. The general rule of thumb is that there should not be more than 6 square feet of storage space for every person in that market. For example, a market of 100,000 people should not have more than 600,000 square feet of self-storage capacity.
Demographics are also a key part of a healthy self-storage market. Markets with household income of $50,000+ per year are best. Why? Because the more money you make, the more stuff you buy – and the more stuff you need to store!
The Right Kind of Price and Terms
An essential part of any self-storage acquisition – probably the most important of all – is the price and terms of the deal. Even the best self-storage facility will be a loser if you over-pay for it. You should never buy a self-storage facility at less than around a 10% cap rate (return on the total price). In addition, you should be able to finance the deal with around 20% down, so that your cash-on-cash return is in the mid-teens.
The best buys in self-storage facilities are from “moms & pops” – individuals who own the property free and clear and do not provide very sophisticated management. You can normally buy from these moms & pops at very attractive prices, and they can seller-finance the purchase, avoiding the entire banking application and approval cycle.
Conclusion
Making money investing in self-storage facilities is a very attainable goal. But you need to make sure that you follow some basic guidelines to ensure that your purchase will be a good one.
Monday, September 12, 2011
Investing in Mobile Homes
There are over 60,000,000 Americans with household incomes under $20,000 per year. To this giant market, a mobile home is the only form of detached housing that they will ever be able to afford. And, as a result, the demand for mobile homes has never been higher. But how can you take advantage of this opportunity?
The Basics of Affordable Housing
Before you can begin to invest in mobile homes, you must first understand your customer. For those families with household incomes under $20,000 per year using the government's own ratio of housing cost to income of 33% their housing budget is around $500 per month. At the same time, the average cost of an apartment in the U.S. in 2010 was around $1,030 per month. The point is that this market segment is extremely thankful to find something that they can afford, and is not very discriminating on the quality of the product. They are looking for basic shelter literally a roof over their head, a solid floor, running water and sewer, and heat in the winter. These customers are not expecting fine carpets, hardwood floors, upscale cabinetry. As a result, a successful investor in mobile homes will not focus on providing more than the basics. That is not to say that the home should not be clean and attractive. But the American obsession with upscale bathrooms and kitchens has no place in affordable housing.
And before you think that this customer is different than you and I, look around you. If you earn $10 per hour or less, you are in this segment. And that is a giant pool of jobs in America today. Almost everyone who works at the grocery store, McDonald's everywhere you go earns in this range. And as America's economy continues to decline, this number grows.
Why Mobile Homes Are The Answer to Affordable Housing
Mobile homes are the lowest cost form of detached housing to build. It costs less than $30 per square foot to build a mobile home, as opposed to around $100 for a stick-built home. And used homes often sell in the area of $10 to $15 per square foot. HUD has controlled the construction standards of mobile homes since the 1970s, with the goal of keeping costs at a minimum. If there's been a way to shave costs, it's been done.
The other key is the quality of life that a mobile home can provide the resident as compared to other inexpensive housing options. Unlike an apartment, the customer has nobody banging on their walls or ceiling. They have a yard. They can have a pet. Basically, mobile homes allow residents to have self-respect, and a neighborhood feel that supports a healthy lifestyle.
Why Mobile Homes Are Easy To Renovate
Mobile homes have some unusual attributes that other forms of housing do not share. One is that they have no permanent foundation. A mobile homes foundation is nothing more than a steel chassis, to which the wooden floor is attached. There are so slabs and no piers nothing expensive to settle or crack. Leveling a mobile home costs in the hundreds compared to a stick-built homes thousands. All utilities run in a common trough as opposed to the myriad of wires and pipes in a stick-built home. This makes it easy to locate and repair the water, sewer and electric pipes and lines.
One of the most unusual components of a mobile home is the fact that none of the walls are load-bearing. A mobile home is structurally similar to a shoe box the walls and roof are the only components needed to make it stand up. This gives you much more freedom in renovations, as virtually all internal walls are simply cosmetic.
An Unbelievable Amount of Demand
If the U.S. is in a recession, you would never know it if you run an ad for a mobile home for sale or rent. Even in a small market, you should receive 30 to 50 calls a week in response to your ad. At a mobile home park in Pueblo, Colorado recently, the number of calls exceeded 150 in one week. Why all the calls? Because there is a huge, unsatisfied demand for affordable housing. But that's not the whole story. The other cause of the giant demand is the poor quality of traditional apartment offerings. Have you seen an affordable housing apartment complex recently? Anyone who thinks that mobile home parks are unattractive has not visited apartments. The true crime center of most cities today are the lower-income apartment developments, with drug dealers standing out in front and prostitutes, gangs and drug addicts living inside. This is a horrible environment for any family or individual to live in, and many buyers and renters of mobile homes are fleeing from these terrible situations. In fact, most cities now view aging apartment complexes as their #1 problem- not trailer parks.
Healthy Numbers
Mobile homes are an attractive investment due to very attractive numbers. Essentially, it is easy to sell a mobile home for much more than you paid for it. A mobile home that you buy and renovate for $8,000 can be sold for $15,000 and a home that costs $12,000 can be sold for $30,000. You can buy them relatively cheaply because most people do not want to invest in this asset type. At the same time, there is a huge supply/demand gap, so you can price them high without much competition. The important fundamental and the one that needs to be your guide in every decision you make is to stick with the business model of affordable housing. You have to construct the monthly payment , including mobile home park lot rent, to not exceed around $500 per month. This is what the customer can afford. If you place the consumer in a position of having a bigger monthly obligation than they can afford as was just demonstrated in the sub-prime mortgage meltdown you will end up in endless defaults. This serves no one, as you are constantly having to clean and re-sell the home and your customers are denied the affordable housing, and long term benefit, that they are searching for.
Gaining Knowledge In This Niche
There are two websites that contain a large amount of information on this investment sector. One is www.Mobilehomeparkstore.com and the other is www.MHBay.com which together make up the largest portfolio of websites for the industry. There is also a new site that contains a vast assortment of articles and tips on investing in mobile homes at www.Mobilehomer.com .
Conclusion
Affordable housing is going to be one of the key investment sectors in real estate in the coming years. Get in now, on the ground floor. You can obtain spectacular returns and -- equally important -- provide nice housing to hard-working Americans who need it badly. This is a giant market, and one that you will be hearing a lot more about in the future.
The Basics of Affordable Housing
Before you can begin to invest in mobile homes, you must first understand your customer. For those families with household incomes under $20,000 per year using the government's own ratio of housing cost to income of 33% their housing budget is around $500 per month. At the same time, the average cost of an apartment in the U.S. in 2010 was around $1,030 per month. The point is that this market segment is extremely thankful to find something that they can afford, and is not very discriminating on the quality of the product. They are looking for basic shelter literally a roof over their head, a solid floor, running water and sewer, and heat in the winter. These customers are not expecting fine carpets, hardwood floors, upscale cabinetry. As a result, a successful investor in mobile homes will not focus on providing more than the basics. That is not to say that the home should not be clean and attractive. But the American obsession with upscale bathrooms and kitchens has no place in affordable housing.
And before you think that this customer is different than you and I, look around you. If you earn $10 per hour or less, you are in this segment. And that is a giant pool of jobs in America today. Almost everyone who works at the grocery store, McDonald's everywhere you go earns in this range. And as America's economy continues to decline, this number grows.
Why Mobile Homes Are The Answer to Affordable Housing
Mobile homes are the lowest cost form of detached housing to build. It costs less than $30 per square foot to build a mobile home, as opposed to around $100 for a stick-built home. And used homes often sell in the area of $10 to $15 per square foot. HUD has controlled the construction standards of mobile homes since the 1970s, with the goal of keeping costs at a minimum. If there's been a way to shave costs, it's been done.
The other key is the quality of life that a mobile home can provide the resident as compared to other inexpensive housing options. Unlike an apartment, the customer has nobody banging on their walls or ceiling. They have a yard. They can have a pet. Basically, mobile homes allow residents to have self-respect, and a neighborhood feel that supports a healthy lifestyle.
Why Mobile Homes Are Easy To Renovate
Mobile homes have some unusual attributes that other forms of housing do not share. One is that they have no permanent foundation. A mobile homes foundation is nothing more than a steel chassis, to which the wooden floor is attached. There are so slabs and no piers nothing expensive to settle or crack. Leveling a mobile home costs in the hundreds compared to a stick-built homes thousands. All utilities run in a common trough as opposed to the myriad of wires and pipes in a stick-built home. This makes it easy to locate and repair the water, sewer and electric pipes and lines.
One of the most unusual components of a mobile home is the fact that none of the walls are load-bearing. A mobile home is structurally similar to a shoe box the walls and roof are the only components needed to make it stand up. This gives you much more freedom in renovations, as virtually all internal walls are simply cosmetic.
An Unbelievable Amount of Demand
If the U.S. is in a recession, you would never know it if you run an ad for a mobile home for sale or rent. Even in a small market, you should receive 30 to 50 calls a week in response to your ad. At a mobile home park in Pueblo, Colorado recently, the number of calls exceeded 150 in one week. Why all the calls? Because there is a huge, unsatisfied demand for affordable housing. But that's not the whole story. The other cause of the giant demand is the poor quality of traditional apartment offerings. Have you seen an affordable housing apartment complex recently? Anyone who thinks that mobile home parks are unattractive has not visited apartments. The true crime center of most cities today are the lower-income apartment developments, with drug dealers standing out in front and prostitutes, gangs and drug addicts living inside. This is a horrible environment for any family or individual to live in, and many buyers and renters of mobile homes are fleeing from these terrible situations. In fact, most cities now view aging apartment complexes as their #1 problem- not trailer parks.
Healthy Numbers
Mobile homes are an attractive investment due to very attractive numbers. Essentially, it is easy to sell a mobile home for much more than you paid for it. A mobile home that you buy and renovate for $8,000 can be sold for $15,000 and a home that costs $12,000 can be sold for $30,000. You can buy them relatively cheaply because most people do not want to invest in this asset type. At the same time, there is a huge supply/demand gap, so you can price them high without much competition. The important fundamental and the one that needs to be your guide in every decision you make is to stick with the business model of affordable housing. You have to construct the monthly payment , including mobile home park lot rent, to not exceed around $500 per month. This is what the customer can afford. If you place the consumer in a position of having a bigger monthly obligation than they can afford as was just demonstrated in the sub-prime mortgage meltdown you will end up in endless defaults. This serves no one, as you are constantly having to clean and re-sell the home and your customers are denied the affordable housing, and long term benefit, that they are searching for.
Gaining Knowledge In This Niche
There are two websites that contain a large amount of information on this investment sector. One is www.Mobilehomeparkstore.com and the other is www.MHBay.com which together make up the largest portfolio of websites for the industry. There is also a new site that contains a vast assortment of articles and tips on investing in mobile homes at www.Mobilehomer.com .
Conclusion
Affordable housing is going to be one of the key investment sectors in real estate in the coming years. Get in now, on the ground floor. You can obtain spectacular returns and -- equally important -- provide nice housing to hard-working Americans who need it badly. This is a giant market, and one that you will be hearing a lot more about in the future.
Tuesday, August 23, 2011
How to Handle the Impossible Tenant
Which Type Are They?
For the sake of simplicity, I’m going to divide problem tenants into two groups: 1) behavioral and 2) verbal. “Behavioral” problem tenants take actions that jeopardize the welfare and aesthetics of the community. “Verbal” problem tenants do their damage by harassment of the park management.
Both types are not conducive to a well-managed, profitable park, and must be immediately disarmed and/or removed from the property. However, in many cases, the proper steps can cure their issues and make them a normal, paying tenant again.
“Behavioral” Problems
The first type of behavioral problem is the tenant who engages in criminal activity. The most common of these is manufacturing/dealing in drugs. Signs of this type of behavior include a constant stream of cars dropping by the house – normally at night – for very short intervals, as well as people milling around in the street at night, in the vicinity of the mobile home.
The important step here is to do nothing yourself, but to only take action through the local police department. You should never get directly involved with this type of tenant, due to risks of physical harm to you and potential liability. Call the police department and tell them what you have been observing. If there really is something to what you suspect, the police will take care of it.
But if the police fail to take action, then your next step is to non-renew the tenant’s lease. Assuming that the tenant is on a month-to-month agreement, you can simply not renew, and they have to move out at the end of the next full month. Even then, it is smart to have a local attorney file this notice and to handle any subsequent legal action to evict them.
The Tenant Who Won’t Keep Their Property Up
Equally disruptive – but not as scary – is the tenant who refuses to keep their property in an acceptable condition. Debris everywhere in the yard, a house with a paint job that you can hardly tell what the original color was, or grass that is 3’ tall. It is impossible to ask the rest of the park community to keep up their property when you allow this individual to get away with murder. So what do you do?
The first step is to notify the tenant in writing that they are not in keeping with the park rules. This assumes that your park has rules; if not, you need to adopt some immediately. It is essential to keep everything in writing so that you have a legal paper trail in case you should have to go to court for any reason.
Give the tenant a detailed request of what needs to be done to be in compliance with park rules, as well as a timetable to complete the work. Of course, they will rarely meet this deadline, but it’s the critical first step to show the court that you are trying to be reasonable.
Once the deadline has passed – and the clean-up has not been completed (or probably even started) – then you have two choices: 1) non-renew the tenant’s lease or 2) take matters into your own hands. To take matters into your own hands, I’m suggesting that you clean up their yard, mow the grass, or re-paint their house at your own expense. You can then either bill the cost back to the tenant, or just write it off. How do you choose what to do? The key is the tenant. If your tenant is old and infirmed, then they simply do not have the ability or funds to make the needed repairs. If they have paid their rent like clockwork for the past several years, why cut off that income stream by evicting a good-paying tenant? If, however, the tenant is young and able to do the work themselves – but too lazy to do it – then you might want to bill it back to the tenant to send a clear message that breaking of the rules is not tolerated. You might break the charges up into several monthly installments to make it more affordable. But you cannot let people continue to ruin the park for everyone.
The Verbal Problem Tenant
These are the tenants who complain continuously about anything and everything. They don’t necessarily disturb the other tenants – their aggression is focused on the park management. I have had these type of tenants who will call at 11 PM and then again at 6 AM; they have virtually no boundaries.
These are much easier to dispatch than the behavioral problem tenants. You simply have to turn the tables on them. Here’s how.
When the tenant calls to complain, tell them “you are clearly unhappy living here, you really should move to a mobile home park where you would be happier.” This throws the tenant off immediately, as they think that their power over you is that you don’t want to lose them. When you let them know that you don’t care about their rent anymore, they are now in a position of weakness. In addition, it costs around $3,000 to move and set a mobile home. So for them to move, they will need to come up with $3,000 cash. Who’s in a position of weakness now?
Conclusion
Problem tenants can be solved. Don’t let a tenant ruin your day. Take action and turn the tables on them. It’s good for you, and it’s good for the community
For the sake of simplicity, I’m going to divide problem tenants into two groups: 1) behavioral and 2) verbal. “Behavioral” problem tenants take actions that jeopardize the welfare and aesthetics of the community. “Verbal” problem tenants do their damage by harassment of the park management.
Both types are not conducive to a well-managed, profitable park, and must be immediately disarmed and/or removed from the property. However, in many cases, the proper steps can cure their issues and make them a normal, paying tenant again.
“Behavioral” Problems
The first type of behavioral problem is the tenant who engages in criminal activity. The most common of these is manufacturing/dealing in drugs. Signs of this type of behavior include a constant stream of cars dropping by the house – normally at night – for very short intervals, as well as people milling around in the street at night, in the vicinity of the mobile home.
The important step here is to do nothing yourself, but to only take action through the local police department. You should never get directly involved with this type of tenant, due to risks of physical harm to you and potential liability. Call the police department and tell them what you have been observing. If there really is something to what you suspect, the police will take care of it.
But if the police fail to take action, then your next step is to non-renew the tenant’s lease. Assuming that the tenant is on a month-to-month agreement, you can simply not renew, and they have to move out at the end of the next full month. Even then, it is smart to have a local attorney file this notice and to handle any subsequent legal action to evict them.
The Tenant Who Won’t Keep Their Property Up
Equally disruptive – but not as scary – is the tenant who refuses to keep their property in an acceptable condition. Debris everywhere in the yard, a house with a paint job that you can hardly tell what the original color was, or grass that is 3’ tall. It is impossible to ask the rest of the park community to keep up their property when you allow this individual to get away with murder. So what do you do?
The first step is to notify the tenant in writing that they are not in keeping with the park rules. This assumes that your park has rules; if not, you need to adopt some immediately. It is essential to keep everything in writing so that you have a legal paper trail in case you should have to go to court for any reason.
Give the tenant a detailed request of what needs to be done to be in compliance with park rules, as well as a timetable to complete the work. Of course, they will rarely meet this deadline, but it’s the critical first step to show the court that you are trying to be reasonable.
Once the deadline has passed – and the clean-up has not been completed (or probably even started) – then you have two choices: 1) non-renew the tenant’s lease or 2) take matters into your own hands. To take matters into your own hands, I’m suggesting that you clean up their yard, mow the grass, or re-paint their house at your own expense. You can then either bill the cost back to the tenant, or just write it off. How do you choose what to do? The key is the tenant. If your tenant is old and infirmed, then they simply do not have the ability or funds to make the needed repairs. If they have paid their rent like clockwork for the past several years, why cut off that income stream by evicting a good-paying tenant? If, however, the tenant is young and able to do the work themselves – but too lazy to do it – then you might want to bill it back to the tenant to send a clear message that breaking of the rules is not tolerated. You might break the charges up into several monthly installments to make it more affordable. But you cannot let people continue to ruin the park for everyone.
The Verbal Problem Tenant
These are the tenants who complain continuously about anything and everything. They don’t necessarily disturb the other tenants – their aggression is focused on the park management. I have had these type of tenants who will call at 11 PM and then again at 6 AM; they have virtually no boundaries.
These are much easier to dispatch than the behavioral problem tenants. You simply have to turn the tables on them. Here’s how.
When the tenant calls to complain, tell them “you are clearly unhappy living here, you really should move to a mobile home park where you would be happier.” This throws the tenant off immediately, as they think that their power over you is that you don’t want to lose them. When you let them know that you don’t care about their rent anymore, they are now in a position of weakness. In addition, it costs around $3,000 to move and set a mobile home. So for them to move, they will need to come up with $3,000 cash. Who’s in a position of weakness now?
Conclusion
Problem tenants can be solved. Don’t let a tenant ruin your day. Take action and turn the tables on them. It’s good for you, and it’s good for the community
Monday, August 15, 2011
15 Ways to Increase RV Usability
It’s that time of year when families who own recreational vehicles (RV’s) and camping equipment begin to book their camping trips for the summer. Holiday camping has to be done well in advance. Before the snow has melted in most parts of the USA, families are dreaming of lakes and fishing, hiking, fairs, camping on the beach and nights by the fire, staring at the stars in the night time sky.
The Internet has made searching for and contacting campgrounds easy, with some campgrounds even experimenting with online booking. The Internet experience for web site users wanting to book a campground is similar to booking hotel rooms. Prospective guests are excited and hoping for a pleasant stay. Any information a web site offers to help them make choices and imagine themselves snuggled in sleeping bags increases the likelihood that they’ll call.
Thoughtful Design Pays Off
Online booking applications should work flawlessly. Poorly functioning site search or booking systems lead to web site abandonment. Photos should accurately portray the size of living space and what comes with it. In the case of a campground, that includes pull-through spots, fire pit and picnic table. Guests want to know what the camp store and swimming pool look like and whether or not they’re well maintained and staffed.
Many camp grounds are family run and privately owned. A budget for their web site may not exist. Some campground web sites are little more than print brochures adapted to the web with little understanding that a web site requires a new approach because it’s used differently. Try to invest in someone with experience in web design and travel oriented web sites.
The network of KOA (Kampgrounds of America) campgrounds use the same yellow and black color scheme and share resources such as maps, directories and booking applications. The similarity between KOA camping sites is helpful for KOA members who only book with these campgrounds because they get a discount.
Sadly, some of the worst web sites in the travel industry come from campgrounds. This includes state parks that have camping facilities. However, there are exceptions. Some campground businesses invest heavily in photos of their grounds and some offer videos of events they hold or on-site attractions.
Usability can’t be underestimated for campground web sites because their demographics are quite wide in scope. For example, there are retirees who travel from campground to campground. Some of them have cognitive (memory) issues with varying degrees of severity. Complicated navigation is aggravating when the navigation moves around from page to page or suddenly disappears altogether. Their hands may not be as steady, making some drop down navigation menus difficult for them to use. Eye sight problems for them include requiring reading glasses. If your web page font sizes can’t be increased in their browser, they will be frustrated. If they can increase the font size and your layout changes as a result, they may not be able to use the site.
Will these retired folks be using the Internet? You bet! Many of them stay in touch with their families and grand kids via email and cell phones and use the latest GPS gadgets, Google maps and the latest gizmos in their big rigs such as automatic levelers.
Families who book campgrounds will have interests that may surprise you. Their kids have iPods and video games. Some family members will want to bring their laptop. Most will have cell phones. If you’ve ever looked inside a family motor home of a tech bunch, it’s a mass of dangling cell phone chargers and cables. Campgrounds that offer wireless access, TV cable hookup and electric may want to promote this information on their homepage as a value proposition right away rather than tucking it inside an “Amenities” page.
Campgrounds that put their tent people away from noisier motor home guests may wish to note this on their web site.
To make your campground web site user friendly, try adding the following:
1. Make sure your site shows the area site map, with all the buildings, roads, camp sites, showers, etc. Offer a choice in how to access it online by letting visitors download it as a PDF or printing an image or sketch.
2. For campers who can not see, can’t download PDF’s or have images turned off because they’re on dialup, an audio description of the grounds would be helpful.
3. Be consistent with your colors, page layout and navigation.
4. Put your phone number at the top and bottom of every page and make it large enough to find quickly.
5. Watch your contrasts. Many camping sites have colored backgrounds with colored text, which make them hard to read. Text that’s all in boldface is difficult to read online.
6. Keep your copyright year up to date. Otherwise it may appear as though you’re no longer in business.
7. Communicate anything and everything that’s customer service oriented. Sometimes what you offer is the difference between someone booking your campground or the one nearby.
8. Make it easy for out of towners to make arrangements by posting links and/or phone numbers to car rental offices, vets, pet boarding facilities, beach tourist information such as beach passes, discount retail shops, camping supply stores, service stations that can handle RV’s (must have lifts for them), organic food and health centers.
9. Put testimonials on your camping site from previous guests.
10. Describe a typical day at your campground. This gives site visitors an idea of the environment, which helps them make educated choices.
11. Place all “call to action” prompts in highly visible spots like above the page fold and make them stand out. For example, a button for “Book Here” or “Reserve Now” and underlined embedded links within text that reads, “Stop by our calendar of events.” Avoid animation and blinking text.
12. Promote extra touches like your dog walk area, handicapped accessible camp store, locally made gifts, bait and tackle shop and dumping station on the premises.
13. Offer a way to stay in touch such as an email list or newsletter for regulars. Include coupons for return visitors to use, such as one free child admission or free pile of wood.
14. Place any sales or limited specials on the homepage. While your rates will likely not change much, there may be incentives to offer such as lower gas prices in the area, biodiesel, merchandise specials from the camp store, and fireworks for sale.
15. Display photos of staff and owners, a welcome message from the owners and office hours for reservations. Make sure emergency contact numbers are easy to find for guests who may run into trouble on their way there and need to alert you of any delays in their arrival time.
A user friendly, descriptive, customer experience oriented, persuasive web site will increase camping reservations. They’re a tool that many potential guests rely on, but they may not answer every possible question someone may have.
Once I booked a trip for my family looking for a peaceful weekend getaway and I chose a new campground based on their web site and its ease of use. However, we later learned that this particular campground has speakers set up all around the camping area and the owners made very loud announcements every few hours, starting at 8am in the morning. One day everyone in the campground was scolded for not putting their trash out properly.
There are some things even a web site can’t help us with.
The Internet has made searching for and contacting campgrounds easy, with some campgrounds even experimenting with online booking. The Internet experience for web site users wanting to book a campground is similar to booking hotel rooms. Prospective guests are excited and hoping for a pleasant stay. Any information a web site offers to help them make choices and imagine themselves snuggled in sleeping bags increases the likelihood that they’ll call.
Thoughtful Design Pays Off
Online booking applications should work flawlessly. Poorly functioning site search or booking systems lead to web site abandonment. Photos should accurately portray the size of living space and what comes with it. In the case of a campground, that includes pull-through spots, fire pit and picnic table. Guests want to know what the camp store and swimming pool look like and whether or not they’re well maintained and staffed.
Many camp grounds are family run and privately owned. A budget for their web site may not exist. Some campground web sites are little more than print brochures adapted to the web with little understanding that a web site requires a new approach because it’s used differently. Try to invest in someone with experience in web design and travel oriented web sites.
The network of KOA (Kampgrounds of America) campgrounds use the same yellow and black color scheme and share resources such as maps, directories and booking applications. The similarity between KOA camping sites is helpful for KOA members who only book with these campgrounds because they get a discount.
Sadly, some of the worst web sites in the travel industry come from campgrounds. This includes state parks that have camping facilities. However, there are exceptions. Some campground businesses invest heavily in photos of their grounds and some offer videos of events they hold or on-site attractions.
Usability can’t be underestimated for campground web sites because their demographics are quite wide in scope. For example, there are retirees who travel from campground to campground. Some of them have cognitive (memory) issues with varying degrees of severity. Complicated navigation is aggravating when the navigation moves around from page to page or suddenly disappears altogether. Their hands may not be as steady, making some drop down navigation menus difficult for them to use. Eye sight problems for them include requiring reading glasses. If your web page font sizes can’t be increased in their browser, they will be frustrated. If they can increase the font size and your layout changes as a result, they may not be able to use the site.
Will these retired folks be using the Internet? You bet! Many of them stay in touch with their families and grand kids via email and cell phones and use the latest GPS gadgets, Google maps and the latest gizmos in their big rigs such as automatic levelers.
Families who book campgrounds will have interests that may surprise you. Their kids have iPods and video games. Some family members will want to bring their laptop. Most will have cell phones. If you’ve ever looked inside a family motor home of a tech bunch, it’s a mass of dangling cell phone chargers and cables. Campgrounds that offer wireless access, TV cable hookup and electric may want to promote this information on their homepage as a value proposition right away rather than tucking it inside an “Amenities” page.
Campgrounds that put their tent people away from noisier motor home guests may wish to note this on their web site.
To make your campground web site user friendly, try adding the following:
1. Make sure your site shows the area site map, with all the buildings, roads, camp sites, showers, etc. Offer a choice in how to access it online by letting visitors download it as a PDF or printing an image or sketch.
2. For campers who can not see, can’t download PDF’s or have images turned off because they’re on dialup, an audio description of the grounds would be helpful.
3. Be consistent with your colors, page layout and navigation.
4. Put your phone number at the top and bottom of every page and make it large enough to find quickly.
5. Watch your contrasts. Many camping sites have colored backgrounds with colored text, which make them hard to read. Text that’s all in boldface is difficult to read online.
6. Keep your copyright year up to date. Otherwise it may appear as though you’re no longer in business.
7. Communicate anything and everything that’s customer service oriented. Sometimes what you offer is the difference between someone booking your campground or the one nearby.
8. Make it easy for out of towners to make arrangements by posting links and/or phone numbers to car rental offices, vets, pet boarding facilities, beach tourist information such as beach passes, discount retail shops, camping supply stores, service stations that can handle RV’s (must have lifts for them), organic food and health centers.
9. Put testimonials on your camping site from previous guests.
10. Describe a typical day at your campground. This gives site visitors an idea of the environment, which helps them make educated choices.
11. Place all “call to action” prompts in highly visible spots like above the page fold and make them stand out. For example, a button for “Book Here” or “Reserve Now” and underlined embedded links within text that reads, “Stop by our calendar of events.” Avoid animation and blinking text.
12. Promote extra touches like your dog walk area, handicapped accessible camp store, locally made gifts, bait and tackle shop and dumping station on the premises.
13. Offer a way to stay in touch such as an email list or newsletter for regulars. Include coupons for return visitors to use, such as one free child admission or free pile of wood.
14. Place any sales or limited specials on the homepage. While your rates will likely not change much, there may be incentives to offer such as lower gas prices in the area, biodiesel, merchandise specials from the camp store, and fireworks for sale.
15. Display photos of staff and owners, a welcome message from the owners and office hours for reservations. Make sure emergency contact numbers are easy to find for guests who may run into trouble on their way there and need to alert you of any delays in their arrival time.
A user friendly, descriptive, customer experience oriented, persuasive web site will increase camping reservations. They’re a tool that many potential guests rely on, but they may not answer every possible question someone may have.
Once I booked a trip for my family looking for a peaceful weekend getaway and I chose a new campground based on their web site and its ease of use. However, we later learned that this particular campground has speakers set up all around the camping area and the owners made very loud announcements every few hours, starting at 8am in the morning. One day everyone in the campground was scolded for not putting their trash out properly.
There are some things even a web site can’t help us with.
Wednesday, August 3, 2011
Equity Lifestyle Fires Starting Gun for the Next Round of Acquisitions
The biggest news story in the manufactured home community business came on May 31, 2011 – so mark that date in your calendar for some type of anniversary celebration. That’s the date that Equity Lifestyle Properties announced that it was buying 76 communities from Hometown America for a staggering $1.4 billion price tag.
So why’s this such a big news story? For a bunch of reasons.
Sam Zell is no idiot.
Sam Zell did not make the Forbes 400 list by making bad purchases. In fact, his reputation at making smart buys is legendary. And he is very good at market timing. He got his start buying apartments in down cycles and riding them to the top. For him to make such a bold move signals that he believes that the market for manufactured home communities has hit bottom and is about to rise. Based on his reputation, most investors would not want to bet against him.
The size of the gamble.
Equity Lifestyle is a large, publicly traded company. Sure, they can take small gambles on all types of things. But $1.4 billion is not a small gamble. I bet a dollar on the slots at the airport coming back from the MHI convention (and I won $1.50), but I wouldn’t have bet $1,000 in a million years. So for someone of Zell’s ability to bet that type of money, you have to assume that he feels really, really good about his bet.
Supporting evidence is coming from all types of sources.
I received an email this morning that describes upward pressures on apartment rents. Why? Because people are losing their homes in droves, and the job market is lousy. But I thought that one item in the letter was particularly interesting: “19 years of continually more aggressive government intervention toward home ownership is about to reverse itself”. I think that’s maybe the most important point of all. The government is showing signs that they are going to abandon taking a proactive stance to help Americans obtain and retain mortgages on homes. That alone will sink home ownership and force families into more affordable alternatives.
And manufactured home communities stand to gain as much in this regard as apartment owners.
Our economy is 100% lousy, and Americans need more affordable housing.
The average two bedroom apartment rent in the U.S. is now over $1,000 per month. Yet around 20% of the U.S. population has a household budget under $20,000 per year. The growing sweet spot in U.S. housing is for options in the $500 to $700 per month range. And that’s exactly what manufactured home communities deliver. You can’t get any type of detached housing for anywhere near the low cost of manufactured housing – and that is never going to change.
Think that our job market and wages are going to improve? Then you must not read the papers – or the forecasts by most economists. I like their tacos, but a job at Jack-In-The-Box is not a high paying career, yet how many folks with decent jobs are having to fall back to that type of work?
Conduit debt for manufactured home communities is returning rapidly.
A vital component to a return to lofty real estate values is the availability of institutional debt. And that is making an appearance through good old fashioned conduit financing. Indeed, I attended a dinner in which a conduit lender announced that they would be doing around $100 million in conduit debt in 2011. This is a big part of the picture, and has been quietly coming on stage over the last six months.
Zell would not have made his bet without knowing that the financing market was also returning.
The biggest factor of all – INFLATION.
If you read a lot of economic reports (don’t forget that I was an economics major in college), you’ll see that just about everyone is on board with the projection of growing U.S. inflation. And what’s the most successful hedge against inflation historically? You’re right, it’s real estate. If inflation comes back with a vengeance, like most people are projecting, just owning real estate will appear a genius stroke. And when everyone figures out about the inflation problem – and the articles in the news are everywhere – the value of all real estate will rise as a hedge against the declining dollar.
There is no doubt in my mind that Zell reads these same publications.
So what can you do to take advantage of this situation?
If you already own a manufactured home community, then just smile because you won. If you don’t have one, then buy one before everyone else figures it out (but don’t make a stupid buy in your haste to do so).
I’m not much of a gambler, but I feel strongly enough about Zell’s bet that I’ve been matching it. I bought 3,000 lots over the past year. And so have a lot of other investors. Everyone’s been buying quietly. But now that Zell has fired the starting gun, we can all come out of hiding and reveal what we’ve really been up to for the past year or two, and start jogging along behind him. And I’m sure that on May 31st of each year I’ll make a toast to the great manufactured home community gold rush.
Q
So why’s this such a big news story? For a bunch of reasons.
Sam Zell is no idiot.
Sam Zell did not make the Forbes 400 list by making bad purchases. In fact, his reputation at making smart buys is legendary. And he is very good at market timing. He got his start buying apartments in down cycles and riding them to the top. For him to make such a bold move signals that he believes that the market for manufactured home communities has hit bottom and is about to rise. Based on his reputation, most investors would not want to bet against him.
The size of the gamble.
Equity Lifestyle is a large, publicly traded company. Sure, they can take small gambles on all types of things. But $1.4 billion is not a small gamble. I bet a dollar on the slots at the airport coming back from the MHI convention (and I won $1.50), but I wouldn’t have bet $1,000 in a million years. So for someone of Zell’s ability to bet that type of money, you have to assume that he feels really, really good about his bet.
Supporting evidence is coming from all types of sources.
I received an email this morning that describes upward pressures on apartment rents. Why? Because people are losing their homes in droves, and the job market is lousy. But I thought that one item in the letter was particularly interesting: “19 years of continually more aggressive government intervention toward home ownership is about to reverse itself”. I think that’s maybe the most important point of all. The government is showing signs that they are going to abandon taking a proactive stance to help Americans obtain and retain mortgages on homes. That alone will sink home ownership and force families into more affordable alternatives.
And manufactured home communities stand to gain as much in this regard as apartment owners.
Our economy is 100% lousy, and Americans need more affordable housing.
The average two bedroom apartment rent in the U.S. is now over $1,000 per month. Yet around 20% of the U.S. population has a household budget under $20,000 per year. The growing sweet spot in U.S. housing is for options in the $500 to $700 per month range. And that’s exactly what manufactured home communities deliver. You can’t get any type of detached housing for anywhere near the low cost of manufactured housing – and that is never going to change.
Think that our job market and wages are going to improve? Then you must not read the papers – or the forecasts by most economists. I like their tacos, but a job at Jack-In-The-Box is not a high paying career, yet how many folks with decent jobs are having to fall back to that type of work?
Conduit debt for manufactured home communities is returning rapidly.
A vital component to a return to lofty real estate values is the availability of institutional debt. And that is making an appearance through good old fashioned conduit financing. Indeed, I attended a dinner in which a conduit lender announced that they would be doing around $100 million in conduit debt in 2011. This is a big part of the picture, and has been quietly coming on stage over the last six months.
Zell would not have made his bet without knowing that the financing market was also returning.
The biggest factor of all – INFLATION.
If you read a lot of economic reports (don’t forget that I was an economics major in college), you’ll see that just about everyone is on board with the projection of growing U.S. inflation. And what’s the most successful hedge against inflation historically? You’re right, it’s real estate. If inflation comes back with a vengeance, like most people are projecting, just owning real estate will appear a genius stroke. And when everyone figures out about the inflation problem – and the articles in the news are everywhere – the value of all real estate will rise as a hedge against the declining dollar.
There is no doubt in my mind that Zell reads these same publications.
So what can you do to take advantage of this situation?
If you already own a manufactured home community, then just smile because you won. If you don’t have one, then buy one before everyone else figures it out (but don’t make a stupid buy in your haste to do so).
I’m not much of a gambler, but I feel strongly enough about Zell’s bet that I’ve been matching it. I bought 3,000 lots over the past year. And so have a lot of other investors. Everyone’s been buying quietly. But now that Zell has fired the starting gun, we can all come out of hiding and reveal what we’ve really been up to for the past year or two, and start jogging along behind him. And I’m sure that on May 31st of each year I’ll make a toast to the great manufactured home community gold rush.
Q
Friday, July 29, 2011
Budget Your Vacation
Sure, a vacation sounds good to you! A free or low-cost vacation sounds even better. But there are a few important points to remember when choosing vacation packages. If you don't think economically, and even cautiously, then your next vacation could actually turn out to be an extravagant bill you can't afford. Consider a four important points.
1.All Inclusive Trip?
You probably know of game shows where the contestant wins an all-inclusive trip to some place exotic. That's the key word to look for: all-inclusive. This usually means that the flight, the hotel stay and entertainment, and sometimes even the rental car are all included in one hopefully low bill. If your vacation does not say all-inclusive then you may be paying only for the flight or the hotel stay. Low-cost tickets to Disney land may sound like a good deal, but can you afford to fly the whole family, stay at a high priced hotel and get around town in a rental car?
2.Comparing the Costs
Some cautious vacationers have done the math on their own – and found some savings to boot. An all inclusive-vacation is convenient and sometimes can offer you a lower price in one combined subtotal. However, if you can find voucher coupons and don't mind investing some hours of research, you may be able to put together a vacation yourself with a subtotal that still beats the all-inclusive plan.
3.Will You Enjoy It?
This is particularly important for honeymoon vacations and family vacations. Older adults and young children tire easily, so plan a trip that your entire traveling party will enjoy. If you plan a trip just for the kids, it will be a long and expensive vacation for the adults. You may plan a trip that sounds fun to you, but what will your children do in the meantime? Will your honeymoon vacation take into consideration both the bride and groom's interest? Or will the two of you be so busy enjoying “room service” that you don't even get to see all of the popular sightseeing spots? One way to maximize the fun is to make a list of what your entire traveling party wants to do on the vacation and plan a trip accordingly. Sometimes a vacation that is actually enjoyable, and doesn't cause any frustration or disappointment, ends up being the most convenient.
4.Can You Afford The Full Vacation?
While some all-inclusive vacations take care of your every need, others merely will pay for the hotel stay and airfare. That means you still have to pay for food, entertainment and other vacation supplies. Can you afford to eat out every night? Does the hotel charge extra for food and beverages? If you cannot afford all of the vacation, then you may want to buy regular grocery supplies ahead of time and limit your outgoing dining to maybe once a day, or only a few times a week.
Ask yourself if you can indeed afford your vacation. If you're on a tight budget, then start planning well ahead of time.
Article By Adam O’Connor, www.RVTravelPro.com
1.All Inclusive Trip?
You probably know of game shows where the contestant wins an all-inclusive trip to some place exotic. That's the key word to look for: all-inclusive. This usually means that the flight, the hotel stay and entertainment, and sometimes even the rental car are all included in one hopefully low bill. If your vacation does not say all-inclusive then you may be paying only for the flight or the hotel stay. Low-cost tickets to Disney land may sound like a good deal, but can you afford to fly the whole family, stay at a high priced hotel and get around town in a rental car?
2.Comparing the Costs
Some cautious vacationers have done the math on their own – and found some savings to boot. An all inclusive-vacation is convenient and sometimes can offer you a lower price in one combined subtotal. However, if you can find voucher coupons and don't mind investing some hours of research, you may be able to put together a vacation yourself with a subtotal that still beats the all-inclusive plan.
3.Will You Enjoy It?
This is particularly important for honeymoon vacations and family vacations. Older adults and young children tire easily, so plan a trip that your entire traveling party will enjoy. If you plan a trip just for the kids, it will be a long and expensive vacation for the adults. You may plan a trip that sounds fun to you, but what will your children do in the meantime? Will your honeymoon vacation take into consideration both the bride and groom's interest? Or will the two of you be so busy enjoying “room service” that you don't even get to see all of the popular sightseeing spots? One way to maximize the fun is to make a list of what your entire traveling party wants to do on the vacation and plan a trip accordingly. Sometimes a vacation that is actually enjoyable, and doesn't cause any frustration or disappointment, ends up being the most convenient.
4.Can You Afford The Full Vacation?
While some all-inclusive vacations take care of your every need, others merely will pay for the hotel stay and airfare. That means you still have to pay for food, entertainment and other vacation supplies. Can you afford to eat out every night? Does the hotel charge extra for food and beverages? If you cannot afford all of the vacation, then you may want to buy regular grocery supplies ahead of time and limit your outgoing dining to maybe once a day, or only a few times a week.
Ask yourself if you can indeed afford your vacation. If you're on a tight budget, then start planning well ahead of time.
Article By Adam O’Connor, www.RVTravelPro.com
Tuesday, July 19, 2011
Flag that Sign!
“Flagging a sign” is an imperfect art that allows you to get a read on the height of your proposed billboard visually from the street. It is normally done one of two ways”
By Crane
To accomplish this, you need a tape measure (100’ fiberglass) and a red towel. You also need a 75’ or so skyhook crane. You attach the skyhook crane ball to the tape measure, and tie a red towel around the cable just above the ball. You then lift up the crane until the ball is at the bottom of the proposed sign face. What you have done is to create a fairly accurate indication of the sign face in mid air – so that you can see if the sign is tall enough.
You now get in your car and drive by the imaginary sign from both directions several times, to study the height. You also take pictures that you can then use to stick a scales white rectangle on the show potential advertisers what the sign will look like.
By Fiberglass Surveying Pole
To do this, you need to buy a 50’ fiberglass surveyor’s extension pole at a survey equipment store. You telescope the pole vertically in sections that snap in place, about 5’ at a time. Before you begin, you tie a red rag to the top of the pole, and then extend it vertically to the bottom of the sign face.
You then have someone hold it while you drive by it several times in you car, all the while taking pictures. The pole is bound to flex, so the measurement is not nearly as accurate as the crane.
It is critical that the pole be of fiberglass construction since it might hit the power lines and you could be electrocuted if it is of a material that conducts electricity. You also need to put you foot beside te pole to reinforce it from slipping when the wind blows. Many an amateur pole holder has had a bad accident when the pole slips and, like a giant lever, hits you in a very sensitive spot with a lot of force.
Now what do you do if the sign is too low? First, see if it is legal to make tit higher. Some states allow you to exceed the legal height when it is starting from below the grade of the road. Is it possible to make it too high? Absolutely, if the sign is too high, it will be above your windshield just when it is meant to be read.
Flagging the sign also will help uncover and tree or other obstructions that you need to negotiate now before the sign is built. If the neighbor has a tree that blocks you, call them and ask if you can trim it, or pay them to trim it. You don’t want to make tat call after the sign is built. The sign is always bigger in real life and will probably make the neighbor mad. Further, once the sign is up, you have less negotiating room and the neighbor may want to blackmail you.
So remember, Flag That Sign!
For more information on billboards and more, visit www.nicheinvestmentnetwork.com!
By Crane
To accomplish this, you need a tape measure (100’ fiberglass) and a red towel. You also need a 75’ or so skyhook crane. You attach the skyhook crane ball to the tape measure, and tie a red towel around the cable just above the ball. You then lift up the crane until the ball is at the bottom of the proposed sign face. What you have done is to create a fairly accurate indication of the sign face in mid air – so that you can see if the sign is tall enough.
You now get in your car and drive by the imaginary sign from both directions several times, to study the height. You also take pictures that you can then use to stick a scales white rectangle on the show potential advertisers what the sign will look like.
By Fiberglass Surveying Pole
To do this, you need to buy a 50’ fiberglass surveyor’s extension pole at a survey equipment store. You telescope the pole vertically in sections that snap in place, about 5’ at a time. Before you begin, you tie a red rag to the top of the pole, and then extend it vertically to the bottom of the sign face.
You then have someone hold it while you drive by it several times in you car, all the while taking pictures. The pole is bound to flex, so the measurement is not nearly as accurate as the crane.
It is critical that the pole be of fiberglass construction since it might hit the power lines and you could be electrocuted if it is of a material that conducts electricity. You also need to put you foot beside te pole to reinforce it from slipping when the wind blows. Many an amateur pole holder has had a bad accident when the pole slips and, like a giant lever, hits you in a very sensitive spot with a lot of force.
Now what do you do if the sign is too low? First, see if it is legal to make tit higher. Some states allow you to exceed the legal height when it is starting from below the grade of the road. Is it possible to make it too high? Absolutely, if the sign is too high, it will be above your windshield just when it is meant to be read.
Flagging the sign also will help uncover and tree or other obstructions that you need to negotiate now before the sign is built. If the neighbor has a tree that blocks you, call them and ask if you can trim it, or pay them to trim it. You don’t want to make tat call after the sign is built. The sign is always bigger in real life and will probably make the neighbor mad. Further, once the sign is up, you have less negotiating room and the neighbor may want to blackmail you.
So remember, Flag That Sign!
For more information on billboards and more, visit www.nicheinvestmentnetwork.com!
Thursday, July 7, 2011
Secrets to Successful Ads
Secrets of Successful Ads
Throughout my life, I've seen billions of ads. Several of these ads are good, and several are bad. Since advertising is expensive, it is important for us learn how to produce successful ads so we don't waste any money on bad advertisements. This article will show you the secrets of producing successful ads.
Secret #1 - Simplicity
This is a very powerful yet most overlooked rule of design. The truth is that a clean, crisp, non-cluttered ad will outperform a clutter, hard to read ad.
The main purpose of an ad is to get people to purchase your product or service. The next objective of an ad is make
people want to learn more about your product or service.
Secret #2 - Focus on a Benefit
Benefits sell, features do not!
People want to know what's in it for them. They would rather know how your product can help them (benefits) instead of what your product can do (features.)
For example, let's say you are a real estate agent and your company has just won the best real estate award possible. I know you're proud of the award and you should be, but please don't make the award a big part of your ads. People that are buying or selling property would rather know that your agency will list their property on-line for convince and to time-savings.
Secret #3 - Appeal to your target market
Don’t try to make your ad appeal to everyone. Design your layout so it will appeal to your target market. Your ad response rate will be greater this way.
Remember each of us is in a different stages of life, and we all want different things. Once you find out what stage of life your target market is in, then you can make your ads reflect their emotional status.
Secret #4 - Emotional Appeal
Design your ads in a way that will show consumers how your product or service will make them feel. This is a very effective marketing technique because ads us subliminal messages that will make us feel a certain way about your product or service.
Kay's Jewelers ads are a good example of this technique. These ads always show happy people that exchange jewelry, hugs and kisses. When we view or hear these ads, we feel warm, loving, and happy. After seeing these ads several times, we start to associate warm, loving and happy feelings towards Kay Jewelers.
Secret #5 - Eye Catching & Unique
Ever since I was little, I was always told to "color inside of the lines" and "you have to color apples red instead of blue." When I colored things the same way every else did, my work got lost in the crowd because it looked the same as everyone else's.
In advertising the rules have changed. It's ok to be different; in fact it's great to "think outside of the box." Some of the best advertisements are so effective because they are completely different from all the other ads.
Decide what is the single most important part of your ad. Then find a way to make it stand out more than anything else. Arrange the ad so the human eye will see the most important item first, then the second most important item, and so on.
Secret #6 - Colors
According to psychology.about.com, "Psychologists have suggested that color impression can account for 60% of the acceptance or rejection of that product or service." The human eye is attracted to the colors red and yellow before any other color. Yellow backgrounds with black text is the most effective color combination.
Each color has different meanings to different cultures. For advertising purposes, it is extremely important to design your ads in a way that appeals to your target market. Try to choose colors that will compliment the message you are sending to your consumers.
Secret #7 - Copy
Use as little words as possible. Try to use words that catch attention like powerful, amazing, shocking, and revealing.
Be sure the copy you use will be legible for your audience. Use fonts that are clear, easy to read and big enough for each particular ad.
Also be sure your ads have a smooth flow. Viewers may get confused if your ads constantly jump from one topic to another.
Secret #8 - Creditability
An ad will not be effective if no one believes it. You can have the most creative, colorful, and eye-catching ad, but if people read your ad and say "Yeah, Right," than your ad will not be profitable. For example, an ad that says "Earn $100,000 a week with XYZ product" will not be as believable as an ad that says "Increase your sales by 20% with XYZ product."
Secret #9 - Problems Sell
People always want help with things and are always looking for easier ways to do things. Make your ads help them and solve a certain problem your consumers have.
Try to start your ads with a question that allows your product to be the answer. Here are a common few examples:
· "Is your cold keeping you up all night?"
· "Are you tired watching your weight?"
· "Do you want to be your own boss?"
· "Is your cellular phone bill as low as possible?"
· "Are you unhappy with your current internet service?"
Secret #10 - Call to Action
Don't forget to tell people what you want them to do after they see your ad. Don't be afraid to come right out and say "Order Now," "Call Today!" or "Visit our web-site at www.bpsoutdoor.com."
Secret #11 - Advertiser Recognition
Don't forget to put your name and / or logo on all your ads. Make sure they are big enough to be seen. There's nothing worse than seeing a great ad and wondering who the advertiser was.
Secret #12 - Tie it all together
Make sure your graphics, words, slogans, and so on make sense when used together. If your viewers have to ask what your ad has to do with your product than it won't be effective.
Secret #13 - Memorable
Successful ads make a lasting impression on everyone. Give your ads something special and unique that will help make your ads memorable.
Good examples of this are: The AFLAC duck, the "Whats up?" telephone commercials, Wendy's "Where's the beef?" from the 80's, and Verizon's "Can you hear me now?" commercials.
Secret #14 - Repetition
Your ads will look more professional if you use the same fonts and colors as often as possible.
The average person must see an ad 7 times before they remember it. Once you've found an ad that produces results, use it everywhere and as often as possible. This will brand your ad into consumers’ minds.
Throughout my life, I've seen billions of ads. Several of these ads are good, and several are bad. Since advertising is expensive, it is important for us learn how to produce successful ads so we don't waste any money on bad advertisements. This article will show you the secrets of producing successful ads.
Secret #1 - Simplicity
This is a very powerful yet most overlooked rule of design. The truth is that a clean, crisp, non-cluttered ad will outperform a clutter, hard to read ad.
The main purpose of an ad is to get people to purchase your product or service. The next objective of an ad is make
people want to learn more about your product or service.
Secret #2 - Focus on a Benefit
Benefits sell, features do not!
People want to know what's in it for them. They would rather know how your product can help them (benefits) instead of what your product can do (features.)
For example, let's say you are a real estate agent and your company has just won the best real estate award possible. I know you're proud of the award and you should be, but please don't make the award a big part of your ads. People that are buying or selling property would rather know that your agency will list their property on-line for convince and to time-savings.
Secret #3 - Appeal to your target market
Don’t try to make your ad appeal to everyone. Design your layout so it will appeal to your target market. Your ad response rate will be greater this way.
Remember each of us is in a different stages of life, and we all want different things. Once you find out what stage of life your target market is in, then you can make your ads reflect their emotional status.
Secret #4 - Emotional Appeal
Design your ads in a way that will show consumers how your product or service will make them feel. This is a very effective marketing technique because ads us subliminal messages that will make us feel a certain way about your product or service.
Kay's Jewelers ads are a good example of this technique. These ads always show happy people that exchange jewelry, hugs and kisses. When we view or hear these ads, we feel warm, loving, and happy. After seeing these ads several times, we start to associate warm, loving and happy feelings towards Kay Jewelers.
Secret #5 - Eye Catching & Unique
Ever since I was little, I was always told to "color inside of the lines" and "you have to color apples red instead of blue." When I colored things the same way every else did, my work got lost in the crowd because it looked the same as everyone else's.
In advertising the rules have changed. It's ok to be different; in fact it's great to "think outside of the box." Some of the best advertisements are so effective because they are completely different from all the other ads.
Decide what is the single most important part of your ad. Then find a way to make it stand out more than anything else. Arrange the ad so the human eye will see the most important item first, then the second most important item, and so on.
Secret #6 - Colors
According to psychology.about.com, "Psychologists have suggested that color impression can account for 60% of the acceptance or rejection of that product or service." The human eye is attracted to the colors red and yellow before any other color. Yellow backgrounds with black text is the most effective color combination.
Each color has different meanings to different cultures. For advertising purposes, it is extremely important to design your ads in a way that appeals to your target market. Try to choose colors that will compliment the message you are sending to your consumers.
Secret #7 - Copy
Use as little words as possible. Try to use words that catch attention like powerful, amazing, shocking, and revealing.
Be sure the copy you use will be legible for your audience. Use fonts that are clear, easy to read and big enough for each particular ad.
Also be sure your ads have a smooth flow. Viewers may get confused if your ads constantly jump from one topic to another.
Secret #8 - Creditability
An ad will not be effective if no one believes it. You can have the most creative, colorful, and eye-catching ad, but if people read your ad and say "Yeah, Right," than your ad will not be profitable. For example, an ad that says "Earn $100,000 a week with XYZ product" will not be as believable as an ad that says "Increase your sales by 20% with XYZ product."
Secret #9 - Problems Sell
People always want help with things and are always looking for easier ways to do things. Make your ads help them and solve a certain problem your consumers have.
Try to start your ads with a question that allows your product to be the answer. Here are a common few examples:
· "Is your cold keeping you up all night?"
· "Are you tired watching your weight?"
· "Do you want to be your own boss?"
· "Is your cellular phone bill as low as possible?"
· "Are you unhappy with your current internet service?"
Secret #10 - Call to Action
Don't forget to tell people what you want them to do after they see your ad. Don't be afraid to come right out and say "Order Now," "Call Today!" or "Visit our web-site at www.bpsoutdoor.com."
Secret #11 - Advertiser Recognition
Don't forget to put your name and / or logo on all your ads. Make sure they are big enough to be seen. There's nothing worse than seeing a great ad and wondering who the advertiser was.
Secret #12 - Tie it all together
Make sure your graphics, words, slogans, and so on make sense when used together. If your viewers have to ask what your ad has to do with your product than it won't be effective.
Secret #13 - Memorable
Successful ads make a lasting impression on everyone. Give your ads something special and unique that will help make your ads memorable.
Good examples of this are: The AFLAC duck, the "Whats up?" telephone commercials, Wendy's "Where's the beef?" from the 80's, and Verizon's "Can you hear me now?" commercials.
Secret #14 - Repetition
Your ads will look more professional if you use the same fonts and colors as often as possible.
The average person must see an ad 7 times before they remember it. Once you've found an ad that produces results, use it everywhere and as often as possible. This will brand your ad into consumers’ minds.
Thursday, June 23, 2011
The Incorrect Assumption on Billboard Height
When I first got in the billboard business, I assumed that the taller the sign, the better the sign. When I was driving down the interstate and I saw a really tall billboard, I would think to myself “now there’s a valuable sign”.
I used to compare my signs to others by saying “my sign’s the tallest and, therefore, is the best”. Unfortunately, that’s a bad mindset and I messed up some great opportunities in my quest for being the “tallest”.
The whole point to a billboard, from the advertiser’s perspective (and they are the boss in reality), is for the billboard to have maximum visibility of their ad message. The easier and longer the traffic can read the ad message, the better.
Being real tall doesn’t often get this job done.
Tall signs actually reduce the ability to read the advertiser’s message for two key reasons:
*
A sign that is twice the height of the other signs creates a reduction of the apparent size of the ad message by a huge percentage. It’s just math – the farther away something is, the smaller it appears. In Houston, for example, where signs can easily be over 100’ to the bottom of the ad message, giant 14’ x 48’ bulletins look like 4’ x 8’ sheets of plywood. The average driver in Houston will have trouble believing that the ad on top of a 100’ monopole is the same size as that on a 30’ monopole – it looks like about 50%.
*
Tall signs go out of your field of vision quickly, and so you cannot read the message very long and certainly not from a distance where the copy is legible. Just as the traffic can begin to read the exit, the sign goes out the “top” of their windshield and so they move on to the next ad message. Now, you may argue that they can see the tall sign from farther back, as it stands majestically above the trees and other obstructions, and that is true, but you can’t read the copy except for the largest words, so you don’t really even know what they are selling. Unless the advertiser’s message is “Wendy’s Exit Now”, the value of the copy is great impaired.
I learned this lesson the hard way on my colossal 120’ high 20’ x 60’ monopole in Dallas. I was so proud of building one of the largest signs in the city that I never bother to think of what the appropriate height would be – only what the tallest I could afford was.
As a result, instead of a dominant giant 20’ x 60’ ad face dwarfing a sea of 14’ x 48’ ad faces, instead I had what looked like a 14’ x 48’ on steroids. The mega height made the ad face look no larger than the surrounding signs, and it also made the sign hard to read except from a large distance – the sign was already out of your field of vision, out of the top of your windshield, from about 1,000’ away.
Tallest may be important in basketball, but in sign world, it’s often a misunderstood negative!
I used to compare my signs to others by saying “my sign’s the tallest and, therefore, is the best”. Unfortunately, that’s a bad mindset and I messed up some great opportunities in my quest for being the “tallest”.
The whole point to a billboard, from the advertiser’s perspective (and they are the boss in reality), is for the billboard to have maximum visibility of their ad message. The easier and longer the traffic can read the ad message, the better.
Being real tall doesn’t often get this job done.
Tall signs actually reduce the ability to read the advertiser’s message for two key reasons:
*
A sign that is twice the height of the other signs creates a reduction of the apparent size of the ad message by a huge percentage. It’s just math – the farther away something is, the smaller it appears. In Houston, for example, where signs can easily be over 100’ to the bottom of the ad message, giant 14’ x 48’ bulletins look like 4’ x 8’ sheets of plywood. The average driver in Houston will have trouble believing that the ad on top of a 100’ monopole is the same size as that on a 30’ monopole – it looks like about 50%.
*
Tall signs go out of your field of vision quickly, and so you cannot read the message very long and certainly not from a distance where the copy is legible. Just as the traffic can begin to read the exit, the sign goes out the “top” of their windshield and so they move on to the next ad message. Now, you may argue that they can see the tall sign from farther back, as it stands majestically above the trees and other obstructions, and that is true, but you can’t read the copy except for the largest words, so you don’t really even know what they are selling. Unless the advertiser’s message is “Wendy’s Exit Now”, the value of the copy is great impaired.
I learned this lesson the hard way on my colossal 120’ high 20’ x 60’ monopole in Dallas. I was so proud of building one of the largest signs in the city that I never bother to think of what the appropriate height would be – only what the tallest I could afford was.
As a result, instead of a dominant giant 20’ x 60’ ad face dwarfing a sea of 14’ x 48’ ad faces, instead I had what looked like a 14’ x 48’ on steroids. The mega height made the ad face look no larger than the surrounding signs, and it also made the sign hard to read except from a large distance – the sign was already out of your field of vision, out of the top of your windshield, from about 1,000’ away.
Tallest may be important in basketball, but in sign world, it’s often a misunderstood negative!
Tuesday, June 21, 2011
The Best Start-Up Business Model
With Flipping single family homes a thing or the past, it’s time to examine other real-estate oriented options for more fertile territory. One area that is often overlooked is outdoor billboard media – basically big signs that advertise located on highways and roads. These old, giant players in the advertising world are suddenly becoming the darlings of media buyers the world over, and creating some exciting opportunities for aggressive individuals who are willing to play.
To enter the billboard business, all you need is a state and /or city license (which is pretty easy and cheap to obtain) and a desire to find new locations. Through “flipping” leases and permits (similar to flipping single family homes, only with virtually no risk), you can get in the business with practically no capital. Flipping billboard leases and permits can be very rewarding financially – you can earn from $5,000 to $200,000 per flip if you work hard and have some luck.
The other option is to build and operate your own billboards. Again, leverage is good with bank loans and 80% of construction costs. And billboard rents are still increasing at often over 10% per year. Over time, you can pay your billboard loan off (normal amortization periods are 7 to 10 years), and then keep the monthly income, or choose to sell to a competitor for big dollars.
With two of the Forbes 400 billboard billionaires (John Kluge and Arturo Moreno) and a host of famous folks who got their start in the industry (think Ted Turner), shouldn’t you give it some thought?
For more information on this exciting opportunity go to www.outdoorbillboard.com, or call (800) 937-6151 today!
To enter the billboard business, all you need is a state and /or city license (which is pretty easy and cheap to obtain) and a desire to find new locations. Through “flipping” leases and permits (similar to flipping single family homes, only with virtually no risk), you can get in the business with practically no capital. Flipping billboard leases and permits can be very rewarding financially – you can earn from $5,000 to $200,000 per flip if you work hard and have some luck.
The other option is to build and operate your own billboards. Again, leverage is good with bank loans and 80% of construction costs. And billboard rents are still increasing at often over 10% per year. Over time, you can pay your billboard loan off (normal amortization periods are 7 to 10 years), and then keep the monthly income, or choose to sell to a competitor for big dollars.
With two of the Forbes 400 billboard billionaires (John Kluge and Arturo Moreno) and a host of famous folks who got their start in the industry (think Ted Turner), shouldn’t you give it some thought?
For more information on this exciting opportunity go to www.outdoorbillboard.com, or call (800) 937-6151 today!
Wednesday, June 15, 2011
The Importance of RV Park Signage
One of the most overlooked improvements you can make to your RV Park or Campground is professional-quality signage. Good looking signage gives customers a great first impression, and has a real purpose -- giving good information and directions. It’s the amenity that keeps on giving; making your job easier and looking good while doing it.
Many RV Park and Campground owners don’t want to spend the time or money creating good signage. They are prone to just hand write some letters on a good old piece of plywood and nail it to a tree or lean it up against a wall. Boy, that sure looks good to your customers!
Nobody would disagree that great signage has many benefits to the RV park owner including:
· Makes a great first, and lasting, impression on your customers, making them feel good about their choice and increasing the odds they’ll come back.
· Gives the customer accurate instructions on when to check in, where to go etc.
· Leads to higher appraised value when financing.
· Can cause the RV park to sell for a higher price to a new owner.
So if we all agree on this, then why would you not have good quality signs in your RV park? Normally it’s money that stands in the way. Here is some ideas on how to improve your signage on the cheap:
· Make the standard post to hold up all of your signs a 4” x 4” wood post sleeved in white PVC. Then put a nice white PVC cap on the sleeve. This low cost finishing touch makes your old wooden post look great. And the PVC never needs paint. You can even use this trick on any existing 4” x 4”.
· Convert all your signs to vinyl lettering on painted aluminum. I use white lettering on a forest green aluminum background, but there are many other choices. The key is that the finished product lasts virtually forever and requires no painting or maintenance. And you can get signs like these inexpensively at Kinkos or Fast Signs. They are strong and can be easily attached to almost any surface.
· Consider putting your entire budget into your entry sign. This is where you make the first impression of your business, and customers may not come in if the sign looks less than professional. For entry signs. I use routed PVC. I chose this because it is permanent, needs no maintenance or painting, an is hard to vandalize. The signs I installed a decade ago look as great today as they did then. And you can choose a color scheme to complement your park and your other signage.
Before you re-paint that old plywood sign, consider the cost of perpetual maintenance and periodic replacement of your poor quality sign against the program I have just outlined. You will soon see that the permanent solution is better financially.
Great signage can mean better sales and greater re-sale value. Invest in good signage, and the dividends will be endless!
Many RV Park and Campground owners don’t want to spend the time or money creating good signage. They are prone to just hand write some letters on a good old piece of plywood and nail it to a tree or lean it up against a wall. Boy, that sure looks good to your customers!
Nobody would disagree that great signage has many benefits to the RV park owner including:
· Makes a great first, and lasting, impression on your customers, making them feel good about their choice and increasing the odds they’ll come back.
· Gives the customer accurate instructions on when to check in, where to go etc.
· Leads to higher appraised value when financing.
· Can cause the RV park to sell for a higher price to a new owner.
So if we all agree on this, then why would you not have good quality signs in your RV park? Normally it’s money that stands in the way. Here is some ideas on how to improve your signage on the cheap:
· Make the standard post to hold up all of your signs a 4” x 4” wood post sleeved in white PVC. Then put a nice white PVC cap on the sleeve. This low cost finishing touch makes your old wooden post look great. And the PVC never needs paint. You can even use this trick on any existing 4” x 4”.
· Convert all your signs to vinyl lettering on painted aluminum. I use white lettering on a forest green aluminum background, but there are many other choices. The key is that the finished product lasts virtually forever and requires no painting or maintenance. And you can get signs like these inexpensively at Kinkos or Fast Signs. They are strong and can be easily attached to almost any surface.
· Consider putting your entire budget into your entry sign. This is where you make the first impression of your business, and customers may not come in if the sign looks less than professional. For entry signs. I use routed PVC. I chose this because it is permanent, needs no maintenance or painting, an is hard to vandalize. The signs I installed a decade ago look as great today as they did then. And you can choose a color scheme to complement your park and your other signage.
Before you re-paint that old plywood sign, consider the cost of perpetual maintenance and periodic replacement of your poor quality sign against the program I have just outlined. You will soon see that the permanent solution is better financially.
Great signage can mean better sales and greater re-sale value. Invest in good signage, and the dividends will be endless!
Monday, June 13, 2011
Need an Attitude Adjustment? Think RV Park Service!
The last time I was at a National Park, I noticed that there is a certain "feel" to being there. It's a happy, safe feeling, kind of like being a kid at your Grandmother's house. And I think you get that feeling from the attitude of the Park Rangers and employees.
So what makes National Park employees different and so attractive as role models for RV Park Management? I think the reasons are numerous:
*
The Uniform: You don't have to wear a specific uniform, but some reasonable dress code sure helps, coupled with the RV Park name on a shirt or a badge. It creates trust with the customer that you are legitimate and gives you a "big company" feel that people tend to favor. It sends the subliminal message to the customer that you care about their stay and stand behind that pledge. You can buy off the internet custom cotton polo shirts with the RV Park name sewn on and they look as good as FedEx. Couple that with some khaki pants and you have a top-notch look.
*
The Park Service teaches a positive, friendly attitude. Then you are happy. It makes the customer happy too. Nobody wants to be greeted with "what do you want?" upon arrival. "Hi, how can I help you" sure works a lot better for customer retention and repeat business.
*
Fair solutions to customer problems. At the Park Service, the customer is always right within certain set boundaries. A study has shown that a customer has greater satisfaction with a business that screwed up at all. When a customer is unhappy for any reason, be sure to fix the problem happily and quickly. Word will get around.
*
Quality signage. Not to beat this to death, but having professional looking signage sure makes you look a lot better as a business. And it costs very little to make great signage over junk signage. The Park Service has some of the best RV signage to be found anywhere.
If you are trying to improve the look and success of your RV Park, I would recommend you look no further than the Park Service for your inspiration. While, they are not perfect, most of the National Parks I have been to do a great job, and every RV Park would be money ahead to follow their lead.
So what makes National Park employees different and so attractive as role models for RV Park Management? I think the reasons are numerous:
*
The Uniform: You don't have to wear a specific uniform, but some reasonable dress code sure helps, coupled with the RV Park name on a shirt or a badge. It creates trust with the customer that you are legitimate and gives you a "big company" feel that people tend to favor. It sends the subliminal message to the customer that you care about their stay and stand behind that pledge. You can buy off the internet custom cotton polo shirts with the RV Park name sewn on and they look as good as FedEx. Couple that with some khaki pants and you have a top-notch look.
*
The Park Service teaches a positive, friendly attitude. Then you are happy. It makes the customer happy too. Nobody wants to be greeted with "what do you want?" upon arrival. "Hi, how can I help you" sure works a lot better for customer retention and repeat business.
*
Fair solutions to customer problems. At the Park Service, the customer is always right within certain set boundaries. A study has shown that a customer has greater satisfaction with a business that screwed up at all. When a customer is unhappy for any reason, be sure to fix the problem happily and quickly. Word will get around.
*
Quality signage. Not to beat this to death, but having professional looking signage sure makes you look a lot better as a business. And it costs very little to make great signage over junk signage. The Park Service has some of the best RV signage to be found anywhere.
If you are trying to improve the look and success of your RV Park, I would recommend you look no further than the Park Service for your inspiration. While, they are not perfect, most of the National Parks I have been to do a great job, and every RV Park would be money ahead to follow their lead.
Friday, June 10, 2011
Investing in RV Parks
Rv parks can have good cash flow, without most of the traditional headaches of being a landlord. The downside? (Every investment has one.) The income can be variable and unpredictable.
We used to travel in a conversion van that we sometimes camped in. When staying at RV parks, I noticed that the managers always seemed relatively relaxed and cheerful. I think this may be because the job is not that stressful. It certainly isn't like being a landlord.
First, as an owner/operator of an RV park, you don't own any housing or vehicles that need to be repaired. Every tenant is responsible for their own Recreational Vehicle. You need only maintain the common areas, and can do that how you want.
Second, even if they stay for months, you can collect in advance and ask them to leave on a day's notice if they cause trouble or don't pay. Regular tenant/landlord law does not apply. These are very mobile residences, unlike regular "mobile homes."
Finally, you have visitors, not tenants. They are vacationing or escaping winter, and are generally in a good mood more often than apartment or house renters would be.
On the other hand, these are visitors, who have no lease. They can leave at any time. In other words, your income can be very unpredictable from month to month. It also can vary a lot seasonally, so you have to budget well. Some RV parks are just closed for half of each year - and this may be the time when taxes and insurance need to be paid.
In buying an RV park, you have to see the actual income from the previous several years. One year is not enough. You want to see that the income has been steady or is growing. You don't want to buy a dying business.
Look at the tax returns to get the truest - or at least the safest - record of income and expenses. Determine the net income before debt service. Decide what you can invest, and what kind of return you want for your trouble. Subtract that "profit" from the net before debt service. What remains is how much you can pay on whatever loans you need to buy the property.
The amount you can borrow - with payments that fit into that number - plus the amount you have for a down payment, determines the most you can pay for the property. Don't forget to account for any additional costs you will have that the current owners don't have, such as higher insurance rates or property taxes. Also, base your calculations on existing income, even if you have a plan to increase it - that is the safest way.
How much do RV parks sell for? I have seen them as low $85,000 for a really small one. Others are priced in the millions. As you look in a given area, you will notice that they are often selling for a similar amount per space. In some parts of Arizona, for example, parks sell for as cheap as $8,000 per space, because of a limited season. In other parts of the country, they sell for as much as $30,000 per space.
You can use this as a rough guide to see if a park is priced in line with others in the area, but in the end it can be very misleading. Good management can make a nice park worth $20,000 per space, while one a mile away may be in a bad location and worth only $14,000 per space. You have to see the actual income and expenses before investing in RV parks.
We used to travel in a conversion van that we sometimes camped in. When staying at RV parks, I noticed that the managers always seemed relatively relaxed and cheerful. I think this may be because the job is not that stressful. It certainly isn't like being a landlord.
First, as an owner/operator of an RV park, you don't own any housing or vehicles that need to be repaired. Every tenant is responsible for their own Recreational Vehicle. You need only maintain the common areas, and can do that how you want.
Second, even if they stay for months, you can collect in advance and ask them to leave on a day's notice if they cause trouble or don't pay. Regular tenant/landlord law does not apply. These are very mobile residences, unlike regular "mobile homes."
Finally, you have visitors, not tenants. They are vacationing or escaping winter, and are generally in a good mood more often than apartment or house renters would be.
On the other hand, these are visitors, who have no lease. They can leave at any time. In other words, your income can be very unpredictable from month to month. It also can vary a lot seasonally, so you have to budget well. Some RV parks are just closed for half of each year - and this may be the time when taxes and insurance need to be paid.
In buying an RV park, you have to see the actual income from the previous several years. One year is not enough. You want to see that the income has been steady or is growing. You don't want to buy a dying business.
Look at the tax returns to get the truest - or at least the safest - record of income and expenses. Determine the net income before debt service. Decide what you can invest, and what kind of return you want for your trouble. Subtract that "profit" from the net before debt service. What remains is how much you can pay on whatever loans you need to buy the property.
The amount you can borrow - with payments that fit into that number - plus the amount you have for a down payment, determines the most you can pay for the property. Don't forget to account for any additional costs you will have that the current owners don't have, such as higher insurance rates or property taxes. Also, base your calculations on existing income, even if you have a plan to increase it - that is the safest way.
How much do RV parks sell for? I have seen them as low $85,000 for a really small one. Others are priced in the millions. As you look in a given area, you will notice that they are often selling for a similar amount per space. In some parts of Arizona, for example, parks sell for as cheap as $8,000 per space, because of a limited season. In other parts of the country, they sell for as much as $30,000 per space.
You can use this as a rough guide to see if a park is priced in line with others in the area, but in the end it can be very misleading. Good management can make a nice park worth $20,000 per space, while one a mile away may be in a bad location and worth only $14,000 per space. You have to see the actual income and expenses before investing in RV parks.
Monday, June 6, 2011
Missouri River Flooding and How We Can Help YOU
As you all know- There are some major issues with the Missouri River flooding. We are aware that it has affected MANY mobile home parks, as well as the residents of these parks. At Niche Investment Network- We want to help!
We own own parks in Yankdon, South Dakota; Nebraska City, Nebraska; and Glyndon, Devils Lake, Pipestone, and Montevideo, Minnesota.
If you are in a flooded park and would like to move to one of these parks, we are willing to help. We will actually pay to have your home moved to our park. If your home is not flooded, but you are looking to move, we will buy your mobile home from you.
Let us help you!
Call or email Dave Reynolds. He can be reached at dave@mhps.com or (970) 856- 4882.
Or contact Frank Rolfe at frank.rolfe@gmail.com or (573) 535- 0206.
We own own parks in Yankdon, South Dakota; Nebraska City, Nebraska; and Glyndon, Devils Lake, Pipestone, and Montevideo, Minnesota.
If you are in a flooded park and would like to move to one of these parks, we are willing to help. We will actually pay to have your home moved to our park. If your home is not flooded, but you are looking to move, we will buy your mobile home from you.
Let us help you!
Call or email Dave Reynolds. He can be reached at dave@mhps.com or (970) 856- 4882.
Or contact Frank Rolfe at frank.rolfe@gmail.com or (573) 535- 0206.
Friday, June 3, 2011
How to Rent a Vacant Billboard by Lowering the Cost--- Without Costing You Anything!
The United States is in a depression. Money is short. And advertisers want real value for their dollar. One of the best ways of attracting advertisers – and providing a great return on their advertising dollar – is to reduce the cost of their advertisement. But how can you do that, when you have a minimum amount you can take for the sign?
Well, here are some ideas on how you can reduce the cost to the advertiser, and still meet your budget for revenue on the sign. And they are all a win/win for both your client and you.
Create a “combo” advertisement.
Why not split the billboard in half – and have two advertisers instead of one? This automatically reduces the cost to each advertiser by 50%. All you have to do to pull this off is find two advertisers who share a common exit. Then you pitch them each to share one billboard with a common exit number across the bottom. The most successful of these approaches are when you can match two businesses with similar goals who are not competitive, such as a motel and a restaurant. But even two competitive businesses, such as two restaurants or two motels, can profit from getting customers off the highway and then let them choose which one they prefer.
By splitting the advertisement in half, you have reduced the cost to each advertiser by 50%, and that means that they only have to sell half as much merchandise to pay for the billboard. And you have not had to reduce your revenue by a penny. Some of the longest-running billboards in America are these type of “combo” signs – they offer such an outstanding value to advertisers that they renew continually.
Creat a “large-scale combo” advertisement.
Sometimes, you can take the “combo” concept to the next level by combining a large number of advertisers into one common theme. An example is a billboard that I organized in the 1980’s for the merchants of Downtown Denton, Texas. The advertisement promoted tourists to visit Downtown Denton by getting off the highway at a certain exit. To pay for it, I organized the merchants together. Even though the billboard cost $1,000 per month, there were 50 merchants in Downtown Denton, so it cost only $20 per month each – a very, very reasonable sum.
The only downside to this type of structure is the extreme management nightmare of organizing and collecting from this many advertisers at one time. That’s why I choose to let the Downtown Denton billboard disband once the Texas economy strengthened – it was much easier to manage and collect from one advertiser rather than 50. But in an economic depression, like we’re in now, it’s a whole lot more fun to have a sign rented – despite the extra work – than have it sit empty.
Learn the available “coop” programs.
Many billboard salespeople are not even aware of the “coop” programs available by major brands. For example, western wear manufacturers such as Justin and Resistol often will pay a percentage of a billboard that promotes both their product and the western wear store that sells it. And it’s not just western wear. Automotive products such as Amalie and Goodyear also have similar programs, as do many other name brands. You need to learn which brands have these programs in place and then go to stores that sell these goods and see if they would rent a billboard if the brand would pay a percentage of the cost. Some of these programs pay up to 50% of the total cost of the billboard, so it is a great opportunity to cut the cost to the billboard advertiser substantially – while not costing you a penny in revenue.
You have to be careful in these programs to make sure that you follow the instructions that the brand requires to get money for your account. The logo must be of a certain size, and there is substantial paperwork required to make the program official. But the payoff is that the advertiser pays a fraction of the normal cost for the sign – with the brand paying the other portion – and your budget for the billboard is not impacted at all.
Conclusion
Everybody loves a bargain – your advertising clients included. Since all three of these techniques allow you to meet your revenue goals for your billboard, while at the same time allowing the advertiser to cut their cost substantially, you should immediately implement these ideas when you are trying to rent that vacant billboard face.
Well, here are some ideas on how you can reduce the cost to the advertiser, and still meet your budget for revenue on the sign. And they are all a win/win for both your client and you.
Create a “combo” advertisement.
Why not split the billboard in half – and have two advertisers instead of one? This automatically reduces the cost to each advertiser by 50%. All you have to do to pull this off is find two advertisers who share a common exit. Then you pitch them each to share one billboard with a common exit number across the bottom. The most successful of these approaches are when you can match two businesses with similar goals who are not competitive, such as a motel and a restaurant. But even two competitive businesses, such as two restaurants or two motels, can profit from getting customers off the highway and then let them choose which one they prefer.
By splitting the advertisement in half, you have reduced the cost to each advertiser by 50%, and that means that they only have to sell half as much merchandise to pay for the billboard. And you have not had to reduce your revenue by a penny. Some of the longest-running billboards in America are these type of “combo” signs – they offer such an outstanding value to advertisers that they renew continually.
Creat a “large-scale combo” advertisement.
Sometimes, you can take the “combo” concept to the next level by combining a large number of advertisers into one common theme. An example is a billboard that I organized in the 1980’s for the merchants of Downtown Denton, Texas. The advertisement promoted tourists to visit Downtown Denton by getting off the highway at a certain exit. To pay for it, I organized the merchants together. Even though the billboard cost $1,000 per month, there were 50 merchants in Downtown Denton, so it cost only $20 per month each – a very, very reasonable sum.
The only downside to this type of structure is the extreme management nightmare of organizing and collecting from this many advertisers at one time. That’s why I choose to let the Downtown Denton billboard disband once the Texas economy strengthened – it was much easier to manage and collect from one advertiser rather than 50. But in an economic depression, like we’re in now, it’s a whole lot more fun to have a sign rented – despite the extra work – than have it sit empty.
Learn the available “coop” programs.
Many billboard salespeople are not even aware of the “coop” programs available by major brands. For example, western wear manufacturers such as Justin and Resistol often will pay a percentage of a billboard that promotes both their product and the western wear store that sells it. And it’s not just western wear. Automotive products such as Amalie and Goodyear also have similar programs, as do many other name brands. You need to learn which brands have these programs in place and then go to stores that sell these goods and see if they would rent a billboard if the brand would pay a percentage of the cost. Some of these programs pay up to 50% of the total cost of the billboard, so it is a great opportunity to cut the cost to the billboard advertiser substantially – while not costing you a penny in revenue.
You have to be careful in these programs to make sure that you follow the instructions that the brand requires to get money for your account. The logo must be of a certain size, and there is substantial paperwork required to make the program official. But the payoff is that the advertiser pays a fraction of the normal cost for the sign – with the brand paying the other portion – and your budget for the billboard is not impacted at all.
Conclusion
Everybody loves a bargain – your advertising clients included. Since all three of these techniques allow you to meet your revenue goals for your billboard, while at the same time allowing the advertiser to cut their cost substantially, you should immediately implement these ideas when you are trying to rent that vacant billboard face.
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