I have been giving much thought to the state of our niche and many of the players in it. I had recently written about the “apathy” I have seen many of my investor friends, including myself, fall under. My choice of the word “apathy” may not have been entirely correct and I am not yet certain I have found a word the correctly and completely defines what I am seeing and experiencing both in my business as much in others.
In the last 18 months I have gotten married, brought two children into my home, welcomed the birth of our daughter, sold one of my mobile home parks, moved an hour away all in addition to the rehabbing of several properties which as you may recall I do myself along with a handyman. That’s a lot going on all during the new, great recession we are facing. My family has about worn ourselves out just getting to our new home. The energy left to battle the changed marketplace is low indeed. This does not mean that I have given up, thrown in the towel, sold out or walked away. It just means I find it a bit harder these days to get up from the lazyboy recliner, head out through one snowstorm after another (in North Carolina for crying out loud) and into the market here in my new town. Fortunately my good friend Scott St.Aubin and his family also moved to this new town and we are now located about 15 minutes from Ryan Needler, another mobile home, land/home, small park and Lonnie deal investor we have known for years.
First let me say that much of my concern is not born of my own strife. My properties have remained rented, at least all of those that are available. I have 3 projects that I am working on but none of those were expected to be completed and available in the short term.
My concerns are based upon what I see happening to people that I respect in this niche and to those in other business ventures who have been affected by the economy, by the credit crisis, the government’s responses such as bail out and SAFE act legislation. The lack of bank lending and the aggressive stance lenders seem to be taking against many faithful mortgage payors is quite concerning.
I have always believed it is best to learn not only from one’s own experiences but from those of others as well. My business maybe in good standing at the moment but I do not wish to become “complacent” (a word that describes a part of what I am seeing in the eyes of many investors) and fall under the belief that things will continue to be so. I have noticed, for example, a dramatic decrease in rental demand in my area. As a landlord this is certainly worrisome. While my properties may be rented for the moment, all properties have some transition and movement, which will require them to be re-rented for one reason or another.
Our costs are certainly not fixed in this game but if demand decreases, our income is no longer fixed either. We may have to decrease rents for the near future (at least) in order to keep vacancy to a minimum. Vacancy costs more than the loss of opportunity rent, it includes the costs of maintenance and heating (in this colder weather) and rehab of the properties and is compounded by higher energy costs, slower demand and longer periods of recapture of money spent on repairing, holding and re-renting.
The “apathy” I spoke of was more of a poorly worded attempt to describe the emotional throwing up of hands in frustration and the depressing lack of energy following it. The inability to get out the door and not only attack the problems of today but to find opportunity for tomorrow. The overwhelming feeling we can get when all the above forces combine against us.
In some ways I am going through much of this vicariously in an effort to prepare my family, my business and myself for the worst while expecting the best. The feeling of scarcity can become overbearing for us who otherwise naturally believe in abundance and opportunity during all economic conditions. I am tired viewing investing from a defensive perspective. Our niche needs to find the opportunity and capitalize on that abundance. I am confident that these changing times will see great minds here and elsewhere in this niche define themselves with new ideas and adaptation of old to overcome these challenges.
The number of foreclosures coupled by limited lending on mobile homes with land gives me hope that properties purchased now will be the best deals ever. The conservative voice within reminds me that for me it will take a decent rental market to hold these properties for the longer term.
As the book “Who moved my cheese?” would teach us, someone has moved our cheese. It is time lace up our running shoes and start off into the maze to find where the cheese (opportunity in this case) now hides. Sitting at the old site and waiting may slowly starve us of opportunity and that increasing scarcity may paralyze us.
Great wealth changes hands during these times and it is those who enter first using sound investing practices that will benefit the most. The rest may find some crumbs along the way and that’s ok but if we don’t get out of the lazyboy we will never meet that opportunity. It is time to stop investing Defensively. As I have often said and written, it is up to us to place ourselves in the path of opportunity.
Tony Colella began investing part-time in mobile homes while working full-time as a police lieutenant. He holds a Bachelor of Science Degree in Business Administration Tony and Scott St. Aubin have detailed just how they create value, cash flow and profits by combining mobile home with land in their books and courses on “Investing in Mobile Homes with Land”.
