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Mobile Home Park
Mobile Home Park Fund V #1
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INVESTMENT STRATEGY
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100% funded
Offered By MHP Funds LLC
17.0%* TARGET IRR 16.0%-18.0%
8.0%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 to 10 years
Estimated First Distribution
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
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Cumulative Distributions

MHP Funds LLC

The principals of MHP Funds, LLC ("MHPF") and their affiliated companies are estimated to be one of the top 15 largest mobile home park owners in the country, with over 100 parks and 10,000 lots in 16 states. The principals have a 15-year track record of success in the mobile home park industry, and have more than 55 years of combined real estate investing experience. They have long established relationships with key market participants such as banks, insurance companies, real estate agents and brokers, and they are able to source attractive investments through their own popular MHPF listing websites.  Their extensive experience in both the ownership and operation of mobile home parks makes them uniquely situated to quickly assess investments, determine their risks, evaluate possible turn-around plans and analyze future growth potential.  They have established, proven systems for handling all aspects of mobile home park investing, and their backgrounds and relationships help them identify properties that minimize investment risk and maximize cash on cash returns for investors.

MHPF has developed a set of stringent acquisition criteria that addresses both strong cash flow from day one and adding value to each mobile home park through various means such as increasing rental rates and occupancy, reducing expenses, and improving the quality of the community. The overall objective for each property is to provide an excellent return on investment for both the principals and investors, while at the same time providing every resident with a safe and affordable place to live.

The principals of MHPF are recognized as industry leaders, highly regarded educators, and consultants, having authored books and written articles on mobile home parks, conducted mobile home park "boot camps" and educational seminars, and served as mentors and advisors to other mobile home park investors. They have also developed some of the most respected websites dedicated to the MHPF and RV park industries.  

Performance of Prior Funds

Principals of MHPF have a strong track record in mobile home park investing that spans over a decade. Since 2010, they have raised more than $52 million for seven similarly structured funds.  However, as with any investment, past performance is no guarantee of future results. 

  1. MHPS Alumni, LLC ("Alumni 1"): This fund was fully subscribed in May 2010. A total of $2 million of investor capital was raised and used to purchase 437 spaces in five parks located in Colorado, Nebraska, Kansas, and Wisconsin. To date, three parks have been sold (La Junta, CO; Crete, NE; and Black River Falls, WI) and two additional parks were purchased (a portion of Elsmere, KY, and a park in Platteville, WI). 
  2. MHPS Alumni 2, LLC ("Alumni 2"): This fund was fully subscribed in October 2010. A total of $2 million of investor capital was raised and used to purchase all or portions of 595 spaces in five parks located in Illinois, North Dakota, and Oklahoma. In addition, the fund has purchased a portion of a park in Elsmere, KY. 
  3. MHPS Alumni 3, LLC ("Alumni 3"): This fund was fully subscribed in June 2011. A total of $3 million of investor capital was raised and used to purchase all or portions of 985 spaces in 12 parks in Iowa, Minnesota, Wisconsin, Texas, North Dakota, Massachusetts, and Colorado. To date, two parks have been sold (New Braunfels, TX and Eau Clair, WI) and a portion of a park in Elsmere, KY has been purchased. 
  4. Affordable Housing Community Fund 1, LLC ("AHCF 1"): This fund was fully subscribed in February 2012. A total of $5 million of investor capital was raised and used to purchase all or portions of over 1,700 spaces in 18 parks in Nebraska, Illinois, Kansas, Colorado, Minnesota, Iowa, Texas, and Kentucky. 
  5. Affordable Housing Community Fund 2, LLC ("AHCF 2"): This fund was fully subscribed in October 2012. A total of $10 million of investor capital was raised and used to purchase all or portions of almost 2,100 spaces in 16 parks in Iowa, South Carolina, Oklahoma, Illinois, Kansas, Wisconsin, and Nebraska. 
  6. Affordable Housing Community Fund 3, LLC ("AHCF 3"): This fund was fully subscribed in July 2013. A total of $10 million of investor capital was raised to purchase all or portions of over 2,000 spaces in 18 parks in states such as Washington, North Dakota, Texas, Indiana, Missouri, Illinois, and Nebraska.
  7. Affordable Housing Community Fund 4, LLC ("AHCF 4"): This fund was fully subscribed at the end of July 2014. A total of $20 million of investor capital was raised and is being used to purchase all or portions of over 20 parks (final number TBD) in states such as Wisconsin, Texas, Iowa, Indiana, Missouri, Illinois, Michigan and Colorado.
Prior Funds Snapshot (As of July 31st, 2014)*
PARAMETER ALUMNI 1 ALUMNI 2 ALUMNI 3 AHCF 1 AHCF 2 AHCF 3 AHCF 4
Date Fully Subscribed May 2010 Oct. 2010 June 2011 Feb. 2012 Oct. 2012 July 2013 July 2014
Investor Capital Raised ($) $2,000,000 $2,014,500 $3,000,000 $5,000,000 $10,000,000 $10,000,000 $20,000,000
Investor Capital Returned ($) $450,000 $0 $150,000 $0 $0 $0 $0
Unreturned Investor Capital ($) $1,550,000 $2,014,400 $2,850,000 $5,000,000 $10,000,000 $10,000,000 $20,000,000
Current Number of Parks Owned (Fully or Partially) 4 5 8 13 14 16 19
Current Number of Mobile Home Park Lots (Ownership % Adjusted) 374 492 565 832 1405 1380 1845
Estimated Current Occupancy (%) 85% 82% 70% 79% 86% 76% 75%
Historical Investor Distributions (As of July 31st, 2014)*
DATE OF DISTRIBUTION TYPE ALUMNI 1 ALUMNI 2 ALUMNI 3 AHCF 1 AHCF 2 AHCF 3 AHCF 4
2010 Q3 Distribution 12.2%            
2010 Q4 Distribution 12.8%            
2011 Q1 Distribution 10.0% 10.0%          
2011 Q2 Distribution 10.0% 10.0%          
2011 Q3 Distribution 10.0% 10.0% 10.0%        
2011 Q4 Distribution
Capital Return
10.0%
10.0%
10.0% 10.0%        
2012 Q1 Distribution 11.1% 10.0% 10.0% 10.0%      
2012 Q2 Distribution 11.1% 10.0% 10.0% 10.0%      
2012 Q3 Distribution 13.3% 10.0% 10.0% 10.0%      
2012 Q4 Distribution
Capital Return
10.0%
13.9%
10.0% 10.0% 10.0% 10.0%    
2013 Q1 Distribution 11.6% 10.0% 10.0% 10.0% 10.0%    
2013 Q2 Distribution 10.1% 10.0% 10.0% 10.0% 10.0%    
2013 Q3 Distribution 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%  
2013 Q4 Distribution 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%  
2014 Q1 Distribution 12.6% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
2014 Q2 Distribution
Capital Return
12.6% 11.5% 12.0%
5.0%
10.0% 10.0% 10.0% 10.0%

*As with any investment, past performance is no guarantee of future results

http://www.mhpfunds.com/
  • Dave Reynolds, President & Partner
  • Frank Rolfe, Vice President & Partner
  • Eric Siragusa, Vice President & Partner
Dave Reynolds, President & Partner

Dave has specialized in the acquisition of mobile home and RV parks for over 20 years, and has managed companies that have owned and operated over 250 parks. Dave currently co-manages multiple MHP investment funds and participates in the ownership and/or management of over 16,000 MHP lots. Dave is owner and CEO of RV Horizons, Inc., which provides property management and accounting services for all of MHPs and lots owned by the investment funds. Dave is a licensed Colorado real estate broker and has been involved in additional MHP transactions in that capacity. He acts as a consultant to other MHP investors and operators, has authored four books on the subject, and has developed several of the most popular websites dedicated to the mobile home industry. Dave has a B.S. in Accounting from Mesa State College, and has completed additional graduate courses in accounting and taxation at Colorado State University.

Frank Rolfe, Vice President & Partner

Frank has been active in all facets of the MHP business for over two decades, where he has managed companies that have owned and operated over 200 MHPs. Frank currently co-manages multiple MHP investment funds and participates in the ownership and/or management of over 16,000 MHP lots. Frank has performed due diligence on hundreds of MHPs for other MHP owners, and is a well-known author and speaker at MHP investing seminars and real estate investment clubs. Since June 2008, Frank has conducted widely attended MHP boot camps. Prior to his MHP business, Frank was the largest private owner of billboards in Dallas/Ft. Worth.

Eric Siragusa, Vice President & Partner

Eric currently co-manages multiple MHP investment funds and participates in the ownership and/or management of over 16,000 MHP lots. Eric has been involved in investor relations, capital raising, and acquisitions including due diligence and underwriting of MHPs. Eric holds a Ph.D. in Electrical Engineering from the University of California at San Diego and has received multiple patents. Since 2008 he has served as President of the of the non-profit North San Diego Real Estate Investors Association, Inc. (NSDREI), one of San Diego's leading real estate education and networking organizations Eric also serves as an educator, mentor and consultant to other real estate investors and professionals. He is blessed with a wonderful wife and two daughters..

Track Record

Business Plan
Property

At A Glance

Investment Type: Semi-Blind Diversified Fund
Investment Strategy: Buy and Hold
Property Type: Mobile Home Park
Target Fund Size: $25 million 
Hold Period:  5-10 years
Estimated Number of Properties: 20-40 properties
Location: Various - parks will be purchased all over the U.S.
Distributions to Realty Mogul 26, LLC: 10% Preferred Return with excess cash flows and appreciation shared 50/50
Distribution Timing: First distribution projected to occur in 6-9 months 

Investment Details

MHP Funds, LLC ("MHPF") plans to acquire, add value, and reposition under-valued, under-managed, under-performing, and improperly capitalized -- but income-generating -- mobile home parks in the U.S. MHPF is looking to assemble a diversified portfolio of cash-flowing mobile home parks to generate income and equity growth.  The exit strategy for this fund is to groom parks to maximize cash flow and appreciation and sell the properties in 1-10 years when the park values have been maximized and market conditions are favorable. 

Realty Mogul investors are being provided the opportunity to invest in Realty Mogul 26, LLC. Realty Mogul 26, LLC is making an investment in Affordable Housing Community Fund 5, LLC ("AHCF5" or the "Fund"), MHPF's 8th mobile home park fund.  Realty Mogul previously closed a capital raise for MHPF's prior fund, Affordable Housing Community Fund 4, LLC, in the amount of $2,985,000. AHCF5 will be a semi-blind pool. Currently, there are three (3) transactions under contract that include six (6) mobile home parks in Indiana, Kentucky, and Wisconsin.  MHPF plans to acquire additional properties throughout the life cycle of the fund.

MHPF will handle all aspects of the investment including finding the parks to buy, completing the due diligence and handling the closing. They will also be responsible for enacting the turnaround plan, managing the properties, handling all accounting and developing appropriate exit strategies. Investors are projected to receive quarterly updates and quarterly distributions, with the first distribution expected in 6-9 months.

Investment Highlights

  • Experienced Sponsor with Significant Market Presence: The principals of MHPF have an extensive 15-year track record in the mobile home park industry and have more than 55 years of experience in the real estate industry.  Collectively, they are estimated to be one of the top 15 largest mobile home park owners in the country, with over 100 parks and 10,000 lots in 16 states. 
  • High Demand for Affordable Housing: According to census data, over 20 million Americans (8% of all households) live in mobile homes.  MHPF believes that the increasing demand for mobile home parks has largely been driven by a fundamental shift in the U.S. towards creation of lower paying jobs and by the increasing number of retirees downsizing their homes.
  • Minimal Capital Investment and Lower Maintenance Costs: MHPF's primary business plan consists of acquiring mobile home parks and renting the lots to tenants who own their homes. Under this plan, MHPF is primarily responsible for maintaining the land, not the mobile homes on the land.  This strategy serves to limit the required upfront capital investment and reduces ongoing maintenance costs.  This strategy also helps enable the tenants to enjoy the pride of owning their own homes, and since the residents are responsible for maintaining their own homes and lots, MHPF does not project needing any major renovation costs to upgrade facilities to attract customers over time.  This does not, however, preclude MHPF from acquiring mobile homes themselves. 
  • Stable Tenant Base with Limited Rollover: In the typical mobile home park, the resident base usually consists of residents living on social security checks or with lower paying jobs that tend to be more secure and replaceable. While most of these residents are not generally financially savvy, they can usually produce the amount necessary for lot rent to keep their home. Due to the high cost of moving a mobile home, which MHPF estimates to be approximately $5,000, tenants are less likely to move.
  • Ability to Maximize Revenue: MHPF believes that when residents own their homes in a mobile home park, the ability to increase rents or pass-through utility expenses and retain them as residents is much higher.  For example, an effective rental increase of $20 would cost a resident an additional $240 per year.  Compared to the cost of moving the home, this increase is much less.  
  • Limited Competition: The supply of mobile home parks is limited in the U.S. due to high entry costs, adverse regulations, extensive government restrictions, and limited access to water and sewer connections. In many areas of the U.S., it is difficult to obtain the proper zoning and meet all the requirements to build a new community. Once the permits are in place and licenses have been obtained, the curbs, roads, driveways, utilities, and other infrastructure improvements need to be built out, increasing a potential developer's costs.  A potential mobile home park developer also needs to cover the carrying costs until enough homes have been brought into the community to cover expenses.  Furthermore, mobile home parks are often perceived negatively and can meet extreme resistance from nearby homeowners and business owners.
  • Strong Pipeline: MHPF continues to maintain a strong investment pipeline and is able to source transactions through several channels -- a large database of long-time owners that have not efficiently operated or improperly capitalized their properties, bank foreclosures, and referrals from boot camp attendees (the boot camp is an educational seminar on mobile home park investing held by the principals of the sponsor).  
  • Dislocation in the Capital Markets: More buyers for mobile home parks have recently entered the market, and although the credit markets have loosened up on higher-priced properties, financing is still often difficult to obtain for properties in need of repositioning.  This has created an opportunity for all-cash purchases coupled with a refinance after the repositioning work is near completion or has been completed. Furthermore, lenders prefer and often demand only seasoned, credible borrowers, which often precludes new entrants from investing in the mobile home park space. 
  • Accelerated Depreciation (Potential Tax Benefit): When comparing depreciation of mobile home parks to other investment properties, apartment buildings typically have a large portion of their value attributable to the building itself that can be depreciated over a 27.5-year period. However, for mobile home parks, the depreciable costs are typically the roads, water lines, sewer lines, electric poles, and other infrastructure improvements.  Since these are considered land improvements for tax purposes, they can typically be depreciated over a much shorter period of 15 years.  This accelerated depreciation over the first 15 years of ownership can be a major tax benefit for some investors.

MHPF plans to work with RV Horizons, Inc. ("RVH"), an experienced mobile home park property management firm owned by one of the principals of MHPF, Dave Reynolds, to enact turn-around plans and perform the day-to-day operations for properties acquired by AHCF5.  RV Horizons employs more than 47 people at offices in Cedaredge, Colorado (company headquarters), Montrose, Colorado and Niles, Michigan, and has more than 119 managers and supervisors in the field.  The team at RVH includes a corporate office staff, district managers and rehab crews that work with the onsite managers as described below. 

  • Onsite Managers: Each mobile home park has an onsite manager and maintenance personnel. The onsite manager is responsible for record keeping, collecting and depositing rent, property maintenance, showing available lots and homes to prospective residents, enforcing rules and regulations of the community, handling resident problems and questions, and all duties involved with managing the property.
  • Corporate Office: The corporate office consists of nine (9) full-time district coordinators who are in charge of working with district managers and onsite park managers.  They oversee the paperwork, deposits, leases, titles, and licenses for each park.  There is also a team of three (3) people in the accounts payable department who make sure the payments are reconciled, approved, and made on time.
  • District Mangers: There are currently nine (9) full-time district managers who oversee approximately 10-15 parks each. They are in charge of communications between the corporate office and onsite managers. In addition, they typically make bi-monthly visits (more if necessary) to each property to check on the property and its management. The district managers are also in charge of overseeing rehab crews.
  • Rehab Crews: There are typically 10 full-time rehabbers on payroll plus at least five (5) independent full-time contractors who travel from park to park and stay approximately two (2) weeks to three (3) months to aid in turnaround after MHPF purchases it.  They also rehab mobile homes which can be sold to future residents.

Risks and Risk Mitigation*

  • Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” ”plans” “future” “intends,”, “should,” “can”, “could”, “might”, “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
  • Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 26, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
  • Management Risk: Investors will be relying solely on the manager of Affordable Housing Community Fund 5, LLC for the execution of its business plan. That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants.  Members of Affordable Housing Community Fund 5, LLC (including Realty Mogul 26, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the manager of Affordable Housing Community Fund 5, LLC has significant operating experience, Affordable Housing Community Fund 5, LLC  is a newly formed company and has no operating history or record of performance. 
  • Uncertain Distributions: The manager of Affordable Housing Community Fund 5, LLC  cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 26, LLC) from either net cash from operations or proceeds from the sale of the asset. That manager, in its discretion, may retain any portion of such funds for property operations or capital improvements. 
  • General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the manager of Affordable Housing Community Fund 5, LLC.
  • Adverse Market and Economic Conditions: Local conditions in the market of each mobile home park may significantly affect occupancy, rental rates, and the operating performance of each property.  These risks include plant closings, industry slowdowns, and other factors that could potentially affect the local economy. Rent control or rent stabilization laws, or other laws regulating mobile home parks, could also prevent MHPF from raising lot rents or selling mobile homes.  Adverse economic conditions such as increases in property taxes, utilities, compensation for on-site associates and routine maintenance could cause an increase in MHPF's operating expenses, which could potentially negatively affect the fund's financial performance.  MHPF has more than 15 years of experience buying and selling mobile homes, with over 100 mobile home parks and 10,000 lots owned and operated by its affiliates.  The company also undergoes an extensive underwriting process prior to each acquisition.  With their experience and rigorous diligence process, MHPF is able to partially mitigate this risk.
  • Competitive Housing Alternatives: Properties owned by the fund will compete with other housing alternatives to attract residents, including other mobile home parks, condominiums, and single-family homes which are available for rent or sale.  Competitive residential housing in a particular area could affect MHPF's ability to sell its mobile homes, rent its mobile home lots for occupancy, and/or to increase or maintain lot rental rates.  Improvements to each investment property planned by MHPF will be designed to make them more attractive to new and existing occupants, in hopes of creating a competitive advantage as compared to other housing alternatives in the marketplace.

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.  We recommend that you consult with a Financial Adviser, Attorney, Accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity.  All investment involves risk of loss, and therefore cannot be guaranteed.  As with any investment, past performance is no guarantee of future results.

Interested in learning more about mobile home parks and semi-blind funds?

Review our blog posts on the subject:

MHPF also provides bootcamps for mobile home park investing across the country. Here is a link to one of their presentations:
(Click HERE)

Property Details

Currently, MHPF has three (3) transactions under contract totaling six (6) mobile home parks that are expected to be included in this fund. 

Parks Under Contract
Park Name Location Status Est. Closing Date Est. AHCF5 Ownership Purchase Price Total Spaces Occupancy Avg. Lot Rent
Country Manor MHP Mooresville, IN Under Contract 10/01/14* %TBD $14,300,000 511 75.7% $360
4 Park Portfolio Madison, IN & Madisonville, KY Under Contract 10/01/14* %TBD $5,750,000 426 70.2% $224
Rio Valley Estates Mazomanie, WI Under Contract 11/01/14* 100% $810,000 40 92.5% $270

*Estimated Closing Dates

Property Highlights:

  • Country Manor MHP, Mooresville, IN: This park is located in Mooresville, IN, an affluent suburb of Indianapolis with an unemployment rate of 5.5%. MHPF believes this is a strong market and that there is room to create value by filling vacant lots, increasing lot rents and selling the remaining park-owned home inventory.
  • 4 Park Portfolio, Madison, IN & Madisonville, KY: These parks are in good condition, but MHPF believes they are in need of professional management and an infill plan, which they project will then allow for an increase in rents and occupancy. 
  • Rio Valley Estates, Mazomanie, WI: This park is located in Mazomanie, WI, which has an unemployment rate of 4.2%, and is approximately 21 miles from Madison, WI. The primary objective of this investment is to fill the remaining vacant lots while increasing rents.

Based on the characteristics of properties previously purchased by MHPF (2010-2014), and the types of properties MHPF is currently seeing in the market, the investment criteria below outlines the typical profile for a mobile home park property that could be acquired for this fund.

Profile of a Typical MHPF Property
Parameter Approximate Value Notes
Price per Lot ($) $12,300
  • Price close to construction costs
  • Spaces medium sized and larger
Loan-to-Value 70%
  • Enough leverage for meaningful returns but not over-leveraged
Utilities: Water and Sewer City services
  • Avoids large capital expenditure risk
  • Reduces operational costs 
Utilities: Gas and Electric Not master-metered
  • Avoids large capital expenditure risk
  • Reduces operational costs 
Metro Population 10,000 to 2 million+
  • Target larger markets or smaller growth markets with diversified employment
Location Midwest and Great Plains regions
  • Properties in these regions typically meet cash flow and return criteria
Age/Condition of Homes Mix of newer and older, in average to good condition
  • Lowers home repossession risk
Tenant vs. Park-Owned Homes Mostly tenant-owned
  • Lower maintenance, pride of ownership, stable tenant base
Amenities Few to none
  • Lower operational costs
Occupancy 70%+
  • At or near stabilization
Permit Status Only legally permitted
  • Otherwise too much risk
Going-in Cap Rate 8-10%+
  • To help meet investor return goals
Going-in Cash-on-Cash (CoC) 10-15%+
  • To help meet investor return goals
Timeframe 5-10 years
  • To maximize park value
Location

MHPF currently owns mobile home parks in 16 states. In this fund, MHPF will look to acquire mobile home parks all across the U.S., with acquisitions generally located in the Midwest and the Great Plains regions.

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