WHAT’S SO GREAT ABOUT MANUFACTURED/MOBILE HOME PARK AND RV COMMUNITIES?

Parks are easily managed because we rent only the land.  The living unit is owned and maintained by the tenant at his expense, not at the landlord’s expense.  Parks under 125 spaces may be managed by an owner or management team of two with time off for golf and fishing.  Maintenance chores and improvement projects can usually be scheduled around personal time, making the “good life” possible.

Filled communities with established and mature income streams provide extremely safe and secure investments where you can invest your last dollar without a large contingency reserve and expect spendable income the first of the month.  Florida communities, particularly South Florida communities, cater to snowbirds and retirees; statistically the wealthiest group in the country, and notoriously on time with rents.

WHO BUYS COMMUNITIES AND WHY?

Professional management companies and individual investors buy communities to realize a greater return on investment than currently available in savings or bonds, with little risk.  Primarily, investors invest to receive the property’s income.  Secondarily, as a hedge against inflation.  Income property buyers  expect the value of their purchase to increase with inflation, with returns on equity multiplied by mortgage leverage.  Federal tax deferment through depreciation write offs is a third benefit, and communities may be written off faster than most other forms of property.  On the state level, Florida has no income tax, and Florida earnings are not taxable in other states.

Community ownership is an excellent vehicle for retirement and  estate planning.  Two examples follow:   Buy a community at about age 60, then sell at about age 70 when you start to wind down and reclaim your cash invested plus receive a mortgage that brings income until about age 90 to 100.  Work 10 years for the community and let it work twenty or thirty years for you.  Another plan starts earlier.  Buy a community while still working and let rents pay off the mortgage, producing a tremendous income at retirement time.  Whatever your financial plan, our job is to match your investment goals with a proper property investment to achieve them.  A chat in person or by phone will help us understand your goals…and recommend a proper investment.  We promise to be honest and frank.

Caveat:  The foregoing is generally descriptive of Mobile Home Communities and RV Communities, however some of our offerings are operated more like apartments when the community owns and rents the living units.  These generally offer greater risk, more intense management, and greater reward.

WHAT DO “RETURN RATES” MEAN?

Our property offering fact sheets describe return as “capitalization rate”,  “cash on cash rate” and “yield”.  The cap rate is the property’s net income divided by purchase price or the interest rate return if you paid cash for the property.  “Net Income” is gross income less operating expenses.  Cash flow is net income less debt service (mortgage payments).  Cash on Cash return is cash flow divided by down payment or the interest rate realized on cash invested.  Profit is cash flow plus principal paid off the mortgage over the first year.  Yield is profit divided by down payment.  All three numbers are useful in evaluating any investment while making sure that income comparisons from different sources use the same criteria.  Return rates tell only the story of the past or present, and not the future and may reflect current management’s ability rather than property potential.  Generally the market pays more (reduces return) for higher quality properties and those with high potential and pays less (enhances return) for lower quality or reduced future potential.  Return rates can help evaluate financing structure.  Cash on Cash rate substantially higher than cap rate indicates some combination of low down payment, low interest rate or extended mortgage term.  Usually the “yield” return will be very close to cash on cash.  Cash on cash rates near cap rates near cap rates indicate shorter term or higher rate mortgages and when accompanied by a fat yield rate indicate investment structure suited to investors interested in rapid wealth (estate) building at the expense of cash flow.

OUR NAME, MOTTO AND LOGO

A fortune is money kept rather than money made.  Fortunes accumulate as productivity exceeds lifestyle.  Fortunes earn on their own, with little personal effort.  These earnings are the time value of money, expressed as interest rate.  Relative risk of a capital sum dictates interest rate.  In money transactions no one repays more capital than they borrow, and capital is said to be fixed or static.

Fortunes are eroded by government’s practice of printing currency without backing.  This practice dilutes the purchasing power of capital over time.  In an inflationary economy money buys less when it is repaid that it did when it was lent.  True interest rate is the interest rate less the inflation rate.  True interest rate is further diminished by taxation on earnings.

At Fortune Real Estate, we plant fortunes by converting your static fortune into a dynamic property investment.  As property income rises with inflation it promotes an increase in property value which helps grow your fortune.  There always comes a time when you want to do something different with your fortunhe.  Then we help harvest your fortune by converting your enhanced fortune back to money, the universal exchange medium.

Our logo symbolizes the motto.  Your fortune follows the growth rainbow into the pot of gold at the end.  The pot symbolizes capital growth, while the coins around the base of the pot symbolize the spendable income produced while your fortune grows.

We specialize in Manufactured Housing Communities and Recreational Vehicle Parks because south Florida parks exhibit excellent income stability.  Parks also exhibit ease of management and an outstanding lack of risk when compared to other types of rental property.  If you lease a house or apartment and the tenant trashes it, who fixes it?  If the air conditioner, appliances, or plumbing breaks, who replaces it?  Who puts on new roofs?  When renting mobile home or RV lots, your tenant fixes all these things, not you!  And what can he do to destroy the land?

Fortunes are fragile with inflation at work.  A half-million dollar nest egg earning 10% interest will produce $50,000 of income.  28% taxation will reduce this to $36,000 spendable.  Maintaining a $36,000 lifestyle will exhaust capital (means you are dead broke) in just 21 years at 3% inflation or in 16 years at 6%.

Mobile Home Parks have sold for about a 10% capitalization rate for 40 years, but it’s a much different 10%.  In 1970 we could buy 183 average mobile home spaces for $500,000 cash.  Rents then were about $35, expenses about 35%.  Net income was $50,000 or 10%.  From 1970 to 1990 published inflation averaged 6% while park rents and expenses grew at an average 8% rate.  In 1990 lots in this park rented for $163, producing a net income of $232,600 and a sales value of $2.32 million.  For the last 20 years published inflation has averaged about 3%.  Now our average lot rents for $385 and produces a comparative net income of  $550,000 and a sales value about $5.5 million.  Where would you rather have invested your fortune?