Work for the park platforms or buy next to them?

Question

I've been running service calls for years and half of what I do is water and sewer under old properties. Two of the bigger park operators in my region have started calling around for contractors, one of them owns something like 30 communities, and it made me look at the asset class for the first time.

So now I'm stuck between two very different ideas and they lead completely different places.

One is that the trades knowledge is the product. These platforms are buying 1970s parks with clay laterals, master water meters, and 25 percent of the water disappearing into the ground. Somebody has to find it and fix it, across a lot of parks, on a schedule. That's repeatable revenue for a small crew, it doesn't take my own capital, and I'd be learning the asset from underneath, which is genuinely where these deals get won or lost.

The other is that I'd be selling shovels while other people own the mine. A park owner buys the land and the pipes, the resident owns the home, expenses run maybe 35 to 45 percent versus well over half for apartments, and people don't move because moving a home costs thousands. The cash flow is the reason institutions are showing up at all. Doing the repair work gets me a good hourly rate and none of that.

For anyone new here, lot rent means the resident pays the park for the ground and the utilities, and usually owns the structure sitting on it. That's why the operating costs are low, there are no interiors to turn.

I don't have the capital to buy a 60 pad park this year. I could probably have a two truck crew serving three or four communities inside a year. Curious which one this room thinks actually compounds into ownership rather than into a busier calendar.

derekj19 · Answer

The service route has a trap in it that nobody warns you about, which is that a 30 park owner will happily become 80 percent of your revenue and then renegotiate your rate in year two. I've watched that happen to a landscaping outfit. They went from three crews to needing a line of credit to float the receivables, and the owner knew exactly how dependent they were.

Doesn't make it a bad path. It means the version that works is serving four or five owners who don't share a vendor list, and pricing water loss work as a program with a defined scope rather than as hourly calls.

The piece I'd actually chase is the diagnostic. Anybody can dig. Very few people can walk a 90 pad park and tell a buyer, before close, where the 25 percent is going and what it costs to stop it. That gets paid whether the deal closes or not, and it puts you in the room while the price is being set.

tonyv88 · Answer

Managing these is a different job from managing apartments and I'd think hard before assuming the ops route is the shortcut, @solder.

What I see on the management side is that scaled park owners are short of people who can handle collections and resident relations across a portfolio, especially when a rent adjustment letter goes out and the phone starts ringing. That's the constrained skill. The infrastructure work gets contracted out, so it's real money and it stays outside the ownership.

But the pipes knowledge is worth more than you think in an ops seat. Most regional managers can't tell whether a $180k capital request for a lift station is honest, so they either approve everything or fight everything. You'd know. That's the version where the trades background turns into a seat at the table instead of a truck rate.

Work for the park platforms or buy next to them?

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