How to Protect Your Deal Before It’s Too Late

*Spoiler Alert: 80% of the time it's NOT the operators fault. BUT, 100% of the time it is, and its easily preventable.

Content By: Corey Woodruff,CEO of MHPdirect Communities

Blog Brought to You By: MHPdirect Communities

🏘️The Setup: Spotting a Home Run

You find a great opportunity — a 100-lot mobile home park, 70% occupied. That’s 70 paying

tenants and 30 vacant pads. The park is beat up but way under market rents………

Your model looks perfect:

• Bring in 30 used homes over 2 years
  

• Clean up the park, management, collections, and bad debt
  

• End at 95% occupancy (5% vacancy factored in)
  

• Boost NOI and refinance or sell at a premium…..investors eager after over the returns.

You raise capital. Everyone’s excited. On paper, it looks like a home run. Or is it?

100% Raise from investors with the operator getting minority stake at 15%-35%, putting the investors

in the majority for ownership (fine) and the investors in the majority for decision making (not fine).

⚙️ The Reality: Chaos on Day One

The moment you close, the real work begins.

You inherit the mess:

• 10 non-payers
  

• 2 abandonments
  

• Overgrown lots
  

• Backed-up sewer lines
  

• Burnt-out streetlights
  

• Manager who hasn’t collected in weeks

The Operator does what you’re supposed to do: file evictions, rehab homes, clean, rebrand, and start

sourcing new units. But the moment invoices start rolling in, investors get nervous. They’ve never

filled a pad. They’ve never bought, moved, or set a used home. They don’t understand that inventory

is tight or that setup crews are backed out 6–8 weeks.

So instead of trusting the operator, they start micromanaging:

• Demanding constant calls
  

• Requesting weekly updates
  

• Questioning every expense
  

• Delaying funding until “they check with advisors

🧨The Slow Burn: How Micromanagement Costs You

Your 2-year fill plan stretches to 4 years, not because the park failed, but because progress was stifled

by over-management. Meanwhile, you’re losing 8% of tenants per year — 8 homes lost annually due

to death, abandonment, or eviction.

The math:

• Start: 70 occupied

• Evict 6, → 64 paying

• Add 30 used homes (costing $600K–$750K all-in)

• Lose 8 tenants/year × 4 years = 32 tenants gone

Result after 4 years:
64 + 30 added= 94 BUT -32 TURNOVER = 62 occupied lots(4 YEARS LATER) YOU STARTED AT 70!

You spent $750K, doubled your workload, and didn’t move the needle.
It’s not poor operations — it’s poor alignment and mismanaged capital.

**One could say operator should have been filling those homes as they became vacant but remember the operator is no longer in control

the investor is and he says finish the homes you brought in first and do it for half as much as operator modeled and planned to have.

🕰️The Hidden Costs: Hours You’ll Never Get Back

Every hour spent on a two-hour call explaining cash flow is an hour not managing your park manager.
Every email thread about “why setup cost was $4,000 instead of $3,700” is time not leasing or

maintaining homes. Every investor venting stress over returns drains mental bandwidth that should

stabilize your community. These lost hours compound like lost homes, bleeding progress while you

soothe people who should have trusted the plan.

⚠️The Core Problem: Investor Emotions/ Operators Lack of Correct Contracting/ Deal Structure

Not market risk. Not management. Emotions.

When inexperienced investors steer decisions out of fear, ego, or impatience, they destroy efficiency.

They:

• Delay funding (paralyzing fill schedules)
  

• Undermine operator authority (confusing staff and contractors)
  

• Force short-term decisions that harm long-term value
  

• Exhaust the operator with constant communication demands

A turnaround isn’t a hedge fund spreadsheet exercise — it’s street-level execution requiring momentum,

speed, and trust.

🧭The Solution: Protect Your Deal Before It Starts

1️⃣ Set Clear Expectations Upfront

Spell out the full turnaround timeline, capital draw schedule, and expected operational volatility.

Investors should expect problems, not panic when they appear.

2️⃣ Include Dilution or Penalty Clauses

If an investor delays or stops funding, trigger dilution or forfeiture of voting power.
Operators can’t be paralyzed mid-project because someone “needs another week to think.”

3️⃣ Lock Communication Protocols

Include in the operating agreement:

• Weekly, monthly, and annual reporting formats

• Call frequency (e.g., one monthly update, one quarterly performance review)

• Mandatory acknowledgment by all partners — no exceptions

4️⃣ Define Operator Authority

Even majority investors should have limited operational control unless they have actual MHP experience. The operator runs the park according to plan, with flexibility for unforeseen delays or cost variance.

5️⃣ Control the Narrative, Not the Emotion

Remind capital partners that stabilization is messy and never linear. Momentum — not perfection — is

the goal.

✅The Big Picture

Investor fear disguised as “oversight” kills more deals than bad markets ever will.

The most successful turnarounds are calmly executed by operators trusted by their capital partners.

A project led by calm execution will always outperform one led by anxious control.

📊The Operator Plan vs. The Investor Reality Nightmare

The Plan

• 100 lots

• 70% occupied (70 tenants)

• Evict 6 → 64 paying

• Add 30 used homes over 2 years

• Total cost: $600K–$750K

• Projected: 95% occupancy (95 tenants)

The Reality

• 8% annual turnover = 32 tenants lost over 4 years

• 64 + 30 - 32 = 62 tenants

• 4-year delay due to funding pauses

• 150+ hours of investor calls

• $750K capital deployed → (-2) net occupancy gain

🔍End Result & Responsibility

Even reducing vacancy to 5%, you net only ~10 homes - Averaging $75,000 per discounted used home.

(a pretty far cry from your modeled out 20k-30k all in)

Now youre done with the 30 homes, and are forced as the operator to go back and beg for additional

funding stating the following: We need more capital to renovate the 20–32 homes that were turned over.

The response is usually far from understanding. Most investors won’t recognize that these losses

were caused by:

• Their delays and micromanagement

• Inaction

• Poorly structured contracts and deal terms
  
  

Rarely do they just hand over money — even though their interference created the problem.

Bottom Line:

• Micromanagement kills returns.

• Set expectations. Protect operators.

• Protect Investors from themselves.

• Structure deals right.

Blog Post Brought to You By:

MHPdirect Communities —

Where property owners nationwide go to sell for the

best price.Backed by one of the most experienced

teams in the industry, with 90+ transactions totaling

over $300,000,000.

If selling your community is something you’ve been considering — or if you’re simply curious about its value — click the link below and fill out the form today.
🌐 Property Evaluation: www.sellMHPdirect.com/propertyeval

🌐 MHPdirect Website: www.sellMHPdirect.com

🌐 MHPdirect Email: [email protected]

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🌐 MHPdirect Linkedin: www.linkedin.com/in/MHPdirect

🌐 MHPdirect Phone: (567)364-6257

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