High Yield Low Management Rentals

Topics: Landlording


I was just introduced to a program that exists in Florida, and indeed, may exist in other States. Here’s the background: Prisons are over-crowded. Most of the inmates are there on drug-related charges. Some for violent crimes. Many for sex-related offenses. Sex offender inmates can be further divided into three groups. There are those who are sexual predators; pedophiles who prey on children and make porn films. Then there are the those who are in jail because they beat women up and abuse them. The blue bloods among this group are those who were put into jail for molesting a minor who looked 21, but who was 17. That can get you 10 years in the wrong place.
In order to relieve prison over-crowding, prisons are beginning to parole certain prisoners up to a couple of years early. A condition of their parole is that they have to get a job and support themselves.   A certain percentage of these inmates are the last type of sex offenders. They have demonstrated a desire to rehabilitate themselves and have no history of violence or criminal activity other than their sex-related crime. Now, they must get a social security number (which weeds out illegal aliens), find a place to live that they can afford on the meager income from the jobs they will be able to get when it is known that they are sex offenders (and they’re listed in a national data base just in case they try to avoid listing this on a job application). Just to make the task more daunting, they aren’t allowed to live anywhere near schools or gathering places for young people. It’s at this point that opportunity rears its ugly head.
I recently visited a small mobile home park situated near the Interstate highway a few miles from the city center. It was owned by an out of town family, but run by two middle aged women. Seventy four of the residents paid $300 per month each to live in 21 ancient trailers furnished with thrift shop furniture. The park checked them out a bicycle to get to and from work until they could earn enough to buy there own. The park also had 15 other units in it occupied by their owners. Isolating just the 21 trailers holding 74 people; any of them could have been bought for under $5000, so let’s say that all together they represented an investment of about $100,000. This investment was grossing $22,000 per month with only minimal management and maintenance effort. Have I got your attention yet? 
My first reaction was that managing this park must be a very difficult job, but to my surprise, the managers said that these parolee residents were the least trouble of all their tenants. Anytime they failed to pay rent on time, or created any kind of problem, their parole was terminated and they were returned to prison; and they all knew this. I was also surprised to know that some of these people had saved up money in prison, or were receiving various pension and subsidy payments from various agencies. 
Most surprising was the fact, that because they were always willing to do odd jobs for the park and for the other residents, they all got along quite well, and they had cleaned up the park and the spaces around their units voluntarily on their own. Even more surprising was that, even after they had completed their sentences, they didn’t move out. 
The reasons were obvious. On any rental or job application they were going to have to admit they were sex offenders. Nobody wanted them to live near them, while those in the park had already accepted them. This has created a big back log in the prisons who would like to parole them, but won’t until they have a place to stay. The day I visited the park the manager got a call pleading for them to take more parolees.
With a pressing demand for beds, the park managers interview each applicant while still in prison, and minutely examine their records to weed out anybody with a past history of non-sex related felonies, violence, or any form of chemical addiction from glue to meth to alcohol. Then they are placed in a large double wide trailer that has been gutted and turned into a large bunk house. Initially, a local charity, or in some areas, the county pays their first month’s rent. If they don’t find a job and earn their rent before the first month is up, they go back to jail. Only when they’ve gotten established are them allowed to move into a bed in one of the trailers along with several others.
In the sex offender situation I visited, a mobile home park worked perfectly to provide a closed environment, but almost any other kind of dwelling would work too.   My mind runs to duplexes, small apartment buildings, and even converted commercial buildings. With so much cash flow available, and with demand growing at flank speed, this is something to look into in your State or County. Start by contacting the bureau of prisons and then work your way down to see what’s possible.
Your next step would be to see if any local charity, of the county, had an interest in providing clothing, furniture, counseling, and training. Also, since many of the people you’ll be dealing with are skilled workers including the building trades as well as now un-licensed professionals, contact people with temporary jobs where they can be placed and begin earning money until they find more suitable work.
Once you’ve got your ducks in a row, let’s look at a couple of other ways this pie can be sliced. First of all the park charges lot rent for the mobile homes. Where normal rent might be $250 per month, they charge $500 for effectively reducing management and maintenance costs. They also move in their own mobile homes and glomb onto those $300 per bed per month rents. 
The investors who had brought this to my attention had bought units and placed them into the park. With four people to a trailer, they grossed $1200 per month and paid out $500 to cover lot rent and utilities. This left them with $8400 per year earnings from a trailer that might have cost $5000. They also paid $25 per person per month to the screener who selected the tenants and keep their beds filled. That takes another $300 away from their gross income, but even so, over $8000 per year seems a reasonable return for a totally passive investment.
I’ve started nosing around for an old tired worn out trailer park on the edge of town that I can either buy real cheap, or lease for a few years. We recently had a couple of tornados go through a nearby town, and I’ve already contacted the owners to see if I can rent their recently emptied spaces. I’ve got some selling to do before I convince them, but I think its’ worth a try.
Let me know how you make out.

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