Rock Hill Investments Inc.\": Trailer

Rock Hill Investments Inc.": Trailer Park Proposal

The purpose of this business plan is to develop a highly marketable mobile home park using personal resources in a sole proprietorship to be called "Rock Hill Investments" in Jasper County, Texas. This county has experienced healthy growth in recent years, and is deemed a suitable site for an upscale mobile home community. Therefore, by carefully selecting appropriate used mobile home units for this property, Rock Hill seeks to create an annual return on investment that will justify the initiative and provide further opportunities for investment in the future. To this end, this investor intends to invest $100,000 of his personal resources by purchasing 10 used mobile homes for $10,000 apiece and situating them on this rural property. The goal of this investment will be to produce a revenue stream of at least $48,000 annually, a portion of which will be reinvested in the property through upgrades to the property and through the purchase of additional trailer units, both new and used, in the future.

Introduction

Review and Discussion

Mission Statement

Executive Summary

SWOT Analysis

Financial Statements

Conclusion

Business Plan for Rock Hill Investments, a Sole Proprietorship

Introduction

This business plan is for a company to be called, "Rock Hill Investments" (hereinafter alternatively "the company" or "Rock Hill"). The company will be a sole proprietorship; according to Black's Law Dictionary (1990), a sole proprietorship is, "A form of business in which one person owns all the assets of the business in contrast to a partnership, trust or corporation. The sole proprietor is solely liable for all the debts of the business" (p. 1392). The property owned by Rock Hill Investment will be situated in Jasper County, Texas, and was inherited by the owner. By carefully selecting appropriate used mobile home units for this property, Rock Hill seeks to create an annual return on investment that will justify the initiative and provide further opportunities for investment in the future. A review of relevant information concerning trends in mobile home communities in the United States and specific information for Jasper County is provided below, followed by a mission statement for Rock Hill and a SWOT analysis of the investment environment. Finally, proforma financial statements for the proposed venture are provided, followed by a summary of the research and salient findings in the conclusion.

Review and Discussion

Background and Overview.

Jasper County, Texas was named for William Jasper, a Revolutionary War hero. Jasper County is one of 254 counties in Texas with an estimated 2004 population of 35,609, a.modest 01% increase from the 2000 census; however, the county has experienced a healthy 13.5% increase in population since 1990 (Jasper County, 2007). Eight percent of Jasper County residents report German ancestry and 11% report they are of Irish descent (Jasper County, 2007).

A political map of Texas highlighting Jasper County is provided in Figure 1 below.

Figure 1. Map of Texas highlighting Jasper County.

Source: Jasper County, 2007.

Some salient demographic and economic data for Jasper County and its residents are provided in Table 1 below.

Table 1.

Demographic and Economic Data for Jasper County, Texas.

People & Income Overview

Value

Rank in U.S.

Industry Overview (2005)

Value

Rank in U.S.

Population (2006)

Covered Employment

Growth (%) since 1990

Average wage per job

Households (2000)

Manufacturing - % all jobs in County

Labor Force (persons) (2006)

Average wage per job

Unemployment Rate (2006)

Transportation & Warehousing - % all jobs in County

Per Capita Personal Income (2005)

Average wage per job

Median Household Income (2004)

Health Care, Social Assist. - % all jobs in County

Poverty Rate (2004)

Average wage per job

H.S. Diploma or More - % of Adults 25+ (2000)

Finance and Insurance - % all jobs in County

Bachelor's Deg. Or More - % of Adults 25+ (2000)

Average wage per job

Source: Jasper County, 2007.

According to Stromberg (2005), many mobile home parks today are so-called "land-lease communities." This author notes that like the enterprise envisioned herein, "That means a single owner (or company) owns the park and rents lots to residents. While most mobile homes -- 55% -- are on lots owned by the homeowner, a third are located in land-lease parks, according to a 2002 survey by the Foremost Insurance Group, based in Caledonia, Michigan, which insures mobile homes. That number has remained fairly constant over the past decade" (Stromberg, 2005, p. 10). The monthly rent for the initial used mobile home units in Rock Hill will run approximately $400, depending on the specific condition and amenities in each unit. This is congruent with national averages that show monthly rents in land-lease communities range from $150 to more than $500, with just over half falling between $200 and $399 a month. In this regard, Stromberg emphasizes, "That makes living in a park a fairly affordable housing option, especially for those who own their units outright" (2005, p. 11).

Marketing for the enterprise envisioned herein will be targeted at middle-income residents of Jasper County as well as northern states where people are attracted to Texas for its warm winter climate. A Web site will be established early on to help promote the enterprise, as well as a series of open houses and promotional events designed to increase public awareness of the benefits of living in such an upscale mobile home community. In this regard, Hurley (2001) points out that there are a number of such advantages that can be used to help promote Rock Hill. Mobile home living frees homeowners from a number of onerous financial obligations; comparisons with conventional suburban housing invariably stressed the substantial cost savings achieved through lower purchase prices, cheaper utility costs, and lower maintenance expenditures. This author emphasizes, though, that:

This argument has to be crafted carefully, however, as industry boosters did not want to portray trailer owners as financially strapped individuals who adopted their way of life out of economic necessity. So, they took pains to emphasize that mobile-home parks catered to people from all walks of life; what distinguished trailerists from their stationary brethren was that they preferred to spend their money on consumer luxuries such as television sets, sports cars, and pleasure boats, and trailer living allowed them to do so" (Hurley, 2001, p. 225).

Because the emphasis at Rock Hill will be on providing an upscale community environment, these aspects of mobile home park life will be highly promoted in the company's marketing efforts.

Mission Statement.

The mission of Rock Hill will be to convert 10 acres of inherited land situated in Jasper County, Texas into a highly marketable, upscale mobile home community. To this end, the author intends to invest $100,000 of his personal resources by purchasing 10 used mobile homes for $10,000 apiece and situating them on this rural property (roughly $400 per month rental per mobile home unit). The goal of this initiative will be to produce a revenue stream of at least $48,000 annually, a portion of which will be reinvested in the property through upgrades and the purchase of additional trailer units, both new and used, as described further below.

SWOT Analysis.

The purpose of SWOT analysis is to help identify specific key issues and to help facilitate a strategic approach to the conduct of the business (Dennick & Exley, 2004). In this regard, the SWOT analysis is intended to identify the respective strengths, weaknesses, opportunities, and threats related to a given business situation. For the purposes of the SWOT analysis, strengths are considered to be positive aspects internal to the company; weaknesses are negative aspects internal to the company; opportunities are positive aspects external to the company, and threats are negative aspects external to the company (Dennick & Exley, 2004, p. 60).

These four analytical categories are applied to the proposed Rock Hill enterprise as follows:

Strengths:

Property already owned outright.

Investor has sufficient resources to entirely fund the proposed enterprise.

Investor is knowledgeable concerning the mobile home industry.

Investor has previous experience with the purchase of used mobile home units.

Weaknesses:

Lack of specific experience on the part of the investor with mobile home communities in Jasper County, Texas.

According to Stromberg (2005), the public perception of even upscale mobile home communities remains unsavory in many cases, and, "Many see mobile homes as unsafe; they're notorious for not faring well in hurricanes, tornadoes, and other extreme weather conditions" (p. 11).

By beginning the enterprise with used mobile home units rather than new ones, the investor may not be able to take advantage of any manufacturer warranties, will undoubtedly "inherit" some undetected structural problems (some of which may take place during the move to the new location), and may incur significant rehabilitation and refurbishment expenses.

Rural property remains without utilities and other requisite services and infrastructure such as roadways, plotting and mobile home pads, the specific costs of which remain undetermined.

Opportunities:

Web site will provide immediate exposure.

Paucity of upscale mobile home communities in the Jasper County region.

Jasper County has experienced healthy growth in recent years.