This Series of Articles is what I call “Behind the Scenes” where Limited Partners can learn directly from my mistakes and lessons on what to look out for in Mobile Home & RV Park Investing. I will pull back the proverbial curtain on the challenges and lessons learned from my journey into syndications and capital raising. It’s not an easy road—it’s filled with legal requirements, communication hurdles, relationship management, and the constant pressure to perform. Along the way, I made plenty of mistakes, but I also figured out what really works. I will share what I did and what I learned about certain topics so you can be better prepared in your Due Diligence.
I’ve been thinking a lot lately about those mistakes I made when I first started raising capital and taking Limited Partners (LPs) on board. Looking back, there are definitely things I wish I had known when I jumped into syndications—especially around the accounting side. It’s not something we talk about much when we’re out there hustling to raise money, but it’s one of the most important parts of running a solid operation. So I want to share what I wish I had known, and more importantly, what you as a passive investor should be asking your operator before handing over your hard-earned money.
The First Mistake I Made: Accounting
Let me tell you something—when I first started, I was relieved that none of my investors asked me about my accounting process. If they had, I probably would’ve panicked. And honestly, I wouldn’t have had a good answer. I thought I had it all handled: a cheap VA bookkeeper, a CPA who I barely talked to, and me trying to patch things together while also running the park. I didn’t realize how much not having the right accounting team in place would come back to bite me. I know many Operators start out doing their own books out of necessity, and that’s okay if its your own money. When raising capital and handling millions of dollars of Limited Partners money, it is our fiduciary responsibility to build a professional team to handle the accounting.
If you’re a passive investor, don’t make the mistake of not asking about this. Accounting might not be the sexiest topic, but it’s absolutely crucial. If the operator can’t explain who’s handling the books, how often they’re being reviewed, and whether their CPA is experienced with real estate syndications, that’s a red flag.
How a Bad Bookkeeper Can Cost You
Here’s where I really screwed up. My first bookkeeper was a $4-an-hour VA who didn’t understand property management accounting. I thought, “Hey, it’s cheap, and I’ll figure it out as I go.” Well, that didn’t last long. After a few months, my books were a mess. By the time tax season rolled around, I handed our CPA a disaster and had no idea what was going on with our finances.
Now, here’s where it impacts you as a Limited Partner. If your operator doesn’t have a competent bookkeeper, you’re going to feel it. When the books aren’t organized, everything gets delayed. That means quarterly reports are late OR non-existent, the numbers might be wrong, and when tax season comes, your K-1s might not show up on time, forcing you to file extensions. I have learned that many Limited Partners accept this as the norm in most Syndications. However, secretly the Limited Partners I talk to all complain about lack of communication and transparency. In fact when I listen to Andrew Keels, “Passive Mobile Home Park Investing Podcast”, communication and transparency is one of the most common things experienced Investors tell Limited Partners to look for in an Operator. If you want to know whether your operator is on top of things, ask them who handles their books and how often they’re reviewed.
Multiple Bookkeepers, One Big Problem
Fast forward through four bookkeepers and three CPAs—I finally found the right team. But those first few years were chaos. Every bookkeeper seemed like they knew what they were doing during the interview, but it always turned out they were either embellishing their qualifications or couldn’t handle the job. I ended up spending more time fixing their mistakes than focusing on running the parks.
If you’re an LP, ask your operator how fast they close out the month and can deliver financials. If they cant deliver a set of reconciled books by the 15th, it may be a sign that things aren’t as smooth behind the scenes as they should be. To take it one step further, ask them for a an copy of the most recent months financials from one of their current Mobile Home Parks. More specifically, ask for a break down on collections to-date, a per unit income and expense sheet is important for investments with Park Owned Units. The per unit income and expense breakdown is a good tell if they are really tracking expenses properly with an integrated work order and bill payment system. Here are two measurements you can ask for that they should be tracking, Operating Expense Ratio and Net Operating Income Growth Rate. If they cant provide those items, fairly quickly, it may be a hint that the financials are not as clear or as accurate as you’d expect. And that can directly affect the returns and transparency you’re hoping for.
What You Should Ask About Software
Here’s something I didn’t know when I started: using the right software makes all the difference in keeping everything clean. It took me a while, but we finally transitioned to a solid property management software (Rent Manager) to handle the Park Operations and collections, while we also use QuickBooks to handle the Property LLC to handle the overall books for taxes. Now, we can track everything—expenses, income, work orders—down to the specific lot. With Rent Manager we get the most accurate display of Free Cash Flow, and with Quickbooks reconciled, we have a true keeping of the books for taxes and K-1 reporting. This setup allows us to see where every dollar is going and how this will affect the year end reporting for taxes, which is key to knowing whether the property is actually performing as expected.
As an investor, don’t be afraid to ask about the software the operator uses. If they’re managing multiple properties, they need to have systems in place that let them keep track of everything. You don’t want to invest with someone who’s doing it all by hand or using outdated tools. That’s a recipe for mistakes, and in this business, mistakes in the numbers mean missed returns.
CPA Drama: What You Don’t See Can Hurt You
The first CPA I hired didn’t care about my business. I felt like I was just another number to them, and it showed in the work. I paid them a lot of money, but the financials were always off. Income didn’t match up with rent collections, the equity was wrong, and it felt like I was constantly fighting them to get things fixed. The worst part? They refused to give me the workbooks showing how they got to their numbers. That’s a major issue, because without that transparency, I couldn’t verify the accuracy of our reports.
For you as an LP, ask your operator how their CPA handles tax prep and reporting. Do they outsource the work to some overseas VA? Do they provide workbooks or a clear explanation of how they calculate things like partner equity and distributions? If the operator can’t tell you this or seems unsure, that’s a sign they don’t have their financials under control.
Why do I say this? The Operator should not just be running the Park you invested in. Instead they should be spending the appropriate time each week, month, and quarter to ensure the books are reconciled and accurately reflect the Operations. If this is done, you should be able to request a financial overview at anytime of the month and get a response withing 24-48 hours. If it takes longer it may be a sign they don’t focus on the money as much as they focus on the Operations.
What Does It Look Like When It’s Right?
Once I finally got my accounting team sorted, everything changed. We now have a process where the books are reconciled and ready for review by the 10th of each month. Any month end corrections or changes can still be made with enough time to have Books ready to send by the 15th of each month. As a result, we’re able to give our Limited Partners timely, accurate financial reports, and we no longer scramble to file tax documents.
I was speaking to my Bookkeeper the other day during one of our 2 weekly meetings, and we discussed how excited we were for this year end coming up. We no longer fear the end of the year reporting, but rather joked how finally we can have our books sent to our CPA by January 15th, whereas last year it took months to finalize and reconcile everything. It was good feeling, and shows how far we have come.
The difference for investors like you is huge. When your operator has their back office dialed in, you can expect transparency. You’ll get clear quarterly financials, timely K-1s, and real insight into how your investment is performing. You won’t be left wondering whether you’ll need to file for an extension because your operator can’t get their act together.
Key Takeaways for LPs
- How much time do they spend on the books: What is their accounting rhythm, how are they and how often are they tracking the numbers for the Investment.
- Ask about the bookkeeper’s experience. Don’t settle for vague answers. You want to know they’ve got someone with property management experience handling the books.
- Find out what software’s they use. If they’re not using an integrated system like Rent Manager or something similar, that’s a red flag. Just using QuickBooks is not acceptable.
- Ask about their Month-End Process. Are they able to close out any month or quarter quickly? Will they be able to provide financial reports requested quickly or will they have go build from scratch?
- Make sure the CPA is involved and qualified. Ask if the operator’s CPA specializes in real estate syndications and whether they provide clear documentation for their work. How long have they used them and how many of their Parks have they done tax returns for. Don’t be afraid to ask for documentation.
At the end of the day, accounting isn’t something most investors think to ask about, but it can make or break an investment. You have every right to ask these questions, and the operator you’re trusting with your money should have no problem giving you solid, confident answers.
Looking back, I realize how important it was to have someone guide me through the accounting process when I first started raising capital. I didn’t know what kind of bookkeeper or CPA I needed, and I certainly didn’t understand how critical it was to have the right systems in place. Over the last couple of years, I’ve grown as a manager and operator, building a team that ensures our investors’ money is responsibly managed and tracked.
As a passive investor, it’s not just about asking whether the operator has a bookkeeper or a CPA—it’s about understanding who they’ve hired and how they’re handling the accounting. Are they closing the books on time each month? Are they able to deliver accurate financial reports and K-1s without delay? Poor reporting and delayed tax documents are often signs that an operator doesn’t have a clear or streamlined accounting process.
If an operator is handing over a messy collection of receipts to their CPA at the end of the year, you can expect delays and potential inaccuracies. Many operators—myself included—start out thinking they can carry over the same accounting systems they used in residential real estate. Or worse, have none and plan on hiring after-the-fact, or doing it themselves. But managing a syndication or fund that deals with large commercial assets requires a whole new level of organization and expertise.
I learned the hard way that getting accounting right is essential not just for the operator, but for you as an investor. When you meet with an operator, don’t be afraid to ask about their accounting team, how they structure their financials, and whether they’ve ever experienced delays in reporting. If the answers seem unclear or they’re still figuring it out, that’s a red flag.It might not be a NO, but it could mean dive deeper and see how if they are improving, learning, and building those teams and systems. Delayed K-1s, vague financials, and lack of transparency in the books are all common problems for newer operators—and they directly impact your investment.Be sure to ask the right questions and feel comfortably your money is being tracked and managed properly.
I know I keep saying it, but Accounting might seem like just one part of running a mobile home or RV park, but from my experience, it’s one of the most important. Don’t hesitate to dig into this area when vetting an operator—it can make all the difference in the performance and reliability of your investment.
I may not have the biggest team yet, but what I do have, I have worked hard to attain. Through many mistakes, lessons, and hurdles, we have arrived at a small but high performing team. Something that provides a solid foundation for us to scale on our path to 100 parks in 5 years. It is an ambitious goal, I know, but one with the help of our team, the trust of our Partners, and the foundation we have painstakingly built, I feel confident we can build.
If you want to talk about this article or just Passive Investing in general, use this link to set up a time to talk to me on a Zoom Call and Let’s Talk!
-The MHP Operator
Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial advice. I am not a licensed financial advisor, and you should consult with a financial professional before making any investment decisions.
