BiggerPockets Real Estate Podcast - 246: Surviving the Coming Crash, Earning 20% Returns, and Buying Mobile Home Parks with Kevin Bupp

Episode Date: September 28, 2017

When most investors hear the words “mobile home park,” they turn and run the other way. But not today’s guest, who’s found incredible success buying (and repositioning) mobile home parks. You’ll learn how Kevin Bupp got his real estate started with single family homes (eventually owning hundreds) and how that led to major problems in the last real estate crash. You’ll also find out how he’s making sure the next crash is different. Discover the incredible power of mobile home parks in generating huge returns in this less-popular real estate niche by learning Kevin’s story. If you are looking to generate huge amounts of cash flow, this is an episode you can’t afford to miss! In This Episode We Cover: The difference between trailer parks and mobile home parks How Kevin got started Why to not choose single family homes How to “stress test” your deals How (and why) he got into mobile home parks The target market for this investment Some objections to owning a mobile home park The average vacancy Kevin deals with Tips for financing mobile home parks The challenges of analyzing mobile home parks How a mobile home park is valued Advice for adding value to parks What you want to consider when investing mobile home parks How to find mobile home parks And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Facebook BiggerPockets Books BiggerPockets Webinar BiggerPockets Pro Replay Podio Insightly Commercial Real Estate Investing With Frank Gallinelli Credit Karma Breakthrough App Books Mentioned in this Show Set for Life by Scott Trench The Book on Rental Property Investing by Brandon Turner What Every Real Estate Investor Needs to Know About Cash Flow… And 36 Other Key Financial Measures by Frank Gallinelli The Slight Edge by Jeff Olson Tweetable Topics: “There’s like a million and one ways to make money in real estate. You just have to pick one and give it some time.” (Tweet This!) “We want to be in front of the sellers when they either decide to sell or need to sell.” (Tweet This!) “Everyone goes through challenges in their business.” (Tweet This!) “Tomorrow probably will provide the answer if you don’t give up today.” (Tweet This!) Connect with Kevin Kevin’s BiggerPockets Profile Kevin’s Personal Website Kevin’s Company Website Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 246. And we saw that happen. We saw the signs and we started trying to sell. We were starting to discount. We tried to sell for 85 cents in a dollar, 80 cents in a dollar, 75 cents. And we were like chasing this decline that we just couldn't catch up to. And so simultaneously what happened is a lot of these speculative builders that had these thousands of rooftop, brand new 3-2-2s, they weren't selling. I mean, they weren't selling them.

There's no owner occupants moving into these things. And so you're listening to. to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody?

This is Josh Storkin, host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. What's going on, man? Man, it has been a crazy couple weeks here. Yeah. And, you know, things are good, though. Things are really good. How's your pneumonia? Man, pneumonia is getting better.

Yeah, I had a slight pneumonia. That was fun. And I sold my 24-unit apartment complex. So that was a big deal. And I have 45 days or 40 days now to find something to put it in. Tom 31. If you guys have a deal, send it to Brandon. Thanks.

Yeah, it's actually one of the reasons today. I was really excited to bring on our guest today because I've been kind of actively looking for a mobile home park, as you guys probably know. And this guy is one of these smartest mobile home park investors in the country. And he's a guy that I look up to a lot. So, you'll hear more from Kevin later. But before we get to all of that, let's hear, today's, I'm great, by the way. Quick tip. Yeah. All right. Josh, Josh, how are you doing? Oh, hey, what's up, man? Hey, man, how have you been? How's your pneumonia? Oh, I'm, I'm spectacular. Okay. Tell me, tell me what's been new in your life. Here, sit down on the couch.

talk a little bit. Oh, man. Let's make Josh feel good. You know, I, this is all about me. I got to take my, I took my girls to see Frozen, the, the pre-Broadway preview of Frozen, which was, it was good, man. Hey, let it go. I'm not ashamed. Let it go.

I like it. Just don't hold it back. Don't hold it back anymore. Yeah, I tried. I try. Let it go. Turn away and slam the door. Can you shut up?

Here I stand. Okay. I don't know that's the words. Guys. Did you sing a little? along though and let it, like everyone sings along to let it go, right? No, no. Everyone sings along.

No, but it was, they did some really cool stuff on the show. This thing's going to be awesome on Broadway. It's going to be really great. So that was, that was good. And then this weekend we actually did bigger pockets. And I personally, we partook at the Children's Hospital of Colorado, 40th anniversary gala fundraiser. We were there to help raise money for Children's Hospital, which is one of my favorite causes.

very meaningful to me. And we were, you know, we through the company and me personally had given a lot of money. So really important to me. They did a great job at the gala. And I encourage anyone who's looking for a place to part with their money. Part with their money. Give it to Children's Hospital. It's amazing.

Yeah. I went to the I Survive Real Estate fundraiser at the same time you were doing that fundraiser, pretty much. Anyway, down and I went to the one. with the Norris group down in Southern California with Amanda Honey. Yeah, that one was supporting St. Jude's and make a wish. Like, yeah, like, they should play this video beforehand about like kids with cancer. I was just bald. Like I was like sitting there in this room with all these investors.

Like, I just crying because I'm like now that I'm a parent, right? It's like it's so different. Like I tear up right now. Just thinking about it. Like parents who have to deal with that. Like that's so sad. Anyway, yeah, give your money to stuff that matters. I mean, that's why we're in real estate is to.

Why? Right. Generally matter. Yeah, generally we can help others. So help others. All right. Quick tip. Quick tip.

All right. Now we're on such a sad note. All right, quick tip today is this. If you're listening to this at least like when this episode comes out, there are about 90 days left in the year of 2017, which means if you've got some end of the year goals, you've got about three months. You know how long it takes to find a property and then put it through the financing? You know, a couple months maybe, right?

You can do it a little bit faster than that, but it might take a little bit of time. So it's time to double down on your goals and really work hard to achieve them. So that's the quick tip is figure out what you're going to be done by the end of the year and then set some really ambitious and specific plans of what you're going to do each week. And if you want to know more about that, we are doing a live webinar on that exact topic this coming week, go to biggerpockets.com slash webinar. And if you're listening to this in the future and you want to watch a replay of that, if you're a pro member, go to the BiggerPockets, pro replay room, biggerpockets.com

There you go. Awesome. Well, we have a great show ahead for you. This is show 246 of the Bigger Pockets podcast. You can check out the show notes at BiggerPockers. pockets.com slash show 246. And hey guys, really, really quickly. We love all the ratings and reviews that you guys have been giving us.

Yeah. But we want more. We do. We really do. We do. We do. We're greedy. So jump on iTunes if you haven't already.

You know, maybe you listen to this on YouTube. Maybe you listen to it somewhere else. iTunes tends to be the largest audience of listeners. So jump on your iTunes and what is it, the podcast app. Yeah, and drop us a rating and review would really very much appreciate it on the Bigger Pockets podcast. With that, let's get into today's show. Today's guest, Kevin Bup is a real estate investor. This guy's really cool.

He starts as, I don't know, I think a self-described kind of failure in high school and ended up going to community college. And from there really just kind of fell into real estate. That was 19 years ago. It was fantastic story over the years. I mean, the guys done multifamily, single family. Hundreds of single family, hundreds of multifamily units. Absolutely. And mobile home parks.

Now mobile home parks. And we talk a lot about that. And that is, that's really one of the foci of today's show was the mobile home part. Yeah, you like that? You like that? Well, I mean, first, first we start with like the economy collapsing, right? Like how to prevent against that again. Yeah.

Yeah. Like the market, you know, was a little topy right now. And he. Topi. Wow, you in the words today. Can I just say something without disruption? Thank you. So, you know, he had suffered some serious pain in 08 when the market was challenging.

Challenging. That's like a four syllable word. You're crying out loud. Okay, three syllable. I'm literally being trolled by my own co-host. This is great. So we dive in on that and really specifically about mobile home parks. And the difference between that and trailer parks, because a lot of people are going to hear me say mobile home parks are like, oh, I'm going to tune out.

But we're not talking trailer parks. We're actually talking about an asset class that is not just, you know, meth heads and, you know, drug addicts and things. And this applies, like the stuff he talks about today, just take out the word mobile home park every time he says it and put in like apartment or what. A lot of the stuff you can apply it to other. Yeah. The direct mail conversation, unbelievable. You guys, listen to that. Yeah.

How he finds deals. So good. At the end of the, towards the end of the podcast, he talks about. that. Anyway. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow.

As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily. They focus exclusively on. landlords, whether it's a single-family rental, a burr-builders risk policy, or midterm holiday guests. You get fast quotes, flexible coverage, and protection for property damage, liability,

and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently without the usual bottlenecks.

It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like Same Day ACH, International Wires, Card, or Check, and set custom roles and approval policies. There's even a dedicated bill inbox for each property to keep everything organized. Ready to simplify your workflow? Book your free demo at bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets.

For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy,

all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a $1.1 billion dollar portfolio of real estate,

starting with as little as $10.00,000 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought-after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund. This and other information can be found in the fund's prospectus at funrise.com slash flagship.

This is a paid advertisement. Let's bring Kevin in. All right, Kevin. Welcome to the show, man. It's good to have you here. Josh and Brandon, looking forward to, man. Thanks for having me. Yeah, this should be a ton of fun.

So, Kevin, I listen to your mobile home park podcast, Mobile Home Park Investing podcast. Am I getting that title right? And so it's a... Yes. I definitely, after you listen to dozens and dozens and episodes of that, I'm like, I got to get this guy in the show. And, you know, we got to know each other. a little bit. So I'm super excited about today's episode because this is like my interest.

It's a, we're talking about mobile home park, right? Or manufacturer. Trillowel park. Hey, hey, mobile home park. Hey, we're looking more eloquent in the trailer parks out there. Yeah. What's the difference? There's, there's classifications. Trailer parks are basically weekly rentals with transient people in them that are just like literally run down shacks. And then there's mobile home parks, which are kind of like the middle of the level. And then there's manufactured housing communities. So, manufacture housing communities would be, so there's parks and I'm buying one right now. And then there's communities. It literally has two car garages. Oh, wow. Yeah, like you, if we had to, we'd probably live in one. I'm not saying that either was wood, but we'd be okay with it. You know,

it's actually a really nice community with like flags outside of the doors and nice cars and things like that. So I'm definitely disparaging. I just, I just wanted before we get started and I see that. You got some But the whole thing is we've got to show what people are like mobile home park, trailer parks. What do I give a damn about a trailer park? And so let's just create that context right up front, right? This is about investing in not just like the bottom of the barrel where you're dealing with addicts and all sorts of difficult tenants. This is we're talking about communities, mobile home park, higher end and the very highest end of the mobile home. Yeah, I mean, yes, yes, no, it's kind of like any other, any other real estate asset class.

I mean, apartment buildings, right? I mean, there are drug-ridden rundown places that you, even if you're packing heat and you're like 350 and like bulked up, you still wouldn't go to at night, right? Brandon just saw his. Yeah, so Brandon, Brandon knows firsthand. So kind of the same thing, right? I mean, where you can buy those decent places that are in really nice communities, but that are repositioned opportunities to where you can take a D class, turn into a C plus or B minus. That's kind of what we do. I mean, that is our strategy.

That's a type of park that we typically invest in. We buy in a great market with great schools, great demand for affordable housing, but maybe the previous owner hasn't done a great job. They've let some of those transient people and the people that we know there's good people out there waiting. Oh, we've got to get rid of the bad. And sometimes it's harder than others, but that's kind of our business. But our communities are full.

I mean, we require that they have jobs. They've got to improve income. And so we've got good hardworking folks that like their kids that go to good schools. and like to pay their bills on time. I mean, that's what we look for. Yeah. That's cool. Let's get into that in a minute.

I want to kind of take it from the beginning because that's what we usually do. So how do you get going in this world? So, you know, you do mobile home parks and other stuff, but how'd you get started? Yeah, yeah, yeah. I guess it goes back to really high school. I'm 38 today. And today's your birthday or like now you're 38? No, no, no, no, no, no.

I'm 38 this year. Okay. Oh, okay. I was going to sing. you a song, but whatever. Happy, happy, happy. Yeah, yeah. Yeah.

But I know everyone's got this story, but I really was a horrible high school student. I mean, I barely graduated high school and just didn't really have direction. I just wanted to have fun. And so I didn't go away to school. I went to community college because I didn't want to waste my parents' money. And I got a job bartending and just was had on fun, not really with no direction of life whatsoever. And I got lucky at the age of 19 where I was introduced to a guy.

He was actually dating my girlfriend's mom. He was like 20 years older than me. And long-starched, we just struck up a good friendship. And I found out he was a really. real estate investor in Pennsylvania where I was from. And I'm pretty sure that he saw like a misdirected child in me. And I saw it in him, this older guy that had been successful and had created success for himself. And so without me even knowing it, he kind of started me started taking me on this wing. He invited me to a three-day boot camp. I don't know if you guys are with Ron LaGrand. I think he's still

out there teaching in this world. He teaches basically, you know, fixing and flipping and wholesaling homes. And I got taken to a boot camp when I was 19 down in Philadelphia, three-day boot camp, how to make money, of flipping homes. And that was start of it. I literally went to that seminar, didn't know a thing about real estate. I never read a book. I mean, I'd even know what it really meant for him to own properties and actually cash flow from them. And I went to this boot camp and just met some other people that I didn't think were any smarter than I was and said, if they can do it, I can do it. I don't know what that means yet, but I can do this. And I'm going to put some time and effort into it. And basically, it was his mentee for a year. I mean, I followed him around. His name was Dave.

I followed him around. I essentially did anything. thing he wanted me to do for him. Met with contractors, helping with paperwork. I did that in between my classes and attending bar at nighttime. And did it for about a year before I went out and bought my first property. So that was really how it started. I bought it. I really run down Roe Home in Harrisburg, Pennsylvania.

It was scary. It was that type of property that you should pack heat. I should bought it. I wish you would have directed me away from it. I always give them crap out of that. I say, why did you let me buy that property? I mean, I made money, but it was scary. And it was a bad part of town.

I still a bad part of town. And that was the start of it. So I continued buying. From that point on, within a year, I quit bartending, quit going to school. They get my A, but didn't finish out school and figured I would put all my effort in real estate. And so this is all I've done since that point in time of my life is invest in real estate full time. I've owned other businesses, but real estate's always been my core business. And I've owned hundreds of single family homes, hundreds of apartment doors.

And for the past five years, our sole focus has been primarily mobile home parks. So that's the long and short of that's a. condensed version. 19 years. Yeah, long time, long time. There was a period of time after 2008. I got hammered in 2008, so it was a challenging time for me. I took about three years off and I started a few other businesses that were not related

whatsoever to real estate. I just, I needed some breathing room and I wanted to do something a little different and just not necessarily try to forget about real estate, but I got hammered pretty hard. So those three years, I did not invest in any real estate actively, but did jump back into it right around 2011. So, and I've been doing it ever since. Nice. All right. So that's awesome. Crazy. Lots of stuff there. Lots of talk about. I want to talk about 08 again. We do it every 10, 20 shows. We kind of dive in on what happened then. I want to do it because every conversation I have with smart people today is market's crazy. Markets heart. Hot. Really hard to find a deal. Things are overpriced. Brandon, I know you were just at an event this weekend where some top economist was like, you know, we're in a really. precarious time, you know, things are things that were on the precipice. You know, I hear a lot of that

from really smart people. I feel it and I feel other people who are very intelligent feeling it. And so what I'd love to hear from you is A, what exactly went wrong for you in a way? And then to follow up, given the sentiment that I'm hearing and seeing, how can somebody who's concern that we might be, you know, at the end of the cycle and at the beginning of the downward one, can people kind of protect themselves? Yeah, and I'll start by saying that every market's different, right? I mean, we all hear that saying, you know, real estate's local. So, right?

You're in Denver. Brian, I forget, you're out in Seattle somewhere, right? Yeah, yeah, Washington State. And I'm in Florida. So all three of us are kind of been very cyclical markets, right? I mean, all three of us are in markets that go up pretty crazily, but also experienced a lot of that crash in 2007, 2008. You know, what happened back then, I'm not going to say that if I'd go back again, I would have done anything much differently.

I mean, knowing what I know today, I wouldn't have bought single family homes. I think that was one of the biggest downfalls for me. And there's nothing against single family homes. It's just, it was what I was taught initially. And so I was really good at it. And we had a pretty big system in place. And I had some partners that owned hundreds of more properties than I even did. And I, you know, we collectively worked together.

And so we had a big machine. It's kind of like steering a cruise ship, right? Like changing course, it takes time. You got a preplan. And it just were like, well, things are going fine. we're going straight ahead. Let's just keep doing it. So single family homes, I would say that just from a 10,000 foot view, it was a very inefficient business model for us, just from the managerial standpoint. And we knew it. We just didn't make the change fast enough. But that wasn't really what killed us. And we were very particular about buying at highly discounted, discounted rates. I mean, we had that model. We would never pay more than 65 cents in a dollar. So we had a ton of equity on paper in our properties. And we really thought we were cash low investors with our single family homes. We did. We were possible. of cash flow, but it wasn't sufficient enough to where any type of correction, we would be able to survive if we saw a mass decline in either the rental rates or even the values or a combination

to the two, which is what happened in our portfolio. And so what really happened down here was, I guess, probably a little bit unique, not that it didn't happen in other areas. Arizona is probably another state in Nevada where this similar scenario took place. And at the same time, that I own a lot of single-family homes. I own apartment units as well. But the single-familers really the thing I think they were like the nail in the coffin. There was a lot of spec builders down here down in southwest Florida. I'm talking like building hundreds and thousands of rooftop, brand new homes for a population that wasn't really even coming. I mean, this is back in the day when a new home bill would be flipped three or four times before it ended up in the last person's

hands, right, before it was even completed. I mean, I don't think things are as crazy today as they were back then, but that's what was happening. So what really happened to us that, number one, value started dropping really fast here. You know, the market started tightening up. a little bit. And we saw that happen. We saw the signs and we started trying to sell. We were starting to discount. We tried to sell for 85 cents in a dollar, 80 cents in a dollar, 75 cents. And we were like chasing this, this decline that we just couldn't catch up to. And so simultaneously what happened is a lot of these speculative builders that had these thousands of rooftops, brand new three, two, twos, they weren't selling. I mean, they weren't selling them.

There's no owner occupants moving into these things. And so a lot of them have construction loans. Most of them had construction loans. And so they started renting out these brand new homes because no one knew how long this correction was going to take. No one knew how dramatic this downturn was going to be. And so we went through a period of time, you know, eight to 12 months where we were getting poached. I mean, these brand new home builders were literally renting out their units for sometimes less than what we were renting out like a home that was 30 years old, right? 3-1. I think you move into a brand new 3-2-2 for the same price, maybe even less. And we had a mass exodus in our occupancy in a short period of time.

And that that combined with literally our equity went kaput. There were some areas where we saw we lost more than 50% of the value. And then rental rates had to drop a little bit as well in order for anyone to survive. You know, landlords started trying to compete against these spec builders that were renting out these new homes. It was just an ugly, ugly cycle. And it got to the point where instead of having cash flow each month and having checks come in, we were writing checks to simply make up the difference of the debt service that we had. And it really became a strategic decision on our part.

We knew that we literally, there's no way. way that we could survive for years that way. In fact, we'd be out of money very, very quickly, probably in less than a year if we continued down that road. Number one, some of them were upside, a lot of them were upside down, even though we were at 65% when we bought them. They're upside down. And they're negative cash flow. So it's like, what do you do? Right. So, yeah. And I know we're going to get to the second part of the question, but I mean, that's, that's scary. If you're paying 65 cents on the dollar, I mean, it's hard to imagine. imagine that you can't cash flow. That you can't cash flow. I mean, that kind of thing should

send shivers down the spine of any real estate investor. And so let's go to the second. Insurance down here play a big part of that as well. I mean, taxes and insurance in Florida are significant. This is shortly after 2004 was a bad hurricane year for us. Hurricane Charlie, I think it was Charlie Ivan and was Katrina that year? I can't remember. But Charlie hit us really hard down here. In that area, we own a lot of properties. And so insurance. is just incredibly expensive, especially in these older structures that are, you know, within 10 miles of a coastal area, which a lot of them are. And so insurance is expensive and taxes are expensive on top of it. So, you know, it's just, it's a challenge to cash flow in some of these markets down here. And so what we looked at, we looked back to that, you know, we were really buying for appreciation. On our balance sheet, we looked phenomenal. And we were cash flowing, but we weren't really cashful investors. Not in the sense that I am today. You know, cash flow is number one priority today. So, so for somebody who's not, Maybe in a better market, maybe in a safer market, you know, less risky, less risk prone to get natural disasters, things like that.

How does it irrelevant, actually? You know, like, how does somebody protect against a market decline like that? Is there any way to do that or is it just, you know, make sure you're not stretched too thin? That's it. Make sure you're not stretched too thin. I mean, now when we buy mobile home parks and we look at things a little differently, through a much more conservative. And I thought I was conservative back then, which is the funny thing.

But we always run our properties nowadays. Like we always do conservative projections, but we also, none of us know like capital market, what's going to happen to the capital markets in the next couple of years as far as interest rates are concerned or what type of LTVs will be available in loans even, you know, like I see multifamily properties. Like they're getting like three years interest only and, you know, 30 plus year emmerizations. I mean, it's just crazy, 85% loaned the values. And we don't know if that's going to be there.

And so whenever we buy a property nowadays, we run it through like our own, it's like our own proprietary stress test. And so it's essentially a pro forma that has different scenarios involved, meaning like if it's got a five-year balloon on that property, what happens if year five we go to get refinancing and it's 8% rates or 9% rates? Or, you know, we can only, we can't get any cash out at that point in time. It's just going to be a rate and term refi, meaning we can't get the capital back to our investors. And we just got to continue holding onto this property. Like, what happens then? And so we always run.

I think that to answer your question, be incredibly conservative, but also think about worst case scenario and run your property through that model, what the worst case scenario. is rents don't always go up like they are now like they don't always go up for seven day nine 10 years forever it's not an attorney thing there's markets that can see a decline in rents and i think we're probably going to there's going to be some markets that get overbuilt with apartments where there's going to be start concessions being given by other apartment complexes and hey free tv over here free one-month rent you know what i mean like that happens and it's part of the cycle so just be incredibly conservative don't always think that the road goes up yeah sometimes the road goes stagnant or goes downhill Yeah, that's so true. And I like that idea, the stress test. I think, you know, no matter what kind of investing you're in, if you're in mobile home parks or in your whatever, you know, single families, whatever, stress test your deals. I'm doing that when I flip a house right now, which I don't flip very often, but when I do, I'm looking at what happens if the market drops between now and then 20 percent? Like, can I at least get out? You know, that's also why most deals that I do. In fact, every deal I do is a rehab of some kind, a repositioning of some kind. So whether it's small or large, everything I want to build equity immediately. Now, granted, I

I could maybe just find a little bit better deals, but they're so hard to find right now. So what I'm looking for is anything that is, you know, a value at opportunity. So that way if the market does collapse 20, 30%, like hopefully then I'll always be broke even and hopefully the cash flow is still going to be there. So again, stress test. I think that's a really, really good tip. So let's talk about then switching over to like, how did you make that transition to mobile home parks? I mean, we're going to do a segment here in a little bit. I got like the section written down of common objections because everyone's got objections to mobile home parks.

I want to know for sure. Like how did you go, you know, I think we'll do a park. Yeah. Well, I mean, just to give a little bit more of the background story of me. So at the same time, we own single family homes, we also had, I like to say, accidentally acquired a few hundred units of apartment doors. And I say accidentally because it wasn't really part of our business model. I just, you know, a 50 unit would get sent to as we look at it.

We didn't even know how to properly analyze that apartment, that apartment property. But that part of our portfolio actually ended up being okay. But we had to sell at the bottom of the market, most of them. And we didn't sell at the right time, but that's because we didn't sell at the right time. but it's because we were so strapped for cash. Anyway, I look back at my business after all this had happened. And you step back and said, hey, what really went wrong and what should I have changed? And the one thing I identified was that at least to me, and there's not, again, I'm not harping on single family homes because they can make great investments for some people, just not me.

I felt like my business, the multifamily side of our apartment buildings didn't take as big of a hit. And they just kind of, they supported themselves. You know, we did buy them right. We didn't know really what we were doing in that space. I mean, we know to manage them, but we weren't buying it. but we weren't buying or analyzing as we should have, but we just got lucky, I think, in most cases, they were just much more efficient, much more scalable.

I mean, it literally took the same amount of the time to buy 500 apartment doors as it did to buy 120 single-family homes. Actually, probably took more time to buy those single-family homes. And so looking forward, I said, you know, I've got to do multifamily. I mean, like, I'm not getting back into the single-family home. Now I'm married. Now I've got kids. I'm going to have kids.

And, like, my life is different. I don't have all this time to rebuild all these single-family homes because it takes forever to get a big portfolio going. And so I knew it was going to get back in the apartment space, or at least multifamily. But so I was out there talking, this is like 2010, 2010, 2011. I was talking to every single person that I could get in front of that was actively an investor in the multifamily space. And like a big investor that owned at least a few hundred units because the climate had changed, right?

The landscape changed from 2006, 2007 era to 2011, right? Still a lot of distress in the market. Things were different. Real estate, a lot of people were still scared of it. And so I was talking to his many people. I couldn't. I got introduced to a gentleman that had been in the manufactured housing space for 30 years from the financing side at first, but then also retired and then started buying communities himself because he had been involved in it for so long. And I had lunch with him and literally left that lunch after about an hour, an hour and a half or so basically telling myself, I'm going to give it a year. I'm going to focus on mobile home parks. He piqued my interest with a lot of different things. I'm going to give this a year like I was going to for multifamily to buy a community and see how it went. And so that's what I did. He literally, he just piqued my interest with enough facts. within this industry that I thought were unique enough. And I thought that there was a lot of opportunity there that I got excited.

And there I went for a year. It took me about a year and I have to buy the first one. But that was it, man, just at lunch with someone that was an operator that, you know, made it sound like it was a better space to be in than the apartment space. And here we are today. So let's talk about that. I mean, really quick before we go there. You mentioned we a couple times. Who is we?

It's not a super partner. Yeah. Yeah. You know, our company today is a little different than it was when I first bought my first couple mobile home parks. The first couple of parks I purchased, I purchased with an older partner that I had owned a lot of other property with in the past. We used a lot of our own money. We did have some private investors come in, but I mean, majority was our own money. And today, our business structure is a little different. We've got a full-fledged syndication that we have

together, a fund that we raise capital from passive investors. And so today, there's three principles in our group. It's myself and two other individuals that make other principles of our company. And that does not include the guy that I own, you know, a couple of the original mobile home parks. So when I say we, I mean, Sunrise Capital Investors is our company and there's three principles in our organization. Got it. Perfect. All right. So what are those benefits? What did that guy tell you about mobile home parks that piqued your interest? And what can you tell our audience? What are the benefits to them? So there's a lot of them. So I'll try to keep it. I'll try to keep it somewhat short. But one of the big ones that I thought was interesting is he kind of asked what my complaints were about,

you know, the residential housing space. You know, like what were the complaints that if I could change, I would. And one of them was like turnover, right? I mean, in the apartment space or single family rental is you have turnover. And a lot of times it's depending on the market, I mean, for the most part, it could be every 12 months, right? I mean, if not sooner than that. And so, you know, when he started talking about manufactured housing and how they own their home, for the most part, you know, we do own a lot of the trailers. It's just, that's not really our business model, but that comes with the other territory. But in any event, majority of our homes in our parks, the people own, the residents own their own home and they just rent a lot.

And so he went on to explain that it's pretty expensive to move these homes. once they get set in place, very rarely do they ever leave? And so, and if they did leave, there's really not many other places that they can go that's any cheaper. So there wouldn't really be a strategic advantage for the home to ever leave that park. And so the turnover is incredibly low, being that they don't get moved out often, more so they get sold. So if a resident wants to move, they have to sell their trailer, continue paying a lot rent whilst for sale. And then the new person moves in and they continue paying lot rent. So that was one of the big ones that I like, just low, low turnover. Another one would be the maintenance aspect of it, you know,

with an apartment or a single family home rental. You've got to maintain the plumbing, the AC, the roofs, all that stuff. They own their own home. All we're maintaining in a mobile home park is the infrastructure, which is the water and the sewer lines and the roads and the common areas. And if their AC breaks, if their roof starts leaking, if their skirting gets broken, whatever it might happen, they're replacing that and they're repairing it. So they're not calling us in the middle of night and they're not bothering us with those

types of things that, you know, have a lot of variables involved with them. And for us, it's just the infrastructure, which is fairly easy to, to handle. Another big one is the returns. I want to start by saying this. You can make great returns in any type of real estate if you buy it, right. Okay. So I'll start by saying that. But with that being said, every market that we own mobile home parks in, if you compare it apples to apples, if you could, took the same size apartment complex, same demographic, I would pretty much guarantee that you're going to find at least a 2% yield premium that you're going to get as far as returns are concerned on that mobile home park.

then on that apartment building. So the returns are significantly higher. We've got pretty high expectations. And on that, we don't have a property today in our portfolio that doesn't meet or exceed 20% annual cash on cash returns. And that's real levered debt. That's not like 5% down. That's like legitimate 25 to 30% down type debt.

And so the returns are just awesome. Again, got to buy it right. We look at a lot of stuff. Brandon, just like I know you're looking at this space. Look at a lot of stuff that doesn't make sense. But there's still a lot of opportunity out there. And I think where the opportunity comes from. And this is one of the last big reasons that he gave me is that there's an aging population of the original owners and developers in a space.

It's not that old of an industry. When you really look back at it, the majority of the parks that are out there today were built, you know, between the 60s and the 80s, with the majority of them being in the 70s. And so it's not really an old industry at all. But a lot of those original developers are still in the space, meaning like they're like in their 70s and 80s and sometimes 90s now and they still own these things. And so they're aging out of the assets. And they also, it wasn't all that sexy of an asset class, 15. 20 years ago. And so they were kind of like the redhead stepchild in the real estate space. Now that's changed, a lot of them haven't really realized that's changed. A lot of them

haven't really run it like a business. They haven't consistently kept rents up to marketplace. They haven't in-filled empty spaces. They just haven't run it like a business. And so there's been a lot of opportunities. In fact, I'd say, I don't know, 80% of the parks that we own today, I'd say the average age of the seller was 65 plus years of age. And they just, and most of them had a tremendous amount of upside and rents and just operational efficiencies. general. And so I think there's still a lot of that out there, lots of mom and pop owners. And that represents a great opportunity for people like us that operate like a business. We're professional operators. And we're looking to get in and maximize the revenue and make it

run as efficiently as possible. So those are just some of the top ones. Like he piqued my interest and I dug deeper to see if it was real to see if there's really an opportunity there. That's cool. Yeah. So one of the things that, you know, I want to, you know, that we talked about all the good things. I want to talk about some of the bad things. But one of the things I've noticed as I'm analyzing deals, I mean, I've made it clear, I think, on this podcast before, that, you know, I'm, I really love the idea of buying a mobile home park. Now, I, the reason I'm looking at it isn't so much, I mean, like, yes, it's all those reasons. But when people ask me, well, mobile home parks is better than everything else, I say,

well, not necessarily. But for me, it was about picking one thing and going with it. You know, I knew I wanted to get something bigger. I knew that there's a lot of competition, but, and this is advice for everybody out there, whether you care about mobile homes or not. Like, I could have just chosen, I wanted to buy a certain size multi, multi-family apartment, right? I could have decided I want to do family flipping. It doesn't really matter. I can find a millionaire in every single category of real estate in every single location in the country. Right. Like, they're everywhere. But you'll never do anything if you don't pick something. So if for people who ask me all the time, why mobile home parks, I picked it. It kind of sounds like you did too. Like it's, it sounds fun. It sounds good.

It'll work. Pick it. Yeah. I'm one of those guys. I mean, I've got to have like, I've got to have focus. Like I know my downfalls are and it's me trying to spread myself too thin, chasing other shiny types of objects, which could be other real estate types. Right. There's like a, million-on-one ways, if not more, to make money in real estate. You just pick one and give it some time. Like, don't even, like, don't give it a month or two. Give it a year at least. And just learn everything you can about it, dive in deep and just commit to, you know, making it work. Because, again, there's a million ways to make money, just pick one and focus on it. Not that you can't expand later on, but until you actually become incredibly successful and, you know, the top of your mark, whatever niche you choose,

don't worry about anything else. Yeah, I love that advice. I had a conversation with a guy last week who was, like his model is to buy, like, properties in, like, Los Angeles and other, like, rent-controlled areas that have horrible returns. Yet he's making a killing off of it. And as I talked to him, I realized, like, I'm going to actually try to get him on the show here because, like, his model was fascinating. And it was all on predicated on buying rent-controlled, low, like, buying a two or three-cap property in a rent-controlled area. But that was his strategy. And he knew how to work just that strategy just right so that when people moved out, he could bump the rent up and it was, anyway, fascinating.

But the point was, like, he picked a niche that he just wanted to become the best at. Now he's the best at that one little niche. Yep. And so, yeah. So those people listening right now who have been listening to the show for four years now and saying, I just want, you know, every week you're like, oh, that sounds fun. That sounds fun. That's fun.

That's fun. Just pick something and do it. So that's it. All right. It is easy. It is easy to kind of get distracted each week or each episode because we've got different topics and different people with really cool stories. You guys are the blame for that.

Yeah. You know, I take some blame. Mostly, blame it on Brandon. Thanks. I had one more that I tend to hear a lot on the mobile home parks, which is they're one of the more recession-proof asset classes in the real estate space. Would you agree with that or disagree? Yeah. I mean, yes.

There was a study done too. And I think it went between 2007 and 2012. And I, for the life, me, I can't find that study. And I don't know who wrote it, who was done by. But they had the lowest default rate in the lending space as far as loans are concerned between that time period, 2007, 2012, mobile home parks did. So that's one fact. But, I mean, really, if you just think about it from a logical standpoint, you know,

when people go through hard times, whether they're like a dual income household and one person lose a job or they get demoted and their income goes down, they tend to kind of move down the ranks, right? And so here's how I look at it. And I know that this isn't necessarily 100 percent. how it will work, but just think, follow me here for a minute. You got an A class apartment building. That's all they're building nowadays, right? That's all they're building. These really high-end apartment complexes. They can't afford those. They move down to a B-plus or a B-grade apartment complex.

Can't afford that because, you know, whatever, the kid wants to go to a real expensive college and they're also not making as much money. So now they've got to move to a C-grade apartment complex. After a C-grade, you start talking about D-grade, which is a place that we talk about scary, you've got to pack heat. It's just not a fun place to live. You don't want to put your family there, right? You're putting them in harm's way. that point in time, your next most affordable option is a manufactured housing community. And it's not necessarily that it's lower quality or, you know, less desirable. But it definitely is like you move down the ranks.

Mobile home parks across the country, like the average lot rent for a mobile home park is somewhere in the range of like $325 a month. And that's taken some really high markets and some also really low markets. Right in the middle or about $325 a month. And there is nowhere in this country that you can live in a safe. environment and how is your entire family for $325 a month. And if you can't afford to live there, then you're literally underneath the bridge or on your buddy's couch, right? I mean, like, there's no other options at that point in time. And so I really believe. And these aren't low-end communities. These aren't like rough places that are scary. They're in places that have good

school districts. They have a better sense of community than most apartment complexes do. Get your yard. And, and so I really think that it's becoming a more well-known choice for people that are renters. It's starting to get a stereotypical image of like trailer. trash and all that. It's starting to go away a little bit in this industry. It's making a big shift. And so do I think they're recession resistant or proof? I mean, proof probably not. I don't think anything is but resistant. I think so because affordable housing is an incredible high demand today. And if we go through a downturn, it only, the demand only goes up, right? Even in good times like when right now, we are not meeting the affordable housing demand in this country. And it's just not being

built. I mean, it's not coming out of the ground. Everyone's building these really high end, a class type community. So I really think it is one of the most recession resistant assets you can invest in. And so, and that's why. I mean, it's just there's no other affordable place you can live and house your family and have a place you've around than a mobile home park. So yeah, makes sense. Make sense. I got an RV this year and we've been going around to RV parks and getting to experience RV parks, which I know a lot of, I know a couple mobile home guys who are also doing RV parks. And it's, you know, very, very similar model. except one is more like a vacation rental, whereas the other one is long-term.

And it's a cool model. And like you said, the required maintenance on these things is really relatively low and easy. So, yeah, I love it. It's great. It's great. Yeah, I mean, the RV park space, we don't know in that business. We do have some RV spots in a few of our parks, but that is a different business model, a lot more management intensive because you have a lot of people coming and going.

But yeah, that's a great demographic. I mean, majority of the people that are traveling in RV. I mean, I think that's an expensive hobby to have. And so the stability of that type of business when you're catering to that clientele, it's great. I mean, you know, most, you're probably one of the younger people I know that. I don't know how old you are, but you look a little, you're definitely probably below 40. He's pushing 70.

Hey, look at the, I like this guy, my favorite guest. I'm below 40. I'm assuming when you go to these RV parks, most of your neighbors are probably 60 plus in age, right? They are. They're great. Oh, my God. They're awesome. They're not against it.

Yeah, yeah, yeah. They're in fixed incomes. They work their entire lives. They've made good money. They don't get pensions. They've got investments. Yeah, it's a great, great class to serve. Yeah.

And to go back to what we said earlier, I bet you we could find lots of examples of RV park owners who are millionaires because of that niche. Oh, yeah. They picked that niche and they rocked it. Like, again, it just like every single niche you can find people that are multi-millionaires from it. Absolutely. So, again, just pick something.

The tiny house movement's actually starting to make its gorgeous way into the RV parks. and we haven't done it yet. Only because tiny houses are so damn expensive, like the cost per foot to build. Like, it's at least where we own parks. It's not a logical housing option. Maybe in like a trendy area,

like an Austin or Asheville, North Carolina or something like that. There's one in Denver now. I just saw one. They just built one like, you know, eighth of a mile from our office, which is fascinating. You know, it'd be interesting to see how the economics of the tiny houses

over time creating tiny houses. over time creating tiny house communities would relate to that of a mobile home park. But yeah, they built one. They needed affordable housing. And so they built a tiny house park for homeless folks in the city of Denver. And it's great. It's close. It's clean.

It looks great. I mean, the whole thing is wonderful. And they're doing this experiment right now. So we'll see. Hopefully it catches on and we can deal with some of that lower income housing crisis that we're having here in the country. Yeah. No, I agree.

All right. Well, let's switch over to the objections. I mean, I want to actually, in this little segment of the show, we're just going to fire a bunch of objections at you. The things you've, I'm sure heard when people say, you know, when you say you do mobile home parks, they're like, oh, isn't it? Whatever. So we're going to fire those at you. So what you got to say. All right. So first one, I don't want to deal with low income tenants.

Yeah. Then don't. Okay. That's your choice of what kind of mobile home park you want to invest in. Okay. As is with any, you know, if you're going to be a single family home investor, that's going to have a rent. or an apartment investor that's going to have rentals and have, you know, annual leases and such, you kind of get to choose what grade of asset you want to buy. The same thing goes with

mobile home parks. Like I said, what we buy, I would say that we make our money because we solve problems. So we'll buy parks that in great locations, great school districts, people that, you know, like the average median household incomes, 40 plus thousand a year, which isn't a lot. But, I mean, they make money to have jobs. There might be a bad element in that community, but we know that we can get it out. And there's plenty of good people to replace them. So my suggestion would be if you don't want to deal with bad people at all, you can go buy stabilized property. But maybe if you're okay with just dealing with them temporarily, you can do what we do. We buy value at properties in great markets, kick the bad out and bring the good in.

If you go buy a park in like the middle of the ghetto that's got weekly rentals and you said you didn't want to deal with bad people, then that's your fault. Don't buy that type of property. So I think you really have a choice on what type of tenant base you want to deal with. I mean, at the end of the day, all of our residents and our parks are all highly responsible. respectable people. And you know, we get the bad apple here and there. It happens anywhere. Even if you had a high-end apartment complex, Manhattan, you got the bad apples, right? So, you know, the goal is just to have strict management processes and procedures in place, you know, background screening. All of our people have to have jobs. They have to go through background checks.

We don't let felons in. We don't let people with, you know, negative rental history. And if they've had an eviction in the past, forget about it. It's your job to filter out the bad. And so it's very easily doable. And, yeah, so just what I say is don't buy one that way. Don't want the people in there. If only somebody had written a book on the book on managing rental properties, you could probably apply that. There you go. Which you can get a biggerpockets.com slash store.

Or rental book. Or rental book. And you can get that one with a book on rental property investing. All right. So next question. Next. Your objection. You want to take it?

I object. Mobile homes decline in value. I can't do this. They do. They do decline in value. I mean, they're depreciating asset just like a vehicle is, right? But that doesn't mean that, you know, there's a couple different components of the business. There's, if you want to have rental trailers, and, you know, like typically we get the same amount

of rent or we don't get much of a premium for rent. If we have a, let's say we have a 1985, three-bedroom, two-bats, single wide, I'm going to give you actually a real example of a park in North Carolina. We have it rents for $6.50 a month. It's like on a rent-to-own type program. 6-50 month. That includes a lot rent and everything. We've got some brand-new homes in that community as well that are three-bedroom, two-bathroom,

literally brand-new, never lived in. And for those, we only get, I believe we get 735. a month that includes, you know, the lot rent and the payment. So we don't get much of a premium. So if you're going to be in the business and you're going to actually own these things and you're right, they depreciate in value, but the rental value is still there. Like the rental value is, it's not going anywhere. They can be maintained just like a normal house can, meaning like they don't necessarily have a shelf life. Like they don't completely like become obsolete when they're 30 years old. We've got some trailers in some of our parks that are like,

back from, I think the oldest one we have is like 1968, but it's been reconfigured. It's got new, like a new roof on it, it's got a pitched roof. It's floor plan had been reconfigured probably 15 years ago. It's all electric upgrade, no gas. I mean, you know, so you can make these things, whatever you want them to be. But if we went to sell some of those, yeah, right. And we'd get 1960 a trailer. We'd get like probably two grand for it, right?

But it still gets $695 a month in rent in the market that it's in. So, yeah, I don't really, that doesn't really affect my business at all as far as them depreciating and value. It's just, it's one of those things. It is what it is. Yeah. So I don't know how else to answer that other than it's not just not a big deal. And your bread and butter is not, your bread and butter isn't owning the homes themselves. I mean, that happens from time to time.

But the bread and butter is owning the park and getting the lot rent, not dealing with somebody renting the unit itself. We own, I don't know the exact number we own. We own over 100 of them, the trailers, but it's just because the parks that we purchased that came with rental trailers. Like the previous owner thought it was a good business model to have rental units. He thought he made more money that way, which is not normally the case at all. And so we acquired them.

but we always have a priority to sell those off and to turn either the existing renters into just a lot renters, meaning they own the home or let them, you know, move out their, you know, move out and their lease, whatever and sell it to someone else that, again, is going to be coming along. Because we know once they actually buy the home, they're going to be a long-term resident. Like the chances of them leaving after that is next to none. Or they'll sell it to someone else and that person will continue paying a lot rent. But, you know, when we buy a park that's got rental trailers, we definitely don't pay a premium.

them, we're still using like our old single family model. Like we are buying them at a fraction of what we know we can turn out and sell them for. So we always, we don't care about making too much money on the homes. We have to sell them. And so even if we paid $5,000 for a trailer and it's really worth 10, someone came in and they gave us eight for it. We would take it because we know that person's going to move in there. We're going to the lifetime value of that resident is going to well exceed that $2,000

that we even just lost on that trailer that we sold. So we're not in the business of losing money, but we're not also not in the business of making money from these. trailer. So being the fact that they depreciate, it doesn't really make a difference. As long as you don't overpay for them in the front end. That makes sense. Hey, really quick before we get back to the objections, what kind of, what is your average vacancy in your parks? Yeah, right now, I think across the board, we're running at 90, yeah, 96%. And that would, yeah, yeah. And that was a fewer, I mean, fewer higher, a few are slightly lower. It depends what stage of the turnaround.

Because right now we have, we have two parks that are currently in the repositioning stage that probably drop down that average a little bit. And then we've got multiple others that are, you know, stabilized and such. So, yeah, but it fluctuates somewhere between probably like 93 to 97 percent, you know, depending on what properties we've just acquired and where we're at with them. There you go. Perfect. All right.

Next one. And this one I'm going to, I actually met with my CPA, Amanda Hahn, just this past weekend. And we talked about this mobile home park. And she said, from a tax standpoint, this is my biggest problem with them. She said, you can't depreciate the cost of a mobile home park that's owned by tenants because it's not your home. All you can depreciate is the improvements to the land. So it eliminates a lot of the depreciation benefits of owning real estate. She said, so you're not going to get the same tax benefits as owning something else. No, you're right. That is true. I mean, there is an accelerated

component to it. So it's 15 years versus, what is it, 27 and a half years for multifamily. Yeah. So there's an accelerated component. But yeah, you're right. I mean, you're depreciating, you know, the infrastructure, the roads and the sewer lines and the water lines and, you know, common areas, any kind of outbuildings or management offices and such. I mean, if you own some of the trailers, you can depreciate the trailers. But, I mean, if you don't own the trailers and you're right, you are limited in that capacity. So it just is what it is.

You know, it's one of those things it is what it is. All right. But on last objection, I guess. It's hard to get loans on a mobile home park. It can be. Yeah, it can be. I would tell you that it's probably one of the asset classes that the banks, as far as their understanding across the board, either the banker gets it or they don't.

And it can be frustrating depending on the type of park your buying. I mean, especially if it's a massive turnaround type play, and if the owner hasn't kept good books and records, which is pretty common in the mom and pop space, it can be incredibly a challenging financing unless you've got a relationship already or you've got a track record. But the good part of that, so there's a good positive flip side of that. And this is played true in most of the parks that we've purchased. You can a lot of times play that to your advantage, depending on the seller in their situation. And we very commonly get owner financing because their books are horrific or they've kept like handwritten ledgers and which are you can't read.

And so a lot of times we'll kind of, you know, not coerce them, but, you know, persuade them to consider owner financing. Number one, ends up being a much more of a benefit for them from a capital gain standpoint, but also a benefit for us because now we get financing. And knowing that if any other buyer came along, they're going to run the same challenge as us that they try to buy it and the bank won't finance it. So once you get to a certain classification, I guess, quality of a mobile home park or, you know, like said, manufactured housing communities are like the really nice ones. There's plenty of programs out there. Fannie Mae will lend on them, lots of CNBS lenders, but typically loan amounts, two million and above, and they've got to be higher quality park, you know. So they can't necessarily be like parks that have a lot of rental units, parks that maybe

have a lot of empty pads in them or are struggling financially or the not good records in place. So there's financing. It's just if you want to compare it to the apartment space, I feel like banks are like throwing money in apartments today. Like you could literally say, well, I just quit Subway the other day and I'm about to buy 50 property and they would lend someone money on that property with no experience in that space. They would throw money on maybe competing for that business. In the mobile home park space, it's slightly different than that.

So it is a more challenge. But I think that where there's a challenge, there's always a benefit for people like us, right? If you're willing to stick your nose to the grindstone and figure it out where others, you know, give up and you can make a ton of money. And that's one thing I love about that I kind of learned, I think, from you in your podcast was, you know, there are all these objections people have, but that's what makes it an asset class that is really enticing because most people, like when I talk about it, what do they say? Oh, I would never buy a trailer park.

Great. Don't do it. For me. Yeah, exactly. Like, great. Yeah. I mean, it's kind of like, you know, I like to tell you when it's in the real estate business, right? We're all real estate investors here.

You make the most money being a real estate investor when you can master the art of being a problem solver. Yeah. And so all these other problems that these other buyers find, like I can't get financing, you can't do this, can't do that. I mean, we literally have a property right now that we're having a challenge and getting it's probably the most challenging properties ever. at and I think it's where it's at in South Carolina. The Carolinas, for some reason, the bankers are like 20 years behind the times. And like it's old, it's a good old boy network. And I'm not a good old boy. And I'm from the northeast. I'm a Yankee in their eyes. You know, so like it's been an incredible challenge. And it's a great park. It's got good financials. And so we're bringing more likely bringing a partner that lives in South Carolina because they want to they want to lend for someone that's in their state that's got a local, you know, local presence there. And so again, we're just, we're going to overcome their objections by this bringing someone.

and locally and partnering with someone that we trust and know that can help us get this deal done. So again, just solving the problems, right? Find the solutions to the problems. Well, you know, and you mentioned a minute ago this idea of a lot of owners don't keep good records. I want to speak to that for a second. What I've found now is I've been getting leads on mobile home parks for a few months now, right?

And so here's a difference when you're analyzing a multifamily that gets sent to you or a mobile home park that the owner calls you or whatever, right? It's like, I got to these owners and they're like, okay, well, how many units do you have? Ah, like, 75 or 80? No, maybe 90. and you're like, you don't even know how many units you have. How can I run the, what's your average rent? Well, I don't know.

I think a lot of them are around 400 bucks, but some of them are cheaper than that. Okay. So, like, that's been the biggest problem for me is that it doesn't, you know, I talk about this on the webinars we do every week. You can analyze most deals in like five minutes on Bigger Pockets Rental calculator or the flip calculator. That takes like five minutes to run the numbers. Maybe a few more if you got to go and actually dig the data up, like what's the

taxes. Mobile Home Parks take me like an hour, two hours, just a, find the data. I mean, I'm not the fast setter, but like, like, if I'm trying to figure out, like, what are the taxes on this property and how does that county figure their taxes? Like, things like that are or how many units are there or how many, you know, what the average lot rent? I can't get that information half the time from these owners. They just don't know. I don't know if you're running into that, but man, I get really frustrated with that. All the time. I mean, that's why for the most part, you know, there's a couple general rule of thumbs I like to

use to come up with a really quick and dirty value. And so at least I can tell on the phone when I've got an owner like that that doesn't have any information or as long as he knows, like, how many lots are there, how many are rented, what the average rent is on the park, how many park on nobody has, what are the rental rates, how many are occupied, how many are vacant, and also what the water and sewer situation is like, is it a well and septic? Is it a county or the city who pays for it? If I can get those general information from them, not even like what the expenses of it, I can at least come up with a rough and dirty that should get me within 10 to 15% of what

a realistic value is, whether or not they're running or right or not, it doesn't matter, but I could still come up pretty close. And so if I come up with a rough number that, you know, tells me that's probably somewhere near a million. And once I get to the part of the conversation where I ask them what they think it's worth, and they say three million, I know we're really, really far apart. And so then I'll dig a little deeper and see if I can get them to tell me how they came off that number and then see if they'll, you'll provide supportive documentation to prove it.

So, but normally I just try. I don't, because a lot of them are just their expectations are out of this world. Most of them just have no idea. They just think it's worth what it's worth because that's what it's worth. Yep. It's like, okay. So what does a mobile home park work then? I mean, you know, is it valued similar to an apartment?

Are we looking at some multiple? Yeah, I mean, it depends on the market that it's in. But I'd say on average, we're typically buying parks. And there's different variables here that might change that scenario. But somewhere between like a 9 and 10 cap is what we're buying parcel. But, you know, there have been instances where we've overpaid for a park in a big way. where we, you know, in your eyes, we would have paid a five cap for it based on actuals, but we knew that the operational inefficiencies, we could change very quickly.

And the rents were also way below market. And, you know, that park was up in Richmond, Virginia. And that probably is one of our best parks to date. And within four months, we effectively bought it out of 15 cap, you know, after we did fix the minor problems that were there. So, yeah, I mean, we overpay a lot. Technically, we overpay a lot. And it's only because the books are so bad. And we know the problems that are there aren't really big problems to us.

and we can fix them quickly. Yeah, people ask me, well, I was going to say, people ask me from the time of I'm like, what cap do you want to buy at? And I'm like, it's kind of irrelevant because I want a value add, a value at. So like, it doesn't really matter. It could be a two cap, but if I can fix it up to make it a 20 cap. That's it. You know, whatever.

I don't even use that. I don't even care. I don't even care. I mean, it really matters on the sale, right? So if you're like doing a pro forma and you want to try to, you know, figure out what your total IRA is going to be after five or 10 years, then you need to apply a cap rate to it to, you know, to try to determine, you know, what that. pie in the sky is going to be like five or ten years from now.

But other than that, cap rate really is irrelevant. And everyone's going to run it differently. And it just doesn't mean the same on the buying side. So on that note, do you, when you look at a property, so I know most apartment complex operators, when you buy an apartment complex a large one, especially like syndicators, they are looking at that sale at the end as the primary way to make money, right? They're, their cash on cash is going to be two, three, four, five percent. But they know that they can add three million in value over the course of five years.

And then on average, once you take up. the sale and all the proceeds, they're going to average 15%, right? Is that how you look at mobile home parks? Are you like, we're not, we're going to make it valuable whether we sell or not? Yeah, so it goes back to the original conversation of like really investing for cash flow, right? Like real money, real money that's spendable that's in our pockets each and every month or our investors pockets each every month or every year. And so in our space, in fact, we have a syndication and we, and we, you know, provide,

your projections in our investor perspectives, but we don't even mention IRR. I mean, it's there, but like, it's definitely not, not our main market. marketing metric that we use. I mean, we use annualized cash from cash returns because that's real money. That's not projections out five, 10 years of what cap rates are going to look like at that point in time. And so for our current fund, like our, you know, based on conservative projections, it's 12 percent annualized cash and cash returns. And our IRAs, this is based on current properties we own, knowing how they operate, but also we buy the same types of properties in our fund that we, that we own. Our model is very similar. 20 percent plus IRA over the, you know,

whether it be a five and 10 year span that you look at. out of that. We'd be looking to push 20% overall. So, but annualized cash for cash returns is that's the real number. And that's how we analyze them on the front end. And that's also with real debt. Like, that's not saying, well, I got this for 5% down. And this is a 40% cash from cash return. Like, that's great. But like, what's it really look like when the day comes when you actually got to put real debt on it? And you got to, you know, yeah. So cool. But yeah, cash on cash is it, man. That's the real metric that I think everyone should really live by as far as what the returns are going to look like. The apartment guys have been having a great run, and I hope they all

continue to have a great run. But when you're looking out five years and you're projecting, you know, selling on a five and a half cap or a six cap, and that's the only way you're going to hit those, those IRR projections. I don't know, man. Like, there's a certain point in time where it becomes incredibly risky. It's just like game of hot potato. I know, I just, I refuse to really play in that space. It's just not, not of interest to me, especially when there's only like two and three or four percent annualized cash on cash returns at play. So, it makes sense. If you want a short term rental, here's something worth knowing. Not all landlord policies are built for your type of property. And with holiday bookings, chilly weather, and higher guest turnover, having the right coverage

is more important than ever. Steadily offers insurance designed specifically for short-term rentals, covering property damage, liability, lost rental income, and even unexpected issues like bedbugs. Steadily works exclusively with real estate investors. So they understand the details that make short-term rentals unique and they build coverage to match it. A quick review of your rates and coverage every year can help you protect your property and your cash flow. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, rental property insurance for the modern investor. For decades, real estate has been a cornerstone of the world's largest portfolios.

But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the fun-rise flag. Flagship Fund. Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10.10. The portfolio features 4,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well

diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio. Check out his historical returns and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement.

All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry. Now, they're the fastest, too. They just launched 10-day DSCR closing. That's right, 10 days. And they're still the only lender with the DSCR price. beat guarantee. That means faster closing. The best terms. Zero guesswork. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion.

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts that help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring

right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Makes sense. All right. So I go, I find a mobile home park. I find somebody who's willing to sell and what we'll ask about how we find those afterwards, but you buy value add parks. How do you add value if you don't own the homes? Are you like putting like putt putt ranges in the parks? Are you having like a putting a little kitchen with a, you know, somebody flipping burgers? Wouldn't that be awesome? Yeah. Like have like a commissary would be amazing. No, I love that. I have to have to run that

past the team, man. No, I mean, I want 12% of all proceeds generated. Yeah, right, right. flipping burgers. I love it. I love it. I mean, there's really a couple of big common ways. I mean, we always like to say, like the low-hanging fruit of upside with a park. And I'm going to give you an example of a park we're in contract with the day. It's up in the Buffalo market. It's literally the nicest park that we'll own. It's the one-to-two-car garages I was telling you about it. It's really nice. And the mom and pop that owns it. They've developed it, you know, 35 years ago. It's a gorgeous community. Their rents are currently at 260. It has raised them 10 bucks. The market is anywhere from 4-65 to like 530. And though I make the joke with our partners that I don't I'm scared that we're not

going to keep that park as nice as what it is when we take it over. Like it's just like because we don't have to do a thing to it. I mean, it's it's well groomed and manicured. So that park there and it's 122 lots, 120 are occupied. And so I mean, it's for all intents of purposes. It's full. I mean, it's full. All you have to do is raise rents. That's a little all we have to do that park. That isn't we are overpaying for a little bit, but we're going to we can hit our returns with it, uh, year one, not a problem. And that's just raising rents. Now, Now, other ways to add value is a lot of times we'll buy parks that have, they'll have maybe some vacant park on trailers, maybe their rental units at the, you know, what happens commonly with these older mom and pops is they're just not really good at budgeting overall expenses or putting reserves aside. And so they start getting these rental units that get the tenants tear them up, they get them back.

And it's going to cost them three grand to renovate. Number one, they try to do it themselves. And then they get the second. And then they get the third. And they start stacking up before they know it. They've got like eight vacant trailers, which is very common, sometimes way more than that, they're sitting. there and disrepair, sometimes a couple of years. And so us, we won't pay really much of anything from the trailers, but we'll get them. We'll dump a couple of thousand dollars into each one of them

and turn around. And, you know, now we've got a lot rental on top of any other profit that we might have made on the sale of that trailer. So that's another big way, that value. But operationally is probably one of the biggest. I mean, as far as like just normalizing the yearly operating expenses, it's very common that you'll see mom and pops that they run their car through it. They run their health insurance, they whatever gambling habits they have. You know, I mean, like literally everything goes in their payroll. Like, they're just bad at managing people. So maybe their payroll has got like four employees. Park we bought Richmond, Virginia, small park, 52 spaces at three full time people on payroll, plus a manager, plus a full time handyman. So five guys where the one handyman should have been doing

all the handyman work. He was basically delegating, like a property manager. And I'm like, uh, uh, that's not going to work. So we literally shaved out like $65,000 off their payroll for the overall all expenses that park, literally just by firing three people and saying, do your job, man. You can't hire other people to do it for you. So that's very common in the space to find them to where it should be a 40% expense ratio, but they're currently operating at 70%. And a lot of times it's very easy to change that and to bring it back down. So those are just some of the big ways of how we add value.

I'd say that. And then the very last way to add value, which is probably the most difficult way to do it is a lot of parks you'll find have empty lots. Like there would be empty lots. maybe it's 100 space park and only 70 of them have trailers on them. So you've got 30, you know, sometimes fully developed pads that have hookups and everything is getting trailers in there, you know, meaning like you're going to go buy used trailers or bring new ones in. It's very capital intensive. And it's also just takes time.

It takes time to get a move, to get them set up, to get them permitted and to get them sold off. So that is probably the hardest way to capitalize on the upside. But there's still a good opportunity to do so. So you probably wouldn't buy like a park that was like, I mean, I kind of see them on like, you know, loop net or whatever. they're like 90% vacant. And they're like, tremendous upside, you know, just bring in part. You know, that's a lot of work. Yeah, that's challenging.

I mean, now, if it's like, it depends, you know, it depends. You know, because if it was in, like, Austin, Texas and I could buy it, right, I know that if I put 90 trailers in there, they would move in a heartbeat, like, Austin. Like, like, it would get filled probably in a matter of a year. If it was in, like, middle of North Carolina somewhere, absolutely not because there's always in, like, the middle of nowhere. Yeah, yeah. Yeah.

Yeah. Yeah. So, I mean, we want to park up in North Carolina now that we've owned for a couple years and we're just starting to capitalize on the other vacant lots up there it's got 52 vacant fully developed pads it's 130 one space community and huge demand right near raleigh i mean just a huge demand for for housing and we're at the point out where literally we can if we get a unit back i think we still on like 13 units now if we get it back it sells like before it's even like we don't have to we having renovated like the last three because the guy's like i'll take it as is

i'll pay you cash here you go um so we know that we can move new units when we bring them in we'll have no you know, occupying when that marketplace. So that one, it didn't scare me to buy, you know, that many empty pads that were there. So is, is there a size of park that's too small? Like, you know, 10, 10 lots, 20 lots or is there like an optimal number? Yeah, I mean, the optimal number that I would say for most people, if you're going to get started, is between probably 30 and 40 lots. You know, the smallest park we own is 35.

You know, it's in a great market, really high lot rents. But really what you want to consider is the ability for you to, for that park, you know, for that park, to create enough revenue that you can afford to pay an onsite manager, unless you're going to be the guy, unless you want to go live in the park and actually run it day to day, you want to be able to afford to pay somebody. That means give them a free lot of rent and probably paying them a small salary to do that. And so obviously, the larger the park, the more opportunity you'll have to, you know, be able to pay so in a reasonable amount to oversee the daily operations. Also on top of that, if you're looking at a park, let's say that it's a smaller park. Let's say it's 20 spaces. and let's say it's on septic systems or a well or whatever.

And let's say one of the septics fails in that park and you got to put a new one in. It's going to cost you $4,000 to put a whole new septic tank and leech field in. That $4,000 over that small of a park, I mean, that's going to crush your, you know, your red. That's going to have a big impact on your bottom line for the year. Whereas if it was a 60 space park, probably not that big of a deal, right, to have a $4,000 unexpected capital expense. And so some other considerations are how far away you are from it. You know, travel expenses can eat up a lot of a smaller.

parks revenue for the year. I mean, if you live in California, you bought a park in South Dakota, we're talking about it. And you have to, you know, spend $500 for an airfare and two nights, three nights in a hotel. It's a small park. That's a big percentage proportionally speaking of your revenue for the year. Whereas hiring space park, it's already, I mean, it's just, it's a drop in the hat. It's not that big of a deal. So that, I mean, that's really, if it's, if it's right next to your house in your same neighborhood, maybe you can manage it yourself, maybe a 10 or 20 space park will be fine. You know, I'm not saying that like you shouldn't cut off.

You shouldn't look at anything smaller, but you just got to take those other items into consideration. That's really good advice. All right. So last question before we go to the fire round. How do you find mobile home parks? And I know that's a loaded question. So yeah.

Yeah. So, I mean, that's one thing that we're really, really good at. We pride ourselves on our ability to find great deals. And, you know, the common way that a lot of people, like just with any other type of real estate is brokers.

You know, there's industry related brokers in this niche. That's all they specialize. And I will say that's probably a little more challenging way. especially in the part of the real estate cycle we're in, you pretty much have to fight to get attention because obviously they've got their buyers list and, you know, which they should,

they should be selling to their past clients that have bought from them before that they know can execute. And so getting on their radar and for them to, you know, seriously pass you a real good deal, probably slim to none chance that's going to happen. They'll give you like the leftover crumbs, which probably aren't that good of a deal. That's why they're real buyers and buy it.

And so we like to take the more roundabout approach. I don't like begging for deals. And so we've kind of created our own, you know, deal flow or funnel. And we've got our own database that we've developed in multiple different markets across the country. And we just do direct marketing. And we do a lot of code calling.

We do a lot of direct mail. And I mean, that is where we have found, trying to think here, I guess probably about 85% of the deals that we own today and that we have in contract even have been a direct contact to an owner. And that works for us. Deal cycles are a little bit longer there because a lot of these people weren't ready to sell when we contacted them. A lot of these times we've, I think our longest deal cycle today is two and a half a

And the first time we've got a response on a direct mail to the time we close like two and a half years because they're not ready to sell. You got to build a relationship. A lot of times that's emotional with these people. They've owned it for a long time. They want to sell to someone they like. And so we've gotten really good at this developing rapport and building, establishing relationships with operators, knowing that we're in the business, knowing that when the day comes, they'll think of us. And so we stay in a we stay in continual contact with them. Christmas cards, Thanksgiving cards, happy fourth of July cards.

You know, any reason to stay in front of them so that when the time comes, it's all timing, right? Like, we want to be in front of them when they either decide they want to sell or need to sell due to other reasons. And we want them to think of us when that time comes. So that's what we do. That's how we do it. And brokers work out well. They just, it's tough in this market. That's all.

So we want good deals. We don't want broker deals like highest and best offer. You know, everyone's going to overpay for it. I'm not going to. I love that mail strategy for any part of the real estate business. I think most people. And they think about mailing, they think about yellow mail or postcards. But the idea of just staying in front of somebody's face with holiday cards, I think is brilliant.

Yeah. Yeah. Anything. You know, now there's a couple cool tools out there. I'm sure you guys are familiar with a slide broadcast. That's another tool we're starting to implement in our business. No. No.

You call them and then it goes straight to their voicemail instead of. Yeah. So you can pre-program a message, a voicemail, and it drops it on their cell phone. So, like, you know, if you're ever out of area and you're like, you know, if you're like, how do I miss that call? Like, I just got a voicemail. It literally does that to them. So they think that they literally just missed your call and they've got a voicemail there.

And it's you saying, hey, this is just Kevin, just checking in. I haven't talked to you in a while. You know, we'd love to speak with you about your park whenever you have a moment. Give me a shell. That's awesome. Yeah. So you can literally upload a thousand phone numbers and send that same message to a thousand different people all at once.

So it makes it a lot more really accessible to stay in contact via phone as well. But I mean, we got like our CRM and we kind of prioritize like who our hot ones are. the ones that like, we know they're making the decision soon. And so like, we need to put a little bit more emphasis on this guy before someone else comes along. So that's how it works for us, man. I think the problem that a lot of people have with direct mail that get into it, they do like one mailer and they don't get a deal out of it. And then they just stop doing it.

Whereas I promise you like the momentum that gets the momentum, the momentum doesn't get built until you've done like six, seven, eight, nine, ten mailing campaigns. I mean, and then you'll stop like three years down the road. You'll be like, so and so will call you all at this mailer. you send them like three years ago. And I held on to this. It's in my drawer. It's like you got to get the momentum going. You got to stay consistent with it.

And just make sure that your message gets to them on the right day. It's kind of like, you know, tire companies do this. And so do credit card companies, right? They send us this stuff all the time. And maybe, I don't know, when you need new tires once every four years or five years, and then maybe you'll look at that flyer that comes like three times a week. So that's so true. It's so true.

In fact, I just sign up for a credit card a few months ago. I never do those credit card offers. I mean, I've gotten 100 of them in the past few. years. But I finally needed a card. I needed it for a business reason. And it came in the mail. And I was like, oh, well, this is a good miles. Like, so I signed up for it. Like, it was exactly, like, it hit me at the exact moment. Yeah. That's when direct mail works. That's, that's what you got to do, man. Same with the phone calls. I mean, I've, we, that deal is the thing about North Carolina with the 131 lots. That was a cold call. And we got the guy at the right time. He had

just taken this property back. He had owner financed like three years prior and just gone through a long, long suit. He was, he was getting older. His daughter didn't want to deal with it anymore. I mean, like, I mean, the timing couldn't have been better. And we got really lucky because that was the first call we made to that guy. And he's like, I'm just talking my daughter earlier about this today. Yeah, we're definitely open to having a discussion. It took a year for us to close it. But, you know, the timing was right.

The time was right on that one. I love it, love it. All right. Let's shift gears here. We're going to talk about more mobile home park questions here. But this isn't in the segment that we call our fire round. It's time for the fire round. All right. These are the short questions that come direct from the BiggerPockets forums,

which of course, our users can go get to by going to biggerpockets.com forums. However, today's fire end is a little bit different. These are all questions that came from selfishly greedy Brandon Turner here because these are, these are my biggest questions. I'm like these look at them. These are the questions that I have about buying my next mobile home park. So, and that we did not cover today because I could go post all these in the forums, but I'm just going to ask them right to you.

Here's what we're going to do. Send me any of your leads from mobile home parks. And then Josh, send them to Josh. Yeah, I'm a wholesale. Send to me. Come on. I'll make it happen. And just, just that would, that would be so great.

Yeah, that would be so great. You could hold that over us, Josh. He would love that. Josh loves the power. Well, no, we'll park. Send me your deals. You got a good mobile home park send it to me. I'll send it to these guys.

We'll all getting together. Well, there we go. I like it. You guys are going to bring it to me anyway. So just cut out the middleman. Wow, it's like three sharks circling around. This is great. All right.

Number one, should I buy a park with septic and well or only city and sewer for my first deal? You should be open-minded to it. Just do your due diligence. I mean, make sure that you get third-party professionals in there to inspect them. We're buying two right now that are on septic and wells. And there's a ton of septics in both these parks that are bigger parks. And it's costing a lot of money to do the inspections, but it's worth it because we've uncovered a few things. And we've got both sellers spending a good bit of money, fixing repairs and

doing things that were deferred over a period of time. So just do your due diligence. Yes, they're a little more dangerous. You should know what your backup plan is. Should they, you know, a lot of things you've got to find out like if it fails, what happens? Can I put a new sept again? There's some areas that have regulatory challenges in place that you wouldn't even be able to put new sept again. You might lose that lot. Or if you had to put new sept again, is there enough ground area, avert and soil based on current zoning is you're going to have to basically, you're going to have to conform to current zoning now, because back when it was built, maybe you needed 3,000 square feet to empty space to put us up again.

Now you might need six. So is there enough room to do it? So lots of considerations like that that you need to think about when there's private utilities involved. And how far away is public water and sewer should the last resort be to connect to it? If it's five miles away, you know, you might not have a backup plan. So you've got to think about those things. Yeah.

Right on. All right. How do I convert a tenant rented home to a tenant owned home? You talked about that. How do you actually make that happen? Well, I mean, it's kind of as simple or as hard as what it sounds in terms of, you know, you've got renters and then you've got people that truly want to be a homeowner. And then you have renters that think they want to be a homeowner, but probably really not.

Like, it sounds like a great dream for them. Wasn't there a dream? You just put it in their head and really at the end of the day, they're still renters. So what you need to do is you need to be able to determine which category they fit in. are they just renters? If so, even if you do like a rent to own to them, you're still in a rental. It's like you're probably going to get it back. They're not going to make it through the entire program. So your goal is to basically be able to determine who the real home buyer is. And if that means that you have a renter in there now and you want to sell that home, then you just, if you've got a

yearly lease, you wait until the lease ends and do a non-renewal, if there is just a month a month in place, you can do it non-renewal right away, give them the adequate notice based on that state and then get the home ready for sale. And then, you know, whether you want to sell it for cash to an end buyer or do like a rent-to-own type strategy. Both are very common. That's what you do. And, you know, we've taken over entire communities. One question is one in Alabama. It had 45, 75, I think, or 68 space park, but it came with 45 homes. That was all that was in there. And the biggest conversion I've ever done, and we're about halfway through it now. And I would tell you that we had to do more non-renewals of leases than we anticipated. We thought we'd be able to convert more than what we did of the existing

renters. But at the end of the day, the renters were just renters. And most of them just need to go. And so, Sometimes you have to kind of plan for a worst case scenario of like a couple months of down cash flow. I don't expect that every renter wants to own a home because what I found is 80% of them, they're renting because they don't like fixing anything and they don't want any additional responsibility above and beyond what they already have. So this is related to question number three then is this is very specific question. Would you buy an all park owned home park? So every property is a rental, a 42 unit in Florida. Oh, very specific. This is very specific.

This is very specific. So this is a deal that came across. What's the address, yeah, I might give it. No, like, this came across my desk last week. You probably saw it, I'm sure, maybe. And it was like a 40-some unit in down in Florida where the hurricane just went through, but it didn't get hit by the hurricane.

And supposedly nothing bad. But it's all park owned. And so, like, I look at it and I'm like, the numbers make sense. 20% cash on cash return as a rental. It makes perfect sense. But then if I start piecing them out as, you know, selling them off, now the rent drops a whole bunch. It doesn't make as much sense anymore.

right? Yeah, you shouldn't be capitalizing the rental portion of the homes because, again, you got depreciating asset there. And if you actually capitalized that rental portion and applied an actual value to it, a multiple to it, you're going to find that it's going to be way higher than what that damn trailer is really worth. Seriously, like, you're probably, really paying like $20,000 per each of those trailers. And they're probably older homes. They're for them for floor. They're probably older. And if they've been rentals a long time, they're probably not worth more than a thousand bucks a pop or maybe, maybe some are worth a little bit more than that. But so you just want to be careful. Like, it's really two different

businesses. You really want to look at the lot rental income of the park and just really pay more what I like to call like a Kelly Blue Book value or whatever you want to call it for the homes themselves. Like what should you be paying for the homes knowing that you're not going to lose money when you turn and sell? Like what can you just get in and out of them? Don't worry about profiting from that side of the business. But definitely do not capitalize the rental side of that park. And, you know, some other considerations, if you wanted to buy it, if you still were considering it, I would start looking at the age of the homes, how many bedrooms and bathrooms, what size are they? What kind of demographic are you be catering to? Are they all like one and two bedroom homes that are smaller? Like,

they sit on small lots that are really close together and dense, meaning like if you want to bring in some bigger, newer model homes, they're not going to fit or you're going to end up using two spaces instead of just one. So, I mean, lots of considerations that you'd have to look at with that park. And then also, who's your end buyer? I can promise you that more, like larger operators and owners do not like that model, the rental model. And so your exit strad, you might, it might be a haltz for a little bit and your end buyer is going to be probably someone that you're going to have to offer financing to or you know a smaller time local investor a lot of banks don't like it either they don't like the rental homes um they just don't don't want to have

involvement in it some might but most don't most all all right so yeah be be careful with something like that not that you can't make money yeah just speak just be careful with that one I'm being careful all right last question of the fire run and we are we are running slightly long, so we're going to try and make this one quick. How do you build relationships with owners or sellers? Got any tips? You'd be nice to them. No, no, no.

I mean, obviously, like just with any anything. I mean, this is like sales 101. I mean, right? Find commonalities, find things in common. You know, compliments go a long way, complimenting their part, complimenting their, you know, the beautiful community they've run over these years. I mean, really, I just keep it very lighthearted, but just find something that we have in common, you know, and to stick with it. And I tell you that the biggest thing for me is the CRM.

I document every conversation I have and I make very specific notes in there about what we talked about because now after you had hundreds of people we've talked to, you forget. And so that way I can pick back up on that because they don't forget, but I, you know, I would forget having that many conversations. So I can call back on. I'd be like, how how the fishing go with your, last time we talked, you were going to go fishing with your son. I mean, do you guys catch anything? And I know you probably have been a million times since. But you were just mentioning how excited you or take that new job out of job boat out that you got that how'd that go you know just little stuff like that you know my dentist does that every time i go to the dentist they're like yeah how was

your trip to disney world and i'm like you remembered no they didn't they write that down in their little CRM or their folder or whatever awesome yeah but it makes every time i'm like wow they think about me so i know by the way so the last question i was fire on i was going to ask with CRM what do you use podio we use no we actually don't you know we're starting we're trying to transition in the podium right now so that we can have more inclusive system that runs a little bit more of our back end, but we're still probably months away from having that fully realized. So we're very basically using Sightly. I mean, because what we use it for right now is, it's just pretty basic in nature.

But we do need to beef it up and Podio is going to be the route that we go. Yeah. But Insightly, I think we have, it's very, you can get a free version of it. I think we have like, I don't know, five or six team members on it or something like that. So maybe it's 30 or 40 bucks a month. Very cool. Very cool. I like it.

It does its job. It does its job. You know what I mean? Like any CRM, there's a million CRM. So if you're just going to use it for just basic follow-up, you know, Podio is pretty elaborate in order to customize it to your needs. And so you don't even need, don't get like stuck in the weeds would be my advice. If you're just getting in there, you need some basic follow-up techniques and software, go get a free version of Insightly or I don't know. There's a bunch of other ones out there that are probably just as good, if not better.

Awesome. Cool. All right. Well, let's transition to the very last segment of the show and then we'll get everyone out of here. The last segment, which we lovingly refer to as our famous four. All right. Let's get to the famous four. These are the same four questions we ask every guest every week and we're going to throw them at you.

Number one, what is your favorite real estate related book? I've got a ton of them. And so, like, I knew this question was going to come. But it's what every real estate investor needs to know about cash flow by Frank Gallinelli. And it's a dry read. It's not exciting. It's not going to keep you up at night because you can't wait to finish the next chapter. But it's all the common sense that you need to understand all the key measurement tools and metrics that are used in commercial real estate analysis.

It's here. And it's actually well written. And it's not, it's actually, it's, it could be way drier. He does a pretty good job about just making it easy read. So I'd say that one, hands down, probably had one of the largest impacts on my life many, many years ago when I first read it. Cool. And we had Frank on our podcast four and a half years ago back on episode number four.

Yeah. Yeah. I think I had him more like three years ago. Yeah. Yeah, long time ago. It's been about, yeah. Check those out. Frank.

Yeah, good guy. Yeah, he's a guy. I mean, I think he still teaches at Columbia University. The guy's still in business. He has a great software program out there. Yeah, he knows his stuff. That he does. Awesome.

All right, favorite business book. And again, I got a million of those. I wouldn't ever say I have a favorite, but this is one that I read. It's probably about a year and a half ago that I read it. It's called The Slight Edge by Jeff Olson. Phonional book for those that haven't read it. Again, I got a whole bookshelf of stuff that I love that would go up there in my top, you know, five list. But this is one that I was looking over there.

I'm like, that's a great book. I've read it probably three times and it's phenomenal. So cool, I've not heard of that one. I'll definitely check it out. What do you do for fun when you're not, you know, hanging out at the trailer park. Yeah, that's it, man, with my trailer park buddies, right? I've got a young family.

I've got a lovely wife and two kids that I spend a ton of time with. But as far as like hobbies, I'm a big cyclist, so I do a lot of bike riding. So do long distance like bike tours and hundreds of miles here and there, hundreds of miles there all over the place. So that's one of my big hobbies that takes up a lot of my, I guess my free time aside from family and business. Awesome. All right.

What do you think last question for me? What do you think sets apart successful? investors from those who give up, fail, or never get started. I think actually the answer to the question is like part of the actual question is like giving up, literally giving up prematurely and not pushing through those points that looks like failure. That's really just a roadblock or an obstacle that you need to work through. Everyone goes through challenges in their business, whether it's in the very beginning, in the middle at the end, whatever, man.

It goes back to the whole problem solver thing. It's like you make money to be a problem solver. You got a problem. Get a solution. You know, don't harp on it. Don't, you know, don't get. give up over it, just find a solution because there is one. You know, I don't know what it is, but you figure that out, right?

And that's how you push forward. So I think that's it, man. Just being able to persevere, I think, is the biggest thing. Just knowing that there's tomorrow. And tomorrow probably will provide the answer if you don't give up today. Ooh, I like that. That's great. Very, very good.

All right. Last question before we let you go, where can people find more about you? How can they link up with you? Yeah, the two best places is my personal website, Kevin Bubb. They can, you know, get links to all my different podcasts. I do two weekly podcast shows, one on commercial real estate, one on mobile home park investing. And then our company website, if they want to read more about us there and learn about what we do in the mobile home park space is sunrise capital investors.com. So those are the two best ways to find out more about me and connect.

And I definitely recommend the podcast. Both of them actually are fantastic. So keep it up. Thank you. Thank you. Awesome. Well, thanks for coming on, Kevin. We really appreciate it.

Yeah, thanks for having me, guys. It's been a lot of fun, man. I've been looking forward to it. So thanks a lot. Sweet. Awesome. Thank you, Kevin. All right, guys, that was Kevin Bup.

Big thanks to Kevin. That was a cool show. Obviously, Brandon was highly invested in the results of that show. I was. Because I got 40 days to find something or whatever it is from today. So I'm looking. But yeah, every time we talk to somebody on the show here, we've done a few others, brought them on the show here,

talk about mobile home parks. Are we going to do this, do this the next six shows? Are we going to? We have a lot of mobile home. No, you don't. But every show. Every show. Yeah, every show is selfish, right?

In some regard. But I mean, like, every time we bring out a mobile home park investor on the show, I'm always, I leave those interviews going, I love that. It's just, that's why I chose that niche. That's why I want to buy one. So I've got 90 days to the end of the year, 40 some to identify and the rest to buy it because that was one of my goals I set in January 1st of last year. I wrote down, I will buy a 50 unit plus mobile home park this year. So make it happen. I'm telling everyone.

Now I'm going to feel stupid if I don't get it. So I got to do it. Yeah. What's your end-of-year goal, Josh? You should just feel stupid. I do a lot. I do. A lot.

I just feel like when you go through life in a continual state of feeling stupid, like you're never surprised when things get more stupid. Right. If you've got a standard that is so low, anything that happens is a way. It's a win. I'm always winning. It's really good.

That's great. What's your goal? What's your, got any fun, end of year goals? Honestly, I haven't really thought about it. I haven't really thought about it at all.

Next week, I'm going to ask you that question, which we're recording tomorrow next week's show. That's great. Wait to give me some time. Yeah. Think about that. End of your goals.

And we're going to find out what Josh Dorkin wants to do. Hey. All right, guys. Well, listen, thank you so much for listening. Great show. Brandon, once again, looking forward to next week. We're getting close to 250. Yeah, that big old 2-50.

We all know what that means. Nothing. Nothing. Pat on the back. Pat on the back. A quarter of a thousand. I was going to say 100, but that's, again, stupid. Yeah.

I'm surprised. We've made it this long time. Me too. Well, thank you. I'm getting out of here. I've got to go find myself a park. All right. Hey, listen.

Great chatting. You guys, thank you for listening. This is show 246 of the Bigger Pockets podcast. Until next time, I'm Josh Dorkin. Signing off. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height, you're in the right place.

Be sure to join the millions of us. others who have benefited from biggerpockets.com. Your home for real estate investing online. It's time for it's time for it's time. The Random 5. All right, one more second of the show which we'd like to throw in here at the end. It's called our Random 6 and we're just going to throw these at you. Number one.

These are completely random non-real estate just to get to know you more. All right. What are you frequently good at? Riding my bike. All right. There you go. There you go. Yeah, I like it.

All right. If you can master any instrument on Earth, what would it be? Guitar. Acoustic guitar, man. Josh just sneezed into the microphone. Yeah, what's happening? Yeah, now he's like dying. I wish I could master that.

Did that come through? It came through a little bit. There you. Do we want to redo that? No, no. I was good. I couldn't control myself. I muted it just late.

Not in time. Anyway, guitar. It's not being original. You want to. to learn the guitar. Guitar would be that instrument. Acoustic or electric. Acoustic, for sure.

You and I, you're going to help me buy this mobile home park and I'm going to teach you how to play acoustic guitar. That's our deal. Yeah, you play guitar. My parents forced me into playing the trumpet when I was a kid. I'm like, I don't want to play the trumpet. I play the trumpet when I was a good. Take this.

You're playing it. We're not buying a guitar. That's awesome. All right. Well, we're going to do some jamming after I got my, my park here. So, all right. Well, I don't know how to play the trumpet anymore. Just so you know, like I quit playing in like 11th grade.

All bring two guitars. We'll have fun. It'll be great. Number three, what was your very, very first job? Oh, a paper boy. I mean, like, real job where I actually had like a paycheck. Well, I was a paper boy when I was 12 years old. So I had a paper out my neighborhood.

That's very cliche. That was that a real job. I mean, is that a real job? That was a paycheck associated with it. Okay. It is. I'd call that. Cool.

All right. Next question. What are you going to be for Halloween? I think Kevin Bup. I don't know. I don't know. I don't know. I'm that bad dad that doesn't dress up.

I dress up. I don't dress myself up. Wow, you're no fun. Next question. Unless you guys guilt me to be in something else. Gosh, I hang my head low. I want to know, since Josh came up with that question, Josh, what are you going to be for Halloween? I, my children are, one is an Ewok.

One is Princess Leia and one is, what's the new girl? I forget her name in Star Wars. And I believe I'm going to be Hans Solo. I was thinking Yoda, you know, for the height. Looks like you're a better man than I. I guess I better step up my game a little bit. You better step up, man. Come on, come on.

All right. Next question. How long before your flight do you arrive at the airport? About 45 minutes to an hour. If I have kids more than that, but if it's by myself, I'm normally, I'm a light packer. I carry it on. I don't check any bags. So I'm pretty, you know, 45 minutes or so.

Nice. Nice. All right. What are your top three apps on your cell phone? Ooh, that's a good question. Credit karma is one. It's amazing app. Have you guys ever used it? Yeah. I've learned some things about credit scores over the past like six months. And credit karma really allows you, it's free and allows you to keep a, the soft pools.

And so it's free and the soft pools of expiring and, uh, or transient in Equifax. And I just really let you know when your, your different credit card companies are reporting to the bureaus because like you really got to get the timing right. I pay our, I pay my credit cards off every month. But if I didn't pay one off before they reported it in the shows, I have like, I'm using 80% of my available limit, which I do often, then your score gets hit in a big way. So it really allows you to stay in tune with when they're reporting. And also, if you get any inquiries that, like, you know, that weren't yours, it'll give you an alert to it. So that's a cool one. And then, I don't know, I got to look at my phone here because I have to think of the other ones.

Facebook. I don't know, Facebook, right? We're always on Facebook. Unfortunately, it eats up too much time. And then actually, Tony Robbins has got a great app on here. It's just got a lot of his videos about it. It's called Breakthrough. Yeah, it's a free app.

It's got a ton of free trainings on it, tons of free videos from Tony. I like Tony's stuff a lot. And so if I'm just like, you know, in a car or something like that or from traveling and, you know, I got some downtime. I'll play one of his videos and one of his training series that's on there. So those are probably the top three I use right now.

Cool. We'll take that up. All right. Thanks for participating in the random six. Yeah. Thanks, thanks, guys. Really appreciate it. Thank you all for listening to the Bigger Pockets Real Estate podcast.

Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoke content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only.

All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.