BiggerPockets Real Estate Podcast - 262: $600,000 in Gross Rents from Mobile Home Parks with Jefferson Lilly

Episode Date: January 18, 2018

Mobile Home Parks can be one of the most profitable business models around, but learning to scale without losing all your time can be tough. That’s the story on today’s episode of the BiggerPockets Podcast, where we sit down with Jefferson Lilly to talk about how he’s acquired 2,600+ “pads” in the past few years and the lessons he’s learned in scaling. We also discuss the ins and outs of raising private money through a “fund,” which will both fascinate and educate you, so don’t miss a moment of it. Whether you want to buy mobile home parks or not, this is one show where the lessons will stick with you for life! In This Episode We Cover: Brandon’s mobile home park Reasons why you should consider buying a mobile home park The legality surrounding mobile home parks How Jefferson came to own about 2,300 pads What you should know about rent-to-own homes How Jefferson markets their properties Methods of payment for these rentals A discussion on RVs vs. mobile homes Jefferson’s thoughts on tiny houses Getting to a “Mobile Home Park 2.0” The 3 key hires for mobile home parks What managing these mobile parks look like Floods and other concerns when choosing a mobile home park How to fund these days How to find parks today And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Money Podcast BiggerPockets Blog Member Blogs BiggerPockets Podcast 111: A Unique (and Profitable) Real Estate Niche You’ve Probably Never Considered with Jefferson Lilly BiggerPockets Podcast 234: Tenants, Evictions, & The Dark Side of No Money Down with Ryan Murdock Rent Manager Pay Near Me Loopnet BiggerPockets Podcast 260: The Ultimate Guide to Negotiating (for the Negotiation-Averse) With Former FBI Hostage Negotiator Chris Voss Best Places Equity Lifestyle Properties National Manufactured Home Owners Association Books Mentioned in this Show The Book on Investing with Low and No Money Down by Brandon Turner Never Split the Difference by Chris Voss Am I Being Too Subtle? by Sam Zell The Snowball by Alice Schroeder Tweetable Topics: “Don’t kick anybody out of your deal. Just scale everybody back.” (Tweet This!) Connect with Jefferson Jefferson’s BiggerPockets Profile Park Street Partners Homepage Mobile Home Park Investors Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show number 262. Folks generally don't move the mobile homes. It costs, call it 4 to 6,000 to move a mobile home. So they're not likely to do that. So you have very stable tenants. The tenants own these homes. And because of the cost to move them, they stay a really long time. So your turnover costs are lower.

Your revenue is a bit higher because you have less vacancy. 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 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 is going on, everyone?

My name is Brandon, your host today of the Bigger Pockets podcast here with my wonderful, fantastic, amazing co-host, Mindy L.J. Jensen. Is that really your middle name? I just made that up. No. It's a, oh, Mindy Sue. That's actually like a name. We should call you Mindy Sue. That's a name. That's not a name. There's one person on the planet named Mindy Sue as like one word. Mindy Sue sounds like you're like, I don't know, you live out in the country and you're like a country bumpkin and you got freckles or something. I don't know. I do have freckles. I do have freckles. That is the only part of that that is true. You need pigtails and overalls. That would make it complete. Anyway,

I'm slightly too old for that. Yes. Let's talk about real estate instead. All right. So welcome to the podcast, guys. Today, Josh is not here, as you can tell, by the higher feminine voice of Mindy. And so he missed out, though. Slightly higher.

He missed out, though, because today's episode is one of my favorites. I know we probably say that all the time. But for personal reasons, this show is one of my favorites. You know, we talk a lot about mobile home parks today, which I am a big fan of. Mind, did you know why? Is it because you're buying a mobile home park in? Maine. I totally am buying a mobile home park. However, listen, guys, if you are not into mobile home parks, that's okay because today's show, like almost everything can apply to not mobile home parks as

well. We talk about landlording. We talk about finding deals. We talk about developing relationships, growing your team, raising a fund, which was a fascinating topic that we've never talked about on the show before, but how to actually build a fund to go and buy lots of deals, which is really cool. This was a really great show. I learned so much, not only because I am also buying a mobile home. Yes, you are. By the time this episode airs, we should be closed on our joint venture mobile home park in this great state of Maine. That is true. Do we want to say it's a three-way venture?

Yeah, we mentioned Ryan. I don't know, three-way sounds weird. It is a tri-venture. Me and Mindy. A tribe partnership. Yeah, Mindy, well, and Carl, well, Carl and Heather, we can call it a five-way partnership. But the other way, Mindy, we did not actually talk about the show because I didn't know if Mindy wanted me to publicly talk about it. But yeah, Mindy is actually partnering with me on the mobile home part that I'm buying.

So, Mindy, this was a good episode for you and I to do together. I'm glad that you were able to be here. I am too. I'm really glad that Josh is a slacker and I'm playing hooky or whatever. Galavanting. Galavanting. That was the word I was thinking of in my head when I was waiting to do this with you. That's because we're partners now, so we have the same mind.

That's how it works. Oh, look at that. I see you. I, okay. All right. Anyway, so today's guest, we'll get to that in just a minute. Before we do, I believe Mindy, you have a. Quick tip.

I do. So I spend all day, every day on the Bigger Pockets forums and I get a lot of messages from people who say, oh, I've been listening to the podcast for decades, but I didn't know you had a website or a blog or whatever. So today's quick tip is, do you know that Bigger Pockets has a blog? The podcast only comes out once a week, but we publish three to four articles on the blog every single day. Day. Three to four. That does a lot.

And sometimes they're Mindies and sometimes they're mine. Sometimes they're Mindy's, sometimes they're Brandon, sometimes they're written by people who know what they're talking about. That's true, sometimes. In fact, they are written by investors who are out there in the investing world every day. You can learn from their experiences rather than from the School of Hard Knocks. I am a graduate of the School of Hard Knocks. Let me tell you, it's the lessons stick with you, but they really hurt to learn.

That they do. So you can go to the big. BiggerPockets blog at biggerpockets.com slash R-E-news blog. Do you know you can also just go to slash blog, FYI? That'll redirect there. Just slash blog. You didn't know that. Yeah, now you know.

Oh, my goodness. The more you know. Bonus quick tip. Yeah. So, yeah. Pockets.com slash B-L-O-G. If you go to B-L-O-G-S, those are member written blogs. Yes.

We are talking about the main Bigger Pockets blog, which has, what are we up to like 9,000 articles. Another thing I hear all the time is, oh, I can't get enough at the bigger pockets podcast. Totally understand you. This, you can learn more about real estate investing, reading that blog than you can just about any other place, except of course, the podcast. That's true. That's doing right now. Well, good job, Mindy. Nice job on the not so quick tip today. Not a quick tip. No, when you want a long story even longer, have Mindy tell them. All right. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing

your operating income and earning your trust while they do it. And that comes down to three numbers, occupancy, delinquency, and net promoter score. If those numbers slip, your income slips, and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the the metrics that actually grow your cash flow. Go to mine.co slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment like an investment. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed.

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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. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. Lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a

program to help prevent that. With their new express rental loan, you can close in 10 days or less. And they still offer their price beat guarantee so you can get great pricing and a timeline you can count on. Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. And with that, I do want to, before we actually introduce our guest, want to say something cool. We are recording this episode. I know, I don't save things very cool. I want to say something cool. No, you're going to like this, Mindy. So we don't, we are recording this episode before, like, before, actually even before Christmas, technically, but this comes out

here in the middle of January. So by the time you're listening to us, we've actually launched another podcast at Bigger Pockets. And it is a podcast hosted by Mindy. Mindy Jensen here. You have your own podcast with Scott Trench. So tell us real quick, you got eight seconds to tell us. Go. Eight seconds. Oh my goodness. Okay. So. One of the most popular questions, one of the most frequently, oh, my goodness, stop breathing. Okay, you got eight more. You got eight more. Go.

Yeah. Okay. One of the most frequently asked questions in the Beggard Pockets forums at biggerpockets.com slash forums. Some of you said beggar pockets, which is an interesting title of a site as well. But anyway, keep going. Wow. Shush. This is my time, not yours.

All right. If I recall correctly, you dominate the first part of the podcast with all of your questions. Okay. Go ahead. Shh. Shh. Okay. So, one of the.

the most frequently asked questions in the Bigger Pockets Forum says, how do I get started investing in real estate with no money and bad credit? And while you, Mr. Brandon Turner, wrote a delightful book called The Book on Investing in Real Estate with no and low money down, I don't think that it's a really great idea to start investing in real estate if you have absolutely no money and terrible credit. So Scott and I are personally involved in the personal finance community. We're really passionate about teaching people about their finances.

So we decided, let's start a podcast called Bigger Pockets Money. And we're going to teach you how to get your money all fixed. We had an amazing first guest. Mr. Money Mustache was on episode one of the Bigger Pockets Money Show, which launched on January 1st. And I'm really looking forward to what's coming up in the future. We've recorded several shows in advance. And we're going to teach you about budgeting. We're going to teach you about controlling all the aspects of your finances.

so you can get your financial house in order and start building your financial future. Wow. Way longer than eight seconds. That was a lot longer. So for those people who are still here, let's get to today's show actually because your show is fantastic. And Mr. Money Mustache is one of my favorite people on the planet. So go listen to those, those episodes if you've not yet. You can get to it by going to biggerpockets.com.

It's the bigger pockets money show. Okay. So biggerpockets.com slash money show. There we go. You can get to it by going to biggerpockets. dot com slash money show. All right. So today's show is amazing. Like we said, we're actually bringing on a repeat guest. His name is Jefferson Lilly. He is actually the original inspiration for me wanting to get into mobile home parks, which is now me and Mindy have now bought one, which is awesome. And we dive into a lot

lot of stuff like I said earlier. But Jefferson is just crushing it. Him and his partner about like, what, 2,600 pads right now? Like mobile homes. Yeah, something crazy like that. Yeah. Including one that's 500 lots in one park. Yeah. Yeah. No, that's two parks. But still like right. It's insane. next to each other. That's crazy. Yeah, they're doing. And again, this applies to anybody, whether or not you're looking at mobile home parks or multifamily or whatever, this stuff applies to all of that. So without further ado, being the longest introduction in Bigger Pockets intro history. Let's get to today's show. All right, Mr. Jefferson, Lily, welcome back to the Bigger Pockets podcast. It's been a while. How you doing? Thank you, Brandon. It is great to be back.

Yeah. Well, today we don't have Josh with, you know, so you can't make fun of him like last time. But, you know, we got mid-de-ear. Feel free to make fun of Brandon as much as you'd like. You can. You can. So, interesting backstory. So when you were on the show back, what was it, February of 2015, I think, yeah. So you came on to talk about mobile home parks. And I had never known anybody who had ever done a mobile home park before. And I was like, man, that sounds cool. And over the next couple years, we interviewed a couple more people who do mobile home parks. And every time, I'd be like, man, that sounds cool. So in like three weeks, I'm closing on my very first mobile home park. So, man, that sounds cool. Yeah, that does sound cool. So now I get to find out if you were just, you know, full of it or if it really is cool. We've got you drinking the Kool-Aid, Brandon. That you do.

So thank you for the original inspiration to the mobile home park thing. And now today's shows, selfishly, I get to pick your brain on how to make this actually a profitable investment. So that'll be fun. There we go. Yeah, that's fine. Yeah, good. But before we get to that. How many pads?

Is it city water? Is it city sewer? Tell me you didn't buy in Maine, though. That's the one state. You heard. Where's your park, right? Yes, it is in Maine. Oh, no.

I know Mindy must have told you that. So, yeah, it is a 46 spot park, city sewer and pad, pad, pad park. Pad spot, whatever. It is city, water, sewer, and garbage. It's also separately, you know, separately metered. So all the tenants just got shifted over to do in their own utilities. Right. Well, I'd say it sounds like about half of them have done the shit.

but they've all been converted. So the other half I need to convert over. Half of them are park owned. The other half are currently tenant rented or park. So park owned, tenant owned. Resident owned. Yeah. And yeah, we bought it for $1.1 million.

And the guy carried 80% of the thing with seller financing on a, was it 25 year, no balloon payment, 5% interest. So that's how everything worked out. Yeah. That sounds like a great park and certainly a great first park. Yes, I think it's a manageable size. And the numbers look solid, especially there's like eight units that are vacant right now. Well, I think it's like four pads empty and then four houses empty.

So once we get all of that up and running, it should be a really, really good park. I think I projected like a 20 something percent cash on cash return each year. Yeah. Once it's up and running. So it feels pretty good there. So anyway. Good for you. How'd you find it?

Actually, telling every single person on Earth. that I was looking for one. And then my buddy Ryan Murdoch, who was on the Bigger Pock's podcast, he actually got the lead from somebody he had bought a house from before or property before and hit me up and then we ended up doing it that way. So and Ryan's actually being a partner in the deal. Oh, great. Yeah. And I'm bringing another partner as well, another money partner who's going to actually be funding the money side or at least a good chunk of the money side of it. So yes. All and all worked out really, really nice. At least I hope so. So anyway, enough about me. This It's not about my interview, but yeah, let's talk about, before we, before we go even any further,

a lot of people are like, mobile home parks, come on, I don't want a trailer park. I don't want, like, that's, that's horrible. I'm not going to ever do it. Why would somebody, and I know we covered this last time, but let's rehash it. Why would somebody ever consider investing in a mobile home park? So I want to jump in and say that before we ask Jefferson, let's remind everybody that Jefferson was on Bigger Pockets podcast episode 11. So you can get there by going to Bigger Pocket.

com slash show one, one, one. All right. Now, Jefferson, I listen to your show on the way in today. Oh, great. Yeah. Why would anybody want to buy a mobile home park? That's where all riffraff. That's a great word.

That's where all the riffraff lives. Yeah. So, you know, there are a couple of reasons. First off, mobile home parks do get, I think, an undeservedly bad rap. Sure, there are some bad mobile home parks. but frankly, there's some bad regular neighborhoods with site-built homes. There's some bad apartments. I don't think it's particularly worse in mobile home parks.

It's just that for whatever reason, that seems to be all that the media covers is the bad news coming out of a small number of mobile home parks. It's just not news to send a reporter into a mobile home park and say, you know, like, hey, everyone paid their rent. this month and the kids down the street are playing in their tricycles and the ladies planting begonias there in front of her mobile home. That's never going to leave this part. Okay, back to you for the 10 o'clock news. That's not newsworthy, but that's the reality for, you know, 99% of mobile home parks, 99% of the time. So just the fact that they have a bad reputation means the smart money

is not chasing these. So right there, when you don't have a huge number of buyers, probably the pricing is is relatively low. So that's one reason right there. Another reason is the repair and maintenance. And Brandon, as you said, you've got a park with at least half resident owned homes. I would encourage you for the other half to put those on rent to own agreements and basically backpedal out of those homes. You probably don't have to sell them at a great loss, but you don't really make a lot of money in the homes and repairing all the proverbial leaky toilets and leaky roofs. So once you get down to what we call really just a parking lot where you don't own any of the homes, first you know, you've helped deserving folks become homeowners and that's a good thing.

But secondly, they're then taking care of all those proverbial leaky toilets and leaky roofs. Lo and behold, when you give a renter a path towards home ownership and they, again, become a homeowner, they don't treat it like a renter anymore. You're not somehow doing. something evil, shifting all the repair and maintenance burden on it. It's just that, you know, the tenants take better care. And if there's the leaky toilet flap for 12 bucks that can be repaired, they're going to go buy that flap at, you know, at the hardware store and repair it. It would cost you, the landlord, 120 bucks to send in a plumber to do it. Anyway, so the repair and maintenance costs are dramatically lower. You just maintain the land, which basically means mowing and snow shoveling for

you up in Maine. It'll mean snow shoveling brand and some sewer unstop. But it's not that expensive to maintain land. Probably 60 or 80 percent of most repair and maintenance budgets, say for an apartment building, go into the improvements, what's above the ground, not the ground itself. So repair and maintenance budget is low. And then thirdly, folks generally don't move the mobile homes. It costs, call it 4 to 6,000 to move a mobile home. So they're not likely to do that. So you have very stable tenants. The tenants own these homes and because of the cost to move them, they stay a really long time. So your turnover costs are lower. Your revenue is a bit higher because you have less vacancy. So anyway, there are three reasons right there. Oh, I'll throw in one more.

The supply of mobile home parks is going away about 1% a year. It's pretty much illegal to build these anymore. And about 1% of the nation's mobile home parks get plowed under every year. So again, the supply curve is shrinking. That's a very different dynamic than say apartment buildings or self-storage or any other real estate niche where they're always building more. Only mobile home parks have a shrinking supply curve. And all those homes have to go somewhere. All those tenants will infill into the remaining parks. I'm off my soapbox now.

What's your next question? So why are mobile home parks going away? Why are they getting plowed under? Is it just the land is so valuable? That's part of it. But, you know, basically real estate is. is always being plowed under and put to some higher and better use. You see that, of course, even, you know, in Manhattan, where they tear down fancy, you know, skyscrapers from the 30s and the 50s, and they put in even bigger, even fancier skyscrapers.

So that's a constant that real estate is always being plowed under and developed into something else. It's just that in pretty much every other niche of real estate, it's still legal to build more self-storage, more single family, more apartment. But we touched on this earlier because mobile home parks have such a bad reputation. And because all those homes are not improvements to the land, those homes all have a title that trades through the DMV, just like an automobile. A mobile home will have a VIN number. So it's wheel estate, as we say. It's not real estate. It's wheel estate.

What that means is that there aren't very many improvements to the land and that means your tax burden, what what you pay? in taxes is relatively low. And a lot of municipalities, of course, also fund, say, the school system. And if, you know, and there are typically a lot of kids that live in mobile home parks other than, say, some seniors parks in Florida. But in general, you tend to get a lot of families starting out a lot of kids. That's a burden on that local municipality. And for it, they get relatively little tax revenue because there are no improvements to the land. So anyway, so there's several reasons there, the bad reputation, the low tax revenues. It's basically been illegal to build a new mobile home park for the last 20 or 30 years. So the supply is not growing. And then there's

the normal development of, we guess, about 1% of the parks every year. So that's why the supply curve is shrinking. That makes perfect sense. I never thought of it that way. But it, Makes sense. And people, you know, they're like you said, when as they shrink and the demand's not getting in, doesn't seem to be getting any less anyway, especially if the economy does go down. We see a decrease. That's actually one of my hopes is that people will shift down to mobile home parks. But there's really nowhere lower to go other than maybe moving in with family or. Yeah, there's some truth to that. But again, once folks own their own homes, at least across our portfolio, we now own approximately 2,300 pads. You know, our average lot rent is a little over $300. That's a fairly affordable number for people to pay every month, even in bad times. In our markets on average, say, and most of our homes would be three bedrooms. A three bedroom apartment would probably be $9.50, maybe $1,000 in most of our markets.

So we're helping folks live for roughly a third of what it would otherwise cost them to live. So yeah, some folks may move down, but really it's just a great on-ramp for folks that, you know, need an affordable housing solution, can't afford a site-built house. We're their path to home ownership. And again, once they own it, their lot rent typically isn't but a fraction of what it would cost them to still be a renter. Yeah, that's another thing I like about it a lot is that, you know, there's a problem with affordable housing all across America. And it's only getting worse. And as we become more and more like, you know, the Europeans model of real estate, it's just going to get worse and worse, in my opinion.

And so like the whole gentrification issue and all, like people are like the bottom half of the U.S. is losing their ability to afford a place to live. So I feel like that helps with the demand and it should continue to produce strong demand for these mobile home parks. Someone wiser than I said the poor are always among us. So there you go. There is always demand for affordable housing.

something like 30% of Americans have $30,000 or less household income. And that's really our target market. Yep. There you go. All right. So let's talk about because, again, this is a selfish show for me. Transitioning these units, these half that I have that are not currently, they're, I mean, they're just tenants.

They're paying, I think, $6.50 a month for rent right now. Lot rent is around $300. They're paying around $6.50 rent. I worry a little bit because all of a sudden, I mean, when I look at that $6.50 number, And then I look at dropping that down to 300. I'm like, oh, man, that kills a lot of my cash flow. Now, is it because I'm no longer doing the repairs and maintenance on that that that's actually going to make up for that? Is that the idea?

Yeah. So factor in, yeah, do two separate P&Ls, one for the land, your, say, $300 lot rent and all your land-related repair and maintenance, run a separate P&L at your roughly $350 house rent and back out all your repair and maintenance. there. And then also allocate in something for your time, Brandon, because unless you've already got a staff there, you're getting started out. You probably don't already have, you know, an asset manager and a bookkeeper and other people on your staff. If you do, more power to you, you can just expense their direct expenses into it. But what I found when I got into this business, I basically was in a similar position to you. I was spending a lot of time. I was making money, renting mobile homes, but I was spending, again, still a fair amount of repair and maintenance.

Still, I was making money, but I was spending so much of my personal time on it, you know, if I had not rented homes, if I had just rent to owned the homes, I did both. I did anything for a buck. That was the way I got started. You want to buy a house? Jefferson's got one for you. You want to rent? Jefferson's got one for you. But the rental tenants turn over a lot more. They're a lot rougher on the house. You could go six months or a year and think, Oh, renting's the best thing. Then a renter is more likely to disappear in the middle of the night and you discover like, oh my gosh, there's $4,000 damage here. And you take that against your previous year's rent at $350 a month. You haven't made any money at all. You just won't know that for a year

or whenever they turn over. I'm not saying that folks that rent to own, you know, always leave a home immaculate if they don't go through. We, of course, hope they all go through with their rent to own agreement, but they don't all. But my experience has been, again, folks that at least put down more money, you're probably going to want to take one to $3,000 down payment on a house. Folks that can come up with that kind of money just tend to be better tenants. They're more likely to go through and own the home. And if they don't, they're more likely to leave it in better condition. So I would encourage you to only rent to own, the folks that are in there in renting, just let them rent. Don't evict. But maybe you present them with,

the following option. You say, hey, if you sign this document and maybe for the folks that are there, it's nothing down. But you can say, hey, you can keep paying your $350 a month for the house. Again, sign a separate lease agreement for the $300 for the lot rent, but say, hey, you can keep your house payment at $350. And if you sign this agreement and agree to rent to own it, you take care of all the maintenance, then I'm going to sell the house to you over three or five years. Depends on the age of the homes. I'm suspecting their older homes. Yeah, the 80s. 80s?

Yeah. Yeah. So probably you do those 350 a month over even two or three years, you know, or you can tell them, hey,

or if you really, really want to rent, that's fine. I'll keep maintaining your home, but your house rent is now $450. They have to pay an extra $100 a month if they want to keep renting because you are maintaining

all the proverbial leaky toilets and leaky roofs. So I'd present them with that option. Let them choose to become home, homeowners or remain renters at a higher price and you'll naturally have turnover over the of the renters no matter what you do with their rental rates but anyway then going forward you only rent to own those homes you never take in another renter and your park will naturally evolve over the next two or three years to be a community of all resident owners that's that's

cool that's exactly what I want to do so but can you explain the difference between why would I want to do a rent to own versus just flat out seller financing? Or is that the same thing in this case? Because they're DMV? Same thing. Okay, because it's because they're DMV type vehicles. Yeah, just for a 1980s home in our community, these are probably metal metal homes, as opposed to the newer ones, which would be vinyl siding, shingle roof and look more like a modern home.

But yeah, for the classic 1980s metal metal, we'd probably sell those in our park with financing for about five grand, four or five grand, say, give me a thousand down and pay me that $350 a month. maybe for the next couple of years. And then you're still going to collect, what, about seven, eight grand out of that house? Or pay me $5,000 cash and you just own it outright. But yeah, that's kind of the way we do it. Put up a website, you know, advertise on Craigslist, advertise in Facebook. There's probably a local, for whatever town this is in Maine.

There's probably a local sort of yard sale community in Facebook. That'll pull. Probably also advertising the local newspaper. You'll get those homes moved. I'm making notes right now. Like, okay, I got to build a website. Because that is, like, I'm across the country. So one of the beauties that when we put this deal together is that the guy who brought it to me,

Ryan lives in the town, owns a bunch of real estate in the town, property manager in the town, right? So he's going to be the boots on the ground there. So I'm trying to think, like, you know, how can I, how can I help? And I think I'll probably end up taking most of that as the website, the advertising, the pushing, you know, like that side of things. Well, he's there showing a unit and trying to, you know, trying to collect rent when somebody doesn't pay rent on time. You're like, that's kind of how we're segmenting a little bit.

Yeah, that makes perfect sense. That's great that you've got somebody local and he can oversee the crews, you know, because you will get some of the houses back trashed and you're going to need to recarp it. We prefer vinyl, but re-floor the houses, repaint them. And he can be the guy getting a couple of competitive bids overseeing the crew. Yeah. Is he going to be on-site collecting rent or do you have an on-site manager for this park? So there was an on-site manager that person is leaving with the sale.

because she's going with the owner's other parks. I guess he's got more. So we have to actually decide that. That's a good topic of conversation. Do I bring in a resident manager not to live there? Or do I just say, you know what? I got this guy. He can take care of it.

We'll just rent out that office unit as an actual house. Make more money. Yeah, we, yeah, there's no need to dedicate a house to be an office. Yeah. So we always turn over houses to be just rent to own agreements. That's right, rent to own homes. frankly, we keep very, there's in this day and age, there's even very little for filing, very little need for filing cabinets. We scan stuff and hoover it all up into Dropbox. Yeah. So I would turn over

any quote unquote office that's a house on the property, turn that over to a rent to own unit. Frankly, even some of our parks have a site built office, some little cinder block thing, and we'll convert that into an apartment if we can. We don't like to rent, but you can't, that's an improvement to the land. So you can't sell off just, you know, just that little physical office that you would have to rent. But yeah, we're always looking for revenue. So I would put that back out into the rental pool, help some deserving family become a homeowner. Probably then if you're friends in the town, have him collect rent. We install a rent box, just a big old metal, heavy gauge steel rent box, typically sunk in a yard of concrete. So no idiot can, you know, drive their truck

into it and try and make off with all the money, put a big old no cash sign on that rent box, only take checks or money order, and then just have him go on site several times the first week of every month, collect the rents, get them deposited. And there are some other solutions out there. We use rent manager now to manage all of our 2,300 pads. I think that actually comes with a tenant portal. Yep. So if you want to get fancy and use rent manager, then your tenants can pay online right through that software package. So you'll still probably have to go, on site and pick up some physical checks, but maybe you'll see that you might start getting 25% of your your money coming in electronically. That's nice. And it integrates right with rent manager

that way. And so that it kind of limits your bookkeeping a little that somebody both deposits the money through the software and it automatically updates your accounting that they have paid. So there's no more reconciliation to do. Just a thought, Brandon. That makes sense. Yeah, what I'm using right now with my own rentals is, and I don't know if they're even, they're still around. I don't know if they're taking on smaller clients like they did for me. I can't remember. But anyway, pay near me, which is a company where I can, all my tenants will go pay rent at

7-Eleven in cash. 7-Eleven then deposits it into my account and the tenant pays a $4 fee. It's been really, really fantastic for us with our lower income tenants that we have in our apartments. So that's another option I'm going to look and do. Okay. I thought I had read that that was a limit of 100 units, like a minimum of 100 units. I think that's what I heard too is that they, they took a, like they added a minimum.

I think, which before when I signed up, unless you're Brandon Turner. I think I signed up before they instituted that. They probably realized that one-off wasn't real profitable to them. No more branded. Yeah, no more brand. I think I had like 50 at the time. And it's been, it's been fantastic. And half the tenants, like, they just don't have checking accounts.

I find that with low-income people. Oh, yeah. Yeah, they just don't have it. So they go to Walmart and get a money order and they would drop in the box. But then our box got broken into once. We didn't lose anything. They just broke into it and then realized there was no cash, I think. and that was it.

But I didn't want it to ever happen again. And so we switched over. And anyway, so yeah, definitely implementing that online payments or paying me if I can. So that's all good. What else do I got for you picking your brain?

Mindy, I've been hogging all the questions if you want to throw anything in there. You kind of have. I know. It's like you act like this is your show. This is not my show. This is clearly Mindy's show.

But Mindy, I know you wrote down some questions here in our notes. I did write down some questions. So my parents live in an RV and they travel around the country building churches. And when they're at a church site, the church, it's through this big group and the church has to provide electric and sewer and water for each site when they're on site, but they're not always on site. It's a really long story, but they had to go, my dad had to go back to work for a few months and they parked their RV in a kind of a half and half RV and mobile home park. Do you have any mobile home parks where you allow the more, I don't want to say transient because it's not really necessarily transient, but you know, the RVs, the true RVs, not the mobile homes.

Are there any benefits to that? Is that like a not cool thing? That was a great question. So eloquently worded. Well, Mindy, I won't refer to your parents as transient because I'm sure they're nice people. They are. They're totally transient. They don't even own a house.

anymore. They only own the RV. They've done it for like 10 years and they love it. Oh, that's total freedom. That's great. Okay, so RVs, as you know, have engines in them. And as we say, those cash flows drive off, whereas a mobile home is basically a giant box that gets permanently tied down to the land, big three foot long augers that go into the ground. It's a permanent water, sewer, electric and gas connection, just like a real house. RVs are kind of plug in play. You just sort of plug in the water like a garden hose and you plug in the electric like a big old oven or something. Anyway, so when we see a park, like we've got a great park in Superior Wisconsin that came. It's about 150 pads.

There were about 10 that had RVs in them. We didn't assign as much value to those pads. We felt it was still a good deal, frankly, even if those 10 RVs drove off the day after we closed. Fortunately, they didn't. Some of them did, and then some others came back and, you know, a little give and take. But yeah, that's a big difference between, say, buying a pure RV park. And this gets into issues of zoning and lot size. The lot sizes for RVs are often much smaller because RVs are smaller. So you can't always convert one into the other, again, for zoning reasons and for reasons of physical infrastructure. That's really a separate discussion. But we don't like RV parks as much. much, not because of the transients that come and go out of it. But we don't like RV parks,

again, simply because those cash flows drive off. And a lot of RV parks have people that are there for one night or two nights and may pay in cash. And then, you know, who's there to collect all the cash? So, oh, that makes a lot of sense. Owning an RV park is a perfect business for someone like your folks who might someday just want to retire. They could buy their own RV park, live in it, in their own RV park, in their RV and then they're there every night to collect the cash, to collect the nightly payment. You know that all the revenues are getting in the bank. It's a perfect sort of retiree business. It is harder to manage from a distance. And again, always the cash flows are more transient.

So I would not pay the same price per pad for an RV park that I would pay for a mobile home park. But again, a little different business, a little bit more like the hotel business versus is the apartment business. That's kind of the difference between RVs and mobile home parks. We like the more permanent cash flows. We like the mobile home park model. But you can generally put an RV on a mobile home pad. And for instance, like that park in Superior,

we have actually got more than 10 RVs in there now. So we didn't pay for that. You know, that's basically free money to have some RVs move in for six months or whatever. we're happy to have them as they turn over will backfill with mobile homes that'll be permanent cash flow. But right now in the short run, sure, if somebody shows up with an RV and says, hey, I want to pay your lot rent and hook up. Yeah, we're fine with that. Okay. How do you feel about the new fad of tiny houses? It's not really so much new fad anymore.

It's a couple of months old. But I don't know how I feel about that. I lived in an apartment with My husband when we were first married, it was 405 square feet. It was plenty of room for us. But these tiny houses are like 100 square feet. I don't even like, how do you turn around? I'm not into that fad. But if that's your thing, I think it's awesome. So what is your opinion of the tiny houses?

And can you put tiny houses on a mobile home pad? I know people have a hard time finding places to park them. Can you double up on a mobile home lot and put two tiny houses there? Like how does that work? that might solve your problem of those empty lots. That was like 20 questions there, Mindy. I don't know. Wow.

Boom, boom. Go. It's getting hit by Mindy's great. It's the movie show. Well, Brandon was hogging you so much in the beginning. Indy show. Okay. So here's a couple of things.

So tiny homes are technically RVs. Okay. Oh, okay. They're like wheels under there and they're not subject to HUD. Housing and Urban Development started regulating the construction of mobile homes in June of 1976. So everything since June of 76 has to have more insulation, can't have aluminum wiring, has to have copper wiring. And I'm not saying that tiny homes don't have good insulation or have aluminum wiring. But my point is for a mobile home to really be a legal mobile home and go

into a mobile home park, it has to have been built since June of 76. And it has to, It really has to be of a certain size. Tiny homes get away from that regulation because they're so small. I think it's sort of anything under like 500 feet, HUD doesn't regulate. So what you've got is a product that's not legally a mobile home. Legally, it's an RV. If your city and county is really strict, they may prevent tiny homes from coming in because they're an RV and a local government could say, oh, sorry, we don't want transient RVs.

You can only have mobile homes in your park. It's rare that that gets enforced, but just understand that could happen to you. You'd probably want to talk to a local city official. If you're thinking of growing a mobile home park with tiny homes, you want to make sure you can really do that because a tiny home is an RV. Anyway, so the other issue, though, Well, a couple there. So you probably couldn't put two on a single lot. That would typically violate zoning. You can only have one residence per lot in a mobile home, whatever it is, mobile home, RV, Tiny Home. You can only have one per lot. I'd be fairly certain most city and counties would start enforcing that if you brought in two or more on a lot. Anyway, and then the third thought that comes to mind is that Tiny Homes really appeal to a radically different customer. than most mobile home park dwellers would. Most folks, again, as we've touched on, are going to be making 30 to 35,000 a year household income.

A lot of them have kids. They're just getting started out. There's no way they could afford a tiny home. Many of those are like 70 to 100,000 bucks. And then furthermore, they've got two or three kids. The math just isn't going to work in a three or 400 square foot footprint. So we appeal to affordable housing customers. They make 30, $35,000 a year.

They want to get a three-bedroom place, 1,200 square feet for, you know, 6, 7, maybe 800 a month. That's, again, a very different market than tiny homes, which tend to be driven more by retirees and specifically eco-conscious retirees that feel great guilt about their carbon footprint and whatnot. I think you're looking for the word millennials. You know, male, hipsters, millennials.

Yeah. Yeah. I knew a guy who bought a tiny house and he did not live in it long. Yeah. I got a good friend that's building it right now. It tends to be a more coastal thing.

You see tiny homes, you know, on both coasts. You don't see them in Wichita, Kansas, but the concept is unheard of. There's so much land in Wichita, Kansas.

That's funny. Yeah. You don't need this little bit tiny home. One of my buddies is making a tiny home right now and him and his wife. I mean, they're like 23 years old.

they absolutely love it. He built a rock wall on the outside of it so we could climb the rock wall around the house. It's about like their, you know, young. I'm sorry, like a climbing wall? Like a climbing wall? Like a climbing wall. Yeah. Oh, that's so fun.

Yeah. Yeah. So anyway, yeah, it is very. Okay. Great. So, okay. It's their house. I just don't expect to ever see him in any of my parks.

No, no. Yeah. And the problem is that they actually have been sent is they can't find a place to put their tiny home. Like they're like parked at some guy's house. right now, like, you know, but they're not really supposed to be. And they don't have, they don't have water sewer garbage hook up. So like, they have to empty a bucket. And like, it's, you know, like. It's not really a house. It's grown in a shed. Got no running water. Yes. So they have to buy their own land. You know, if they could get a half acre of land,

improve it, put in a well, put in a septic and put their house on their own quarter or half acre of land. Maybe that's a solution for them. Yeah. But yeah, again, they're, it's a great concept, but it's not really a factor in at least the mobile home park world. Sure. That makes sense. I built a playhouse for my kids. There's electric in there. I mean, there's not electric in there.

Wow. If it's under 120 square feet, you don't have to have it inspected. Permitted. Oh, it is 118 square feet. And my, I feel okay putting electric in there because my father-in-law is an electrician. Oh, nice. For like a thousand years. And actually, he did.

Can I come? When I'm in Denver, can I come hang out? your playhouse thingy. Yes. I don't need a hotel. I'll just hang out there. You don't need a hotel. You can just stay in the playhouse.

It might get chilly. I'll give you a blanket. Well, you got a heat out there. I just put a little space heater and electric. There you go. I've got electric. Perfect.

I'm branded between Mindy and myself. If things get bad for you, you'll always have a group. Thank you. Don't worry. Just call us. Thank you. So good to know.

This is like the best show. All right. So let's shift gears here because we talked a lot about mobile home parks, but some people listening, they don't really care about mobile home parks. But we do. care about real estate investing as a whole. And so I want to talk about some of the things that apply to any real estate investor. Specifically, a couple of things that you're doing. One,

when we talked to you last time, you talked a lot about, you know, I mean, you were building up your business. It was you and I think your partner and you were in there swinging in the trenches. Today you've got kind of an operation going. I mean, you brought on team members and all that. That is something that anybody, whether they're looking for mobile homes or whatever, when they want to scale, you have to bring in people. So can you talk about, look, what have you done in the last couple years to scale. What's your operation look like today? And tell us about that. Yeah. So when we got started, as I call it, it was mobile home park 1.0. It was Brad, my partner and myself doing everything, our own bookkeeping, quick books and spreadsheets, putting our own

ads up on Craigslist to market the properties, answering many of the phone calls ourselves. You know, we manage the properties. We've now gotten to what we call mobile home park 2.0, where we've hired on folks that in turn do that. So Brad and I are managing not the properties. We're managing people that manage the properties. So some of our key hires, and by the way, we made most of these key hires too late. We did not really hire ahead of the curve. That is my biggest point of advice to your listeners is hire ahead of the curve.

But we brought on a couple of key points here, a controller, a lady who's been in the business of real estate accounting generally, not specifically mobile home parks, but she's been doing real estate accounting for more than 20 years. And that's more than enough experience. But we've got, again, an experience controller. So she just makes sure. Yeah, what does that do? Yeah, she makes sure that the books are right. So for instance, you know, we buy a park. Okay. What's our opening balance sheet? Some of that is non-depreciable land, but some of it is depreciable pavement, water and sewer pipes, fencing, signage. This is your opening balance sheet. So all that has to be logged in. And then, of course, that triggers the correct amount of depreciation. At least we believe

it is now the correct amount of depreciation now that we've got her working for us. She also just makes sure expenses are coded correctly. So if I have to deal on an emergency basis with a vendor and, you know, buy $400 worth of pipe at Lowe's out in Wichita, that shows up on my credit card. She'll pick through the credit card and say, hey, Jefferson, what's this $400? And I say, oh, you know, that's the lamplighter mobile home park. And, you know, that's for piping for house number one, two, three. So, you know, again, get it, you know, expense it or put in our books appropriately. So she produces all the P&Ls, all the balance sheets, all that stuff.

that then ultimately helps us pilot our business correctly because now we know, you know, what homes we're making money on, what homes were not, what the overall park profitability is. So that's what she does. And then ultimately all that goes out to our investors. So Brad and I obviously could be doing that ourselves. We used to do that ourselves. But now we have her. So we can do other things with our time, like find new deals to buy. Anyway, so hiring on a controller was a key. thing. And then in just another couple of weeks, we've got an accounts receivable person starting. Now, you wouldn't normally think of that as being a key hire, but the mobile home park business is really fundamentally a collections business. Again, we have approximately 2,300 tenants.

All of them owe us, say, $300 a month. So that's about a 600,000 a month run rate of rent that we've got coming in. We need to make sure that everybody actually pays. And the first line of defense is the managers to make sure that all the tenants have paid. But this accounts receivable person now still oversees, checks will oversee and check every lot. And for instance, make sure that, okay, we did get the rent paid. It was late. Did the manager actually enforce the $50 late fee? So a lot of it really is revenue assurance. It's above and beyond just receivables. It's really ensuring that we have a culture across our portfolio where the managers are, in fact, collecting all the rent on time or charging late fees and, again, collecting those late fees, if not. That's another key hire.

And then the third I'll mention is that we've hired on a lady to do all of our asset management. So she's been a decade with two of America's top 10 largest mobile home park owner operators. So what asset management means, at least for us, is she's overseeing the reinvestment back into the properties. So Brandon, what you may find, for instance, with yours is, again, you've got some homes that need to be rehab. They're vacant. So are you going to spend three grand and do, you know, a so-so job rehabbing them? are you going to spend five or six and do a really nice job? There's no right answer there. You just need to know your market and decide to what extent you're going to improve a home.

Or your park may need to be repaved. So you know, you probably want to get a couple of competitive bids because you're going to spend 40, 50 grand repaving. So those that sort of reinvestment back into the property is what we call asset management. Again, stuff Brad and I were doing. But now we have this lady doing it for us. So again, we can focus our time on higher and better usage of our time. So anyway, getting our financial side of things nailed and then getting our operations side of things nailed has been, basically what we've been up to really over about the last 12 months. And we probably should have been starting even almost at the time we had our first podcast with you a couple years ago. But that's what we've been building, mobile home park 2.0.

We're about to bring on some other folks just to do home sales and marketing on Craigslist and in local newspapers and things. That's going to be a dedicated person that will do that sort of marketing and sales across all our properties. Anyway, so that's kind of where we're at. Can that person be local to you or can it be anywhere in the country? I mean, you're just looking. Yeah, that could be really anywhere. Our finance people are down with my partner, Brad, down in Orange County. Again, I'm up here in San Francisco and our properties now are coast to coast.

We own from Washington State over to North Carolina down to Florida. But not in Maine. Not Maine. Not in Maine. Run away from Maine. I hear there's some new guys that just bought a perk there, though. They may not know what they're doing. It might come up to sale in another three months.

We'll see. We will see. All right. Managers. What about like you mentioned the managers having to make sure the rent was paid or, you know, like the late fees were issued. You have a manager for every park or what is that? Yeah, we have a manager for every park.

And that's almost always somebody that lives in the community. And we look for folks that not only live in the community, but own their own house. So that means they're likely to be more stable, more committed to the community. And we look in particular for folks that have particularly nice homes. Doesn't have to be a brand new home, but we're looking for a home that's clean, probably been painted if it's an older home. We want their front lawn to be cut. Those are people that show pride of ownership.

those are excellent candidates for being your manager. So those are the kinds of people typically that we look for. And again, in our world, managing means collecting the rents and filing some evictions. It's not getting into asset management. All the reinvestment back into a park we handle at headquarters. All the check writing comes from headquarters. We never give a manager a checkbook or even petty cash. All the investment in the park is seven.

They just focus on the top line of our business, getting the rent in the bank and filing evictions as needed. That's our definition of a mobile home park manager. And do you pay them or is it like a deduction in rent? Do you actually give them a salary? It doesn't sound like that's a huge chunk of time. It certainly isn't a full-time job from where I'm standing. It's rarely full-time. You'd need to have a park of probably a couple hundred pads or greater to get to,

to full time. And the average size of our park is probably right around 100 pads. We did just buy a two park portfolio in Wichita of 500 pads. And that is a full time manager and several full time maintenance guys. But that's a behemoth of a park and it's institutional grade. It's pools and clubhouses and the lawns are cut immaculately. And that's a whole different ball of wax when you get up into a park of that size and quality. But yeah, for your typical sort of 40, 50, 80 space park, it's probably somebody on site. On site, we typically give them free lot rent, plus we pay them about $10 a month per pad. So Brandon, you've got something like 46 pads. So they'd get about another $460 a month in addition to free lot rent. And then we pay them an additional $5 a month

for any park owned home. So they'd get about another $460 a month. So, That might be you've got another 20 homes there. Brandon times five is another hundred bucks. So we'd pay free lot rent plus about $560 a month to a manager for a park like Brandon's. Okay. And do they do any of like lawn care or anything like that? And that would be additional work for additional pay. But yeah, we have a couple of managers that do that or up in some of our parks in the upper Midwest

towards the north where we have snow plowing. Yeah. So we'll occasionally hire managers to do additional work for additional work. additional pay, but that would almost certainly not be included in their compensation. So is lawn care typically the responsibility of the person on the lot, or is that typically the responsibility of the park itself? That's typically the homeowner's responsibility for their lot, but a number of our parks have like a playground area or just sort of a grassy area like near where the entrance is.

it's often, it's common to find common area land in a mobile home park that needs to be paved. Okay. All right. Sorry, it needs to be mowed. Yeah, yeah, yeah. Well, okay. Let's talk about the paper. Although you could pave it and then you have no more mowing.

Well, I was going to ask about the paving thing. Have you had to redo roads inside of mobile home parks? That feels super expensive. Yeah, it is expensive. This was our park in Raleigh, Durham, North Carolina. We knew this going in. Our diligence was good enough to discover that a third of the pavement was basically gravel. It had been really bad.

It was probably badly done to begin with. It was on a hill. It was at the bottom of a hill. There was a lot of runoff. Anyway, so we knew going in that a third of that park was going to have to be repaved. And in fact, our bank made us do a holdback, I believe, of $50,000 specifically to get that paved. So we did. We did it right.

It actually worked out to be, I think. closer to a $70,000 expense. That's about a 90 space park. So we were paving in front of, yeah, roughly 30 homes. So call it, yeah, somewhere around 2,000 per pad was a rough ratio of what it cost, at least in that park to get it paved. Anyway, so we spent the $70,000. The bank then sent us the $50,000 holdback.

They basically increased our loan by $50,000 and wrote us a check back for 50. after we had photos and had proved that we had done the work. So it's rare that you would do it. I don't believe we've done anything other than some pothole repairs in our other roughly 22 parks. What about flood zones? When I was looking at buying a mobile home park, almost every property I looked at had at least part of it. And this one even like part of it in the very, very back might be considered flood area.

So what are your thoughts on that? They tend to scare banks more than they scare me. You know, keep in mind, most mobile homes are already mounted up about 30 or 36 inches up off the ground. So a lot of flood zones are places that, of course, it floods rarely. And when it does, it might only flood four, six, eight inches. So you just need to look at it carefully and really say, what are the odds that we're going to have, you know, six feet of flooded here? Okay. and the odds of that are relatively low.

That would be really only parks right in the dead, dead center of a flood zone that would ever get to potentially anywhere near that high. You know, you pray it never happens. But if it does, again, it's easier to repair mobile homes. You can, of course, if the worst happens, just haul it out and bring in a new one. Or maybe you're just cutting out the bottom foot or a couple feet of the floor boards around the bottom and you're redoing inside the house. you're redoing the bottom couple feet of sheet rock if that's what got wet and moldy. So generally it's easier, I think, for mobile home parks to recover than apartment buildings from floods.

And again, you've got a much higher threshold, literally of about 36 inches before you really have any problem with floods in a mobile home park. That is a great answer. That's what I was thinking. Yeah, you know, when I was looking, there was, you know, there was one that I really liked. I fell in love with this park or the numbers of the park anyway. I never saw it. But everything was great about it until I found out that it was right next to a big raging

River and yeah I looked at pictures I typed into Google you know this town name and then flood and I just see picture to picture of like a massive floods I mean like just like over the house floods and I was like yeah no okay so I left that one do not buy next to the Mississippi River brand and I think floods every year I will I will not I grew up so the Mississippi River yeah then you know yes yeah so in my town we had a thousand year flood right after I moved in right right I was them. I moved in. My gutters were all nasty. I removed them. The next day it started raining. And two days later, I met Home Depot trying to buy up every piece of gutter they have because it was awful. But there was, there were two mobile home parks that are right on the river. And it was a thousand year flood. This place never, ever floods. We live in Colorado. We don't even get moisture ever. So one, one park had about 12 pads in it. And they just wiped out the whole park. They removed every mobile home. And now, they're going to turn it into, I think, like a regular playground park. And they won't allow them, they won't allow people to come back in and move in next to this river again, even though it never floods.

Like, this was such a freak occurrence. The other mobile home park on the river was fine. It came up, you know, the 36 inches, but, or not 36 inches. It came up like 12 inches, but you've got the 36 inches, so it's okay. But, I mean, if you look at the river now, it's like four feet down from where it did flood. So we did get a lot of water. but you know part of part of well part of this whole discussion goes to like when people buy real estate like it's always it's always scared me to the idea of buying like one or two properties because

freak things do happen occasionally if like you put all your eggs in one basket I'm going to buy you know one fourplex and that'll be my property that's carrying me to retirement there could be a freak occurrence especially out here on the west coast where an earthquake which insurance doesn't cover unless you have earthquake insurance could wipe out one of my properties you know if I only have one thing. So when I looked at a mobile home parks, I didn't, I didn't even go into this business going, I'm going to buy a mobile home park. I said, I'm going to buy mobile home parks. I'm going to create a business and eventually create a fund or raise money and do the whole syndication model or whatever, because I don't want to own one park that could something freak happen and lose it. And I know

you're kind of doing the same thing, Jefferson. You're actually doing a fund right now, right? Can we just talk about that really for like, what does that even mean? And how can real estate investors use that? Yeah, so we're just about to launch Park Street Partners Fund three to go out and buy probably a dozen mobile home parks. So it's obviously the mobile home park business, but it's slightly different than doing individual deals when you invest in a fund because as a limited partner, your risk is spread out. You own part of 12 properties, maybe 15. we tend to buy nationwide so folks would get diversification across, you know, a bunch of different cities and states. And that way, if you do ever have a whoopsie and your park floods, cash flows go to zero, or you discover, you know, hey, we've got toxic waste to clean up for

half a million bucks, you know, whatever your worst nightmare is, it would be rare that even then that you would ever have to go back to your limiteds to do another capital call. You've almost certainly got enough cash coming in, either just in the bank that hasn't yet been deployed, or you've got enough cash coming in from existing properties that maybe you suspend your payouts for a quarter while you deal with the issue, but then, you know, you resume the next quarter paying out your earnings. Anyway, so we like funds. We think it's better for investors, because again, they get that sort of diversification. Brad and I like it, because that way we know how much money we have in the bank and we know whether we need to go look for, you know, a couple of really big parks

or, you know, maybe just a couple of mid-size or smaller parks. We'll see what the fund turns out to be. But we like the fund structure. I think it benefits both limited partners and general partners. All right. So let's say I want to build a fund. Let's say I'm going to make the Brandon Turner fund here. And I'm going to go out and buy, let's say small multifamily properties. I like those, right? I'm going to go out and buy. So I'm going to go start a fund. I'm going to raise $5 million from whoever I can raise it from. I have to obviously register something with the SEC. Is that right?

Yeah, you would, you should. If you're raising money from other than just friends and family. So if you're dealing with people, you already have a prior existing business relationship with. You can do anything you want. Just form an LLC, write up your own operating agreement, you know, raise money. But again, we've got, for instance, our own mobile home park investors podcast. We get 12,000 down.

a month. And that doesn't mean we have a pre-existing business relationship with those folks. So we've registered our funds with the SEC. It's a 506, I believe, reg D registration, which basically just means you tell the SEC, hey, we exist. And we're going to be advertising widely, like on our podcast. Or you could even take an ad out on the Super Bowl, whatever you want. But in In exchange for being able to advertise widely, you can only take accredited investors, folks with a million and up net worth that's exclusive of their primary residence. So it's got to be a million or more of sort of other investment assets. Or they've got to make $200,000 a year if single or $300,000 a year if married.

But if they have either that net worth or that income, they don't need both. But if they meet one of those thresholds, then they're an accredited investor. And yeah, then you just go about things the normal way and raise money. But you can't raise money from proverbial widows and orphans. Folks have to prove that they are well to do and presumably sophisticated enough to understand the numerous risks from investing with you, Brandon. That makes sense. And that's kind of where I see myself headed. When I looked at this one park that I'm buying, this is a test to me.

Like, I mean, I don't want to sound like I'm doing it flippantly, but I'm doing this to see, do I want to get into the Jefferson Lilly model? Do I want to become your competition? You know, like, do I want to build a business around this? And I like the idea of it. We'll find out. You know, maybe I'll go into apartments instead. If I find that I like those more. But I like that apartments have a little bit more competition right now.

So, okay, so I got the fund. I'm building. It's the Brandon Turner Fund. And I register, let's say that, and I start building. I raise $10 million. So now I've got $10 million raised. Do people then give me that money when, like, right away? Or do we wait until I have a deal or do they wire the money?

When do I get the money and when do I start paying interest on it? So that's all up to you. Those are all deal points to be negotiated. The way we do it is we start paying out a preferred rate of return right up front, or we start accruing it. We'll actually pay it when we have profits. And Brad and I won't take anything out until we get our investors caught up and paid first. But the way we do it is, yeah.

So we tell folks, yeah, invest now. If you've got, you know, 50 grand or a million, whatever, put it in our fund now, frankly, we don't want to have a deal lined up in a couple of months, go back to our investors, and then have them say, oh, yeah, but I found some other great deal. So I just, I can't invest, or I can only invest half as much. I'm sorry. It's a little different when you're raising money from institutions. You're raising money from, you know, like the Colorado public teachers retirement system. Those folks, you know, can commit an earmark money for you. But frankly, your average, you know, John Doe, who might just be investing five or six figures, if they see

something better, they're likely to do some other investment. So we don't want to have to go back and chase folks down. We just say invest now. The fund is open. You'll start accruing your preferred return now. Some of those deal points may change with our third fund. We're blessed to have a lot of people that have heard of Park Street partners that are now hounding us by email, phone, and text wanting to know when our next fund opens. We didn't start that way, believe me. But anyway, those are all deal points. But I certainly for a first fund, advise just accrue it, pay it out, get the money in the bank right up front and then go find a deal. You know, what I love, what I love about the fund, too, is so I'm doing my very first syndication

deal as well right now. I'm, I'm just a small, what they call them, K, K, KPs that key part. Anyway, whatever, like I'm a small part of the general partner. I'm a general partner, but I'm a small part of it with my buddy, Ben Labovich. So we're putting together a deal right now. And what scares me, or makes me nervous, I don't know what scares the right word, is that exactly what you've said, is that we've been putting this together for a couple months now. We've got all these people committed.

I mean, we've over committed 150% or whatever it is to what we needed to raise. However, nobody's given any money yet. We don't see the money until like closing table and then anything could happen. And that freaks me out, which is why the fun thing makes me sound. The fun sounds more fun to me. Yeah. Our first deal was that way. We were kind of scrambling to get the money raised,

and we had folks just send it into the title company. But at closing, we were oversubscribed about 50%. And here's a little tip. Don't kick anybody out of your deal. Just scale everybody back. You want everybody still in your deal so that presumably you do well for them, and then they tell all their friends. And they're a little upset that they didn't get all of their money.

in. It was only two thirds, but keep everybody in your deal. Don't kick anybody out to scale down. I love that tip. I never thought of that, but that's fantastic. Yeah, that's really interesting. So when you say scale them back, instead of, I say I'm going to give you $100,000, you instead only accept $75 for me. Yeah. We just at closing, we send you back $25,000. And we send you a signed and updated subscription agreement that says you actually have $75,000 in the deal. Okay. Oh, that's really interesting. I like that tip a lot. I do too. I'm not even doing syndication deals yet. Yeah, I like that. I'm not sponsoring them yet. Yes, I like that a lot. Okay. So now I've got this fund. How does it break down? I know this could vary in deals. But do I just pay, I mean, does this say, hey, I'm going to give you guys 8% or 10% period forever. Do you get a piece of all the deals? How does that all factor in? Yeah. So it's all to be, they're all deal points to be negotiated. The

The way we've done our funds is we've paid out, say, an 8% preferred rate of return, and we pay out 50% of all additional profits. Okay. So Brad and I have to return more than eight for us to get a split. The first eight goes back to our investors. Now, the way our fund works is that that's, you can think of it like a loan. So anything above the eight pays down their capital balance. And then if and when we say refinance and pull out big dollars, a hundred percent of those big dollars go back to our investors. So in the long run, which maybe is year three and four, by then our investors should have all their capital back.

And that 8% preferred rate of return goes away. It's like a loan that we've paid back. but they still own half the deal forever. So Brad and I have effectively at that point bought in to half of the deal. They still own half. Effectively for free at this point, they've gotten all their initial investment back, and they still get half of all the profits and depreciation out of that deal. That's the way ours work.

You can imagine very complex situations with more complex waterfalls and who gets what amount of money between 8% return. 18 and if it's a more than 25% return, it's this, it's that we try and keep our funds simpler and aligned. For instance, we don't charge a management fee. We do take a 2% acquisition fee, but after that, our only compensation comes from that profit split. So we're very aligned with our investors. We've got to get them paid first before we're participating in any of that profit split. That makes perfect sense. Okay, I've got a couple of questions about what you just said. So you said preferred rate of return and you said preferred rate a couple of times. I'm not familiar

with that term. Is that like preferred stock where different people are getting different rates of return? Or like what does preferred rate of return mean? Yeah. So what it basically means is if you were to invest $100,000 and let's say our deal this year earned $15,000 in profit. So you would get the first eight. There's your eight percent preferred rate of return on your 100,000. So now the deal made 15, we paid you eight. So there's what, seven left. That we then split 50-50 and you'd get another $3,500 on top of your eight. So you would get $11,500 all in. And then Brad and I would get the other $3,500. We're dealing generally with much larger numbers than this, but I'll just keep it simple with 100,000. I don't need your

piddly little 100,000, Mindy. Yeah. And are you? But then, Wendy, once we say the next year, let's say we refinance it and we pull out enough money that we can pay you 100 grand, all of that that would go to you. Now it's just a 50-50 split. You've got all your money back. Let's say the deal now earns 20,000 in the next year. You get 10. You get half of that. And Brad and I get the other 10. You've got all your money back, but you're still own half the deal. You're still getting a return of now half the profits out of that deal. What if you refinanced and couldn't get, let's say Mindy put the $100,000 and you could only refinance enough to get her 50% of that back, you know, so now she's got 50 grand and she still makes 8% on the 50. Yes. Right. And then,

okay, I had not heard of anybody doing it this way. For a grand would be 8% on the 50 and then it's split remaining. Yeah, I think that's fascinating. Brandon, you can do anything you want. You can do whatever you want. You can set it up however you want. I'm going to set it up so I get 100% all the time forever and the investors get nothing. Can I do that? Can I invest? If you can raise money on those terms. I'm going to listen to your podcast.

I will give a high five to whoever invest in that deal right there. Wow. A high five and zero percent return. Exactly. Sign me up twice. All right. All right. Okay.

One thing. And Mindy, I know this is your question. You wrote it here, but I'm going to ask it because I'm rude. You can ask my next question. Rude. Do you have a time frame? So when you're going to sell these properties, are you holding them forever? We do have a time frame.

The funds are 10 years. What we found, Brandon, was that when we were talking to investors about investing, they all kind of wanted to know what the lifespan of the fund was. That gives them some surety that they will get their money back at some point. So we found it very difficult to go to the market and say, oh, it's an open, you know, the fund just goes forever because what your investors here is, I'm never getting my money back. That's not the case, but that's what they hear. If you don't say, oh, yeah, the fund has a 10 year life. Then investors kind of know, okay, at least after 10 years,

these guys are going to be forced to sell everything and get me my money back. So we'd advise kind of anywhere between a 5 and 10 year lifespan. And you can always renegotiate, right? You know, when the fund is up, if all the limiteds are like, hey, let's keep the party going, this is a great business. You can always just extend your fund at that point and keep extending it if the limiteds are all, you know, if the limiteds all want to do that. So you still have the option to even take it longer if everybody's happy. But yeah, you'll probably need to put a finite life on your fund, at least until you can go public. And then, of course, people can always buy and sell their interests on the public markets. But the actually being public, you'll probably need to put a

finite life on your fund. Is that the plan eventually for you, go public, do you think? Who knows? You know, there's some talk of some other larger partnerships that may go public, and that would set a nice path and precedent for us maybe to go public someday. Also, public companies tend to have, you know, stock that they throw around. Who knows? Maybe we get a very interesting buyout offer from somebody larger. We'll see. We're not counting on it, but there's a non-zero chance that something like that happens. All right. Cool. I'm non-zero chance. I like that answer.

Okay. So I am going to, Brandon said I can take his next question. I'm going to read his mind. How are you finding parks today? Brandon took forever to find his mobile home park. He even said me, there was one in my town that was listed for $3 million. What was it? 20 lots.

Something like that. Yeah, it was crazy. It was ridiculous. I went and drove past and I'm like, well, I don't think anybody got shot today. It's actually, it's not that bad. Just price right there. Yeah, right there. Nobody got shot.

So there you go. Brandon, your property didn't get anybody, nobody got shot in the last week. So there you go, worth a million. So how are you finding parks today? Yeah. And Brandon, how long were you looking? It's been about two years. Is that it?

It's been about two years. No, I mean, it was like, so I decided I committed back January 1st of 2017. I said, I'm going to buy a mobile home park this year. That was commitment date. Oh, okay. Then I started looking. It's really been less than a year. It's been less than a year.

I started looking and started feeling things. And I will close on the 28th of December 2000. And yeah, so it went down to the wire. Well, that's awesome because it took me, I think, 17 months to close on my first part from the time I first got turned on to this space. You know, and things started clicking until I actually closed my first deal. So you're ahead of me, Brandon. Oh, good. Fantastic.

Congratulations. Yeah, but you didn't have Jefferson Lilly to coach you along the way, Jefferson. So we find parts a number of different ways. There is no panacea. The most successful path so far has been brokers. We go to all the trade shows. We meet all the brokers there. We do other, of course, phone calls and emails and stuff.

For those big trade shows, we typically host a cocktail hour. And we invite all of the brokers to come have, come get liquored up on Park Street partners. So all of that is, is maintaining top of mind with brokers. So we've found that to be where we get most of our deals. That said, we've also, we have bought off publicly available websites like LoopNet. We tend not to pay the high prices that get listed on some of those public websites,

but where we can get a deal at a more reasonable price, say a third less, then some of those widely shop deals can begin to make sense. We also do some outreach directly to park owners. We've mailed out postcards. We make follow up phone calls. So that's produced some results. And then again, we have our mobile home park investors podcast. And for instance, our deal in Raleigh, Durham, North Carolina came from a couple of guys

that knew about this off market park for sale. They had listened to our podcast and they just called us up. We always are happy to partner or pay referral fees. I think we paid those guys something like a $75,000 referral fee for that deal. I know of a mobile homeowner in Lundantt, if you're looking. $3 million. You can get those things. $3 million, $20 spots plus a house.

We'll talk after the show. Okay. All right. So you're doing a variety of things. There's no panacea. We do a little bit of everything. All right. Okay.

Is there a particular size property you're looking for or that you won't look at? Like, it's something too small or it doesn't sound. like there's something too big if you did a 500 lot property. Yeah, there's where we're at now, not to sound cocky, but there's probably nothing that would be too large for us. Okay. So on the downside, on the smaller side of things, we probably would be looking generally for 50 space parks.

It would depend a little. It really depends how much money we can prudently invest. let's just say a typical 50 space park on city water, city sewer in a decent metro is certainly going to be 20 and maybe $25,000. So we're going to be investing. The total purchase price would be a million, a million and a quarter. So we'd be investing a quarter million, maybe 350,000. And again, obviously borrowing about 75%.

Anyway, so that might be roughly what the low end would be. Now, if it were a really sexy park like on the water in California, who knows, a 10 space park might be, you know, a million bucks or more. It would be in California. But anyway, let's just say for most of the Midwest, it's probably 50 spaces. That said if it's a market that we're already in places like Wichita, Kansas, Oklahoma City, Tulsa, now Superior, Wisconsin, we're in Lakeland, Florida, we're in Raleigh, Durham, North Carolina. For markets that were already in, we'd consider something much smaller. It could be a 10 or 20 space park.

we'd just sort of bolt it on to our property that's already there. Probably the tenants from the smaller park would pay their rent over at the larger park. And probably the manager from the larger park would now just pick up an extra 10 or 20 pads to manage. We've actually done that with our Tulsa. We've got two parks in Tulsa. One of them is much larger. And that's the way we co-manage those couple of parks. So again, if it's a market we're already in, there might almost be nothing too small.

Okay. My last question before we go to the fire round, are you typically getting 25% down payment? Is that typical for banks you're seeing right now? And the fund provides that down payment? Yeah, we get financing from a number of different sources. Regional banks are going to be right in the sweet spot for sort of smaller and mid-sized deals, let's say purchase prices of half a million up to maybe two million.

When you start getting to two million and up, those are big enough deals that you can get CMBS financing, collateralized mortgage-backed security financing, which is this fancy Wall Street debt that's better, cheaper, and longer than bank financing. You can also get some agency debt from Fannie and Freddie, the federal government or government-guaranteed agencies also do write mortgages on larger and typically middle to better quality parks. So it depends a little on the size and quality of your asset, but there are things other than bank financing that you can get. All of it's 70, let's say on average 75. We got, actually, we just did a CMBS piece where I believe we got 77% loan to value. So sometimes you can do a bit better.

And then, of course, Brandon, as you know, there's always seller carry. That's all across the board. It sounds like you've gotten about 80% financing, which is great. And seller carry, you've got a really nice piece of debt there for your park. So, you know, anything is, is possible. with sellers, just bond with them and, you know, find out what their needs are and see if you can work out something where you put down relatively little and borrow relatively long at a reasonable rate the way you have. So, yeah, one more thing I didn't mention earlier that helped with this park a lot that I'm excited about is, you know, in negotiation, which we just did a podcast with Chris Voss who wrote, never split the difference. And so I, I'm trying to use my negotiation skills.

And this was honestly more Ryan Murdoch than myself. But we negotiated the price. He did not want to go on price at all. So we got them from 6% down to 5% for interest. We got 25 years with no balloon. And then we got them to take the first year and do interest only because there was some rehab to be done the first year. And so I didn't want to lose. So I thought, you know, after we had already come to terms with everything, we were like almost done with the, I mean, we were all on the same page. I said, it was like the last minute, hey, hey, go ask if we do interest only the first year. That seems reasonable considering we'd lose money if not. And the guy was like, oh, yeah, that makes sense. So it made no difference to him. Made no difference. I mean, they just helped us go from,

you know, where we would have probably broke even actually the first year to now making an extra 20 grand the first year, just an interest. So yeah. Really? Yeah. So anyway, you can negotiate all sorts of stuff. Thanks. Thanks. Yeah. That's, and 5%. Yeah. 5% is fantastic on a commercial loan for 25 years with no balloon. That's great. I'm not going to get that from a bank ever. And no personal recourse? Uh, I, I honestly don't know. I'll talk to, uh, you don't know if you're on the hook. I mean, I'm pretty sure I am going to be, I'm pretty sure it's going to be a recourse. The fact that We never talked about it.

It makes me think that we just, I don't know. I guess I can negotiate that point now. I got a few weeks. All right. So let's go for no personal recourse. I'm going to go for no norm for seller carry. All right. I'm going to.

No personal recourse is the norm, but. That's good. All right. That's good to know. This is this podcast is all worth it right here. I'll send you your consulting fee later. Um, let's let's shift gears here and head over to the world famous fire round. It's time for the fire round.

All right. This is. the fire round. This is the part of the show where we ask you questions direct out of the Bigger Pockets forums. And today, Mindy scoured the forums because she wanted to ask you some questions about mobile home parks. Go figure. So let's see what Mindy has chosen for us today. Mindy, you want to start it? Yes, I do. I would like to know how much I should budget for insurance on a mobile home park. And what am I insuring as the owner of the mobile home park? Great question. Okay, great questions.

So basically, mobile home parks are two different things, the real estate and the wheel estate, the mobile homes that sit on the land. I love that term. So the real estate, you don't really need to ensure. It's very rare that even if you get hit by flood and tornado, it would be almost unheard of that either of those events would actually like lift pipes up out of the ground or pull pavement up off the ground. So the actual ground, the real estate, is virtually impervious, and we don't really insure it. There's nothing, the risk of loss is very low. Now, what may get damaged, of course, is your cash flow, if all your tenants, heaven forbid, get swept away in a flood, or let's say their homes, not the tenants. So you can get, and we do advise and we do get, I believe, one year's worth of business continuity insurance.

So if the worst happens to one of our parks and our cash flow, everything goes to zero, that insurance company writes us a check for whatever basically last year's NOI was. So that makes us whole for one year. And then we scramble, of course, to bring mobile homes back in and try and get the cash flowing again. So again, don't insure the land. This is my unprofessional advice. I'm not an insurance broker, but I'm just telling you what we do. We don't insure the land, but we do ensure the business, the cash flow.

Now, for any homes that we own, the wheel estate that we own, you can't insure the tenants' homes. You can't not legal to ensure something you don't own. The resident owned homes. For your own homes, we do insure those. I believe we get a relatively high deductible, which in this business is $1,000. So we're fully covered for all the damage to a house above $1,000. And it varies. If you're in Oklahoma, it's going to be higher, call it a percent and a half of the insured value.

So say a $20,000 home, your insurance would run about $300 a year, basically to insure that. In places farther north, frankly, like Wisconsin, where you don't get very many floods or tornadoes, it's, I think, closer to a percent. It would be more like $200 in a place like Wisconsin to insure a $20,000. used mobile home. But anyway, so we insure those for replacement value with a $1,000 deductible. All right. What about liability?

You know, somebody trips and falls and do you guys, is there insurance on that kind of stuff? Oh, I'm sorry. Yes. So we do have general liability. I believe it is a total of $2 million per year, maxing out at $1 million per occurrence. So basically if we had two slip and falls, each with, a million dollar judgment in a year that would max out our insurance so far thank heavens we've

had no such things but yes we do get general liability insurance again at that at that at that level one million plus one million two million dollar cap okay do you have any idea oh go ahead i was going to ask who does this insurance is that what you were going to ask to like where do you go to get this insurance oh so there there are folks that specialize in writing insurance on mobile homes and mobile home parks We use a couple of guys, Kurt Kelly and Dan Greenfelder. We use mostly. We may have also dabbled with a couple other folks, but it's mostly those two guys. They both specialize in manufactured housing insurance, again, both for the real estate and for

the wheel estate. That's fantastic. I was going to ask for that business continuity, like, for a supposed hypothetical 46-unit property for around a million dollars, like, what's a rough estimate that somebody pays for that you know, $1,000, $10,000, $5,000 a year. Oh, I think the business continuity, yeah, I think it's on the order of a percent. Let's just say if you paid a million one, probably your park had about $100,000 in NOI. Yeah, I think so.

So you paid about a 10 cap, 11 cap. Yeah, so I think that runs about 1,000, about a percent. So they're basically figuring the odds of getting hit or about 1 in 100, something like this. It's about 1%, I think. But, again, it will vary with where you are nationwide and what. what the risk is that your park maybe gets flooded or not. Obviously, that insurance is higher if your park is or is partially in a flood zone. But yeah, so just get a couple of competitive insurance quotes.

And we generally only deal with insurance companies that I think are at least like double A rated. I think AAA is the highest. So we're dealing with double or triple A rated insurance companies. So basically we can be relatively sure that they're not going to go out of business on us and not pay a claim. We don't deal with lower ranked insurance companies. Okay. Well, good tips. All right.

Next one, I'm thinking of building my own mobile home park. Is this wise? No, that's deal. Don't do it. Okay. Okay. So, I mean, unless you're telling me you've got, you know, vacant land provision to be a mobile home park, like in downtown Denver or downtown Chicago or some really major.

You know, if you've got that on the land, frankly, you're not going to develop it into a mobile home park. Yeah. So what most people don't quite grasp is that even if you have all the provisioning, and again, it's very hard to get this these days. It would almost certainly be grandfathered land from 20 or 30 years ago. But if you in fact really can develop a mobile home park, let's think through the logistics. And we actually did a whole podcast on our show, specifically entitled, why you should never develop a mobile home park. Basically, you go ahead, you put in all that money, you're probably going to be spending 20 grand per pad for the land plus all the development. You have to put in the roads, probably put in

sidewalks, you have to put in, you know, water, sewer pipe, maybe gas, maybe electric. Anyway, you're talking about spending, investing 20,000 per pad. And what you have at that point is an empty mobile home park that's not cash flowing. That's not a good thing. So now, because it's so rare that people move homes into parks, you almost always have to provide them yourself. So now you probably have to come up with another $20,000 or $30,000, maybe $50,000 if you want to do it really right. But you have to come up with, say, 20 to $50,000 to go buy used or new homes, bring those in, set them up, and then get those on rent-to-own agreements. So most people don't think all the way through to the second part. There's no point in having an empty mobile home park.

You've got to double your development budget than get into the house business fully. Own all those houses. Try and sell them. Believe me, it's almost always easier to just buy an up and running cash flowing park the way you've done, Brandon, maybe backpedal out of the houses, but just get down to just owning the land, cash flow, buy in place cash flows is my message. Okay.

After, I got that question before we started this. Oh, there you go. Good job. All right. Okay. Can you give me some advice on tenant screening for mobile home parks? Is it any different in your experience than for single family homes or apartments? So I've never owned any other kind of real estate other than mobile home parks. So I can't be certain, but I don't think it's different.

Basically, the way we run our screening is tenants all, of course, have to produce a driver's license or some valid government issued paperwork showing that they're here legally. We check their background. we make sure that they have no violent felonies in the last 10 years. If it's 11 or more years, we figure that's okay. You know, they've been clean for a decade. Frankly, doing dumb things like DUIs or even spousal abuse. We don't like it. But that's basically allowed.

We just don't want anybody that shows a propensity to do violence to strangers. like they walked into a bank with a shotgun, you know? Yeah. So for that kind of violent felonies, there just can't be any in the last 10 years. We also don't take sex offenders. That's not a protected class, at least not in the states that we're in. I was just going to ask that. Can you discriminate against registered sex offenders?

You can. Or as we say, we can affirm that we want to build a community with no sex offenders. Keep in mind also, folks that are sex offenders tend to have to stay away from kids and virtually every mobile home park has a lot of kids in it and the lots are 50 feet wide and the sex offender would be within 50 or 100 feet probably of kids and sometimes they have to be farther away. I don't know all the regulations but but anyway. So yeah, we don't take sex offenders and we don't take anybody that's done any, has had any violent felonies in the last decade. And beyond that, then if they're clean, we'll look to verify their

income, we probably want that to be at least two and a half times, maybe three times of the rent. And so we'll verify that they're employed. And then, of course, we're also looking for that almighty down payment. Can they come up with, say, $1,000 down on an older 1980s house? It might be three or potentially $4,000 down on a brand new house. But if you've run those background checks, they're employed, they're not violent felons, and they can come up with that kind of cash, then they're likely to be a pretty good tenant. And we take a There you go. All right.

Number four, this is kind of a loaded question, but we'll see where we can go with it. From a new mobile home park investor, I'm looking for some methods for due diligence when considering the purchase of a mobile home park. So it just has any insight for a new guy. Yes. So we've done two podcasts on exactly that. We've done one entitled on site due diligence and one entitled off site due diligence. So on site, first off, you're going to do your off site.

You know, that's just like, hey, a deal comes across your desk. You're going to want to look up, for instance, what is the average house price in that community? We like to use a website called bestplaces.net. I love that. Yeah. So we can just put in, you know, Oshkosh, Wisconsin, and boom, there it is. We see what the average house price is in that town. We like it to be 100,000 or greater.

We also look on that website to see what average household income is, and we like that to be $40,000 or greater. We'll also run a test ad on Craigslist, and we like to see about 20 responses or more in a week when we put up mobile home for sale. We'll have the seller send us like a photo of a home that might be vacant. We'll just run the test ad and try and drive traffic into their community. And who knows, maybe if a home gets occupied before we close on it, that's a good thing. But anyway, so we'll run a test ad as well on Craigslist. On site, then we're looking to meet a couple of residents casually. We'll typically drive through the park, roll down the window, and just say, hey, you know,

can you tell me what the lot rent is here? And of course, if the seller of the park says, oh, the lot rent's $350 and the tenants are saying, oh yeah, it's 250, that would be a problem. So we're looking to just validate what the lot rent actually is. We'll ask then tenants just say like, hey, you know, so is the manager here any good? Now, understand there's always tension there between landlords and tenants. And so it's not surprising when something's negative. But if it's negative like, oh, that landlord, you know, manager is always hassling me to pay my rent.

That's actually a good thing. if it's more like, oh, you know, the manager is sleeping with some tenant and that other tenant, like they never make them pay their rent because they've got a personal relationship going. If we hear that kind of thing, you know, that that tells us probably all we need to know about the manager. That manager won't be continuing with us. So we do that kind of thing. We'll drive through competing parks in the town, just see how full they are, how well managed, what their lot rents are.

And then we'll also, for instance, just go into the police department. say, hey, you know, we're thinking of buying Sunny Acres mobile home park. You know, is it, is it a bad park? How does it compare to other parks? And usually the police say, oh, yeah, we're, you know, in there every month or so, but it's more domestic violence rather than drugs. And it's no different than any of the other parks, you know, so that we consider that a clean bill of health if we don't hear that, oh, it's the drug park in town. Anyways, that's kind of some of the stuff that we do on site. That's perfect. Okay. I find it, I find it interesting that,

you actually physically go to a location that you're about to drop a million plus dollars on. What a great tip. So I'm in the forums all day, every day at biggerpockets.com slash forums. And I see people over and over, oh, I bought this property site unseen and there were problems. Well, Southwest Airlines is really cheap. You can get a round trip ticket to almost anywhere from almost anywhere for under $500. $100. Even if you're paying $30,000 for a property, is it not worth $500 more dollars to go check out that, oh, it's a burned out crack shack. Okay, maybe that's not worth

$30,000. Go check it out. Yeah. Thank you for that tip. I actually did debate a little bit. I debated a little bit because I was like, well, I got, you know, I was like, I got my partner, Ryan, he's there, lives in the town. He can do it.

Like, he is the partner that's on the ground, right? Jeff has seen it. That's okay. Yes. There are somebody else's eyeballs on it. Correct. But since like I'm putting the deal together, essentially, and I'm bringing in a lender, you know, a partner to help fund the deal.

I thought it would be good for me to do it. So I'm paying $700 for a round trip ticket tomorrow. I'm actually going there tomorrow to check it out. So anyway. Plus, you get to meet Ryan and you get to go to Bangor, Maine. I know. I've met Ryan before, but I get to hang out with him. Yeah, I'm actually staying at his house.

That's going to be fun. Oh, nice. Yeah. So I was in Bangor this summer. You were. And we drove through. Stephen King lives downtown. Me and Stephen King are going to hang out.

Okay, that's not true. Really? No. That would be so cool. So, yes, Stephen King has a really cool house. His fences like bat wings and spider webs and like totally. When you drive down the house, the street, you're like, oh, there's his house. That's no.

Yeah. I'm going to look for it. He's not really a low profile celebrity. Like, no, he's not. That's funny. But I was talking to Ryan. He said everybody kind of leaves him alone. That's funny.

Yeah. All right. Well, that was the end of the fire round. Now we're headed over to the world famous. Famous for. All right, the famous four, these are the same questions we ask every guest every week. And we're going to ask them to you, Jefferson. Number one, what is your current favorite real estate related book?

Other than anything, I don't think you've written a book yet, have you? I have not. All right. So other than a book you've written, which you haven't written. Maybe someday. Maybe someday. Yeah, so Sam Zell has just come out with a book called Am I Being Too Subtle? It's a very good book.

Sam Zell, for those who don't know, is chairman of equity lifestyle properties. The ticker is ELS, and they are the world's largest mobile home park owners. So he's got obviously a publicly traded reet, and he owns 150,000 pads. He's big. So a couple more than you. A couple more. So his book, I'm reading it. I'm not done with it, but I like it a lot.

It talks about his background and his folks fleeing Nazi Germany all the way through his rise, going to school, quitting his first law school job, buying, I think his first apartment building and just how we got into real estate. I would advise folks to read, Am I Being Too Subtle by Sam Zell? Okay. What is your favorite business book? Non-real estate related. I really like Snowball. The biography of Warren Buffett. I think that's Alice. I'm trying to remember her name. Anyway, I've met the author. But yeah, very good book. It doesn't just cover Buffett's business dealing and business thinking. It gets into, frankly, some of his personal shortfalls.

He had some strained relationships with his wife and his kids. I think from time to time, he was very focused on building his business and their tradeoffs in life. And I think that book does a pretty fair job highlighting not only his brilliance, but frankly, some of his weaknesses as well. So I really like snowball. Yeah, it's nice to see the, I don't want to say downside because he's Warren Buffett, but I'm a huge fan of Warren Buffett. But it's nice to see that it's not all rainbows and unicorns. Yeah. All right.

Next one, Mindy. What are your hobbies besides buying mobile home parks? Now I spend a lot of time. I now have three kids. I think I've had two, I guess, since we spoke last. So I've got two boys and a girl. And it's just a ton of fun spending time with them. I took them, I think, yesterday to the playground for three hours and just watched them

run around and around. Well, not my littlest girl, but the boys. Anyway, so yeah, just spending time now with family. This is a fairly forgiving, fairly profitable niche of real estate and gives me a fair amount of flexibility to do stuff like that and just take off for an afternoon and take the kids to, you know, to the park. That's awesome. I love it. All right. Well, last question from me. What do you believe sets apart successful mobile home park investors or any investor from those who give up, fail, or never get started. I've seen a number of folks get sidetracked. Yeah, they never get into this business.

They hear one of our podcasts or, you know, they read a book about this business and they love it, you know, and I'll spend some time with them. And then, like, I bump into them a year later and their story is, oh, yeah, you know, I love mobile home parks. You know, I used to do single family fix and flip. But the month after I talked to you, Jefferson, I found the best single family fix and flip deal ever. So I'm doing that. And then my buddy, he found a good quadplex to buy. So yeah, yeah, yeah. But next year, I'll get out of that deal. And by next year, I'll be in the mobile home

park business. So you can call that distraction or inertia. But yeah, a lot of people who find this niche come at it. Not the way I did. I came at it with no prior real estate investing. A lot of people have already done real estate investing. And it's just so easy to keep doing whatever you were doing because you know it. So right there, that means a lot of people fail to get into the business. Once you're in it, again, it's pretty profitable, pretty forgiving. I've only ever met a couple of people that really had like wipeouts, like 100% loss of their capital. And in all of those, those couple of cases, it didn't have to do with the park per se. It wasn't that, oh, all the tenants up and moved. It was that they like way overpaid and they couldn't make their debt search.

service or one lady had a real sort of environmental problem in the town and the whole town's water supply got poisoned. None of that has anything to do specifically with this niche. So if you get into it and you don't overpay, then you're likely to do at least fairly well. And if you buy it right and you're willing to put some elbow grease and capital, as I think you're going to do, Brandon into like rehabbing some homes, bring in some homes and infill some fully constructed vacant pads, then you're likely to do quite well. You just got to break your inertia and distraction, get focused on this, get into it, and start working it. That's such a good advice. Such good advice. All right, Mindy, take us out. Mr. Jefferson, Lily, where can people find out more about you?

Yeah, so we've got a couple of websites. Our company's website is parkstreetpartners.com. We've got information there, both for folks thinking about getting into the business on their own. We've got some resources there, or for folks that might say, hey, I just want to make a passive investment and co-own mobile home parks with these guys. We've got information on our fund there. And again, in early 2018, we're going to be launching our next fund, and we'll probably do funds roughly every year. Then again, I've alluded to our podcast that it can be found at mobile home park investors.com. They'll find links to the podcast on iTunes, Stitcher, I believe also Google Play. We also have their links to our LinkedIn group.

We've got a group of almost 4,000 people, the biggest of its kind on LinkedIn, trading tips and tricks. So join our LinkedIn group. And then finally on that webpage, we also have a link to our calendar. We try and put in the big industry events and some of the public company earnings calls

so people can just sync our mobile home park investors calendar right into their mobile phone or computer and be abreast of upcoming industry events. So there you go. The podcast, the LinkedIn group, and the calendar, all at mobile home parkinvestors.com. Perfect. Brandon, we should go to some of those industry events. I should.

Get a get liquored up to the. Get liquored up by Park Street. Partners is buying. It's Vegas. That's coming up in April. We'll see you there. That's awesome. Is it in Las Vegas this year?

It's in Vegas. Usually the last weekend of April is the big show in Vegas. And then there's also a very good, slightly smaller show in Chicago. usually the first week of November. So we're always at both. Those are the M.H.I. Events, which stands for Manufactured Housing Institute. And that's our industry's big nationwide lobbying group, obviously trying to get things

passed or undone like Dodd Frank in Washington, D.C., and again, all the annuals. So, yeah, check out. I think it's just mH.i.org. So I would also advise for folks. You don't necessarily have to join that prior to buying your first park. but maybe once you have, you might want to at least attend some of the events and maybe join that, that national group. I love it.

Brandon. I just might do that. All right. Well, Jefferson, this has been fantastic, like really, really good. So I'm definitely going to take a look. I mean, I have like a million notes, but I'm going to take an applying to my life. I hope people do too. So.

Yeah. Thank you. Whatever your next deal is, Brandon, you can call. We might pay you a referral fee or we'll partner with you on it. There we go. We're open for business at Park Street Partners. I like it. I like it.

All right. Thank you, Jefferson very much. And we will see you around. Adios. All right, that was a fantastic show. I felt like it was totally selfish like most of these are. Yeah, it kind of is. Isn't that why you started it?

You wanted to ask people direct questions? That's why I started bigger pockets back when I was seven. Okay, that's the podcast. Yeah, that's me being selfish and greedy. But hopefully you guys can learn something as well. And for those people who stuck with us for the entire hour and a half long interview, you guys are awesome. So thanks for hanging around.

Anyway, Mindy. Brandon, I'm excited to do this mobile home park venture with you. I'm very excited. This is really awesome. 46 units is, it seems like a nice size but not overwhelming size. I agree. It feels like a good. 20 of them are already owned by somebody else, so we don't really have to do much with that.

So I'm kind of excited. Not kind of. I'm really excited, but it's been a long day. It has been. All right. It's been a really long show. Thank you. for letting me step in.

Anyway, all right, guys, thank you for being a part of BP. Come follow us over on social media, Twitter.com slash bigger pockets, Facebook.com slash bigger pockets, Instagram.com slash bigger pockets. And you can find me and Mindy on those sites as well.

So search around. All over. All over. All over. All over. All right, guys. Thank you so much for being a part of Bigger Pockets. And by Mindy. It's been a fun.

Bye, Brandon. For BiggerPockets.com. My name is Brandon. And this is Mindy. Signing off. You're listening to Bigger Pockets Radio. Simplifying Realest for investors large and small.

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