BiggerPockets Real Estate Podcast - 369: Escaping the Day-to-Day Grind to Work ON Your Business with Jefferson Lilly

Episode Date: February 13, 2020

Want to step out of your business and finally gain the freedom to think more strategically? Let Jefferson Lilly show you how! Jefferson is a mobile home park investor, who went from sleeping on an air mattress on-site at his mobile parks to running a lean team and focusing his energy on raising millions from investors. No matter what stage of your career you’re in or what your preferred strategy is, you’ll get a ton of value out of this high-level discussion about building a “2.0” business that serves you AND your team. You’ll learn how Jefferson went from acquiring parks “deal by deal” to starting a fund, how he overcame fear to hire several six-figure employees, and how he incentivizes his team to maximize occupancy. Also, Jefferson breaks down the criteria he uses to narrow down potential deals (including proximity to a Walmart)—AND reveals the four main ways he and his team reach out to mom-and-pop park owners. This is an awesome show, whether you’re interested in mobile homes or not. So check it out, and subscribe to the BiggerPockets Real Estate Podcast so you won’t miss the next one! In This Episode We Cover: The “unfair advantages” of mobile home park investing 4 main methods to find off-market deals How his team uses brokers to source deals Hiring 6-figure employees How Jefferson has raised more than $30M from 200 investors How he incentivizes his team based on occupancy 2 factors that drive profitability in the mobile home park business The difference between a “2.0” business vs. a “1.0” business Jefferson’s biggest career regret Why he aims to hire “coaches” rather than “cheerleaders” How and why he started a fund rather than individually syndicating deals And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinar BiggerPockets Podcast 111: A Unique (and Profitable) Real Estate Niche You’ve Probably Never Considered with Jefferson Lilly $13M in Equity from One Deal & Cash Flowing Despite Being Comatose with AJ Osborne BiggerPockets Podcast 339: 60,000 Tenants?! How Frank Rolfe Built a Mobile Home Empire Mobile Home University BiggerPockets Podcast 262: $600,000 Per Month in Gross Rents from Mobile Home Parks with Jefferson Lilly Indeed.com BiggerPockets Podcast 361: Using $3,500 to Kickstart an “Unsexy” Investment Empire with Tristan Thomas Tim Ferriss Podcast The Dave Ramsey Show Quickbooks Check the full show notes here: http://biggerpockets.com/show369 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 369. I've kind of gone through what I call Mobile Home Park 1.0 to now Mobile Home Park 2.0. 1.0 is, you know, you're doing everything yourself. I'm now, and for several years have been at Mobile Home Park 2.0, where I do directly almost nothing with the properties, but I have to now hire and manage and incentivize people. 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's going on, everyone? This is Brandon Turner, host of the Bigger Pockets podcast here with a slightly different type of show today.

With my co-hosts, plural, Mr. David Green, and Mr. Ryan Murdoch. Ryan's joining me in the seashed. David's over there in California. What's up, guys? It's amazing seeing the command post from this side of the screen. Yeah, this is a new perspective for me.

Yeah. Appreciate you guys. Let me tag along today. Yeah. We love us. It's a treat whenever we get the mercenary in the studio with us. I like it.

It was a full house today. It was a full house today. And we brought on Ryan today, one, because he was like sitting outside my window with like his face pushing the glass. Puppy dog out. Because he knew we were going to be talking with Jefferson,

Lily today. Jefferson, Lily, is a real estate investor who actually got me excited about mobile home parks in the beginning. He was the first one introduced me to the idea. Then Ryan got excited about it and we've learned a lot. And we're actually buying a property right now, actually a couple of them from Jefferson. So we thought it'd be kind of a cool show to bring them in, talk about kind of what we're doing. But this show goes a lot deeper than just mobile home parks. And this fact, we talk a lot about moving what he calls moving from 1.0 to 2.0, which means working in your business to on your business. So whether you're buying your first property or your 100th property, you're doing a million dollar fund or a $30,000 house hack.

It doesn't matter. You're going to learn a lot about how to kind of transition in your investing phase and your investor cycle to kind of the next level. Very cool stuff today. So stay tuned for all of that. And before we get to that, though, let's get to today's. Quick tip is super simple. Save the date.

This is your official save the date card. No, David Green is not getting married. Not that we know of. Are you getting married? No, definitely not. So this is the save the date card. What I'm talking about is the Bigger Pockets conference. BPConn 2020.

The date is set. We actually have a date for BPConn 2020. It's going to be October 5th and 6th in, General Mo, please. New Orleans, Louisiana, right next to Bourbon Street. What are actually my favorite places I've ever been? I was at another conference there. Actually, I think it's the same hotel.

This one of the best conference I've been to. This is going to be even better. So tickets are not yet for sale, though. This is just a tease. I'm like the, I don't know, girl or guy. at the bar that likes to tease you with a little bit of a, you know, rolling up my sleeve a little bit. That's what this is. We'll keep you posted later on early bird pricing. But for now, check out my ankles. Is that good? Does that work? I love it. And if you want to see the rest,

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So visit costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. And now it's time to get in today's show. Anything we got to cover before we bring in Jefferson? It's like I dominated this intro. I didn't let you guys talk at all. You dominate everything. You watch me on the basketball court. I'll dominate. No, I don't even know how to shoot basketball. David texted me the other day and the text just said, I had a dream last night. I was a basketball player. I've been dreaming a lot about basketball lately. It's like, oh, we haven't talked about that. But what's up, David? Are you considering a career change? Do you want to get into that now? Let's do it. The deep dark depths of my soul.

I don't think we're time to get to it now. Maybe we'll do a Facebook live about that or something. Maybe we will. This is awesome, man. All right. Well, without further ado, let's get to the interview with Jefferson Lilly. Jefferson, welcome back to the Bigger Pock's podcast, man. A three-peeder.

Glad to have you here. Third time's a charm. We'll get it right this time, Brandon. That we will. And today we brought in a special guest, of course, Mr. Ryan Murdoch sitting here next to me along with David Green. And the reason why is because, as we've talked about and we probably mentioned in the introduction,

We're actually in process, Ryan and I, of buying a couple mobile home parks from you right now, which is funny because you're the one who taught me about mobile home parks like years ago when you were on the show the first time. Yeah, you were the impetus. Is that the word of impetus? Okay. Impetism. That's it. Yeah.

Have you bought anything from any of your other guests? I have. Any other asset class? I don't think so. I don't think I've ever bought anything from a guest before. So this is the first. Okay. Anyway, the reason why that's cool.

And the reason why I think that's so neat is because it showcases. like that kind of investor life cycle where like when you bought those you were at a certain phase of your business you grew them to a certain point and now you're ready to sell them move on to something else so we're going to buy them from here take them further and someday we'll sell them and probably sell them to a random other guest or something you know like it doesn't mean like what i think that's important yeah okay i'll give a more result there you go that's that it's so cool because like it's not always a win lose in real estate it literally can be like hey this benefits you at this point in your career benefits us at this point and a benefit

somebody else later on down the road. And so real estate moves in these ebbs and flows. That's kind of a lot of fun. So I like that. Yeah. Yeah. We're happy with it. So I hope you are doing should be should be good. You can have me back on for a fourth time in another couple of years. You can you can talk about how the deals have done and it'll be awesome. Yeah. It's fun. So just just throwing out to everybody listening is like you don't like like like you can seek win wins in any kind of real estate thing. Especially like I find especially when you're dealing with like buying from investors like different investors have different parts. You know, like we bought that mobile home park from your friend, Ed. Yeah.

So Ryan had a friend named Ed. We bought his mobile home park. Ed's great. He's still investing. But at his point, he wasn't prepared. He like, he didn't want to do the work that we were willing to do. So instead he just ended up carrying the contract on it.

And he'd make. Yeah, win win. He makes passive income now. And we got ourselves our first park like a year and a half ago. So, yeah. Anyway, cool. All right. Well, let's get into this.

Before we talk, like, you know, we can go through mobile home park stuff. We can go through a lot of stuff today. But before we get all that, can you give us a big, I mean a quick introduction? Who are you? How did you get into real estate in the beginning? Like, what was your very first deal? Yeah. So I got into it.

Well, really it was sort of 15 years ago. I think it was 2005. I was just thinking about it. I was working in high tech. I was on, I think at that point about my second of what would be three different startups. And I was just looking for some passive income. And I thought, you know, hey, I'm a big fan.

of Warren Buffett. I love value. I want to stay within my circle of competence, whatever that was. But I figured I would buy an apartment building and, you know, just because that was kind of all I knew, right? I figured I had always lived in a house or an apartment building. Let me buy an apartment building. I'll fix it up. Maybe some new kitchens, new roof, make it better for the tenants, make it better for me. And then just in going online, like at LoopNet, I kept looking for apartment, well, multifamily. And there'd be these, you know, one in a hundred mobile home park things. and I'd just say like, that's absurd. I'm not buying a friggin' mobile home park,

and I delete the search result. And, you know, look again and again, Peer, Illinois, Lubb excess, Ames, Iowa, you know, these things kept popping up that were priced better. Anyway, so I got hit over the head several times, but then finally just decided to look into it. So I had my day job at that time. I never, at any point, was so taken with mobile home parks

that I just said, hey, I'm giving up all the sexy Silicon Valley stock. options and I'm going to go do parks. But I ended up, it then took about a year and a half from when I started getting educated about parks. It took just 17 months, I think, until I closed on my first deal. But even then, I still had my day job, which I think is a great way to transition into real estate. The income from that first property wouldn't at that point quite have really been enough to support me, but it was a significant chunk of passive income. Anyway, so that then eventually So I'd moved on to a third startup, and I could see after about a year that that third startup wasn't doing real well. But my mobile home park was doing reasonable and I was putting virtually no time or money into it.

So at that point, I had the confidence and left the day job, as it were, and got into real estate and then invested some more money in that property, built it up, improved the cash flow further, ended up buying a second park. And here I am 12 years later. I think I'm now up to 30 parks. And we've got one more under contract and a second hope under contract this Friday. So we'll see how quickly I can get to 32. That's awesome. That's awesome. Can you walk people through real quick?

And I know we covered this in the first episode that we did with you back on episode. I don't remember. 11. Oh, 211. Oh, 211. You're right. 11 and then 262. So 11 we could really cover it as like why mobile home barks.

We give you a quick just under like what a piece. keeled to you about that, besides it just being cheaper and popping up on loop net? Yeah, so part of it was price, but then really at least as much was just kind of structurally why this is such a compelling niche, which I'm sure you've now found getting into it yourself, Brandon, but a couple quick things. So first, the supply curve is actually shrinking. It's effectively illegal to build any new mobile home parks. Zoning laws, density, other things have been changed. So even if it's not literally illegal in your city or county, it's almost certainly not economically feasible. And then about, so the supply curve right there would be fixed, but about 1% of these

get plowed under every year and become redeveloped into some higher and better use. So the supply curve is actually thinking, my estimate is about 1% a year. Demand continues at 1% a year, just as population grows, same demand for apartments and, you know, multi-million dollar houses. And in general, grows about 1%. The interesting thing about this business shrinking, though, is when, say, 1% of the mobile home parks get redeveloped every year, those mobile homes have to go somewhere, and they're infilling the remaining mobile home parks. So the fact that the supply curve is shrinking actually creates its own roughly 1% demand. Plus, just as population grows, there's another 1% demand growth. So it's probably about a 3% supply demand imbalance between, again, growing demand,

about 2% a year, shrinking supply about one. The other interesting thing I think about shrinking supply and just that you can't build these anymore is that, frankly, what gets a lot of real estate is to get over leveraged, they get into a property, and then 10 more developers come and, you know, open self-storage units or apartments or build office towers all within one mile of the property. So in the boom times, in virtually every other kind of real estate, you get overbuilding and you can get then, frankly, a lot of people going bankrupt because of excessive price competition. So that doesn't happen here because there is no overbuilding. So it's just a very, very stable business.

And then secondly, I'll just mention again, most of our tenants own those mobile homes. So all those things that cause all of us landlords headaches, which usually are the proverbial leaky toilet. and leaky roofs, almost all of those maintenance responsibilities are on the tenants because the tenants own almost all the homes. So you have reduced repair and maintenance expenses. Plus, again, you actually have a more responsible tenant base than your typical apartment renter. These folks don't live in a house as nice as you and I do, but they do own that home. They do have, by and large, they do have an ownership mentality rather than a renter's mentality. You've got really a better quality tenant base, lower repair and maintenance expenses,

and a fairly favorable, you know, competitive dynamic with your competition slowly but surely going away. There we just summarized episode 111. There it is. Done. Let me ask you, Jefferson, a lot of our listeners are newer investors and they're trying to figure out which niche would be right for them. Can you share a little bit of your experience of working in mobile home parks? What type of person or what type of mindset tends to gravitate towards this and do better? That's an interesting question. So I've never worked in any other real estate niche. So it's hard to do a

comparison and say, hey, you know, this is so different than self storage or office or what have you. My general sense is, again, this is not sexy. So, you know, folks that tend to like to be able to about owning a sexy gleaming office tower or brand new hotel or what have you, this wouldn't be the thing for them. What's sexy about this business is the cash flow. It's not the properties. Let's be frank, there are very few sexy-looking mobile home parks. Somebody who's comfortable, I think, thinking outside the box. And again, not afraid to roll up their sleeves. And we can talk a little bit about this, but I've kind of gone through what I call mobile home park 1.0 to now mobile home park 2.0. 1.0 is, you know, you're doing everything yourself. You're scheduling the plumber. You're

answering the tenant calls, you're putting the ads up on Facebook and Craigslist for your property. I'm now, and for several years, have been at Mobile Home Park 2.0, where I do directly almost nothing with the properties, but I have to now hire and manage and incentivize people and have systems in place so that people who work for me do all that. And that's a fairly big leap going from managing properties managing people in a way it's almost like being in a separate business. I'd say it's a big leap going from having no rental properties at all to buying a mobile home park. I mean, that's a big step. A lot of people are going with a single family home or a duplex or a small multifamily that's

close to them. You went from no rental properties to a mobile home park. And I don't know the size or the distance away from you. But what did that look like and what kind of systems did you have to build out and what kind of mistakes and things that you learned from that? So I made pretty much every mistake in the book. I bought a park with a sewage lagoon and well water. Good times.

But that's the bad news. The good news is it's all up and to the right from there. It doesn't get any uglier than that. But yeah, so I got started doing everything myself. Well, first off, I got educated. So, you know, I started reading books. I built up an unofficial advisory board of about 10 guys that were already in the business. And so I was, you know, bouncing deals on and they would give me a thumbs up or a thumbs

down. I did attend the mobile home park boot king. The original founders, not but the original founders were two other guys, Steve and Corey. Anyway, so I got educated that way and just started meeting other park owners and again reading all the material that I could. And there's a lot more of it out there now. But I got as educated as I could.

I bounced deals off folks and found one that seemed to. pencil out and that my advisors thought was decent. Again, in retrospect, I would not advise buying a park on private utilities, at least not for your first park. But anyway, that's what I cut my teeth on. And so I was traveling out to the park. It's in Oklahoma City. I'm here in San Francisco. That's obviously 12,500 miles away. So I had an on-site manager. I was also traveling out there and living on-site one out of about every three weeks as I was bringing in how. I was bringing in houses. I was my own general contractor. I would bring an air mattress and, you know, my toothbrush and some breakfast cereal and milk for the fridge, provided the house again, was hooked up to

electricity and had running water. I would sleep in the park for about one week out of every three. I did that for a couple of waves, but it was a total of about a year that I was effectively living site one third time. And just being my own contractor, general general contractor, getting the plumber to do this and getting the guy to grade the roads and getting the painter to paint and overseeing all that. And then I come back to San Francisco and make more phone calls and find more houses to buy. I was buying mobile homes and bringing them in, in filling some vacant pads and obviously improving my cash flow. So anyway, that's kind of how I got into it. I didn't even, you know, I got started just doing my own QuickBooks. You know, we've now evolved to

manager. We now have someone else who posts ads. We have stuff. We have stuff. someone else who does that sort of general contracting asset management work. But again, I'm operating at a much larger scale than that first park. It was only about 66 pads and it was only about two-thirds full when I bought it. Anyway, so that's kind of how I got into it. Again, starting with the day jobs. Most of that lived on site was really in the second year. The first year, I wasn't doing too much.

I was still working the day job and just kind of seeing how things went with the park. before making that switch to doing it full-time. So there's a couple of things I want to dig into here because this is cool. First of all, you mentioned, actually, let me go here first. That going from like version 1.0 to 2.0, I think that like that is a theme that applies across the board, whether you're buying motor parks, single family houses, duplex, whatever, that I work in the business to working on the business. Can we talk to that transition for a little bit?

So how did you, first of all, like why did you make that shift? And then what's the beginning? How does somebody who's listening to the show right now? I mean, there's people listening to show right now who have headphones in. They're at their rental property right now. They just got finished yelling at a contractor. And now they're painting a wall. Like right now they listen to this.

And they're laughing now because I'm calling them out. Like, and I did this for a decade. So like, and I'm not all the way over it sometimes. How do you go from that to I don't even deal mostly with the day to day of the properties? I got people that'd handle all that. Like what's that transition look like? Yeah. So I wish I had done it faster.

You know, that's kind of one of my greatest regrets. is I'm doing the right things. It's just taking me too long to get where I am and I just should have done things faster. But, you know, it started off, I think, in about month four or five of operating that first mobile home park when I said, okay, I really hate putting numbers into QuickBooks. And I went, I think, on Craigslist and found somebody to do my QuickBooks. I still wasn't at the level of rent manager or that sort of real multifamily accounting system. But that, again, was somewhere around four or five months into my first deal. I outsource the accounting. I think probably within that first year, I also found somebody to be putting up, to be putting up ads like on Craigslist back then, more than Facebook. But I mean, so I outsource kind of pieces of it. And then frankly, hiring somebody else to be an asset manager, really sort of a general contractor and super property manager, a manager of the managers. That didn't happen until about five years ago when I started raising outside capital and really started growing. And so at that point, we hired somebody from within the business, I think off Indeed.com. But we found somebody that had been trained and had spent almost, I think almost a decade working for some of the largest mobile home park operators.

And so we hired her to come work for us. Now with my new fund, I've done basically the same thing. hired a guy who again has some fairly deep multifamily and actually self-storage experience to come work for me. It's easier, you know, those are six figureheads. It's not like you're getting somebody at minimum wage to really drive your properties towards full potential. But with a fund, you know, we're now, this fund is a little, right around 15 million, cumulatively I've raised about 35 million. It's not that money's no object, but when you have that level of funding, you frankly, you can afford and you have to afford to start bringing in, quote, unquote, real help

to help grow the properties. So anyway, it was a impression. I like this, the definition of 1.0. 1.0 is doing it and 2.0 is managing others and providing others' opportunity to do it. That's pretty much true. And Brandon was kind of laughing at me because this is my life right now. I'd say 80% of our talks are just, I can't do this. This is hard. You know, it's hard enough to learn how to be really good at something, but it's 10 times harder when you're trying to get someone else to do it to your standard in your way. So I think, I mean, if you're at that point trying to make this transition, I know these listeners 100% are relating.

They're just on the edge of their seat to hear this. And if you're not there yet, you're going to get there. So this is good stuff for you to start hearing to prepare for. This is exactly the problem that I'm having is you'll, I either get newbies who come and they say, hey, I want to work for you and learn everything there is to learn, which is great, but it doesn't necessarily help you in your position where you're managing a fund and your investors

are expecting a performance. And what you've done is what I've heard you say is I found people that had experience and you're willing to pay. But I think what I'd like to know is can you walk us through the process of what they said that made you stand out and recognize, oh, this person could be good, what you were looking for, how you knew this is the guy I'm willing to pay six figures for the gal, as opposed to giving someone a chance and seeing how it goes. Yeah.

So for us, it was basically just hiring a really only interview. viewing people that had already been in the business, and then just, you know, figuring out a little bit about cultural fit and a little bit about still the experience level. So there's some people, for instance, that are asset managers in this business that really have never done anything other than sit in front of a spreadsheet. So, you know, we'd ask questions like, how many mobile home parks have you actually visited for your company? And sometimes we'd hear like, oh, yeah, last year my manager took me out for one day and we looked at one of the properties close to headquarters. You know, so I was like, so what do you do with your time? Well, you know, I'm analyzing the variances, the rental variances, the utility collections. So for us, that's valuable, but that's not going to be a full-time job for a still relatively small fund like ours, the big equity lifestyle and yes, communities and other big publicly traded reeds with hundreds of properties can afford to have somebody that's really a financial analyst, even though.

their title is asset manager. So we weeded out those people. And then you'll have some asset managers that, again, don't, they're a little bit more like a cheerleader. They're like running programs and trying to get all the managers to clean up their communities or get the most number of outside move-ins, that kind of thing. But they still haven't necessarily like hired, trained,

fired a manager, hired a subsequent manager, or changed a compensation plan for a manager. I call those kind of folk coaches. So what we need, being relatively small, need that coach asset manager, somebody that's gotten traction, hired, fired managers, changed compensation plans, that kind of thing. We don't need a cheerleader who's, you know, sending out emails saying, hey, $500 bonus for, you know, whoever has the most outside move-ins. We need more than that, some of that, but more than that. And again, we're not yet at the level of needing anybody at least full-time to do. do financial analysis. We will likely be hiring somebody to do that here in Q1 of this year,

part time. Anyway, so we're really looking for folks that have that sort of coach mentality that can change the players on the field. They've done that already. Frankly, that means we're taking less of a chance, you know, less of us see how, you know, see how it works out. Presumably we're hiring somebody that's actually done all that, proven they can do it. And they just come right in and hit the ground running with us. You know, I struggle a lot when I'm hiring because I, you know, I'm, what I'm trying to do the last year to put it in the terms you described today, which I like is I'm trying to build a 2.0 business from the ground up, which is hard because most people start with the

1.0 and then they build in. But I'm like, okay, well, what do I need to have a 2.0 from right now? So I hire like four people right off the bat and brought in a bunch of partners. Like Ryan here is one of them. And we're building this thing. But here's what I struggle with in doing this. Do I hire for heart and for passion and for culture fit and they're just great, but they have no experience in mobile home parks at all. But they're just like, they're perfect for like, I love them on the team. Or do I hire for they, they've been working in mobile home parks for 20 years.

They get this. They, they can teach me how to run things. Like, and I start with that at bigger pockets when we're hiring people at bigger pockets. Do you hire for experience more or culture fit more and let them learn the skills or you hire for skill and let them learn the culture. More of the latter, more hiring for skills. Culture is certainly important. And like what you guys are doing at bigger pockets, you've got, I don't know, how many dozens and dozens of employees now? Are you over 100? 30 something? I think we're like 30 something. 30 something. And you're all kind of in an office

there in Denver, right? Yeah. All under one room. Me and a couple others. Okay. We get to stay in Hawaii. It's pretty fun. I know you were on the beach in Hawaii. Working hard. Yeah. Yeah. Working. and the owner is working in Hawaii. Working hard. On his tan. No, sorry, working on the collection of this show. That's what he's working.

I'm here just to keep him on track. Yeah, I let Ryan do the work in the back. Yes, there we go. But no, so, you know, my organization for better or for worse is fairly remote speak. I'm here in San Francisco. Frankly, I'm kind of like the or one of the few guys in San Francisco that knows anything about mobile home parks. You know, if this were all software and social networking.

chip design, I would have a deep bench of folks to hire. So I don't. But I like living here. Coincidentally, though, our business, the mobile home park business has really always sort of been tri-headquartered. The big companies have always been in Denver, where you are in Detroit or in Chicago. So my asset manager is from Denver, and he lives and works there. And I anticipate as, and then, of course, our managers are all on site, wherever the properties are, which is now South Dakota, Nebraska, Texas, and Idaho in my new fund. And then we're in about 12 other states with my previous funds. But anyway, so for better for words, frankly, I think we've had less of a culture simply because we're all remote than when you have a whole company and a

literal and figurative water cooler to gather around. You know, we've never had a company meeting where absolutely everybody that works for me has been together under the same roof at one time. That would mean flying in all the managers from Wyoming and from Wisconsin and from New York State and whatnot. So anyway, so I certainly want to build a culture of accountability and I want people to have fun, but at the same time when everybody's working remotely, at least for me at this stage, I'm more about hiring for somebody who can actually deliver results, rather than somebody who's specifically a cultural fit, and then I've got to train them on how to do what they need to do.

Hey, do you offer any equity in your deals or in your fund or GP for your asset managers or your people? Or are you a sole owner basically? How do you structure incentives, I guess, is what I'm curious about? Yeah, so no, there isn't equity. That gets a little sticky. It's not an impossibility. but so what we do is we do allow folks to actually write a check and invest in our fund if they choose to,

folks that are employees. And folks that are employees of a company don't have to be accredited to invest. If they're a full-time employee, regardless of what their net worth is, they can invest. Yeah, so we're a 506C fund. And so Park Avenue can only take accredited investors as far as the true pure. investors all have to be accredited. But again, yeah, our own employees can invest if they choose. Anyway, so, but we do pay, you know, we pay out bonuses that is mostly geared around occupancy. What drives are, basically, they're very, very simplistically, there are two things that

drive our profitability. It's bumping rents and it's then getting homes occupied, getting lots occupied, be it either through renovating a house that's already there or buying. saying a new house from a factory and trucking it in. Frankly, we don't need an asset manager to just put out a notice that says, hey, your lot rent has gone from $2.95 to $3.15. So we don't compensate our people based on rents. We do, based on occupancy. Every house that comes in between our manager, our on-site manager and our asset manager,

we're paying out a low four-figure bonus for every house that comes in. Right now, again, we're growing, but so far we've got, I'll call it 110 vacant pads. So that's not going to get filled across our portfolio, across six properties. Sure. And we're about to close, well, I think in about another six weeks, we're about to close on a property that's quite large, but has approximately 100 vacancies. anyway, so that'll be, say, 200 vacancies at a couple thousand in bonus. That's potentially $300,000 to $400,000 of bonus to pay out within my organization. That's not going to happen

in one year. I mean, if it did, that'd be great. I'd happily pay it. But realistically, that's going to be spread out across probably a four or five year infill process. And I'm sure we'll buy additional properties and have additional opportunities for our employees to earn money. But the real heavy lifting, you know, getting a crew to actually renovate that house and get the mover to move in a new house. Did he level it? Oh, he got to call the mover back to re-level the house and submit the invoice because it cracked in the back bedroom. And it was 300 bucks to get the roof crack fixed when the mover removed it. And then you got to advertise it and get people to come in.

And, you know, there's a fair amount of heavy lifting with the business, I think still less than apartments. But there's certainly, certainly up front at the infill. there's a fair amount of heavy lifting in this business if you've got properties with bacon fats. So again, we pay out significant bonuses to managers that can do that. We also promote managers. We've had two particularly good managers, including the one there at the property you're buying from us,

whom we've promoted to be a regional manager. So we give them some additional pay and additional responsibility to help us in turn manage other managers. So getting that sort of, of upward career trajectory for folks also helps compensate them. You know, they get compensated on infilling others as well, but they also just get the psychic benefit then of being promoted, of managing then other people.

They get that experience. That's cool. So that's another thing we've done for some of our best managers. That's cool. One of my buddies is A.J. Osborne, he was on the podcast a while back, but he's one of the larger self-storage operators in the U.S., him and his family own a ton of self-storage. But he mentioned to me that his entire leadership team of his company,

he's got a large company, lots of employees. His entire VP team or like leadership team, they all came from like ground level at their company. Like one guy was like the maintenance guy at a random storage unit. And like over the last 10 years or whatever, they've just like certain people have proven themselves and they promote from within and they give people opportunity to excel. And when I heard that, I was like, I love that idea.

So it's very cool to hear you doing the same thing is promoting from within and to encourage growth and growth mindset between them with employees. That's cool. Yeah. Very smart. People love to call real estate passive income, which is interesting because most of the investors I know are very busy.

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which is much cheaper than learning the hard way. You mentioned the fund. You know, you have a fund. Can you go through the difference between a fund and a syndication? I know I'm hogging all the questions here today from Ryan and David here, but like why fund, what's the difference

and why did you choose a fund? Yeah, so I think what you mean by syndication is when you raise money just for single deal. And we call that deal by deal. Yes, that's syndication. I still consider raising money in a fund syndication. Fundamentally, syndicator is anybody that raises money from others to buy real estate or other assets and, you know, split, split the profits. We like, the, the fund model really

is kind of the, for an investor, the difference between a sort of traditional one property syndication and what we do is the difference between buying a stock and buying a mutual fund. So we are a focused, if you will, mutual fund. We only buy mobile home parks. But the advantage then for our investors is that they get geogercification and deal diversification. For instance, if you do a traditional syndication,

you invest in one property and heaven forbid something goes wrong, you could get hit with a capital call. Like, hey, we just need to come up with another quarter million bucks to fix the sewage system and you're 20%. And so you've got to write a 50,000, $1,000 check, you know, to help fix that property. Again, we've got a fund. It's our first fund here

in the new partnerships about $15 million. We may well, we'll certainly keep, I would guess, about 5% of that in cash, $750,000. We may go upwards of 10%. That would be a million and a half. So I can't guarantee that we would never do a capital call, but it's highly unlikely when you're in a fund and again, they're liquid reserves. Plus, I'd say within a year, you know, the fund might well be cash flowing, a million and a half or more a year. You know, call it a hundred some odd thousand a month. When you operate at that level of scale and something is bad and you've got a quarter million

dollar whoopsie, it's just a lot easier to cover that, take some cash off the balance sheet or just earn out that money unless it's an absolute emergency. You know, just earn it out over two or three months. There's your quarter million bucks. maybe suspend a dividend for a quarter, which we've not had to do, but you could, you know, and then just take care of it that way. And our investors get a lot more diversification and a greatly reduced risk that we would ever have to go back to them for a capital call.

And then, frankly, we as a fund, the advantage for me is, you know, I just closed. So again, so I bought six properties this year. They've all been at reasonable prices for cash, quick closings. So we don't write offers that say, hey, you know, if after 45 days we don't have financing, but we have a letter from a bank, you know, we get an automatic 30-day extension, blah, blah, blah. Our offers generally aren't that way. It's just, hey, you know, we've got 10 million bucks in the bank. Your property costs two and three quarters.

We can do this all cash and we can close in, you know, 30 or 45 days. Let's just make sure you're, you know, committing any fraud. Let's make sure the rent is there. We'll do a phase one, make sure the property is clean, but we'll just then wire over the money out of our fund. We don't need to deal with the bank. So the first four properties we bought as a portfolio back in June, we just closed on some CMBS financing last month, borrowing out about $5.5.5 million against what was a $7.5 million acquisition. But we had plenty of cash in the bank. We didn't need the money until about last month, December. So now we've got an extra $5 million. million in the bank. We've already got our next acquisition lined up that'll probably use up about three million of that. Anyway, so that's the advantage for a fund is you can usually get better pricing. Rather than having to scramble, our first deal almost fell apart because we had a big investor drop out. But again, as a fund, we don't have to scramble. We've just got the cash in the

bank and we will just close quickly at a little better price. Yeah. Do you find it more challenging to raise money to sit in your fund if you don't have deals lined up to deploy that capital with? Or what does that look like? Do you get pushed back from investors? You're going to sit on my money for X amount of months? Very little. Frankly, what tends to happen is investors that think that way tend to sit on the sidelines until I've bought a deal or two. Our fundraising over this last year kind of grew exponentially and we had almost in the last month prior to closing. So, you know, some investors will join, you know, get on the train very late after they already

see the fund has made a number of good acquisitions. So be it. But anybody, but it hasn't seemed to be a major problem. There's a fair amount of interest in space. And we've got a pretty good track record. We're very aligned with investor interests. We don't take fees. We're just a straight up split of profits. That's very different. So perfect fund. but there's certainly some calling things about our fund, and we've had 100 some odd folks write us checks. Can you walk me through what the process is like to go from buying your first park to running a fund?

Yeah, so we ended up doing three deal by deals in 2014, and then in 2015 graduated to the fund structure. So it was some of the same investors, and it was very similar legal paperwork, and we used the same attorney that had advised us on our individual syndications as on the fund. So in that respect, from a process standpoint, the paperwork, what have you, it was really quite similar. What we did start doing roughly at that time was I came on the Bigger Pockets podcast and then started my own podcast, which is the Mobile Home Park Industries first podcast, simply

called mobile home park investors. So that started getting us, uh, improving our marketing. So then we started getting much more traction, more, more interest once we were podcasting more. So the marketing probably changed more from syndicial syndications to fund syndications. The marketing changed more than, than anything else.

Yeah. It is interesting how podcasting, I mean like podcasting and things like social media, it's like, It's all like new world stuff. Like the old school guys would never even consider podcasting to raise money. Yeah, like, I mean, like for the last fund that we did that we close, like we, you know, we raised all the money for it. I think we raised, what was it? Four million bucks, something like that.

Yeah, we almost five. Like I literally put out a thing on Instagram and it was like not even a post. It was like in the comments on Instagram. I said, hey, got a new 506C fund. If you're interested, link in the bio. And like we filled that thing. I mean, we have, I don't know. I think we have a thousand people on our list right now of our credited investors.

And we're like, just out of that. Yeah. crazy, like crazy what social media can do. So I would just encourage people listening to this. Even if you're not right now raising money, it would not be a bad idea to start developing your presence on social media as an expert or as somebody who's trustworthy because social media builds trust and credibility in a way that previous generations would never even imagine and it's hard to believe.

Yep. Yeah, huge. Hey, hey, Jefferson, so you're raising money that way. I'm wondering, let's talk about finding deals real quick because you have a lot of deals, a lot more than we've got, definitely. How are you finding them? I mean, how are you staying competitive? I mean, I'm assuming you're working through brokers, but are you doing also off-market stuff? And then how are you staying competitive against those big REITs that can take a, you know, 3% return and everyone's happy?

Yeah. So as far as sourcing, that's changed a fair amount now for me and in my new Park Avenue Partners Fund. So so far, those six deals and the seventh we have under contract are all off-market. There's no broker involved. They were never up on LoopNet or mobile home park store or any of the any website. So we've built a network now of some folks that basically just do the heavy lifting for us of phone calling, mailing letters, driving through parks, you know, just literally knock on a door, see if you can find out who the owner is. That's cool. A network of folks. Those aren't, you know, six-figure head employees. Those are people that were on basis. Several of them are made. It's just not a base salary.

It's just, you know, hey, you brought in a good deal. We'll pay you a nice commission on it. And, you know, and frankly, having the podcast and having the website that we do, you know, we do some people that just send in a lead. So that's great as well. They know we buy mobile home parks and they'll just reach out and let us know. It might be the only time we hear from that person because it's just like, hey, my uncle has got health concerns and he needs to sell his park. But, you know, we're happy for those one-off leads. And then again, we've got a solid handful of folks working for us that are just working the phones. And I'm sure in this new fund, we will eventually buy from a broker. You know, we bought a lot from brokers, probably two-thirds or three-quarters of the deals.

And my previous funds came from brokers. Again, those deals tend to be priced a little more highly, a little more richly now. So we're making a very concerted effort to source deals in a proprietary and off-market way. But there is no panacea. There is no single thing to do that's guaranteed. We kind of do a little bit of everything, brokers and sourcing. And sometimes we see things posted like on Craigslist or something. You never know where you're going to see a deal.

Yeah, super cool. And as far as competing, you ask also about competing with three. So we tend to buy deals. Our average deal size has been about two and a half million. And that's still, fortunately, relatively below the radar screen of most of the big reeds. They're looking for five and certainly $10 million deals. I hear that advice all the time. When you're trying to avoid the big dogs and whatever thing you're in, you just got to go smaller. And you can go smaller because you're usually running a leaner operation than what they are. You know, I find that when you're competing with people that are doing things at a big level, they just do not have the ability.

to do the level of diligence that a smaller person can do, right? Like if you're buying 50 homes a month, you cannot look at every single house and make sure that it doesn't need a lot of work, right? So you're going to just take on losses and you understand that's a part of your business model to be that big, you know? And when you're small, you can.

You're leaner, you're quicker. It's like this analogy of you're this jet ski that can zip in, look at a deal and zip out where your competition's a battleship. It's going to take them four days just to get completely turned around. I'd like to know in your Jeff, how have you divvied up the responsibilities that go into this?

You've got analyzing deals, looking for deals, purchasing deals, managing deals, doing rehabs. Can you share the different roles that you have within the organization and how you're structured? Yes. So again, we've got a handful of folks that are sourcing deals. We've got then our VP of operations who still does, I'm guessing 15 or 20% of his time on acquisitions. So he's sort of 80% actually managing the managers, but that's obviously property level stuff, but he does still help out some with the acquisitions level. We've got a sort of an internal model that basically cranks out a number. It ranks and it's not scientific.

It's not pure science. We're still going to do other diligence. But just having a fairly simple model to just put in some numbers, what's the price, what's the location, what are the lot rents, you know, how strong is the economy. Just to have it kick out a number also helps us just filter through which deals we want to pursue. But then frankly, a lot of the analysis still comes to me. Again, we may and probably should have already hired that out. But for the deals that we're actually pursuing, I'll do a simple financial model and put together some budgets as well on that.

So that's kind of how the deal is processed. And then once it's, and then I'm closing it and with, you know, help from attorneys. None of those folks are on staff. Those are all outside firms. And then it does get turned over to my VP of operations to actually operate it and deal with the CAPEX and fix the roads and get the three mobile homes fixed and get four new ones and on and on. We'll work out that plan. That's part of the budget. We'll work that out for each property. And then again, it's his responsibility to execute against that and get the property cash flowing better. So you've got someone who loads up your pipeline, that's your VP of operations. You've got you that analyzes it, decides to pull the trigger and then sees it through to close.

That'd be like the filter of the funnel that gets it through. And then once it's done, you turn it over to another member who manages the asset. Are there any other positions in there? It's back to that asset manager. Yeah. Oh, so you're running it really lean. You've got the same person who's like loading you up with deals. And then once you get in there and close it, they take over again.

Yes. He principally runs the deals, but he also helps do some of the analysis. So his job basically has evolved. I hired him, again, trying not to repeat every single one of my previous mistakes. You know, I have hired largely ahead of the curve with my new fund. So, for instance, I brought him on before we did even our first deal. So he was initially 100% acquisitions screening through things. And his job has now shifted to be 80% operations, which is his background.

But yeah, just being a smaller fund, you know, I wasn't in a position to hire on a six-figure head just to look at and screen deals. Anyway, so that's kind of the, that's the way I've managed things so far. We'll see as we continue to grow. We may well bring on some of full time to help screen and source. We'll see. And how about you, Brendan and Ryan? How are you guys structured? So we have, so yeah, like I said earlier, I was, I was trying to.

build from the ground up this like a head of the curb thing. So, or this 2.0. I will preface it with this. I, like, I'm making this up as I go. So I didn't actually build this off anybody else's model really other than bigger pockets. But I looked at and said, okay, what would I need? If I was going to own a thousand pads, maybe a dozen parks or, you know, seven to 10 parks, maybe you call that. What would I want to have? And so I said, okay, well, I'd probably want somebody in charge of acquisitions. So I found somebody, everybody here came from within bigger pockets, meaning members of bigger pockets, not employees. So we have a lot of, so we have have an acquisitions guy who just pretty much runs acquisitions now and a financial analysis.

So that's Walker. We have investor relations, which is me and Mike. So Mike is half assistant, half investor relations. Mike does other things as well besides that, some bigger pockets related stuff. Ryan, who kind of oversees the entire operation, everything from talked about him. He's kind of probably what Jefferson, what you do, which is kind of overseeing just everything to make sure the ship is always, you know, moving. And then Brian, who is asset manager, who is a partner, if not employees is a partner. He just is making sure everything is working right once we buy it. And then we brought in actually, we out a full-time person,

mostly on commission based to do a park infill. And so we have Tristan Thomas, who was on the podcast a while back. We hired him just, like his only job is to fill parks that we're buying because we're buying, just like you or Jefferson, like buying them that need a lot of, or at least have a room for infill. And I know you guys did like the park we're buying from you. You guys did a lot of infill. And now we're going to try to finish it up. And so we brought in Tristan to help with that.

So I appreciate you leaving. some meat on the bone for us. So thank you. Jefferson, I've got a question about your analysis. How have you been able to avoid getting bogged down analyzing every part, every park that's on the market? Like, you must have some quick sort of hard and fast criteria or a quick analysis that you can either weed these things in or out before you spend however much time it takes you to do a deep dive analysis. How have you been able to combat that? Because we found that that was a bottleneck for us early on and still can be where you just got way too much to analyze. You've got to weed these things out quickly. How do you do that? Yeah. So that's our financial model. It's not hugely sophisticated,

but I put it together. And again, you're just putting in some of the basics, how many pads, what's the lot rent, how strong is the economy based on things like what's the average house price in that metro area, that kind of thing. So that kicks out a number. You know, I can't say that every single deal that's been emailed in that we've, you know, done that much on. Some of them, I'm sure, have just skipped by and, you know, we missed them. But, you know, we try and run those through our model and then just prioritize things. We're definitely more interested in deals that come in from the folks that source deals for us. And we have them already focused on healthier metros.

So that right there, just knowing that whatever they find is coming from a healthy metro, you know, it makes it more interesting. We'll have some quick discussion around pricing. We're happy to fire off an offer. If a seller's like, you know, hey, just make me an offer, great. That's the way we do it. It's not a perfect process. I'm sure as we continue to grow the fund and staff up, it'll be better. Still probably never perfect. But it'll, but it's fairly targeted. It sounds like it's fairly targeted. And you've got some sort of hard stop criteria that has to be met before it even proceeds to the next step. So you're not just doing a shotgun approach, looking at everything everywhere. You've got, you've got it fairly honed in as to what you want.

Fairly, yes. Yeah, and I think there's a lesson that any investor, whether they're mobile home parks or whatever, is like there are probably criteria that you just Jefferson, right now off top of your head, like, like internally, you would just like, yeah, no way on that deal. Like, yeah, it's got a separate sewer, lagoon, blah, blah, blah. You'd be like, no, pass.

Or hey, it's located in a population of 300 people live in the town and nobody else within a four hour drive. Yeah. So like, you've got those criteria. So you can screen them out. Yeah, you get a feel. Yeah, that helps. You can look at things and just kind of ask a couple of questions.

And, you know, with 10 or 15 seconds, you can be 80% certain whether it's interesting or not, you know. Let me ask you, because it's very similar to every business that I see, right? Like me as a real estate broker, when somebody calls me and they start talking about wanting to buy a house or sell a house, I know you're a good client or you're not within 10 or 12 seconds of talking to you. What questions are you asking? Yes. That's what I'm getting at right. I think so are they. You just know.

If they're saying things like, well, you know, I'll buy a house, but it has to be a really good deal. And I really want something with seller financing. And I'm hoping, you know, I can get it for 30% of what it's worth, but I don't want a lot of work. That's just a person that's going to wear you to the ground, right? You're like, if I find that deal, I'm buying it myself. Everybody is buying that house, right?

You are not getting that deal. It's 70% off. That's exactly right. Versus, hey, I'm moving to California in a month. I need to find a place to live. Right. I got a great job lined up. I got savings. I can do it down. Just find me something. I got a wife and a little kid. We need to find a house. Like, I know that is a good lead that I need to pour my time into him. If you don't find a house, I'm going to look bad in front of my wife.

I'll make you look at it. Like, we're not Brandon and Heather. We can't live in a Prius. Brandon rolls down the window to stick his feet out of it because he's feet tall and the priest's five feet long. Yeah. What do you look for when a deal crosses your desk and you were to Ryan? What are those things? That's why I was using that example that stand out that you're like, ooh, this looks good. I keyed in because I just saw that. You know, is it a metro of 100,000 people and up that's healthy? Is it a park of 100 spaces or more?

Is it all city utilities? Is it at least 80% full with resident owned homes? Is it within five miles of a super Walmart? This is really, really good. So I rarely get all of that. But if the deal's got four out of five things, you know, that's interesting. Three out of five, maybe, but four out of five, yeah, let's. That's really helpful, though, because that's what people are looking for.

They're like, how do I put this matrix together to know what I should analyze to what I shouldn't? Yeah. Yeah. That's what our financial model does as well. I would encourage everybody, whether you're, again, big time investor, or just starting on your first property, like define those criteria, just like Jefferson just did.

What are those five things that you want in a property? Okay, you want a house hack in Denver. great. What are you looking for? Well, I'm looking for either a house or a duplex in these five neighborhoods. Okay, great. What do you want? You know, like, how many bedrooms do you need? Like get that criteria. And now that accomplishes a couple of things. One, it helps you narrow your focus on what you're searching for. But two, when you can get deliberate to other people, like, I mean, my criteria almost identical to yours, Jefferson, very much like we have the same kind of numbers. And for a while, we're just like I listened to my podcast, bro. I know. It's just like I listened to your podcast. Weird. You taught me everything I know.

So it's like I once like I've had a team of interns. We have a team of interns or not an interns like the team of individuals who are finding deals for us. Same thing that you kind of have. Like people looking for deals. In the beginning, they were just firing so much at us. And finally we were just like, no, we want these five things. We have to hit four out of five. And it was the same number.

We said if it doesn't have four or five, don't even bring it to me because I don't want two out of five. And so by doing that all of a sudden we started getting solid leads that came in. And again, if you're on your first house, duplex, single family, talking about an apartment, identify what those things are that you're looking for. Because you probably have in your head, it's probably somewhere back in there that you, that everybody listening has what they want, but they haven't defined it on a piece of paper because now you can give that to other people. And now other people are more focused on bringing you deals as well and they're not going to waste your time.

It's a win-win for everybody. Yeah, I think that's the single most impactful decision we made in our business is defining that correct here. Yeah, defined exactly. So much time, inefficient use of time, analyzing stuff that we had no business even looking at because it was not anything we'd be interested in. So until we sat down and it was alarmingly simple to do that once the kind of light clicked that, okay, we have these six or seven criteria.

Like Brent said, very similar to yours, Jefferson, probably blatantly stolen right from you. But yeah, now we can look at something and quickly within, you know, two minutes. We can say, no, this one's going in the trash pile. We don't want to spend any more time on it all. Let's move on to something else it fits. Yeah. Cool. Cool.

All right, well, guys, before we move on to the next segment, I'm curious, where do you see yourself How did Jefferson, like in the next few years? Like, where, how big do you want to grow this thing? I mean, are you like billionaire focused here? Like, where do you see yourself? No, I don't think quite billionaire focused. But yeah, I want to keep building the business. I would envision doing this for at least another decade and probably doing a fund sort of every 18 months or something like that. So, you know, that might be six, six funds over the next 10 years, something like that. I want to get better at hiring at systems, people, operations, that kind of thing. maybe Mobile Home Park 3.0 will be hiring people to raise funds for me,

as I'm still doing, I'm still at fundraising 1.0, so to speak, where I handle most of the investor relations. You're already ahead of me if you've got somebody doing investor relations for you. But yeah, I want to make it more of a machine, the fundraising and then the property operations. So I'm sure there'll be a lot of growth for me still in both of those areas. over the next decade. But I also spend a fair amount of time with my family and my wife and I homeschool our kids

and it's mostly her, but we're very family-focused. So I'm not looking to, you know, work 80 hours a week and in the efforts of trying to become a billionaire. I'm well-to-do enough that there are other things that are important to me as well. Smart, smart, man. All right, well, let's shift gears here and head over to the deal deep dive.

Deep dive. All right. This is the part of the show where we dive deep into one of your particular deals, Jefferson. So do you got something in mind that we can pick apart? I do. Let's do the, we'll call this, well, it is. It's the Cherry Woods deal, which was the first deal of those syndication deals that we did in Ottawa, Kansas. All right.

Let's go through that thing. First of all, I was going to ask what kind of property is it? It's a mobile home park, correct? Shocker. You're talking to Jefferson. So, yes, it's a mobile home park. All right, David, next question. We're just freestyle this thing, aren't we?

Yeah. Are we going down the list? Okay. Okay. Well, you said earlier that we were just going to fire a random question. We normally do, but I thought Brandon wanted to try something different when he said, we're just going to throw things at you. But he must have meant throw the process at you.

Okay. There you go find this deal. This deal came to us from a broker at a major firm. Yes, that's how it came to us. We liked it. it probably wasn't snapped up by other firms because there's a relatively small deal, 45 pads in a smaller town, Ottawa, Kansas is not Kansas City. It's, I think, roughly a 30,000 person town. All right, number three. Okay, Jefferson, how much was that property?

It was a total of 800,000 was the purchase price. And we got 62, basically three-fiths. I think that's 62 and a half percent seller carry, a note we're all paying on. We had to come up with a relatively large down payment, whatever, the 37 and a half percent down. But that also de-risked the deal for us a bit because the mortgage was relatively low. All right. So then on that note, how did you negotiate that? Like were there any fancy negotiation strategies or anything tips, stories that went with that? No, that one was relatively easy.

The seller indicated he was at least open and maybe even preferred seller carry. So that was fine. So we're still writing him a check every month. So it just worked out, worked out well. Yeah. So. Okay. Those are the best words to hear ever that the seller prefers seller carry. Yeah.

Yeah. Almost as good as clear to close. Yeah. How did you fund the portion that you didn't, the seller didn't carry? Yeah, the actual equity we had to come up with. So that was quite an interesting process. There's a story there. So we thought we had one by, sorry, one investor lined up.

He happened to be out of Wyoming. We refer to him as Mr. Wyoming. And he had already been in real estate, although doing more like multi-million dollar fix and flips of fancy houses. But he had some real estate experience. We needed about 450,000 down. We wanted to have what we needed plus some cushion. Anyway, so he asked a lot of great questions, then wanted to follow up with my partner. We all got on the phone with them.

Then he wanted to do a follow-up meeting. Then he went radio silent on us for a week or so. Then he came back with some more questions. Then he asked if he could do just half the deal. Somewhere along that process a little too late. We had found him simply because I had been doing some blogging online. But anyway, so somewhere along that process, we've got about a total of about six or,

I think it was about seven weeks to close. So he, after several weeks of kind of stringing us along and cumulatively burning up, I don't know, probably a dozen hours or more with us on the phone, just sent us a one-sentence email that said, I'm sorry my wife won't let me do this deal. Oh, man. We had already started calling other investors, though,

not as soon as we should have, but we had already. So, you know, I had also sent an email to a guy, we'll call him Mr. Boston, a gentleman who had lived in a house that I had lived in, a triple X in Boston, wasn't a roommate, but he owned one of the other units. We had kept very loosely in touch by email over roughly 20 years. And I sent him an email. He knew what I was doing.

He expressed interest. Send him an email, a presentation and said, hey, if you want to do this deal, you know, let me know. And I'll be happy to get on the phone with you. And he sent back a text and said, you know, I'm in. And I sent him a text back like, okay, when do you want to talk about the deal this week? So I can discuss it with you.

And he texted back and said, Jefferson, what's your bank account? I'm wiring you $100,000 in the morning. I said, okay, great. And we did raise money also from approximately six other individuals. But it was just interesting in that very first deal we did. We went guardrail to guardrail. We had Mr. Wyoming, who just dragged things out and was kind of, frankly, amateurish and never invested. And we had Mr. Boston, who I spent, you know, 10 minutes with writing an email and a couple of follow-up texts, and he wires over $100,000. So to this day, I've never had another Mr. Wyoming, anybody that difficult to try and raise money from. And I've never had another Mr. Boston,

anybody that, that easy to raise money from. But it's just interesting that on that very first deal for fundraising, we kind of went guardrail to guardrail. Wow. I mean, is it true that, is it true that You guys are raising money with Open North Capital by having Ryan sell his hair to Locks for Love. That's what we're going to talk about that, dude. We want us to talk about that. Very few things are off limits with me. That's why Brandon's growing his beard out.

He's trying to keep up. That's it. I'm going to shave the beard locks. Yeah, be be a good charity. Yeah, for those. It's going to be a great charity. I'm also going to ask you, Jefferson. Has anyone ever told you that your voice sounds like James Spader,

Ultron from Age of Avengers or Age of Ultron? No, I've had people say I sort of have a radio voice, but nobody's ever gotten that specific. I will try and take that as a compliment. You might be able to make some money doing voice work for Ultron in like the spinoffs. Okay. In case the whole mobile home park thing doesn't work out. In case it doesn't work out, it's important to have alternate job skills. Exit strategy is great.

So Jefferson, back to your park. What did you end up doing with it? Was it more of a conservative sort of long-term buy and hold? or was it a more aggressive value ad reposition and sell it? What would you do with it? Yeah, it was kind of a nice in between. There was or has been, I think, cumulatively now over about five years, probably something around 30% rent increase upside spread out over about five years.

That park also out of the 45 did have, I believe, 12 empty pads, fully constructed, but obviously just empty. So we invested an additional capital bringing in mobile homes there. Park is now virtually full. Anyway, so that was it. We got into the home business in a fairly significant way. We also used the 21st Mortgage Cash Program a fair amount there to infill that property with brand new homes. Our test ads had pulled well enough and the economics there were good enough. We felt and we've been proven correct that we could infill it with brand new houses and really make quite a stellar community out of it. Cool. All right. Well,

What was the outcome then? What did you end up doing with it? Did you sell it? What was the outcome? Oh, yeah. So it's part of our portfolio with the previous partnership that we're now selling. So I believe it's under contract right now. Very cool. That's why makes the money on it.

Good. Hopefully so. Yeah. What lessons did you learn from this deal? Yeah, just don't spend that much time with an investor that waffles. That's the key thing. You know, you need to have more irons in the fire. Fundraising has gotten easy.

since then, it can be precarious, frustrating when you're getting started if you're dealing with just one investor or some small handful. So I guess my lesson learned and my advice there for folks getting into the business, whatever your deals are, again, have more than one investor. And assuming your numbers are pretty good, it will get easier in time. So hang in there. And hopefully you'll get to the fund level. fundraising if that's what you choose to do, you know, within a couple of years.

Awesome, man. Very cool. All right. Well, with that, I'm going to move on to the last segment of the show. We're going to bypass the normal fire round because it's been a long show and go right into the world famous. Famous for. This is the Famous Four. The part of the show where we ask the same four questions every guest every week. And we're going to ask Jefferson. But before we do, let's hear from Jay Scott to see what's going on this week over on the Bigger Pockets business podcast. Hey there, Brandon and Bigger Pockets real estate podcast listeners. This is Jay Scott, your co-host for the Bigger Pockets business podcast. And this week on the business podcast, we have lifestyle entrepreneur Yarrow Stark with us. Yaro tells us all about how over the past two decades, he has built multiple businesses with multiple streams of income to generate passive income, which allows him to work from anywhere in the world and do what he wants when he wants. So if you're looking to build your lifestyle business, check out this episode of the Bigger Pockets Business Podcast.

Now, back to your famous four. All right, big thanks to Jay Scott and Carol, of course, for running the Bigger Pockets Business Podcasts. It's an awesome show. Check it out. And make sure you guys are leaving them ratings and reviews. All right. With the, hey, speaking of ratings reviews,

you know what I saw you guys the other day? I saw that Bigger Pockets on terms of reviews and ratings has officially surpassed Tim Ferriss's podcast on iTunes and number of radio. So thank you to everybody for leaving reviews and ratings on Instagram. on iTunes. Keep doing it. I still got Dave Ramsey to overtake, but, you know, thank you to everyone. So with that, let's get to today's famous for question number one, Jefferson. And you may have answered this last time. Maybe it's changed. Maybe it's not. Favorite real estate related book. Do you have one? Well, now it's probably Sam Zell's, Am I Being Too Subtle. It covers his life.

It covers when he was in college and started managing a college quadplex. that like his roommate's dad owned or something. So I think it does a very good job of stepping through, at least how he got started managing a property, not even owning it, and then worked his way up into where he is now, owning mobile home parks and office and apartment and Nixeter cable manufacturing for computers

and all kinds of things. Anyway, so am I being too subtle by Sam Zell? Cool. The next question is the same question we ask everybody as our second question. What is your favorite business book? Oh, general business? Probably snowball. That's a particularly good biography on Warren Buffett. Again, covers his business career, but also, frankly, some of the sacrifices that business success meant for him and for his family. I think it's a fairly balanced perspective, again, not only just on his business and how he

invests, but also what, uh, what sort of a dad he was and, uh, I just gives a very good overall perspective on, on Warren Buffett. Awesome. He's one of those people that's very intriguing. Everybody likes Warren Buffett. You'll never find a person that says, I hate Warren Buffett. It's like, I hate Christmas. It doesn't make any sense.

Okay. What are about some of your hobbies? Ryan hates, Ryan hates Christmas. Not, not a fan. He's, he did not a tree. He did not have a tree. He did not have a tree. He did not. He did. His wife got me a present. Well, us a present.

That's why he hates it. That's why he hates it. Yeah. I still like Warren Buffett, though. Okay. Okay. Okay. I think that further proves your point. I hate Christmas. I still like Warren Buffett. Anyway, keep going, David. What are your hobbies? My hobbies? Oh, gosh. You know, I don't have too many. You know, I ski a very little bit. I've got three little kids five and under. So maybe those are my hobbies. now, just really spending a lot of time with my kids and taking them to the park and traveling a bit outside of our hometown here. Yeah, and I think I alluded earlier, we actually homeschool the kids. That takes time. So, yeah, I'm really pretty family focused right now. So we'll say that's my hobby. All right. Have you ever heard that book, Call of the Wild and Free? It's a homeschooling book.

I just got it. I'm not sure I have. I'll mention it to my wife. Yeah, have a read. It's called the call of the, I think it's called Call of the Wild and Free, but anyway, I'm liking it. Cool. They'll probably homeschool Rosie someday. My last question. Jefferson, what do you think separates successful real estate investors from all those who

give up, fail, or never get started? I think a big thing is focus. I see a lot of people, you know, that'll email me or even talk to me on the phone or they, I'm seeing them posting online and they get like totally excited about mobile home parks. And then a couple of months later, they're like, like, oh, yeah, but I found a great little fix-and-flip deal. So I've got this little three-bedroom in Des Moines and I'm fixing it up and blah, blah, blah. You know, it takes focus, I think, to do well whatever you want to do in life.

Again, I've chosen to focus on this niche. Other people just kill it in raw land or self-storage or what have you. But I just think the ability to really focus, keep your standards, build your deal flow, and then only do deals that meet your focus is, what leads to success and a lack of that leads to failure or at least mediocre results. I want everybody to go and rewind the last 30 seconds to listen to that again because that is some of the best advice ever given on the podcast ever. Like that's it.

Like so good. Yeah. Yeah. So good, man. Well, thank you very much. This has been fantastic. David, you want to take us out and do your last question? Yes.

A lot of us have liked what we've heard here and think it was so good. So if we want to find out more, Jefferson, where can we find out more about you? Yeah. So first off, hit my website. It's park avenue partners.com. You can literally just contact me there. Also, I would say, again, I mentioned the podcast that I've started for the mobile home park business. We also produced an industry calendar of events.

And I run the largest mobile home park group on LinkedIn. And people can find all of that right at. mobile home park investors.com. That's kind of all the social networking stuff. And again, the main website, parkavine partners.com. Very cool. Thanks, man. It's been good.

It's been awesome. I appreciate all the advice and mentorship over the years. Yeah. That's been awesome. Thank you. Ryan, any closing thoughts here? No, just thanks for letting me hang out, guys. I appreciate it. Yeah.

It's been fun. All right. It does look terrific. Appreciate that, David. Thank you. I'll sell you some. Yeah, I'd love to help you guys recently. That's exactly what I want to do. All right. This is David Green for Ryan, the hairpiece Murdoch, and Brandon Captain Mobile Home Park Turner, signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, Without all the hype, you're in the right place.

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