BiggerPockets Real Estate Podcast - 596: The 3 Ways to Find Profitable Properties that Big Investors Won’t Touch w/Amanda Cruise

Episode Date: April 14, 2022

Mobile home park investing wasn’t very attractive until a few years ago. Thanks to big names in the mobile home park space (like BiggerPockets’ own Brandon Turner), the mobile home investing game has become one of the hottest commodities in the world of real estate investing. But it must take a huge jump to go from investing in single-family rentals to double-digit-unit parks, right? Today’s guest, Amanda Cruise, is here to tell you that bigger doesn’t always mean more challenging. She actually got out of single-family rental investing due to the non-stop headaches of dealing with contractors, property managers, and tenant maintenance problems. She started doing “Lonnie Deals” where she would seller-finance mobile homes to local buyers. Soon, after enough success, she moved on to tackling entire mobile home parks! But how did Amanda beat out the competition when the mobile home park space is so hot? Thankfully, Amanda shares her three top tips on getting around institutional investors so you can purchase cash-flowing mobile home parks, without the headaches of syndicating or raising vast amounts of capital. In This Episode We Cover: “Lonnie Deals” and seller financing mobile homes for profit Why changing title on a mobile home is far easier than on a traditional home Finding motivated sellers and how to slide under the radar of institutional investors Scaling your team and the “must-have” roles when buying mobile home parks The not-so-secret way to get a list of mobile home park owners in your area The true “value-add” opportunities to look for in a mobile home park And So Much More! Links from the Show: Craigslist Facebook Marketplace Airbnb LoopNet CoStar Sarah Weaver's Website David's Instagram David Greene's Real Estate YouTube Channel Rob's TikTok Profile Rob's Instagram Rob's Youtube Channel BiggerPockets Podcast 563: W2 Retired and Traveling the World with Just 15 Units w/Sarah Weaver Robuilt YouTube Channel: Why I’m buying a $3,250,000 Airbnb in Arizona Brandon Turner's Instagram Mobile Home Park Investing Course by Amanda Cruise Connect with Amanda: Freebies from Amanda's Company Website Amanda's Instagram Check the full show notes here: https://biggerpockets.com/blog/real-estate-596 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets Podcast Show 596. Is anybody ever ready to invest in real estate, right? I think it kind of comes back to, like, you can do it from day one. I talk with a ton of commercial real estate investors, and everybody thinks the same. There's no reason you have to start in single family. If that's where you want to start, that's awesome. You could also just learn about mobile home parks and go buy a 15 or 20-lot park, and that can be your first investment.

What's going on, everyone? It's David Green, your host of the Bigger Pockets Real Estate podcast. The best place for you to be if you want to build wealthy real estate. If you're looking to find freedom for your life, if you're looking to find more money, if you're looking to find a way to exercise

your creative juices and your God-given talents, you, my friend, are in the right place. Bigger Pockets is a community of over 2 million people that are all trying to do the same thing as you on the same journey as you. And we want to help you accomplish that goal. We do that by providing a forum with thousands or tens of thousands of questions that different people have asked where you can look up their answers or you can ask your own questions

and have it answered by the community. An amazing array of blog articles, incredible books that have been published by different people that are experts in different fields so you can learn from them. And of course, the best real estate podcast on the planet. Hosted by yours truly and my good friend Rob Abas Solo. Rob, how's it going? Hello, man. I'm telling you, as I was doing this, uh, this,

interview. I kind of felt myself growing taller and my beard getting bigger as I became Brandon Turner wanting to actually get into the mobile park home game. Like this was a very inspiring episode because Amanda, I don't know. That's what I love about this, man. Everybody always makes every niche that they're in feel so approachable and doable. And she was very relatable, I felt. What about you? Well, first off, it sounds like you're evolving into the real estate Pokemon next evolution that you're becoming. I haven't even reached my final form yet. I wonder what's going to to happen as if like the hair at the top is going to slowly go down as it starts to come out your chin like someone's just going to pull it from the bottom and then it's going to come

that'd be really funny maybe for the thumbnail we can photoshop my pompadour down on my actual chin yes that's exactly right yeah and then you just got to start saying so good after every three sentences and then that's the next step to being branded yeah there you go i thought today's episode was great it's full of actual practical advice for if you wanted to invest in mobile home parks or if you're just considering it, this is a really good, well-rounded, easy-to-understand introduction into how you make money doing it, what you're looking for, how to negotiate these deals. What were some of your favorite parts of today's show? She talks about three things that she does to avoid going head-to-head against really just

big fish in the, I call it the lagoon, the mobile park lagoon, but three strategies that she does to really not compete so much against some of the bigger, more institutional firms out there. and also, you know, just a little plug for later on, she also talks about the number one thing that she looks for when investing in mobile home parks. So stay tuned for that. Yeah, I thought that was really good. And I just thought, I mean, it was very open with a lot of the stuff that she's sharing. So this is one of the best parts about the real estate community is there's hardly anyone keeping secrets. Everybody is sharing what they're doing. There's plenty to go around. There's so much to learn. So this was a fun show.

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That's hostfinancial.com. Today's quick tip, Amanda shares in the show that she calls the county to get lists of mobile home parks. Now, you may not be a mobile home park investor, but that doesn't mean that you can't use other people to help you accomplish your goals. So today's quick tip is to call your county and ask them if they can get you a list of different asset classes that you may want to be interested in investing in and call those sellers directly. All right, Amanda, welcome to the Bigger Pockets podcast. How are you today? I'm doing great. Thank you for having me. I'm so excited to be here with y'all. We are excited to have you. So can you give us a brief rundown of what your portfolio looks like

right now and what you're specializing in? Yeah. So right now, we are specializing in mobile home parks. Our current portfolio is three parks, 80 lots total. And then we have a couple of notes as well. Okay, and who are you investing with when you say we? Oh, yeah, me and my husband were a team. So his name is Jonathan. I'll refer to him. Now, I have to ask, is being friends with you going to cause some funk in my relationship with Brandon since you guys are both investing in mobile home parks?

You know, as much as a threat as I am to him for sure, I think it's going to be okay. I actually, truthfully, I have three things that I try to do to not compete with big investors like him. So I think he's going to still be friends with you. And when we say big investors, do you mean people that are six foot nine? Exactly. I don't care if they only have one lot. That's right. Well, I think that's a pretty good plug for later. Like, you know, I've got three things that I do to not compete with big investors. I want to know what those three things are. But before we jump into them, you know, mobile home parks are perhaps one of the scariest, seemingly scariest investments to hop into. I got to imagine you probably didn't start with mobile home parks. Can you tell us a little

bit about how you even got there? Yeah. So I had a pretty traditional upbringing as far as work and jobs and stuff. My mom retired from an elementary school. And so like her, I joined corporate America and I was climbing the ladder at a big credit card company and really just realized one day, I don't want this. I'm working so hard. I want to be working hard for myself and my family and not for somebody else. So like a lot of people, right? And I started looking at alternatives and eventually stumbled into real estate, which I'd always sort of had in the back of my mind as, hey, that would be cool one day. And, you know, Bigger Pockets was really instrumental in giving me the confidence and the knowledge to get started in investing. And David, that was right around when you were coming on. So you personally were

really instrumental in that. So thank you for them. And, you know, we started. We started with a single family, a duplex technically, and then got another single family. After that, we sort of pivoted to individual mobile homes, something called Lonnie Deals. And then after doing that, we started on mobile home parks. And we love that. And we sort of haven't looked back. And nowadays, I actually get to work with other investors too. I'm the commercial subgroup lead for the North Carolina Ria and just get to work with other investors and kind of teach them how to come along into commercial real estate too. So you kind of mentioned something here that, I mean, this might seem second nature to you, but as someone that's kind of new to this world, you mentioned you got into a Lonnie

deal. What is that? Yes. All right. So once we were into single family homes, we kind of didn't like a couple things about them, like contractors, managing contractors and all that stuff. And I'd heard about this thing called a Lonnie deal, and I'd filed it in the back of my head. It was from this amazing investor, by the way, his name is Bill Cook. He's the most amazing creative deal structureer out there. And he had mentioned this Lonnie deal. And so we decided to look into him. Essentially, it's named after this guy Lonnie Scruggs.

He was from Virginia. He's since passed away. but he sort of coined this term. You buy an individual mobile home from somebody who needs to sell it, just like we do with single family homes, right? So you buy it from somebody who needs to sell. You get some price on it, and then turn around and you sell it to somebody who's going to live there, right, a family. And you hold the note on it. They pay you just like you're the bank, just like with the home I live in, I pay the bank every month. And so we became the bank for them.

And these Lonnie deals can be very, very lucrative. And so I'm happy to kind of walk through how it works with you. Please do. Yeah. Yeah. Okay, cool. So we're thinking about our first Lonnie deal, for instance. So this guy owned a mobile home in Raleigh, North Carolina.

He was living in Wilmington. He bought it because he was doing a lot of work in Raleigh for a company. they were doing construction. So he was a hustler. He was smart. He bought this mobile home. And then when his boss told him to go to Raleigh, he would rent it out with him and some buddies and charge back to the company. Okay. Well, then all of a sudden, they aren't doing any more work in Raleigh. He needs to sell. And so that's a motivated seller right there. It comes up on the end of the month. It's in a mobile home park. That means lot rent is due. So he doesn't have any income coming in and lot rents do. So he's a motivated seller. He puts this mobile home up for, I think, 22,000. We ended up getting it for 12,000 down,

and then we gave him another 3,000 over the course of two years. Okay, so now we have this mobile home. We did no work to it. It was a very nice home. We turned around, and we sold it to somebody who is living there. She bought it from us for $25,000. She gave us $5,000 down, and then had a note for $20,000. That note, that payment that she makes to us as if, because we are her bank, is that 18% interest. So we're making a crazy return on this mobile home without doing any work. And so it's all passive now. She gets to live in the home and own it when it's really hard to get financing on a pre-owned mobile home, especially in that price range. So when we're able to offer that financing, it really becomes a win-win situation. And that's really what a Lonnie deal is.

Okay. So let me ask some clarifying questions on a Lonnie deal, because in this instance, when you're, I guess, the executor of the Lonnie deal, do you have to actually own the mobile park in order to do this? Or are there instances in which you're basically buying a mobile home on someone else's land and just paying monthly rent to that person while you flip it? For these deals, we did not own the parks. We were not into parks yet. You just want to do it. Honestly, we don't even do lawny deals in parks that we do own. I mean, we sell homes in parks. We do own. But no, you do not have to own the park to be able to do this. It's a really good way to sort of get in to investing for pretty low money out of pocket. And yeah, you don't have to own the park. So there's a difference

between being a mobile home park investor and then a mobile home investor, right? So when you talked by owning parks, basically, that's where you're renting out the spaces that someone pays you to put their mobile home, but they may own the mobile home. In this case, you're talking about getting a mobile home from a motivated seller and then selling it to somebody else on seller financing, basically, and that's how you end up with a note. Yep, that's exactly right. And honestly, those were so good, and we really liked it. We liked being able to give somebody a home to make a great return on that. And so after doing a couple of these, that's when we decided, hey, let's go all in on parks. Let's do more of this type of thing.

Yeah, because you had mentioned you didn't like being in the single family space because I think you mentioned the contractors and the organization and all the moving pieces. I call it death by a million paper cuts when you get into that world. None of them are really super challenging or hard problems to solve. They're not rocket science. But they're just coming at you so often that it's very annoying, you know, like this ankle biting problems that never go away. And you sort of start to lose your drive and your passion when all the fun gets taken out of it.

So if you're getting into what you're describing now, are you still dealing with those problems? Or does the seller financing part making you the bank sort of remove the parts you don't like? In the Lonnie deals specifically, it really does simplify things. And obviously, there's nothing wrong with single family investing. That's great. We weren't that good at it. That wasn't great at estimating repair costs. We didn't do enough of them to really get good at it.

So when we moved over to these individual mobile homes and now we have these notes on them, there is almost no work. It is the most passive thing. Like I tell myself in a future life or maybe in a decade or so, I'm going to be a note investor. It is passive. It is so much easier than even mobile home parks. We just, the check comes in.

We're not the check. But we get, you know, it's deposited every single month. The only thing currently that we have to do is make one phone call a month to confirm there is still insurance on the homes in case there's a fire or something, right? We want to get paid out as a new holder. Exactly. That's literally the only work for these. Is that pretty hard work in this industry?

Because like trying to flag, if you've got 100 notes, trying to flag down 100 people every month, is that, how does that like play out? That's a great question. If I had 100 notes, I would have an assistant to make that phone call. And in fact, we do have an assistant even to make the one, the two phone calls that we have. But you're right. Like anything like that, if you get enough of them, you're going to have to systematize. You're going to want to systematize. that. Yeah, I think that's something a virtual assistant could do fairly easily if you just say,

hey, here's the phone number's call and ask this question of the person that answers the phone. You can systemize that well. All right. So Amanda, let's say that somebody comes across a motivated seller and they realize, hey, I can buy this place, but I want to sell it to someone else because I don't want to be responsible for the maintenance. If you own the actual mobile home, it's very similar to being a single family residential investor to where now you also own the problems that come from that home. You're trying to pass that onto the owner and be the bank. So is there a process that's somewhat simple for who you contact, how you structure this, how you set the seller financing up for someone that's never done it?

Yeah. So there are contracts for that. And I'm sure you can Google note contracts. But what makes a mobile home pretty easy to transfer is it's through the DMB. It's just titled. There's no land. So it's not deeded. There's no closing.

So just two individuals can swap titles of mobile homes fairly easily. So would you go to a title company? Is that where you would go? Are you saying you would literally go to the DMV? Yeah. So you can just get a notary. Like as if you're selling your car to somebody, which you can do on the internet, like Facebook marketplace or what, then you just meet up and you have a notary,

say, yep, this person's signing it over to the other person. And then you do want to go to the DMV because we, the new owner wants to go to the DMV to register it. And then we're also registered as a lien holder on the home. So I've heard that you have a, a flea story, and I take that two ways. This could also, this could be a very interesting story about dog fleas or a very interesting story about the basis of the red hot chili peppers. I'd like to hear about it. A couple years ago, we were doing more of these individual mobile home

flips and stuff, right? So we go out to one. We had it all planned out. I wanted it to be a quick turnaround like, I always do. So we had already negotiated with the sky. We were going to buy his mobile home. My husband had walked through it. I had. I had. I had to be a quick turnaround. I always do. I want to be a had not. So we get there, we paid him, we did the title transfer everything. A couple hours later, I'd already gotten, you know, somebody off of Craigslist, I think, to come out and take the carpet out of this home. It looked gross. So I already had that. The guy came out. He removed the carpet. So then I just went and walked with him through the home to make sure everything looked good because I wanted to put it right back on the market the next day and have a super quick turnaround.

Okay, so I have a three-month-old baby at this point. Who is in the back of our car? I get back into the car from walking through this home. I look down and there are these little tiny black bugs jumping off of my feet. The home was infested with fleas. So big lesson learned on this. And this, I don't care if it's a single family home, a mobile home. Anywhere you're going, if you haven't been before, wear close-toed shoes. I don't know why I wore wore. sands in that event. That's a very important lesson. I have, yeah, I've walked many of my houses in flip-flops or crocs. Not advisable. Hopefully not again. Not OSHA approved. That's right. And it was so gross. Luckily, they didn't get in our house or on my baby. Well, luckily they didn't make

you hate real estate investing because I feel like, especially when you're new, it doesn't take very many bad experiences to put a really bad taste in someone's mouth. And then they just don't want to do it at all. So kudos to you and kind of fighting through that. Now, I have a question about where you're finding people that may have these kind of properties to sell. Where are you making connections where you're getting in touch with someone who owns a mobile home in a mobile home park that might not want it anymore? Facebook Marketplace is a great place to go to find homes. If you want to infill in a park or if you want to do a Lonnie deal, Facebook Marketplace is a great place to go. Back when we did these, we would also post Bandit Signs.

I know those are controversial, but we would post. them somewhat near parks or at busy intersections that just said we buy mobile homes, when we would get so many phone calls off of those. That was a really great source. Are you ever finding any of the buyers or sellers on Craigslist? Yeah, we post right back on. No, actually, sorry, you said Craigslist. Not really. There are some that come up on Craigslist, but honestly, I find on Craigslist it's more people who are doing what you're trying to do than people actually trying to sell. I've just found better luck on Facebook marketplace.

Yeah, that's a good point. Like, I'll find a lot of the time that realtors are the only people actually attending real estate meetups because they're all looking to find clients there. And there's like three people there that might actually be looking for a realtor and 47 realtors that are all fighting. And that's not the right proportion. So you do want to sort of find places where someone who owns a property would want to be getting rid of it, not where a bunch of other people that are looking to buy the same

thing as you are going. So let's say you do find somebody. And they've got a mobile home. kind of tired of dealing with it. They're just not good at managing it. Um, it's got some problems. They don't have any money set aside. And they are looking at it more like it's a money pit than it's a cash filling asset like what we wanted to be. What do you need to know from a seller in order to write an offer? On a mobile home or a mobile home? That's a good. I said park, but sorry, I meant mobile home. We'll start with that. Okay. So on an individual mobile home, you want to know

how many bedrooms it is, what the lot rent is. Um, and you honestly, you're walking. it. You want to know what the problems are. And you're just trying to identify issues that you either will have to fix or just let the other person that's going to end up buying it know that they need to fix. But there's not that much that you really need to know other than have an idea of the market at the time. Just know what are other three-bedroom, 1990 mobile homes going for? And that's, that's really it. It's not, it's not too much more complicated than that. So same question. but now let's say you'd like to buy an entire mobile home park. What does your due diligence consist of?

Oh, yeah. So, well, due diligence is a whole ballgame. So let me start first with what you want to know from a seller to even be able to come up with a number to even go under contract. And so there are really three buckets of information as a baseline you have to get from a seller, right? just as a reminder, the value of a mobile home park as a commercial asset is based on net operating income, right? The income that the property produces, so income minus expenses, that net operating income, not including your mortgage, not including your debt, but that net operating income,

just divided by a cap rate, gives the value of the park. So that net operating income is very important. So you want to know both sides of it. The income, the property produces and the expenses, we also want to know about the infrastructure. So on the income side, we want to know what is the rent? Is there pet rent? What is the vacancy?

How many people are paying and not paying? Are there other sources of income, maybe like storage or laundry? You also want to know if the homes are park-owned or tenant-owned. On the expense side, you want to know every expense. you're trying to tease this out of them through a conversation, right? Who's managing the park? How much does that cost? What does that manager do?

How much does the landscaping cost? What are the utilities costs? Are those paid by the tenants, the residents, or are they paid by the park? How much does insurance costs and what type do you have? Is this in a floodplain? Telephone costs, right? The residents are going to need to somehow contact the owner or the manager. Does that cost any money?

Are there any licenses and permits? What are the taxes? We can figure out what the taxes are going to be on our own, but we always like to ask as well, are there any recent legal fees? And then, of course, you're going to have overhead. You're going to want to factor that in. You're going to have to file your taxes, right? And you always want reserves.

So the income and the expenses, those two pieces really can give you your net operating income. The other piece you're going to want to know is the infrastructure side. So if we think about a mobile home park, the infrastructure. is critical. It's really what separates it from being a piece of land. So you want your electrical. If there's gas, then gas. Your water, maybe it's city water, maybe it's well. And your sewer. Maybe it's city sewer. Maybe it's septic systems. Hopefully it's not a lagoon or something else like that. We won't touch those. But you want to know what it is. And so getting those three pieces of information is really critical in being able to to come up with an offer.

So I guess I have a couple questions to follow up on what you were saying on the expense side. So question one, you said you can find out the tax bill for every single individual property, but you like to ask. Is this sort of like an initial test? Is this like due diligence on the seller to make sure that they're honest? Yeah, that's an interesting question. So we always trust the owners, right, to start with. But it is always good to ask questions that you have a way of verify.

fine, because if somebody is trying to pull one over on you, run. They know more about this property than you are ever going to find out during due diligence because they already own it. If they are purposely trying to cover stuff up, I would run away from that asset. Okay. That makes sense. So number two here, I guess you say that you look at the net operating income. Obviously, this makes sense because you want to make sure that it makes money.

But on the flip side of this, do you ever go into a park that may not show, show a giant, you know, net operating income, but you can sort of quickly identify how to slash costs and expenses so that you can effectively, like, you know, add 25% value to the, to the park in a few months with some rehab and work? Absolutely. And that's the number one thing I look for when I'm analyzing a mobile home park is can I increase the net operating income immediately or almost immediately, right? You'll see a lot of parks listed as value ad, right? I'm a value ad investor. I don't buy anything that's turnkey. I think most people listening to bigger pockets are in the same boat. So that becomes a big buzzword, right? A value ad mobile home park. A lot of times

the value add is through infill. That's fine. That's great. You can infill. You can increase the value. But that's not what's going to make me buy a park if infill is the only way to increase. the value. I need there to be a way to come in and increase the rents or bill back the utilities or have some real impact on the net operating income to increase that and therefore increase the value of the park. And just to clarify, when you say infill, that just means getting more, you know, more tenants in your park. Yes, thanks, Rob. So infill is a way of taking an empty lot, either a vacant lot that has nothing there or already has the utilities connected, you know, the electrical, the sewer, the plumbing, and bringing a home there so that now you have somebody

paying that law rent. Would you consider this one of the bigger risks with mobile home parks? Because, I mean, I feel like it makes a lot of sense to go in and say, okay, you know, net operating income is not great. But hey, I can come in and, you know, we can get these people to increase the rents. We can collect, you know, the 12 months of rent that we, that we're owed from these people over here. We can landscape. We can do this and this and this. But obviously, when you're talking about mobile home parks, just like you said, the infrastructure, if it's a lagoon, if it's a septic, if it's city sewer, all three of those, I have to imagine, have vastly different expense, you know, expense implication. So I'm kind of curious. Do you consider just going into a value

add a huge risk, or do you see it as a huge opportunity? It can be both. And I will say, the number one least understood item of mobile home parks and is really the due. diligence on the infrastructure, on those utilities. And so we actually have a course on mobile home park investing. And this is one of the main reasons we created it because we did so much research when we were learning about mobile home parks. And still, when we were buying our first park, we had no idea how to do due diligence on those septic systems. That's what you're buying is that infrastructure, right? If that fails, you have to put new infrastructure in place. So what we learned through that process is you actually have to go in and pump the septic tanks to be able to inspect

them. Now looking back, that makes total sense, but we weren't that familiar with them, so we didn't really know at the time. So you need professionals for all of your utilities to go in. So in the septic case, you want the tank pumped, you want the tank pumped so he can look inside and say, oh, this is cracked. We found two cracked tanks in the first part that we bought. It's not that big of a deal, right? I think it only costs like $4,500 each to fix. But you want to know that going in. You want to walk the drain fields. You want to make sure that land is actually absorbing the water. So a lot of people kind of don't know how to do that due diligence on the infrastructure. But in my opinion, that's one of the most important things you can do

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Zero guesswork. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion. So what are some questions that you might ask the inspector who's going to be doing the work? Yeah. So you definitely want them to be looking in the tank and just make sure everything looks good. They can tell you if you need to add a filter, which prevents the sludge, if you will,

from going into the drainfield. You're going to walk the drainfields with the subject professional because they can tell you, like, hey, this land is soggy. That's a bit of a red flag where, hey, I smell sewage. That's not something you want to smell when you're in a drain field. And then we have all utility professionals walk through. We just have an electrician walk through and look at the panels and make sure everything looks good. We have somebody inspect the water lines to make sure that those, we want to know what types of water lines and we want to know if they're in good shape. And so just making sure that you identify professionals for all of your utilities that can

be there during due diligence and help you walk the park and look at all of the lots and all of the connections. So I have to imagine that every park you go into is a little bit different. and, you know, it seems like you've done this a couple of times now. So how has your team, how did your team start out when you were getting into this? And who is your team now? Like we call them, David calls him his core for and my side of the business. I call it my Airbnb Avengers.

Probably one day I'll get sued for that. But for now, we'll call them the Airbnb Avengers. What about for you? Like, who are the critical people on your team? Yeah. So I got to work on the name. I don't have a cool name like y'all do. but for every park, you want to make sure you have a lender and an attorney that have mobile home park experience,

not just a commercial lender, not just a commercial attorney, particularly on the lender side. Remember, the person you're talking to when you're talking to a lender is essentially a salesperson, right? They want you to bring your business to that bank. They are not the underwriters. They're not making the final decision. So if you go with a lender who doesn't have a mobile home park on their portfolio, there's a real chance that you could get to the final stages and they could walk away and then you won't have funding. So lender and attorney with mobile home park experience is a must and then utilities, right? The professionals in all of the utilities having all of those contractors, those are really the big pieces that you need. What about the day-to-day side of things? Do you have a team that's effectively running the operation for you?

Yeah, so depending on the size of your park, you may want a manager in place or not. And everything is a spectrum, right? There are some people with single family houses that prefer to do all of the day-to-day management themselves. And you can certainly do that. Five, ten, fifteen, twenty, fifty lots. People do that all themselves. So you don't have to have a manager.

We choose to have managers in our parks. And so we have somebody who's on point to make sure rent is collected, to make sure the grass is mowed to make sure there aren't cars, you know, a bunch of cars sitting out that can't even run. And so we do have a person on point day to day. And Jonathan works with the manager on an ongoing basis and kind of keeps in the loop that way. I like it. So when you're, let's say that you're like, hey, I think I want to be a mobile home park investor. I want to be an Amanda Cruz, I want to be a Brandon Turner. And I have a good idea of how to analyze a property, income, and expenses. Now I feel like I know what to look for in due diligence. When you get bombarded by all of

the opportunities that come your way when you're looking on LoopNet or Co-Star, wherever you're finding these deals, give us an idea what Amanda's lens looks like when she's looking at a property. When you're scanning it, what are the things that are jumping out at you that make you think this would be a good deal? Yeah. For me, it goes back to that income piece. I want to know what is the current rent and what are the market rents? And I may need to do a little bit of research. In order to find out market rent, that's really pretty easy. You can call local parks in the area and pretend to be buying a mobile home park. My husband really likes to, he enjoys doing that with a fun accent if he's calling in the mountains or something like that. And so you're figuring out

what are those rents and what can I bump it up to? Where can I remove expenses? Water billbacks. I know you guys talk about that a lot with, or Brandon talks about that a lot with parks. That is one of the biggest things is taking utilities that may be absorbed by the park. A lot of parks are owned by the people who created them decades ago. And they just absorb the cost of water or the cost of electric. So being able to meter that and have residents pay for the true usage that they're having is a big way to reduce expenses. We're looking for places where, like,

I've seen a park that was like a 20 lot park that had a full-time and a part-time manager. There is absolutely no need for one and a half people to manage a 20-lot park. So looking for areas where you can reduce expenses and streamline. And it really comes back to that net operating income. And I know I hit on this a minute ago, but we don't touch anything. That's like a lagoon or sort of those private systems. Septic is fine for us. I know that scares some people.

but really septic we're comfortable with lagoon's step too far. So why is that? Tell us. I mean, I have a general idea, but for David to explain. So it's very, very expensive to put in a lagoon. I mean, it could cost $200,000, $500,000. And you have sometimes county, sometimes state restrictions and testing that goes on. And if all the sudden that testing comes back and you have risks, there's almost no alternative. It's not like you can just connect. Almost never. Can you just connect to the city infrastructure without it?

I mean, most of the time you can't even connect. If you can, it's hundreds of thousands of dollars to be able to do so. So when you're talking about a park that may only be worth $800,000, a million, one and a half million dollars, that completely devastates your investment. That's very interesting. So I guess now that we have a kind of a rundown here of the due diligence, what to look for, building the team, what not to get, aka a lagoon here, which honestly changes my perception of all those neighborhoods that are like, Blue Lagoon and it's on a lake and all that stuff. Now I'm like, why would you call it a lagoon? But moving on from that, you did mention earlier something that I wanted to get to. And you said there are three specific strategies that you talk about that you actively do to avoid, I guess going up against some of the bigger.

the bigger fish in the lagoon, if you will. Yeah. So a couple of things here. One, I can think of any big investor, and they're going to want 150-lot mobile home park right outside of Raleigh, North Carolina. That's very desirable. The population's growing like crazy. And that makes those investments very attractive and therefore very, very expensive.

So if we're thinking back to how mobile home parks are valued, the income divided by a cap rate equals the value. Those cap rates get really, really compressed. And they trade, they sell for so much money to big investors who get cheaper funds than people like I get. So we are comfortable in tertiary markets. We really like tertiary markets. And I've heard people say this recently about apartment complexes as well, right? Looking in tertiary markets with stable populations, we don't want the population doing a nose dive, stable populations, but with multiple industries for jobs, so you still have a strong market, just not as competitive as the big markets. So that's where we're able to find some better deals.

Another thing we're doing is looking at smaller parks. A lot of the big investors cut it off at 100. I think Brandon cuts it off at 100. So we'll go in and look for smaller parks and put them together. if they're in the same area, so for instance, we have a 50-lot park and a 28-lot park a couple miles away from each other, well, now I have a 78-lot portfolio. A 78-lot portfolio is a lot more desirable than just a 28-lot park. And if you can get enough that you're over 100 lots, well, now that portfolio can really sell for maximum value. So that's one of those strategies. And I would say even if you're not looking to add together to get 100 lots or something like that, even looking at

smaller parks, five, 10, 15 lots, there's just not as much competition for those. So if somebody's looking to get into mobile home parks, there's really a lot less competition in those smaller parks. So that could be something to look at. The third area where we really try to differentiate is doing something big investors can't do, which is to say forming those personal relationships with the sellers. We are in contact with as many sellers as possible. especially in the areas where we already own parks. And as soon as somebody says they might one day be interested in selling, then, hey, guess what?

I'm going to be out in your area next week. Can I come take a look at your park? Can you show me around? And you can just have a conversation. A lot of people love to tell their stories. How did they create the park? Was it them and their spouse? Maybe their spouse passed away or maybe their son doesn't want to take it over,

whatever it might be, just getting to know that person. and the investment. And then when you're connecting with them, because you always want to follow up, right? Every couple months, you never know when they're ready to sell. They know you. And they remember you. And then if you can give them a reasonable price,

they're going to be more inclined to sell to you than some big investor from across the country. You know, I've always wanted to ask this, but I didn't want to upset Brandon, so I never did. But I'm going to ask you, Amanda, because you seem like I'm much for a reasonable person than that, six foot nine bearded giant. I would imagine, this is speculation, okay?

And this is where I don't want to offend anybody. But dealing with owners of mobile home parks would probably be a little more relationship-based, maybe less formal than when you're dealing with residential apartment buildings where you sort of have institutional money that's going towards that. You have a lot of people that like to use big fancy words. For instance, they'll say finance instead of finance because it makes them sound smarter. So it's a little more intimidating in that world, and they're better at marketing. So they're looking for who's the top buyer I can possibly get, and you've got to wind them and dine them a little more. And I've always imagined the mobile home park owners are kind of the mom and pop style.

And it's been in the family for a long time, and they more want to feel good about the purchase. Am I way off with how I perceive this or have you found that to be the case? Absolutely not. And so I think there are two classes of mobile home park owners. Like you just alluded to, there are the people who developed them. those don't exist as much in apartment buildings these days. Whereas in mobile home parks, there are still a lot of people whose families,

either they created them themselves, they built them or their parents did or something along those lines. They don't even think of themselves as commercial real estate investors. They just own this park because that's what they did for money for decades. And if you look at sort of the bigger investors that are getting into it, sure, if you're going to buy from them, they want top dollar, they know exactly what they're doing. So you really want to be looking for the people that built the parks.

They're the best ones to work with. And they want to see the park succeed, right? They're going to give you all the information. They're going to work with you. And if you have a problem, you can call them up and say, hey, I couldn't find this one tank that we, you know, whatever. And they'll actually help you because they really want you to succeed. Yeah, they've sort of given away their daughter in marriage and they want to make sure that

you're taking good care of her versus the person who's like, I don't know. This was just a business for me. and there's 40 different people involved doing some little part of the transaction. Nobody's very emotionally connected to it at all. That's exactly right. Well, Amanda, this is all really gold. I think my question here, and I'm sure a lot of people in the audience probably have this question too, but at what point is someone ready to invest in a mobile home park?

Like, you know, you did the money deals and you kind of worked your way up. Were you ready for the mobile home park when you did it? Like, what was that defining moment for you? you said, I'm ready for this or I'm going to do it regardless. Is anybody ever ready to invest in real estate, right? I think it kind of comes back to, like, you can do it from day one. And I think a lot of people say that. I talk with a ton of commercial real estate investors and everybody thinks the same.

There's no reason you have to start in single family. If that's where you want to start, that's awesome. If you want to start with an individual mobile home investment, that's awesome too. you could also just learn about mobile home parks and go buy a 15 or 20 lot park, and that can be your first investment. So really, as long as you're willing to learn how to do it, you can jump right into that and be a commercial real estate investor from day one. All righty.

Well, I think that that's really good. I think we got some really good insight into how to get started as well as if you're already investing in mobile home parks, sort of like your due diligence stuff was really helpful. so thank you for sharing that. Good. We are going to move on to the next part of the show, which is the deal deep dive. Amanda, do you have a deal in mind that we can devour? Yeah, I sure do.

All right, awesome. So question number one, what kind of property is it? It is a mobile home park. Question number two, how did you find it? This is a 50-lot mobile home park. We found it by cold calling sellers. Quick tip for people who are interested in finding these. some of the counties you can call and ask for a list of mobile home parks and they'll give it to you.

So that's what we did in this case and then backtracked the owners and called them. Dang, that's a good, that's a good quick tip. David. Yeah, you got the county actually doing something useful for like the first time ever. Usually they just make everything harder. They're like, oh, this could be easy. We could just give you a form right now, but where's the fun in that? Let's make seven unnecessary steps and bounce around to make sure you really want it.

True. And you might still have to do that. Wasn't there a guy that worked for Puff Daddy at one point? I don't know if he's still called Puff Daddy. I'm making myself look old. I think it's P. Diddy now. P. Diddy. All right. Because at one time he was P. Diddy and Puff Daddy. I think he, I don't know how Pee works better than Puff, but whatever. Wait, hold on. I also recognize that that might also make me look very, very.

He goes by a new name. And he would like have that guy run all over town doing ridiculous stuff. Like, go get me a slice of cheesecake from this particular. particular place and the guy would come back and then it's not cold anymore doesn't that sound familiar i feel like that's what the counties do they just p ddity you all over the place totally and the dmv yeah yes the dmv same thing that's a very good example okay next question how much was this mobile home park 50090 000 how did you negotiate it not super well so we i think we wanted it for under 615 We went in at like 570, Mrs. Betty came back, maybe a little over 590, and we ended up settling on 590.

We went under contract. I mean, looking back now, that was just a crazy good price, but, you know, we didn't know, right? And so, as I mentioned earlier, we found two cracked septic tanks as part of our due diligence, and we tried to go back and, you know, ask her, hey, we found these things. We're going to have to repair them. what do you think is fair here? And she wasn't hearing any of it. She was like, look, I've been wheeling and dealing my whole life.

Okay, she created this park. She is very hardened. She's been wheeling and dealing her whole life. If we didn't buy it, she was going to keep it. She's not taking a dime less than $5.90. So we paid $5.90. And how did you end up funding this deal? We used savings and we pulled money out of retirement accounts.

What did you do with it? So we executed our business plan. We increased the rents. We build back water. We fixed the infrastructure, both the septuics and the roads. We made it look nice. Put up signage. And we refinanced it. The next question would be, what did you end up doing with it? Yeah. So it sounds like you refinanced it and you kept it. Yeah. So we refinanced it. And the new value of the park was a million dollars. So we paid $590 a year and a half later. It was worth a million dollars. So that meant we could take a bunch of money out and a cash out refinance. We could have taken about 300 minus some, you know, legal fees and stuff like that. And we ended up taking 250 out of it. How do you feel like you did not negotiate that well when you bought it for $590 and it was worth

a million a year later? We didn't know any better. We didn't by negotiating it or meant we thought we would get money off for the septic tanks. It turns out we got a great price for it. We just didn't know any better at the time. I think that's just such a great point to highlight. There's so many people that a year ago, two years ago, got so caught up over a $4,000 squabble with the seller.

And they thought, this isn't fair. And now the property's got up $300,000. And they won that battle over $4,000, but they lost it over $300,000. And when you're in different markets, you just have to understand what leverage you have. And sometimes sellers have leverage and sometimes buyers have leverage. And when sellers have leverage, that usually means the market's going up. So you don't have to win that battle as much. When buyers have leverage, that usually means the market's going down or it's staying the same.

So winning those battles is more important. But if you can understand that, it kind of gives you freedom to not get caught up in minutia. That just is sort of largely unimportant. 100%. Just because you didn't get money off doesn't mean that was a bad negotiation. I mean, honestly, at the end of the day, the negotiation was buying an undermarket value. You know, you just have to kind of look at it from a broader view. That's awesome.

Congratulations. That's a lot of equity in a year. Yeah. Great points there. Thank you on that negotiating piece. Hopefully people got something from that. So we just shared one lesson that we learned from your deal, even though we're not being interviewed. Do you mind sharing a lesson that you might have learned from your own deal?

Yeah. So a lot of people talk about being afraid, right? You're so afraid we're doing this new big thing and how to overcome it. For me, I really learned that identifying the source of the fear is a big piece. So for me, I was afraid people weren't going to pay us. This deal closed the first week of April 2020. People were in lockdown, losing their jobs left and right. And I was terrified they weren't going to be able to pay us.

So what I did was I analyzed that. I put numbers around it so that I could look at it and logically say, okay, 50% of people need to not pay us before we can't make our mortgage payment. And that allowed me to be able to move forward. So I would say the big lesson is analyze the downside, look at that number, and then you can make a logical decision. All right. Well, that is fantastic.

And thank you for sharing. We're going to move on to the last segment of the show. It is the world famous Famous for In this segment of the show, Amanda, we are going to ask you the same four questions we ask every guest, every episode. I will start with number one.

What is your favorite real estate book? I really liked Ken McElroy's ABCs of real estate investing. It was really eye-opening. It walked through a seedy apartment complex that ended up having a ton of value added to it. It was my first real introduction to fix and flipping. in commercial real estate. Question number two, what is your favorite business book?

I really liked unscripted by M.J. DeMarco. In that book, it's, by the way, warning way too long. It's like 17 hours on Audible. But there are a lot of really good pieces in there. There's a great quote, he says, when there's a gold rush, sell shovels. I love that line. It's a really good way of thinking.

And it really helps me think through things. Like, Rob, you're in short-term rentals. That's huge right now, right? One of my good friends, Sarah Weaver, created an entire company to furnish short-term rentals. It's stuff like that that's just so smart. And I love that unscripted really highlight some of those really smart business moves. Sarah's really great. We just had her on, I don't know, like a month and a half ago.

She was one of my first interviews in the Baker Pockets family. So, um, nice. Question number three, hobbies. What are your hobbies outside of killing off flea infestations in mobile home parks and adding value? Yeah, I like to see different places. Even if it's just going an hour away to do a walking food tour, I love to just see different cities, experience them, especially through food, hiking, and really just learning about new places. In your opinion, what sets apart successful investors from those that give up, fail, or never get started? Everybody has something that would make it way easier to get into real estate investing.

There might be a couple people out there who think, oh, it was easy for her because she could take money out of retirement to fund her mobile home park, right? Hopefully not too many people are thinking that. But when I was starting, I would look at people in their 20s and think, oh gosh, it's so nice that they have their weekends and evenings free. They don't have families. They can go out and look for new properties. Everybody has something that would make it easier.

being able to turn the lens and think of what is my advantage? What do I have? Is it funds? Is it a network? Is it time? I think successful people are able to look at their advantages and run with those. Bringing the fire today, Amanda. Lastly, perhaps the most important.

You know, it's not technically a question. It's a statement to you. But tell us where people can find out more about you. Yeah. So I have a couple cool videos on my website. It's, you know, five ways to find off market. Mobile Home Parks or three ways that mobile home parks are better than single family homes. So you can get to those at voyage investing.com slash freebie.

I also post about investing and about mobile home park investing on Instagram. So come follow me at Investing with Amanda. David, what about you, man? People want to come and catch all your fire knowledge bombs. What can people find you? Well, I'm David Green 24 everywhere except TikTok. So I finally gave in instead of. Okay, I'll start a TikTok and guess what?

Some sleazeball out there took my name just like they did to Rob, so he became Robiltoe, and David Greeno didn't have the same ring to it. So I'm trying to think of, I don't remember. It sounds kind of like a fancy seltzer water, though. David Greeno. Yeah. Yeah. Or it could be like the stuff you pour down your drain to get out the green gunk type of a deal,

a little less, less classy. Yeah. So stay tuned for what I'm going to pick for TikTok. I think we're still working. on that. And then my YouTube channel is David Green real estate. Super simple. I'm not very creative or fancy. Like if you want to find my stuff, just put in my name and you can find it there. How about you, Rob? You can always find me on the YouTube's. Smash that like. Leave me a comment. Tell me something you learn from my videos at Rob Built, Instagram, Rob Built. TikTok,

as we said, Rob Bill Toe. Just a friendly reminder, guys. There are a lot of fake bots that comment on the channels and on Instagram. David and I will never ask you for crypto or to invest in 4x or to message us on WhatsApp. Please get in the habit. And this is good for everyone of looking very closely at the handle of the person that messages you. It is very easy to take all of Halliberry's pictures, make a fake account, and call it like Halle's Barry and then message people and say, hi, I'm Hallie Berry and I want to give you

money. That happens all the time. So if there's an underscore where it doesn't belong, they'll often put like a period in there. It looks like a real profile when they message you because they have all of our pictures. but there's so many of these fake ones we can't even keep up with it. So if anyone out there has a connection with Instagram, they can get us the dang blue check bark so this doesn't happen.

That'd be great. Until then, please, like Rob said, be very careful that you're not responding to a fake person and giving them your information. Also, I want to give you a shout out, Rob. You recently put out a YouTube video of the property that we're buying in Scottsdale. That is fantastic. I have only got into the first half of it, and it's super good.

So please go check out that video if you're listening to this. Rob is very good. at making these things. And it kind of showcases the property we're buying, how we got to buy it, a little behind the scenes look. So if you want to check that out, please do. Amanda, I'm going to give you the last word. Is there anything you like to share with our listeners that you think is extra important?

Just thank you. I mean, it was so great to give back. As I mentioned, Bigger Pockets. It was so instrumental in getting me into investing. So thank you for having me, Rob and David. And just look forward to hopefully giving some people some information. Awesome. You did.

You gave me a lot of information. I think I'm going to hit you. because I have this vision of turning a mobile home park into like a luxury glamping kind of mobile home park. So we should talk. Absolutely. I already told you. I think one of my, you know, I would love to do it. Let's talk about it. Okay. All right. Thank you very much, Amanda. This is David Green for Rob the YouTube Wonder Abbas Solo. Signing off. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value, and the best markets across

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