Epic Real Estate Investing - Mobile Home Park Investment with Kevin Bupp | 599

Episode Date: February 28, 2019

Meet Kevin Bupp, a real estate expert, and a CEO of  Sunrise Capital Investors. He is here to tell you more about a slightly different business, mobile home park investment! Learn what to look for when acquiring home parks, how the process of negotiating the purchase differs from buying a single-family house, and the 3 guiding principles for Kevin’s success.  Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. My personal saying is that there's always going to be, it's all timing, so there's always going to be a point in time in a owner's life where they either need or want to sell. One of those two things is going to happen. There's many different reasons why each one might occur in a owner's life to where they become a seller. And the goal is to get your message in front of them when that day comes. Hey, rock stars.

Matt Dario here at Epic Real Estate. Welcome back to the Real Estate Investing Show. And if you're into real estate investing for cash flow specifically, you're going to love today's episode. Today's episode of Fock Leader Thursday. Okay, so today it is my pleasure to welcome back to the show, this real estate expert, serial entrepreneur, charitable, humanitarian, adventure seeker, and passionate family man. So please help me welcome back back. Kevin, welcome back. Matt, thanks for having me, buddy.

I'm looking forward to catching up. Yeah, we've been playing a little bit of podcast tag. Yeah, right. And having a hard time nailing it down, but I'm glad we finally did. So you are a cash flowing expert. This is your focus. And so it's near and dear to my heart. But you do it with a slightly different asset class.

Why don't you just, I mean, maybe we do. We do. We might remind what it is that you're doing how you do it. Yeah, we have a little twist. I mean, now we've owned other types of real estate. We've owned lots of residential, lots of multifamily over the years, commercial. And just happened across mobile home parks. Now it's going on seven years.

And that is solely what? we focus on today. And we love the niche man. So we've been buying parks for going on seven years now and own them in now. Today, as we do, it's recording 11 states and soon to be 13 states here in the very near future. So own them as far north as New York and Michigan and as far west right now is Oklahoma and then everywhere else in between. So got it.

Is that where you started with mobile home parks? No, not at all. No, many, many, many, many years ago. I got my, I cut my teeth in single family, you know, buying, mostly doing like, you know, really rough rehabs in the inner city of Pennsylvania where I grew up and then started doing buy and hold. I was always taught to buy and hold and during cash flow. That was kind of model that was, you know, put onto my shoulders way back when.

And then kind of migrated into multifamily. This is all way back before the crash. And then crash hit me pretty hard and was just really looking to scale the business up again because I lost pretty much everything during the crash. and, you know, at some point in 2011, got introduced mobile home parks, really didn't, wasn't interested at that point, you know, put a little bit more thought into it, a little bit more education behind me, and saw something that seemed very intriguing and I wanted to give it a shot. And so bought my first park way back then up in Atlanta.

And here we are today, man. So I've done a little bit of everything, but this has been our sole focus for the past seven years. That's great. You know, I have almost no experience with a mobile home park. I don't even know if I've ever stepped foot on one. I had not ever stepped foot in one until we actually bought one. So, okay. Good.

So I have a, you know, we, we have a business over here where we help people build real estate investing businesses and we support them along the way and we build their systems and do all that. And through their marketing efforts, they come across all kinds of stuff, most of which I can help them with. But I did have a client recently that came and says, Matt, I got this mobile home park. What do I do with it? And I said, I don't know. Let me get back to you.

So I hit you up and I connected you too. And he said he's pretty happy with the end result. What's your version of the story? Yeah, no. So we have not bought the park yet. We're actually in contract with that park. And him and I actually have a call, I think, tomorrow with the seller. We've uncovered a few potential hiccups in the infrastructure.

And so, I mean, as of today, you know, we're due to deal together. Thank you, Matt. Appreciate the connection there. And yeah, hopefully it does go somewhere because it looks like a great opportunity. And it's up in Michigan. Again, we own something up in Michigan now. He's actually based in Michigan, you know, the person you connected me with. And we like Michigan as a marketplace.

I don't think I'd want to live there a little too cold, but it's a great market to own mobile home parks in. Right. So when you go through the due diligence process, which of you guys are going through right now, what are the big differences that you're looking for compared to single family? Yeah, I mean, probably, a lot of similarities, but there's a couple additional caveats that exist in our space. Like to use the example of this park that we're doing with one of your students, that one is on private utility.

So it's got a private well system for the water supply. So it's in a somewhat rural area. It's close to Grand Rapids, but not close enough to where there's municipal utilities. And that's common with mobile home parks. A lot of times when they're built, you know, whether it's 15, 20, 30 years ago, they're typically build on pieces of land that don't have a higher and better use, right? So it's cheap land then. And then over time, you know, cities or towns kind of get pushed outwards. And you'll find parks that might have been on private utilities, you know, 30 years ago. And then municipal sewer and water lines come

close by and to get connected. But with this one, it's still probably, it's still probably 15 years or so before the growth really gets that close to it. And so it's got a private well for the water. And then it's got a basically a master septic system. So just, you know, think of like a, a huge, robust version of like what you might find on one single family home like a 1500 or a thousand gallon tank you've got like a 15,000 gallon tank and a huge leach field that might encompass like a quarter of an acre and so that's what this system has and so like one of the caveats with this park was we knew that they had multiple violations from the from the EPA for the the sewage the sewage

system wasn't working properly and that happens with septics if you don't maintain them if you have tree roots growing into the lines and so this one we kind I knew there was a little bit of hair on it going in. We didn't know how in depth or how drastic it was. But as we dug deeper, as we got engineers involved, we uncovered what the seller said was about a $50,000 repair. It was more like a $250,000 repair. So the infrastructure is very important, especially in situations where you've got private

sewer. Some of the other things that you want to identify is, you know, in a perfect world, Matt, like we don't want to own any of the homes in that community. So we don't want to own any of the trailers. We just want to rent the land to the folks that own the trailers, right? So just basically thinking of like it is a parking lot where they park their mobile homes that aren't very mobile. It's very hard and expensive to move them. And in that situation, we're just basically, you know, providing the infrastructure, the water and sewer and a place to park their home.

And so, but there are a lot of instances where parks will come along with rental inventory. So where the park actually owns some of the units. And so in that situation, just like if you buy a single family home, You're going to want to go through and do walkthroughs, ensure that, number one, there's someone living there. Number two, that it's in, you know, a good structural shape. And that deal that we're talking about now up in Michigan, I think it's got about 11 or 14, I believe, Park Road Homes.

And so we've got to, you know, throw inspection on all those. But, and then the other similar things that you would do, you don't want to verify the rent role, verify the financials. You know, we always get experts involved when it comes to anything regarding the infrastructure. We'll get engineers involved and water companies. companies and sewer companies and things like that. We'll also deal with, you know, talk to the county, find out what kind of historic code violations the community might have had,

try to get the general, I guess, temperature reading from the county on how they feel about the community. A lot of times we're buying value ad stuff where if it's a single family home, you know, the code enforcement officer might not be all that happy, but, you know, they get pretty pleased when they see someone coming in that's going to clean it up. Mobile home parks have a negative stigma to start with, and so they're already starting a little bit. behind. And what I found is that a lot of times we come in, like, you know, thinking that we're the guys with the capes on. Most of the time municipalities don't really perceive us that way. Because all they think is at a mobile home park. No matter who takes it over, it's going to be a problem. And so we spend a lot of time during due diligence, just really getting a really good

gut check as to how much friction we're going to have with this city or this township if we buy this property. If it's a value-ad place. Like the one I'm speaking of Michigan, this thing is literally had sewage issues for like four years and they've been ignoring it. And so they've had multiple violations. The city hates it. I mean, if it was up to them, they would have shut it down. So we got the gut check that they truly want to work with whoever the next buyer is and they want to be flexible. In other instances, we've had the complete opposite to where it's like, you know what, you're wasting your money. You better not buy this thing. We're going to continue working to shut you guys down. So it's always good to know that going in. And multitude of other things as well.

But those are some of the unique aspects of mobile home parks that might not exist in some other asset classes. So is this grounds for like what single families would you be going back to the seller and asking for an adjustment? Yeah, that's what we're going to do. That's what we're going to do. It's a pretty big adjustment though. It's not just an adjustment and price on this one because the current condition of this infrastructure, a bank won't touch it. They won't touch it at all. I mean, it's got an environmental issue.

It's got just a litany of health department violations, not just one. like multiple because the guy just kept ignoring these violations as they came in. And so it's a situation where we surely won't want to sign our name on a recourse loan with this underlying issue in place. It's a big one. And so we're going to go back and do a price reduction, attempt to do a price reduction, but also get him to carry financing for a period of time, you know, get him to take a small amount down, about about 10 percent is kind of our goal and price reduction as well. That will give us enough time to, you know, number one, we'll, instead of putting all the money as a down payment,

we'll inject a significant amount of money into the infrastructure improvements, into the cosmetic improvements of the park itself, get some stabilized financials in place because he doesn't have them. I mean, his books are horrific. And so if he is in agreement, we'll get him to hold for two to three years, get some good stabilized books in place, fix the infrastructure issue,

and then take him out with some bank debt in a couple years down the road once it's ready to go that route. So we'll see how it goes. I don't know. I'm not sure I'm too optimistic at this point. He didn't seem to receive it. But, you know, the interesting thing is, I think it's just a game of poker in these situations. He thinks he's got this, this product that everybody wants.

But for the most part, people are scared, scared to death when it comes to not just infrastructure issues, but when you've got like the EPA involved and the counties involved, and like there's literally just the health violations that are, you know, pages and pages long, it's a big deal. That's a big deal to deal with. And it really is a lot of risk. And we've, we've gone down that road before. we're comfortable with it. And we know that we can fix it.

But so we're going to, we'll probably play hardball with him. And I'm guessing we'll probably have to walk away from the table. And hopefully it comes back to us. That's kind of my gut check of how I think it's going to play out. And I'd like to buy because it's actually, it's a good opportunity. But I'm surely not going to overpay for it. I think that's in today's world. That's the interesting thing, man.

Maybe you're seeing the same thing. There's so much, there's so much anxiety out there from, from buyers, just feeling like if they don't buy today, there's not going to be a deal. left, right? And they're very anxious to overpay or to overbid. And that is not us. So we're slow impatient buyers. It's good. Yeah, the, was it the Warren Buffett? The best investing is boring investing. Absolutely. Absolutely. I mean, we're in it for the long run. We're not in to make a quick buck. Like that property there, again, I said it's, it's just outside of the Grand Rapids, MSA. Grand Rapids is a phenomenal market. And the growth is heading that direction.

throughout the interstate. So it's only a 40-minute drive to downtown Grand Rapids. So, I mean, it's very much a commuter suburb of Grand Rapids. So it's a phenomenal location. It's only going to get better. But, you know, today, it's a little rough.

Right. I can see how those exterior elements could get somebody really excited about purchasing the property. And then once you get in, there's so much more to uncover. And so thank you for helping and looking out for them

because what I say around here, it's better to miss out on a good, one that is to buy a bad one. Absolutely. A lot of few bad ones and boy, you remember those. You forget about the good ones you might have missed out on, but you remember the bad ones. Well, I mean, this one would sink somebody ship. Like, this one would sink the unassuming buyers ship completely, especially if they went

just on the advice of the seller. You know, the seller like literally had some quotes from like a local septic company that were like $45,000. I mean, they were all BS. There was nothing real about it. We got a real engineer involved. And it literally was five times the amount. But if someone would have just gone into it saying, hey, this is a great deal.

Because what we're paying for, it is a great deal if the repairs are only $50,000. But now it's not a good deal whatsoever. It would truly eat someone's lunch. Right. So when you go back to the table to negotiate with a seller, you know, kind of what does that conversation look like then? Yeah, I mean, it's typically just laying out the facts. I mean, he told us X, here's, here's, you know, here's the Y. Z. Here's the real facts behind the matter. And ultimately, the facts are it's a $250,000 infrastructure

repair. He's got just, it's been piling up. He's got litigation literally shipping at his heels. I can't believe that the, the city hasn't litigated yet. It's crazy that they have. It's been like literally three and a half years of violations and he's just been ignoring them. So, I mean, he's got the pressure from the city. He's got, you know, just pressure from the, you know, the park's not producing. Like, it's only half full. The residents that are there know that there's an issue. He's got a lot of slow payers and, you know, delinquent, um, tenants on his hands. It's just, it's a downward spiral. And so, uh, there might be another buyer out there, but, you know, surely, um, I can't imagine at the price that we have it under contract for. And so that's, we just lay out the facts and

say, you know, here's what it is. Any next buyer that comes in is going to discover the same thing we've discovered. Um, they're not going to get bank financing. They're going to request you hold financing, because here's what has to happen. Like literally you have horrible financials. We've got to get it stabilized. We've got to fix this infrastructure issue. I'm not going to give $200,000 down to you as a normal down payment because I got to go dump another $250 into this thing.

And that completely screws up my returns. You know, so it's just the facts. I don't know how to put it. Like, we're just transparent with like, here's what it is. Right. Here's how it works. And if this doesn't work for you, you know what? Here's my number.

You know how to get to, you know how to reach us. And once you spend another 60 or 90 days with another buyer that probably, you know, probably bails out, call me back. That's great. Not to be arrogant, but I mean, it's really, that's exactly how I do it. Most of the time, those types of deals come back around. And I think you just got to be willing to walk away and know that you're, that you're confident enough with your bids and your analysis that you know what a good deal means.

You know what a bad deal means. And if we're buying it today, what we have their contract for, it's a bad deal. So it's not worth the time or energy. What I, the additional thing that, my approach at that point, especially when you're, you know, you're probably going to walk away is, you know, this is a really nice property. It's why we got into contract with you in the first place. Why don't you just go fix it up yourself and keep it? It'll produce really well once all this stuff is fixed. So the funny part about that is one of the offers he made was that we could either pay,

I think we have another contract for $560 or $580, somewhere around there. He was going to sell to us unrepared for 580 or he would repair it himself and sell it to us for you know 630 so like you you know basically he'd make back that entire amount but I think that was his way of basically screwing that buyer whoever was going to cut whatever he was going to do was going to be a band-aid repair and would have put the buyer in a really bad situation and so he was willing to repair but it wasn't the right repair right sweet okay so um seems like the the negotiation and the buying process is relatively similar to single family the due diligence is much more extensive. It seems like there's a lot more that can go wrong when you're checking

with the city and the EPA and lawsuits, all kinds of stuff. When you're actually looking for the deals, how is that different? Yeah, you know, um, compared to single family. I would take that one of the big differences and I was a single family buyer, so I get that space really well. It's a different type of buyer typically, you know, as far as, um, we've very rarely ever run across what I consider to be like a motivated seller, you know, someone that's kind of in distress. It needs to sell like fast. which is a very, it's a very typical profile for a seller that's going to sell it 65 or 70 cents and a dollar or single family home. And so that's one thing. Just knowing that going in, that, you know, they're selling a business. Most of the time, if they're doing anything right,

it's making money, you know, it's paying for its debt. It's not all that big of a stress point for them. And so a lot of times it's a little bit of a slower process, a little bit, it's a little bit more sophisticated of a negotiation. I mean, you're really, you're really buying a business at that point in time. So that's where it differs a good bit. And it's very similar to buying a multifamily apartment or another type of commercial real estate. It's all income driven. But, you know, the one interesting thing about this niche, Matt, that I don't think a lot of people realize is the sellers or the current owners, it's got a very aging population of owners. Like, it's a very young niche when you think about it compared to other types of real estate. Like it's really only been around since like

the 40s and 50s where most of the communities actually were built in like the 60s. 60s, 70s and 80s. And so it's not that old of an industry. And there's still a lot of first generation owners out there. And now they're in their 80s. Now they're in their 90s. I've had a dialogue going with these two brothers up in Minnesota. They're 93 years old each. They're twins. And they built their park like 40 some odd years ago. And there's a huge opportunity to you have to buy from these owners that are truly aging out of these asset classes. And so like that's one of the unique things. A lot of times it's more of a, it's a personal, it's a personal connection.

A lot of these folks aren't really motivated to sell because they're in financial distress. A lot of times it's more of a personal rapport, a relationship building with these sellers more than it is like the highest and best dollar amount. I mean, the dollar amount has to be fair, but we've bought many parks over the years that we were not the highest bidder. And I think we just happened to have a better end with the seller, right? Had a better relationship. Right.

So no like and trust plays a big role, right? Absolutely. Absolutely, absolutely. So, for example, these two 93-year-old twins, I guess, is one-ninety-old twins? Or two? Two-90. Yeah, yeah, yeah, there we go. There's one set of twins.

One set of twins, right. Right. Not four. How did you find them? How did you meet them? Yeah, so we do a lot of direct-to-owner marketing. Direct mail? Yeah, we do a lot of direct mail.

I'm trying to think how we initially got in contact with them. I think it was the direct-mills. So we do a lot of cold calling. We have a full-time outbound cold caller in-house. We do a ton of direct mail. We do work with brokers as well, but about 90% of our portfolio literally build ourselves by going direct to owner. And actually, it's a funny story.

Now I'm recalling how our original connection happened. We sent them a direct mail piece. And I've never spoken with either one of these guys, the brothers. Their old school is old school gets. They literally wrote me a handwritten letter back from the letter that I sent them. And we've literally been pen pals for like three years now. We've never spoken on the phone. They sent me pictures of the, their mobile home park, it's gorgeous.

It's actually it's on a stream, and they literally send me pictures like, I don't know what you catch in a stream, but whatever types of fish you catch in stream in Minnesota, they'll send me pictures like over the summertime of what their grandson caught, like off their deck on the mobile home out of the mobile home. They actually live in the mobile home park. It's crazy. Yeah. They know what they're doing. They're feeding the buyer's emotions. Yeah. Yeah. No, no, no. It's awesome. But they're actually, they're ex-attorneys. So, I mean, these guys are sharp guys. They had a law practice in town and retired. and they both live in the community and just it's a great place for them to retire and they enjoy it, but they're not ready to sell yet. I don't know when that's going to happen. I mean, they're up there. But anyway, so we do a lot of, to answer the original question.

We do a lot of direct owner marketing. Last year we bought nine communities and eight of those nine were our own efforts. So direct owner, only one came through a broker. So we like brokers, but what we have found is that at least in today's market, once it gets in a broker's hand, and I get this, it's the broker's job. It's their fiduciary responsibility to get the highest and best dollar amount for their client, you know, the seller. So once it gets his broker's hands, it goes out to the world. There's always going to be someone that's willing to pay more than you, Matt, more than me.

There's always going to be a buyer that's willing to pay a little more, take a little bit less of return. So we'd rather avoid that and create some upside for ourselves by going direct to owner. That's our goal. Got it. So to build a relationship, that's a, that's, it takes time, right? So with that said, how many projects do you acquire a year? As many, that makes sense. I mean, last year we bought nine.

Yeah, I mean, it really is the truth. I mean, last year we bought nine, year before that, we only bought six. You know, we're shooting to, it's not necessarily a number of communities. We've kind of have like an assets under management target. So we'd like to add like another $100 million of assets under management this year. It's off to a slow start. It's funny. Like literally, up until like last week, I was getting a little down.

I'm head of our acquisitions team here and I was a little down. You know those times where I'm like, literally, nothing. been happening like literally for the past month and a half i feel like we're spinning our wheels like things are falling off the board nothing's going back up and then literally just a week ago almost like the floodgates open i literally had a couple opportunities come in just out of nowhere and um and and our pipelines getting filled back up and we've got some momentum going again and we're excited so that's good it happens to the best of us man you can hit those slumps and just be like oh my god is the market shifted and i don't know what happened and yeah i was down i was i was kind of

prepping my partners, I'm like, guys, like, I'm, you know, like, I know, like, I know we have like 11 months left or 10 months left, but man, it's, it's looking rough, man. How it's going today? I don't think there's any way that I'm going to be able to meet this goal, you know, and just kind of plant the seed now so that I don't get, you know, a bunch of crap in 10 months when I, you know, completely failed this stuff. I told you way back in, so, yeah, to push through those slums, let's talk about that because I think there's a lot of people experiencing that right now, thinking,

Stuff like direct mail doesn't work anymore and PPC is too competitive and expensive. And, you know, Facebook is like now playing games with advertisers. And, you know, there's a lot of chitter chatter negativity going on. But we all experience that. The best of us will experience those slumps. And I don't know, you tell me that my whole philosophy is just stay consistent with the activities that got you in the first place. And what we'll find is the money that we make today is a lot of times based off

of activity we did 60, 90 days ago, right? Yeah. I'd imagine for mobile home parks, it's probably stuff that you were doing a year ago, right? It was like our deal cycles way long in the years. I mean, we've had deals that have literally taken from first point of contact. They've taken two years to close and sometimes more than that. So, yeah, no, but the consistency is the key.

It really is. I mean, you know, just being consistent with what works, don't slow down on the direct mail, you know? Like, make sure that you're keeping the right data and analytics to really measure what's happening, right? so that you're not just haphazardly spending your money on things that maybe truly aren't working anymore, aren't working as effective. You need to change it up a little bit.

But consistency is the key. I mean, my personal saying is that there's always going to be, it's all timing. So there's always going to be a point in time in a owner's life where they either need or want to sell. One of those two things is going to happen. There's many different reasons why each one might occur in a owner's life to where they become a seller. And the goal is to get your message in front of them when that day comes, right? It's kind of like, you know, the credit card or like the tire advertisements, like only once every four years if you're a normal driver, if you drive 10,000 or 12,000 miles a year, do you need a new set of tires in your car? But yet, I guarantee at least at least two times a week, probably sometimes more, there's freaking tires plus and, you know, tire mart and all those.

Like, they're always sending advertisements knowing that one of those days, either you just hit like a nail on the way home and now you need a whole new set of tires or it didn't pass inspection if you're in one of those states, you know, and you need new tires. Like, their goal is to get the timing right. They would have to send you one, you know, the same week you've got new tires. You wouldn't have held on to the damn thing. You'd have thrown it away. And then you'd have been scrambling to find a tire place, you know, when you actually need a new tire. Same thing with credit cards, right? I mean, they see them nonstop and very few times they ever get used.

But hopefully they'll get you on the day that you need a, you need a credit line or you're looking for maybe a new point system, you know. So it's a great way. Very, very similar. Very similar. Totally. 100%. And only people that have been in this game for a little while actually recognize. that. People are just getting into it. And if they enter into a slump and get started,

they're like, oh, this real estate thing doesn't work and they quit. Right. And I guess just the lesson there is that everybody goes through it. And consistency is what prevails. Yeah, it's kind of like when, you know, during the recession, a lot, you know, during downtime, whether it's a recession or just a down slump, a lot of people see something at work. And so their immediate reaction is to pull back. is to slow down with whatever they're doing. If it's marketing, like, right, they lower their budget, their marketing budget. They stop doing as much direct mail, whereas you should be really doing the opposite at those points of time, which is kind of counterintuitive, you know, but you need to pump it out more.

Because honestly, if you're feeling that way, I guarantee it's affecting your other competitors as well. They're going through the same challenge. So do the opposite of what they're doing, you know, beef it up. And I guarantee you'll see some results from it. You have my office bugged or something? What's that? I said, do you have my office bug?

Oh, this is your gospel? I think I just said that yesterday to my team. Great. So you've got a podcast. I think you and I maybe a handful of others, some of the longest running real estate podcasts. And, you know, you talk a lot about real estate. What do you wish you could talk about more

that you don't get the opportunity to? Man, that's a great question. You know what I enjoy, one of the biggest things I've enjoyed on my show, and I wish I could do more of it. And I'll explain with the challenges of why it doesn't happen as often is I've had some guys in my show. So I've got a, I've got two shows. I've got a mobile home park investing show.

And then I've got a show called Real Estate Investing for Cashflow, which is where I interview guys that are commercial real estate investors. And I've had guys on from all different types of asset classes, whether self-storage or retail or office or car washes or, you know, I mean, the list goes on and on. I've had some old school guys in the show that literally, probably a handful of them that One guy he owned a couple billion square feet of office in Chicago. He's been around for like 70 years. Guy was like 88 years old.

I mean, he started when he was like 16. And he didn't even know what a podcast was. He had no idea how to have some people help him like get on the show. And the amount of information and wisdom gathered from someone like that that's been through not just one downturn, not just two, but multiple downturns, multiple challenges, multiple capital markets. I wish I could do more of that. I wish it were more folks like that I could get on my show and have just candid conversations. It doesn't have to be about real estate. Just candid conversations about life and experiences and see it through their eyes.

I really enjoy that. So I wish I could do more of that. The challenge is they don't know technology that well. And they surely don't know what a podcast is. You know, I ran across somebody like that once. And I got probably, I think was probably the most valuable advice and lesson that I've ever received since. and I'll share it with you, but what was the biggest thing you took away from that one person? You know, with him, with that guy I'm speaking of one of the interesting, there's a couple,

there's two really interesting things. He really did follow like the Warren Buffett philosophy of just really having long-term projection, investing projection. So that was one thing. Like he was an office guy. He knew office doesn't always do good, but he knew he was in for a long haul. He wasn't in just for the one-up cycle. And then, you know, he's going to try to get out the peak. He wasn't going to try to time it. So he was very, he was very focused on keeping his leverage points really low. So he knew that he would go through ups and downs.

He knew that there would be points in times where he had 60 or, you know, or 40 percent vacancies in his office buildings, which could be catastrophic to majority of folks that keep 70, 80 percent leverage points in their properties. And so he was very focused on low leverage, not overpromising to his investors. So his returns were affected, right? His cash from cash returns weren't as substantial as maybe some of his competitors. But the longevity of his investment cycle and the stability that he offered his investors allowed him to continually outshine those competitors that came into his space and came out of the space,

came in and came out. The guy, he was still there, you know, 50, 60 years later. And he's seen people come and go, come and go. And you just play it safe. He played it safe and consistent. So, I mean, it's a very simple elementary lesson. But, you know, we very much practice. practice that in our business. Our LTV, our leverage point across our portfolio runs in the low 60 range.

We surely could probably get much higher cash on cash returns by leveraging the properties much more. I know there's probably, we're leaving some equity on the table, but we're surely prepared for downturn, you know, and I feel like we would thrive through it because of that. We wouldn't have, we wouldn't have those concerns. We wouldn't lose sleep at night about being over leveraged if a catastrophic event occurred like 2008. Right. Yeah, it's one thing to read some advice like that on a meme on Instagram

and something entirely different to hear it from somebody that's been through it, right? I remember when one of my very first RIA meetings I ever went to, there was an old guy. He'd made a fortune with one bedroom, one bath apartments, which is like the thing that everybody. It scares you. He was scared of it.

Yeah. Right. And it was really fascinating. And it was just like, wow, there's a million ways to make a million bucks in this business if you do it right. And they had asked them, one of the questions was, if you had to start all over again, what would you have done differently? And his answer totally set me off on a whole new journey was, I wish I would have bought more

and sold less. Yeah. I guess I hear that. Oh, my God. That's his biggest regret sitting up there at 90-something years old. And he just thinks of all this, how much wealthier he would be if he just didn't sell anything. Yep. So that's why I go through that gut-wrenching decision all the time. And we're not really sellers. You know, and I'll give you the flip side of that story. So we're not sellers. We don't consider ourselves sellers. We did sell a couple assets that if you'd ask us the prior year, if you'd ask us in 2017, like, you know, would you consider selling, you know, this out of the other property? Would be like, no, absolutely not. Like they perform incredibly well. Our basis is really low in them. I mean, no, it just doesn't make sense. You know, they're not making any more mobile home parks. No, we're not selling. And last year, we had, uh, towards the end of the

year we had some, um, what I felt to be ridiculous unsolicited offers come in for a couple of our properties that you never lose by taking money off the table. So like I, I subscribe to the don't sell, um, because ultimately, um, it's, it's the way to build wealth. I mean, think of it from a long term horizon, but also there is a chance that like there's, there's, there's, there's risk associated with that to a certain extent. There is no risk with taking money off the table. Like, there's never going to be risk with truly exing out of a property, realizing that those capital gains, sucks to pay Uncle Sam. Hopefully you've got another plan for you can 1031 or do something else with the money.

But in any event, you still don't lose in that endeavor, right? And so we're surely not sellers, but everything's for sale at the right price. And as long as you can truly leverage that and have a plan to leverage it into something bigger and better, I think it's quite our right to do so. Right. Well, it's one thing to sell to improve your portfolio. It's another thing to sell and go have fun. Right, right. Absolutely. I think it was an audience full of fix and flipper, so I think that's who he was addressing, but I agree with you 100% on that. What is something that you hear in the real estate investing world that you hear over and over again that makes you cringe when you hear it? Not to get started today. You know, like, you know, I agree that we've been.

on an uprun for a long period of time. And my personal opinion is the folks that basically say, I'm keeping my money on the sideline or I'm not doing this out of the other because there's a recession coming or just they're looking for an excuse not to do anything. And so they want to sound smart without taking action. Absolutely. Exactly. They want an excuse for not taking action. And, you know, I do agree that it's more challenging to find deals that you know, I kind of talked about that a little bit before the show. You got to work a little harder. You got to work a little smarter. But that's okay, right? I mean, that's just all part of the business, right? There's ebbs and flows. And so there's, again, there's always going to be a point in time when a seller

needs or wants to sell. Your goal is just to be in front of them when that point in time comes. I don't care if it's single family or mobile home parks, multifamily, self-storage, whatever it might be. And so don't wait. Like, there's not like a right or wrong time to get started as a investor. And so do it today. whatever your, your, your, your asset of choices, whatever you decide you want to do. There's a thousand on different ways to make money in real estate. You can do turnkey. You can do fix and flips.

You can do buy and holds like you do. You can do mobile home parks. You can do everything else. I mean, but just do it. Take some action and have some intention behind it. Your analogy of the tire shop and the credit cards, I think is so perfect for real estate as people are, are looking for the, when is their market going to be up? When is it down? When should I get in? Just like you're saying. And it doesn't matter what the market is doing. It's not a good or bad

market. That's an up or down. And in every market, there's a relative low price to buy at and a relative high price to sell at. And that's always going to happen because life happens every single day, right? You get a flat tire every day. You run into a situation where you need a credit line that happens to somebody every day. And the same thing with sellers. The motivation, something in life hits them, causes them to be a motivated seller. That happens every single day. It's great advice. Yeah. The advice I give is figure out how to get creative, right? Because it's funny. I've got some friends that aren't in real estate. They really don't know anything about real estate. They own a home and that's about it. And a couple of friends over the years that I've heard over the last probably two

years, you know, like they're in their primary residence. Like they've gained a ton of equity in this thing over the last couple years. And they're like, you know, we got whatever half a million dollars equity here. We're going to turn around. We want to, you know, buy another home in a neighbor. We really want to live and whatever it might be. And they start shopping. They're like, holy crap, the prices are so high. And I'm like, right. You're getting a very high inflated price for your home. You're selling it. But like that doesn't, you know, it's like a linear exchange into something that also appreciated at the same rate, right? And so you just got to figure how to get creative. I mean, there's still ways to make money in these types of markets.

You just got to get a little more creative, be more creative than the next guy. The few years I was a real estate agent that happened all the time. You dealt with a seller that was demanding to get more for their house and then they'd go to buy a house. How could they ask that much for that? I was like, you're just asking that much for yours. It's funny. Kevin, if there were three guiding principles for your success, three guiding principles. For mine or advice to do others? This is for yours, for you. And I'm asking the question a couple times, so you have a second to think about it. If there were three guiding principles for your success, what would they be? For the success that I've had? Is that, Is that how you're asking?

Your guy. Principles for you. Yeah, the one of the biggest ones, I don't know where I'd be at today if it wasn't for a mentor. And this is someone that came into my life. I'm very lucky. I'm very blessed because it was surely by accident, I wasn't really looking for him. I know most people go out looking for a mentor. He found me.

And so the universe kind of pulled us together. And this was back when I was 19 years old. And that's when they introduced me to real estate. And that's really what set me on my path. And so I know that I got lucky. And that normally is the case of how our paths crossed. and we're still great friends today, and that was 19 years ago. 20 years ago, wow, I'm aging myself here.

So, mentor. Yeah, absolutely, absolutely. And don't subscribe. You know, I get on bigger pockets every once in a while, I see people posting about, you know, don't pay for it. You know, you can learn everything you need to learn here. Like, it might be the truth, but like it's kind of like saying like you expect a four-year degree, a bachelor's degree without paying for it.

Like, yeah, I know there's online like classes now. There's different things you can get, like, you know, free, like different lectures from universities. You can get on Spotify and so you can probably get the knowledge there, but like it's going to be puzzled together, you know, bits and pieces here. If you really want to take action, you want to do it in a very direct, targeted manner, seek out a mentor that directly align with your investment philosophy and suck it up and spend the money and bring that person aboard and accelerate your results. Yeah. I've got two. I've spent $80,000 last year. and coaches and at 10 times that return.

Yeah, absolutely. No, I feel you, brother mindset of not paying for it. If you want to go fast, go for it. It's an investment. Absolutely, absolutely. One of the other ones is enjoy what you do. You know, like don't subscribe just to, you know, looking at Facebook posts, seeing like people hold checks up,

but how much money they're making and thinking just because they're flipping houses or wholesaling houses that's for you. Like real estate investing might be a good fit. But there's, again, a million in one different ways. ways to make money as a real estate investor. So find the one that you might have to go through a few, you know, but pick one, find one that directly aligns with your, whatever, it's your core values or maybe it's a lifestyle choice you're trying, or a lifestyle you're trying to build, you know,

kind of you can build this business around your lifestyle, but find something that you enjoy doing that like, yeah, I like the idea of a four-hour work week, but, you know, I don't know how realistic that is. And it shouldn't even be an end goal for yours because if you truly enjoy what you're doing, it shouldn't seem like work anyway. So I love what we do here. I love the staff that we have. We've got some awesome people on our team.

And it's fun, man. I really, I know it's goofy you to say, but I enjoy mobile home parks. I like the people we serve. I like our resident base. I like knowing that we're providing a clean, safe, and quiet,

affordable product and markets that aren't affordable. That's fulfilling for me. And I like the art of the deal and I like hunting down deals and getting deals done. So I enjoy it. If I didn't, I'd go do something else. Sure. All right. So seek a mentor.

Enjoy what you do. What would the third one be? Yeah. It probably goes back to find something that you enjoy doing, but dedication of a certain amount of time. So if you say, hey, I want to learn how to fix and flip properties. Ignore all the other noise. Ignore all the other shiny objects. We know there's a ton of them out there.

and dedicate a certain period of time, whether it's 12 months, 24 months. Don't think about anything else. Don't change your path. Don't listen to your buddies that just made X amount of money doing something else, a completely different strategy, and put the focus and put the time into it and dive, you know, both feed in and learn everything you can learn, listen to every podcast, you know, get that mentor, you know, go to go to boot camps, basically engulf yourself in that one strategy of that one niche.

And again, give yourself the time. to become good at it. I see so many people that kind of dive in and they get burned out before they got started, you know? Right. They didn't set themselves up mentally for the amount of time that truly takes to master any one thing. So, yep, fantastic. I love it. Seek a mentor, enjoy what you do. And I'd say invest in becoming an expert at what it is you're going after. There you go. Or at least being good at it, right? Really good at it. And if you're good at it and you enjoy it, there's nobody that's going to stop you. Boom.

Perfect. Kevin, let's end on that. If someone wanted to get in touch with you, what's the best way for them to do that? Yeah, two different ways. My personal website, Kevin Bup.com, you can go to the contact us page there. And then our company, if you want to learn more about what we're doing, the mobile home park space, it's sunrise capitalinvestors.com. And again, the contact us page, you'll be able to track me down through that. Cool.

We'll put all that in the show notes for you too. Awesome. All right, buddy. It's been a pleasure. Thanks, Matt. Always fun, man. I'll see you again soon. We'll do it again.

Yeah, absolutely. You take care. Thanks for having me. Alrighty, so that's it for today's episode of Thought Leader Thursday. I'll see you right here next Thursday for another episode right on the Epic Real Estate Investing show. Take care. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.