Latest / Go Big with Gib Podcast / Corey Harelson’s Blueprint for Real Estate Wealth

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Corey Harelson’s Blueprint for Real Estate Wealth · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Welcome to this episode of Go Big With Gibb.
• 0:16
  Speaker 1: Today I've got one of my very good friends, corey Harrelson, here on the show.
• 0:19
  Speaker 1: Corey, how are you today?
• 0:21
  Speaker 2: Doing awesome.
• 0:21
  Speaker 2: Gibb Excited to be here.
• 0:23
  Speaker 1: Yeah, yeah, absolutely.
• 0:24
  Speaker 1: We're very excited to have you.
• 0:26
  Speaker 1: Corey, if you could introduce yourself to our listeners.
• 0:29
  Speaker 2: Yeah, absolutely, my name is Corey Harrelson.
• 0:31
  Speaker 2: I have a mobile home park syndication company called Freedom Investing Group and I've been investing in mobile home parks since 2016 and also doing some other fun things trying to balance being a good father and living a fun life and running a real estate syndication business.
• 0:51
  Speaker 1: Corey, that's awesome, so talk to me a little bit about.
• 0:55
  Speaker 1: First of all, what part of the country are you living in?
• 0:59
  Speaker 2: I'm in Boise, Idaho, land of potatoes and hops.
• 1:05
  Speaker 1: Very cool and and um, you mentioned that you had a family.
• 1:08
  Speaker 1: I think before the show started, you mentioned that you had two children as well.
• 1:11
  Speaker 1: Is that right?
• 1:12
  Speaker 2: That's right.
• 1:13
  Speaker 2: Yeah, 10 and six and um, and and yeah, that's the they, they.
• 1:17
  Speaker 2: They were kind of a big driver for what got me into the um mobile home park and real estate game to begin with Back in 2015,.
• 1:28
  Speaker 2: I used to be a structural engineer before the real estate thing.
• 1:32
  Speaker 2: Back in 2015, I was working 60 to 80 hour a week, so I was working a ton and feeling like I was missing seeing my kid grow up.
• 1:38
  Speaker 2: At the time I only had one kid he was two, not even two, and I was just working all the time I wasn't seeing him.
• 1:45
  Speaker 2: And there was a week straight where I went without seeing him awake, like I would leave in the morning before he woke up, get home in the evening after he was asleep, um, and just literally never saw him awake.
• 1:55
  Speaker 2: And so then, um, it was I think on Sunday of that week.
• 1:58
  Speaker 2: It was I think it was about five o'clock and I was like, like I'm done, like I got to go home, I'm going to go home and put my kid to bed Gosh, dang it.
• 2:04
  Speaker 2: And so I went home early enough that Sunday to put him to bed and I went to take him away from my wife to go give him his bath and everything.
• 2:18
  Speaker 2: And he looked at me like I was a total stranger and it was like clawing and crying, trying something different.
• 2:23
  Speaker 2: It was.
• 2:23
  Speaker 2: That was pretty tough, but so I I, that's when I did what everybody else did and I read Rich Dad, poor Dad, uh, that same book that got so many people into it.
• 2:30
  Speaker 1: Um, it was like oh, my gosh assets that pay you.
• 2:46
  Speaker 1: There's a way out, yeah, so, um.
• 2:46
  Speaker 1: So what year was it when you um had?
• 2:47
  Speaker 2: that um aha moment where you were like gosh, something's got to change.
• 2:49
  Speaker 2: You know, I've got a small child and a family and I need to be at home more 2015, it was 2015.
• 2:51
  Speaker 2: And up until I had my kid, it was.
• 2:52
  Speaker 2: You know, I had my career, my wife had hers, and so I didn't really, you know, it seemed fine, but then at that point it was like I needed to do something different.
• 3:00
  Speaker 2: I couldn't, I couldn't keep doing that until I was 65 and just be an absentee parent.
• 3:04
  Speaker 1: Yeah, so talk to me about that transition.
• 3:06
  Speaker 1: How did you make the transition from being a structural engineer to investing in mobile home parks?
• 3:14
  Speaker 2: So originally when my wife and I decided to get into real estate, we were going to do duplex, threeplex, fourplex was our original criteria.
• 3:22
  Speaker 2: We have to pick a niche.
• 3:23
  Speaker 2: That's the niche we picked.
• 3:24
  Speaker 2: I'm an engineer, I'm left-brained, so I built a spreadsheet pro forma spreadsheet.
• 3:28
  Speaker 2: I figured out how to build that and I started analyzing deals and I quickly got discouraged.
• 3:32
  Speaker 2: A lot of the deals, even back then, the price to rent ratios just weren't great.
• 3:37
  Speaker 2: They weren't going to cashflow very much, if at all.
• 3:40
  Speaker 2: And then I stumbled on a mobile home park for sale on Craigslist of all places.
• 3:44
  Speaker 2: It was a little.
• 3:46
  Speaker 2: This was just me and my wife investing our money at the time and so it was a little nine lot thing.
• 3:50
  Speaker 2: Didn't end up buying that one, but I punched that into my spreadsheet and it looked a lot better and it kind of opened my eyes and said, oh, this is odd.
• 3:59
  Speaker 2: So I ended up syncing up with the only person I knew in real life who invested in real estate.
• 4:04
  Speaker 2: He was a real estate agent and he had some rental properties and I I met up with my friend Matt.
• 4:09
  Speaker 2: I said, matt, I'm I'm thinking of doing something crazy and I need you to talk me out of it.
• 4:12
  Speaker 2: I need you to tell me why I'm thinking of buying a mobile home park.
• 4:15
  Speaker 2: And he, he, he said oh no, I know guys who own those.
• 4:19
  Speaker 2: They're, they're, they're cash cows.
• 4:20
  Speaker 2: And so I just kind of dove in and learned as much as I could and we bought our first park in 2016,.
• 4:28
  Speaker 2: A little 12-unit thing, a 10-minute bike ride from our house.
• 4:32
  Speaker 1: Wow.
• 4:32
  Speaker 1: So talk to me about the advantages of investing in mobile home parks compared to something like multifamily.
• 4:41
  Speaker 2: Sure, yeah.
• 4:41
  Speaker 2: So mobile home parks and multifamily they're both housing, so they have that in common.
• 4:47
  Speaker 2: They're both rental real estate, but there are some pretty big differences.
• 4:50
  Speaker 2: So, first off, just as far as demand goes, mobile home parks are the most affordable form of housing in the country, and we're in an affordable housing crisis right now, so that's huge.
• 5:00
  Speaker 2: The only form of housing that I know of that works from an affordable standpoint without government subsidies.
• 5:06
  Speaker 2: So there's affordable apartments, but typically those you've either got incentives to develop it and keep the rents low with LIHTC, or you've got direct subsidies to residents with like a section eight.
• 5:16
  Speaker 2: There's some sort of government subsidy that makes the apartments affordable.
• 5:19
  Speaker 2: But otherwise I mean, the average apartment rent in the country is somewhere around $2,000 a month right now, which for most Americans is not affordable.
• 5:26
  Speaker 2: So, whereas mobile home park rent, some of our most expensive parks just passed the $500 lot rent mark, so they're much more affordable.
• 5:35
  Speaker 2: So from a demand standpoint, you've got that.
• 5:38
  Speaker 2: And then the other big difference is that in a mobile home park, typically in most cases the resident will own the home and we will own the land.
• 5:47
  Speaker 2: So it's really they're just renting to be able to keep their home on our land.
• 5:52
  Speaker 2: So we're both owners, we're in it together, so they own the home, we own the land.
• 5:56
  Speaker 2: We both have an incentive to want to make the community nice, and so typically when we come in and try to find an undermanaged community, once we come in and start actually fixing things up and doing the CapEx and taking care of the deferred maintenance, the residents, once they see that, will by and large get behind us and be appreciative, and so we tend to.
• 6:17
  Speaker 2: Even though it's a lower income tenant, we do have a high quality of tenant typically and there's some other advantages with that as well where if the leaky toilet leaks it's not our toilet, it's their toilet.
• 6:29
  Speaker 2: So the little ticky tack maintenance stuff is less, although we do have there's still the main water lines and main water pipes and things that we do need to maintain.
• 6:40
  Speaker 2: And then the other cool thing is the turnover is really low because they've got a bunch of equity in their home and they've got a really good.
• 6:46
  Speaker 2: You know they would have to pay much more to be able to share a wall in a crappy apartment somewhere, with neighbors banging on the wall when their kids cry, versus having a yard, being able to park by their door and it's cheaper, so it's a really good deal.
• 6:59
  Speaker 2: So they tend not to leave and when they do, they want to harvest the equity in their home.
• 7:03
  Speaker 2: So they tend to sell their home, which means they'll find your replacement tenant for you.
• 7:10
  Speaker 2: They still have to pass our background check, but it's actually, when we have turnover, quite common for us to have a zero day turnover.
• 7:15
  Speaker 2: They move out on the 30th, the next person moves in on the first, so we get zero cost, zero day turns.
• 7:20
  Speaker 2: So there's lots of good benefits to it.
• 7:22
  Speaker 1: Yeah, no, I love that.
• 7:23
  Speaker 1: Talk to me a little bit about the typical returns that a limited partner could expect in a mobile home park investment, and I'm not necessarily talking about any one specific deal, but like, based on the current market conditions and the current environment, I mean, what kind of returns would be typical and what's the hold period?
• 7:45
  Speaker 1: That kind of thing.
• 7:46
  Speaker 2: Yeah, absolutely so.
• 7:47
  Speaker 2: They obviously vary from deal to deal, but I think one of the and mobile home parks are well known for their cashflow, so it's typically going to be a bit higher cashflow over the life of the hold than your standard multifamily obviously varying deal to deal, but bigger than the cash flow, I think the thing they're not known for.
• 8:07
  Speaker 2: That, I think, is actually the bigger opportunity is the value add, Because there's just so many of these things that are so undermanaged and they're in an area where there's just desperate need for affordable housing and there's empty pads and you can bring in new homes and sell the homes and actually it's not only just, you know, maybe making it nicer and so that you can justify a little bit higher of a rent, but the bigger issue is actually being able to add units.
• 8:31
  Speaker 2: It's like being able to add a floor to your apartment building, so you're actually adding extra supply of affordable housing.
• 8:37
  Speaker 2: So the value add with that is huge.
• 8:39
  Speaker 2: So every, every lot that you fill, depending on the area, could be worth $60,000, $70,000, $80,000 of extra equity into the deal.
• 8:51
  Speaker 2: So the value-add piece is huge.
• 8:53
  Speaker 2: So our typical plan for the hold period is these are assets that are going to be good for a really long time and once they're full, it's a lot of work.
• 9:03
  Speaker 2: To get them full, you have to bring in the capital and bring in the homes and get them set up and there's some construction that goes along with that.
• 9:08
  Speaker 2: But once they're full, they're very low maintenance, very low risk, very stable.
• 9:14
  Speaker 2: They were one of the best performing assets in both the great recession and through the pandemic, and so the idea is that we want to hold these for a really long time.
• 9:24
  Speaker 2: So I'm not looking to.
• 9:26
  Speaker 2: So we do some deals sometimes where we will sell, uh, but but for the most part, our plan is to build up into a cash out reef, so we'll we'll improve the value and then do a cash out refinance to get investors their capital back, uh, which is typically your mileage may vary, but typically a non-taxable event in a cash out refi.
• 9:46
  Speaker 2: So there's this no tax event.
• 9:48
  Speaker 2: You get your capital back and then everybody, including the investors, still owns it and we can cashflow for the longterm.
• 9:53
  Speaker 2: So that's usually our strategy to.
• 9:55
  Speaker 2: It's super cool because you can take the same chunk of capital and just build up this portfolio over time.
• 9:59
  Speaker 2: You don't lose the asset when you like you would if you sell and you also don't lose the asset like you would if you sell and you also don't trigger the huge depreciation recapture and all the tax headaches.
• 10:11
  Speaker 2: So that's our typical business plan with them.
• 10:15
  Speaker 2: And then, as far as returns go, I mean we're usually aiming for with conservative underwriting, to be targeting IRRs in the high teens or up around 20 is usually where we're targeting.
• 10:30
  Speaker 1: So you're basically I mean you're buy and hold, investing.
• 10:34
  Speaker 1: Then it sounds like I mean you're looking to hold the mobile home park.
• 10:37
  Speaker 1: You know, potentially like I mean it could be 5, 10, 15, 20 years.
• 10:40
  Speaker 1: It could be 5, 10, 15, 20 years.
• 10:44
  Speaker 1: I mean, is there any cap to how long you would expect to hold it, or is it just kind of like you know, as long as um, all the economics look good and and and we're increasing value and we're getting cashflow, we're just going to hold this property as long as possible.
• 11:00
  Speaker 2: So most of our deals it's as it's it's a hold as long as possible, and so we're always looking to partner with people who are, who have a long-term mindset.
• 11:08
  Speaker 2: We're not looking, we're not flipping these things.
• 11:10
  Speaker 2: Uh, typically, that's it.
• 11:12
  Speaker 2: I mean we've.
• 11:12
  Speaker 2: We've partnered with some other people on somewhere that looks like man.
• 11:15
  Speaker 2: We've partnered with some other people on somewhere that's like man.
• 11:16
  Speaker 2: We can really shoot this value up and sell it.
• 11:18
  Speaker 2: So it's not that we don't do those deals too, but typically, typically, yeah, we're looking for very long-term hold.
• 11:24
  Speaker 1: Yeah, no, that's fantastic.
• 11:26
  Speaker 1: Now what are most of these investments?
• 11:30
  Speaker 1: Are they 506B or 506C, or does it just kind of vary from deal to deal?
• 11:35
  Speaker 2: So we've done both 506Bs and 506Cs, and so the last one, what we did, which worked really well, was to actually do a 506B to C conversion.
• 11:47
  Speaker 2: So we've got our investor list with investors that we personally know and we have a pre-existing relationship with, and so some of that we do have.
• 11:56
  Speaker 2: Some of them that are not accredited and we don't you know that have been with us since the first five.
• 12:00
  Speaker 2: Five, five that we syndicated were all 506B and so we don't want to necessarily leave them out, so that gives them a chance to get in.
• 12:07
  Speaker 2: And then it's actually a pretty cool thing you can do where you're not advertising the deal or anything in the, you're following all the 506B rules, and then you shut that down and then you open up a 506C, so it kind of lets people.
• 12:19
  Speaker 2: I think it's kind of the best of both worlds.
• 12:22
  Speaker 1: Yeah, no, that is the best of both worlds, because it's unfortunate when you've got a 506C and you can only accept accredited investors and you have a bunch of friends and existing investors that would like to invest but are not able to do so.
• 12:37
  Speaker 1: So that's kind of cool.
• 12:38
  Speaker 1: So is that a common thing for you to do, to go to do the 506B to 506C conversion, or is it just kind of something you did recently that worked really well?
• 12:48
  Speaker 2: We just did it for the first time on our last deal that closed at the end of May.
• 12:53
  Speaker 1: Now, you know, is it typical for you to acquire mobile home parks where you can add additional, you know, pads.
• 13:03
  Speaker 1: Is that common?
• 13:04
  Speaker 1: Or how often is it that you buy one that still has the meat on the bone, so to speak, where you can build additional pads out?
• 13:13
  Speaker 2: On almost all of them that we bought.
• 13:14
  Speaker 2: That's the case, and the reason is because they were almost all mobile home parks were built in the 50s, 60s or 70s.
• 13:22
  Speaker 2: That's when they had the big boom and they kind of stopped building them after the 70s.
• 13:25
  Speaker 2: There's a few that have gotten built since then, but not very many.
• 13:29
  Speaker 2: And so what?
• 13:31
  Speaker 2: The phase that we're in right now is you've got all these owners who are either first or second generation owners, who built these things.
• 13:37
  Speaker 2: They're older, they're kind of at retirement age.
• 13:40
  Speaker 2: They tend to not even have a mortgage on them.
• 13:42
  Speaker 2: They've owned these things forever, so they just haven't had much incentive.
• 13:46
  Speaker 2: The mailbox money is good enough.
• 13:47
  Speaker 2: They haven't had much incentive to actually go maximize them, and so you can drive around and look in your area.
• 13:53
  Speaker 2: There probably are some.
• 13:54
  Speaker 2: You drive around and look, and some are really nice, and there's probably another one right down the street from that one that has potholes in the road and the trees are overgrown and 40% of the lots are vacant.
• 14:04
  Speaker 2: And there's no reason for that.
• 14:06
  Speaker 2: The demand is there.
• 14:07
  Speaker 2: The reason is just because it takes just enough effort and just enough capital that, if the mailbox money's good enough, you might not do it, and so you know.
• 14:16
  Speaker 2: So you've got to actually have the money to bring the home in.
• 14:18
  Speaker 2: You've got to coordinate.
• 14:19
  Speaker 2: You've got to find the home.
• 14:20
  Speaker 2: You've got to coordinate with the mover to get it brought in.
• 14:23
  Speaker 2: You've got to coordinate with some kind of a contractor to come and build steps and hook up the utilities.
• 14:27
  Speaker 2: If it's a used home, you might need to renovate it.
• 14:29
  Speaker 2: So there's a bunch of steps to it that we can do, and when you do, it's very worth it, because then you can sell the home and recoup your capital, usually make a profit on the sale.
• 14:40
  Speaker 2: But even if you didn't make a profit, the boost to the equity is huge.
• 14:43
  Speaker 2: So the one we closed on in May is 79 lots and had 24 vacant, and so for every lot we fill, that's going to be $60,000 to $80,000 of equity times 24.
• 14:54
  Speaker 2: Of equity times 24, there's on a 79 lot park, there's there's a huge.
• 15:01
  Speaker 2: It's a huge, huge return on investment and that's 24 more families in a community that really needs the housing.
• 15:03
  Speaker 2: That's 24 more families that get an affordable place to call home.
• 15:07
  Speaker 2: So it's it's.
• 15:08
  Speaker 2: It's a pretty cool, it's a pretty cool thing.
• 15:10
  Speaker 2: So that's the type of parks that we look for.
• 15:12
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 15:16
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 15:29
  Speaker 1: If you want to secure your financial future, go to investwithgibbcom to schedule a 30-minute introductory meeting with me.
• 15:36
  Speaker 1: Gibb Irons Again, that's investwithgibbcom to schedule a 30-minute introductory meeting with me.
• 15:39
  Speaker 1: Gibb Irons Again, that's InvestWithGibbcom.
• 15:44
  Speaker 1: Yeah, no, that's fantastic.
• 15:46
  Speaker 1: So, corey, what parts of the country are you investing in in terms of your mobile home parks?
• 16:00
  Speaker 1: Is there a specific market that you're targeting or specific markets that you feel like have really good dynamics, or is it more just based on what's available out there, because I know there's a very limited supply of mobile home parks, right, like they're a lot more difficult to find, I would think, than multifamily, but I could be wrong.
• 16:18
  Speaker 2: There's a lot less of them.
• 16:19
  Speaker 2: So it's estimated there's 44,000 mobile home parks total in the country.
• 16:23
  Speaker 2: I don't know how many apartment buildings there are, but it's a lot more than that.
• 16:26
  Speaker 2: Yes, so the first several years we've got location criteria as far as what we look for in the metro, with population and, and you know, housing, median home.
• 16:39
  Speaker 2: We want $200,000 median home costs and and a hundred thousand people in the Metro.
• 16:44
  Speaker 2: But, um, we, for the first several years, we, we were pretty scattered, um, and it was good in the sense that we could find good deals, um, and it was also good in that we got to try out a bunch of locations and really figure out what we like and what we don't like.
• 16:58
  Speaker 2: So currently, right now, the market that we're targeting the hardest is Ohio, kentucky and Tennessee.
• 17:05
  Speaker 2: I really like those markets.
• 17:07
  Speaker 2: We're in a bunch of other places Minnesota, illinois, arizona.
• 17:11
  Speaker 2: I have owned in Michigan.
• 17:13
  Speaker 2: I used to own in Idaho where I live, have owned in Michigan.
• 17:18
  Speaker 2: I used to own in Idaho where I live, um, um, but I like that.
• 17:20
  Speaker 2: I like those locations.
• 17:20
  Speaker 2: The big thing I like about those locations, compared to the others, is the uh, if you're filling in homes, it's honestly it's, it's the availability of used homes in those areas.
• 17:28
  Speaker 2: So up in Minnesota there's tons of demand where our parks are but it's really hard to find.
• 17:32
  Speaker 2: We we've got them pretty much full now but it's been really hard to find homes, find people who work on homes.
• 17:36
  Speaker 2: It's just a lot more work to get it done, whereas it just seems like every corner you go to there's a mobile home in those states and so there's plenty of used homes, plenty of people that work on used homes, plenty of people that move used homes.
• 17:49
  Speaker 2: So the whole process of the value add it just seems easier in those markets and the price to rent ratios are right as far as there's there's plenty of parks that need the value add, that are that are sold at a reasonable price, where it'll actually cashflow and produce good returns.
• 18:04
  Speaker 2: So I'm really really digging on Ohio, kentucky and Tennessee right now.
• 18:08
  Speaker 1: No, that's, that's fantastic.
• 18:09
  Speaker 1: Now, do you have any deals going on right now that you can talk about?
• 18:14
  Speaker 1: Do you have anything new coming on the horizon, or is that confidential what you've got?
• 18:22
  Speaker 1: I know you've always got something going on, but are you at liberty to talk about any deals you've got going on?
• 18:28
  Speaker 2: We do have a portfolio under contract.
• 18:34
  Speaker 2: Our PPM is not quite done on it yet, so we're, we're, we're starting out 506 C, so I think it's okay for me to say it on that one, on this one, because of the size, but it's, it's, it's going to be really good.
• 18:45
  Speaker 1: I'll leave it at that.
• 18:46
  Speaker 2: It's it's in Tennessee and it's going to be.
• 18:48
  Speaker 2: It's it's in growing markets, it's it's going to be really good, so it should be coming out soon.
• 18:56
  Speaker 1: Okay, fantastic.
• 18:57
  Speaker 1: Well, I'll check back with you about that because that sounds like a very exciting opportunity and I'm happy for you.
• 19:03
  Speaker 1: So, corey, let's transition a little bit.
• 19:06
  Speaker 1: I love talking to you about what you're doing with mobile home park investing.
• 19:10
  Speaker 1: I think it's a really good asset class.
• 19:13
  Speaker 1: It's a great asset class.
• 19:14
  Speaker 1: It's a great place to be.
• 19:16
  Speaker 1: I've always personally wanted to do something in mobile home parks, but I just never have, and so, anyway, I think it's fascinating.
• 19:23
  Speaker 1: But let's transition now and talk a little bit about mindset.
• 19:29
  Speaker 1: I know that you're a super intense guy.
• 19:33
  Speaker 1: You've done a lot of different things.
• 19:35
  Speaker 1: You had a career climbing.
• 19:37
  Speaker 1: I think you've done a lot of ultra races and maybe Ironmans.
• 19:43
  Speaker 1: I don't even know all the stuff that you've done, but I know you've got a lot of athleticism and you're just a really intense guy that likes to really push the envelope.
• 19:52
  Speaker 1: Through that, you developed a really good mindset, a really strong mindset.
• 19:58
  Speaker 1: Talk to me a little bit about mindset and how important that is to you in your investment journey, and then I'd love to hear a couple of stories from you about how you have used your mindset to overcome different challenges.
• 20:12
  Speaker 2: Yeah, absolutely so.
• 20:13
  Speaker 2: I used to.
• 20:15
  Speaker 2: All I wanted to do for many years was climb, and then at some point I had an accident where I blew up my hand and had a kid at the same time, so I needed to scale back time.
• 20:26
  Speaker 2: So then I ended up ultra running a bunch and, um, I have learned a bunch of lessons in these that seem like they translate over to investing pretty well, um, especially because these are things where you are constantly evaluating risk and where things are going to go wrong, and so you have to be able to cope with that.
• 20:45
  Speaker 2: So, yeah, so I've got a couple stories I guess I can share with you.
• 20:50
  Speaker 2: So, I think, a bunch of parks that have done very, very well, and and all the awesome things about mobile home parks.
• 21:11
  Speaker 2: But I had one that did not go well, and fortunately it was just a.
• 21:14
  Speaker 2: It was it was a personal money.
• 21:16
  Speaker 2: I didn't have any investor money in it, thank goodness.
• 21:19
  Speaker 2: But I bought this park.
• 21:21
  Speaker 2: It was in a beautiful location, right on a river, stand-up paddle boarders going by.
• 21:26
  Speaker 2: It was nice, well-maintained, did all my due diligence on it, but it had one feature that I hadn't done before, and this was prior to me doing any syndication stuff, so it was just mine.
• 21:39
  Speaker 2: But it had a, had a wastewater treatment plant, so it was private sewer, effectively there was no city sewer to hook into and that that worried me.
• 21:49
  Speaker 2: So I did a whole bunch of research on how to do due diligence on these things and I I had it inspected, I talked to the, you know, I interviewed the operator.
• 21:57
  Speaker 2: That had a great operator.
• 21:59
  Speaker 2: I talked to the city, the county, the state, the federal EPA, everybody.
• 22:02
  Speaker 2: Everything was tip top.
• 22:03
  Speaker 2: I did all the due diligence that everybody said you should do.
• 22:06
  Speaker 2: Everything's fine.
• 22:07
  Speaker 2: I screwed up and I made a big mistake on that one.
• 22:12
  Speaker 2: And here's the tip.
• 22:17
  Speaker 2: Here's the tip.
• 22:18
  Speaker 2: If I'd done this one thing, this deal would have been a home run.
• 22:20
  Speaker 2: Here's the tip.
• 22:20
  Speaker 2: Here's the tip.
• 22:20
  Speaker 2: If I'd done this one thing, this deal would have been a home run.
• 22:22
  Speaker 2: I took the appraiser's word for the replacement cost for the insurance, so they had the appraisal.
• 22:29
  Speaker 2: In the appraisal they list the things that you're going to insure and they list their recommended replacement costs, which is what the insurance uses to set the values.
• 22:36
  Speaker 2: And that was way off.
• 22:38
  Speaker 2: Everything was fine for about a year and then the building had a fire and the plant totaled and that replacement cost was off by about a factor of 10.
• 22:45
  Speaker 2: And it was terrifying.
• 22:47
  Speaker 2: Um, like, once I realized what was happening, I mean, we, we had to get this thing replaced.
• 22:53
  Speaker 2: I give I, I mean I, I had to.
• 22:55
  Speaker 2: I sat down with him.
• 22:56
  Speaker 2: I thought we were losing everything.
• 22:57
  Speaker 2: There was a point where I sat down and had a teary conversation with my wife.
• 23:00
  Speaker 2: Like I was crying.
• 23:01
  Speaker 2: I was like I think we're going to.
• 23:02
  Speaker 2: I had personally guaranteed the loan Right.
• 23:03
  Speaker 2: So I, like I thought we were going to lose the house and the whole nine yards it was.
• 23:08
  Speaker 2: It was really awful.
• 23:09
  Speaker 2: So I'll get back to how that one turned out, but I think it relates to my other story, which is, uh, related to an ultra marathon.
• 23:16
  Speaker 2: I was running, um, I, I, for several years ran ultra marathons, which is just anything longer than a marathon.
• 23:23
  Speaker 2: Um, and I typically do these on trails, over mountains kind of races.
• 23:28
  Speaker 2: Um, they're super fun.
• 23:30
  Speaker 1: Um, it's, it's, it's it doesn't sound super fun to me, but I'm I.
• 23:34
  Speaker 1: I'm going to take your word for it.
• 23:37
  Speaker 2: It's the food's much better too If you join a road race.
• 23:39
  Speaker 2: Everybody's eating goose, goose.
• 23:40
  Speaker 2: The aid stations on these things are serving breakfast burritos and pancakes.
• 23:43
  Speaker 2: It's great, um, uh, because you just need as many calories coming in as you can get.
• 23:47
  Speaker 2: But so, anyway, this one, this was the leadville 100.
• 23:50
  Speaker 2: I ran that in 2014, 14, I think, 2014 um, and so I I had never done this is my first 100 mile race that I had ever done.
• 24:00
  Speaker 2: I you start at 5 or 5 thirty in the morning.
• 24:03
  Speaker 2: I had run all throughout the day, and now it's, and now it's that night and it's somewhere, I think, around one in the morning to go.
• 24:12
  Speaker 2: So it was mile 70 something.
• 24:14
  Speaker 2: Um, cause I had about a, I had about a marathon to go and I remember thinking like I can't, I can't my legs.
• 24:31
  Speaker 2: This was, this was a Leadville, colorado, so it's way high elevation, you know it's.
• 24:33
  Speaker 2: It's one in the morning.
• 24:33
  Speaker 2: It was very cold and my legs were so sore and tired I couldn't actually move fast enough to keep myself warm.
• 24:40
  Speaker 2: So I had a giant down coat on because I was just basically shuffling at this point in the race and I made the mistake of sitting down next to a space heater in the medical tent and it was nice and warm and people were bringing me soup and stuff and I was in this total, just pity party.
• 24:56
  Speaker 2: I didn't train hard enough to be here.
• 24:58
  Speaker 2: I don't deserve to be here.
• 24:59
  Speaker 2: This is dumb.
• 24:59
  Speaker 2: Why am I doing this?
• 25:00
  Speaker 2: I got to draw I can't you know all of the negative thoughts that were going, because my legs were just screaming and I just couldn't move them.
• 25:09
  Speaker 2: And they brought this guy into the aid station.
• 25:11
  Speaker 2: They kind of carried him in sort of he had passed out cold on the trail.
• 25:16
  Speaker 2: They haul him in, they put him up on the table, they're about to hook him up to an IV, which is an automatic disqualification.
• 25:22
  Speaker 2: If you have to get an IV, you're out of the race.
• 25:24
  Speaker 2: And he kind of comes to and sees what they're doing, fights them off and staggers out of the tent into the night to keep going.
• 25:33
  Speaker 2: This guy who had passed out cold and I'm sitting here going oh, what's my excuse?
• 25:38
  Speaker 2: Again, like my legs hurt, all right, all right.
• 25:40
  Speaker 2: So I just get up and I just I had to take one step.
• 25:48
  Speaker 2: I had to, just I had to just not think about the fact I had a marathon to go and I had to just think about, like I can take one step and I can take another step and I think I can at least walk to the next aid station.
• 25:54
  Speaker 2: So if I can still walk, I'm not done, I'm just going to keep going.
• 25:57
  Speaker 2: And so I I just stumbled out into the night and I.
• 26:00
  Speaker 2: It was still a long time to go, but I did end up finishing the race.
• 26:04
  Speaker 1: So you ran a hundred miles.
• 26:07
  Speaker 1: What, what?
• 26:07
  Speaker 1: What was your time on that?
• 26:09
  Speaker 2: 28 hours and 40 some odd minutes so 20, 28 hours.
• 26:15
  Speaker 2: Yes, yeah, 28.
• 26:16
  Speaker 2: Yeah, so, but so I guess the lesson learned from that was you know, if you can take another step, you're not done.
• 26:23
  Speaker 2: Right, and so I thought I was done.
• 26:25
  Speaker 2: I was like there's no way I can do another marathon right now I'm.
• 26:27
  Speaker 2: I'm looking at the whole thing.
• 26:29
  Speaker 2: It's like how do you eat an elephant?
• 26:30
  Speaker 2: Right?
• 26:30
  Speaker 2: You, one bite at a time.
• 26:31
  Speaker 2: I was looking at the whole elephant.
• 26:33
  Speaker 2: I have another marathon to go.
• 26:34
  Speaker 2: There's no way I can run a marathon like this.
• 26:37
  Speaker 2: But I could sure just walk to the next aid station, which is just a few miles up the road.
• 26:42
  Speaker 2: I could walk.
• 26:48
  Speaker 2: So if you can keep going, you're not done.
• 26:49
  Speaker 2: And so I guess, getting back to my wastewater treatment plant story, yes, I'm sitting there having this teary conversation with my wife.
• 26:54
  Speaker 2: The plant was going to be insanely expensive, and not to mention the temporary pumping fees in the meantime, as soon as the insurance was covering that for a few months, and as soon as that ran out, I didn't know what we were going to do, and so I didn't know what to do.
• 27:08
  Speaker 2: I was kind of in the same thing, just throwing up my arms like we're doomed here and um.
• 27:13
  Speaker 2: But I said, okay, what can I do?
• 27:15
  Speaker 2: Well, I know a bunch of other people.
• 27:17
  Speaker 2: I'm going to just start calling and seeing if somebody has a good idea.
• 27:20
  Speaker 2: So I started making phone calls to people, um, friends who own parks, other things and the best advice I got was from my friend, blake, who said hey man, you just and I was like it's a personally guaranteed loan, all this stuff and he goes you just need to call your banker and level with them.
• 27:34
  Speaker 2: And so I did.
• 27:35
  Speaker 2: I picked up the phone and called, um, my, my bank, uh, that I had the loan with, and I said, hey, john, like we, I got a problem.
• 27:42
  Speaker 2: Like this is, this is what's going on.
• 27:44
  Speaker 2: Like I never want to be the person who's you know I mean I don't care if it's an investor or bank like, if someone's giving me money, I don't ever want to be the person who's not going to be able to to get that back.
• 27:54
  Speaker 2: But I said I got a problem and honestly, john, like here's what I've got.
• 27:58
  Speaker 2: I've got a HELOC, I've got an emergency fund, but it's not enough.
• 28:02
  Speaker 2: I don't know what to do here.
• 28:03
  Speaker 2: And he worked with me on it.
• 28:05
  Speaker 2: We had done the right things, we had increased the revenue.
• 28:07
  Speaker 2: We'd build back water and sewer, we filled in empty lots, We'd done the thing.
• 28:10
  Speaker 2: So the NOI had gone up quite a bit and we did a like a cash out refi on the park to cover the gap that my, that my emergency funds wouldn't do.
• 28:27
  Speaker 2: So, he, he.
• 28:28
  Speaker 2: So that's a, that's the power of relationships, and B, that's the power of hey, I can at least make some phone calls here.
• 28:34
  Speaker 2: You just got to like.
• 28:34
  Speaker 2: You may not even know all the steps, but if you can just figure out a next step, then you're not done.
• 28:39
  Speaker 2: And so, yeah, we did it.
• 28:40
  Speaker 2: We replaced the waste, we executed the whole replacement project of the infrastructure of this wastewater treatment plant.
• 28:46
  Speaker 2: Now it's got brand new infrastructure right.
• 28:50
  Speaker 2: And then we ended up selling the park for $800,000 more than we bought.
• 29:00
  Speaker 2: I bought it for $1.75, uh, and sold it for 2.5.
• 29:05
  Speaker 2: So $750,000 more than we bought it for.
• 29:07
  Speaker 2: So, um, I still ended up down on the deal, but not not nearly down as much as I would have if I just threw up my hands and quit, um and so.
• 29:15
  Speaker 2: So, yeah, so if you're, if you're ever in a tough pickle, don't give up.
• 29:19
  Speaker 2: Just look for that next step.
• 29:20
  Speaker 1: I love that.
• 29:21
  Speaker 1: I've had times in my life where I wanted to give up and I didn't really know where to turn.
• 29:30
  Speaker 1: A lot of times it can just be as simple as making a bunch of phone calls and telling people what you're dealing with and saying, hey look, this is my problem.
• 29:35
  Speaker 1: Have you ever run into anything like this?
• 29:37
  Speaker 1: Can you give me any kind of suggestions?
• 29:39
  Speaker 1: Sometimes it takes a lot of those kind of phone calls and you start to think like hush, you know it's never going to happen, but then you just never know where help is going to come from.
• 29:49
  Speaker 1: And I've definitely had some people in the past that you know I've.
• 29:52
  Speaker 1: I've reached out when I was at a point where I was ready to give up and somebody was able to give me that recommendation, like your friend saying for you to call the banker.
• 30:00
  Speaker 1: I mean that you know that was a game changer for you and it turns out that, like honesty was the best policy.
• 30:06
  Speaker 1: I mean, you called the banker, you, you, you, you shot them really straight.
• 30:10
  Speaker 1: You should, you know, told them what you were up against and they were able to help you, instead of turning on you and saying, oh gosh, well, corey, you know, I guess we're going to have to call in your note.
• 30:19
  Speaker 1: You really laid all your cards out on the table and it worked out and you ended up getting out of that situation with very minimal damage, considering you were in a very, very bad spot for a period of time there.
• 30:33
  Speaker 2: Right and I try to think of it now as if it's like lessons learned, right?
• 30:38
  Speaker 2: So I actually, and not even lessons learned, but like, what are the good things I learned?
• 30:41
  Speaker 2: Right?
• 30:41
  Speaker 2: So I I actually and not even lessons learned, but like, what are the the the good things I learned from it?
• 30:44
  Speaker 2: So I I think of that money like I have a I have a PhD in infrastructure replacement at this point and we actually did use that knowledge.
• 30:50
  Speaker 2: I did another deal that we bought um in Illinois, where we bought the property from someone who was in a similar situation to us where he had a failing well water system and he had the equity in the property but he didn't have the cash to execute the project that needed to happen.
• 31:05
  Speaker 2: It was about a $600,000 project and so we came in and bought it.
• 31:09
  Speaker 2: We got it at a very good price and he gave us a seller credit for most of the well system replacement.
• 31:14
  Speaker 2: So we got that at a very, very low basis, executed the replacement, which is done now, and now we's we have this a hundred percent occupied park where we save the community.
• 31:24
  Speaker 2: I mean, you can't have a community with no water.
• 31:25
  Speaker 2: We basically save this community and it's got brand new infrastructure, a hundred percent occupied, tenant owned home park.
• 31:31
  Speaker 2: Um, it's, it's, it's, it's pretty awesome.
• 31:34
  Speaker 2: So, um, I'm hoping I can find some more deals like that where we kind of use you, take that experience and make, make a lemonade out of the lemons cory.
• 31:43
  Speaker 1: Um, that that's.
• 31:44
  Speaker 1: That's fantastic man.
• 31:45
  Speaker 1: So, um, look for for the uh folks that have heard you here on the podcast today that want to reach out to you, what's the best way for them to contact you?
• 31:53
  Speaker 2: yeah, so we I've got actually a free pdf that kind of compares uh, mobile home parks to multifamily, and you can get that at PassiveMHPcom.
• 32:03
  Speaker 2: And LinkedIn is also a good spot too.
• 32:06
  Speaker 2: I'm on there a lot.
• 32:07
  Speaker 1: Yeah, yeah, you're super active on LinkedIn.
• 32:09
  Speaker 1: Enjoy following your content.
• 32:11
  Speaker 1: Well, man, look, it's been fantastic to be with you.
• 32:13
  Speaker 1: I really appreciate you coming on the show and look forward to running into you again soon.
• 32:19
  Speaker 2: Heck, yeah, thanks Gib.
• 32:20
  Speaker 1: Thanks, corey.
• 32:21
  Speaker 1: Look forward to running into you again soon.
• 32:22
  Speaker 1: Heck, yeah, thanks, gib.
• 32:23
  Speaker 1: Thanks, corey.
• 32:25
  Speaker 1: Thank you for listening to this episode of Go Big with Gib.
• 32:28
  Speaker 1: If you haven't already, go follow us on social media at Gib Irons.
• 32:36
  Speaker 1: We'll see you next time.