Latest / Real Investor Radio Podcast / Ep. 101 | Real Estate Investment Strategies in Mobile Home Parks & Much More with Kevin Bupp
Transcript
- Craig (00:12) Hey, it's Craig Fuhr. Welcome back to another episode of Real Investor Radio, joined again by Jack BeVier. Jack, good to see you today, Jack BeVier (00:22) Absolutely, good morning, great to see you. Craig (00:24) I'm just going to jump right into it and introduce our great guest today. We've got Kevin Bupp on the show. He's a real estate marketing professional with extensive business development experience and a sincere passion for helping others achieve above average and safe returns. has a proven track record in identifying and repositioning value add multifamily and mobile home parts. Love that. through a very disciplined due diligence and analysis approach. Kevin is also the host of two top 10 real estate podcasts. Kind of flexing a little bit there, Jack. We'll get there one day. Yeah, we'll get there. The podcasts are Real Estate Investing for Cash Flow with Kevin Bupp and the Mobile Home Park Investing Podcast, both of which he's prominently displaying behind him today. Shamelessly, Jack BeVier (01:01) working on it. Kevin Bupp (01:15) There we go. Craig (01:15) And you can learn you can learn more about Kevin reach out to him at Kevinbupp.com that's B-U-P-P or emailing him at Kevin at Kevinbupp.com. Kevin welcome to the show brother. Kevin Bupp (01:27) Yeah, Craig Jack, thanks for having me. Excited to be here. Craig (01:30) Yeah, man, let's let's just jump into a substantive conversation. I thought that I would do, you know, some some research today on sort of the state of multifamily, Jack. And, you know, what I found was is that, you know, obviously, with Kevin, Kevin jump in here anywhere, multifamily in 2025 is sort of a story of two worlds between stability at the core and strain at the edges. I was checking out Bill McBride's calculated risk newsletter if you all haven't checked out Bill's newsletter. It's just fantastic. And so Bill just did a story on the state of multifamily. Freddie Mac is reporting that single family serious delinquencies Jack which is 90 days or more. You know kind of ticked up. Nothing too significant still at like you know less than a little bit over a half a percent in July where agency portfolios remain rock solid. Fannie and Freddie Fannie's delinquency rate is the same. It's just above half a percent. But the rise in multifamily defaults is a couple of the main drivers behind that are in the CMBS side, Jack, where the delinquency rate is pushing seven percent right now in some markets across the country. So love to get your thoughts on sort of what we're seeing from that standpoint, Jack, and then really talk about, you know, is there a silver lining? our cap rates, you know, stabilizing our guys getting better deals. Are we seeing, you know, more transactions in the multifamily market? So yeah, jump in. Jack BeVier (03:00) Yeah, Kevin, I'm really interested in your take on this. This was like my kind of anecdotal experience was like, we've always monitored the multifamily market. We'd be in Mo we've dominions been mostly a single family buyer, but always would like to buy multifamily properties. I always just found that like the Delta and the cap rates between what I could get a deal. could get on the single family and the multifamily next door. I just preferred the return profile, the risk return profile of the single family that kind of switched up. last summer, I would say, or like, you know, last year, early part of last year, I started to see that multifamily cap rates were expanding while single family had continued to stay tight. And so, actually picked up a couple of multifamily properties last year. And so I got all excited about it. And I'm like, sweet, this is going to be like, you know, new phase of me, like buying multifamily stuff and adding it to the portfolio. And then over the winter and for the first two and a half quarters of this year, three quarters of this year, multifamily, and at least in my, in a local to me, tighten back up. And I was just getting blown out again and like, you know, couldn't, couldn't make it work. But the, know, kind of the relationships that had developed over that period of time with the brokers, you know, they Kevin Bupp (04:07) you Jack BeVier (04:15) You know, they've kind of consistently been talking about like, yeah, there's a, but there's inventory coming and there's situations that are like, in back there, working themselves out. People are trying different creative solutions to, to make ends meet where cashflow isn't quite as good as it needs to be, or the, we're getting to a balloon payment on a loan. And so like kind of just wait, just wait, there's still more coming. And I think we're just kind of seeing that now, at least in the Maryland area that, that that inventory is actually now starting to come out and. Kevin Bupp (04:35) Yeah. Jack BeVier (04:43) there's less capital available for it. And as a result, we're starting to see some cap rate expansion in multifamily right now. That's just been my local experience. What do you say? Kevin Bupp (04:50) Yeah. Yeah. And, and, and just for full transparency, we're, you know, we specialize in manufacturer housing. And while I have quite a lot of LP, you know, personal investments, with other multifamily sponsors, like that, that isn't our world. don't live and breathe it every day. But I mean, I think, I think, there's a lot to impact there. I think it's, sub market by sub market market by market, right? You know, I think there's a, you'd mentioned like you got, you had some deals look like, you know, things were expanding. There are going be some good opportunities coming out, you know, getting flushed out. But I think ultimately what's occurred is that a lot of two things. Number, number one, a lot, hasn't been hardly any bill. Anything that was that that's come online the last couple of years was already in planning four years ago, five years ago. Right. And so like there hasn't really been any new starts for the last couple of years. And so you had a lot of this excess inventory that's getting absorbed. And so, you know, now when anything comes back on the market, like there's a, there's a demand for that product, right? It's not excess inventory. In addition to that, you've got a lot of capital that's been on the sidelines that just kind of waiting and watching and, waiting for the right time, right. For the right opportunities to come out. So I think every market is, is living and breathing differently than the next. I do think that there's obviously going to be there's foreclosures and things like that that will be flushed out. I mean, I still, get emails from brokers and the multifamily stuff. I saw one just come out yesterday somewhere in Texas. I didn't really dig into it at all, but it was a, you know, a foreclosure, like a 650 unit apartment complex. Um, I mean that, you know, there's, there's still appetite for that. Um, I think a lot of these defaults were a direct result of two things. Number one, the debt they put in like high leverage bridge debt. Number two, uh, adjustable rate loans. And so To your point, Craig, you'd mentioned the low default rate of the agency stuff. It's because it's long-term, you know, fixed rates, right? And, you know, leverage points that were significantly less than, you know, the 80 % or sometimes depending on the capital stack, like 85 % on some of these bridge products that were put in place years past. And so... You know, it's just, I think there will be opportunity, but I think also there's competition of equal amounts that will be looking for that opportunity that comes out. And so I think in any of the major markets, I mean, like I'm in the Tampa Bay area to think that you're going to be able to buy a, you know, a larger multifamily property for a six cap at any time in the future, I think is foolhardy. That might be the case. Maybe if you, you know, if you go to maybe some Midwestern markets, you might find a little bit more cap rate expansion than that of a like a Phoenix or a Tampa or Orlando, you you name your large market, but, you know, I think, it doesn't change the fact that if you're a disciplined buyer and you work really hard, you look at a lot of deals, right? You, you turn over a lot of rocks, like you'll find something, right? Like that's what it comes down to. Like you're going to find something. You just gotta be disciplined in your approach and you gotta maybe work harder than the next. And so I always, no matter what, what the market's doing, I always feel there's opportunity out there. you know, 23 and 24 were literally our two biggest growth years that we've had in the last decade. This year, we thought we'd be able to maintain the same momentum and we worked incredibly hard at it and we looked at a lot of stuff. We bought some great deals, but for whatever reason, just we haven't transacted on as many in this calendar year. we work our asses off to find deals and find needles in the haystack and have capital available and have a reputation that you know, folks know that, hey, we'll never get to us like we can get the deal closed, no matter how high water, we'll get it closed, we'll get to the finish line. So anyway, I now I'm now I'm rambling, based on your original question. But yeah, I think there's there's a lot going on. You mentioned the CNBS, you know, I don't I haven't looked at these data points for quite some time. But you reference that CNBS is quite a bit higher their default and agency. And it was that was that specifically CNBS loans tied to multifamily? Or is that just CNBS in general? Craig (08:07) That's fine. it was CNBS tied to multi-family. Kevin Bupp (08:27) That's yeah, that's that's surprising only because you know, again, I don't know what I don't know. We've done a number of CNBS loans, but typically, you know, they're not like, they're not high leverage point loans are typically fixed for at the shortest five, most of time, they're 10 year term loans. And then, you know, a couple of years ago, and those are being originated, they're probably pretty competitive with where agency was that maybe not as competitive, but they were probably, you know, somewhat in line with where the rates were at. So a little shocking to hear that the CNBS multifamily loans have a literally a 7x default rate over that of agency. I'd be I'd love to dig deeper, figure out why that is. But I thought you were gonna tell me that that's also tied to like office because I offices. A lot of those loans are typically CNBS loans. And as we all know, offices having some challenges at the present time. Jack BeVier (09:12) Hey, I'm curious about, I'm curious about your experience as an LP investor. We're generally not like we're usually the sponsor when we're doing deals, but we made some LP investments back in late 2022 thought that we were being really picky about it. and, we were focused on the debt issue, right? Like having that longer term debt and, and so, you know, we didn't, thought we'd be, you know, as interest rates rose, we were like, Hey, you know, yeah, stuff's getting messy, but like, but we're going to be okay. Cause we got this long-term debt. And we still, I think we probably made like four investments. We still had one of them, like we're, we're now an activist investor because the dudes like, you know, just completely not, you know, executing extremely poorly. Right. and so now we've like rolled our sleeves up to try to get our hands on the keys and, know, cause it's just not going very well. How have your LP investments gone? Kevin Bupp (10:00) Yeah, it's all across the board and ours are, mine are pretty diverse. I think I'm an LP and I think it's like 20, 23 or 24 different deals. that was most of those were made probably between like 2018 and 2022 give or take. And it's a wide range. It's assisted living. It's a multifamily, some industrial in there a couple of retail investments. So mean, it's, all across the self storage is another one. And I would say that, There's one self storage deal out of the three that I'm in that, um, that, that is struggling. Um, good, good operator group, I think just, um, got out in front of their skis a little bit with, um, with, with, their underwriting, um, at that point in time when they bought it. And I don't know what else to say other than that, because they love the other stuff in their portfolio is, is doing well. just think they overpaid, um, at a point where there was FOMO, you know, fear of missing out. And so I think get back to being disciplined. I think they lost that disciplined nature that, that I knew them for. Um, when everyone else was fighting for the same deal. The multifamily stuff I have is a mixed bag. I'd say that the two that are challenged right now are literally debt related. They both have made capital calls, a number of capital calls. They've had extensions put in place by the lender. The lender's been cooperative. I would say both those operators are actually executing. you know, really well. They're communicating well, you know, they're owning it and they're in the trenches with everyone else. And so I don't have a complaint there. You know, it's just, you know, the investments, yeah, the investments, think just again, no new that that Rachel going to change as fast as they did as aggressively as they did. But, you know, if we had a crystal ball at work, then I'm sure they would have made different decisions back then. But I've got a couple other LP investments in multifamily stuff that Jack BeVier (11:33) but if you're just... Kevin Bupp (11:46) that kind of went in like they were already they were kind of a class properties. You know, there wasn't a massive like lost lease recapture. They were more coupon clippers. And so they, you they tied in agency debt right on the front end and obviously time typically will heal all wounds. Right. And so that's those things haven't produced as high of a return, but guess what they're paying, they're still paying distributions when everything else isn't. So, you know, it's a, it's a, it's a, it's really a mixed bag across the board, but really the multifamily stuff I have is the one that's suffering everything else with the exception of that one self storage deal. it's performing and it's paying. So maybe not, maybe not performing to the original projections entirely. Right. But, a few, a few that actually have exceeded expectations, but not many, most of them have missed the mark, but they're still paying out. Jack BeVier (12:28) Yeah. Craig, let's go. You go ahead. Craig (12:29) Hey, man, let's yeah, let's let's just jump in to give us like a brief background of, know, how you started, why you got into real estate and, you know, bring us up to speed to today. Try to truncate all that into a sentence or two, I'm sure. Just kidding. your time. Take your time. Kevin Bupp (12:42) Yeah. Yeah, yeah, I'll do my best to keep it brief. So, you know, I'm 46 today. I got introduced to real estate at age 19. So I was pretty young and bought my first property at 20. And I always joke and say that real estate found me. I didn't find it. So very grateful and feel blessed that that that happened. It was single family. Yeah. I met a guy, David, actually the girl was dating at the time her mother had been recently divorced. He started dating this local guy named David. David happened to be a local real estate entrepreneur, business owner. And that just Craig (12:59) that single family or ⁓ Kevin Bupp (13:14) by seeing him over at over at her house, I go visit her. I mean, we're like 19. We're in community college at the time. I got to know him. Like he was just a nice guy. And I didn't grow I grew up very, you parents both blue collar, neither went to college just you know, middle class. didn't have a lot didn't go without right like I was all relative I thought I thought we had everything we needed back then we weren't poor we had a nice home and all that but you know when a one one vacation a year like that type of thing but both my parents worked and we didn't have any business owners in our family I didn't know any business owners right that was just a very foreign world to me but I met David I you know a couple things I noticed you know the first couple times I met him he always dressed a little little snazzy at least in my eyes like compared to what how my parents dress he dressed a little snazzy drove a really nice car It seemed to be around. You know, I would go visit my girlfriend. Like if I was in between classes or something like that. And then David will like pop by the house randomly. And I'm in my mind, you know, people of that age had nine to five, right? They should be at work. They are not out and about at one o'clock on a Wednesday afternoon. And, and so that was just intriguing to me. And, as I became friends with him over the first couple of months, he just, he got to know a little bit about me. I mean, I was tending bar at the time, going to community college, not really knowing what I wanted to do. I'd always been entrepreneurial, literally. Craig (14:05) Right. Kevin Bupp (14:25) shoveled snowmode grass at a young age, got a paper out of H-12, learned how to install car stereos and people's cars back when that was cool to have loud stereos. You know, I was 14, 15, did my parents' garage and was always trying to make money so I could go buy the material things that were important when you're a kid, right? You know, sports equipment, bikes, all that kind of stuff. So, and I knew that my parents like it either came at birthday time or Christmas time. Like those are the two holidays where Craig (14:32) Nice. Kevin Bupp (14:50) Maybe I got one of the items that was like on a potential wish list, right? Outside of that, I got better go figure out how to buy it myself. and so you fast forward David, he, he invited me down to a conference of his. I, again, I didn't know anything about what he did other than he owned real estate and he had tenants that paid, paid him rent, right? He'd go around, collect rent. And, he invited me to a conference down in Philadelphia that he had already paid for, for himself and his, he had like a kind of like a silent business partner and his partner couldn't go and he invited me, honestly, I had no idea. what it was going to entail. I just said, yes. I'm like, this guy paid a couple of grand to go this thing. He's inviting me. he obviously seems to be pretty successful. I don't know what the I'm doing in life right now. So I want something. And so I'm to go and, and, and see what this is all about. And so that was, that was the start of it. I went to, it was Ron LeGrand. He's still around today teaching. think, yeah, yeah. ⁓ he's, he's, my God. Yeah. Yeah. It's it's a, it's a circus. ⁓ Craig (15:33) well, that's... Jack, have you ever experienced a Ron LeGrand event? Jack BeVier (15:38) not I've never had the pleasure never had the Craig (15:41) So I've met I've met Ron several times and went to a multifamily event and several years ago. And, you know, Ron's getting up there at age now. And so he's Jack. He's got a stage. And then there's like a table on the stage and he's sitting at the table in a chair with a desk and he's just reading from the frickin, you know, the notes in the big binder that you get. And I'm like, I'm not learning. Kevin Bupp (15:52) he's got to be 90 years old. Craig (16:09) I like you Ron, you're a good guy. You've got insane experience. But like, I think we could bring this info to life a little bit better to keep the huge audience, by the way, massive. There's probably still 150, 200 people in the room to see this thing who paid big money. So go ahead. Kevin Bupp (16:17) Yeah. Yeah, yeah, that's. Yeah, no, no. So that's how that event was I went to. was all about how to fix and flip and wholesale single family homes. That was the topic of that particular event I went to. And that's not what David's business model was. Like he was kind of a buy and hold guy. Like he would sell some stuff here and there, but mostly everything he bought, he would do a renovation and then just rent it. And he had done that for years. so anyway, I went to this conference, couple hundred people there. And what happens, I met a number of folks that I felt weren't really smarter than I, they knew something I didn't, but they were making in my eyes, just, you know, just tons of money, right? Like doing deals, wholesaling deals, making five and 10,000 checks or 30, 40 K on flips. and you know, met people that had portfolios or rentals where they were making 20 K a month of income. And like, that was just, was like, man, this is, this is it. I don't know how yet, but this is, this is what I'm going to do. ⁓ and so I came back from that event and, and I, I knew that if I didn't do, if I didn't take some type of action, it was overwhelming because I didn't know where to start. Jack BeVier (17:12) Mm-hmm. Craig (17:12) Right. Kevin Bupp (17:20) All I knew is that I knew David. and so, you know, I identified a few areas where he struggled. He was 25 years old or nine. So like technology was new to him. Like a flip phone was new to him. Like emails, like that was just a thing that, that was, that was a foreign thing to his business. And he struggled like returning calls and this, that, yeah. So I, I, I saw areas where I could maybe help him in his business. So I made him offer. He, he, he, couldn't refuse. It's basically, me come work for you for free. I only worked Thursday and Friday nights at the bar. I took 12 credits at a time. So I had a lot of time during the week and I said, let me come help you. Maybe I saw him struggling, put together a PowerPoint for a pitch for one of his private investors and like it literally took him four hours to do what should have taken like four minutes. Right. And so I helped him there. I helped him like, I'll say, Hey, let me return your phone calls for you. You know, he had rentals that were sitting around for two months. He's like, I don't know. I'm like, you got like nine voicemails in your phone. You know, like what do you like? Let me return these things. Right. And, And so I just acted as like an assistant. I was there helping him out, you dropping off leases, picking up leases, whatever he needed, you know, and I did that for like 14 months. And we spent a lot of time together and I got to learn, you know, how he did it, why he did it, you know, what he said, who he said it to, why he said it, all that stuff. that was, that was the start of it. I went and bought that first property, you know, about a year after he and I started working together and used about 7k of my own money that saved up bar attending and leverage one of his private investors. got to know over that year. Craig (18:17) That's great. Kevin Bupp (18:45) And he funded a piece of that project and that was it. was the first one. Bought as a rental, had intended to renovate it and just rent it. And I did that. And I realized very quickly that my model, it just couldn't mirror David to that point. He had been doing a long time. He had a lot of capital. had access to bank relationships and loans and all that. And I didn't. So I ended up selling that property within six months of me renting it to another investor that wanted a rental. And then I basically morphed my model a little bit more and I took to where I would wholesale a couple of houses. I got really good at marketing. I got really good at the whole, you know, guerrilla marketing stuff, bandit signs, you know, um, back then classified ads and newspapers, bus stop signs, even billboards, that kind of stuff. And, uh, and I got really good at marketing and you know, creating deal flow. And so I just started wholesaling a couple of keeping one wholesaling couple, keeping one. And, that really evolved over, you know, my early to mid twenties where I ended up Craig (19:21) was so much easier. Yeah. Kevin Bupp (19:35) building a pretty big portfolio of single family homes and some multifamily properties and then lost everything in oh eight kind of started over again in 2011. And that's when I got introduced to, you know, mobile home parks, one of the assets that we're focused on today. And so back in 2011, bought a mobile home park that was distressed, turned it around, kind of like kicking off your phase two of my journey and bought the second. That was Atlanta that first one was in Atlanta. It was a 34 unit. Craig (19:56) What area of the country was that? many units? Kevin Bupp (20:04) It was an REO is interesting. This is still like 2011, 2012. Everything was still in distress, right? There was a lot of fallout still from, uh, yeah. Yeah. You can buy everything. And this was a completely, it was an REO had been vacant for a year. They basically the, the, the servicing special service that came in and kicked out, um, all the tenants in these units, all these units are like park owned homes, um, which is not a standard practice or model today, but like they're all owned by the property owner. Jack BeVier (20:09) Atlanta was amazing in 2011 and 2012. Kevin Bupp (20:29) And the special services came in and literally removed everybody and it boarded up these units, took away the stairs and all that stuff. I mean, so when we bought it, it was empty. a lot of them have been vandalized. People came and stole the AC units and all that, but we bought it at a price where I was like, you know, if this doesn't work, I can at least sell off each one of these homes as a fire sale for probably 10 K pop still have the piece of land underneath it and make all my money back just by selling the homes. And like, that was my plan B. And so bought it, renovated it, turned it around, sold the homes off over the first year and a half. did a cash out refinance and I was off and running again for the second time. it just really, yeah, go ahead. Craig (21:02) I have to ask what happened to the girlfriend? Kevin Bupp (21:07) Yeah, we, I mean, we, we were still friends. I was, she went off, did her thing, got married, you moved out. actually lives out in California now. And, yeah. So it was remain friends split at, you know, but it what happened is I grew up Pennsylvania, small town, and I couldn't wait to get the out. just couldn't. just never want to hate cold weather. Number two, I just, needed a little bit more energy around me it was, it was a small town mentality. And so I moved down once, once I did about a year and a half of my own deals up there. Craig (21:16) You know the reason? Kevin Bupp (21:33) I wanted to move somewhere warmer. was always a water guy. And so I moved to where I'm at now, Tampa, Tampa, Florida, came down here and just went gangbusters. It was just like an eye opening experience. And so I decided I wasn't going to, I wasn't going to bring the, my buddy always says, don't, don't take sand to the beach. So my girlfriend and I split up at that time, I moved down to Florida and then really started fresh and kick things off with a bang. Jack BeVier (21:42) Nice choice. We'll play it. Craig (21:53) Kevin, I feel like we're living parallel lives only you've just executed better. I always like to tell the story of when I got started in 2004, I had no money, none. And I go out and take this class. Jack BeVier (21:59) Yeah. Kevin Bupp (22:00) Ha ha ha. Craig (22:08) get that first deal. My my girlfriend's father funded all the you know put up 100 percent of the money. We flipped it in 90 days and we netted ninety eight thousand dollars on our very first flip ever at this house this crappy house up in Baltimore. So but I wound up marrying the girl. She didn't get away. So yeah but but but strangely enough she's in Tampa right now looking at colleges with my daughter. So I might be out there sooner sooner than you think. Yeah man I've got to get someplace warm. Kevin Bupp (22:19) Wow. my gosh, that's funny. Craig (22:36) So then. Kevin Bupp (22:36) Yeah. So I grew up in, I grew up in Harrisburg, which is really close to Baltimore. I mean, an hour and a half away. Craig (22:41) worse. So bring us up to speed on sort of like your transaction volume over the last several years and what you're super focused on right now from an investing standpoint. Kevin Bupp (22:52) Yeah. So, so there's, mean, we, typically stay in our lane. And so literally up until 2020, all as we bought were mobile home parks. Like we just try to go all, all in, deep and be the best at, you know, in a particular niche. And so that's what we did. you know, grew, grew sunrise into, you know, pretty significant size organization at this point in our journey, we've got about 400 million of, manufacturer housing in our portfolio today. and, You know, I'm always, I'm always, I've always viewed myself and my partners kind of the same way. My business partner is just contrarian investors. You we start buying parks, we know us with buying them. And now it's a lot more competitive. It's a lot more difficult to scale a meaningful sized portfolio because they're not making more mobile home parks, but there's more people getting into the space that want to buy them. Right. And so you get this supply demand and balance that creates a challenge. It's great when you're selling, but it's very difficult to buy, you know, quality assets and quality markets at a you know, a price that can still provide a return on investment. It's more and more difficult to do. And so we're always open, you know, keep our eyes open and don't want to chase any shiny objects are really good about not doing that. But in I think about 2018, I interviewed a guy on my podcast, who was who owned a bunch of parking lots of parking garages. And, and I've been through these interviews before of asset classes, I didn't understand asking probing questions, getting a better understanding of the business model and That was a business model where I got off that call with him and I couldn't stop thinking about it. I call him the next day, you know, spend an hour on the phone and flew him to Tampa. Like, you know, two weeks later, um, spent the day with them and just, you know, I went to a bunch of my partner. started going to all the different association meetings, um, uh, national conferences, um, that revolve around the parking industry and just getting to understand it better. And, um, took our first dive into the asset class in 2020. So study it for a couple of years. and then start buying parking assets back in 2020. So those are the two verticals, mobile home parks and parking. Parking does consist of it's a little bit of a mixed bag. It's either a surface parking lot or a parking structure like a parking garage. But all of which are in, know, growing markets, downtown urban locations, you know, have, you know, variety of demand drivers of why people are parking there. So that's really the two things that we do. We do it day in, day out. We don't chase any other objects. We don't chase anything, new trends or anything like that. It's like, do what we're really good at. We've got a whole infrastructure in place that supports both those businesses. And just we try to be disciplined and buy assets that make sense and pass on the ones that don't. the last few years, I'd referenced this earlier and you just brought it up again about kind of what the last couple of years have looked like. I went through this 08, I went through 08, I lost everything, lost my primary residence, had, you know, tens of millions of dollars of judgments and liens and lots of, lots of fallout from that. So it was a eye opening time. Thankfully I was not married at that point, didn't have kids. And so a little bit easier to work my way through that and navigate that without the burden of a family and kids at that point. But you know, it still was, it was a rough patch for like three years. It was, it was great. In fact, not even three years. I started buying in three years after that all fell out, but it took me many years to really fully recover credit wise, financially, all that. but, you know, that made me never want to do that again. You know, I never wanted to go through that again. And so I kind of vowed to not that I feel like I did things wrong the first time around, but I just, I wanted to be Uber conservative, Uber disciplines, so that whatever we bought, whatever team we built would be sustainable through a, you know, another inevitable crash, whenever that might happen, right. Another cycle. And so back in like 2020, reason I bring this up like in 2020, 2021, 2022, when rates went to, you know, historical lows and real estate just went gangbusters, you know, we use that as an opportunity to number one, kind of prune out our portfolio a little bit, you know, just really take advantage of the market. People were offering prices that I couldn't make sense. I couldn't underwrite myself knowing the asset better than anyone else. And I couldn't make sense of how they were paying that. So we kind of peeled off a few. took some chips off the table. And then we bought, we did, we definitely bought stuff in those years, but not much. mean, I was watching people around me, like guys that I even helped get into the business, like, I don't know how they're buying that. I literally don't know how they're making the numbers work. And so we didn't buy a lot. weren't, we weren't able to be competitive as a buyer on a lot of stuff. And so, you know, that, was frustrating at the time. That was frustrating. In fact, that created some challenges internally in our business. Cause we had a lot of capital that wanted to find a home. we couldn't take it. We had to turn the way, you know, and if it's if we're not going to take it, they're going to take their capital and put it somewhere else, which they did. And so that created, you know, stress within the organization, because like, we wouldn't be able to buy deals. And we just found it challenging to place all the capital that was in the market. And, and so we didn't, and we just waited. And, and then now looking back, it was was a was a great decision on our part, because a lot of stuff that was bought during those years, people overpaid for it, got out in front of their skis. But it put us in a really good position. And number one, we never ever missed a distribution. Like we have literally had like 34 quarters of on time distributions. So we never, you know, never miss on distributions. And number two, we were one of the few men left, not left standing per se, but like that actually had liquidity, had a good track record, had a reputation. So when everyone else was on the sidelines in 2023 and 2024, whatever transactions came out that actually made sense. there wasn't nearly as much competition and you know, we were kind of like on the top of the podium, like, Hey, we'll buy it. You know, we'll take it down. And so it just allowed us to do quite a lot of deals in those two years, just to do the lack of competition and, just other buyers no longer in the marketplace, kind of running damage control and whatever they bought the years prior. And so, this year's proven a little more challenging. I think there's more capital coming back into the market. I've noticed that, personally, you know, Craig (28:07) Alright. Yeah. Kevin Bupp (28:24) a number of more bidders on projects that come out than what we historically seen the last two years. But again, we'll keep that discipline. It's treated us really well. We'll buy what makes sense and just pass on what doesn't and know that that will create like that's ultimately created a very sustainable, durable business for ourselves, for our employees, for our investors and everyone that's involved. Craig (28:44) Sure. Jack? Jack BeVier (28:47) What's the mix of stuff you've bought this year in terms of after-process? Kevin Bupp (28:50) Yeah, Yeah, so it's parking and mobile home parks and will wrap up this year with seven seven mobile home parks, which equates to about 27 million worth of parks and then potentially another 5 million one that might close by the end of the year. So 27 potentially maybe 32 million of parks and we closed the one parking garage, which was I think just over $25 million. So it's actually it's pretty pretty down the fairway right down the middle this year. last year was, we closed about 115 million worth of property and only 33 of that was parking. So what has happened with our parking stuff over the last five years? We look at a lot of parking to find one that checks all our boxes, a lot of parking, even if it's in a great market, a lot of parking that was built over the last, you know, call it three, four decades, a lot of it was purpose built to predominantly service office buildings that are in those local markets. I don't want that. I don't know how to fix that problem. And so while it might be a phenomenal city, phenomenal location, I don't know how to get the people back in the office, right? And, if they're not back in the office, then they're not using the parking garage. So we can't buy it. And so for that reason, we look at a lot of parking and we've only ended up buying one parking deal a year for the last five years, which is fine. Cause everything that we bought, it's performed flawlessly. It's been phenomenal. It's in great markets, but it has to check a variety of boxes, which a lot of, a lot of parking just doesn't do. Jack BeVier (30:10) Are those like, are the parking deals? I'm curious about that. I really don't know anything about it. Like, those primarily cashflow plays or are they some combination of like a cashflow play and a covered land play where you like the land appreciation and you're getting a check in the meantime and you like the combination of those return profiles? Like, how do you think about what a good parking deal is? Kevin Bupp (30:31) Yeah. Craig (30:32) And is there any value add that you guys do to that? Kevin Bupp (30:35) Yeah, all the above. It's a great question. Great questions. It's all the above. So the funds that we rolled out are a combination of parking and mobile home parks. They're, we classify them as growth and income funds. And most of the growth comes from the mobile home park. Most of the mobile home parks we do a value add, you know, like there's, there's multiple levers to pull. And so there's typically a much more of a growth opportunity there. Whereas the parking is much more of a kind of a core or core plus asset. However, with all that being said, Craig (30:53) Mm-hmm. Kevin Bupp (31:05) we still are not coupon clipper type buyers. You know, there's got to be at least a couple of hours that we can pull. you there's gotta be a little value add component on the parking to where we can, you know, you know, adjust the inefficiencies that are there, adjust parking rates, what have you. And so there's always a value add component, I would say is significantly more in the mobile home park side than in the parking. The parking's generating income day one. And so that's really the income strategy of our fund approach. But then as far as your question about like the cash flowing covered land play, so we always look at parking. We always look at it as parking first. Like we're not developers. I'm not going to speculate on what it's going to be or what it could be down the road. I want to know that it has the opportunity to be redeveloped. It has the opportunity for air rights. And so it could be something else. It will be something else, but to try to underwrite that and put a value on it, that's not our 14. That's so we don't take that approach. We look at it as parking first. ⁓ It's got to stand on its own as parking. We got to feel confident that Craig (31:53) Yeah. Kevin Bupp (31:57) based on the location, based on the, you know, the parking demand generators, like who's parking there, why they're parking there. We got to feel confident that each one of those income streams of parkers, we feel very confident it's going to be there for at least 10 years, if not more. And so, you know, I'll give you an example, like the parking garage that we just, the one we bought this year is in Philadelphia, it's in historic Philadelphia. It's a standalone parcel. Um, it's right next to the Renaissance hotel. Um, it's two blocks from the Liberty bell, um, three blocks from independence hall. mean, it's 70 % of the parkers that park there are transient parkers, meaning that they're tourists that are coming in to see all the multitude of attractions and historic Philadelphia. know those attractions aren't going anywhere anytime soon, right? I know that people will not stop visiting. Yeah. Uh, you know, Philadelphia to go visit all those historic sites. I know that will not happen. That's 70 % of the makeup. Craig (32:39) Ha ha ha. Jack BeVier (32:40) I'm moving the liver beat now. Kevin Bupp (32:48) And there's also a massive shortage of parking in that, in that area of Philly. And so like you can't, you're not building any more of it. It's very difficult to find parking. then, you know, last to the trends, you know, to the, tourists that are using it, the rest of the 30 % makeup is made up of, you know, four and five star hotels that are literally on that same block that don't have their own parking. They're big, the Renaissance. And I forget the other one it's on the same block. It's huge. They don't have parking. In addition to that, there's a you know, tons of restaurants and nightlife and everything else, right? Events that happen down there. And so I know that's not going to going anywhere anytime soon. I know that it will be in demand for many, many years to come. I also feel very confident that when parking is not the highest and best use, whether that's 10 years, 15 years, 20 years, whenever that comes, when that day comes that, that piece of land that it sits on. will be incredibly valuable, is incredibly valuable and has the ability to actually go vertical and turn it to something else. So again, we don't want to write that piece, but. Craig (33:42) Jack, I always think of I always think of that surface lot that was that I think it's one one light. It was there forever. And now it's one of the most gleaming, you know, high rise buildings in all of Baltimore. Yeah, I'm sorry. What is it? There you go. I knew you. Jack BeVier (33:53) 414 light. ⁓ Kevin Bupp (33:58) Well, you know, do yourself an exercise. Go back on Google Earth has a historical satellite view. If you go to the top, I don't know if you guys know that, but it's a pretty cool feature. it sometimes goes back to like the even sometimes as far back as like the 80s in certain areas, 80s and 90s. And you go to a big city, go to any big city and you know, look at what the view looked like back then. And a lot of the high rises were developed in the eight seventies and eighties. so like, might not be as impactful as if you could go back and look at what it looked like in the sixties, right? But even then you'll see back in the eighties and nineties areas that were surface lots, or maybe, know, some combination of to where now they are not, they're a building of some sort, right? Like there's much less supply of surface lots. Like go to Houston, go to Dallas, go to Baltimore, go to some of these big cities and you'll see, Jack BeVier (34:18) What? Craig (34:28) Yeah. Kevin Bupp (34:45) that that's the common trend. again, it comes back to everyone knows location is the most important factor in all of us. It really is like, it's kind of like time typically can heal most wounds. Location, if you've got time, location can typically heal most wounds as well. If you buy a property in the right location, the path of progress, knowing that there's going to be demand for that property today, five years from now, 10 years from now, 30 years from now. And so that's kind how we look at parking, but it's got to make money today. It's got to stand on its own as parking today. Jack BeVier (35:12) What's the cap rates on that? What was the cap? Kevin Bupp (35:14) Yeah. So like the one we just bought there in Philly, was, I'd say that's more of a core plus deal. So it did have a little bit of value add component. On that one, we went in at like a six, I think it was like a 6.7 cap rate. We ended up getting debt, like 5.8. So right out of the gate, about a hundred basis point spread, which again, isn't crushing the game of life, but it consists in income day one. And then we've owned it for, bought it in, I think May. The hourly rates, I'm going to just, Jack BeVier (35:36) solid. Kevin Bupp (35:44) I don't remember the exact numbers, but the hourly rates were about 12 % below market. So we made an immediate adjustment there, no attrition at all, because people need to park and they just hadn't been adjusted in quite some time. And then we also made some minor, like little minor changes. It's crazy. Like people want to feel safe when they park. And so we, you we went in and just, you know, there was lights that were out and things like that repainted it. Basically, Hired a porter to monitor the garage on a daily basis, clean up any trash, any debris, you floating around, restriped it, put brand new lights and really bright LED lights. And literally just those couple improvements alone increased the, the parking ratio on a daily basis for folks that were not just parking there during the day, but you know, we're going there for evening, either events or staying at the hotel, what have you. And just a little changes like that make a huge dramatic improvement and, obviously, you know, go directly to the bottom line. Jack BeVier (36:36) What's, what does the operation look like to run four or 500 million bucks of parking garages and mobile home parks? Like what's, what are your ops? Kevin Bupp (36:42) Yeah. Yeah. So we are vertically integrated on the property management side for mobile home parks. So, you know, it's got its own leadership team. That's a independent division. Sunrise capital investors is our investment arm. Sunrise communities is the property management company. Sunrise communities has its own leadership team. You know, it's got a president of operations. It's got regionals. It's got district managers. It's got community managers. It's got, you maintenance personnel and a litany of other folks kind of on that side. I think there's changes all time, but it's probably 50 or 60 folks on that side of the equation. The parking and one of the reasons why we got attracted to parking is, you know, with the mobile home parks, every time we buy another mobile home park, we got to hire more people. Like it's, there's no way, right? We always have to hire more personnel every time we buy another property, right? And property management is not a sexy business. It's not very profitable. It's kind of a necessary evil, right? It's a pain in the ass, if I wouldn't be completely honest. It just is. It's a lot of moving parts. Craig (37:22) Yeah. Kevin Bupp (37:36) turnover. And again, it's not a very profitable business. We were happy when we break even with it. ⁓ Craig (37:41) So is that to say you always have to have a new person on site or a couple people on site at each bar? Kevin Bupp (37:48) Yeah, every parks got at least one person on site, some depending on size, sometimes more, you know, our biggest largest single community has about 750 sites in it. And so that's got, you know, community manager, assistant community manager, two sales and leasing agents, you know, whole maintenance staff. And yeah, there's probably 10 staff members there. Whereas like we've got some smaller communities that have like one, you one person, and then we might outsource like lawn care. Everyone functions a little different next, but at minimum, we have one person. And most times it's two or three. On the parking stuff, what one of the areas that really attracted us was that it was an opportunity for us. There's a lot of parking professional, some publicly traded parking management companies throughout the country, some local, some regional, and some on a national or international level, big companies that have really robust technology platforms and infrastructure. We didn't really want to rebuild that. We had no interest in nor would we be able to do it as good as some of the groups that have been at it for multiple decades. And so we saw parking as an opportunity to be able to, um, invest in, in great assets and great markets. Um, you know, deploy a significant amount of capital without having to build out in a whole new internal infrastructure to support it. And so on the parking stuff, we literally have, um, you know, we've got like our financing, we've got like a full-time CFO and all that. That's not all they focus on, but so we've got some, we've got some proportionate focus from our finance team on the parking, but we have one dedicated asset manager in house, like a senior asset manager that essentially works directly with the various management comp, parking management companies that we work with. work with different parking management companies throughout the country, depending on who's the best in that respect of sub market. And our in-house asset manager really is the only, if we have one dedicated employee, he's it. Like he's, he's the one that, that services and oversees the majority of the parking stuff that we own. And everything else is pretty much outsourced because we would never be able to do it cheaper than what these management companies can do. They've got a massive staff. big infrastructure, their technology forward, and it would cost us millions upon millions of dollars to try to rebuild that and replicate it. And we wouldn't be able to justify it because we're just not large enough to do that, right? We don't have a big enough holdings to do that. Jack BeVier (39:45) scale. Craig (39:54) interesting. I actually had no idea that that was sort of the business model there that you know there's an asset owner and then they just I guess nationwide or regional management companies for the lots. Kevin Bupp (40:05) Yeah. But it's you got to have, there's still involvement. Like you got to have involvement. have weekly calls. have our asset managers weekly calls. And then big monthly calls where we take a deep dive into the financials. You know, look at, you know, what we budgeted for, you know, the various parking demand drivers, where we're at that month, you know, why we fall off. Like there's got to be a lot of answers associated with it. There's a lot of moving parts of parking, like Craig (40:09) Bye. Kevin Bupp (40:29) at a high level, when think about parking, you're like, Oh, people come in, they pay, they leave. There's so many variables with events in the, yeah, with events in the area. It's, you know, just a linear things, you know, busy times for hotels, slow times for hotels, restaurants, kind of the same thing. Restaurants come and go. Um, you got office buildings nearby that, you know, some people are back to work. Now they need a place. They don't really have dedicated parking. Now they're like leasing a hundred spaces from us. Um, and then this other guy's leasing 50 spaces, uh, they're downsizing. So they're going to stop. Craig (40:33) I can figure that out. Kevin Bupp (40:59) leasing those 50 spaces. mean, there's, it's a continual, a process month in month out to, to maintain stabilization, these parking assets. And you know, it's, something like some of them are just in such a location, like the Philly one to actually, I'm not going to say you get to set it and forget it, but there's no other option. Literally there's nowhere else to park. And so like people are going to absolutely park there no matter what. still have to have oversight, but like, there's no other option. So either you're going to park like 10 blocks away and walk your ass or Craig (41:16) That's a good one. Kevin Bupp (41:25) You know, you're going to park in our garage. No matter what. Craig (41:27) curious. Jackie, any other questions regarding the lots? Parking? Yeah, I'm curious going back to mobile home park investing. Did my foot in the pool on that a couple years ago, made a pitch to a small boutique shop that would, you know, basically be that a small hedge fund. Essentially, I was working with a guy that raised a couple hundred million dollars for, you know, sort of a mid tier park. Jack BeVier (41:31) not what no go ahead go ahead Craig (41:53) provider. And so a couple of things that come up with me, I'd love to get your take on. feel like, you know, self storage was the natural migratory path of all real estate, you know, single family and multi-family investors. felt like over the past few years, like a lot of them were flocking to the smaller tertiary markets for self storage. And what I feel like mobile home park investing is right now is sort of like that same disjointed you know, the stereotypical guy is 70 years old, kids don't want anything to do with the park. You know, is like, tell us about one, how you're finding the deals. It's not an easy database to sort of figure out like the 35,000 parks in the United States and then sort of calling, you know, which ones you're interested in. that from a marketing standpoint, I'd really be interested in hearing what you've learned with that. And then talk about, you know, Are you finding these deals off market? Do you have a broker network that's bringing them to you? So interested in hearing about how you built that business. Kevin Bupp (42:56) Yeah. Yeah. And, and I'll do my best to unpack hit all those points there. So back, back up to when we first started buying parks, about the very first one off of loop net, which is probably one of maybe only two parts we ever bought off of like loop, loop, net or correct. Yeah. Well, it's actually the broker did a horrific job of listing the park. It's probably the only reason why it was still listed and, and, and, and we bought it. Like the listing was the worst listing I've seen to date. There was no information. He didn't know anything. He was hired by the servicing company. Craig (43:10) There's no competition there. There you go. Kevin Bupp (43:25) He was a residential broker, didn't know anything about mobile home. I mean, just, was, I had, yeah, yeah, it worked out well. but, at that, at that stage, we, we quickly realized that we couldn't go buy the list. you know, I wanted to really carry over a lot of the tactics that had always worked for me for finding single family stuff, like, you know, getting all that guerrilla marketing and realized quickly that we couldn't just go buy the list, from, from, from a list broker. And so we, I had had prior experience during my little three year hiatus. Craig (43:28) Perfect. Jack BeVier (43:30) chefs. Craig (43:39) Yeah, yeah. Kevin Bupp (43:51) Um, Oh, wait to like, 11. I had to still put food in the table. I had to be able to eat. And so I started a few side businesses, not related to real estate. Um, and, uh, um, in, those side businesses, I learned, I, I didn't, again, I was, this is like shoestring budget. I truly like all my bank accounts got garnished. I didn't really have any money. And so I had to learn how to hire virtual assistants, like VA's over in the Philippines. Like that was a new thing. It's a pretty, it's pretty prominent now. Right. But like, that was a new thing back then. And so anyway, I learned, I learned how to hire and. Craig (44:14) yeah. Kevin Bupp (44:21) managed staff overseas with those other businesses. And so I kind of carried that forte into building a database. So I hired a team, learned how to do it myself, you know, put a system together, taught them how to do it and had like literally at one point a team of six VA's that's all they were doing was building out this database nationally on my behalf. Craig (44:38) Was that a lot of Google Maps type searching? Kevin Bupp (44:41) Yeah, like the initial stage was like Google Maps. mean, because you can identify, can visually see what a mobile home park looks like from an aerial. And so it was kind of like just breaking up the country in a grid, right? Literally what we did. And then literally in that grid, like this is your focus for this week or next, right? Like this grid by grid by grid. Once we got that grid done, we exit out, you know, move to the next. and so we did that in, in a little up until probably three years ago, um, nearly every property we've ever bought, it's in our portfolio was direct to owner. Craig (44:46) Yeah, Yeah. Yeah. Kevin Bupp (45:09) and a lot of it, long-term relationships, you know, cold calls, mailers, but long-term, you know, just, just maintaining a relationship with a, with a mom and pop. But over time, you know, this industry has become very consolidated, especially like larger parks and good markets. mean, like other groups like ours, lots of them out there trying to buy or have bought. And so it's not as many mom and pops anymore. And some of that more, in, in, the larger markets or even, even the, some of the better secondary markets, it's, it's, it's definitely like any parts of like a hundred space or larger. Craig (45:10) Really? Kevin Bupp (45:38) I'd say probably 60 or 70 % of our own by groups like ours are larger groups now at this point in time. and so for that reason, we've had to really evolve, from off the market stuff, direct to owner to really leveraging broker relationships. And we do both still. but I would say over the past three years, 70 or 80 % of what we bought has been broke relationships to that of, direct to owner. ⁓ and I think there's an opportunity with the direct to owner on the small stuff still, like if you're looking at, you know, Craig (45:42) I agree. If you're. Kevin Bupp (46:03) you know, 30 space parks, 40 space parks, and sec, especially like secondary tertiary markets or rural markets. Like you probably still have a better chance of just going direct to owner and that stuff. And you could probably, you know, get a better deal doing that. But that, you know, we just, we kind of have a certain size that we go for now. for us, it's location is much more important than that of trying to buy at the, you know, at the best cap rate, right? Like I think location typically always wins out than trying to. buy a property at the highest cap rate, know, thinking I'm paying the lowest lot, know, lowest price per lot, but it's in a rural market, right? Like who am I pulling from? Like who's living there? Do they have, is there a demand for affordable housing? Whereas I know if I buy it in the middle of heart of St. Louis, um, a suburb or whatever, know, anywhere, Tampa, mean, like it's real, like you're not building them anymore. There's a high demand for affordable housing. The median home prices are 400 K plus. I will pay much more for that type of product than I will trying to steal a product, um, at a 10 cap. in a, you rural market. no, no right or wrong there, but I think there's an opportunity still for direct to owner off market stuff on that smaller, smaller profile deals. Craig (47:05) I agree. And so the assets that you're looking for now, is it a mix of like park owned homes, tenant owned homes? And then do you try to switch everything over to tenant? I'm Yeah. Tended on. Kevin Bupp (47:14) Yeah. Yeah, I mean, in a perfect world, everything would, we wouldn't own any homes. But that's, unfortunately, it's just not how it functions. Like you got to be in this business, you have to be willing to own homes or even buy new homes and bring them in, right? And one form or fashion or another, like you're going to own homes. We own a number of communities where we own zero. They just, they've always operated that way and they've got a really stable, mature tenant base. People don't move all that often. And, and when they do, they put their home up for sale, just like you would a stick boat home and they sell to somebody else. And then You know, we just get our lot rent, which is beautiful. Then we have other parks where 40 % of the homes are owned by us. And most of time it's because we inherited it that way. You know, we bought it from the prior ownership and they had built a model or accumulated homes of how they ran it. And when we bought it, we basically acquired them. We assumed their homes, but we always have the intent of selling those homes off. You know, we have different rental conversion programs that we have in place. you know, if we are acquiring rentals and we can't convert them, we'll wait till they go vacant, renovate them, then turn around and sell it to an end user. You know, we have different finance companies we work with to help finance, you know, the end buyer. We do lease to owns if we have to. So like we've got a multitude of processes on how we get to the end game, which the end game is not owning the home and getting someone in there that's going to actually be responsible for that unit. And for the most part, it's the reasons behind that is like the residents become much stickier. retention rate is significantly higher than they own the home than now when they rent it. And so I want someone that's going to be there for multiple years and not necessarily just turn over every 12 months. There's no money to be made and, and, know, rental units, uh, unless you're in a market where the rents are like 2000 bucks a month, which there's not many like that for mobile homes. But if you're in a market where it's, you're renting over 1200 bucks a month on a rental and you turn it every 12 months, you got to go back in and put, you know, six K, seven K into a paint carpet and drywall repair. have two down months of not collecting rent. Any profit you thought you made is gone, right? It's just wiped out. So we prefer not to own the homes. Craig (49:12) always the jack speaks about that all the time tenant tenant duration so Jack BeVier (49:16) Yeah, it's the killer. Kevin Bupp (49:17) Yeah, it's huge. Jack BeVier (49:17) It's the killer that everybody fails to underwrite, you know, they, um, yeah. Kevin Bupp (49:20) Absolutely. Absolutely. Yeah. So we always push really hard to convert. In fact, I'll go as far and do it often where we'll actually, I'd rather lose money on a unit. let's say I'm into a home for 40 K. I got a buyer that comes in there. qualify credit wise. They've got good stable income and they've got cash in hand of 35 K cash. It's cash is King. I will lose 5 K all day long. Cause number one, know if they buy that home outright, they don't have another monthly obligation of a mortgage payment, right? And so like, they're underlying lot rents by four or 500 bucks a month. There's not many things in the world that can happen. Well, not even that, but like, there's not many things in the world that can happen that if they have a hard financial month that they can't figure out a way to come up with 500 bucks to pay. On top of that, this thing that they own free and clear and that is not risk. And so they're going to do anything in their power to not lose that home because now the home sits on the lot. Like if they, if we have to go through an eviction process on the lot, they got to figure out what to do with that home, either move it or Jack BeVier (50:01) Yeah. Yeah. Kevin Bupp (50:16) we repossess it, And so, yeah, so I'll lose that 5k all the time. They ain't moving it. No, they ain't moving it. Craig (50:17) Yeah. Jack BeVier (50:19) $35,000 home. they're always paying. Craig (50:24) They ain't moving it either. the cost of picking that thing up off the putting wheels back on it is what 15? Kevin Bupp (50:30) Well, they didn't have the 500 bucks to pay the lot rent, right? Like they're not going to lose their homes. Like that's got, know, it's like they're, going to prioritize getting that lot rent paid, um, and not run the risk of losing that home. So I'll lose money all day long to get a, cause I know that once they move in there they own it free and clear, they're, they're going to stay there for a very, very long time. Craig (50:46) Would you say the same the same applies in those tertiary markets that folks might be listening to the podcast right now and they're saying to themselves, you know, I thought about getting into the mobile home park space, but they're not coming in with, you know, 150 lots. They're going to go out to one of the tertiary markets. Would you say that the same philosophy applies on age? You know, if you can get tenant owned, great. You know, are you going to get the better tenants there? Are you just going to have headaches? So what's your take there? Kevin Bupp (51:13) Yeah, I mean, it really depends on the sub market. It also depends on how it was run historically by the prior owner, right? If the prior owner had a high pride of ownership and he did a good job of only selecting high quality tenants to live there, you know, check credit, made sure they didn't have criminal records. then I think you can get very stable parks like that, even in rural markets. You know, I would say the market's the most important part. I mean, if it's always, I would say like you could buy the prettiest park. you know, but, but if it's in the middle of nowhere, there's literally one employer. and that risk of the risk of that employer going overseas is, is real. and, and the schools aren't great. it's just not in the path of progress populations declining. Like I can't fix any of those other things. And so while you might be buying this pretty park, you just need to know that inevitably, you know, once your current resident base, either they, you have a slow attrition where people just, you know, move, maybe they move for jobs or whatever else, or like they die at some point, like Who are you backfilling? Like who are you attracting to live there? Who needs to live there? Is it a market to where actually affordable housing is a need? I know everyone says like affordable housing is a problem nationwide. That's not entirely true. There are definitely some parts of this country where you can affordably live. Lots of those areas though, don't have really good economic bases. They're not really good employment diversity. There's not good job options out there. And so, yeah, I would be very... very, very careful of those types of buys. Just make sure that you're very comfortable and confident in the market. First and foremost, the market has got to be compelling enough to say, Hey man, there's something going on here. There's energy here. There's people that live here they want to live here. And here's the reasons why it's schools or it's jobs or these couple of employers and there's diverse employment base and all these things that people want to stay in and live in that area. Only then would I consider buying something. So it's like market first and then property second, I'd rather buy a really rough rundown, you know, just place that's full of drug sex and rock and roll, but buy it in the middle of Tampa. Cause I know, I know what I can, I can literally wipe the slate clean. Cause I know there's good people on the outside. If I make this nice, I know there'll be people waiting in line to move in. And so the bad element is temporary. I can get rid of that. Cause I know the market's so strong that I can bring people in that were willing to pay double the rent, triple the rent. If I make it nice enough for them, you can't say that with like that role type of part. Craig (53:21) That's interesting. What's your take on utilities? So a lot of these parks have private utilities, septic ponds, crazy like that. What's your take on buying that kind of stuff? Sometimes I do it, I don't even know I'm doing. Kevin Bupp (53:34) No pun intended, That's funny. Yeah, no, we own a mixed bag. You just have to understand it. We don't, we don't own anything that's on a lagoon, which is basically a big open cesspool where sewage goes and gets treated. We do own parks that are on well systems. do own parks that are on wastewater treatment plants. We own parks that are on your traditional septic type systems. It's all about due diligence. mean, you gotta, you know, when you're buying it, you gotta, you know, get engineers involved, professionals involved, come in and assess the systems, assess the operations, understand the regulatory structure on a state level around that system. And just go in eyes wide open. I mean, these systems like these wastewater treatment plants, they're no different than that of what the city you live in or the municipality you live in that they use. just a scaled down version. So, but things break, they're mechanical, right? And they have a, they have a Uh, you know, useful life expectancy to them. Um, but if they're maintained, they can last way past that. Um, you know, if they're maintained and kept up with and, and repaired and upgraded. So we, we own all the above. I'd say the funny thing is a lot of people put the emphasis on the sewer systems, like these private sewer systems, and that scares them. Um, the thing that's actually scarier when you really think about it as a well system, like you can't, you can't poison somebody with sewage unless they're out there drinking out of it. Right. Uh, you, know, like, Craig (54:49) Alright, what? Kevin Bupp (54:51) But with a well system, like you're responsible for the livelihood of the entire community of providing clean, safe drinking water to the entire community. And so if you slack, which we don't, we hire professionals, we don't operate our own wells. We bring licensed individuals in whatever market we're in that literally monitor the well, sometimes daily, sometimes we, depends on what the municipality requires. They report to the state, they do samples and all that stuff. But if you are lax a days ago in your well and you slack or your well gets infiltrated, you're responsible for that. There's a big liability there if you don't manage it correctly. So it's nothing to be scared of, but again, go in eyes wide open and make sure you do your due diligence. Craig (55:29) Check. Jack BeVier (55:30) You mentioned a partner, what's your partner do? Kevin Bupp (55:33) Yeah. So if you had to bifurcate our company down the middle, I'm more in the, handle all acquisitions. You know, man, again, we got a team underneath us, but like generally speaking acquisitions, debt placement. And then also I oversee our president on the operations side of the property management. So I'm very involved in like the nitty gritty side of the business. I always have been, it's just kind of my forte. Whereas he's always been on the capital, capital raising side of the house and kind of behind the scenes structure, like our accounting team, finance team, all that. again, we do each do quite a bit more than that, but, he raises capital. I find opportunities to buy and then I oversee the operations side to ensure that we operate them efficiently. If you had to simplify it. Jack BeVier (56:09) I would have thought with the podcast presence that you were the fundraiser. Kevin Bupp (56:14) Yeah. So, I mean, I didn't start the podcast for that reason. I mean, I started, uh, you know, for an entirely different reasons, cause it, wasn't anything out there that existed 11 years ago. Um, you know, now, now, yeah, yeah, I was an early adopter of podcasts. So I used to listen to podcasts for years driving and I'm like, man, there's just wasn't many out there. Most of it was like single family, fixed flip wholesale podcast. think Jason Hartman was around and the real estate guys radio show was around. That was about it. Um, and a few others. And, so I, yeah. Jack BeVier (56:23) Yeah, you got it early, man. That's pretty cool. Really cool. Craig (56:39) Joe McCall had it. Joe McCall was a very early adopter. Kevin Bupp (56:43) but it was mostly like, you wholesaling, right? Like that was his business model or fixing. Yeah. And so I was like, well, I should, mean, if I, if I'm seeking this info, I'm sure others are as well. And that's why I started it. I hadn't started to try to raise capital. I, gosh, I never even talked about deals we're working on or anything. I never like gave a pitch on the show for probably until four years into it to where I, I had enough people kind of reach out and say, Hey man, like heard you working on this project. We'll have to get involved. And finally, like we kind of put our heads together and say, I should start. Craig (56:46) Yeah, yeah, yeah, exactly. Kevin Bupp (57:09) not promoting, you know, being obnoxious, but like to start making mention of what we're doing at Sunrise. And also it became a big fundraising tool for us. And we've brought in a significant amount of capital as a result of relationships that we've been able to build through the podcast, but it was never originally built with that intention. Craig (57:29) Did you ultimately, I was going to transition to sort of the philosophy around the podcast. And so good segue. Did you ultimately go to, terms of listenership and folks that may have one too, you know, Hey, this guy's doing, you know, sounds like he's got a great business. Definitely knows what he's doing. How do you capture that person as a lead then to necessarily, you know, to possibly invest with you? Do you guys have like a funnel set up for that or? Kevin Bupp (57:55) We do. do. Back then it was, uh, know, way back then it was probably like sending, sending, don't know, send an email to whatever the email address we had, you know, I don't know, info at, or, know, uh, and then that would literally go to Brian up until probably five years ago. Brian literally was our IR team, my business partner. He was the IR team. He made every call, talked to every investor. Um, and now our, our team is, I think we've got like 12 people on that side of the house, right? Between like investor relations, um, you know, lead management, um, all different parts of the funnel process. And so, Craig (57:59) Give us a call. Yeah, yeah, yeah. Kevin Bupp (58:25) We've got a couple of sales guys in the back end that basically close any qualified leads that come in. But back when it was Louis Bryant. So whatever that lead, it was very basic. Came in, Bryant, give them a call and that was it. That's how it started. So today is a lot more formal. Craig (58:41) Great. So we've had you for about an hour. Don't want to keep you too long. What's your take on, know, give us, give us, you know, the highlights of the next 12 months for you. Like, what are you excited about? What's what's moving the needle for you? You know, what do you think? Kevin Bupp (58:58) Yeah, that's a great question. I'd say we've we have placed a huge emphasis over the past, I'd say call it three or four years on our team. And we've we've made some great hires and we've really spent time focusing on getting the right people on the bus. And yeah. ⁓ Craig (59:13) Can I stop you there? Quick question. So how much of your team is here in the United States versus the, you know, the VAs that you've got so great at managing? Kevin Bupp (59:22) Yeah, think only I'll answer that in reverse. think there's about eight to 10 that are outside the US. Everyone else is domestic. Yeah. And there are different parts of our business. mean, there's some on the sunrise capital side that are in the Philippines. We've got a couple of folks that have worked for us for now for like, Craig (59:30) Mm-hmm. Okay. Yeah, so... Kevin Bupp (59:42) six, seven years maybe in Mexico. I think three or four Mexico and then there's maybe four or five in the Philippines. And I believe one of our analysts is actually in India. I think 10 give or take, everyone else is domestic. Craig (59:56) So you mentioned you started to say you've set up this great team. ⁓ Kevin Bupp (59:59) Yeah, so I think what I'm most excited about is just our, know, you can't do it alone. We're at the size where like, you know, there's only so long you can wear so many hats. And we've, over the last three or four years, we've really put emphasis on bringing the right people on the team. But even more important than that, I think we've built out a legit leadership team. Folks that are way smarter than us, way more qualified than Brian and I might be in certain areas of the business. And that's allowed us to to really scale over the last couple of years and scale comfortably and make better decisions. And so now that that team and that team's now truly really been in place over the last three years and then really the last year, everyone's really hit their stride. And so I would say I'm most excited about the ability to go out and when there's an opportunity, when it presents itself. you know, historically, there years past where we'd have more operative, like we would look at things, we were like, well, let's not do that one. That's going to be too much of a strain on bandwidth, right? Like let's pass on this one now. And let's pick the easy ones, the low hanging fruit. Whereas today, like we've got the team to where we can, we can deal with more complex deals, buy bigger portfolios on one fell swoop. Whereas like if you'd have brought to me maybe, you know, three or four years ago, Hey, I got this 10 part portfolio. It's 3000 lots. Um, I'd been like, man, I'm excited. Craig (1:00:58) Sure, sure. Kevin Bupp (1:01:16) But I can't even like, we don't have the team to even run due diligence appropriately in the allotted timeframe on that deal. Like maybe we could raise the capital, but I don't feel comfortable getting through the due diligence. And I don't even know if we have the ability to onboard that damn thing. Like it's going to be chaos. It's going to be a mess. And so for that reason, we would have passed on it. Whereas today I know that they can pretty much handle anything I can throw at them at this point. In fact, they're like saying, come on, bring it on, you know, buy more deals. ⁓ so that's exciting. And again, we will never buy anything just to Craig (1:01:40) That's cool. Kevin Bupp (1:01:44) you know, grow our lot number or say we have a higher AUM. Like we're still, still maintain the same discipline, but maybe be able to do, you know, not hairier deals, but just more complex deals. Maybe deals that like in the, in the mobile home park space, the deals we used to always pass on were deals that required big infill, meaning like we'd have to go buy new homes and bring them in. We'd have the capital to buy the homes, but it's a logistical pain in the ass to actually bring home, not just bring them in, but actually have a whole sales process. Right? Like you got to sell the day, you got to get them set and then you got to sell them. Jack BeVier (1:02:13) Yeah. Kevin Bupp (1:02:14) And that takes manpower to do and it takes your systems and processes in order to do it efficiently to where you're not losing your ass. And so we can do that now. I mean, we just bought a bought a portfolio where we're going to infill, I think like 120 homes over the next four years. And we just ordered the first batch of 25. Like honestly, I didn't, I wasn't involved in picking the floor plans. mean, like, which is beautiful. You know, it's I'm like, I know that the guy that's picking them. Craig (1:02:17) time. Kevin Bupp (1:02:36) He worked for another organization. They had like 20,000 lots and he was a part of it from the ground floor and helped them grow from like 4,000 lots to 20,000. like infilling 20 homes, 25 homes, it's like he'll do it in his sleep, you know? And they can do a better job than I. Yeah, he knows what people want, you know? He's been there and done that. So I don't have to be involved, which is a beautiful thing. Craig (1:02:46) Yeah, what do they need you for? Jack, I'm interested to hear your take on that as well, given the the growth of the Dominion Group and Dominion properties over the last several years and and putting in the right leadership and personnel, like is there anything that would scare you and Fred at this point from an acquisition or development standpoint because you feel like you've got, you know, just better people in seats? Jack BeVier (1:03:17) Yeah. I think that, one of the, one of the, one of our great regrets is not, is not hiring better people, people earlier. Like we did a lot ourselves for a long time. And, know, so we cut our teeth and we like, feel very confident. know, you know, lots of aspects of the business, but we spend a lot of energy and took, you know, lot of gray hairs, doing work that if we had just brought in the better people earlier, they would have done a better job than we did. So like at this point, am highly confident that our, you know, that all of our departmental managers are better at their jobs than Fred or I would be. And that has allowed us to scale and scale without stress. We still have a machine that does a certain thing though, right? Like it is not a machine that does all things, but we've, but we've, know, but, the skillset has expanded a little bit and we can take on a little bit bigger projects. And one of the things that Fred and I are often wrestling with when we're like, look, you know, evaluating opportunities is like, Hey, how is that going to fit with this particular machine that we've built? Right? Like, can this, you know, is it how closely adjacent is it to like our core business? And, you know, and if it's a little bit too far and we realized that like, Hey, we largely measure, is this a shiny object or not by how much stress is this going to impose upon the people who are really running the company at this point. And so I wouldn't say that we've built a company that can do all things in residential real estate in Baltimore. And that's pretty niche-y already, right? ⁓ But it's a of a lot better than it was before we invested in great people. Craig (1:04:45) Yeah. Kevin Bupp (1:04:52) Yeah. And I think a lot of us go through that evolution of, you know, you, you wear all the hats for way too long, right? Like it's just, uh, you know, it's, it's, you know, we always should hire way sooner than what we do. And, and only until you realize you get all this talent in place, you look back and like, damn, I should have done that sooner. You know, life is so much better and a little bit easier. Craig (1:04:53) So Kevin, go ahead. Jack BeVier (1:05:09) I mean, I mean also cashflow, right? Like you also have to be able to afford it. have to do enough business to be able to afford people. And then there's that interim period where you're like, you invest in the people and you're like, this better pay off. Cause otherwise like this is a lean year, right? Kevin Bupp (1:05:13) Yeah? Yeah, yeah. Well, you have to take, you have to take a step back personally, right? Cause you get to the point where you start, you just start making money in your own business. You're like, I'm actually now getting paid for the time I put in. But then you get that weird pivotal moment where you're like, I need people, but that means I need to stop basically paying myself or, you know, cut that back quite a bit so I can actually pay them. And then you're like, to your point, like this better work out, you know, and, uh, and it's like, you almost got, you bet you thought you made it. And then now you got to reinvest a hefty amount and Jack BeVier (1:05:33) Yes. Kevin Bupp (1:05:50) basically bring risk back into the equation because bringing anyone new into the fray, there's significant risk with that, right? And it's a big investment, big time investment, big money investment. Jack BeVier (1:05:55) investment. Yeah. And we're gonna we're gonna take two or three years back, you know, two or three years back, step back in terms of like cash flow and profitability, because now we've like jumped up payroll a whole bunch on faith that these people are going to work out. It's it's a hard. It's a hard leap to make. Craig (1:06:12) Kevin, I'm curious, I love the getting back to David in your life. Do you speak to him at all anymore? Kevin Bupp (1:06:20) We stay in contact. Yeah, I mean, probably not not as often as what we did way back when but yeah, it's probably a couple times a year like holidays that type thing. He lives out west now out in Cali and not that that makes a difference but so I don't I go visit family back in Pennsylvania like historically that's where he lived as well and I would see him just you know, by default by going back home you have to visit people and but yeah, we stay in contact. He's still doing well he's he's again he's I'm 46. Yeah. So he's, he's, he's older. He's up there. Right. So he's kind of at a different stage of his life, just kind of relaxing and enjoying the sunshine and not doing much, you know, just playing tennis and, chilling out. Yeah. Craig (1:06:56) As it should be, ⁓ we speak to investors every single day. It's that wearing all the hats that can be very stressful on new investors, sort of intermediate investors wanting to get to the next level. And so I've always found it particularly important to have great mentors and sort of folks that have been there before you. And I think the more that new and intermediate investors can find those people in their lives, the better things generally turn out for you. ⁓ Kevin Bupp (1:07:22) Yeah, agreed. Craig (1:07:25) Great story, thank you for giving that to us. Man, it's been a pleasure speaking with you. Can you tell folks where to find you online, where the podcasts are, where to find you if they want to know more about Sunrise? Kevin Bupp (1:07:38) Yeah. Yeah. So, uh, Sunrise, uh, if you want to learn what we're doing over there, you'll check out our offerings or we've got case studies on the website, some white papers that we, that we give out for free as well. Um, you can go to invest with sunrise.com as far as social. pretty active. I'm very active on LinkedIn. I'm also, um, active on Instagram and Facebook and you know, I always joke and say my last name BUP B U P P it's unique enough where if you just type in Kevin BUP on any of those social platforms, I should be the first one that comes up. Craig (1:08:04) you are. Kevin Bupp (1:08:05) Yeah. It's one of the positives of having a weird last name. And then the podcast, yeah, you can, you can, I think we even have a link on our website and bestwithsunrise.com, but you can find it everywhere. You know, Apple, Spotify. I don't know where the other places where people listen to their podcasts now, Apple and Spotify are the only two I can think of. There's probably like a hundred others, but Craig (1:08:21) That's good. you capture those, you got 90 % of the market. So, well man, thank you for taking the time to be with us today. Love to have you back on in the future to hear about how the company's growing and just can't thank you enough for your time. So really appreciate it. Kevin Bupp (1:08:26) That's right. That's right. I appreciate you guys having me on man. It's been fun conversation, very enlightening as well. So appreciate it. Jack BeVier (1:08:42) That was real pleasure, real pleasure. Craig (1:08:42) Yeah. All right, guys, that's Real Investor Radio with Craig Fuhr and Jack Levere. We'll see you on the next one.