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Building Affordable Housing Through Mobile Home Communities with Andrew Cramer · The Academy Presents podcast

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Did you know that 90 % of the world's millionaires
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You're already taking the first step. just by
1:00
joining us here today. Well and that's kind of
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what we're facing with the zoning battle that
1:05
we have right now is it's 104 pads they're wanting
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us to um plat each one so they get 104 taxable.
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Yeah and that if you think about it that's it's
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it's not even if you look at young I know the
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stats here but like you know we've built a handful
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of like bridges built that built you know, one
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new park and done a few sort of expansion of
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parks. But if you compare it to the amount of
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stick frame houses being built, it's not even,
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it's not even comparable. So if you're a city
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and you're approving a new mobile home park,
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you really can only look at that the same way
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that you look at a subdivision. And so if you're
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sort of a county planner or a planning examiner
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or a land use person, you're going to say, all
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right, well, Angel wants to build a hundred unit
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mobile home park. And my home builder over here
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wants to build a hundred unit subdivision. In
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his mind, they're kind of the same. And that
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means, hey, no, no, no. I want 100 tax laws here.
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And I want 100 tax bills generated. And you're
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like, why? It's like, well, because that's what
2:02
this guy's doing. So it would be very difficult
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to create an environment where a new manufactured
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home park is going to be treated entirely separately
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from the subdivision. Don't get me wrong. It
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should. One of them. promotes all these things
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we've been talking about the last little bit
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here, whereas the other one just sort of market
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rate housing. And there, you know, we've looked
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at a couple kind of creative ways to get around
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that. There's some interesting stuff you can
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do with like agriculture land that we've looked
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into. So we'll, you know, there are solutions
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out there that are kind of in the future that
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we're definitely trying to figure out, but. What's
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that? We paid for the lawyer yesterday. Yeah.
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Unfortunately, really unincorporated land. It's
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unincorporated. So, and based on the laws in
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Texas, they can't because it's 20 acres or less.
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Yeah. Um, so that, that's why we had the lawyer
2:59
involved. Um, there's more to it than that, but
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that's the basics of how I understand it. But
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I want you to back up because so, okay. So our
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mobile home community has a master meter coming
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in on the water. So then, when you say you're
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giving the utilities over to the residents, are
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you going in and sub -majoring those at each
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pad? Usually, yeah. Yeah, so there's a good amount
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of utility work that happens there. And then
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we obviously kind of, we do this and sometimes
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it's sort of a requirement from the Landlord
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-Kennedak, oftentimes we just do it as sort of
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a collaborative measure and say, hey guys, This
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is what we're doing, and here's why. But I think
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that's important, because it can be adversarial
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if you say, hey, guess what? We weren't paying
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your water bill. No, you have to pay your water
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bill. That can be, if you don't communicate that
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correctly, it can be a very adversarial sort
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of negative in a tenant's mind. But with proper
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communication and proper education, they'll realize
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that, wait a minute, because great example, right?
3:55
So you have a home sitting here, and it's a family
3:59
of five. and they're living there and that's
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one space. And so they're paying space rent on
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their one space and you've got one next door
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that's a little park model with a single person.
4:07
And that's maybe it's like, you know, we have
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a lot of truck drivers that live in our communities
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and like they're not even home. So what do you
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think? Is the water use equivalent in those two
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properties? Not at all. So it's an equitable
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way to distribute expenses. and even then the
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family of five is going to reduce their usage
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because they're going to see that water bill
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and the single guy is going to get the great
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break on rent because he's not using the utilities
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that's fair and that's what I mean like you so
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if your water bill is whatever $5 ,000 a month
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and you can reduce that bill by 30 % just by
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meter just by metering forget everything else
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well now that's 3 ,500 bucks a month so that's
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money saved by the property but it's also money
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saved by the tenants they can their living situation
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just got more affordable rents didn't go down
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but the living situation got more affordable
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and I like another great example I like to use
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on that front is like storage or laundry you
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know if you have to get in your car with your
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laundry drive to a laundromat that's gonna be
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an expense for you because it's time it's all
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these other things versus if there's on -site
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laundry you can now walk your laundry to that
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and do your laundry on site that's gonna save
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you time it's gonna save you money Storage, another
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great one, which you have to drive down to the
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mini storage place and pay the 90 bucks a month
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for the little storage thing. That's impacting
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the affordability of your home. We love putting
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storage into our parks. And it's another great
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win -win, right? Like if I put down, we have
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some great modular storage that we've designed.
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So now we're adding revenue to our property.
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But in doing so, we're creating a more affordable
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situation for our tenants where now instead of
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having to go off, and we can offer that storage
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way cheaper, than like a mini storage place again
5:49
because we don't you know we have all these other
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it's not it's not the same economics right if
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you just add a storage a modular storage unit
5:57
to a home park so that's again where our investors
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win we're increasing the revenue of our property
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but our tenants also win because now instead
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of having to drive a couple miles downtown to
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get to their storage they have it right next
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to their home so there's there's a lot of examples
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like that where you can take you can make a property
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more valuable you can increase the revenue of
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that property, and yet it can become more affordable
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for the people living there. There's a lot of
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ways to do it. Okay, so I'm thinking now with
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the on -site laundry facility. So most modern
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or most new mobile homes come with washer dry
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hookups. So can you middleman that with say like
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washdry .com or something where you can get them
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washers and dryers? I mean honestly oftentimes
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like with with you I mean with and with new homes
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like god bless you get a nice low water using
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um you know laundry laundry machine in your own
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unit yeah absolutely I encourage that but the
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reality is the properties we're buying oftentimes
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have older homes that don't have any laundry
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or like any laundry hookups or anything in the
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unit so the reality is If you're, you know, and
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like, you know, when you're in a very affordable
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situation, like spending a couple thousand bucks
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on laundry is not really attainable. So we always
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say is like, we can deliver these units and same
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thing, unlike a commercial laundromat that's
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paying rent in the commercial strip mall, we
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can add, you know, three washers and three dryers
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to our community center. There's no, there's
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no, we're not incurring a monthly rental expense.
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Now there's a little bit of utility costs, but
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like our cost per load of laundry. is vastly
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lower than a commercial laundromat. Thus, we
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can charge less. So that's what I mean. If you're
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a tenant that has to pile your laundry in your
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car, drive to the laundromat, pay, let's say,
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$10 to do your laundry. Well, you just lost time
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and you've lost $10. If we can deliver a laundromat
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where your cost of laundry is, say, $3, that's
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a massive win for you because not only did we
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save you the $7 on your laundry, we saved you
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the time. We've taken the hour where someone
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has to watch your kids or you saved the hour
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where you can't be doing something else. So I
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think that's there's so many examples of that.
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That's actually where we find that the sort of
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just rents going up, sure, it happens, but when
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you can deliver value for your tenants, they're
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not one -to -one ever. If you're delivering value,
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it doesn't have to be like, hey, we spent $100,
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so therefore we get $100 of rent increase for
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that $100 we spent. There's so many ways to make
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that a non -linear correlation, things like...
8:34
Diving roads, you have no idea what a value that
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is for someone living there. If you go from a
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dirt road to a paved road, their just life gets
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so much better. And they're thinking, God, that
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my life, you know, this is a better place for
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me to live. Like I mentioned, playgrounds, we're
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not getting any money from putting a playground,
8:50
but the value of the community, the value to
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the tenants, tremendously increases. Another
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thing we always do is locking mail boxes, which
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are not relatively very expensive, but particularly
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when you're in a property with a lot of seniors,
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mail theft is a big deal. And their medications,
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their social security check, that comes in the
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mail. And when you're providing that security
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for them, they are eternally grateful. So there's,
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it's not, I think oftentimes people get stuck
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in this notion of like, you have to get, if I'm
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going to spend a dollar on this property, I have
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to figure out how to get that dollar back out.
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And it has to have like a one -to -one correlation.
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you don't have to. There's these long -term effects
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and building goodwill with tenants we have found
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is so tremendously valuable because the last
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thing you want is a group of tenants who feel
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like they're being treated unfairly because that,
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I can tell you, is very expensive and you don't
9:45
want to have those situations. So again, getting
9:48
back to the start here, great quality of life,
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great investment, those two things can absolutely
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exist next to one another and they should in
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affordable housing in particular. Now I am I'm
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a firm firm believer in the Maya Angelou quote
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and I butcher it all the time But you know people
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aren't gonna remember what you said or what you
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did, but they'll always remember how you made
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them feel It's so important to make sure that
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it regardless of what demographic you're coming
10:15
from That you are you feel seen and you feel
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heard what and let's let's to add to that how
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The amount you're paying each month for rent
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isn't necessarily related to that at all right
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more like if if I'm making you if I'm making
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an active effort to make your house to make your
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quality of life better versus on the other side
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someone who's not who doesn't care about it he's
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like hey but I'm going to charge you a hundred
10:41
bucks a month less give me a break any one of
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us is going to want the is going to want the
10:46
former versus the latter they're going to want
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to be in a place where they feel valued where
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they feel where they feel heard as you just said
10:52
but also we're like their quality of life is
10:54
being is being at the very least considered,
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right? There's so many times where you see these
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kind of like low -income situations where it
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just, they're being disregarded, they're being
11:04
sort of locked in these giant concrete affordable
11:06
housing, apartment buildings, and no one's really,
11:09
there's no community, there's nothing, it's just,
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it's like people store. It's really, it's pretty
11:13
bad versus you can have a vibrant community and
11:16
you can continue to make those investments. And
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then people are not only torrent, of higher rents,
11:22
they're happy to pay the higher rent because
11:24
they know when the rents go up, they're going
11:26
to get something. So I think that's where like,
11:29
you know, it's not those are those are all really
11:31
important things that we we are constantly taking
11:33
into account as we're buying new properties.
11:34
And as we look back in our portfolio, we're always
11:36
going to make those types of improvements and
11:38
say, how can we make this community better? Because
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if we make the community better, we can have
11:42
a more valuable property and we can also have
11:45
tenants that are happy and we have and they There's
11:49
in many housing, it's great because tends to
11:52
feel valued and tend to feel like that people
11:54
are that the community is improving. Guess what?
11:56
They're going to spend money on their homes.
11:58
We see that all the time where you see these
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sort of beat up structured where people are living.
12:02
We start investing in the community. People repaint.
12:05
People rebuild their porches. People clean up
12:07
the trash up on the exterior of their homes.
12:08
People put a new roof on their home. Their home
12:11
is getting more valuable, but that means your
12:13
property is getting more valuable. So it's there's
12:15
all these correlative. very mutually beneficial
12:18
things have happened but it really has to happen
12:20
at the like the property owner has to start that
12:22
process because they're the ones who ultimately
12:24
control the majority of the assets and infrastructure
12:26
and once you do that though you have a bunch
12:28
of partners your tenants don't become your enemies
12:30
they become your investment partners because
12:32
they're making their homes better. So then do
12:35
y 'all have like an HOA or do you have like a
12:38
set of standards by which your residents have
12:40
to keep their homes at? We do. The thing about
12:46
highly regulated environments, a lot of that's
12:48
governed by the state. And so we sort of, you
12:50
know, we try to not, I mean, we do try and enforce
12:54
cleanup. Honestly, what we find is in general,
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when you start to take an active role in management
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and an active role in cleanup, you know, not
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everybody's perfect and there aren't, you know,
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there's always going to be sort of, you know,
13:06
when we buy parks, there's a criminal that we
13:09
have to be conscious and aware of. We have found
13:11
almost every time once active management shows
13:14
up those folks just leave they don't because
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it's not you know yeah and I joke that I've yet
13:20
to meet the criminal mastermind but criminals
13:22
in my experience are kind of like trying to get
13:24
away with something as easily as possible and
13:27
so when you when when living in your property
13:29
no longer is the path of least resistance to
13:32
sort of conduct their illegal activity they're
13:35
not gonna they're not gonna want to take the
13:36
risk and so that's that's always you know, we
13:39
often face those questions from our investors,
13:41
which is like, how are you going to get rid of
13:43
the criminal element here? Like, do you work
13:45
with police and do you hire security? And, you
13:48
know, you have a lot of experience in that, but
13:50
the reality is like, we just get to work. We
13:52
just get in and we start working with people.
13:54
We start, and we find out it's, it's always,
13:56
always a very small percentage that is doing
13:59
that in a hundred unit arc. We usually find it's
14:01
like one or two tenants that are creating, and
14:03
don't get me wrong, those one or two people can
14:05
create a lot of problems. And that's where, but
14:08
you find it, you isolate it, and you start to
14:10
understand that once you get rid of that element,
14:12
people are gonna reward you by saying, oh my
14:14
God, these guys are really taking this seriously.
14:15
And you're gonna have a much better productive
14:18
environment as a result. Yeah, that's a, again,
14:21
you've brought some perspectives that I haven't
14:24
necessarily heard before. Most of the people
14:25
that we've talked to, and well, number one, there's
14:28
not a lot of people building new mobile home
14:30
communities in the United States. Very. There's
14:32
not. We are a rare breed. And not only is this
14:36
our first development, this is our first mobile
14:38
home community. So we took the double whammy
14:40
on it. Yeah, that's awesome. But it's everybody
14:43
we've taught you is like, oh, you have to have
14:44
an HOA. You have to have an HOA. But what you're
14:48
saying makes so much more sense or makes sense
14:50
also, not necessarily that they're mutually exclusive,
14:53
because in one of our complexes, the more distant
14:58
management became so the more The less of an
15:04
active role that the property management company
15:06
was taking at the property, the more criminal
15:08
elements crept in. That's right. Yep. Because
15:12
they are looking for the path of least resistance.
15:14
They want to know, you know, where can I get
15:17
away with the most stuff, the most like, or the
15:19
easiest? Like that's where I want to be at because
15:21
it takes a lot of thought process to figure out
15:26
how to fly under the radar. And the reality is,
15:29
you can absolutely have an HOA. HOAs are great.
15:32
But I think in the end, what you need is an active
15:36
community. And if you have that, a structure
15:39
like an HOA or a tenant organization is great.
15:42
But in the absence of an active community that's
15:44
invested in their homes and invested in what's
15:46
happening in their homes, that doesn't really
15:48
do anything. So I'm not for or against HOAs or
15:54
tenant organizations or tenant associations.
15:57
they can be a great tool for an active community,
16:02
but in the absence of that, if it's just like,
16:06
hey, we require you to join the HOA, it's not
16:08
really going to do anything. I think you have
16:10
to have, and it's really, it's not like it shouldn't
16:13
really be a focus area. The focus should be,
16:16
let's build like a really vibrant ecosystem that
16:20
can create a really beneficial long -term sustainable
16:23
community. Um, and then, and then at that point,
16:26
the HOA or kind of a religion association doesn't
16:28
really matter. Um, so are there other activities
16:32
that y 'all promote in your communities to give
16:35
more of that community feel? You know, it's,
16:38
it's funny, we, we've tried a lot of it, it tends
16:43
to be pretty community specific is what we found.
16:45
Um, so that's going to be the geography, the
16:47
little sort of sub geographies. We have properties
16:50
that are predominantly like affordable housing
16:54
period. And that's where people are looking for
16:57
a place to live that is, you know, that they
16:59
can afford because everything else is super expensive.
17:01
So in those circumstances, we try and our community
17:05
improvements are going to be around things like
17:07
we've already talked about, things like storage,
17:09
things like laundry work. How do we make this
17:11
community as affordable as we can for you? We
17:13
have other communities where it's, you know,
17:16
largely a family park. And so in those circumstances,
17:19
we're going to focus more on safety. and we're
17:22
going to focus on things like playgrounds, barbecues,
17:26
those types of elements. It's going to depend
17:28
on the lot sizes, too. We have a property where
17:30
there's a portion of it that's long -term RV
17:33
sites. And there, we want to kind of, and it's
17:36
a little bit of a competitive market for long
17:38
-term RV. So there, we want to make sure that
17:40
we can make the sites bigger, which would be
17:43
ideal. But so what we've done there is we've
17:45
provided free lockable storage as part of this,
17:47
as part of those units. So it's a pretty nominal
17:50
investment for us. But now if you're living in
17:52
a small RV, you've now got like a nice lockable
17:55
secure storage outside of your RV where you can
17:58
store it. So like it's really kind of, we try
18:00
to, we try to understand the communities that
18:02
we're in. Then we try and make improvements that
18:04
are going to be of most benefit to those. You
18:06
know, you don't want to put a playground into
18:07
a senior part. And of course, finally, you don't
18:10
want to, you know, if there's, if you're in sort
18:11
of a more urban location, maybe things like laundry
18:15
and storage aren't as important because if the
18:17
mini storage is across the street and it's a
18:19
very competitive market and they're giving away
18:20
free months of rent, you might not need it. So
18:23
it really, it kind of depends on what the community
18:28
needs and we try and respond to those needs.
18:32
So in case anybody is wondering, I'm taking copious
18:35
notes because number one, I've never actually
18:40
interviewed anyone that has done a full development.
18:43
I'm a home community. So I'm super excited. Yeah.
18:47
But it's it's the stigma. Like how how do you
18:53
get rid of the stigma? Because this is going
18:55
to be, in my opinion, the new affordable housing.
18:58
This is going to be the move that really helps
19:01
people bridge the gap between what they're earning
19:05
and being able to own a home. Because what your
19:09
quote unquote starter home cost today is insane.
19:13
The house I'm sitting in right now, 20 years
19:16
ago, we got for $150 ,000. This same house, they're
19:20
saying tax value on it is now over $300 ,000.
19:23
This house is not twice as nice as when we bought
19:24
it. Yeah, it's a you know, and I will believe
19:29
me, I'll be the I'll be the first to shout it
19:32
from the rooftops when that when I when we can
19:34
figure out how to break that stigma, but it's
19:35
very real. And all I can say is kind of like
19:38
I said at the start, try to at least be conscious
19:42
of what you're saying when you say things like
19:44
trailer trash or you say things like mobile homes
19:48
are crappy wobbly boxes and a stick frame home
19:50
is better. It's number one it's not but also
19:53
just kind of think about who's listening because
19:56
it's a thing where man it's not just you could
20:00
really turn someone away from what could be a
20:02
life -changing decision for them and I think
20:05
that's kind of if there's one thing to take away
20:08
from this I would hope it's that like just kind
20:09
of something very small, just like that stigma,
20:12
you can personally make a difference in it. And
20:14
that you not saying that might be enough to make
20:17
someone sign that contract to buy a home and
20:20
put themselves on a path for, for like a really,
20:22
really unique way to build wealth. So that's
20:24
probably my hope. No, absolutely. You know, I
20:27
should say thank you for being here. Um, it's
20:30
just been, it's, it's been enlightening, honestly.
20:34
Um, for me, it's someone coming into the space,
20:37
new sort of new. We come from real estate, but
20:41
each, each niche in real estate is so much different
20:45
from the one next to it. Yep. You think, you
20:48
think real estate, they're all the same, but
20:50
there's, there's little nuances. There's little
20:52
differences that until you're talking to somebody
20:55
in that space, you're not going to, you're not
20:57
going to see those or get the full picture. So
20:59
thank you for being here. No, thank you. It was
21:02
great. It's great talking with you. Absolutely.
21:04
If somebody wants to get ahold of you, how did
21:05
they get ahold of you? Uh, you just, um, If you
21:10
just look up Andrew Kramer or Bridgeview Asset
21:13
Management on LinkedIn that's an easy way to
21:15
do it and then bridgeviewassetmanagement .com
21:18
is the website and we kind of we're pretty active
21:20
on there in terms of like what you know all the
21:23
all the stuff that you and I talked about today
21:24
we kind of we can get in there's a little bunch
21:26
of articles we've put up that gets into a lot
21:28
more detail and all these things and yeah love
21:30
to love anyone feel free to reach out and all
21:32
our contact info is in both of those places.
21:35
Awesome sauce. All right, guys, you heard it
21:37
here. This is going to be the new thing. I swear
21:41
it is. This is it. Let's hope we can kind of
21:44
turn that around a little bit. Thank you again
21:47
for having me. And guys, until next time.