Latest / The Capitalizing Your Life Podcast / From Sewage to Success: Overcoming Septic Tanks, Potholes, and Challenges in Mobile Home Parks with Tyler Lekas
Transcript
- Glenn (00:01) Today my guest is Tyler Lickus with MHCI Group. Welcome Tyler. Tyler Lekas (00:11) Hey, thanks Glenn for having me on. I really appreciate it. Glenn (00:15) Yeah, I feel like we're running parallel lives with our real estate business and saw you on LinkedIn and I'm glad to have you on. Tyler Lekas (00:23) No, I really appreciate you having me on and yeah, amen. It seems like you and your partner are really scaling up and you guys are kind of at the same, you know, general level that we're at. You know, we're not Blackstone, but we're not the, you know, the mom and pops with 100 units, you know. So it's good to talk with a fellow operator. And I think you were kind of saying before the podcast how you, you're kind of in the same operational. Yeah, that's awesome. Glenn (00:46) Yeah, definitely. Yeah, when I met Jason, Jason Postle, he was on a couple episodes ago, it seemed like he was more of what my business partner, my business partner went, he was semi-pro hockey player and he's in part of the acquisition portion of it, then I'm more of in the weeds with the operations. Tyler Lekas (01:04) wow. Yep. Everybody, we had an interesting conversation, don't mean to derail the conversation or whatever, but an interesting conversation with kind of a bigger group. They have 20 million plus and we were carving up the different pieces. Hey, who found the deal, you get XYZ amount of equity. Hey, who's running the books, they get XYZ amount of equity. So we were carving all that up. Glenn (01:18) Yeah, no problem. Tyler Lekas (01:36) And they told us, actually, we didn't carve up anything for the property management side. You get your property management fee and that's it. And you get no equity for it. you know, Jason had to jump in because I was, you know, blew a lid. had steam coming out of my ears and whatever. Cause I was like, these guys clearly have never managed a mobile home park ever. There's no third party manager and they mostly did apartments. There's no third party management company. can go higher to operate these things. I mean, it's the lifeblood of the business. If you want to scale in any sort of way is the operations side. It is the property management side and it's the side nobody wants to do. Zero people want to, I mean it is not fun. And that's part of mobile homes, know, not everything's gonna be fun about it. I love the business but the operations is the lifeblood of the business collecting rent, property conditions, etc. So hats off to you brother, I'm sure you've got some good stories. Glenn (02:30) Yeah, I would say I literally we're gonna do like a due diligence walk with the owner and the park we're buying is in rough shape and I could tell by the types of parks that you guys buy, we have similar class. We can call them class C, but I don't know that'd be loosely said, but we're buying these vacant parks and fixing them up to make them manageable is what it turns into. Tyler Lekas (02:58) Yep. Glenn (03:00) The owner is about five hours away and I was like, it's a 15 unit park. So it was, I was like, there's no way you could manage this park five hours away. Tyler Lekas (03:13) 100%. And it's like, what people, what were you gonna say, Glenn? Glenn (03:18) No, was just the place is a mess. The place is a mess that we're buying and that's what we buy. We buy stuff that's, you know, we're putting it back together type stuff, so. Tyler Lekas (03:29) Yeah, and like a 15's pad park. five hours away, you got to think about like the on-site operations too. A lot of people are like, well, you'll get a great deal on a 15 pad park. Maybe in Arkansas, I'm just talking about Arkansas terms, maybe $10,000 a pad, right? And you're like, man, that's a great deal. And then you got to think about who's actually going to be in the on-site eyes and ears, right? And even if you give somebody free lot rent, that's one 15th of your income you're giving up. And if you think about a 200 space park, then you pay somebody, you know, we'll just say 40 grand a year, 35 grand a year. Glenn (03:42) Yeah, yep. Tyler Lekas (04:03) the net expense ratio is about the same, right? When you think about those two, but you can actually pay somebody a living wage to do one job and the other guy doesn't care at all. So now you are gonna be brought into the management side a lot more on a 15 pad park. And people don't think about that either. They just look at the price per pad. And you got to think about all those logistics, all those wheels turning because if you buy that 15 pad park and you don't have somebody that's good, eyes, ears on the ground and you got a bunch of revolving. door then guess what you're spending gas and time and know truck mileage to get up there so it's it's it's you know people people fail to realize that kind of those intricacies of the on-site management I think Glenn (04:49) Yeah, definitely. just bought, so we have a, we have, our portfolio is crazy compared to most operators. We have. think we have 30 properties and it's 600 units. So the average count is about 20 units per park. And I'm sure some of them are a little bit bigger, but we just finally clustered a 200 unit portfolio in this one area. where we actually hired a real park manager to actually pay him like full time and be able to give him on a livable, like what you were saying, livable wage. Because before, you'd have somebody at like a $500 a month pay and you're like expecting them to be on call anytime you call them and it yeah. Tyler Lekas (05:40) And they're working another job. They're working at Dunkin' Donuts. They're working at, you know, wherever. And they're like, I can't get, I don't care about $500 a month. Like, you want to fire me? Go for it. Like, like they're not, they're not. Glenn (05:48) Yeah. Yeah, we're like strong arm in them and they're like, I don't care. Tyler Lekas (05:54) Yeah, like, you want to fire me? Great. I'll continue to work on my other job or two jobs or whatever it is. So yeah, it's why those big institutional guys go after the hundred plus faces, you know, because they don't want to do the work, but I bet. Glenn (06:05) Yeah, definitely. Tyler Lekas (06:09) My guess is in the next decade that those smaller parks will start to work. Because it's like, if I bought a 20 unit apartment building right now and the rent was $1,200 a month, it start makes a lot more sense. You give somebody free rent $1,200, that is not a living wage. somebody's definitely incentivized at $1,200 a month. $300 a month or $500 a month maybe in Florida or $600 a month, they just don't care. So as a lot runs continue to increase and that, and a lie continues to increase those smaller properties that you guys have consolidated, you're going to look like a hero in a decade or maybe even five years. don't know Florida. don't know Florida has, you know, probably a lot more, know, faster, real increases than here in Arkansas. we're a more sleepy. but yeah, I think, I think that works out for you guys long-term and assuming you guys, want to stay, stay on the good fight, fight the good fight every day. Glenn (07:05) yeah. Tyler Lekas (07:06) Cause I don't know if you've heard this, but I've heard other operators out there. I just, I don't want to drop his name, but there's this guy that was really smart that I talked to a couple of years ago and he partnered with a really big firm that had a lot of track record buying mobile home parks. And he said, I just cannot deal with the residents. He's like, I just can't do it. And he was like, he was like the front man. Like he was the, he was the operations guy. He was like, I had to get out of the business, even though I owned like a piece of all these really good assets and whatnot. He's like, I had to sell back. He's like, I just could not take it. So fighting the good fight every day and dealing with all the residences. It's, it's a big, it's a big deal. I don't know if you feel the same, same sort of way, or if you're, you're in love with the operations side. I, I don't want to poo poo it too much. Glenn (07:54) I kind of like it, but I would say that the key to loving it is to not be answering the phone. I have people answering the phones and I pretty much manage it after that level. We put it together. Generally, we start the podcast off with... Tyler Lekas (08:04) Hahaha Glenn (08:21) your story, if you could just tell us a little bit about yourself and how you got into real estate. Tyler Lekas (08:26) Yeah, yeah, so I went to school in Dallas, Texas, graduated there, started off in finance. I worked as like an institutional fixed income trader, ended up leaving finance at the end of 2017. And I got into mobile home park shortly after that, bought my first park actually down in Florida, in Titusville, Florida. I bought a 55's pad park down there. spent all my money on that park and I moved actually I drove my car down there. so, and at the time I kind of went through a transition. So I was living in Dallas, worked in finance there. And I worked in finance in Portland, Oregon, where I'm from originally. And, and then I picked up and moved across country to buy this asset and self manage it. And, my friends and family thought, you know, I had, I should be institutionalized. they're like, you're buying a mobile home park in Florida. What the hell are you doing? You know, Glenn (09:18) Yeah. Tyler Lekas (09:27) So. Glenn (09:27) from going from the most boring asset, fixed income, to mobile home parks. Tyler Lekas (09:33) Yeah, and I had, you know, like my family's like most, like, you know, I was making a decent living and had good wages. And, you know, I was, I was doing pretty well for a, you know, late twenties and people just were like, dude, what the hell are you doing? So, and I was actually so broke after I bought that first property that I had to Uber and I worked for a courier service at night and I self-managed that asset during the day to pay my bills. Glenn (09:39) Yeah. Yeah Tyler Lekas (10:03) met Jason shortly after that, know end of Jason always says end of 2018 I would say beginning of 2019 same thing and he he had some capital and I was a little short on that at the time and So we ended up looking around we looked in like Georgia and Alabama Etc to like look for some more parks and we actually looked in Florida. We just couldn't make sense of any of the cap rates down here So we ended up I actually talked to Frank Rolfe, who we kind of call the godfather of mobile home park investing. And he's like, well, I hate the Southeast. I'm like, okay, well, if you didn't hate the Southeast, I was like, where would you invest down here? And he's like, well, I really hate it. I'd invest up in the Rust Belt. And he's like, but, you know, there's no institutional ownership in Little Rock, Arkansas, and there's no consolidation down there. And I heard there's some really good deals on some parks. He's like, you're gonna have to put up with a lot though. If you want to buy it, buy some stuff down there. And so we started looking for mobile home parks in Arkansas, in Little Rock. A buddy of mine had just started working at Marcus and Millichap. He dug up two parks for us and we ended up closing on those. And then the asset in Florida was stabilized. So I ended up moving to Arkansas to be our eyes and ears on the ground here. been here ever since. We bought 18 properties, 974 units of house to close on our We're about to close on our 19th property to make it a thousand thirteen and it's kind of all she wrote so Glenn (11:32) Awesome, man. And so in Arkansas, like, what would you say like the normal price per pad is in Arkansas? Tyler Lekas (11:44) So listed prices per pad, I think are significantly different than what we're buying stuff for. So like, you know, for example, something was just listed, it was 112 units, two operators probably you know, bought it and they bought it for $36,000 a pad. There was another one that just got listed, it was 220 units, was listed in like November, December, traded for 13.1 million, 227, so about 59,000 a pad. So you see stuff like that getting traded all over the place and smaller parks that are vacant and they maybe trade for 25 to 30 thousand a pad. Our average price per pad is like about 23. Before we bought some larger assets it was sub 20s. Like we bought 22 spaces for $289,750. We bought 38 spaces for 675,000, right? So you have like these, you know, we bought a lot of our stuff at really, really, really, you know, discount to par, but we were going direct to owner. And Jason and I were really tag teaming that. So Jason's a monster on the phones and just full background for your audience. Jason Posse is my business partner. He was on the podcast with you a month ago, something like that, six weeks ago. And so he's a monster on the phones. He calls the guys up, hooks the meeting. And since Arkansas is so good old boy, I go out and meet them. They're like, these guys are real, right? I get 50 phone calls a day from all these random brokers, but I want to meet with somebody, right? Because these guys will have a piece of hay in their mouth and a cowboy hat on and overalls, no shirt underneath, you know? And so they like the face to face stuff. And so that's how we've kind of, that's how we conglomerate or we put together a portfolio. Glenn (13:23) Yeah. Tyler Lekas (13:34) here in Little Rock. was a tag team effort. Jason called and I met and then we worked on the deal together and then we closed it. So just to give you a little more background. Glenn (13:45) So yeah, so I was thinking, I follow you a lot on LinkedIn, you're some, you know, what's a property that you, I don't know if this is the right wording, but what's a property that you've backed out of during contract? What was the reason for backing out? Tyler Lekas (14:02) Yeah, yeah, there's been a there's been a couple. I'll give you two examples without getting, again, too long winded. But there was one where we had a client of ours who I should say an investor of ours who had a 1031 exchange. We got the deal under contract. The wastewater treatment plant was failing. So we retraded the guys. Basically what we said the wastewater treatment plant was going to be to fix. They told us to pound sand. So we dropped it. There was another deal. Glenn (14:09) Yeah. you Tyler Lekas (14:32) out in Fort Smith, Arkansas, that was priced really well. The problem was they had no fall in their sewer lines, main sewer line running throughout the property. So what happened was, for your audience, right, sewer lines was at... Glenn (14:46) belly? Is it like a belly in the pipe like where it goes it doesn't go the right direction? Tyler Lekas (14:53) Yeah, it wasn't even a belly. They put this sewer line in, I think like a decade ago, and it was scheduled 10 PVC. And so when you scoped it, what happened was they laid the line flat. So when you scoped it, like this side of the line was actually okay, but all the, was just tilted enough to where at the front of the property, all the sewage pooled, and then it pushed up and flooded all the front houses. So it would like run out into the main street. The sewage would. So, and with that, they hadn't replaced any of the electrical pedestals. So they were like hundred amp. They were short circuiting. There was actually open wires in the sewage. So when we got the deal under contract, they wanted us to close really quick and they wanted hard money within 15 days. We thought that was a little strange, but I went out there and I ended up like walking the property and I was like, there's like open sewage like everywhere. Glenn (15:25) Yeah. Mm. Yeah. Tyler Lekas (15:52) And I was like, there's electrical wires all over the place. So we got a quote and it was like $70,000 to redo all the electrical pedestals. And then it was like another 150, 180 to redo the line. So it actually had fall. anyways, infrastructure issues that ended up leading to a retrade. And then we ended up dropping the deal. But most deals we vet kind of on the upfront and we make sure that we can close them and we kind of know the property going in. do enough due diligence, I'm sure just like you guys, we don't want to waste a bunch of time talking to a seller, getting something on a contract, spending time and money and then dropping the deal. It's a waste of everybody's time, you know. So those are two deals that come. Glenn (16:33) Yeah, so with the sewer treatment plants, we've actually ran into that just recently. We've never dealt with them before. And it's always been like the area where I've heard, I've never gotten into it, but it's about, I've been told that they could be between like 300 to $500,000 to replace it. And then the city, and I know there could be more. Tyler Lekas (17:00) For the bigger properties, 100 space plus, it could be a million bucks. Yeah, it's big money. Yeah. Glenn (17:02) Yeah. really? Yeah, I've never, yeah, like I said, and then the other thing that we were looking at, and the one that we just, literally retraded today to drop it, like, cause we bought a, we're buying a portfolio, but long story short, we dropped it because we're like, this is too much of a mess. And the, the, guy's like, Hey, you can call my, the guy that works on it, he'll tell you all about it. And the guy, the first thing, first thing he says, like that guy hasn't done anything I've told him to do in the past 20 years. And I'm like, Tyler Lekas (17:28) Yeah. Glenn (17:36) that's not a good. Yeah. And yeah, so we ended up dropping it because we knew we knew is like, this is a ticking time bomb that we can't really we're not we're not getting into it. But so, yeah. But the other thing I don't know if you have heard about it, but I've heard that you can actually sell or lease out the sewer treatment plant to. Tyler Lekas (17:38) Yeah, that's bad news. Yeah. Glenn (18:04) like external utility companies that will operate it for you. Have you ever done that? Tyler Lekas (18:09) We've never done that before. We only really have one private utility system and that's a septic system at one of our properties. And then we have lift station, we have a lift station system on another property, but everything is basically public, public, know, public water, public sewer on all of our other properties. So we haven't dove too much into, you know, the wastewater treatment plant kind of area. And it's actually funny, I'm not about to talk out of the other side of my mouth here. We're actually looking at a really large deal up in, Missouri right now and it actually has that. So there's a third party operator on the wastewater treatment plant that's at this property. So it's well wastewater treatment plant. And the, you know, Jason was like, you know, we're looking at the deal. Yeah. I would say Jason's the sunshine on the rain cloud. And yeah, I just like, I just, always want to like, look, if I can make the deal Swiss cheese and it still works, I'm good with it. You know? So I, you he was like, Hey, this is really Glenn (19:00) Me too, me too. Yeah. Tyler Lekas (19:12) this is awesome because you know there's a third party operator on that I'm like what's the contract look like can they leave what if they leave is there another third party contractor that we can get in there to to operate the deal how efficiently do they operate the deal do they actually fix the lines if the lines break or is it just the wastewater treatment plant like how does the deal work Jason's like trying to come up with some good news here, Tyler. So anyways, so we're actually, we haven't got the deal under contract. We're kind of in the initial phases of looking at it, but it's interesting. It's definitely a plus, I believe. If they are locked into a contract and stuff, my problem is like, what if they just leave overnight? I just... And then you got to operate it and you got to find it. I don't know. I don't know what that whole mechanism looks like. Like if there's a million dollar problem, right? Because this is a hundred and seventy five space park. So it's sprawling, right? So it's over like 30 acres. So all the lines. Yeah. So you're talking about a lot of flow, right? So you're not just talking about like a super tight knit park. So you're talking about a lot of flow that has to come. I you have to think about the pressure. You understand what I'm saying. Glenn (20:12) Yeah, wow. Yeah. Tyler Lekas (20:25) It's an interesting dichotomy. If the thing blows up, are they forced to? Or if they walk away from it, do you have to sue them? I don't want to deal with that. Glenn (20:34) Yeah, they're going bankrupt, then what do you do? Tyler Lekas (20:38) Right, they file for chapter seven and then you're left with it. So I don't know, I have a feeling it's always gonna come down to the guy that actually owns the property because he's on the hook. But I can't imagine these guys, I mean maybe there's insurance too, you can hit, operator has, yeah, something along those lines. But no, sorry, never dealt with it, we're kinda diving into the weeds at the moment though. Have you guys, are you guys dealing with that? I know you said you're dropping a deal, but have you guys? Glenn (20:49) yeah. Yeah, just thinking that. This is the first one. This is the first one. We had another one where it was crazy. The road had caved in and it was going into the sewer treatment plant. And yeah, it was wild. And then the most recent park we bought, we bought an RV park. It was on a sewer treatment plant, but the previous owner converted it to sewer for like for us. mean, with. Tyler Lekas (21:32) nice, that's awesome. Glenn (21:33) with a price, you know, he didn't do it for us. He converted it and then we bought it and we paid a premium for it. I would say that it's one of the best location parks we have, but it obviously never dealt with a park without, we always have septic and it always generally always have well. So it's like the first time we don't have either of them. Yeah. Tyler Lekas (21:51) wow, so you guys are buying, are you guys ever worried about the water table for your septic coming up and so then the ground does no longer leaches? Because I know the water table is pretty high in Florida. Glenn (22:05) Haven't had that issue. We had one road during this hurricane. I've never seen it before happen like this, but it was a dirt road going into the, was, thankfully it's an asphalt road going up to the park, but then the park took a dirt road in, which is actually harder to asphalt when you have a dirt road leading to your park. But since it was already there, it's a lot easier. Long story short, but the road like exploded from the water tables coming up, which I've never seen before. And the divots in the road were like three feet. Like there was like a big valley in the road from the water tables washing out. yeah, we, guess hopefully that last hurricane that we had was like out of control. Like it's the worst hurricane we've ever seen. Water levels at a higher, it flooded in areas it's never flooded before. I mean, at least on record. So it's kind of like. Yeah, hopefully that doesn't happen again. But yeah, it's Tyler Lekas (23:08) Yeah, it's a problem. I it's the natural natural disaster risk. And I know this is a, you know, this is a podcast where we're bouncing ideas off each other and I don't want to dive too much into your business. But have you guys seen it like become impossible to insure any of your parks? Are you guys buying anything on the coast or anything like that? I mean, I just heard insurance premiums have gone bonkers down there. Glenn (23:10) Yeah. Sure. Yeah. Yeah, so generally the way we insure is we buy, not get insurance on the mobile homes and we don't, we did when we first started and we could get insurance before Irma was the last hurricane that it happened and then they pretty much anything older than 1993 or older. I think 1993 was when Hurricane Andrew came through and they changed building code. regulation. So before that, that's why most insurance come, we can't, you're unable to find it. Like we've looked very hard with specialists, all types of people, and you can't get wind insurance on your mobile homes, which banks require. And we generally buy our mobile home parks with park owned homes, and then we convert them to tenant owned with private money. So if we were to go through the banks, we have to underwrite it with the lot rents and generally the prices we're paying don't really match the lot rents. So, they wouldn't be able to do it. So long story short, we'd go private and then we roll out of that into a conventional financing. But by that time it'd be tenant owned homes without really you're just having general liability insurance is all you need. But yeah, we've had a little bit the most, there's two hurricanes. The first one was Tyler Lekas (24:54) next Glenn (25:00) coastal flooding we had two parks take on a little bit of water and really one park the units took on water and then the the other one was like a hurricane three going straight into Tampa like just south of it and that one was river flooding which is different and thankfully our parks did not get flooded Lot of parks did that like on farmland it actually flowed right into these parks and they they they took on some flooding but it was actually the trees that were the most expensive part for us because they you know, they land on power lines and then they rip down the poles which is like two to three thousand dollars a pole and we we went through like I mean, 50,000. We have a full-time electric guy working for us right now, a full-time roofer and a full-time tree guy right now. So it's hopefully they took out all the weak trees this season and we'll have not as many issues. But I would say overall, the issues are minor. It's just you have a portfolio of 30 properties. You're going to have a lot of, you know, a lot of trees falling down. So if you look at each individual at the expense wasn't too bad, but it's like Tyler Lekas (26:00) Yeah. Glenn (26:18) Death by a thousand cuts when you have 30 other with who knows what's happening to each one. Tyler Lekas (26:26) Amen. Yeah, it's definitely, it's the more assets you get, it's you can't really get away from the problems. There's always something going on. Yeah, I saw an email come in last night with a resident. It was like 104 in the morning and a resident email and said, I can't log into my account. I need somebody to call me in 10 to 15 minutes. Glenn (26:52) Right away. Tyler Lekas (26:53) Like, you know, like they put it through like our tenant web access on rep manager. And I just was like, what are you talking about, man? You know? But yeah, the more properties you have, you definitely have to have like an infrastructure. Do you guys have, you guys said there was like a people that, do you have like a call center? Like what does your corporate kind of team look like? Just out of curiosity. Glenn (26:57) Yeah. Yeah, yeah. Definitely. So my background is I work for American Homes for Rent and we pretty much operate it as a call center, the whole operation. So my goal was to kind of duplicate that. And we have three people in Nicaragua and Mexico, but we have a fourth one being hired soon. And then we have two local and then we have park managers. So the two local people. One focuses on occupied units, the other one focuses on vacant units and leasing. And then we kind of, as we need more administrative type staff, we'll pretty much hire VAs through like Mexico. Yeah, I mean, they pretty much, they are really good workers. And they can accomplish everything we're looking for. So, yeah, so what about you? Tyler Lekas (27:58) really, only VAs, Nice. Yeah, we've got a call center that we've hired through like a third party. They hired, they answered all of our calls throughout the whole portfolio. We've got a leasing team down in the Philippines. They're actually down today because they got hit with that typhoon. Yeah, and they seem to think they got with typhoons like eight to 10 times a year. Glenn (28:26) Nice. wow. Tyler Lekas (28:37) It's kind of a wild place to live. I didn't even realize. But yeah, and then what I was actually looking for is kind of like what some companies call the glue. And so like an administrative assistant, maybe you overpay a little bit. So it's not like that, you know, 35 to 40, it's more like that 45 to 50, but they like take on a lot of like the admin work. Like for example, I mean, not saying this is a huge project, but as you know, you and I both know there's a lot of those little projects going on every, every single day. But like, you know, we're trying to do like interactive maps for all of our properties. like you got a map and then you you can interactively change it like on rep manager or another system. So I'm working with like Upwork, a guy on Upwork right now. But again, that like distracts me from, you know, like we're doing some stuff for a refi right now. We're doing some stuff, you know, we've got the whole construction team that we're trying to infill units in right, you know, blah, blah, blah, blah, and so on and so forth. So like stuff like that, you know, electrical accounts, water accounts, keeping up on those for all the different properties. So I get administrative assistant is really the next person we really want to hire. And then like a full time construction manager that's probably going to be like that 75 to 80 range that he'll drive around the state. He'll make sure everything's done correctly. He'll check all the, you know, the contractors work, which we have, you know, we're rehabbing 16 park owned homes right now up in Jonesboro. I drive up there every Friday to make sure that those construction guys are doing what they're supposed to. And we've blown through probably a hundred GCs and different contractors that have a crew of guys that can rehab mobile homes because again, they stole from us. So they didn't get work done or they didn't get. Glenn (30:06) Yeah. Yeah. Tyler Lekas (30:20) you know, whatever. So that's kind what we want to hire next. But yeah, right now we've got a full-time bookkeeper. She helps with the water as well. She kind of stepped into the water role. She's a saint and a godsend really. She's like one of the only employees we've ever hired who's taken on more work than she needed to without a raise or even us asking her to do it. She's pretty incredible. I don't know who raised her, but thank God for that. Glenn (30:50) Hahaha. Tyler Lekas (30:52) And, and then we just hired a district manager and he's probably, he's like 24, but he's, he's over 10 of our assets and he's just a really hard worker and somebody I don't have to micromanage. So I really like him. Those are kind of our two superstars. And then we got some other onsite managers that, just kind of help us with the eyes and ears on the ground and they do okay. But that's kind of the whole, that's kind of the structure right there, but. Glenn (31:16) Yep. Yep. Tyler Lekas (31:20) the admin assistant being in the office. I want to hire that out to a VA, kind like you guys are doing, but I want them in the office. I want an administrative assistant that's really organized that I can be like, do this, do that, you're accountable because I can see you in the office next door. I kind of like that feeling, even if I have to pay a little bit more for it. I don't know if you guys feel the same way or you guys are just like, look, here's the numbers and we got to stay within this budget. I don't know how you feel about that. Do you guys have a... Glenn (31:53) Yeah, so the way I try to have, I have one person that I pretty much lean on pretty heavily and I let her kind of be in charge of the VA. So I try not to talk to the VA's at all actually. But it's because, and it's not because I don't want to talk to them, it's because it kind of leaves that chain of command and she kind of knows what I'm looking for. And if you look at each role, we have Tyler Lekas (32:08) wow. Glenn (32:22) For us, it's the big one is delinquency. We have leasing and marketing. So applications that come in that can all be done remotely. then we have, you know, answering the phones and then accounting. So the accounting, we pretty much are pivoting one of our hires over to just constantly. All she's doing is reconciling and doing billing and everything. So she goes through all the bills she makes her they're all there. And then we actually have a third party accounting team that comes behind us to to manage that as well. So it's like a fractional CFO that runs in a bookkeeping company that, you know, oversees most of it. And it's a lot, you know, but I would say that the goal is to lean on this one girl that I have to her name's Tara. She's great. And I You know, she she pretty much manages our the operational aspect of it. And my background is at leasing for the last company that I worked for, American Homes for Rent. And I pretty much. Try to recreate that because they're, you know, we managed, you know, we were leasing 350 houses a month. So, yeah, so I in Florida alone, so I was just like, if I could just create a small version of that over here, you know, so that's kind of. Tyler Lekas (33:43) Wow. Yeah. Glenn (33:51) what we're trying to do and obviously lots of mistakes happen. And, you know, we just, the big one for us as well is that the construction manager, you know, that's where Garrett and I kind of oversee both sides. He kind of drives properties regularly and I'll, you know, make sure that the billing and everything's correct and consistent. And we try to streamline it. like almost do things by measurement. so that every quote will be the same is really what it comes down to. Like, skirting costs this much per foot, then we have, you know, for whatever it is. Tyler Lekas (34:32) No, it makes a lot of sense. And it's, it's funny. You say driving the properties regularly. was about to ask you about that because every single time I drive a property I haven't been to in like three or four months. I mean, it's like, I actually just made a video about this and I sent it to our marketing guy. I'm posting on social media here soon, but like, there was like three dead trees in this property and I missed it. Whatever four months ago or whatever it was, but I made a video about it I was just like, I talked to our manager there and I was like, what, what, why is this Glenn (34:47) Yeah. Tyler Lekas (35:02) tree dead and it's like over the top of one of the mobile homes. Like it's any sort of windstorm comes up like this tree is going on this house. This is a problem. Like we got to get this thing going. So like I scheduled the tree guy that we normally use in this area, called him up on the phone, got a schedule like right there on the spot. And then it's like, you know, non-running vehicles. Like we don't want non-running vehicles in our property. It's like, Hey, you got to do your job here. You know, like they don't. I come back through and those vehicles are still here. Glenn (35:06) Yeah. Yeah. Uh-uh. Tyler Lekas (35:32) haven't gotten violations for that and that and that that that that that that that right then you gotta go like you gotta be super clear about that and like this manager has been with us for two years now and it's like this is not our first conversation you know so it's it's it's like i don't know how to get these guys to care and you know frank rolf does something kind of interesting where he he has somebody drive the property and and like a third party like you hire off like quick jobs or like what Glenn (35:39) Yeah. Tyler Lekas (36:02) is it called on Craigslist? Yeah, whatever. Yeah. And, even those videos, they don't like get behind the houses, right? There's like mattresses sometimes stacked up behind mobile homes and refrigerators and everything else. Like you gotta go out and walk the properties. I I've heard too many guys on LinkedIn that may have way more robust operations than we do. Say like, I love being an outside operator. That means I just don't have to go to the properties. My onsite manager takes care of it all. Glenn (36:03) Yep, Craigslist, yeah. Tyler Lekas (36:32) I don't know. I don't know how you do that. You need somebody who cares to go on the property because there's just a lot of stuff that gets out of sorts. And these managers that live inside mobile home parks, and I mean this respectfully to anybody that's listening to this podcast that lives inside of a mobile home park and maybe manages a property, they seem to live like the residents a little bit, which is not super high quality. So you kind of have to remind them that, look, you're having 15 mattresses out on your front porch, on the mold that's going on there. Glenn (36:56) Yeah. Tyler Lekas (37:04) like not it's not exactly what we want the community to look like here. We want it to be clean. You know, or the I just got onto a resident who's now leaving because she was feeding like 18 stray cats at a vacant park owned home that was right next to her. So she was leaving out all this garbage. So cats were coming there and then raccoons and rats were coming there at night. Right. So then we had a rat problem and a raccoon problem. So I like, hey, look, you do that one more time. You're gone, you know, and the manager didn't want to have that conversation. because she'd known the person for 20 years and she babysitted them or whatever. anyways, getting on site and running your parks. I was just about to go down and ask you that same thing. It sounds like your business partner is more on that side of the business. Do you drive parks as well? that? Glenn (37:50) We kind of, I think it's kind of where we have our meetings, because we live next to each other, pretty close down the street. So we, we generally, I mean, we talk on the phone like every day, but we'll, what we always do is we plot it out by where the Longhorn steak houses are. So we'll like say like, okay, Longhorn steak house is right over here. So we'll go, which, which put it into like the, you know, the order that Longhorn ends up at one o'clock or something. Tyler Lekas (38:19) Yeah, that's awesome. Glenn (38:20) That's our big thing. It's crazy. All of our properties have a Longhorn steakhouse very close to it. So we generally go to Longhorn steakhouse for lunch and it's kind of like a treat. we go early in the morning and we generally finish up around one that's at Longhorn. We know where all the Longhorn steakhouses are in Florida. So we kind of regulars at all of them. Tyler Lekas (38:40) Nice, yeah, it's... Nice, that's awesome. Yeah, it's, I always say, especially when returning a property around, crack heads aren't up at eight. It makes walking property really easily. you know, the problem residents usually like to sleep in a little bit. Not that I'm not open to having tough conversations, but you know, sometimes when you're just doing a property walk and you just got to hand out some violations and kind of direct your manager. Glenn (38:54) Yeah. Yeah. Tyler Lekas (39:10) The early morning visits are the less chaotic. You go there at five o'clock, you're gonna get stopped by a lot of people. Glenn (39:17) stopped. You're not. Definitely. So yeah, so something we do is I require notices for every property because there's always problems no matter what. And it's on the 15th of every month. they like what we because of the way the three day notices hit, you can't have the three day notices overlap like seven day notices for us because they don't they kind of cancel out each other. So we try to we we post notices on the fifth. or the sixth three days and then by then we should know whether we're evicting and then we go through the second time around on the 15th. So the properties are forced to be driven twice and generally the park manager will take pictures on the day that they're doing the three day notices and then they'll circle back on the 15th to either post them like they took the pictures on the on that day when they're posting on the six and then they'll post them on the. you know, on the 15th of the month. So yeah, it's just because we have smaller parks, you can't have like one person per park. So that's why they they're assigned to groups of parks is all we're doing. So Tyler Lekas (40:29) I Yeah, I, I, Glenn (40:31) But it's not perfect, not perfect, I would say. it's over time and it's constantly combing, just like what you're saying. mean, like, there might be crackheads in the neighborhood now, but in a year from now, they will not be there. I can assure you. We're weaning them out while putting better residents in. Tyler Lekas (40:44) It will definitely not be there. Yep. sure yeah and like what I would say to people as well they're like you know stop in a conversation with a guy and they're like well you how are you to like you know build some standard operating procedures for a management company and kind of like get it get a rocket I'm like Again, you gotta look at who the quality of your talent is at these properties. I had to write basically a one-pager on how to take pictures of the notices and then log in in a rep manager. Glenn (41:16) Yeah, definitely. Tyler Lekas (41:27) Like, hey, I just want to let you know, if you take a picture and when we check your Friday report, if there's a finger over the top of your camera, you're going to have to retake it. Right? Hey, if it's off center and you're taking it like sideways and upside down, so we can't read the notice, you're going have to retake it. If it's blurry, you're going to have to retake it. If you take it from too far away and then we have to zoom in on it and it's too grainy to read, you're going to have to retake it. Like all things that I, to me, would be like very common sense, like you go up, Glenn (41:36) Yeah. Tyler Lekas (41:57) it's framed in the middle of the picture, right? You take a picture, you upload it, know, RentManager, RMAP Suite Pro is really simple system to use, like crazy simple. You take pictures and you know exactly what the picture looks like. But like I had, like, it was like, I want to say six weeks of twice a week calls with all of our managers to get everybody to do it. Like, I just was like, I don't think you understand, like, the... brain damage that the on-site operations have to go through. That's taking pictures of notices and taking pictures of making sure that like, Friday reports are basically like property conditions and stuff like that. You couldn't get our managers to frame in a notice they posted on the door correctly. mean, it's a little mind-numbing at times. Glenn (42:48) Yeah, so I have one story to compare. I had one girl, she, I didn't know she was doing it and she did it for a long time, but she was taking blue painter's tape and she was framing out the notice on the door with the blue painter's tape. So it was a blue frame around every notice on every door. And I'm like, what are you doing? I was like, do you understand? It's like, we don't want to be like, just like. Dashing our residents with this blue painters tape And if you drove through the neighborhood you would see every single person that's been laid on their their rent because they have this blue painters tape around the notice and I'm like She's like nobody told me that I couldn't do that. I was like, okay We'll have to yeah, we'll have to make a memo on that one. I guess Tyler Lekas (43:38) Yeah, like I just feel like everything has to be in an SOP. Like you have to treat you have to treat and again, like, you know, I'm sure there's some somebody's just going to listen to this and it's going to be all offended by this. But like you've got to treat the employees like the robots. Like you take you put your left foot in front of your right and then you walk up the stairs. And then when you get to the door, you take a piece of masking tape and you tear it off with your teeth and then you put it at the top left hand corner and the bottom right hand corner. Glenn (43:42) Yeah, yeah. Tyler Lekas (44:08) and you don't shove it in their door, you don't throw it and wad it up and throw it out their door, you don't try and slip it underneath their door, you tape the top left corner, you tape the bottom right corner, then you take a picture of it and it's centered in your, I mean, it's like everything has to be laid out. Then you walk to the next house. So if you're at one, then you walk to two. And if two doesn't have anything wrong with it, then you walk to three, you know what I mean? It's like, I just feel like you have to like, like, Glenn (44:34) Yeah, I understand. Tyler Lekas (44:35) Robots and it's it's sad but it's I just people that think for themselves. I'm like, my god, like my district manager. We just hired He He Was like hey Ty's won't let you know I went out and I took the company credit card because he's got he's got a card He's like I just went to Home Depot. I bought a roller right like totally we can roll out a lot right, and like measure it. And then he goes, I bought string and I bought six posts because we had a new home coming in. He's like, I just want you to know, I measured the lot out. I measured it 20 feet because we put a driveway in between each house. Right. He goes, I measured it 20 feet from the other house. And then he goes, I, and I marked it out for our movers because he goes, I know we're running around tomorrow and I just don't want to miss that, that house coming in. Right. So just in case, you know, dusty or guy, we got a mover like pulling himself. Glenn (45:21) Yeah, yeah, Tyler Lekas (45:24) I felt like God was smiling on me, like the sunshine came down, like the, you know, like he thought for himself, he's like, hopefully this is okay, I spent some money on some twine and some, you know, steaks and a roller, and I thought for myself, and I was like, it's God's gift right there. Glenn (45:27) Hahaha. Yeah, awesome. Tyler Lekas (45:42) Man, that is beautiful. And then Dusty came out and Austin was there to meet him. Austin's our district manager. And Austin was still there to meet him, but he had everything all staked out. Dusty knew exactly where to put the house if he needed to. And it was beautiful. was like, chef's kiss. Somebody thinks for themselves. Holy crap. It's some common sense. Think it ahead. So I don't have to do it. So it's a... Glenn (45:59) There you go. Tyler Lekas (46:08) It's a low bar out there, it's the operations as we're dealing with. I think another thing, I don't mean to go too far off course with this, but I another thing that people don't realize with rental increases, because I've had some interesting conversations with people about rental increases. If you don't increase rent, don't get to increase the residents, they can't ask more of you on the management side because you can't pay anybody. And you can't pay for Infrastructure and you you can't pay to keep the property up and you can't pay for new improvements Because the government is constantly raising taxes on us insurance is constantly raising their rates Our plumbers are constantly raising their rates, etc. So like as the lot rents get higher, right? It's not it's not pretty I don't like it any more than anybody else does as prices go up, but we get more professional management, right? And that's better for the residents. We get more amenities, which is better for the residents the park stay around because Glenn (47:07) Yes. Tyler Lekas (47:08) A lot of people, I don't think, realize that if the land value of the asset eclipses the NOI multiple, the park goes away and it gets demolished for an A-class apartment building or a Home Depot or whatever. If you don't understand that math, I've got a bunch of LinkedIn posts about it, but just run the math. If the property is worth a million dollars and the NOI multiple is worth 800,000, somebody's going to come in there and just develop it. It's like these rental increases, they're necessary for continuing to improve the asset, improve the community. And I think that's what our industry really needs is higher lot rents to continue to get more high quality management and more high quality care for the residents in their communities. I have you had to difficult conversations with people in the past about rental increase? Glenn (47:58) Yeah, I I completely agree with you. I think with us, we like to have a very high standard of, for one, no clutter. Everything has to be kept in a storage shed. But also, we do our part. For the second that there's a, for us, it's septic tanks. It's a big expense. We do add PVC fencing, new asphalt. we are almost like self-insuring the mobile homes as well, which we don't really say out loud, but it's like there's an expense to if something happens and say somebody can't afford it, we'll actually help them out, but charge them back over the course of the loan or maybe the next year or so. We had somebody with an electrical issue happening to their mobile home that they live in and it's their mobile home. So it's kind of like, well. Do we want this mobile home to catch on fire or do we want to fix the problem and then we just have to charge it back? You know, so we we told them we'll fix it, but we can we're to have to charge you back. And that's like literally no interest. No, we're not profiting in any way. We're just giving them a safe place to live. So, yeah, I mean, the higher rents increase the the the. Really, it's I mean, if they're too high, nobody will live there. And and if they're you know, the market will decide that and yeah, we're in the same boat. I mean, we're in Florida as well. So the rents that we're charging are probably double. It's, it's, you know, some, you know, some of our properties are getting, or one of our properties is getting about 900 a month lot rent. So it's kind of like, yeah. So it's a, I'll send you the video of the unit, but of the guy that just renovated it looks like. Tyler Lekas (49:44) Wow. Glenn (49:54) beautiful construction, but these people take good care of their homes and and It's it's in the Senate center of the city of Tampa. So you're you're really there's no more affordable housing in that area except for our mobile home parks compared to you know, a two-bedroom one-bath apartment Would be like 18 1900. So you half of that is pretty much a lot rent, you know, so Yeah, lot rents are important. I've heard from other people, other operators, one very good one. He's he's that's what he said. He said, look at what the two bedroom apartments are leasing for. And half of that number should be what the lot rents are. And and so far I've seen it. It's like that's pretty accurate. You know, so if it's a if it's a thousand dollars for a two bedroom, it should be five hundred. If it's 1500 for a two bedroom, it's 750. Tyler Lekas (50:54) Amen. Yeah, it's definitely the like we're Little Rock. It's kind of interesting like the two bedroom, one baths, like apartments, non-subsidized, know, section eight housing. You know, they're creeping up on like 14, 1500 and we're still at, you know, our most of our properties in Little Rock are 395. And so we're, you know, we're at that like three X. So we've got like a, there's like a, a definitely a, a bridge that we're trying to close there. Some of the institutional guys like BlackRock just bought a company, a roots management, whatever spot of property. They're at like four 65 and some other real flagships here. I don't know you guys know flagship communities, but they're here. They're out like four 55 or four 50. So they're, they're creeping up there, but, but it's, there's a, there's an interesting rent arbitrage here in Little Rock that a lot of people didn't maybe still haven't seen because Little Rock's kind of off the radar but it's something we've like we took most of our properties But again, somebody's going to flip their lid over this, but we took most of our properties and took them from 125 to 300 almost immediately. know, like lot of lot rents here were 100, 125 to 300. And we took them to 300 because that's where the market was. Like that's where every other operator was operating at. Then we took them slowly to 395 over the last couple of years. But it's, it's got to continue to like, and most of these properties, like you take over lot rents are probably super low, but they're in Glenn (52:10) . Tyler Lekas (52:32) terrible shape. The roads have puddles and the infrastructure has fallen apart. There's bad, really bad people in there. There's abandoned homes that need to be demoed. Stuff costs money, you know? I don't know why we get demonized so much. I remember one time I was living in an apartment. I bought a house recently, but I was living in an apartment building. They raised rents from 1,100 to 1,400 overnight. Like after my year lease got up. I didn't see anybody, I didn't see any of them show up in the paper and get demonized. Like somehow apartment guys get away with it, you know? And it's like they're doing that because they got to improve Glenn (52:44) Yeah. Tyler Lekas (53:08) property to you know so it's a lot exactly Glenn (53:09) Yeah. If you didn't like it, you could leave. I know that sounds terrible, but it's, I mean, if you didn't like the 300, yeah, if it was $300, you're like, well, I'm gonna go find something cheaper. And if there's nothing else, mean, what, you know, but I would say that, like you said, it's not even about like, I mean, yeah, there's definitely money to be made, but I would say that you're adding the places we're buying were The reason it's we buy, I generally were buying them from tired landlords that are just can't, they're exhausted of all funds. They aren't able to raise, they don't raise rents. And then they're at the tail end of the management. So it's like, you can raise rents on the front end and yeah, some people would pay it, but you have to constantly reinvest into the park to consistently keep up with the market. So you have to be able to maintain. that the quality to keep your tenants good, residents happy, that, you know, maintain, you know, the value of the park as well. So it doesn't get scraped and, you know, some car wash gets put into the place of your mobile home park. Tyler Lekas (54:28) Yeah, I always want to be super transparent with everybody. I didn't get into business because I'm Mother Teresa. Don't ever get that twisted. I want to make sure I can put new tires on my car when they wear out. I want to make sure I got money in the bank so if I send my kids to college, I don't have any kids right now, but if I want to send my kids to college one day, I got enough money so I can pay for that for cash. I want to be able to go on a vacation. Hey, look, I did not get into this business to make zero dollars. So it's not all altruistic, but it is necessary for the health of the asset. Don't kid yourself. And so I think those tough conversations as us mobile home park operators have to continue to have and face them head on versus apologizing for it. Because I'm certainly not going to apologize for raising rents and dumping hundreds of thousands or millions of dollars back into the portfolio over the life of the assets. making everybody's life better. Like I remember we bought this property where I could not drive. I used to have a kind of a bigger SUV that I drove around and there was legitimately two foot potholes and this park had not been paved in 30 years. So these people were driving more expensive cars than they were the value of their house. So they would bottom out in these potholes, wreck their car, bang up the bottom of their car, half flat tires, et cetera. So we eventually paved the roads. And like just that alone was like $78,000 and we paid for the driveways too while we were there. And everybody was ridiculously happy, but that happened after we raised rents from 125 to 300. And we couldn't do it before that, right? So it actually happened on a refi that these two assets together, but we refied these two assets. We pushed rents, cleaned up the books, refied them, pulled some cash back out and then dumped a bunch of that cash right back into the property for tree trimming, road work, Infrastructure issues, you know putting new homes on pads, etc, etc Now this property looks completely different if I showed you pictures before and after you'd be like I like it looked like a you know Look like Haiti and then it looks it looks like a regular I mean, it was like dogs were running all over the place, know, it was just bad So I'm sure you have similar stories that you just don't Glenn (56:55) Yeah, I think we can go on and on. I'm actually thinking of other stories, I let's move on to the what's so Tyler, you are going to be at 1000 units very soon. Where do you where where would you I guess what's the next goal after 1000 you're making yourself a cake and Tyler Lekas (57:16) Yeah, yeah, yeah, was, I was, yeah, so I'm gonna, I'm gonna make myself a stupid cake and post something on social media. But, yeah, I mean, next up after 1000 units really is we're trying to get to 10,000, 10,000 of these things by 2028, 2029. And You know, we're trying to build a real company out of it. You 500 employees, whole nine yards. Don't know if we ever get there, but that's really where we would like to get to. That's kind of the goal. Jason and I have always kind of wanted to build a big, company. And we think the vehicle of mobile home parks is a really good way to do that. And so that's what we'd like to do. Don't know, like I said, no idea if we're ever going to get there, but that's where we'd like to go. And that starts with another 40 space park, another 30 space park, another 100 space park. know just one foot in front of the other and continue to kind of systemize the whole thing and hire really good people to do the jobs that are kind of sucking up your time to continue to go out and build the business so that's that's what we're trying to get to and You know, it's a lot of fun, you know, trying to, I mean, I love the deal side. I love the underwriting side. That's kind of like the stuff that gets me excited about the business. You know, the day-to-day management side doesn't get me super excited. I'll do it because it's necessary for the health of the business. But I love the underwriting side. I love driving properties and like, what's going on here? Let's figure this out. What's happening here? How do we make these numbers work? They're dealing with the bank, dealing with investors. I like all that stuff. And I do love the initial turn as well, where you actually get to turn an asset and then you kind of see the before and after and you get to see kind of the fruits of your labor. When I was in finance, right, you'd make some money on Tesla stock, but like all you saw was the green, like you saw the graph going up. But on this, like you see the turn of the asset and like there's literal money that you're making from the turn and you're helping everybody, you you're better in everybody's lives, which is really cool. Glenn (59:12) Yeah. Tyler Lekas (59:25) and it's a win-win for everybody. that's kind of the next steps. Anything I missed there that you were looking for in particular? Glenn (59:34) No, no, where can people find you? Tyler Lekas (59:37) They can find me at Tyler at MHCI group. You can follow me on LinkedIn. I got some pretty good, some funny content on there and I try to be entertaining because I'm trying to build a kind of a personal brand. So investors trust us a little bit more and we go out and raise money. But yeah, LinkedIn or Tyler at MHCI group. You guys can reach out to me there. Glenn (59:59) Awesome, Tyler. Well, thanks for coming on the show. Tyler Lekas (1:00:02) Hey, thanks, Glenn. I appreciate your time.