Latest / The Land Development Podcast with Ryan Glick / The Opportunity in Manufactured Housing with Andrew Cramer - TLP189

Transcript

The Opportunity in Manufactured Housing with Andrew Cramer - TLP189 · The Land Development Podcast with Ryan Glick

• 0:00
  SPEAKER_00: You're never going to win even when you win, when it comes to government.
• 0:03
  SPEAKER_00: And I was right.
• 0:05
  SPEAKER_00: And I won, but I still lost.
• 0:21
  SPEAKER_01: Hey, what's going on, everybody?
• 0:23
  SPEAKER_01: Welcome back to the Land Development Podcast.
• 0:25
  SPEAKER_01: I am your host, Ryan Glick.
• 0:27
  SPEAKER_01: I'm excited today to be joined by Andrew Kramer.
• 0:30
  SPEAKER_01: Andrew is the principal at Bridgeview Asset Management.
• 0:33
  SPEAKER_01: Andrew, thanks for joining me.
• 0:34
  SPEAKER_00: Thanks, man.
• 0:35
  SPEAKER_00: Thanks for being here.
• 0:36
  SPEAKER_01: Yeah, yeah, absolutely.
• 0:37
  SPEAKER_01: And I, you know, I when I was preparing for this, you have an interesting path, it looks like, getting into this industry just based on what you went to school for and what you started uh started out working as.
• 0:49
  SPEAKER_01: And you started in chemistry, it looks like, or at least in the in that field.
• 0:54
  SPEAKER_01: And so I I got to hear the story on how you went from that to getting into real estate and development.
• 0:59
  SPEAKER_00: Yeah, no, I uh I as a little boy I dreamed of being in mobile home park management.
• 1:03
  SPEAKER_00: Doesn't everybody?
• 1:04
  SPEAKER_00: No, yeah.
• 1:04
  SPEAKER_00: It's a weird path.
• 1:06
  SPEAKER_00: Um yeah, I kind of I, you know, we're principally in the manufactured home park kind of development management ownership business, and it's a weird, uh it's it particularly I would say the last 10 years it's changed quite a bit.
• 1:18
  SPEAKER_00: So I've been doing this about 14 years, and and I it used to be this very funny kind of offshoot of multifamily housing.
• 1:26
  SPEAKER_00: It wasn't really its own asset category, and it's still very sort of a niche investment product, particularly on the on the development side.
• 1:34
  SPEAKER_00: Almost no one's building manufactured home parks, especially in the Northwest.
• 1:38
  SPEAKER_00: So, you know, I kind of I kind of slowly worked my way into real estate.
• 1:42
  SPEAKER_00: I was uh I went to graduate school for chemistry, as you said, and then ended up working for a REIT, believe it or not, that specialized in like class A lab space.
• 1:51
  SPEAKER_00: So I sort of like shifted in a little bit there, and then from there, this is you're going back a long time and kind of during the recession, got laid off, ended up starting a business that was actually an urgent care center that sort of, you know, a little bit nearer, got I got a lot of construction experience there because I ended up doing the entire fit out.
• 2:09
  SPEAKER_00: I started with a cold shell.
• 2:11
  SPEAKER_00: So that was more construction, and then ended up in the northwest.
• 2:15
  SPEAKER_00: And then just because it was such a weird investment climate, I kind of wanted to build apartments or buy apartments, and I just couldn't, didn't have the money.
• 2:24
  SPEAKER_00: So uh that I could borrow essentially hard, hard money at 12% interest.
• 2:29
  SPEAKER_00: And the only thing I could buy was a mobile home park.
• 2:31
  SPEAKER_00: So bought a park in southeast Portland, uh, managed it, turned, you know, cranked on it for about a year, refinanced it, took those proceeds, bought another one, um, and then brought some investors along the way and various different people.
• 2:44
  SPEAKER_00: And then, you know, we've done about 35 different properties now, currently own 23.
• 2:50
  SPEAKER_01: Well, I think uh one of the things I was gonna ask you, and you kind of answered this a little bit in how you described your path to get there, was you know, it's not always the easiest path or most um, I guess it's there's a lot of risk when you jump out on your own and you start your own company and you build your own, whether it's an investment company or a development company.
• 3:07
  SPEAKER_01: And you had that early experience, it sounds like, when you started the urgent care center.
• 3:12
  SPEAKER_01: And so you were you were basically your own boss then and you were running that.
• 3:15
  SPEAKER_01: So you had that experience before you ended up uh starting Bridgeview Asset Management.
• 3:19
  SPEAKER_01: Did that ease your experience starting it a little bit, or did you still have some of those early, you know, nerves getting into doing this on your own?
• 3:27
  SPEAKER_00: Real estate is a is a funny business in the sense that it's so like there's it's so high capital requirement at the front end, and you're sort of relatively cash flow poor.
• 3:39
  SPEAKER_00: Uh particularly, you know, it's a scale business, and everybody aspires to kind of you know to do like the smallest amount possible and control the most amount of real estate possible.
• 3:48
  SPEAKER_00: That's kind of like the investment management real estate dream.
• 3:52
  SPEAKER_00: We never did it that way just because we started at the ground.
• 3:55
  SPEAKER_00: Um, so you know, I I had a construction company for a number of years that sort of merged into the asset management company.
• 4:01
  SPEAKER_00: We had the investment management business that sort of interacted with investment, that all kind of merged over the property management, that all kind of merged together.
• 4:08
  SPEAKER_00: So we've always been pretty integrated.
• 4:10
  SPEAKER_00: And I think so, from a risk standpoint, you know, I I guess when I was starting, I I I didn't really I always I always kind of looked at it as kind of classic entrepreneur, just kind of getting to the next job.
• 4:26
  SPEAKER_00: And I kind of had different, you know, I was doing third-party construction work, so I had that very clear like bid this job, go get this and get paid, and then try and get to the next job and try and take a little bit of money out every once in a while.
• 4:37
  SPEAKER_00: So that sort of like classic small construction company experience I had.
• 4:40
  SPEAKER_00: And then on the investment management side, really kind of learning what different investors' appetites were and what people wanted to do.
• 4:47
  SPEAKER_00: And that really led me, you know, to on the development side, actually building, um, you know, building really, you know, one was a park right next to another park, and the the other one was a full-on new engineered development from you know, from the ground up to kind of from like greenfield to uh a finished product.
• 5:02
  SPEAKER_00: So the it was always to me, you know, from a risk standpoint, to be honest, I didn't really think about it that much.
• 5:08
  SPEAKER_00: Like, oh my God, is this not gonna work?
• 5:09
  SPEAKER_00: Because I was so focused on getting to the next thing.
• 5:12
  SPEAKER_00: It was rare, particularly early on, that I was taking a step back and being like, will this business be successful?
• 5:19
  SPEAKER_00: It was much more just getting to the next job.
• 5:22
  SPEAKER_00: Um, and that's kind of been even now that we're sort of at a bigger scale, I I I try, I do still tend to think programmatically about what is the next, you know, what can we influence and change right now?
• 5:35
  SPEAKER_00: And let me focus my efforts on that.
• 5:37
  SPEAKER_00: And let me try and take my team who has that whirlwind of activity every day, and can we sort of extract some effort to all uniquely focus on on this one thing?
• 5:46
  SPEAKER_00: So I, you know, I'm that's just kind of, you know, that's just kind of how the how I've tried, you know, attempted to spend my time and run the business.
• 5:54
  SPEAKER_01: So let's talk about your company really quick.
• 5:56
  SPEAKER_01: And is it I think you said this in the beginning as well, but are you exclusively doing manufactured home communities?
• 6:03
  SPEAKER_01: Is that kind of the business model for you guys?
• 6:05
  SPEAKER_01: Pretty much.
• 6:06
  SPEAKER_00: Yeah, I'd say we're we're heavy, you know, we're basically in the Pacific Northwest.
• 6:10
  SPEAKER_00: Um, and I would say within that, we do a lot more kind of development type work.
• 6:14
  SPEAKER_00: Like we have a project in eastern Washington that's a 65-unit park that we bought as a 25 unit, you know, 25 lot.
• 6:22
  SPEAKER_00: So if you think about like a subdivision, it's very similar.
• 6:25
  SPEAKER_00: So we had approvals for the extra 40 spaces, but we had to do everything, go into the ground, we had to run laterals, uh, essentially go it long.
• 6:33
  SPEAKER_00: It ended up the city kind of made us go back through like a mini land use approval, which was not great.
• 6:38
  SPEAKER_00: Um, so but we'll do that.
• 6:40
  SPEAKER_00: At one point, you know, we had, you know, I had three excavators kind of doing the work directly.
• 6:46
  SPEAKER_00: We're not so much, I'm not so much doing the on-the-ground work largely just because geographically we're we're relatively spread out within the region.
• 6:53
  SPEAKER_00: So it's kind of hard to manage like individual crews.
• 6:56
  SPEAKER_00: Coupled with we just got keeping really great project managers.
• 7:00
  SPEAKER_00: We sort of function as a GC, uh, but I don't do third-party work anymore.
• 7:05
  SPEAKER_00: So um, but that you know, we're able to really retain really close management of all those of all those job sites.
• 7:10
  SPEAKER_00: And uh yeah, so that's but in in general, I've always said like as soon as we run out of deals and manufactured housing, we'll go do something else.
• 7:17
  SPEAKER_00: But like they keep popping up.
• 7:19
  SPEAKER_00: It's a weird asset class, too, because a lot of it is what we like to buy are going to be these parks that are older.
• 7:26
  SPEAKER_00: Maybe there's 50 units, and then we dig in and do our research.
• 7:30
  SPEAKER_00: We're doing our right now, it's a great example.
• 7:32
  SPEAKER_00: So we've got it's a park with 33 units there, but we're digging in, we're looking at the city records.
• 7:36
  SPEAKER_00: There's 62 approved spaces.
• 7:38
  SPEAKER_00: And you know, mobile home parks are a little weird.
• 7:41
  SPEAKER_00: Probably, you know, a little bit like raw land guys.
• 7:43
  SPEAKER_00: Sometimes it's like a farmer that that just has land that suddenly got rezoned and he has no clue what's going on with it or what the, you know, he doesn't care about things like grade and utility access and electric.
• 7:54
  SPEAKER_00: So we mobile home parks are a little bit similar in that sometimes this happens, right?
• 7:57
  SPEAKER_00: Where it's like a guy who inherited from his dad in this case, who's a super nice guy, but not really a real estate investor, and doesn't understand what he's sitting on.
• 8:06
  SPEAKER_00: And so now for us, the challenge is all right, we've got these 33 units, and now we've got these approvals, and that's where sort of the gray area is.
• 8:13
  SPEAKER_00: Because if it's a what am I gonna do?
• 8:15
  SPEAKER_00: Do I want to go barrel into the city and demand that they allow all these permanent spaces, or do you kind of want to work your way in?
• 8:22
  SPEAKER_00: And it oftentimes there's quite an art to it because you're gonna maybe look for all the utility connections, maybe we'll go down a couple feet, see if there's actual laterals in the ground that are that are servicing these future spaces.
• 8:32
  SPEAKER_00: What's the power?
• 8:33
  SPEAKER_00: You know, the more you can lend to your argument, I've found, the better.
• 8:36
  SPEAKER_00: So if it's a, you know, if it's a 200 KW transformer for 32 mobile home spaces, that seems a little excessive.
• 8:42
  SPEAKER_00: So we're gonna say, all right, maybe let's go to the utility.
• 8:45
  SPEAKER_00: And maybe they originally had, you know, they had 65 laterals originally when they put that transformer there.
• 8:50
  SPEAKER_00: So there's all these kind of like little things you can do to determine what should have been there.
• 8:57
  SPEAKER_00: So we do a lot of that.
• 8:58
  SPEAKER_00: We do a lot of kind of diagnosis on the due diligence side and then saying, all right, let's let's can we turn this into because obviously buying 32 spaces and ending up with 62 spaces is a is a pretty good win.
• 9:10
  SPEAKER_00: And as I'm sure kind of on the development side, your audience well knows, you're talking to do like if it's 32 spaces with five acres of undeveloped land, well, that's okay.
• 9:20
  SPEAKER_00: But now, like, we're going to pre-app and then we're spending 120 days screwing around with uh land use, or best case, right?
• 9:26
  SPEAKER_00: And then you're spending another 180 days in permitting, and all the while the fire marshal is going to change his mind nine times.
• 9:31
  SPEAKER_00: So, like, there's all of that we take, you know, we have to deal with as well.
• 9:35
  SPEAKER_00: So when we see these pre-approvals that are historical, you know, we're really gonna lean into those because you just you have it's such a different path when you can go to the city and say, hey, these are always supposed to be here and look at this map, and you guys, this is your map, not mine.
• 9:49
  SPEAKER_00: And by the way, you know, we're we're looking at your water line and like it branched, so clearly you guys knew this was coming here.
• 9:56
  SPEAKER_00: It's like, you know, it did it did a 90 and then it's capped on this side.
• 9:59
  SPEAKER_00: So like, why is that there?
• 10:00
  SPEAKER_00: So you can kind of keep, but it requires, you know, you kind of have to have that construction knowledge to sort of pull those little pieces out.
• 10:09
  SPEAKER_00: That's been really helpful for us.
• 10:10
  SPEAKER_00: So just the because in the absence of that, you you know, I think most folks could probably find that map.
• 10:15
  SPEAKER_00: But even then, right?
• 10:17
  SPEAKER_00: If you're like the developer side or the land development is a lot of like looking into code and looking at historical records and trying to find everything you can before you start spending six, seven, eight hundred dollars an hour for your land use attorney and your civil engineer to start doing stuff.
• 10:33
  SPEAKER_00: So, you know, at least for me, I've always wanted to try and get as much of that done on the front end as possible.
• 10:38
  SPEAKER_00: Um, and that's really lent itself to to uh to tremendous benefit in in kind of what we do as well.
• 10:43
  SPEAKER_01: Well, that's a really good example because obviously there's two paths you can go down where you can you can acquire existing mobile home parks or you can build your own.
• 10:50
  SPEAKER_01: And this one has a little bit of both potentially in it.
• 10:53
  SPEAKER_01: And uh I think a lot of people, when they get into this space, or at least you you hear a lot more about people acquiring existing mobile home parks and not so much about people building new mobile home parks.
• 11:02
  SPEAKER_01: Yeah.
• 11:03
  SPEAKER_01: And I know you mentioned that in the in the Northwest, that it's it's largely like that out there.
• 11:08
  SPEAKER_01: What's weird is that I feel like, and it's probably just has to do with my algorithm on social media, but I feel like I'm starting to see more content or more people getting into this asset class.
• 11:21
  SPEAKER_01: And it might just be literally because we've talked about it a few times on the show, and so now I'm getting fed more of that stuff.
• 11:26
  SPEAKER_01: But are you do you think it's it's growing at all around the country?
• 11:29
  SPEAKER_01: Have you heard anything or have you seen anything?
• 11:32
  SPEAKER_00: You know, like you, I'm and probably more so, like, you know, for me, it's like when you're a hammer, everything's a nail.
• 11:38
  SPEAKER_00: And I I always joke when I talk to when I talk to investors and prospective or guys who just start investing with us, they'll be like, these things are everywhere.
• 11:45
  SPEAKER_00: I never saw a mobile home park in my life.
• 11:47
  SPEAKER_00: And now I see them all, and it's kind of true.
• 11:48
  SPEAKER_00: Like they are hiding in plain sight, and particularly in like the Northwest, California, Florida, Texas, they're they're these, they are there, and you just don't really think about it.
• 11:58
  SPEAKER_00: And then once you start thinking about it, and you know, social media is you know, clearly listening to what we say and all these things.
• 12:05
  SPEAKER_00: So, like, yeah, it's very I I think the from an industry standpoint, it is changing in the sense that there's a lot more attention on it.
• 12:15
  SPEAKER_00: It is, and that has largely been this is the evolution is similar to any other industry.
• 12:19
  SPEAKER_00: One of the problems we had is people bought these properties as sort of cash that give you like a 30-second overview of the history of mobile home parks.
• 12:29
  SPEAKER_00: They started out as you know, Ryan's parents owned a farmhouse on 30 acres, and then, you know, you bought a mobile home and you set it up, and then your brother did, and then your cousins did.
• 12:43
  SPEAKER_00: And literally that's how many, many parks were developed.
• 12:46
  SPEAKER_00: They were just these like family assets, and they sort of blossomed.
• 12:50
  SPEAKER_00: They'd add a unit, add another one, dig another septic, add a unit, add a unit, and then the cities expanded and they got public utilities, but it was it was not for the most part, older parks weren't really designated.
• 13:01
  SPEAKER_00: They were, and you can still see it today.
• 13:03
  SPEAKER_00: You'll see these like a farmhouse with 60 units, or you'll see like a house on the hill and 200 units.
• 13:09
  SPEAKER_00: And they've all like that's that was a very common development pathway for manufactured home parks.
• 13:13
  SPEAKER_00: The next round of buyers showed up, you know, late 80s, early 90s.
• 13:17
  SPEAKER_00: And these guys were sort of opportunistic investors with not necessarily maybe using some of their own money, and they were buying them as cash flow guys.
• 13:25
  SPEAKER_00: And so they would say, hey, I can buy, like, I could buy an apartment building at a six cap, or I can buy this mobile home park at a 12 cap.
• 13:32
  SPEAKER_00: And all right, I got the money.
• 13:34
  SPEAKER_00: I don't really care.
• 13:34
  SPEAKER_00: So, and then, you know, they have relationship lending, and so it wasn't really an institutional class yet.
• 13:39
  SPEAKER_00: And then, you know, fast forward a little bit and during that same time, like ELS shows up, equity lifestyle.
• 13:45
  SPEAKER_00: They started, they were the first kind of big institutional player.
• 13:48
  SPEAKER_00: They started buying, they own, you know, whatever, 35,000 lots, and they're all really, really high quality properties.
• 13:53
  SPEAKER_00: And then, you know, even since I've been started, there's been a little bit more sort of private equity interest.
• 13:59
  SPEAKER_00: And that drives, you know, I mean, that drives good and bad, because I think the good is it's opened it up from sort of a lending standpoint.
• 14:07
  SPEAKER_00: There's institutional products available for manufactured homes that makes the deals themselves more valuable.
• 14:13
  SPEAKER_00: The residents who live in these homes, they have way more options for home sales.
• 14:17
  SPEAKER_00: Like they were sent, if you owned a home in a mobile home park, you kind of had to find like another guy to pay you cash for it.
• 14:22
  SPEAKER_00: And it wasn't now there's you know, Title I being passed.
• 14:25
  SPEAKER_00: It's technically, it hasn't, it hasn't really grown yet.
• 14:28
  SPEAKER_00: But Title I is really the the first step of FHA lending essentially on manufactured home parks on leased land.
• 14:35
  SPEAKER_00: Uh, so that was a that's a big change.
• 14:37
  SPEAKER_00: Um, but obviously the downside is you bring these people who are highly opportunistic, who are not necessarily even know where these parks are, let alone have visited them, and they see$400 a month space rent, and they look at an apartment in the same area and they say a one-bedroom apartment, uh, that's renting for$1,500.
• 14:56
  SPEAKER_00: Well, we can double these space rents, no problem.
• 14:58
  SPEAKER_00: And then so now you've got this very this turmoil in this new asset class, and you've got some, you know, you've got some reasonable backlash from the tenants, and they complain to the attorney generals, it gets political, boom, two, you know, and literally like that is the that is how rent control shows up, in my opinion.
• 15:14
  SPEAKER_00: You get sort of unscrupulous management that's gonna, and there's gonna be a blanket reaction to that eventually.
• 15:19
  SPEAKER_00: So yeah, I mean, I think it's good and bad that what what what has happened in the industry.
• 15:23
  SPEAKER_00: And getting back to sort of the attention, it's interesting.
• 15:26
  SPEAKER_00: I think there are people who are kind of, you know, buying a couple of parks here and there or trying to aggregate a portfolio on that same premise of I'm gonna go to the I'm gonna go to South Carolina, I'm gonna go to West Texas, or I'm gonna go to Kansas, and I'm gonna buy four parks and I'm gonna increase the rent.
• 15:43
  SPEAKER_00: So it's it is a I think there's still a lot of optimism without experience that that's gonna start to, you know, it's I think it happens, it happens in most asset types, right?
• 15:55
  SPEAKER_00: Where like you have one guy who comes in, subdivides, uh, you know, takes 15 acres, subdivides it into a hundred lots, and local builders show up and they buy his lots for 75 grand a piece, and suddenly his$2 million investment he made 7 million bucks on.
• 16:11
  SPEAKER_00: And it's parks are going to be similar.
• 16:14
  SPEAKER_00: And I think the next, you know, the next guy who does that, he's not paying 500 grand for that 15 acres.
• 16:18
  SPEAKER_00: He's paying two and a half million.
• 16:19
  SPEAKER_00: But he's like, oh, that's fine.
• 16:20
  SPEAKER_00: I'll make I'll just make a million bucks when I do this.
• 16:22
  SPEAKER_00: And so it's a I think it's just a natural evolution of the market.
• 16:25
  SPEAKER_00: The difference here is you've got a very, very, very politically sensitive undercurrent, and and that is not oftentimes paid attention to by by people sort of jumping in and trying to buy a bunch of stuff, aggregate a portfolio, and then go sell it, go sell it to Invesco or go sell it to BlackRock or something.
• 16:41
  SPEAKER_01: Yeah, well, one thing as you're talking about that one thing that also feels like there's a lot of uh a lot of attention on just builders in general and housing in general.
• 16:51
  SPEAKER_01: And I feel like the climate on social media, which you never know if it's real people or what's happening out there and stuff, but you do still have people whose mindset is still in the like early 2000s and they want they want an acre and they want their house and they want it to be affordable for them.
• 17:12
  SPEAKER_01: And, you know, now as I feel like as the industry is trying to come up with affordable and attainable solutions for people to, you know, purchase a home, and this asset class is brought up as a possible solution.
• 17:23
  SPEAKER_01: You get a lot of people who are like, they have their conve connotation of trailer parks, you know, going back to when they were kids or whatever, growing up in their town.
• 17:32
  SPEAKER_01: Do you feel like that's changing from what you're seeing in some of the uh the parks that you own and operate?
• 17:38
  SPEAKER_00: It's uh yes, I think the you brought up the stigma uh of mobile home parks, and and that is a you know, pre-19, it's 1976.
• 17:49
  SPEAKER_00: We're going back 50 years.
• 17:50
  SPEAKER_00: And so that's when HUD, Housing and Urban Development, developed a standard for manufactured housing.
• 17:55
  SPEAKER_00: And before that, you know, mobile home parks really started cropping up post-World War II.
• 18:00
  SPEAKER_00: So it's sort of in the in the late 40s, early 50s, and there were no standards.
• 18:04
  SPEAKER_00: The trailer stigma is those first 20 years of the industry because, and that's every time you hear, oh my God, I don't want to live in a trailer, wobbly box, blah, blah, blah.
• 18:13
  SPEAKER_00: Because for a while it was true.
• 18:14
  SPEAKER_00: Post-76, those units are built to the exact same standard as any stick frame home.
• 18:19
  SPEAKER_00: I would argue post-95, their standard is better.
• 18:23
  SPEAKER_00: And I say that simply because they're they're manufactured in a climate-controlled environment.
• 18:28
  SPEAKER_00: Uh, I don't know how many times you you've driven by, at least out here, you know, you you're in a rainstorm and you see apartments being built and you see some OSB wrapped up with some home wrap.
• 18:39
  SPEAKER_00: Like, is that good?
• 18:40
  SPEAKER_00: Is that like you you boys safe with that?
• 18:42
  SPEAKER_00: So, I mean, there's and you know, they the so I I would arguably it's built to a higher standard.
• 18:47
  SPEAKER_00: But stigma exists, and I, you know, we we fight that all the time.
• 18:50
  SPEAKER_00: You know, one of the things we frequently do is we look for someone in a market who's looking for an apartment and who has no concept of home ownership.
• 18:58
  SPEAKER_00: And we say, you know what, you can rent this two-bedroom apartment for$1,700 a month, or you can buy this home, and your land rent plus your home payment is going to be$1,400 a month.
• 19:08
  SPEAKER_00: So right out of the gate, you're saving money.
• 19:10
  SPEAKER_00: And then in five years, this is what happens.
• 19:12
  SPEAKER_00: We've done an analysis of that.
• 19:13
  SPEAKER_00: And if you look at like living in an apartment for five years, you don't even get your security deposit back.
• 19:17
  SPEAKER_00: If you buy a home in one of our properties for five years, you've built somewhere between$50,000 and$70,000 of equity, which, you know, if you're in an if you're trying to, if you're living in an apartment trying to get your life started or you're in an affordable housing situation, like that is life-changing money.
• 19:30
  SPEAKER_00: So it's really like we found that it's a, it's there's an education step that the only way I've been able to successfully do is sort of person to person and explain this.
• 19:40
  SPEAKER_00: Because you're absolutely right.
• 19:41
  SPEAKER_00: It's not uh the the solutions with manufactured housing are tremendous uh because it what it does is it sort of bifurcates land from home.
• 19:52
  SPEAKER_00: And in general, what people think is you don't own the land, it can be ripped out from underneath you and they can double rents and blah, blah, blah.
• 19:56
  SPEAKER_00: And all of that is theoretically true, but with the right structure, that can't happen at all.
• 20:01
  SPEAKER_00: And I frequently remind people that property taxes aren't rent controlled, property insurance isn't rent controlled, HOAs aren't rent controlled.
• 20:09
  SPEAKER_00: So, like, there's even though you think like, yes, I own my stick frame home and I'm fine, man.
• 20:15
  SPEAKER_00: You know, anyone who owns a home can tell you that like that those costs are anything but controlled, and you you get reassessed all the time, and then property insurance can jump around no matter what.
• 20:24
  SPEAKER_00: So the safety and security of a private agreement with land, and the nice thing about landlord-tenant relationships, pretty much anywhere, is that they're kind of, depending on the state, they're sort of governed.
• 20:35
  SPEAKER_00: And so if you say, landlord, land tenant, here's a 30-year land rent agreement that stipulates how much the rent can go up, that stipulates our responsibilities with respect to one another, you know, for the most part, every state has some version of, all right, we are agreeing to this.
• 20:51
  SPEAKER_00: And if either one of you don't abide by this, like the state has pretty specific measures for enforcement.
• 20:57
  SPEAKER_00: So I think that's vastly better than trying to do like a big, giant 300 lot affordable housing situation where you've got these teeny tiny windows and everything else we see.
• 21:07
  SPEAKER_00: And there's sort of, there's an entrapment that happens with affordable housing that where people just kind of get stuck because they can't afford anything else and they can't really leave and they don't want.
• 21:16
  SPEAKER_00: I mean, I don't want to get too far into that, but the the difference is with manufactured housing, you you give a homeownership opportunity to that exact same person.
• 21:22
  SPEAKER_00: So now five years later, they're not just paying a subsidized rent to live in their Section 8 apartment.
• 21:28
  SPEAKER_00: They've got equity, they've got options.
• 21:30
  SPEAKER_00: And I think to me, the the the affordable housing, whatever you want to call it, crisis solution, it has to involve some level of, and I'm not saying everybody will take the opportunity, but you have to provide some kind of opportunity for someone who is struggling to afford housing to advance.
• 21:48
  SPEAKER_00: And I think that's often, if not always, missed in affordable housing conversations.
• 21:53
  SPEAKER_00: It's a lot of just like, how do we make this more affordable?
• 21:55
  SPEAKER_00: We need more grants, we need more this, we need more that.
• 21:57
  SPEAKER_00: And you don't really take into account the lives.
• 22:00
  SPEAKER_00: Of the people that are going to move into those move into those structures.
• 22:03
  SPEAKER_00: And we really try and do that.
• 22:04
  SPEAKER_00: Not that we're not a subsidized organization, but we definitely deal in affordable housing.
• 22:09
  SPEAKER_00: And that's all that's central to everything because you get that person who owns their home, they take better care of it.
• 22:14
  SPEAKER_00: They're going to be invested in the community.
• 22:16
  SPEAKER_00: They're going to stay longer.
• 22:17
  SPEAKER_00: All sorts of good investment thesis arguments, but also just the life of that person.
• 22:23
  SPEAKER_00: I've seen that.
• 22:23
  SPEAKER_00: I've seen, you know, I've seen a 22-year-old kid put$3,000 on a single wide and stay there for five years and then sell it.
• 22:31
  SPEAKER_00: And when he sells it, he makes$35,000 and he can now go buy a home or something.
• 22:35
  SPEAKER_00: You know, it's it's it's an amazing process.
• 22:38
  SPEAKER_00: And if you look at it from like an in a return on investment, it's it's astronomical.
• 22:42
  SPEAKER_00: And again, you don't like you don't need to be an investment manager at JP Morgan where you're talking about millions and millions of dollars.
• 22:48
  SPEAKER_00: You can take someone putting$5,000 down and paying what is what amounts to just rent that they would have to pay anyway.
• 22:55
  SPEAKER_00: And then after a number of years, getting$50,000,$60,000 out is un unfathomable.
• 23:01
  SPEAKER_00: I can't think of any other way to do that.
• 23:03
  SPEAKER_00: So yeah, that's kind of, I mean, the I we afford as you can probably tell, affordable housing is very near and dear to me.
• 23:10
  SPEAKER_00: And that's something that, you know, it manufactured housing dovetails really nicely with.
• 23:14
  SPEAKER_00: Um, and I it's weird because it's almost always not even brought up in affordable housing discussions.
• 23:22
  SPEAKER_00: There's a lot of talk about affordable apartments, there's a lot of talk about affordable townhomes and home ownership, but they never, and you know, it's it's I I can't really we we try, we we we do everything we can, but you know, we're pretty small fish.
• 23:36
  SPEAKER_00: But it's a very, I I really, you know, to get around to the start of your question, I you know, the stigma is very real in terms of the existence of it, but like it's justification, it's 50 years old.
• 23:47
  SPEAKER_00: The arguments about that the upon which that stigma is based are literally 50 years old.
• 23:52
  SPEAKER_00: So I don't know.
• 23:52
  SPEAKER_00: It's a it's a really tough one, unfortunately.
• 23:55
  SPEAKER_01: Yeah, well, you said something there too that I wanted to dig into a little bit deeper just because I don't fully understand how the the process works with these uh these communities, these parks.
• 24:04
  SPEAKER_01: So it sounds like they're buying the unit, but the land is not, they're not buying the land as a part of that.
• 24:12
  SPEAKER_01: Do they then pay so when they're paying property taxes, are they paying that on the unit itself and then the landlord or whoever owns the property is paying the property taxes on the land?
• 24:21
  SPEAKER_01: Is that how that works?
• 24:22
  SPEAKER_01: Or am I maybe I'm not understanding it completely right?
• 24:25
  SPEAKER_00: That's exactly right.
• 24:26
  SPEAKER_00: Yeah.
• 24:26
  SPEAKER_00: So you essentially you have a land investment, right?
• 24:29
  SPEAKER_00: So you, you know, again, think about a subdivision where you've got a bunch of it.
• 24:32
  SPEAKER_00: The only difference is they're usually not like deeded separately, but that's where, yeah, you your your home.
• 24:38
  SPEAKER_00: So let's walk through an example, right?
• 24:40
  SPEAKER_00: Like we're putting a home, a new single-wide home, and it's a two-bed, two-bath, 14 by 48.
• 24:47
  SPEAKER_00: So that home will sell in that, I'm just thinking of a concrete example of one of our properties.
• 24:52
  SPEAKER_00: We're selling those homes for about$140,000.
• 24:54
  SPEAKER_00: So, you know, 8%, 20 year am, you're kind of looking in that like$850,000,$900 a month payment.
• 25:01
  SPEAKER_00: The space in that park is$700, so$1,600 a month.
• 25:04
  SPEAKER_00: So that home now, your your obviously your mortgage payment is fixed for those 20 years.
• 25:09
  SPEAKER_00: Your space rent component has very strict regulations upon how it can change.
• 25:15
  SPEAKER_00: So that really, you know, over the 20-year life of that investment, your your variability is so much lower because the only thing that go can go up is a very small percentage of that payment, right?
• 25:25
  SPEAKER_00: About 40%.
• 25:26
  SPEAKER_00: So that will go up by effectively CPI.
• 25:30
  SPEAKER_00: And so you're, you know, when you think about things like so you're right, there are there are personal property taxes due, uh, but on that$140,000 sale, you'll probably pay somewhere between like$200 to$300 a year in personal property.
• 25:44
  SPEAKER_00: So it's not like it's not like actual property taxes you have on on you know assessed fixed to the land real estate.
• 25:51
  SPEAKER_00: And there's insurance too, but again, the insurance is probably going to be somewhere in the realm of about that.
• 25:57
  SPEAKER_00: You know, 20, we we've we've tell people to budget 25 to 30 bucks a month for insurance.
• 26:01
  SPEAKER_00: And that's for a new home.
• 26:03
  SPEAKER_00: So again, contrast that with that same home in the same market of the same size and construction quality.
• 26:10
  SPEAKER_00: Well, now you're probably now you're looking at twice, three times.
• 26:15
  SPEAKER_00: You know, that that house on a on a subdivided lot is 300 grand.
• 26:18
  SPEAKER_00: And now you're, you know, what are your tax payments?
• 26:20
  SPEAKER_00: Well, in Washington, I can tell you it's gonna be four,$4,200 a year.
• 26:24
  SPEAKER_00: What are your what's your insurance?
• 26:26
  SPEAKER_00: $1,200 to$1,700, depending on you know who your broker is.
• 26:30
  SPEAKER_00: So it's like right out of the gate, you know, everyone's like, well, hey, I have to pay a lot rent payment every month.
• 26:35
  SPEAKER_00: It's like, well, yeah, but you know, you're also gonna pay that in the form of property tax insurance.
• 26:40
  SPEAKER_00: So the cost of ownership, as the analyses we've done, the cost of ownership of a manufactured home in a park, with and keep in mind, this all stipulates that you either have an agreement with the landlord that stipulates how those rents can go up, or there's state level controls around it.
• 26:58
  SPEAKER_00: I mean, that's so that's important.
• 27:00
  SPEAKER_00: So anybody who's who's saying or thinking, you know, this guy doesn't understand, like you can the space rents might be 500 bucks today, but they could be$1,000 tomorrow.
• 27:08
  SPEAKER_00: Absolutely.
• 27:09
  SPEAKER_00: And I think anyone looking to buy a manufactured home should be very conscious of that.
• 27:13
  SPEAKER_00: And for the most part, you know, as a guy who owns a bunch of these parks, like someone who's gonna show up and buy a home, if you ask for some kind of an extended contract, even in a non-rent-controlled market, that's something that landlord's gonna be interested in because you know, you are, remember, you're bringing a really nice home into his park and you are gonna stay there.
• 27:33
  SPEAKER_00: That's that you are providing a service to that landowner.
• 27:36
  SPEAKER_00: So I think that's kind of we're we're we have these discussions all the time, as you can imagine, about you know, not so on the on this side, you've got the guy looking for a two-bedroom apartment who has no concept of homeownership and is thinking, what?
• 27:48
  SPEAKER_00: I can't own a home, I'm not allowed to own a home.
• 27:51
  SPEAKER_00: And then convincing him that he can.
• 27:52
  SPEAKER_00: And then on this side, you've got maybe someone looking for a home and the investment value of owning a home.
• 27:57
  SPEAKER_00: And so we kind of try and bring those groups to meet at with at our properties in in a way.
• 28:02
  SPEAKER_00: And that's kind of quickly, you know, the the frustrating thing to me is we have this country, whatever, this environment has done a great job of convincing people they'll never own a home, as of convincing young people that home ownership is impossible.
• 28:15
  SPEAKER_00: There's a political motivation for it, kind of on both sides, but it it's really it has an impact.
• 28:20
  SPEAKER_00: It has an impact on people's thoughts where they, you know, you take someone and says, You're never gonna own a home.
• 28:25
  SPEAKER_00: Well, they're not gonna try.
• 28:26
  SPEAKER_00: And the truth is they can own a home.
• 28:28
  SPEAKER_00: Um, and on the foot, you know, on it just, it it just really and then the same thing you're talking about with the stigma.
• 28:33
  SPEAKER_00: When you, when you or me or our friends are joking about trailer trash and and wobbly boxes and who would ever want to live in a trailer park, that has an impact too, because that young person's hearing you and they're gonna say, God, these guys who I kind of aspire to and want to be like, I don't want to tell them.
• 28:48
  SPEAKER_00: So these, you know, these stigmas are damaging.
• 28:51
  SPEAKER_00: And so that's it's just you know, another thing we struggle with is kind of trying to, you know, convince people, not only the investment value, but just there's there's very, you know, there's you don't have to listen to these uh, you know, essentially fabricated uh stigmas that exist now around manufactured housing.
• 29:08
  SPEAKER_01: Do you think, well, speaking of the stigma too, I uh, you know, the the buyers are one group that you know has potentially has this that you have to get past.
• 29:16
  SPEAKER_01: How about the community and also the city leaders as well?
• 29:20
  SPEAKER_01: Because I think they may also have some of those same thoughts in their mind.
• 29:24
  SPEAKER_01: And so when you're trying to get, especially if you're doing new development, if you're trying to get a project approved, or even in your scenario right now where you may have an extra 20, 30 units that are approved on one that you're acquiring, you know, how is the city going to react to adding more units?
• 29:39
  SPEAKER_01: Do you see that they've become maybe more open to the idea of this as uh attainable housing, or is it is it still something you have to battle through?
• 29:48
  SPEAKER_00: That's a great point.
• 29:49
  SPEAKER_00: Um, and I can tell you the parks that I've been involved with expanding a big part of it is like, well, it's already a mobile home park.
• 29:58
  SPEAKER_00: So we're we'll do they they I've like the pre almost every pre-up I've been in, they say that.
• 30:02
  SPEAKER_00: They go, eh, I guess it's an existing park, so we'll allow this expansion.
• 30:06
  SPEAKER_00: And then in the new one, they they we had to do all of these machinations and fabrications at the land use stage to convince that city that this isn't a mobile home park.
• 30:16
  SPEAKER_00: No, it's not, it's not.
• 30:17
  SPEAKER_00: They're manufactured structures, but I promise it's not a mobile.
• 30:20
  SPEAKER_00: So so a hundred percent the stigma exists.
• 30:23
  SPEAKER_00: And it extend they and there's a there's a there's a there's a sort of stigma reason and there's a practical reason.
• 30:30
  SPEAKER_00: The stigma reason we've already talked about, right?
• 30:32
  SPEAKER_00: And if you're a city, you don't you don't want that in your in your city limits and gross.
• 30:36
  SPEAKER_00: And and it somewhat in the defense, a lot of mobile home parks can get very mismanaged, and then they do become a big problem because just administratively, if you've got a guy committing crimes in a manufactured home in a park, who's liable?
• 30:51
  SPEAKER_00: Who who has like the if you're a policeman just trying to respond to that?
• 30:55
  SPEAKER_00: There's an extra layer of confusion that, as you can imagine, creates all kinds of problems.
• 31:00
  SPEAKER_00: And the city's like, oh my, what with this guy's out of state?
• 31:02
  SPEAKER_00: This owner doesn't care.
• 31:04
  SPEAKER_00: He's just scraping cash off this thing.
• 31:06
  SPEAKER_00: And then you've got this owner, you've got maybe like we see a ton of unfortunate when we buy a new park, we see a lot of elder abuse situations, which is awful.
• 31:12
  SPEAKER_00: And it's really hard to deal with because we don't own the home.
• 31:16
  SPEAKER_00: We it's not our unit.
• 31:17
  SPEAKER_00: And so that's that I will defend cities and municipalities about because they're right.
• 31:22
  SPEAKER_00: That is difficult.
• 31:23
  SPEAKER_00: The stigma, right?
• 31:24
  SPEAKER_00: We already talked about the practical one, is a little more insidious, which is let's go back to that 100-lot subdivision, right?
• 31:30
  SPEAKER_00: So let's just say the average value in that in that community is$500,000 per home, right?
• 31:37
  SPEAKER_00: So you have$50 million of value.
• 31:40
  SPEAKER_00: And so when your tax assessor comes through, he's looking at$50 million.
• 31:44
  SPEAKER_00: So he's got, you know,$750,000 of annual tax revenue coming off of that$100 lot subdivision.
• 31:50
  SPEAKER_00: Now let's go through to the mobile home park.
• 31:51
  SPEAKER_00: So that same hundred lots, same hundred people, same arguable burden on public services, right?
• 31:57
  SPEAKER_00: They have cars, they're gonna use the parks, they're gonna use the schools, they're gonna use the utilities.
• 32:01
  SPEAKER_00: That same park, you might be, you know,$100,000 of space of like land, because remember, no improvement to the land, right?
• 32:10
  SPEAKER_00: That's one of the that's one of the benefits of manufactured housing.
• 32:13
  SPEAKER_00: Those homes are independent, titled personal property.
• 32:16
  SPEAKER_00: They don't go with the land.
• 32:17
  SPEAKER_00: So the assessor is now looking at eight to ten million dollars of taxable value versus$50 million if it was approved stick frame housing.
• 32:25
  SPEAKER_00: So not I'm not saying that your average assessor is sort of doing that analysis, but he can't he can't help it, right?
• 32:31
  SPEAKER_00: If he's looking at like, if he's looking at his city plat map and he's like, wait a minute, I'm getting, I'm getting$800,000 here and I'm getting$100,000 here.
• 32:40
  SPEAKER_00: And so when maybe, you know, maybe when the land use guy comes to him is like, hey, this park wants to expand, it'd be like, no, no, no, no, no.
• 32:46
  SPEAKER_00: Let's wait for some guy to build townhomes.
• 32:48
  SPEAKER_00: So that's there, there are, I don't, you know, it's hard to say the public public bodies and and governance is is just so it's it's very hard to predict and manage and deal with, even in like a more like the Pacific Northwest is sort of blue, right?
• 33:05
  SPEAKER_00: Very progressive.
• 33:06
  SPEAKER_00: But even within that, I've had cities do drastically different things um when it comes to manufactured housing.
• 33:12
  SPEAKER_00: So it's really, I don't, I don't know.
• 33:14
  SPEAKER_00: I think what need you need to have from a from a development standpoint, if you want to build and and make an impact with manufactured housing, you gotta find like different ways to do it versus just going full bore hundred lot new mobile home park anywhere.
• 33:32
  SPEAKER_00: You have to be creative.
• 33:33
  SPEAKER_00: You have to do what we do.
• 33:34
  SPEAKER_00: You have to kind of buy a park and expand it.
• 33:36
  SPEAKER_00: You can you can take advantage of like different zoning if it's like a you know, there's some ag stuff where if you can sort of bring in housing from like uh with using agriculture exam stuff, there's some stuff we've explored doing that way.
• 33:47
  SPEAKER_00: Um, expansion's always good.
• 33:49
  SPEAKER_00: There's like that kind of whole, you know, we haven't gotten into like the whole ADU tiny home thing, but there's um some interesting opportunities there.
• 33:56
  SPEAKER_00: But you can't, I don't think that just like the traditional approach, because you know, you're not gonna ultimately you're never gonna be able to afford what DR Horton or Fairway America can pay for the land.
• 34:09
  SPEAKER_00: There's it, we just don't the economics are different.
• 34:11
  SPEAKER_00: So it's just that's a it's it's tricky on the economic side too.
• 34:15
  SPEAKER_00: So unless it's, you know, you have to be, we we have found that uh these alternate methods for development are gonna be much more advantageous and and better pathways to go down.
• 34:25
  SPEAKER_01: One thing I was thinking about as you were talking about, you know, trying to, you know, trying to make these communities attractive for buyers, also for the the community as well.
• 34:35
  SPEAKER_01: Are there certain amenities that you have to provide or you do provide in some of these parks in order to make them more attractive, both from a a consumer standpoint, but also the community in the city?
• 34:46
  SPEAKER_00: It's uh so there's some standards, right?
• 34:48
  SPEAKER_00: So like the the the Freddie Mack and Fannie Mae standard actually stipulates and requires certain things.
• 34:54
  SPEAKER_00: And so in addition to like what we're talking about with expansion, we're always trying to get parks into institutional quality.
• 35:00
  SPEAKER_00: And in doing so, everything you're saying comes true, right?
• 35:02
  SPEAKER_00: The it the overall appearance and aesthetic goes up, the amenity quality goes up, roads get paved.
• 35:08
  SPEAKER_00: Um, you know, you have to have a minimum of three amenities and those amenities.
• 35:11
  SPEAKER_00: So we we love to do like, you know, the bet the best thing we'll always do is locking mailboxes, believe it or not, because like a lot of seniors are in the park, and so things like medications are sent in the mail.
• 35:20
  SPEAKER_00: So that's a huge one.
• 35:22
  SPEAKER_00: Playgrounds, we love to employ one of my project managers.
• 35:24
  SPEAKER_00: Is just a is a is a it's hilarious because the the playground names are always really goofy.
• 35:29
  SPEAKER_00: It's like the gone bananas and the mango madness.
• 35:32
  SPEAKER_00: And so my one of my guys, Dan, who's like a total great, you know, but like classic construction, he was a foreman, just super tough guy.
• 35:39
  SPEAKER_00: And you hear him on his phone scream at the guy's being like, I ordered the gone bananas, not the mango madness.
• 35:43
  SPEAKER_00: You guess it's just it's funny.
• 35:44
  SPEAKER_00: But yeah, so we we do a lot of playgrounds.
• 35:47
  SPEAKER_00: Um and I think the you know, it helps from the city standpoint.
• 35:51
  SPEAKER_00: What really help what the city's really like is one thing I've seen happen a few times is a a bad mobile home park is kind of like a dirty bond.
• 36:02
  SPEAKER_00: It will, it, it radiates out, it it impacts the whole the whole surrounding community.
• 36:08
  SPEAKER_00: People don't want to, not only people don't want to live in that park, they don't want to live next to that park.
• 36:12
  SPEAKER_00: And I've seen some really cool examples where we have bought a rough park and kind of cleaned it up.
• 36:17
  SPEAKER_00: And that that's not very complicated, I should add.
• 36:19
  SPEAKER_00: Like it's you bring in a bunch of dumpsters, you get rid of all the trash.
• 36:22
  SPEAKER_00: There might be a hand the most like trouble tenants I've ever seen in a big park, rough park that we had in in North Portland for a number of years, it was maybe five people that were causing and you know, propagation of errors, right?
• 36:36
  SPEAKER_00: If you, if Ryan's leaving trash on his porch and I'm your neighbor, well, I'm gonna leave trash on my porch if no one's gonna.
• 36:41
  SPEAKER_00: So it's it's and it works in both directions.
• 36:44
  SPEAKER_00: Once they see active management, they're not gonna get involved.
• 36:46
  SPEAKER_00: They're like, oh man, these guys are serious.
• 36:48
  SPEAKER_00: So you can very quickly, relatively, uh, make a big impact on properties like that.
• 36:54
  SPEAKER_00: And then suddenly the apartment building next door, well, now they're looking at being like, all right, well, maybe I can replace the windows now because no one's gonna be throwing rocks through them, or maybe I can replace my setting, maybe I can repaint.
• 37:03
  SPEAKER_00: Whoa, my rents are going up.
• 37:05
  SPEAKER_00: Maybe I should do so.
• 37:06
  SPEAKER_00: I've seen that happen first time.
• 37:07
  SPEAKER_00: I've seen the surrounding single family homes go up in value.
• 37:11
  SPEAKER_00: I've seen the surrounding apartments, I've seen literal changes in the commercial uses once uh once a mobile home park cleans up.
• 37:18
  SPEAKER_00: And so there's some really, I think a smart city, not that I've I've seen it happen in reverse, right?
• 37:23
  SPEAKER_00: Where they'll suddenly take credit after we've shown up.
• 37:26
  SPEAKER_00: But a smart city would look at that and they would say, all right, we're not just gonna wait around for someone to redevelop this, because redevelopment, I mean, is it I just disagree with for a number of reasons, but incentivize someone to come in and make that place better.
• 37:39
  SPEAKER_00: Uh, because then if you're if I'm the mayor of Sandy, Oregon, what better thing can I say to my constituents at re-election than like, I've added this much affordable housing, I've increased the single family home values in this market by this much.
• 37:54
  SPEAKER_00: And look at everything I did, and I and I'm I like because you know, what is your the private guy who did it?
• 38:01
  SPEAKER_00: I'm not running for anything.
• 38:02
  SPEAKER_00: Like, let him take credit.
• 38:03
  SPEAKER_00: So it's a it's a great way for a public for like local governments to take credit for a bunch of stuff that they don't have to pay for.
• 38:10
  SPEAKER_00: They literally just have to get out of the way.
• 38:11
  SPEAKER_00: Uh yeah, like I said, I've only seen that happen in reverse.
• 38:14
  SPEAKER_00: I've yet to see a city actually subscribe to that day one.
• 38:18
  SPEAKER_00: But cool, we'll get out of your way.
• 38:19
  SPEAKER_00: How can we help?
• 38:20
  SPEAKER_00: Because I think you're right.
• 38:21
  SPEAKER_00: But you know, I think that's it's we're we're getting there, but that's a really man, there's just nothing.
• 38:26
  SPEAKER_00: And it like as a community member, if you, you know, if if there's plenty of people who live in proximity to a rough manufactured home park, I can all but guarantee you focusing efforts and resources on that park will immediately improve the surrounding area.
• 38:39
  SPEAKER_01: Well, I know we had a lot of other stuff that we could probably get in here to here today.
• 38:43
  SPEAKER_01: We're at a little over 40 minutes right now, so I probably should uh get into uh I guess do you have uh you talked about one of the projects that you have going on right now.
• 38:51
  SPEAKER_01: Do you have a project over the years that has been maybe your favorite or one that stands out the most in your mind?
• 38:57
  SPEAKER_00: The the the best one, I mean, it's like that one I mentioned to you that we're that we're you know, we're gonna be closing on in a couple of months.
• 39:04
  SPEAKER_00: Um these these these ones that have this like unforeseen, yeah, like the best financial performers are gonna be the ones that are, you know, you buy them at a good number, uh, the market takes care of you.
• 39:17
  SPEAKER_00: Um those tend to be like the best financial performers.
• 39:19
  SPEAKER_00: Uh, but I shouldn't say the the best ones we do involve a change of characteristics.
• 39:25
  SPEAKER_00: So that's where you're buying maybe a park that has a ton of RVs and you're converting that into what's called like a park model home, which is kind of like a little mini manufactured home that sits in an RV space.
• 39:35
  SPEAKER_00: Um and the investment community treats those very differently.
• 39:38
  SPEAKER_00: The community changes because the the occupancy of that unit is way way, it's just, you know, someone's gonna live there full time and is gonna be an active member of the community.
• 39:47
  SPEAKER_00: RVs just tend to be more transient.
• 39:49
  SPEAKER_00: So change of character are really fun to kind of be a part of.
• 39:53
  SPEAKER_00: I love just the the getting through and adding spaces to in the in the manner we're talking about.
• 39:58
  SPEAKER_00: Those are great.
• 39:59
  SPEAKER_00: You know, the best the best example, we had a park on the Southern Oregon coast where like all of that happened, where we bought what amounted to like an RV campground and then over time converted it.
• 40:09
  SPEAKER_00: And so when we finally sold that park a couple of years ago, it was an institutional quality manufactured home park.
• 40:16
  SPEAKER_00: And just to kind of see that transition happen was really cool.
• 40:19
  SPEAKER_00: Um, and it took a long time, but it was a you know big property, but you know, that's so the and the investment return was significant because we paid you know five million bucks for it and sold it for 17 million or something.
• 40:30
  SPEAKER_00: So like that works really well.
• 40:31
  SPEAKER_00: But just the transformation of the community and seeing, you know, when that happens, if done right, all the all the residents benefit from that too.
• 40:39
  SPEAKER_00: Because yes, rents do go up, but if your home, when I buy a property is worth$60,000 and when I sell it, it's worth$175,000.
• 40:47
  SPEAKER_00: Yeah, the rents have gone up, but that value is very real.
• 40:50
  SPEAKER_00: And that's like, like anything else, the the perception of housing is always gonna be a little bit imbalanced to the economics of that same housing, right?
• 40:59
  SPEAKER_00: Like you don't, there's a reason why someone pays$15 million to live in, you know, Palo Alto or something.
• 41:05
  SPEAKER_00: It's not, it's not just like they didn't, they didn't use better drywall for that house.
• 41:09
  SPEAKER_00: It's just there's pretty and that exists at every level.
• 41:12
  SPEAKER_00: And so I think a more desirable community is gonna increase the demand of that community in not in proportion to the rents, right?
• 41:19
  SPEAKER_00: So like a super desirable community where the spaces are$1,000, people want to live in.
• 41:24
  SPEAKER_00: An unsafe, horrible, dirty community where the spaces are$500, no one wants to live in.
• 41:28
  SPEAKER_00: It's not just an affordability thing.
• 41:29
  SPEAKER_00: So yeah, I think the, but yeah, those are really like anytime you can kind of mess with something and can and change the character of it and see the benefit.
• 41:37
  SPEAKER_00: And you know, like I said, most of the time, your average tenant isn't going to be like super thrilled about someone showing up and making a bunch of improvements because it, you know, they're just worried about their rent going up, which is reasonable.
• 41:47
  SPEAKER_00: But it is cool to see that one in reverse.
• 41:49
  SPEAKER_00: I don't mind so much because I kind of love that when they're like, man, I had no idea.
• 41:53
  SPEAKER_00: You know what, you don't like, you know what Fred sold this house for?
• 41:55
  SPEAKER_00: This is crazy.
• 41:56
  SPEAKER_00: Did you know that?
• 41:56
  SPEAKER_00: So I just I like hearing that.
• 41:58
  SPEAKER_00: That's that's a that's a cool thing and a cool thing to be a part of.
• 42:01
  SPEAKER_01: Well, it sounds it seems like from a for developers who are listening in who are who've never had any experience in the Sasset class and are interested in getting into the SASEC class, that at least it seems to me in the short conversation we've had here that the most logical path is to acquire an existing an existing uh park and then being able to do work on that existing park and potentially if it if it's allowed to be able to expand that park and do development.
• 42:28
  SPEAKER_01: But it seems like if they're gonna get into this asset class, they also have to have an appetite for tenant management or at least outsourcing that to somebody else who's gonna manage, manage that.
• 42:38
  SPEAKER_01: They it's not just a build sell and then move on to the next project.
• 42:41
  SPEAKER_01: Does that seem seem right?
• 42:43
  SPEAKER_00: I would also encourage anybody who's sort of in the in the business of you know building out subdivisions or or maybe even going through on the vertical and and doing home building, look at this.
• 42:55
  SPEAKER_00: You know, look go on to like Clayton Homes or Cavco or something and just look at what the options are.
• 43:00
  SPEAKER_00: And so if I'm a guy and it's you know, if you're doing like narrow lots or you're doing townhomes or something, uh you could probably make this pencil.
• 43:08
  SPEAKER_00: And now, so instead of like trying to sell attached product, which is gonna be harder to sell and all these things, like turn that into like make some super cool, you know, 16-wide single section home, but like they make some really impressive stuff.
• 43:21
  SPEAKER_00: And if you're already in control of the land and you've already got the scale to bring them in at scale, man, it's gonna be the economics of that, I think would be very interesting.
• 43:30
  SPEAKER_00: So I think like, not that we I don't do this, and I know I kind of in a way sort of discourage it, but I think if you're if you've got like irregular lots or it's attached product or it's something that's not necessarily going to fetch the premium, you you know, I'm I know I got plenty of buddies who are land guys, and like that always sort of happens, right?
• 43:46
  SPEAKER_00: You under you got your good lots, you got your crappy lots over here.
• 43:49
  SPEAKER_00: So I would definitely look at that and do it and you know, kind of look at it through the lens of like a build to rent product almost.
• 43:56
  SPEAKER_00: And because there's a there's a tremendous, I mean, I'm not involved in it, but as there's Seems to there seems to be a tremendous demand, demand on the build and rent side.
• 44:03
  SPEAKER_00: So I think just the economics of it would be very interesting.
• 44:07
  SPEAKER_00: And just I say that because I think there's some really interesting innovative designs happening, but they need a buyer.
• 44:14
  SPEAKER_00: And so for you know, for you know, if you're if you're a single family home developer and you're looking at a townhome product that's 1,500 feet and you're looking at, I don't know, 250 bucks a foot to build it, that's that 15 by 50 like is going to be way cheaper than your cost to build.
• 44:31
  SPEAKER_00: So I think that's sort of an interesting thing that that if on if I was a developer listening to this, like that's probably the immediate take was just go go check those things out, see what these big builders are doing.
• 44:42
  SPEAKER_00: And it's they're not building cheapo stuff anymore, they're building some really interesting products.
• 44:48
  SPEAKER_00: And I think that'd be, you know, and actually for the most I think this is federal law now.
• 44:52
  SPEAKER_00: That the if it's a sing if it is if a lot is allowed to accommodate a single family unit, you cannot not allow manufactured structures to go onto that unit.
• 45:02
  SPEAKER_00: So I think like that that's a fairly recent change.
• 45:05
  SPEAKER_00: And one of the one of the I think it might have been the 2018.
• 45:07
  SPEAKER_00: But anyway, that's something both from a cost and interesting, do something new and innovative.
• 45:13
  SPEAKER_00: Um, I think I think manufactured housing is uh is an interesting tool for that, particularly if you're sort of in the home building business.
• 45:19
  SPEAKER_01: Well, let's go ahead and shift into the last segment, which is the lightning round.
• 45:22
  SPEAKER_01: So I've got five questions for you, all about your experience and everything.
• 45:26
  SPEAKER_01: Uh first one, what's the best piece of career advice you've ever received?
• 45:30
  SPEAKER_00: The best piece of career advice is I would probably say is be willing to do what others won't.
• 45:38
  SPEAKER_00: And that sort of has and that everything I we talked about, right?
• 45:42
  SPEAKER_00: Like getting into construction, property management, be willing to do what others won't and and explore those opportunities.
• 45:47
  SPEAKER_00: Don't just try and do what everyone else is doing.
• 45:48
  SPEAKER_01: All right, second one.
• 45:50
  SPEAKER_01: What's one mistake you've made that you feel has taught you the most over the years?
• 45:54
  SPEAKER_00: Picking a fight with a municipality, you're never gonna win, even when you win, when it comes to government.
• 46:01
  SPEAKER_00: And I was right and I won, but I still lost.
• 46:04
  SPEAKER_00: So yeah, don't don't don't pick like be be a community member.
• 46:08
  SPEAKER_00: I I thought that's the sort of more responsible way to think about that.
• 46:12
  SPEAKER_00: Don't don't try and fight a government, it it won't work and it it it just creates all these problems.
• 46:17
  SPEAKER_00: And I still it's a park that I'm still in that I'm still dealing with, and it doesn't matter that I was right because the city has a as you can imagine, has a very bad taste in their mouth from being taken to court by some guy.
• 46:29
  SPEAKER_00: So don't do it.
• 46:30
  SPEAKER_00: Just just be a good community member.
• 46:32
  SPEAKER_01: All right, third one.
• 46:33
  SPEAKER_01: What's one thing you look for immediately when you visit a property?
• 46:37
  SPEAKER_00: I want to see I want to see energy in the community, and it doesn't matter if it's a town of 2,000 people or if it's a t if it's a city with 250,000 people, like I want to see it the the property can be rough and in bad shape, but I want to see an energy there, and that can be new homes being built, new tenants moving in, road improvements, something.
• 46:59
  SPEAKER_00: I just want to I want to feel that something's happening.
• 47:02
  SPEAKER_00: It's the I I don't want to get involved in it, like you can give me a property for free.
• 47:07
  SPEAKER_00: Um, if it's in a city that where nothing's going on, that that's that's a major turnoff for me.
• 47:12
  SPEAKER_01: All right, fourth one.
• 47:13
  SPEAKER_01: What's one misconception people have about manufactured home communities?
• 47:18
  SPEAKER_01: One right, yeah.
• 47:20
  SPEAKER_00: I I think that they that there's the the misconception is people think that there's something wrong with them.
• 47:28
  SPEAKER_00: And it's not just people living in a community.
• 47:32
  SPEAKER_00: And that's sort of the first thing.
• 47:33
  SPEAKER_00: I mean up quick, like my my entry, I forgot to mention this.
• 47:36
  SPEAKER_00: I was staying with some friends out in California on a hiking trip, and we rented a VRBO that was a mobile home.
• 47:42
  SPEAKER_00: And I remember showing up and being horrified and being like, oh my god, this is terrible.
• 47:45
  SPEAKER_00: I can't believe it.
• 47:46
  SPEAKER_00: And then you know, you go in, it's just like any other home.
• 47:48
  SPEAKER_00: And that that that literally started me down the path of being like, why do I why did I think this?
• 47:52
  SPEAKER_00: This is stupid.
• 47:54
  SPEAKER_00: Why was I worried about this?
• 47:55
  SPEAKER_00: So uh it's not there's there's there, they're literally no different from any other home at this point.
• 48:00
  SPEAKER_01: All right, last one.
• 48:02
  SPEAKER_01: If you could give one piece of advice to someone just getting into land development, what would it be?
• 48:07
  SPEAKER_00: One piece of advice.
• 48:08
  SPEAKER_00: Uh do as much as you can on your own.
• 48:13
  SPEAKER_00: Draw a site plan, do the code research, meet with subcontractors, go to the pre-app meet, like learn as much as you can about the process because that's all free.
• 48:23
  SPEAKER_00: And getting, you know, I feel like most people get stuck trying to raise money before anything has happened.
• 48:28
  SPEAKER_00: Good projects that are moving, people want to be a part of.
• 48:32
  SPEAKER_00: Um, and you would be amazed what you can accomplish on your own.
• 48:35
  SPEAKER_00: I think that's so like do things.
• 48:37
  SPEAKER_00: The one piece of advice, do things on your own.
• 48:39
  SPEAKER_00: Get in there and do it.
• 48:40
  SPEAKER_00: Don't hide, don't try and hire third parties right there.
• 48:42
  SPEAKER_00: Learn the process.
• 48:43
  SPEAKER_00: People love talking to people.
• 48:45
  SPEAKER_00: You're gonna find tremendous support.
• 48:48
  SPEAKER_00: People love it.
• 48:48
  SPEAKER_00: They love telling you about what they're doing.
• 48:50
  SPEAKER_00: Go talk to a plumber, go go meet an electrician on site, have them tell you about schedule 80, you know, PVC and all this stuff.
• 48:56
  SPEAKER_00: It's a good, it's a good experience and it will teach you a ton and it will move your project forward, even if you even if you don't have the money right away.
• 49:03
  SPEAKER_01: Awesome.
• 49:03
  SPEAKER_01: Well, Andrew, what's the best way for people listening in to connect with you and to learn more about your company?
• 49:08
  SPEAKER_00: Website's great, bridgeviewassetmanagement.com.
• 49:11
  SPEAKER_00: And then we're pretty active on LinkedIn.
• 49:13
  SPEAKER_00: So if you just look up Andrew Kramer or Bridgeview Asset Management, um, that's a good place to find us.
• 49:18
  SPEAKER_00: But yeah, happy to any anyone who has further questions, always happy to talk.
• 49:22
  SPEAKER_00: I love talking about this stuff.
• 49:23
  SPEAKER_00: So feel free to reach out.
• 49:25
  SPEAKER_01: All right, guys.
• 49:25
  SPEAKER_01: So if you look in the description for this episode, you'll see a link there to the show notes page.
• 49:28
  SPEAKER_01: And on the show notes page, I'll put the links there uh to the Bridgeview Asset Management website and then also uh Andrew on LinkedIn.
• 49:35
  SPEAKER_01: Uh Andrew, appreciate you hopping on here.
• 49:37
  SPEAKER_01: I learned a lot today, a lot of things I didn't know about this asset class that you uh you were able to dig into.
• 49:41
  SPEAKER_01: So I really appreciate that.
• 49:42
  SPEAKER_00: Thanks, Ryan.
• 49:43
  SPEAKER_00: This is great.
• 49:44
  SPEAKER_00: I appreciate it, man.
• 49:44
  SPEAKER_01: Yep, you bet.
• 49:45
  SPEAKER_01: All right, guys, that's all for this episode.
• 49:47
  SPEAKER_01: If you're not already subscribed, please click that button.
• 49:50
  SPEAKER_01: Otherwise, we will talk to you all next week.