Latest / Brick by Brick - Wealth Building Conversations / Why Mobile Home Parks Are More Nuanced Than You Think

Transcript

Why Mobile Home Parks Are More Nuanced Than You Think · Brick by Brick - Wealth Building Conversations

• Leo Young: Yeah, so the the first deal was in North Carolina. it was a distress deal. kind of an unfortunate situation, but you know, basically it was another group. I think it's like similar, you know, investor operator relationship. The the operator wasn't doing well, you know, th so they they have to take the property back and they were kind of motivated to sell. We came in, we bought it, we got the the funds raised for it. it was like a third. full. I think was 80 units, like twenty something full. We we came in, we brought in ten homes. super hard to infill, by the way. So for for the listener, is like when you think of occupancy in a multifamily building, you see the occupancy go up and down. One big difference is that for mobile home parks, the occupancy is much more stable, but it's very hard to get up. So bringing in those eight homes plus another two more, that was difficult. But through that exercise, we I think we we tripled the book value of the property, which is far beyond our our projections. I think our rule of thumb is like, Hey, we we want to double your investment every five to seven years. I think for this one we underwrote it to be a little bit more aggressive, but still we we exceeded that. So everyone was happy. Loren Wernette: Welcome to another episode of Brick by Brick. Today we have with us Leo Young. Leo graduated with a finance degree, went and worked at at Tesla in the sales department. And when you think finance degree in Tesla, you immediately jump to mobile home parks. And that is what Leo is going to talk to us all about today as he made his transition into mobile home park investing with I think about eight parks currently, Leo, across or maybe 10 parks across eight states, something like that. Leo Young: Mm-hmm. Yep. And more. More coming too. Loren Wernette: More coming, more coming. So excited to have you on on the show. what you probably I'm sure don't know and what most of our listeners probably don't know is when I started into real estate, I actually thought I was gonna go into mobile home parks. my first I I had like zero dollars in the bank. I mean I had some money in the bank, but not much in the bank. And I went and made a two and a half million dollar offer on a forty-five unit park and then a two million dollar offer on a hundred unit park or something, all seller financed. Thankfully I did not get those. but Leo Young: Nice. Loren Wernette: I have some familiarity with the with that asset class. And so I'm excited to talk to you about them. Leo Young: Yeah. Let's let's do it. Let's chat. Loren Wernette: Yeah. So we get started here. You know, you came from Tesla, you know, were a top rep with seventy-five million dollars in commercial real estate. define that number. You mentioned it in your your intro show notes that you provided me. Define that number to me. Leo Young: Mm-hmm. Loren Wernette: How much of that was your own? How much was that with brokers? and how much do you currently have under management today? Leo Young: Yeah, so it's it's a mix of everything. It's some degree of broker transaction. So I I was a broker right after Tesla. I mean, long story short, you know, found discovered real estate when I was at Tesla, fell in love with it, got my license, was learning and earning essentially. So some degree of broker transactions, some degree of purchase and and manage transactions. So I think right now, probably around thirty million AUM at the time of recording, but probably a little bit more 'cause we're closing on quite a quite a few deals in in the coming months. Loren Wernette: Nice. And and you're the principal founder of Cornell Communities, correct? And correct Leo Young: That's right. Loren Wernette: me if I'm wrong, but like when you went and got your CRE certificate from Cornell, is that where the name came from? Or or how did Cornell Communities name about come about? Leo Young: Yeah. Yeah. Yep. Yeah. So in in part that and I had a co founder who you know, we started this business together, he went to Cornell for undergrad, you know, I I did that certification there, he's like, Well, we have this in common, so let's let's stick with the name and it's it's kinda like a sensible approach to manufactured housing communities, right? You know, Cornell kind of just implies that you're you're not just going in guns blazing. Loren Wernette: Got it. So I I think interesting how you got the name. I want to think maybe take a step back because we jumped right over the Tesla piece a little bit, right? You were Leo Young: Yeah. Loren Wernette: a finance major and you went and worked at Tesla. And I think in your in some of the stuff I read, you're saying you went into sales without even being able to give a presentation. So talk to me about Leo Young: Yeah. Loren Wernette: like that transition into Tesla and then how you transitioned from Tesla into mobile home parks. Leo Young: So it was an intentional decision to take the non standard path. I would say to go back even further, you know, I didn't really have good mentor figures growing up, you know, no one to kind of set me straight. I had to learn a lot of this on my own. And, you know, pros and cons, right? I mean, the cons is just that like I think I I could go further with good guidance, but you know, I had to find out the path later on. But the the pros it is just that I'm I'm more empowered to take my own advice. And at the time in in college, I was like not able to find a job that I really liked in finance after college. I just, you know, didn't see myself as a a a desk jockey, you know, just, you know, forty hours a week doing all that stuff. nothing wrong with it, just not for me. But an opportunity came along at Tesla. Tesla was my dream company. I really wanted to work for Elon Musk. I loved his vision. I'm very impact-driven to you know change the environment at the time. So I took that leap of faith. I hated sales going into it. I I turned down many sales positions because I was like, yeah, it just feels icky. You know, I still don't like sales. But I think what I got from that position is just learning that it's not just sales. Like you're you're just learning the fundamental skill of communication. and being organized and having a good mindset. And, after you get rejected, not letting it get to your heart, right? So learning that from the ground up, I I was able to find my own path to success. I mean, I'm still an introvert and like I'm not really I've learned how to speak better now, which is great. But, you know, I think learning that and finding my own way to do it rather than like the hard closer, you know, that was never me. But got to the top, found real estate. At the time, company was just tough period of time in in their history. They were like almost going bankrupt. Everyone was like the whip was getting cracked extra hard. I was just getting really burnt out. Had a few kind of life-defining moments that I was like, okay, I need to find a way to build cash flow that doesn't depend on me showing up. So that's how I found real estate, because I was like, hey, you know, I I saw this like, you know, cheesy statistic that I was like, ninety percent of millionaires do it through real estate. And I was like, All right, well. If I'm a betting man, I'd pick real estate. That's how I got into it. Loren Wernette: Got it. it it's similar statistic that a lot of us have seen, right? Between that and then reading Rich Dad, Poor Dad, you know, Leo Young: Yeah. Loren Wernette: it's like eighty percent of the people I talked to, that's how that was their path, right? That was their entry drug in into it. Leo Young: Exactly. Yep. Exactly. Exactly. Yep. Loren Wernette: So how so you made that decision, hey, I'm gonna get into real estate. What did you actually do next? Did you just abandon Tesla and go get your CRE degree or did you start doing something else? Leo Young: So I started as a passive investor, so a limited partner or an LP, into some apartment buildings that I found. you know, I was just learning everything that I can, consuming content on YouTube, Instagram, the blogs, you know, bigger pockets, things like that, reading books just to get into it. so I did that and just fell in love with the concept. So the ability to just get money to show up in your bank account without doing anything. That was really pretty cool to me. you know, I I thought I was onto something, so I wanted to to do more of that. then I got my license as a a real estate agent. So I was selling residential and commercial real estate. I think the one thing, you know, I like when I was younger, I was just very ambitious. I mean I I still am, just more tempered and you know, with a more methodical approach. But you know, w when I was young, I was like kind of hotheaded. I was like, all right, I'm gonna go into this guns blazing. And quit my job, went into it full time. I was like, no, I'm not gonna join a team because like I don't wanna take direction. So I was like figuring this out on my own. Learned a ton because I was just super motivated. and you know, ended up doing a ton of different transactions from like government subsidized rentals to like multi-million dollar mansions to commercial property. So I I I just learned a ton, which then, you know, got the attention of this recruiter who, you know, got me to join a a fund to be on their acquisitions team. Loren Wernette: Hmm, got it. So you mentioned you were an LP and so I assume at some point there was a a distribution check that initially showed up. And and Leo Young: Yeah. Loren Wernette: I think I I read, how impactful was seeing that first check, like, hey, I didn't have to do hardly anything to get this money show up in your check, and how much was it and what did you do with it? Leo Young: Yeah, it it wasn't a lot, but it was life changing for me because that just proved a a concept that it's real. Right? That that like, okay, th this thing isn't theory that like I can attain it. I think a lot of what I think it is possible in life is just built through evidence, is like, can you do it? And can you do the reps? And like what does it look like? Trying to figure out the game too. Like, is this a game that you want to play? 'cause I mean, look, it real estate's not the most sexy asset. It's not gonna be crazy yield I I don't know, penny stocks or something like that. But Loren Wernette: Mm-hmm. Leo Young: hey, it it it's got its place within the portfolio. So that's what I like. Loren Wernette: Yeah, makes makes a ton of sense. And I think the sexiness factor depends on which asset and you know and and also how you judge sexiness, right? Some people think A Leo Young: Mm. Loren Wernette: plus plus multifamily is sexy. Other people think the cash flow from mobile home parks are sexy. So right. All right. Leo Young: Absolutely. Yeah, yeah. You know, and end of the day it's like the the cash in your bank account that that's what determines if you win or not. In part. Loren Wernette: Yeah, there's nothing sexy about an A plus plus menu or multifamily that's losing money. Nothing. So yeah, unvariable debt. Exactly. Leo Young: Yeah. Yeah, exactly. On variable debt. Yeah. Loren Wernette: So okay, so now you're basically doing CRE and you're doing this. Tell me about the jump from that to fund manager for mobile home parks. How did that that change happen? Leo Young: Yeah, so I was recruited to join a fund and they were doing a specialty kind of assets, basically telecom assets, so like you know, cell towers. very interesting asset class. I kind of learned how the big institutions look at investments, learn Loren Wernette: Mm-hmm. Leo Young: how to, you know define and and underwrite risk to an extent and kind of the power of consolidation. So, you know, the the fun game is all about scale. one Loren Wernette: Yeah. Leo Young: asset alone is not gonna do anything, but if you get a thousand, then now we're talking. So, learning the the power of that. But also, I mean they they were corporate. I I don't think I'm a very corporate guy, as you could see right now. it it just it's not me. So, you know, I was still yearning for more and you know, my mutual friend reached out to me, you know, he kind of knew my background in real estate and he's like, I wanna do this thing together. you know, I want to start a business, it's gonna be a lot of work, but you know, it's very compelling. I liked mobile home parks because A, you know, it it made money, but then also B, it's got a good social impact to it. you know, to earlier what I was saying, impact means a lot to me. So to me, being able to provide and revitalize affordable housing is super important. especially in an industry that I think is quite misunderstood. Loren Wernette: Hm. Interesting. Yeah, I I I don't disagree. I think that it is misunderstood. and I'm interested to understand, you know, that partner in you, okay, you say, we're gonna go do a mobile home park. What did that what was the initial thought on what that looked like? Was that, hey, we're gonna go buy one and get a fund? Or are we gonna to just go get a small one and see how it goes? Or or ha like Or was it we're gonna go raise thirty million dollars, fifty million dollars and buy a whole bunch of what was the what was the precipice of that decision and what it Leo Young: The the end goal at the beginning was to raise and scale up the the fund more or less. just syndicate a lot of deals, raise money from investors and build up the the scale that way. Cause he he came from a private equity background as well. He's working at a fund that specialized in mobile home parks. So kind of knew that business model and he's like, Loren Wernette: Space. Leo Young: it it makes sense. Loren Wernette: Got it. So if you think about any any fund, I think there's three legs of a stool, right? There's the the capital raiser, the operator, and then the person that finds the deals. And so in that, where do you sit? Where did your partner sit? And what does that look like today? Leo Young: Yeah, so my my partner has since left the business, by the way. So he he kind of found out that hey, the business model of private equity is is very hard. 'cause you you need a lot of scale for it to make sense. And Loren Wernette: Mm-hmm. Leo Young: the cash doesn't come quickly. It comes very, very, very slow and there's a lot of risk that you take. So, you know, for for us, like, you know, the the GP gets their their upside split after you make sure that investors get a certain preferred return, your return of capital, all that stuff. And when does that happen? I if you refinance and you return capital to investors, great. You're you're at step zero now. You you get some cash flow. So it's not until you you sell and you build that value that you get. And he's like, it's not for me. I I I can't wait like three to five years for like every single project to see maybe a payday. Because hey, if the market goes against you, right now interest rates a as we record this, the the five year Interest rates four point eight percent. Absolutely wild. Loren Wernette: Mm-hmm. Leo Young: It was three point five in May. Just no, in in March, in March, six months ago. So crazy. but but so yeah, the as far as building the the fund, you know, I ha a seat. I mean I think I start as the operator. So building like learning the ins and outs of managing the asset, you know, how to underwrite them, but I think the reality is that when you start, you're wearing every single hat. There is there is no work that is above or below you because you are the end all be all. There's no one, like you don't have money to hire people, you don't have all these things. And like partners is is good in theory, but also that just it it's just too much variables because then you have to manage their personality, their their working style, their goals and what they want out of it, what they think a fair relationship is. So it was just me and him to start with, for a long time. Loren Wernette: Got it. So you were operating and he was raising capital or who was finding deals? And how how'd you find your first deal? Leo Young: We were we we were both doing it. we were both kind of trading off. I think the he he was better kinda on the Excel on end of financials and stuff like that. So he took more of the the charge up front in terms of finding deals, but I mean was super involved as well. I was like building relationships with brokers, underwriting deals and you know, throwing out offers as well. So I I would say it's it's a bit of both, you know, he he was doing more acquisitions, I was doing more operations, Capital raising is better both. Loren Wernette: Got it. Okay. So so tell me you get it you got the fun story rate, which anybody knows how to get a fun story, right? You're gonna spend a bunch of money up front to get fun documents around. At least that's how mine go. And then you find the first deal. Where was the first deal? What were the numbers? What did that look like? And and have you exited that one? Leo Young: Yeah, so the the first deal was in North Carolina. it was a distress deal. kind of an unfortunate situation, but you know, basically it was another group. I think it's like similar, you know, investor operator relationship. The the operator wasn't doing well, you know, th so they they have to take the property back and they were kind of motivated to sell. We came in, we bought it, we got the the funds raised for it. it was like a third. full. I think was 80 units, like twenty something full. We we came in, we brought in ten homes. super hard to infill, by the way. So for for the listener, is like when you think of occupancy in a multifamily building, you see the occupancy go up and down. One big difference is that for mobile home parks, the occupancy is much more stable, but it's very hard to get up. So bringing in those eight homes plus another two more, that was difficult. But through that exercise, we I think we we tripled the book value of the property, which is far beyond our our projections. I think our rule of thumb is like, Hey, we we want to double your investment every five to seven years. I think for this one we underwrote it to be a little bit more aggressive, but still we we exceeded that. So everyone was happy. Loren Wernette: What makes it what made it hard to fill? Leo Young: So it's like a mini development project when you're bringing in a home. So a a mobile home park, just think of it in the literal sense, it's a mobile home parking lot. So to bring in a new home, you have to get the site scoped out, make sure the topography is good, the utilities, you know, if it's not set up, you have to extend it to get the permits. You have to source the home, get the transport sorted out as well. If there's dealer licensing, you have to get that. there there's a lot more and then, you know, approvals for, you know, certificate of occupancy, inspections, and then that gets you to the starting line of having a unit ready to sell. And then you have to sell it, do showings, follow up, you know, closing them. And then the next challenge is actually having the the buyer approve for financing is because, you know, a a lot of these the clientele is like lower income, you know, they haven't heard of the concept of a FICO score, they come in with numbers that you don't really see often, but hey, they they try to get something approved. So we have to work with them, figure out a way to do it. Maybe they start off as a rental and then we convert them to a tenant own home later. But yeah, that's just kind of top view of the infill process. Loren Wernette: So this was more of an expansion than just an infill, right? One my understanding, 'cause infill would just be there was a house there, the house has been removed or it's dilapidated, we're gonna remove it and we're gonna put a new house. Sounds like you actually had X number of lots and or pads and you extend extended that out to fill the acreage with additional lots or pads. Leo Young: So so no no no. It it was existing pads. Like we we were basically Loren Wernette: Mm. Leo Young: licensed for it was seventy seventy eight, I think. and we had the the usage. We didn't expand it, but each even doing that is quite involving. Now if you're licensed and you don't have the pads and you have to set it up, that's even another project as well. You need to get engineering studies done, you know. set crews and figure out the the pad prep and all that stuff. Loren Wernette: So it's if you were thinking about it from a home building standpoint, it's the difference between building on a infill lot, which is what you did, versus like taking a field and turning it into infill lots and building a house. Leo Young: Yeah. And and also each state has different requirements on what you're able to do, what their standards are and all that stuff. Loren Wernette: Got it. So I think another thing I want to touch on, because I understand this, but and I want to make sure everybody else does, is park owned homes versus tenant owned homes. Can you explain that and explain why I think you guys are doing tenant owned homes, why tenant owned homes are better in your opinion than park owned homes. Leo Young: Yeah. So the simple concept is that, again, this is a mobile home parking lot. So we we like for the tenants to own their own homes because it it's a win-win, conceptually. So the tenant, they own their own home, they manage the maintenance of it, they pay, you know, insurance taxes, all that stuff on their home. But we we pay insurance taxes on the land, which is generally a lot more. So They like that because they're not having to come out of pocket for a land cost. They're not buying land. They're not setting up utilities, maintenance, compliance, big property taxes, their home is chattel. So it lowers the cost of housing for them and also helps them build equity over time because instead of a rent, they're paying off a mortgage, something that they'll own. And when they move out, whenever it does happen, they just cash out of their home. They could sell it, make a profit, move on. For us, we like that because we're not managing maintenance. I think with mobile home parks, it's a very efficient cash flow, it's in a very efficient business model in terms of the cash flow. So it it's like call it, you know, 30% expense ratio. Like we can get it down to like 20 if we wanted to. so for us, the way that we have our staffing set up, it's very different than let let's say an apartment building. You have a live-in super, you have a leasing staff and all that stuff. We don't have that. So we just operate differently, we want to minimize the overhead. So for us, that's helpful. Increases the NOI, which consequently increases our value too. Loren Wernette: Yeah. Got it. And there's I guess some people might argue that they park owned homes better because of the higher cash flow. you basically are buying a fifteen thousand dollar house, putting it on there and charging eight hundred bucks or a thousand bucks a month for rent versus lot rent, which I don't know what your lens about two fifty, three fifty a month fee. So higher higher annual income, but also higher expenses 'cause now you've got to deal with maintenance and all the other stuff. So Leo Young: Yeah, exactly. And I I think different operators have different business models. They're certainly I think the park owned homes model is getting more popular now, especially people from different asset classes coming in. They're like, w well, why not? They the cash flow's pretty crazy, the one percent rule is just blown out the water, it's great. versus for us we you know, we we just try to stick into our own lane. We kinda we tried it, didn't work as well as we wanted it to. So we're like, you know, just just get good at what you're good at. Loren Wernette: Yeah. Yeah. I know I have an friend that's an operator down by Fayetteville, North Carolina, and I think she's got a mixture. but a lot of her park owned home or sorry, a lot of her yeah, park owned homes, she'll put a tenant in place and then lease it to them for a few months. And if they turn out really good, then she offers to basically sell or finance the property to them and turn it into their problem, right? And and then if they leave, then there's a exit there. But Leo Young: Sure. Yeah. Loren Wernette: different different strokes for different folks. I totally understand Leo Young: Yeah. Loren Wernette: somebody that's got ten parks and doesn't want to deal with maintenance of couple Leo Young: Yeah. In different states as well. And it's like you're you're away. And I think another kind of challenge, I I think a lot of people they learn mobile home parks or anything conceptually first. You're like, you hear this thing on a podcast, but then versus when you're actually getting your hands into the the problem, trying to solve it, you're like, Okay, you you quickly know what's worth your while, what's not. And one of the tough challenges is figuring out what the actual condition is of the home. So when you're managing these rehabs from afar, you look at a photo, you have your manager take a photo of it, great. But then when you show up you're like, there there's soft spots here, this smells bad, what's going on? So, that quickly adds to your budget, that so it's like much harder to run. Loren Wernette: Yeah, I I totally get that. I remember walking a mobile home one time and having to walk near the edges of the wall so that I didn't fall through the floor. Yeah, Leo Young: Yeah, that crab walk. If you know you know. Loren Wernette: yeah. good times, good times. Leo Young: Mm-hmm. Loren Wernette: So all right. So we we talked about kind of your first deal. I would love to dive into your most recent acquisition, not only just like what you purchased it for, kind of what the NOI is, you know, what what cap rates these things are trading for currently. But what are what's your cap stack look like on on the acquisition side? Leo Young: Yeah, and and also just one kind of disclaimer. U usually I I don't go into specifics on the the purchase price and all that stuff, especially on something public because a lot of these properties they're far they just their assessed value is far below what we purchase it at and you know, we we wanna make sure that, you know, taxes don't triple overnight because someone heard something, you know, like, hey, welcome, welcome to town, here's your new tax bill. Loren Wernette: Give give me a hypothetical example of a park somewhere in the country and what it Leo Young: Yeah. Yeah, Loren Wernette: would look like. How about that? Leo Young: yeah, yeah. so so we're we're looking at a a park. I mean I I I can say just something that we're underwriting. So there's a a park in Illinois, for example. Illinois is pretty they're not the most aggressive in terms of chasing taxes. I I think Texas and Florida are because, you know, they they don't have a state income tax, so they they need their tax money. Okay, so in in Florida actually, we we were looking at at this deal, it was a three and a half million dollar deal. and basically to purchase it at that, you know, the prior owners got it for a million bucks. So hey, taxes are gonna go up three and a half per like three hundred and fifty percent the year after sale because the schooling district in Florida, they they want their cut. So they they appeal it immediately, you know, they bring you up to the the purchase price. So for the numbers to make sense, we would literally have to raise rents by about $65, $70 per tenant. that that's 20 something percent just to break even from the tax reassessment. so it's it's a tough equation to make sense. So you know, for for us, like we we try not to look in like you know, rent control kind of states because of that, or we try to underwrite that into the the business plan. Like, are there restrictions on that? how are we tax reassessments and all that stuff? but as far as the purchase, you know, typically cap rates, it depends on the market. I would say most people want it to be accretive to debt. So, you know, you want to purchase at a cap rate above the interest rate that you're getting at. So around like seven, eight percent is pretty common. Nine percent is it's like getting more attractive. But then you'll also see deals being marketed by brokers. They're like, this is a 9% cap rate, but they're including parkour and home income. And To to you, the listener, you're like, well, what's the difference, right? It's just NOI to me. But the difference is that a lot of lend most lenders don't give you credit for parkown home income. And that's because it's chattel and it's it's depreciated over time in their minds. it doesn't last very long, even though it does. but they they just don't give you credit for it. So, you know, if you're you're you're gonna hit like DSCR constraints or anything like that. Loren Wernette: Are there are there lenders now just focusing on these type of acquisitions? and I guess what are some of the constraints? Cause I in historically Leo Young: Yeah. Loren Wernette: when I've looked at this stuff, like there hasn't been a lot of interest on the private credit side to lend on these type of assets. Leo Young: Yeah, it's it's getting better. I would say in the past five or so years, a lot more lenders have started to learn the asset class. They're like, wow, this is like pretty good. You know, you have turnover rates of about five percent compared to you know, fifty percent in multifamily, so it's like an annuity for me. You know, I can underwrite this as a more stabilized asset. So they they like that. but the tenant owned home versus park owned home, I think probably a newer lender would just say, yeah, sure, why not? versus more experienced one, they're like, okay, we we need you to break out the expenses for the the land versus the homes. another thing is that I was saying earlier, the rates shot up a lot this year. So that's just making deals a lot harder to to pencil out. You know, lenders that retrading, they're they're coming back, they're saying, Well, hey, you know, my hands are tied, you know, I need a certain spread above the rates. And you you can't make the cash flow make sense and you have to go back to seller. They don't want it because they're like they're used to a certain valuation. So it's making the market very interesting now. there's Loren Wernette: Yeah. Leo Young: a lot of changes. Loren Wernette: Interesting. All right. So I'll I'll give you a hypothetical and let's let's build out the kind of cap stack here. So Leo Young: Yeah. Yeah. Loren Wernette: let's say we've got a seventy-five and I have no idea if these numbers will work, but just bear with bear with me. Seventy-five Leo Young: Yeah. Yeah. Loren Wernette: lot park that you're gonna buy for four million dollars in North Carolina. Okay. it's seventy-five percent occupied. what are you you get the thing under contract. Where are you getting the capital, the four million dollars to purchase it from? Are you buying getting some from LPs and some from the bank? Are you you in seller financing? And then what are you doing over the next three to five years to get that thing up to close to a hundred percent? And then what's your exit look like? Leo Young: Yeah. So that that's realistic. I think North Carolina is one of one of those states that healthy investor interest because they're hey there there's no rent control, there's good population growth and stuff like that. Weather is not the not the worst in terms of like, you know, catastrophes. so yeah, seventy five loss for four million. I would say typically around sixty five to seventy five percent of it would be financed by a bank. And the rates are probably around seven to eight percent on average. I would say in North Carolina people want to be seven cap or a six cap as far as what they are. So you're a little bit negative leverage going in if if that's fine by you. But you know, in terms of investors, you know, people are thinking, what's your yield on cost, right? You know, if we put in some extra money, we bring in new homes, then we boost up the NOI, well that will increase the the value of the property. So that's one way to value add. So there's a few different value levers for a mobile home park. One is infill. You just go through you bring that do that whole process, bring the home in and everything. That is the best way then the best way to society, but it's also most risky, most costly to you. Because you you're on the hook for more contingent liability. So you as the sponsor, you're signing on personal guarantees. If a tenant doesn't pay, it falls back on your personal assets. So you have to be comfortable with that. and yeah, that that's the equation that you have to make sense of. Second is getting the expenses to be better. I mean, that that's like with any commercial property is you know, you want to rebid vendor contracts, see if there's any cost improvements that you can do. maybe a manager is getting overpaid. we we've had managers that were pay sixty, hundred, hundred and twenty thousand dollars versus, getting it integrated with like a an off site team. You know, an off site versus an on site. you can kind of make the the expenses better that way. Third, and you know, kind of like more somewhat controversial, I guess, is just increasing the rents. You know, I I think the reality is that the average rents for mobile home parks were for a mobile home lot it was fifty dollars back in the sixties. That equates to around five hundred dollars if you account for inflation in today's dollars. But as you said earlier, you see a lot of properties that are what 200 lot rent, 300 lot rent. So why is that? Is because a lot of the owners, they're individuals and they they just don't keep up with inflation. You know, they kind of they see it as their clubhouse. They're like a lot of them live on site. 'Cause they they don't want to have Loren Wernette: Yeah, well. Leo Young: that tough conversation of tenants banging on their door, be like, Why'd you jack up the rent? So then, know, we have to come Exactly. Loren Wernette: their basis is really low. Their basis is really low. And so why not keep it at 250? I'm already pulling 700,000 a year and doing nothing, right? Or besides mowing some lawns. Leo Young: Exactly. Exactly. Which then comes a a big issue is that they don't they're not proactive in budgeting for these big capital projects. mobile homework are fifty, seventy, hundred years old and you don't have the proper budgeting for like a failing sewage system or you know, need to repave the roads. So that that's why a lot of, you know, mom and pop owners they sell because they're like, Well shoot, I have this bill coming to you. I don't have anything saved for it. So screw it, I'm gonna sell. Give it to next buyer. Next buyer is like, well, I need to make the money make sense. I need to raise capital. no investor is gonna say, yeah, give me a four percent on on this deal. I'm in. great, no, just keep it in your high yield account, right? So you have to budget for the capex up front. how do you implement it and stuff? So it's some degree of rent normalization. still, I will say the rents obviously have to be. It has to make sense to the local market because it's a free market, people can leave and people do leave. If if the value isn't compelling, then people leave. So you have to be cognizant of that too. But though those are the three value drivers. Loren Wernette: to the to comment about people leaving though, they're relatively sticky, right? Because especially if you're buying a park that has mostly tenant owned homes, they are either paying the five thousandish dollars to move their home or they're just abandoning their home and having to rebuy someplace else or rent, correct? Leo Young: Yes. that's the kind of old school view of it. there's more options for residents now. Loren Wernette: Mm. Leo Young: a lot of them are selling, you know, because l let's say, you know, we're putting in, six figures of CapEx dollars to make the the community a better place. It's more desirable. And you know, real estate is all about location, location, location. So people want in. And you know, there there's wait lists, like we just don't have the supply available. to house people. so then yeah, they they could sell off their home, you forty, fifty K or something, depending on which market, and and get out. And it does happen. Just not as still like super, super low. It's not that, you know, maybe it's like seven percent turnover as opposed to five before. So yeah. Loren Wernette: Right. Yeah, they have the option to sell if they have the credit and the ability to go get financing for a new home, right? But if if if they don't yeah, or rent. So got it. All right. Leo Young: Right. Or or rent. Yeah. Yeah. Loren Wernette: So go back go back to our example. So you got a four million dollar acquisition, you're gonna get a sixty-five percent LTV loan. That means you're bringing about one point four mil to the table. Is that all coming from LP dollars? Are you doing seller finance deals with the buyer or the seller? How are you coming up with that 1.4 million? And then also when you're buying a park, what percentage of the purchase price do you set aside additionally for the the the capex Leo Young: Mm. Loren Wernette: that you need to fix? Leo Young: Yeah, yeah. So great question because I think it's very important to budget your CapEx correctly up front, especially in mobile home parks. that that's like one of the the kind of big ways of a a business blowing up i is just like you don't have something budgeted for it. because like infrastructure's old, right? So for us, what we do, a lot of it is from investors, you know, we we basically raise the down payment plus the reserves from investors. we're we're able to to underwrite it such that it's compelling to them still. And for us, we try to suss out as much as we can the risk factors and define kind of like, hey, you know, if we need to repave the roads, let's get a few bids on like what this would cost, things like that. So to set aside some amount for the definable capex and then also like a little bit of buffer room, because there there's always something that you don't factor in during the acquisition process. So all in all, maybe it's like, let's say you're 65 LTV, 35 for the down payment, may maybe it's like call it closer to thirty-eight, you know, if you factor in like closing costs, people always forget about closing costs. There's like title commitment like, you know, title policies, transfer Loren Wernette: Broker fees. Leo Young: fees, all that stuff, attorneys fees, all that stuff. and then reserves. So maybe it's around another 10% for reserves. So you're all in maybe forty, fifty percent of the the property's price as equity. Loren Wernette: Got it. So you're buying it for four and you're ending up ra you're either raising or borrowing up to six ish. Leo Young: Y yes, correct. Yeah, yeah, all all in project costs, but br probably closer to five. Yeah. Yeah. Yeah. Loren Wernette: Got it. All in, all in project. Okay, so let's say five and a quarter, right? So you're in five and a quarter, you get your other whatever units up and running. what how long are you planning on sitting on this asset? and then what's what's an exit look like? Leo Young: So for us in particular, we we like the middle term hold. you know, we're we're not like the family offices that just never sell. that that is a type of investor because they they just get the bonus depreciation, like mobile home parks depreciate like immensely. So they just get Loren Wernette: Sure. Leo Young: that on their books and never sell. For us, we like to cycle between like three and seven years as a whole period. So it's enough for us to to bring value, you know, because the the the value curve, you know, it quickly kind of It's sharp in the beginning. You add a lot of value, right? first couple of years and then it stabilizes. a lot of our investors like the cash flow, so we like to hold on to it for a little bit. Then, you know, come like two, three years time, we might want to test the markets, see if a lender would give the property more value or a third party buyer, see if that makes sense. You know, if it makes sense net of all fees, then you know, we'll we'll do whatever makes more sense. So kind of have a liquidity event in the middle term. Loren Wernette: Got it. And are you guys capturing that depreciation for for the LPs? And then how is Leo Young: Yeah. Loren Wernette: that recapture impacting your distributions at the liquidation event? Leo Young: Yeah, so we we give depreciation to our investors, but we don't factor it into the underwriting because depreciation and how much you can take, how you can take it, it's unique to ed every individual. You know, like some some people are like real estate professionals, some people are not, you know, etc. Different states too. so the cool part about mobile home parks is that so there there's this thing called bonus depreciation, which I'm sure you're aware of Lauren, that came back. Amazing, you can take a hundred percent of the bonus depreciable section. So basically the five, seven, and fifteen year components of your property, which in a mobile home parks sense it could be up to 70%. So it's a lot. And when you're getting a loan to get this property, you're easily hitting dollar for dollar. So if you put in like a dollar, you're getting a dollar in depreciation. As far as recapture, I mean it it's just finance 101. So you pay back whatever depreciation that you took in the start. But Finance 101 is like, hey, if you take that, if you save that money, make it do something else, make it make more money, then it it's better than doing that. That's also why Warren Buffett's number one rule for investing is don't lose money. It it sounds like stupid, but it makes sense intuitively when you're like, okay, if I'm beyond if I'm behind on my basis, I'm gonna work harder. And I still have to pay back the dollar, which then I'm screwed. Loren Wernette: Yeah. Leo Young: So yeah. Loren Wernette: Right. Interesting. Got it. Yeah, it's a it's it's a super interesting model. we a bonus depreciation is a very interesting topic. We don't participate in any of that currently because all of our stuff is so quick turn. it's it's it's we're building or their loans. and so don't don't capture anything there. So we just make up for it by just returning a lot of money, but it Leo Young: Yeah. Yeah. Absolutely. Loren Wernette: it's it's certainly it's certainly a nice model. All right, so you got to the point where you're liquidating and then when you get to a liquidation point, I we skipped over this. These are all syndications, meaning and and by syndication you have a park and then you have a fund with a pool of investors. And you have another park and you're not creating a pool fund where things flow into, correct? Leo Young: Yeah, for for the most part. It's syndication. Sometimes we do joint ventures, if we have enough cash on hand to just take it on ourselves. and yeah, typically it's I mean if you want to get specific, w we do a mix of five six B and and C's, just depending on the project. Loren Wernette: Got it. Okay. Good to know. All right. so we you mentioned a little bit a few few minutes ago about the rent normalization, right? And I think you also, talked a little bit about affordable housing as a mission. Those two things are a bit diametrically opposed, right? I want to maximize value by getting higher rents, but I also want to make sure I have affordable housing for my tenants. When you're looking at a park and you're trying to make decisions, which one of those is going to win? Leo Young: That's a great question. And part of why there's a lot of misunderstanding in in this space, because I think people think that affordable is synonymous with cheap, which, it it sounds intuitively right, but the reality is that it's a lot more complex. You know, the the truth is in the nuances because the there there's a few threats for mobile home parks, right? real estate, your goal is highest and best use. So if you don't keep up with the local rents in the market, then a developer is gonna see the value of that land as more valuable to be redeveloped, which happens a lot. So you have multifamily apartments coming in or apartment developers coming in to bid higher. One example is we're looking at a deal in Tennessee. We bid on it five and a quarter million and we we were outbid by over two million dollars by an apartment developer who who just wanted to level a lot. Kick everyone out and like good luck. So it it happens. And you know, people are trying to figure out a solution to that. But the solution is raising rents responsibly such that you're in line with market and keeping up with the maintenance. Because also, you know, parks get shut down because of healthy health and safety reasons, right? It just like, you know, your your septic system isn't serving, then shoot what you you can't live here. So that happens as well. So there there's a lot of kind of threats. to the existence of mobile home parks. and yeah, I mean it's it's nuanced in like how you do that. Certainly there's people that are just like, well, hey, you I I could just bump it off 300 bucks. yes, that does happen. But you know, for us, like we try to see things as more nuanced. Like how do we do it in a way that people still feel it's compelling? They see that we're doing things. They see that we care. So it it's not easy. and there there's no black and white answer. Loren Wernette: Yeah. I I think that's a pretty thoughtful way to look at it. And and I don't disagree. I think it's just interesting how how one every operator is going to be a little bit different. And one's going to be exactly what you said. I'm going to maximize the value and try to, you know, in c add a few amenities and try to deal with it. And other ones are just going to be, you know, the opposite. So I think it's also interesting that you brought up the developers because, you know, about 30 minutes from me, there's a hundred and forty unit park. that was recently purchased by a developer that's going to basically just get wiped out and turned into, I think condos or something, right? And we've seen more and more of this across the country. and in fact there's been some legislative push on several states of this right of first refusal concept where the the tenants have the right to basically purchase things before, you know, instead of a developer on like the 60, 90, 180 day timetable. Which we can have a whole conversation about the feasibility of a tenant in a mobile home park purchasing the property. But as you Leo Young: Yeah. Loren Wernette: look at your business, North Carolina hasn't had that happen yet, but they're talking about it in the legislature. How do you figure into a rofer when you're looking at a park from a pro forma standpoint and thinking about making an offer? Leo Young: It's it's tough. You know, I I think the just to to preface this is I I believe that the kind of free flowing of the market will kind of draw out the best outcomes. So if you want to have a certain behavior happen, you just design an incentive structure to make that happen. So, you know, why why do people buy real estate is because y part of why is like you can get depreciation. And depreciation can give you more, value of your dollar, all that stuff. So, putting in place like a a a rofer or rent control, it just it limits certain things. you you think, intuitively it's the right thing to do, theoretically, right? you y y you could say yes, in a in a college classroom, but the reality is it's it's much more complicated than that. So right of first refusal, it's Definitely it's more of a a hurdle than a stop sign more or less. we could definitely navigate it. I think the end of the day is that someone a responsible operator needs to come in to manage the property well, to revitalize it, to do whatever is necessary. And, you know, a a lot of, you know, tenant owned communities like they're also finding. Well, shoot, like just because we bought it doesn't mean that, you know, we we could just stop the rent raises from from going up, right? It's because, well, shoot, we we have to budget in like Half a million dollars to replace this and all that stuff. We have to hire consultants because none of us have, the the brain power or anything. It's not that you don't have the brain power. It's like you need feasibility studies, you need to hire engineers, you need to hire consultants to make sure that, your business is on on track and to reach consensus, you need more resources. So it's not like a kind of magic wand, as you know, people present it as. So the way that we underwrite it is just hey, we we expect more of it. more of a process to purchase it and to sell it. I think some states they are doing what I just said and incentivizing people to sell it to residents, which is pretty cool. You know, y they they're reducing your transfer fees or, you know, giving you a tax credit. there there's various things. you know, we'll we'll see how it plays out. But ultimately like who who we sell our parks to it doesn't matter. I mean if it's tenants, great. it just, you know We obviously have to do right by our investors whatever is best for them. Right. if a tenant can match the offer and if there's incentives to do so, yeah, why not? Loren Wernette: Hmm. It makes me wonder if there's not a a play in the future, if the if the tenant owned structure takes over, if there's not a play for some company to come in and be like, hey, you guys want to buy this, great. We'll come in, we'll do the management. And in exchange, we take the depreciation from the from the taxes, right? If you're gonna hold it Leo Young: Hm. Yeah. Loren Wernette: for a long period of time. They get to have their rent control and then some family office that wants to sit on it forever gets to take the depreciation. Leo Young: Yeah, and and that's the the beauty of the free market. I I think there there's always enterprising and innovative individuals that are just motivated by, whatever they want to get out of life. And usually it's like to maximize their their dollar, all that stuff. So yeah, I mean it could be a possibility. Loren Wernette: Spitball and I thought about it for about four seconds while we were talking. That's it. So so so we've Leo Young: Yeah, it's a cool concept. Yeah, yeah. Loren Wernette: we've we talked in de a little bit of detail about some of you, no, we really haven't talked about your deals, but we talked about the structure of what a deal would look like. Can you give me an example of a deal that just didn't go the way you thought it was gonna go and and kind of how you unwound that thing? Leo Young: Yeah. So I think there's a lot of things that D do you hear the sorry, d do do you hear the dog barking in the background? Okay. Loren Wernette: Yeah, it's okay. I can clean it up later. Leo Young: Let me let me just grab him real quick, is that fine? Loren Wernette: Yeah, go ahead. Leo Young: Sorry, you'll have to mark that moment. Loren Wernette: That's fine. We'll de I'll deal with it. Leo Young: so so yeah, I mean I think. So yes, a lot of deals don't go according to the pro forma is how you underwrite it. I think that's just how the world works. There's a lot of complexities that you don't factor in. So one of which is a park-owned home community that we took over. Loren Wernette: Mm. Leo Young: we we thought, hey, you know, if people are doing this, you know, what's the harm, right? We should just try it. And Yeah, I I think all the things that you think can go wrong are going wrong. It's just these homes are not in good condition. We're or it's just hard to manage the rehabs from far away. maybe contractors are are not doing good work. tenants when they come in, they're less motivated to stay because they're not building equities. They're they're like, whatever, Loren Wernette: Mm. Leo Young: I'm just gonna go. they don't treat the home as good as if they owned it as well. Just renters, I mean, I think a few renters, they just When they're like, I I'm not dealing with the repercussion, screw it. They they they throw in whatever in the dishwasher, they bang up the walls, they when they get drunk, they punch holes in your walls and they knock out your your windows and it's just like, Well shoot, how do you underwrite that? Loren Wernette: Right. Leo Young: so yeah. Loren Wernette: Got it. So it's you're in the middle of that one currently. Leo Young: Yeah, yeah, we're we're managing it. it's it's tough. I think when when push comes to shove, you know, kind of see what type of operator you are. you know, how we are able to step up, you know, we had someone from our team move on site for a few months to oversee the the rehabs of the homes. It's it's a lot to ask for, but also, you know, when when the situation calls for it, like do you step up? So side note. That that's something I look for when I, LP into other people's deals. I I want to get a sense for that grid. Loren Wernette: Got it. Yeah, I aft I the thing that ruined me of at mobile home parks was I knew a guy that had about a hundred and ten units and he did all park owned homes and it was about forty minutes, forty-five minutes from his house. And him and his two teenage sons were at that park like seven days a week just fixing things. Leo Young: man. Loren Wernette: I mean, not just fixing things, but you know, they had they were trying to bring it up to s you know, they bought it with like 60% occupancy and the rest of the lots had houses on them. And so as they were bringing cash in, they were renovating houses plus fixing things plus renting houses out. And it wasn't in a great area. And they ended up having a really, really nice exit after about five to six years worth of seven days a week work. Leo Young: Yeah. Loren Wernette: and it's just like, there's other, there's other ways to make money than that. I mean, that's a Leo Young: Yeah. Loren Wernette: there's nothing wrong with that, but you know, that's not the path that I wanted to take. Leo Young: Yeah, y I I think people in the in the park own home model, it's kind of like a horizontal apartment complex, right? Like you have a live in super, you have a maintenance staff, like they're pretty much on site doing these things all the time. But you have to also understand is like the rents in a mobile home park, they're probably like thirty percent of comparable rents in town. Like so in a secondary market, like we we have rents at like seven hundred dollars versus you can rent for twenty one hundred or twenty two hundred. So, pe people pick that for a reason. But, for you as the operators, you don't even have to budget for this. Like s what what's how do you make it work, right? So you you just have to Loren Wernette: Yeah. Leo Young: deal with the constraints, you know, do the best in in imperfect environment. Loren Wernette: Yep, makes makes a lot of sense. So if we've got an operator of some business that has a couple of rentals looking at mobile home parks as a space that they want to move into, other than just swiping you an LP check, what would be like today? What would be like the first thing that they would start doing if they were interested in learning more about this space? Leo Young: Get educated, talk to people. So it's it's much easier to get educated in the in the space now. You know, you have a lot of people kind of sharing their their thoughts. I think, you know, Frank Rolf is like a a very well known person in the space. Loren Wernette: Mm-hmm. Mobile Mobile Home Park Mastery, I think was his podcast. I think I listened to all those. Leo Young: Yeah, that that's right. I mean he's yeah, he he's been in the space for thirty years. the the guy was a Stanford graduate and he picked mobile home parks out of everything. So, he Loren Wernette: Mm-hmm. Leo Young: he's he's doing something right. So I think learning that, but also talking to different operators, you know, figuring out like, hey, you know, if there's a way that you could partner with them, you could help with some things, you know. I think the beauty of commercial real estate is that there's just so much work and it's very hard for someone to do it themselves. So, you know, chances are You need people, maybe you could do a partnership, for someone earlier along, or work for someone, if if they want to work for one of these companies, I think, for us, when we hire people, we we look for their s experience within the manufactured housing space. Cause there there's Brookefield, Blackstone, yes, community, there's they have such great training and this asset class is so unique. So it helps, you know, not be not needing to, you know, train them from scratch. Loren Wernette: Yeah, makes sense. So if someone is looking for LP investment and they're interviewing the GP, what are three good questions that they should be asking every GP to get an idea of of whether they're a good partner or not? Leo Young: Mm. There there's so many. I I think for LPs, you know, I I think they they learn from theory and to get it to what reality is, there's some degree of nuance, so I try to give the context. But first off, it's like, tell me other similar deals that you've done and how they went, right? Because a a sponsor could do anything. I mean they they can specialize in the Dallas market. They can have an industrial building, self-storage, mobile home park, and like this is their first mobile home park. Well, how how how much confidence do you have in their numbers? Or if this is their only strategy, if this is their only asset class like Frost, we only do mobile home parks, we do it nationwide, sure, but this is our our only thing. So we get good at the playbook. So you want to see like how likely is it that you hit the projections? You know, how confident are are your assumptions? Are are you in their assumptions, right? Second is like, hey, tell me about a project that didn't go according to plan and what happened. And you're not necessarily looking for a perfect track record. I think, in my opinion, the perfect track record is just I don't know. I I I feel like something's missing. because nothing goes fully according to plan, as you know. In real estate, there's so many variables. so yeah, just understanding what's going on and not automatically disqualifying because you know someone had like, you know, a a poor deal, for example. because things happen, but like how you respond to it matters. Third is like Tell me about your team. what is your team setup? Because I think when it comes to the syndication space, there's so many different setups. There's there's people that do this part-time, they they want to go full time into the syndication space. They they have a full-time, 40 hour a week, 50 hour a week job, that they're trying to, you know, just break into the space, which is totally fine. You know, I think it takes a lot to get started in this space. but you know, their their level of like resources, abilities is different than, hey, you know, a hundred employee kind of firm. Loren Wernette: Mm-hmm. Leo Young: that has whole in infill crews and stuff like that compared to Blackstone. Blackstone is just know, Loren Wernette: Right. Leo Young: there. So understanding their setup is very important. Loren Wernette: And what's important to you too, because you might not jive as an LP with a Blackstone because you're this big in this huge pool, but you may Leo Young: Yeah. Loren Wernette: like working with someone that's, you know, two or three deals in and has a small team and you have direct access to the G P, you know, principal. Leo Young: Yeah. Exactly. Exactly. A and and look, it it's got the entire variety, right? There's people everywhere on that spectrum. You s have to see like what makes sense 'cause there's so many variables to you as a a as a limited partner as well. So ultimately there is some degree of gut feeling, at least to me. I I have conversations with the team, I see what's going on to the best of my ability and some degree it's gut feeling. Loren Wernette: Yeah, I I think I think that's right. I think there's a is there a clicking? you know, on the G P side when we have investor conversations, a lot of times you can get down and be like, Yeah, there was a there was a click there, like we get along, you're probably gonna invest with me. And other times like, Yeah, I probably don't wanna work with this person. And I've had a few people that I've talked to and I'm like, I think this is not gonna be the relationship for either of us, so Leo Young: Yeah. Yeah. And and I I think the nuance is not every relationship is for everyone. There's no universally good or bad one. Like you know, there's there's people that, you know, reach out to me to to you know, try to get me to do an LP with them and you know, it they're like a salesperson. They they talk like a car salesperson. not not to use Loren Wernette: Huh. Leo Young: that analogy, 'cause I was a car salesperson, but like, you know, they they got that like intense vibe to them and like every time Loren Wernette: Right. Leo Young: I talk it's like to that guy. I can't talk to the principal, so it's like I I don't know. I I don't know if I could trust the numbers. I don't know if I can trust you and what if things go south? so probably not Loren Wernette: Yep. Yeah. Leo Young: a good fit for me. Loren Wernette: Yeah, I get that. So just total aside, when I started into sales long time ago, I also had a negative opinion of salespeople. and just kind of make the sales roll your own. And you know, I found that consultative selling fit my style much better than Leo Young: Yeah. Loren Wernette: than the hard push. But so I I I relate to that topic. Yeah. Leo Young: Yeah. Yeah, I mean help helping people buy. Yeah. Yeah. I I I think the the evolution of sales, like it it's come a long way. Like I think the best salespeople are consultants. They're like they're they're like a doctor. They you know, what brings you in today? you have a headache? Like when did that start? You know, how did it happen? What have you tried? Have you tried closing all the windows and opening them again? You know this thing. And then prescribing you a solution. So yeah. Loren Wernette: Right. Have you tried restarting it? Leo Young: Ha ha ha. Loren Wernette: perfect. All right. So if anybody out there is interested in what you're talking about, interested in learning more about mobile home parks, interested in your LP fund, or just wants to reach out, how can they get a hold of? Leo Young: So two ways. One, if you want to learn more about my company, my team, what we do. We also have a lot of free educational resources about mobile home parks. Visit us at Cornell Communities.com. That's C O R N E L L C O U N I T I E S.com. Or if I could be a resource to you, I I I try to respond to messages on LinkedIn and Instagram. LinkedIn it's Leo Young L-E-O-Y-O-U-N-G. Instagram, it's Leo Young Real Estate. Loren Wernette: Awesome. And we will make sure we have all of those in the show notes so that all the listeners can easily find those. Leo, it's been a pleasure talking to you. I've actually enjoyed this conversation quite a bit because I know something about it. And so I was able to ask some okay questions. Leo Young: Yeah. Loren Wernette: and so I appreciate your time today. And to all the listeners out there, if you got any value out of this, please reach out to Leo and and let him know you listen, you got some value out of the show and chat with him about what he's got going on. and if you got value out of the show or someone that would get value out of the show, please share the show with them. You sharing the show with other people is how the show grows. We don't advertise, we don't market. I just like to have good conversations with good people and let it grow from there. So any bit of sharing or unsolicit or any any bit of sharing would be helpful. So and to everyone else, thank you and we will talk to you again next week.