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Mobile Home Parks: Hidden Goldmine - Walter Johnson #6232 · Financial Survival Network

• 0:00
  Speaker 1: Ah, So let's just say a self storage down the
• 0:02
  Speaker 1: street was a hotterbox, Well yours in your park, you
• 0:05
  Speaker 1: can get fifty or sixty now they would rather write
• 0:08
  Speaker 1: from you. One is closer and it's in their community.
• 0:11
  Speaker 1: Two is cheaper than the one down the street. So
• 0:14
  Speaker 1: there's definitely other ways to maximize profits in revenue in
• 0:17
  Speaker 1: molall parks.
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  Speaker 2: You're listening to Carrie Letz's Financial Survival Network, where you
• 0:22
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• 0:26
  Speaker 2: thrive in today's trying times. You need the Financial Survival
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• 0:46
  Speaker 3: Welcome you are listening to and watching the Financial Survival Network.
• 0:50
  Speaker 3: I'm your host, Carrie Leutz. It's February third. Hard to
• 0:54
  Speaker 3: believe we made it through January. The country still somehow function.
• 1:00
  Speaker 3: I'll go figure nobody can quite figure it out, but
• 1:04
  Speaker 3: I guess it's when the ship is sailing. The ship
• 1:07
  Speaker 3: keeps sailing until something stops it from sailing. But if
• 1:11
  Speaker 3: you want to sail, you want to excel, then you
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  Speaker 3: need to listen to my next guest Walter Johnson. He
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  Speaker 3: is a mobile home park magnet. And Walter, it's great
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  Speaker 3: to have you on the show. You know, you've been
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  Speaker 3: in real estate. You retired when you were twenty seven,
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  Speaker 3: then you got bored, and then you somehow discovered mobile
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  Speaker 3: home park. So how did that evolution take place?
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  Speaker 4: Walter? Well, yeah, well, I guess the the re tyrant part, right.
• 1:45
  Speaker 1: So I had friends that when I was living in
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  Speaker 1: Denver and they had nine to five lived in his
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  Speaker 1: high rise on a nineteen four beautiful view, and they
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  Speaker 1: want their word from their nine to five And I
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  Speaker 1: stayed home and I was trigging a bottle of wine
• 2:01
  Speaker 1: every day waiting for our freezy at home.
• 2:03
  Speaker 4: So that gets boring after a while.
• 2:05
  Speaker 1: You can get back to work or become alcoholic, right,
• 2:08
  Speaker 1: So yeah, I just chose to get back to work, right.
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  Speaker 3: Yeah, twenty seven is too young to retire, man, let's
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  Speaker 3: face it, come.
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  Speaker 4: On, Yeah, but you think so, are you? Like, Hey,
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  Speaker 4: this is actually a great bucket list. I'm retired by
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  Speaker 4: the age of thirty, and it's sound right in theory,
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  Speaker 4: but it's the American dream. Yeah, exactly. I don't.
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  Speaker 1: I don't think that's the American dream. So I think I'll
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  Speaker 1: keepboard until I expire.
• 2:30
  Speaker 3: Nightmare is an there man that for sure, Key is
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  Speaker 3: not to retire at twenty seven. It's to be able
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  Speaker 3: to retire at twenty seven.
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  Speaker 4: Right, yes, and keep going absolutely.
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  Speaker 3: Yeah. So, like many of you out there have a
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  Speaker 3: very negative connotation of mobile home parks. You think of
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  Speaker 3: trailer trash, you think of meth labs, you think of
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  Speaker 3: a bunch of cars up on blocks, and you know,
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  Speaker 3: you have very negative impressions of the whole space. But
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  Speaker 3: it really isn't like that, is it, Walter, No.
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  Speaker 4: No, no, I'll give someone. I'll give your audience a secret.
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  Speaker 1: So in mobile home parks, usually like there's a city
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  Speaker 1: or county inspector that I actually goes, and there's park
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  Speaker 1: roles so that the home actually has to half you know,
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  Speaker 1: you can't have any cracks or bust out windows. They
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  Speaker 1: have that scurrying on the homes. They have to keep
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  Speaker 1: their homes in a certain like a certain condition. If not,
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  Speaker 1: then you can't bring in new homes and actually sell
• 3:26
  Speaker 1: them because the city our county inspector goes and says, well,
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  Speaker 1: this park is not up to our standards. Therefore you
• 3:31
  Speaker 1: have to get it up to our standards to be
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  Speaker 1: able to bring in new homes, so they really regulate them.
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  Speaker 1: And I think when you when you actually go into
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  Speaker 1: a park, you'll look at it and saying, yeah, this
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  Speaker 1: is actually relatively clean. And I like that idea versus
• 3:44
  Speaker 1: just buying a house in some random subdivision and you
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  Speaker 1: can't control the subdivision.
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  Speaker 3: Right, So and then it becomes a question of like
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  Speaker 3: who your tenants are or how do you work it?
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  Speaker 3: Do they own they purchase the trailer from you and
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  Speaker 3: rent them in rent of space?
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  Speaker 4: Absolutely? Yes, yep.
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  Speaker 1: And we do our our same background checks, same credit checks,
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  Speaker 1: same income verifications, so we do the same I would say,
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  Speaker 1: really similar to let's say apartment building aura or a
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  Speaker 1: single family rental.
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  Speaker 3: What's the average cash flow on this type of deal
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  Speaker 3: we're getting.
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  Speaker 4: I mean, if we can get the.
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  Speaker 1: Cap rate in the indust rate like two or three percent,
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  Speaker 1: we're right around about twenty to thirty percent caption and
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  Speaker 1: cash return.
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  Speaker 4: And that's when we look which is.
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  Speaker 3: Nice, which no wonder the sophisticated investors private equity have
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  Speaker 3: gotten into it. But I can't see some Wall Street
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  Speaker 3: firm or Miami firm because all the hedge funds, everyone
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  Speaker 3: knows they've all moved down to Florida now to escape
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  Speaker 3: New York. I can see them effectively managing a mobile
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  Speaker 3: home park.
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  Speaker 4: No, they manage it from the ivory tower. I would say, right,
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  Speaker 4: we're managing boots on the ground. So we kind of
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  Speaker 4: you know, we intersect at times.
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  Speaker 1: But you know, they have a ton of capital that
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  Speaker 1: they get for sheet and they're able to to you know,
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  Speaker 1: manage from an office in let's say Florida or New
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  Speaker 1: York or Chicago or LF.
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  Speaker 3: So a cash on cash return twenty thirty percent? Is
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  Speaker 3: there a room to upgrade these parks when you buy
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  Speaker 3: them to value ads as we call them, or they're
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  Speaker 3: extra spaces you can put in put in more units?
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  Speaker 3: Do you upgrade the units?
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  Speaker 4: Yeah, upgrade but in more more homes.
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  Speaker 1: If you have a you know, vacant house or vacant
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  Speaker 1: lots that that don't really fit home, you can someone
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  Speaker 1: you can put it. Someone can use that for storage,
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  Speaker 1: or you can you can put self storages. Right, so
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  Speaker 1: self storage is actually you know a great asset. But
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  Speaker 1: if you actually have some extra land on in a
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  Speaker 1: mobile park, you can put a mini storage on there
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  Speaker 1: and actually charge you know, fifty sixty bucks a moth
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  Speaker 1: and compete with the self storage down the stream.
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  Speaker 4: Very cool, and so I'm all right.
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  Speaker 3: How much did you say they bring in a month
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  Speaker 3: on average?
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  Speaker 1: So let's just say a self storage down the street
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  Speaker 1: was a hotterbox, Well, yours in your park, you can
• 6:09
  Speaker 1: get fifty or sixty. Now they would rather write from you.
• 6:12
  Speaker 1: One is closer and it's in their community. Two is
• 6:15
  Speaker 1: cheaper than the one down the street. So there's definitely
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  Speaker 1: other ways to maximize profits in revenue in my wall parks.
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  Speaker 4: Interesting.
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  Speaker 3: Interesting, So what's the biggest drawback to this space?
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  Speaker 1: The biggest drawback what I'm facing is that it's not
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  Speaker 1: I mean, you will make money, but you're you're you're
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  Speaker 1: of course, nothing's for free, I guess in life, right,
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  Speaker 1: So you're still working hard to find deals, You're still
• 6:41
  Speaker 1: working hard to bring in new homes, so there's still work.
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  Speaker 1: So even though you're actually making money, I wouldn't say
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  Speaker 1: it's passive.
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  Speaker 4: I al would say it's it's it's proactive in that right.
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  Speaker 3: So when you're getting into this, when you buy a park,
• 6:58
  Speaker 3: you're buying it for cash. Can you find nance these
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  Speaker 3: things you can finance? So right now, I think raids
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  Speaker 3: are probably seven to seven point seventy five. I think
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  Speaker 3: we got we got a cool from a lender. However,
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  Speaker 3: right now, if you talk to a seller and are
• 7:13
  Speaker 3: usually open to sellar carries or sellar financing, we can
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  Speaker 3: get a rate cheaper than that.
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  Speaker 1: So that's actually a great point. I'm glad you brought
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  Speaker 1: that up. It's because if you actually buy a park.
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  Speaker 5: And it's an a cap, right, so eight a cap,
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  Speaker 5: but then you can actually have the seller finance seat
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  Speaker 5: for six percent, and especially if it's great six percent
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  Speaker 5: inches only, then you're actually doing.
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  Speaker 4: Really well double digits returns.
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  Speaker 1: Now, if you decrease expenses and raise the rents, now
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  Speaker 1: you're at you know your your above twenty percent cash
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  Speaker 1: on cash return.
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  Speaker 4: Gotcha?
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  Speaker 3: And uh, all right, So, like what are the red
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  Speaker 3: flags when you look at a trailer community.
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  Speaker 4: Let's say I better pass this.
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  Speaker 1: One by, yes, so we you know, we get a
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  Speaker 1: lot of those a lot of those red flags. So
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  Speaker 1: one is low occupacy too, is that it's just not
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  Speaker 1: in the right I want to say neighborhood, but it's
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  Speaker 1: not in the right area, so the population is not there.
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  Speaker 1: So if you look at let's say a part and
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  Speaker 1: the homes in the area about one hundred thousand, one
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  Speaker 1: hundred and twenty five thousand dollars like a single family home,
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  Speaker 1: you actually don't want to buy. That part is the
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  Speaker 1: reason being is because with lobbyns and you're selling a home,
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  Speaker 1: you're competing with that single family home.
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  Speaker 3: Right, So you okay, And basically most communities are adverse
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  Speaker 3: to you opening or building new mobile home communities, right,
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  Speaker 3: and therefore the supply is restricted.
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  Speaker 1: Yes, yeah, so the supply is restricted, but the demand
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  Speaker 1: is going up, so we definitely have a conundrum. I
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  Speaker 1: would say, when you look at the mobile home park
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  Speaker 1: in a particular area, they use those those that revenue
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  Speaker 1: for taxes to pay for schools or whatnot in that
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  Speaker 1: community monthly. The cities and counties don't make a lot
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  Speaker 1: of mon audio on mobile home parks, therefore they do
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  Speaker 1: not like them.
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  Speaker 4: Plus, I would see the average person.
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  Speaker 1: In a subdivision saying I don't want a mobile home
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  Speaker 1: park in my neighborhood.
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  Speaker 3: So you do have that state You got nimby people, right, yeah, yeah,
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  Speaker 3: you got you know, please anybody building anyone building new ones.
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  Speaker 1: There's a few, but I haven't met a lot and
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  Speaker 1: I don't know a lot of them that said, hey,
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  Speaker 1: here's actually a plot of land, we're going to build
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  Speaker 1: a mobile home park, and actually was successful.
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  Speaker 4: It takes years.
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  Speaker 3: Maybe you could do it in Alaska or something or
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  Speaker 3: some remote area with.
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  Speaker 1: Yeah, it is anything like that right towards you know
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  Speaker 1: the good old boys system like a handshake. You probably
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  Speaker 1: build ten, you know, homes in that particular park, but
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  Speaker 1: you know it takes years. And by the time you
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  Speaker 1: build those ten and you see the time you spent
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  Speaker 1: in in the income you're generating human as with buy
• 9:53
  Speaker 1: one that's already existing and cash they want right all.
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  Speaker 3: Right, Well, hey, anything else you want to tell us
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  Speaker 3: about this opportunity?
• 10:02
  Speaker 4: Yeah, I think for your for your audience and your listeners.
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  Speaker 1: I think you mentioned something in the beginning of this
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  Speaker 1: in the segment that the private equity companies in these
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  Speaker 1: big wigs are coming into buying parts. That is true,
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  Speaker 1: but there's still opportunity for you know, your listeners or
• 10:17
  Speaker 1: just people in general to actually buy mobile home parks
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  Speaker 1: and actually have a I would say, a stable cash
• 10:22
  Speaker 1: loan compared to I think it's even better to partment
• 10:25
  Speaker 1: though these are Sego family homes, So I think there's
• 10:28
  Speaker 1: definitely still opportunity. I don't want to pake this picture
• 10:32
  Speaker 1: that since we're in luck, we're in in. Are these
• 10:35
  Speaker 1: other big wigs are in that that this opportunity is
• 10:39
  Speaker 1: lost and that's not the case.
• 10:40
  Speaker 3: All right, excellent, all right to thank gutting questions for
• 10:44
  Speaker 3: Walter myself, shoot me an email Walter. How do we
• 10:47
  Speaker 3: reach you? How do we connect with you on the web?
• 10:49
  Speaker 1: Yeah, yeah, reach out to me so you can email
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  Speaker 1: me Walter at Sonoscapital dot com or give me a
• 10:55
  Speaker 1: call on my office forty zero six seven four two
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  Speaker 1: zero three five.
• 11:00
  Speaker 3: All right, And the links are in the show notes
• 11:02
  Speaker 3: to this interview on Financial Survival Network dot com. When
• 11:06
  Speaker 3: you visit there, just got to click it. And I
• 11:08
  Speaker 3: would just ask that when you stop by, you opt
• 11:13
  Speaker 3: in for our free newsletter, like over sixty seven thousand
• 11:17
  Speaker 3: other FSN members have. And Walter, appreciate you coming on
• 11:22
  Speaker 3: interesting investment proposition. We'll talk to you again soon.
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  Speaker 4: Thank you appreciate it.
• 11:27
  Speaker 2: Thanks for listening to carry Letz's Financial Survival Network, your
• 11:31
  Speaker 2: solution to today's trying times. For the latest, go to
• 11:35
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than
• 11:41
  Speaker 2: ever