Latest / REL Freedom Podcast / Derek Vickers - 38 Mobile Home Parks Totaling 1900+ Units

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Derek Vickers - 38 Mobile Home Parks Totaling 1900+ Units · REL Freedom Podcast

• 0:05
  Speaker 1: Welcome to the Real Freedom Show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate.
• 0:11
  Speaker 1: I'm your host, mike Swenson.
• 0:13
  Speaker 1: Let's get some real freedom together.
• 0:14
  Speaker 1: Hello everybody, welcome to Real Freedom, talking about building time and financial freedom through opportunities in real estate.
• 0:26
  Speaker 1: And I know so many people in the investment space are interested in mobile home parks.
• 0:31
  Speaker 1: They've heard stories about people that have had thousands of units, made a ton of money, live in the life they've always wanted to live because of mobile home parks.
• 0:40
  Speaker 1: And so today we get to dig deep into mobile home parks and we've got Derek Vickers here.
• 0:45
  Speaker 1: Derek is CEO of Victory Real Estate Group and host of the MHP show, which, for those that couldn't put that together fast enough mobile home parks, I'm assuming.
• 0:54
  Speaker 1: Unless you have a different MHP, that isn't obvious, but he owns and operates 38 mobile home parks for over 1900 units and built the company while working a full-time, 9-to-5 job and then jumped all into that.
• 1:08
  Speaker 1: So move to Florida with $300 in your pocket.
• 1:11
  Speaker 1: A bunch of personal problems.
• 1:12
  Speaker 1: Maybe we won't get into that and then started on 100% commission sales position and got to where you're at today.
• 1:18
  Speaker 1: So excited to have you on, Derek, Mike.
• 1:20
  Speaker 2: I am excited to be here.
• 1:22
  Speaker 2: I love sharing some of this journey because I didn't come from, I wasn't fed with a silver spoon I think that's the same, but I'm one of those, just a regular guy, and I love talking to people because anybody can do this.
• 1:37
  Speaker 1: Well and that's the myth for most people is they make a reason why they can't do something, and I would kind of agree too.
• 1:42
  Speaker 1: I feel like I was raised middle class, nothing special.
• 1:45
  Speaker 1: I view myself as just a regular guy too, and so there's reasons why you can't do it.
• 1:50
  Speaker 1: So you can set those own limitations if you want, or you can decide to move forward and do it.
• 1:54
  Speaker 1: So just share real quick, just a little snippet of your background, and then we'll dig more into the mobile home park genre.
• 2:01
  Speaker 2: So my background was really in the insurance sales business.
• 2:05
  Speaker 2: I know you touched on that a little bit, but I did move to Florida.
• 2:08
  Speaker 2: I was hanging out with the wrong people in Virginia.
• 2:10
  Speaker 2: I just got an attack return.
• 2:12
  Speaker 2: It might have been $288,000 or $288 now that I'm thinking about it, not 300.
• 2:19
  Speaker 2: But I moved to Florida on a whim.
• 2:21
  Speaker 2: I knew a guy down here and I was like I'm not going to do it, I'm not going to work a nine to five anymore.
• 2:27
  Speaker 2: I didn't want to do that.
• 2:28
  Speaker 2: I was a terrible employee and I always wanted to make something of myself.
• 2:33
  Speaker 2: And so I read a book I forget what book it was it was.
• 2:36
  Speaker 2: Basically, it said that commissioned salespeople make more money than like doctors, lawyers and all this stuff.
• 2:43
  Speaker 2: So I'm like, dude, I'm going to become a salesperson.
• 2:45
  Speaker 2: And so I learned that business, got my teeth kicked in for three years and then I started making a little bit of money for year four and five.
• 2:54
  Speaker 2: I did it for almost 10 years.
• 2:55
  Speaker 2: I built up a team of over a hundred salespeople where we were crushing it in every category with this company.
• 3:02
  Speaker 2: But it was based on cold calling door to door, some on the phone, but in the beginning like it was just brutal.
• 3:09
  Speaker 2: I had to knock door to door every day, and so that's my background.
• 3:13
  Speaker 2: Then COVID happened and that's when the world kind of blew up in the insurance business, like Florida, was still open relatively speaking, but there was still a lot of uncertainty in the market.
• 3:23
  Speaker 2: So when my guys who got in the field, no one was buying insurance.
• 3:25
  Speaker 2: That was the last thing people were thinking about Because our insurance wasn't necessarily like a necessity.
• 3:31
  Speaker 2: And so I always wanted to get into real estate because initially, mike, I thought these guys that were worth 50, a hundred million, a billion dollars.
• 3:41
  Speaker 2: I thought they got a paycheck.
• 3:42
  Speaker 2: I thought they got a paycheck that says a billion dollars a year.
• 3:45
  Speaker 2: I thought that's what net worth was.
• 3:48
  Speaker 2: But then I learned from studying that, like dude, these guys own assets, they own real estate, they own businesses, and so I'm like real estate that makes sense, it's a hard asset, I can go touch it.
• 4:01
  Speaker 2: It's not the stock market, it's not any of that stuff which I don't like, no-transcript.
• 4:09
  Speaker 2: And then I had a buddy that was actually investing in mobile home parks and he was like dude, you need to look at this asset class, because I'm looking at multifamily in Tampa, orlando and it's $250,000 a door or something.
• 4:18
  Speaker 2: I'm like man, I'm never and I didn't want to buy one unit.
• 4:21
  Speaker 2: So I saw that mobile home parks is.
• 4:23
  Speaker 2: I could get a little scale at 20 to 40,000 a space.
• 4:26
  Speaker 2: Harder to do that now in these good markets, but yeah, so I started out and found my first park and partnered with some guys on that, and then we were off to the races.
• 4:36
  Speaker 1: Well, it's interesting that you mentioned that, because I talk with people, even multifamily real estate people, that want to start with a single family home or a duplex, and I tell people if that's what you really want to do, go ahead and do it Like you shouldn't not do something if you're really interested in it.
• 4:51
  Speaker 1: But at the same time, we focus a little bit more on smaller apartment buildings and so I'm sharing just the economies of scale of an apartment building versus a duplex, like what does 20 units look like versus one unit.
• 5:02
  Speaker 1: And then there's still people that would come talk to me and say Mike, why are you focusing on 20 to 50 units when you can be focusing on 100 or 200?
• 5:09
  Speaker 1: And then there's people like you if we're coming down to cost per unit, you blow all of that out of the water.
• 5:15
  Speaker 1: So why are people excited or intrigued about mobile home park investing?
• 5:20
  Speaker 1: Like for somebody that hasn't heard, that hasn't listened to any podcast talking about mobile home parks.
• 5:26
  Speaker 1: What is it about the mobile home park that is so intriguing to an investor?
• 5:29
  Speaker 2: Well, there's many, many different things.
• 5:30
  Speaker 2: So one is that it's still a relatively fragmented business and so there's a lot of mom and pop owners out there.
• 5:38
  Speaker 2: So there's opportunities.
• 5:39
  Speaker 2: You got mom and pop.
• 5:40
  Speaker 2: They've owned the park for 20, 30, 40, 50 years.
• 5:44
  Speaker 2: They bought it for 100 grand in 1970.
• 5:47
  Speaker 2: So they've got all this equity built up.
• 5:49
  Speaker 2: So there's seller financing opportunities that you can find those really good deals, the seller financing deals.
• 5:56
  Speaker 2: And now with rates at what they are now, that's huge.
• 6:01
  Speaker 2: Now, if you can get a deal seller carry.
• 6:03
  Speaker 2: So that the mom and pop aspect of it, the fragmentation of it, and also just the fundamentals of the business they're not building any more mobile home parks.
• 6:12
  Speaker 2: Call your local municipality and say, hey, I want to develop a mobile home park and see what they say they're going to be like hell.
• 6:21
  Speaker 2: No, we do not want to fricking another trailer park in this town, and so you can't.
• 6:27
  Speaker 2: They're not being developed.
• 6:28
  Speaker 2: More of them are actually being demolished every year.
• 6:31
  Speaker 2: For you know, guys like you, they want to build.
• 6:33
  Speaker 2: You know, a nice multifamily three or 400 unit building there.
• 6:38
  Speaker 2: It's more tax dollars for the city, it looks better and you know.
• 6:45
  Speaker 2: So.
• 6:45
  Speaker 2: Actually, the supply and demand factor there's dwindling supply of this every year and there's more demand because the demand for affordable housing is going up.
• 6:56
  Speaker 2: I mean say so.
• 6:57
  Speaker 2: Take Tampa, florida, where we are.
• 6:59
  Speaker 2: I think the average two bedroom apartment there is like 1600 bucks now maybe 17, 1800.
• 7:05
  Speaker 2: So your mobile home park is the cheapest place in town, right, because it's just getting and it's hard for a developer, and you'll know this, to build a nice class A complex and charge a thousand bucks a month, which I think that would be considered affordable housing.
• 7:20
  Speaker 2: You just can't do it right.
• 7:22
  Speaker 2: So that basic fundamental.
• 7:24
  Speaker 2: And then when you get on the operation side, you're really looking at the tenants own their own homes, so I'm not responsible for any.
• 7:31
  Speaker 2: So we have a couple of homes that we own, but my tenants if the sink breaks, if the toilet breaks, it's their deal.
• 7:39
  Speaker 2: So the only thing that's my responsibility is the general infrastructure of the park, up to where the plumbing and the water hooks into the trailer, right, and there's still problems with that, don't, don't get me wrong.
• 7:50
  Speaker 2: It's like there's none.
• 7:51
  Speaker 2: Okay, and so that is great.
• 7:55
  Speaker 2: And you know, if you build your community right, like if you buy a park and build it right, you can get a sense of I guess you would call it pride of ownership, where these people in their homes and they're actually invested with you to make the community nicer.
• 8:10
  Speaker 2: So some of those basic fundamentals is what I love about mobile home parks, because as more people get into the business too, like prices are just skyrocketing.
• 8:22
  Speaker 2: If you would see some of the returns like I was making a new deal book and I was gonna show this to some investors and some of our deals that we did in 21, and I'm looking at the IRRs on these things I mean it's just, it's stupid.
• 8:33
  Speaker 2: Like I'm like man, I don't even know if the investor's gonna believe this and so, anyways, long answer.
• 8:40
  Speaker 2: But that is why I love mobile home parks.
• 8:41
  Speaker 1: Well, it does make a lot of sense.
• 8:43
  Speaker 1: I mean, that's why I like focusing on multifamily, because there's a housing shortage.
• 8:47
  Speaker 1: There's an affordable housing shortage.
• 8:49
  Speaker 1: People can't build properties that can touch the economics of where we're at today, and so that is a crisis that's gonna continue to get worse and worse and worse, because we know we're not building properties fast enough to meet the demand for housing, and especially on that affordable housing side.
• 9:07
  Speaker 1: And then, like you talked about, nobody's gonna do a new mobile home park development, and so you've got that limited resource.
• 9:13
  Speaker 1: So there is gonna put a lot of pressure and a lot of demand on that low income housing opportunity because it's going away.
• 9:19
  Speaker 1: And so, even to your point, like, as I'm just talking about processing these things, as I'm saying them yeah, they're gonna own their own house, you're not gonna get that call of, hey, this happened, this happened, come out there to a certain extent.
• 9:30
  Speaker 1: And so the thing that a lot of investors don't want is that late night call.
• 9:34
  Speaker 1: You're probably not gonna get that because it is their own property.
• 9:37
  Speaker 1: So there's a ton of upside to that.
• 9:38
  Speaker 1: But there's been a lot more competition too over the last few years, for sure.
• 9:42
  Speaker 2: And you know, when do those calls that come in?
• 9:44
  Speaker 2: When do they happen?
• 9:45
  Speaker 2: It's always nights and weekends Nights weekends Thanksgiving, christmas because everybody's home so in terms of identifying these opportunities.
• 9:55
  Speaker 1: If I wanted to go find a single family home property to flip, I'm gonna go to the MLS.
• 10:00
  Speaker 1: I'm gonna try to find some off market stuff.
• 10:02
  Speaker 1: How do I find mobile home park deals?
• 10:05
  Speaker 2: So that's a great question.
• 10:07
  Speaker 2: That's.
• 10:07
  Speaker 2: Another thing about this business is that it's a manual.
• 10:12
  Speaker 2: It's an antiquated business.
• 10:13
  Speaker 2: The data is very poor.
• 10:16
  Speaker 2: Like if you go on to Corexie if you have a subscription to Corexie or something like, you can go in there and probably find data about just about every apartment complex in the US, right, if you search mobile home parks, you'll find some like some of the stuff that's traded in the last three years, but the data will be so terrible, like you won't be able to like.
• 10:36
  Speaker 2: It's so bad, and so each state is different.
• 10:40
  Speaker 2: And so if I was an individual, starting, basically what I did is I found the health department in Florida had a list, basically that, because you have to have an operating permit for a mobile home park, typically in states.
• 10:53
  Speaker 2: In Florida there was a list of mobile home parks and not all the numbers were great, but you could find them right.
• 11:01
  Speaker 2: So that's one way, and if the state doesn't have that, you can call the local municipality and ask them, because a lot of them do have lists of where the mobile home parks are, because some of them are on.
• 11:13
  Speaker 2: They have well systems, they have septic systems, they have treatment plants like private utilities, and so a lot of that stuff is regulated by the state and so typically there's some master list of the state's doing these yearly inspections.
• 11:28
  Speaker 2: You can go find them there Also.
• 11:31
  Speaker 2: I mean there's lists that you can get online, but again, the data is terrible.
• 11:35
  Speaker 2: It's not great.
• 11:36
  Speaker 2: Rheonomy is a good program.
• 11:39
  Speaker 2: I'm sure you know what that is.
• 11:40
  Speaker 2: Our guys use Rheonomy and then also like, if you're whatever area that you're in, like you can go, because typically most of the mobile home parks are sort of centered in the same areas, depending on where you live typically, and you can kind of start there too, you'll find the parks.
• 11:59
  Speaker 2: You can do a little skip tracing If you got some of these programs.
• 12:02
  Speaker 2: I think Prop Stream we've used that before it's relatively cheap.
• 12:06
  Speaker 2: You can go online and then brokers have deals and wholesalers, but you have to get in with these guys to get any quality stuff.
• 12:17
  Speaker 2: Really.
• 12:17
  Speaker 1: Now just to back up a second.
• 12:19
  Speaker 1: When you decided to go after mobile home parks or pursue that, what led you to that?
• 12:24
  Speaker 1: I know you mentioned the positives of why mobile home parks, but were you researching somewhere?
• 12:29
  Speaker 1: Or did you read a book, listen to a podcast, have a friend find out about some sort of training course or kind of what lit up where you decided mobile home was the asset you were going towards?
• 12:39
  Speaker 2: Yeah.
• 12:39
  Speaker 2: So I had a friend.
• 12:40
  Speaker 2: He had been buying mobile home parks and actually when I was cold calling for insurance, I met this guy in Orlando.
• 12:46
  Speaker 2: He would actually come to my little $300 a month condo.
• 12:50
  Speaker 2: If you can imagine that in Orlando Now we would cold call.
• 12:54
  Speaker 2: He would cold call for mobile home parks.
• 12:56
  Speaker 2: I'm like what is this shit?
• 12:57
  Speaker 2: You know I want to get into multifamily, not mobile home parks.
• 13:00
  Speaker 2: And then he was being successful with it.
• 13:03
  Speaker 2: And then when I'm like COVID happened because I first I called him.
• 13:06
  Speaker 2: I'm like dude, I got a little bit of money.
• 13:08
  Speaker 2: I had like 50 grand, okay, a little like nothing.
• 13:10
  Speaker 2: I'm like dude, I want to invest with you.
• 13:12
  Speaker 2: And he's like, dude, you don't have enough money to invest with me.
• 13:16
  Speaker 2: And I'm like dude F you man like screw you, dude, I'm going to go find these deals myself.
• 13:21
  Speaker 2: And so I found the list and started, you know, hustling after it.
• 13:26
  Speaker 2: But I did understand those fundamentals.
• 13:29
  Speaker 2: After that happened, I started doing some research.
• 13:32
  Speaker 2: I was listening to the podcast and I understood the fundamentals and I'm like man, I like this.
• 13:37
  Speaker 2: You know I'm going to start looking for deals and I already knew how to cold call an insurance.
• 13:41
  Speaker 2: And so it was like okay, I can do this.
• 13:43
  Speaker 1: So talk a little bit about the financials and how that works with a mobile home park.
• 13:47
  Speaker 1: They're paying rent for their space, You're providing the utilities and all that kind of stuff.
• 13:52
  Speaker 1: Just kind of walk through the basic financials of a mobile home park Like if I was to run across somebody that was interested in selling.
• 13:58
  Speaker 1: What are you looking for?
• 13:59
  Speaker 1: How does that break down?
• 14:00
  Speaker 2: This is kind of a two-part question.
• 14:01
  Speaker 2: Typically, when you're buying for mom and pop, their financials are just atrocious, like they're not even you have to build your own.
• 14:10
  Speaker 2: And so when you're underwriting these deals and understanding what a stabilized mobile home park will do, it really depends on the utility setup that's there.
• 14:20
  Speaker 2: And so if you have public utilities so we have one park where it's all direct built, just like a normal person would have in their house or their apartment you get the bill for the trash, you get the bill for the water, you get the bill for the sewer, all that.
• 14:33
  Speaker 2: It's not like that in most mobile home parks.
• 14:36
  Speaker 2: But if it's one that's like that, I can get that expense ratio to 25 to 30% safely, because most of our expense ratio is gonna be, you know, liability insurance and really property taxes is where you just get crushed and so that.
• 14:48
  Speaker 2: But if I have a park that's on a wastewater treatment plant system, do you know what that is?
• 14:54
  Speaker 2: It's a wastewater plant and a well, so you're gonna have an operator that has to come around on a weekly basis to operate that stuff.
• 15:02
  Speaker 2: So your wastewater treatment plant.
• 15:04
  Speaker 2: I think down the road here it costs us probably almost 30 grand a year to operate that thing.
• 15:09
  Speaker 2: So it's not as harmful as if you have a larger park.
• 15:12
  Speaker 2: But if you have a smaller park, that can kill you.
• 15:15
  Speaker 2: So those properties will operate more at like a 35 to 40 percent expense ratio.
• 15:22
  Speaker 2: And then the other thing that people don't think about with mobile home parks is that these infrastructures are old.
• 15:27
  Speaker 2: You know, some of our parks in Tampa were developed in the late 40s.
• 15:31
  Speaker 2: So, yes, they're city water and city sewer, but the water lines are relatively old, obviously, and so we'll have to.
• 15:38
  Speaker 2: You know, we have expenses R and M expenses still and then your property manager if you're buying a large enough park, you're gonna wanna pay quality help to operate that.
• 15:48
  Speaker 2: So you're generally gonna be around 25 to 40 percent expenses when you're looking at a deal.
• 15:56
  Speaker 2: So it's kind of a tough question to answer, because when you're looking for these parks you're looking for mismanagement.
• 16:04
  Speaker 2: And so, to give you an example, a park that we bought in 2021, I think the yearly NOI that the seller had was like I don't know 40 grand or something we bought it for.
• 16:15
  Speaker 2: No, it was less than that, but it was like a two cap, like in place.
• 16:19
  Speaker 2: So his NOI was like 40 or 50 grand a year.
• 16:23
  Speaker 2: Now we're at.
• 16:25
  Speaker 2: You know we're bringing in 29 grand a month at this park at a 35 percent expense ratio.
• 16:31
  Speaker 2: So whatever that is, I mean it's just it's a huge jump.
• 16:34
  Speaker 2: So that's yeah.
• 16:36
  Speaker 2: Our NOI is roughly 220, 25k, 220k.
• 16:40
  Speaker 2: So clearly his park was mismanaged right and so you look for those opportunities like that.
• 16:46
  Speaker 2: If you were to base that deal off the in place financials there, you wouldn't have even bought it.
• 16:51
  Speaker 2: You'd been like this is a terrible deal.
• 16:52
  Speaker 1: So does that answer your question?
• 16:53
  Speaker 1: Yeah, no, that's good, I was gonna say.
• 16:55
  Speaker 1: I mean, even in the multifamily space, a lot of times when we see properties for sale, it is a rat's nest.
• 17:00
  Speaker 1: When I'm working with investors, or somebody who's even a newer investor, I say look, you may not get the numbers.
• 17:06
  Speaker 1: It's not gonna be a nice, clean, quick books printout of the numbers.
• 17:09
  Speaker 1: Here's the income, here's the expenses and all the detail.
• 17:12
  Speaker 1: It's gonna be some sort of rat's nest, some sort of put together on just a plain sheet of paper, handwritten.
• 17:18
  Speaker 1: But therein lies the opportunity, because you know we call them tired landlords.
• 17:22
  Speaker 1: You've got somebody.
• 17:22
  Speaker 1: That's the mom and pop operation.
• 17:24
  Speaker 1: It might have been this is what's gonna be their retirement and they had this rental property or they inherited it from somebody, or there's a ton of deferred maintenance and so kind of similar to you, with utilities that might need to be updated.
• 17:36
  Speaker 1: You're trying to piece together post it notes and chicken scratch to put together here's what it is.
• 17:42
  Speaker 1: And now you're trying to project what it can be in the future and deciding is there enough opportunity or at what price is that gonna happen?
• 17:49
  Speaker 1: And so it's not that far off from what we would experience on the multifamily side just a little bit different.
• 17:55
  Speaker 2: Totally.
• 17:55
  Speaker 2: And I mean, I've got pictures of rent rolls that you ask an owner for a rent roll and they're like what's the rent roll?
• 18:01
  Speaker 2: And they got to write it down on paper and we were closing a deal at the beginning of 2021 and we're like, hey, how can like, can you send us your bank statements, cause we want to make sure that this rent is actually coming in?
• 18:13
  Speaker 2: He sent me a picture of cash, a lot of cash.
• 18:17
  Speaker 2: I'm like okay.
• 18:18
  Speaker 1: I guess that works.
• 18:19
  Speaker 1: At least that's legit.
• 18:21
  Speaker 1: It wasn't just a Google image search of some cash, so at least it was a real life picture of the cash.
• 18:26
  Speaker 2: Yeah, it was.
• 18:27
  Speaker 1: It was a real life picture.
• 18:28
  Speaker 2: And you know, in 2021, banks were a little bit more lenient.
• 18:31
  Speaker 2: They're lending on pro forma.
• 18:33
  Speaker 2: Now you probably can't do that as much, but yeah, just funny stuff.
• 18:38
  Speaker 1: So talk about why, obviously, if they're well run and they're maybe more of a cash cow, you're not gonna want to sell it.
• 18:44
  Speaker 1: What are the reasons why people are selling the mobile home parks?
• 18:48
  Speaker 2: Various reasons there may be.
• 18:49
  Speaker 2: You know, if you're looking at a mom and pop, they could just be tired.
• 18:52
  Speaker 2: Like you mentioned, they're a tired landlord.
• 18:54
  Speaker 2: They there may be some emergency that happens in the family where they have to go and do whatever right.
• 19:01
  Speaker 2: Somebody dies, you know.
• 19:02
  Speaker 2: The owner passes away and it's passed on to their kids and their kids don't want to operate this trailer park, like they don't understand the worth they trailer park, right, so they don't want to do that.
• 19:14
  Speaker 2: And then, you know, in the last couple of years, I mean some of these sellers didn't think that they could get these numbers for their parks.
• 19:20
  Speaker 2: You know they thought that.
• 19:21
  Speaker 2: You know they thought that they were whacking us over the head when we were paying 40,000 a space in some of our stuff and we're getting $800 in rent.
• 19:31
  Speaker 2: I mean you know that that's a 2% rule right there.
• 19:36
  Speaker 2: So that's you're doing well on those deals.
• 19:38
  Speaker 2: And so I think that's the main reason and what you know.
• 19:42
  Speaker 2: The interesting thing, mike, that our acquisition team has seen here recently is that people that bought in 2020 and 2021, they're trying to pitch their deals off again.
• 19:53
  Speaker 2: A because it's hard for them to sell now because they paid too much then.
• 19:56
  Speaker 2: But then they get into the you know the management of it and if you don't know what you're doing, like you know, it can get out of hand.
• 20:03
  Speaker 2: I mean, same as in multifamily, I'd have to imagine, like, if you don't know what you're doing, the operations can kick your.
• 20:10
  Speaker 2: You know what, and so you know a lot of that.
• 20:15
  Speaker 2: And some of the bigger groups that may sell, maybe they've got an asset that's out of the way or it's a pain that they don't want anymore.
• 20:23
  Speaker 2: Like we were thinking about selling a couple of assets because we were trying to do a big fanny refinance and there was a couple assets that we were going to kick out because they were kind of out of the way, they were a pain, they were smaller and so that's why people would sell.
• 20:41
  Speaker 2: Generally is what I've seen.
• 20:43
  Speaker 1: For people that are looking to come in, buy something add value to then sell it.
• 20:49
  Speaker 1: What are the value add opportunities?
• 20:51
  Speaker 1: We touched on them some with some of the operations and that sort of stuff, but what are the value add opportunities out there for you?
• 20:56
  Speaker 2: So obviously, collecting your rent, actually collecting your rent, putting in a collections process if the parks full, because, as I mentioned before, so in this, for those of you that don't know anything about mobile home parks like, a lot of times, even if the parks are on city utilities, the owner gets one bill for the water, one bill for the sewer, one bill for the trash, so you can bill all that stuff back and add value.
• 21:24
  Speaker 2: Obviously, you can increase the aesthetics of the park and raise the rents, get the people out that aren't paying, just like you would in any other asset, and bring in good people.
• 21:34
  Speaker 2: And also, if you have vacant homes there so there's vacant homes you can either a fix those up and bring them in at market rent or be what we did is that we actually would sell these homes, even if they were in terrible shape, as a handyman special.
• 21:51
  Speaker 2: Okay, mike, you can buy this home for 500 bucks.
• 21:54
  Speaker 2: We'll give you free lot rent for three or four months.
• 21:57
  Speaker 2: You come in and fix it up and boom, you can sell it, you can live in it, you know whatever you want, but we're going to bring you in at market lot rent after those four months, and so we were getting these massive jumps in value because these people had, they had a bunch of vacant homes and we were in super, super strong markets and so we were able to sell those handyman specials, just like that, where people came in and they rehab them themselves.
• 22:22
  Speaker 2: So that's a way that you can add a ton of value.
• 22:27
  Speaker 2: Another way which I will share, this, but so like if you've got a market, that you got a market.
• 22:33
  Speaker 2: Let's say, they're renting homes for 1500 bucks but the lot rent is 300 bucks supposedly in that market.
• 22:41
  Speaker 2: So there's a massive gap there.
• 22:45
  Speaker 2: It doesn't make sense, right?
• 22:47
  Speaker 2: These people are paying 300, these people are paying 1500.
• 22:50
  Speaker 2: So you can go in and take those park owned homes and convert them the lot rent at, let's say, 600 or 700, right, because the bank is only going to cap the lot rent, they're not going to cap the home rent, right, and so you're paying for a park on the lot rent.
• 23:08
  Speaker 2: But you see what I'm saying.
• 23:10
  Speaker 2: So you can go in there and kind of just change the allocation right and get big jumps in value.
• 23:18
  Speaker 1: Yeah, and then are you typically looking to buy, add value, sell, or are you just going to try to continue to hold?
• 23:25
  Speaker 1: Take that cash flow, or what's your strategy here?
• 23:27
  Speaker 2: So we were buying value add and so we bought, yeah, and so this is kind of we were holding right now.
• 23:36
  Speaker 2: Right, you know we're kind of just sitting right now because what we would want to, we already recapped half of the portfolio at the beginning of last year and so you know, the other stuff I'm not going to refinance at seven and a half percent right now when my in place debt is at four and a quarter.
• 23:53
  Speaker 2: So we're just, we're just sitting tight right now.
• 23:56
  Speaker 2: But typically we would go in refinance, give the investors their money back.
• 24:00
  Speaker 2: We get all our money back and some, and we'll just hold it for the long run.
• 24:04
  Speaker 2: And you know, build a big portfolio and you know, sell it to somebody.
• 24:08
  Speaker 2: You know, eventually, you know that's kind of the strategy.
• 24:13
  Speaker 2: I mean, if somebody came in and offered a stupid price, now I, you know I take it, but we're not sellers right now like Somebody would have to, their head would be whacked off at the closing table, like we take a massive number and that's about it real estate agents, are you tired of letting the busyness of life get in your way From achieving your real estate investing goals?
• 24:36
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• 24:40
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• 24:48
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• 24:52
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• 24:54
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• 24:56
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• 24:57
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• 24:59
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• 25:04
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• 25:09
  Speaker 1: So, in terms of financing these then, was this done through private capital?
• 25:14
  Speaker 1: How were you able to continue to finance and grow that large holding?
• 25:17
  Speaker 2: We have investors and so we were using investor capital you know friends and family and then we were using local banks.
• 25:23
  Speaker 2: So we had some great relationships with some local banks here that we're willing to finance some of these value add deals with just our expertise and what we had been able to do.
• 25:34
  Speaker 2: And also the lending environment was way different in twenty twenty one and twenty twenty two.
• 25:39
  Speaker 2: I mean it's been.
• 25:40
  Speaker 2: I don't know if you bought anything recently, but it's just been tough to make sense of deals here recently.
• 25:46
  Speaker 2: But you know, in answering your question, that's how we would finance and capitalize these things.
• 25:50
  Speaker 1: Yeah, it's the same.
• 25:50
  Speaker 1: I mean I tell people we're looking to grow our portfolio, it's harder to find deals that pencil, but that doesn't mean I'm just gonna be like that.
• 25:57
  Speaker 1: We're done because we want to continue to grow and build wealth and so we just have to creatively come and find different ways or maybe be willing to take on a little bit more hassle in the upfront to be able to get an asset that we see the future value in.
• 26:12
  Speaker 1: And so it doesn't mean we're just gonna say that rate suck will come back in five years, you know, because we can't do that.
• 26:17
  Speaker 1: So, yeah, you gotta put on your creative hat.
• 26:19
  Speaker 1: You gotta look at things different ways and maybe find opportunities where people first blush don't see that same type of opportunity.
• 26:26
  Speaker 1: But to have that consistent cash flow that you've built up and you've been able to hang on to.
• 26:31
  Speaker 2: Yeah, you just continue to ride that wave while you got it, yeah, you ride the wave and you know, same as you like, we're looking at so many deals every week.
• 26:38
  Speaker 2: It's just insane at how and we put tons of offers out there because now all bets are off Like you can send an offer to a seller and you know, it's so interesting.
• 26:49
  Speaker 2: I was talking to the head of my acquisitions today and where I'm like I'm getting to these deals that I backed out on, didn't back out, but I'm like, do that?
• 26:58
  Speaker 2: I'm not making an offer on that.
• 27:00
  Speaker 2: They're coming back around now Because back, you know, the brokers like, yeah, dude, screw you, they're never gonna take that off.
• 27:06
  Speaker 2: Now they're coming back around.
• 27:07
  Speaker 2: They found a contract or whatever.
• 27:10
  Speaker 2: And I was like we're doing the right thing.
• 27:12
  Speaker 2: Because I get frustrated.
• 27:13
  Speaker 2: I'm like, oh my god, I'm impatient, right, and I think we're doing the right thing, we're being patient, we're hanging around and I think some of these prices are gonna continue to drop.
• 27:26
  Speaker 2: It's just it's been so slow.
• 27:29
  Speaker 2: There's still a gap between the seller and the buyer, for sure, but it is.
• 27:33
  Speaker 2: I do think it's after today and this week I think it's closing a little bit because these deals are coming back around.
• 27:40
  Speaker 2: They're just not gonna sell.
• 27:41
  Speaker 1: Yeah, I mean in the multifamily market right now.
• 27:43
  Speaker 1: What we're looking for is you're trying to test out and see who's actually motivated to sell.
• 27:47
  Speaker 1: It's a little bit different here.
• 27:48
  Speaker 1: We can see a market or a price a lot more easily.
• 27:52
  Speaker 1: But we've got people that are throwing in low offers and for some of the properties that I have listed, I tell people you're not gonna find out what that motivation is until you put out an offer and see how they respond.
• 28:04
  Speaker 1: If they come back and say, okay, we'll do it for a little bit less, they're not that motivated.
• 28:08
  Speaker 1: If they come back and do it for more than you expected, great.
• 28:11
  Speaker 1: But you don't necessarily see, based on a list price, how motivated they truly are until you put an offer out there and see how they respond or how quickly respond.
• 28:20
  Speaker 1: That'll give a tell of what their motivation level is.
• 28:23
  Speaker 1: So you just have to sniff some of that stuff out a little bit more.
• 28:26
  Speaker 1: Versus buying based on the price, now it's buying based on we make an offer and we see how they respond to get a sense of what the true price is that they're willing to accept Exactly.
• 28:36
  Speaker 2: And isn't it interesting, mike, is like what would happen if you sense in 2021, if you send an offer, you know, half a million bucks below list price, they would have just grew off, yep, yep.
• 28:48
  Speaker 2: So it's just so interesting how it changes, because you know, brokers aren't getting 50 guys saying, hey, we'll pay cash in closing 30 days and 45 days, no due diligence period, yeah Well, and the other challenging thing that we're seeing too is it might take time, after you make that lower offer, for them to come back around.
• 29:07
  Speaker 1: Just like you said, you've got people coming back around.
• 29:09
  Speaker 1: We had an offer that we wrote on a multifamily complex, and it was low because you couldn't make the numbers work, and the feedback the listing agent is getting is we can't make the numbers work at this price.
• 29:22
  Speaker 1: Well, they came back, they had a big price reduction, but it's still not anywhere close to where we feel it probably should be, and so you might have to wait three months, it might be six months, it might be 12 months, or they decide to hang on to it.
• 29:35
  Speaker 1: I mean, that's the other thing too with rental properties is at a certain price, they decide hey, I'm good enough to continue to hold on to that.
• 29:42
  Speaker 1: We just had a seller decide to stick with the property they had because they couldn't get the price they wanted.
• 29:47
  Speaker 1: So, yeah, it's a little bit more of a waiting game, little bit more of a poker playback and forth, and that's not going to change for a while.
• 29:54
  Speaker 1: Either.
• 29:54
  Speaker 1: These rates are going to be here to stay.
• 29:56
  Speaker 1: So either the sellers are going to get smarter with what's happening in the market, or you just have to wait and play that game a little bit more than you used to.
• 30:04
  Speaker 2: Exactly, and I was talking to one of our business partners and we were saying the same thing like something's going to give.
• 30:11
  Speaker 2: Either the sellers are going to come down or we're going to be like, okay, we can squint and we can pay a little bit more, and so something's going to give here At some point I just don't know exactly when and what that is and it seems to be going slower than I had initially thought because, as you know, like and I got friends that are brokers, you know, but they, you know, I understand, when the market's hot, the market's hot, you know, and some of these mom and pops, you know, they got told that they could get a bajillion dollars for their park that's worth, you know, a million dollars, and they, you know, retired to Italy and Greece in their mind, right, and so they already spent the money and now they just can't get off of that number.
• 30:55
  Speaker 1: It'll be interesting to see what happens, but it doesn't mean you just give up trying.
• 30:58
  Speaker 1: You got to just continue to poke and prod and find a hole somewhere and hopefully work your way in there.
• 31:03
  Speaker 1: Well, Derek, thanks so much for coming on and sharing.
• 31:06
  Speaker 1: For those people listening that haven't really been exposed to mobile home parts, I'm excited that you got to break down some of those basic nuts and bolts for people that want to get ahold of you or learn more about what you're doing.
• 31:16
  Speaker 1: How can they do that?
• 31:17
  Speaker 2: So you can go to I got a bunch of stuff going right now.
• 31:20
  Speaker 2: So if you go to goparkinvestingprocom, I actually did a free webinar where I go over actually the basics of mobile home park investing the basic terminology, basic definitions, how to underwrite, how to look for deals and tell if they're good so you can go there and get access to that free webinar.
• 31:38
  Speaker 2: That's goparkinvestingprocom.
• 31:40
  Speaker 2: If you want to reach out to me, you can reach out to me on Instagram, facebook.
• 31:46
  Speaker 2: I'm on all the social media platforms at DerekVickers885.
• 31:49
  Speaker 2: And then you can also check us out on the MHP Show podcast.
• 31:53
  Speaker 2: We're on iTunes and Spotify.
• 31:56
  Speaker 2: We interview operators in the industry, brokers.
• 31:59
  Speaker 2: I do episodes on things.
• 32:01
  Speaker 2: I think I did one on underwriting this past week.
• 32:03
  Speaker 2: So we've got a lot of stuff out and I'm putting out content every day on everything.
• 32:08
  Speaker 2: So just check me out.
• 32:10
  Speaker 1: Thank you so much, Derek, for coming on and sharing.
• 32:11
  Speaker 1: Appreciate it and best elect to you as you continue to find more properties in the future.