Table of Content
- #523 MHP: Choosing to Invest Locally Versus Investing Logically
- Ep #108: The Everchanging MHP Landscape From a Industry Veterans Perspective – with Eric Hanson
- Email Marketing Automation Manager
- #525 Navigating Real Estate Deals in Today’s Ever-Changing Market
- #526 MHP: Mastering the Leasing and Sales Process in Mobile Home Parks
- The Mobile Home Park Investing Podcast - Real Estate Investing Niche
What Warren Buffett did through 21st Mortgage is he created a lender arm that essentially will work with park owners like ourselves. Let’s say we have a hundred space mobile home community and there are only 70 of those lots are occupied with homes, the other 30 are vacant. He’ll essentially work with the park owner to bring brand-new home inventory in and give them a period of time to get that home sold. 21st will do the financing for the end buyer. It’s a win-win that the park owner gets up some brand-new inventory in their park.
It’s a win for 21st because they get the lending side of it and it’s a win for Clayton Homes because they made the home that’s sitting in that park. It’s a very direct way for Clayton Homes. Essentially get their inventory in front of the eyes of those that are going to be buyers, which are folks that are probably friends of friends that already live in a mobile home community. It’s been a game changer for the industry and it’s only moving in a positive manner from here on out. There are lots of positive changes on the horizon as well.
#523 MHP: Choosing to Invest Locally Versus Investing Logically
Number one, like all of our mobile home parks are listed. What FEMA does, quite often, pretty much every time, is in a mobile home park or an RV park, that infrastructure, most of the times underground. So, that is the quickest path for temporary housing is by FEMA basically, manufacturing a bunch of mobile homes and putting them back in these mobile home parks. I do have a special guest and surprisingly to me, I can’t believe that we haven’t met before. We maybe have casually because we’re both here in Florida and both been active in real estate in Florida for a long time.
We raise capital from investors for the equity component and then leverage it with somewhere between 65% and 75% loan-to-value debt in a first lien position. During that period of time, I met an individual through a mutual friend. I wanted to be the multifamily guy and I had lunch with Randy because I love meeting new people. I can’t tell you that I had this grand vision of business that I wanted to start at that point in my life.
Ep #108: The Everchanging MHP Landscape From a Industry Veterans Perspective – with Eric Hanson
So, you got a month, maybe two months in worst case scenario of no revenue net, that particular unit. So, that doesn’t exist in any mobile home park to where the resident owns the actual home itself. It’s very capital-intensive to go buy homes and bring them back in and to create a sales program to fill your community back up.
New owner moves in, takes over the responsibility of that lot rent. So, there’s never a downside or down period of time, to where you’re not collecting rent. So, you don’t have that gap of revenue, that you might have an apartment that you’ve got move out, maybe it takes you a couple weeks to make ready, a couple more weeks to market.
Email Marketing Automation Manager
Berkshire Hathaway owns Vanderbilt Mortgage and also 21st Mortgage. Both of those are predominantly on the consumer-facing side and doing the lending practices on individual mobile homes. They’re starting to do some recourse community financing for park owners like ourselves.
They’re CMBS lenders who are securitized mortgage instruments. There are tons of recourse that are out there for communities. There are local banks that do lending on mobile home parks. There’s a lot of different lending options out there. I would say that it’s still a little easier probably to get lending on a traditional apartment complex than it might be on a mobile home park. However, there are plenty of lending options available to mobile home park investors.
#525 Navigating Real Estate Deals in Today’s Ever-Changing Market
You can't just hook mobile homes up to your pickup truck and tow them down the road. You don’t go in and buy individual mobile homes. You go in and buy the land and all of the necessary services around that land to maintain it and such. People come onto your properties with their own mobile homes. My parents were at work, 9 to 5, Monday through Friday, and David would happen to be around random days of the week, right? I think he maybe saw a 19-year-old at that time, a kid with no direction.
Most of the time, it’s been inland like Central Florida, but even Central Florida gets impacts from hurricanes. They get high winds or tornadoes that whip up and things of that nature. And I can tell you that there’ve been sleepless nights here over the last five years, when we go into Florida of, I just don’t want to have to deal with this tree falling or homes getting ripped out. Obviously, your folks possibly being injured, what have you. But I think there’s that type of risk, pretty much anywhere you own in the country, maybe up north, the biggest risk is like you get eight feet of snow.
So, I think where there’s become a lot of similarities is in models where you actually own the mobile home. So, there are many parks that we own today where we own a portion, a small portion of the units inside that park. So, we’re responsible, they’re rentals, we’re responsible for maintaining the roofs, maintaining the HVAC system, and all the mechanicals that go with that unit. So that’s a much more similar model to that of a multifamily. And again, I’d say that’s probably the more common model today in the park space, where there’s a majority of the homes are owned by the homeowner. And then a smaller minority is actually owned by the park as either rentals or rent to own, some type of creative financing strategy.
It took me about fourteen months to buy the first property, looked at a lot, made a lot of offers, got scared away from a few and bought my very first mobile home park back in 2012 up in Atlanta, Georgia. I still own that one and I proved the concept there. I bought another one and bought another one. We’re now in thirteen different states. We’ve got about 2,000 lots under the ownership and we’re the mobile home park guys. I wouldn’t say that we’re the only mobile home park guys but it’s a niche that fits us very well.
He shares his expertise through the Mobile Home Academy, and also is the host of the Real Estate Investing for Cash Flow podcast, which has become one of the hottest real estate podcasts on iTunes. And that’s exactly how I found you, probably five years ago, was through that podcast when I was really, really getting ramped up and really immersing myself in real estate. I think your podcast was one of the first that really got me going. Thank you for helping set me on this path.
I like being in the parking lot business. We rent parking lot spaces to folks that own mobile homes. It’s a beautiful thing and it’s become quite lucrative. So, what happens a lot of time, there’s two different instances that typically occur.
The Mobile Home Park Investing Podcast - Real Estate Investing Niche
In a perfect world, Kevin, I want to be the parking lot owner. I want to be the place where they have to park their mobile home and these things aren’t very mobile, even though they’re called mobile homes. Once it leaves the factory and makes it into a community, it very rarely ever leaves. Some statistic says that 98% of the homes never moved to a second location. You can’t just hook them up to your pickup truck and tow them down the road.
No comments:
Post a Comment