This Mobile Home Park could be worth $80 Million?

My friend Justin Donald wanted to travel the world with his wife. Small problem. She had a job. She was a teacher. And her boss was like, yeah, no, we're not going to give you off the whole year to do that. So he was like, how do I replace her 30, 40, $50,000 income with something passive inter mobile home parks. So he started dragging his family not to vacations, but to parks just like this, trying to figure out how could we invest in this asset class where the properties aren't massively expensive, but cash flow. $60,000. That's how he became called the mobile. So he went and took a course on them. One like this, which I always recommend doing. And then he started going around and talking to any investor that he could find that owned these properties. He'd pick up the phone and he'd say, hey, can I talk to the owner? I'm thinking about owning one too. He'd do it in small locations. The dog gets what I'm trying to do here. And then he would run around and say, could I come by? Could I visit your site? After doing this for a few months, kind of slowly gathering up his knowledge on the subject matter, he pulled the trigger on a mobile home park just like this. All right, so the deal is we were trying to buy a mobile home park in Austin, Texas, and then the market said, go pound sand. There are none available. Literally none available. Look at this. Look at this graph. Basically what it's showing you is that there are all of zero parks available in Austin. So I was like, ugh, I don't want to drive all the way to Killeen. Look where Killeen is. It's way too far away. So, so how do we break down mobile home park investing? Because what you really need to do is buy it in a secondary market typically. But we're going to play one here in Austin. This mobile home park was bought in 2012 for 2.7 million bucks, right? That same mobile home park, after listening to my friend Justin, probably like 146 times $2,000 per lot is 292,000 times 12 times 0.7. We'll just say it's 30% expense ratio. And then the last one here sold at like a 3 cap. So if it's really a 3 cap, that's 81 million. Oh, my God. So there's probably no way that this 30 acres located where it is isn't worth somewhere between 20 to 80 million bucks. Yep. Okay. Awesome. That was really helpful. The mobile home park guru. Pretend like I'm calculating This when we do our call or are we doing our call? You just did the call. You just nailed the call. Oh, I. I was talking to Justin. He thinks this is worth anywhere from 20 to 80 million dollars. She went from 2012 2.7 million dollars to 20 to 80 million dollars. Huge variance. Because, you know, I called them and oddly, they wouldn't tell me all of their profits and personal financials. I have no idea why. It seems super weird. Anyway, so I think this is really interesting asset class, and that's why we're going to talk more about it. People are going to need more and more housing that is reasonably priced mobile home parks. Well, this shows you that I'm not very safe. The reason we're going to mobile home parks is because the increasing cost of home mean that more and more people are going to need places to live reasonably. And we think that mobile home parts are an interesting way to invest. These mobile homes are probably some of the more expensive ones in Austin because they're located right off the freeway, almost right by downtown. Crazy part is there's no mobile homes for sale anywhere. And that is because of this phenomenon I was talking to you guys about, which is one, it's a moated business, meaning people do not like to have mobile home parks in their neighborhoods. That's not that nice, but that's true. It's the whole, like, not in my backyard phenomenon. And so anyway, they don't build a ton more of these, which means that you have a moated market around your business when you own a mobile home park. Also, interestingly enough, the homes are mobile, but they actually don't really move anywhere. People stay in these for a long time. As you can tell, they got like rose bushes going on. We've got fencing built around this. These mobile home owners end up staying in the same location for quite a long time. This mobile home park was bought for $2.7 million in 2012 and is now, we think, worth anywhere from 20 to 80 million dollars. Big variants, because we don't exactly know their financials since they didn't want to cop that up for us. But a lot of it's based on land costs. Like, look at this one. I mean, covered in, you know, plants and everything from people living here for a long time. So one of the first things that I would want to do if I was buying a mobile home park is I would want to learn from the masters. I already told you about how Justin took that course, but you want to come and get your hands dirty. You want to feel what this feels like. I would never buy a mobile home park by myself, never having done it before with no other people in the game. Because you're going to have to do some door knocking. You're going to have to actually go and see what's happening inside of units just like this one. So the reasons why I like mobile home park investing are a couple fold. One is constrained resource. We talked about the fact that there are only about 45,000 mobile home parks in the country. That's why a lot of these big private equity firms like these guys, these guys, guys, these guys are all buying these mobile home parks. The other part that's interesting about it is they're a constrained resource for a couple of reasons. One is it's hard to get permits for them in city centers. And also because if you think about it, this is 30 acres, this thing that we're on. And on 30 acres, they only have 146 sites, typically multi families. You know, you could have 146 sites on one acre or less. And so what they call in real estate is the best use case for the land. Meaning the highest return for the least amount of money is not typically mobile home parks. The benefit here for us little guys is that we can actually get into this asset class without a ton of hard infrastructure costs. Like, I mean, check this out. This is not expensive to build or buy. You can buy mobile home parks for mobile homes themselves for 30,000, 40,000, all the way up to a couple hundred thousand dollars. But that's definitely a lot cheaper than a house. The other part that's cool about mobile home parks is if they are not park owned homes, then you as the owner of the mobile home park are not responsible for taking care of them. Something's broken. Don't call me, call the plumber. And so that's a huge benefit. Now park owned homes are great too. That means you can rent them out to people. But a lot of stuff going wrong means a lot of maintenance. Texas is one of the best places to invest in mobile home parks in my opinion. One, it's got the most of them, something like 5,100 plus mobile home parks. Also, the state is growing rapidly and so fast growth in a state leads to fast lot rents, meaning that you can charge people more. I was looking up some statistics here and basically the population of Texas has grown from 11 million to more than 30 million today. That's good for lot rents. The other thing that's interesting is the average apartment rents in Texas are twelve hundred Dollars per month. There's no question that demand for mobile home parks would be high because that's pretty expensive. I bet this mobile home park we're in right here charges anywhere from a grand to two grand per month. This is a pretty nice facility. Oh, hey, one other thing I forgot to tell you. Texas has great protective rights for landowners. So that means that you have rights in case you have to do the sad things of evictions and moving people out. A lot of states, it's damn hard to evict. We own some property in D.C. and some of our friends who own property there had people that they couldn't evict out of their house for more than a year. So they're stuck paying all the costs. That is not Texas. And they just strengthened this law. So the question becomes, how do you find a deal? Right? How do you find one of these mobile home parks? There's lots of different sites to do it. You can go on on one like LoopNet, you can look at them at typical real estate sites. I think the actual key here though is that I would go to a site like this one and I would find a Realtor who specifically knows how to do mobile park investing. You don't want somebody who's a typical realtor who goes from selling houses in Travis Heights might get a bit. Oh, my mess. Oh, Jesus. Are they all over me? Oh, God. Don't tell me that investing isn't hard because it may or may not have sat on a pile of ants, had ants in my pants, and now I have ant bites all over me in places where nobody should have ant bites. That's a true story. You want to invest in passive income sources, Be prepared. Oh, very itchy now. But what I would probably do is I would go with a Realtor that specializes in mobile home parks and RV parks. You can find many of them. Here are some examples. And I would get somebody who buys these things all day long because the truth of the matter is every type of asset class has a specific specific specialty to it. And so here's a couple ways that I would look at it are things like cap rate. You want to look at value added services. You want to know number of mobile home park owned homes as opposed to leased. You want to know what their vacancy is. You also want to think about the land cost overall because this isn't the best use case. Eventually there may be another reason to own a mobile home park. One note of warning there is. If you want to sell the mobile home park as something else, you have to find a way to move people to another location. There's lots of rules and regulations surrounding that, so don't think that you can just kick everybody out. One other thing to think about is 49 or so of the 51 states in the US have a mobile home park association. Texas has one. One, and one of the strongest. Which basically means they help strengthen rules and regulations surrounding mobile home parks. If you're an owner, I think it's a really good thing for you to join to learn about exactly this. How do people run these? Yeah, the last thing that I would say is with mobile home parks, if you're going to invest in them for the very first time, you want to make sure that you're not investing in hopes and dreams, you're investing in realities. And what does that mean? That means that if a mobile home park is only 30 or 40% occupied, it's a pass. Let's be honest. This is your first deal. You don't know a damn thing about what you're doing. And so you need to make sure that you're not taking huge risks so you can have that second opportunity to do an even bigger deal. Okay, All I'll say to wrap up here is you're going to look at a ton of mobile home parks and you're going to get intimidated. And then people are going to tell you on the Internet that there's no way that you can do this. And then you're going to go out and you're going to lose some deals, and then you're going to spend a bunch of time up front looking at homes, obsessing about mobile home parks, and nothing's going to have happened, and you're going to feel like your time is wasted. And that's what happens when you do deals. But the difference between deals and everything else is once you execute on a good deal, I've seen very little else that can replace your income and that can create generational wealth. That's how you become this Warren Buffett of cash flow investing and get to travel the world while owning a mobile home park that cashes checks. All right, I'm off. I got some mobile home parks to look at.