Creative Finance with Mobile Home Parks

Hello and welcome back to another episode of Multifamily Strategy Live. We're doing a special one today because we have some fun announcements. For those who don't know him, he has recently been posted on the channel and the podcast. Jan Wanot, not pronounced Jan, not pronounced Wano. Jan Wanot, say it right, know the name, people, because this guy is a badass.

Thank you for having me, Christian. It's not Christina, get it right, people, because that is definitely not Chris.

What the heck? I've never— I will literally answer the phone, hey, this is Christian. Hey, Chris. I'm like, that is not what I said.

Yeah.

So as two people who never get called the right name, uh, welcome to the live. Yawn is a master of mobile home parks. What he's built is actually incredible. I want to talk about it a little bit here for those who haven't watched the podcast episode, but we have some really fun things coming up. So for the live, you guys are welcome to post any questions here. We will get to them. We're going to go live for the hour or so, uh, unless you guys don't have any questions, in which case we'll talk and then we'll get off. But, uh, we're launching a couple of really fun things. Specifically on Thursday, we're teaching live how to do mobile home parks creative finance. Uh, Yan, when did you actually get started buying mobiles? Like, how long have you been in this business?

Yeah, I've been doing the mobile home park since 2020, and I got into it because, like you, Christian, I started with single-family, small multifamily. Like most of us do. And I was managing about 20 of my own rental units, and I owned all the properties, and it was going pretty well. But one month, I actually had in the same month 3 washing machines break, and I was running around like trying to get these new washing machines installed. And I was just like so sick of it because everything was going wrong. And I'm like, how can I— I love real estate investment, I love the cash flow— how can I keep cash flowing without owning so much stuff that breaks all the time? And that's when I started researching the uncorrelated assets. So if you don't know uncorrelated assets, they're assets that are uncorrelated or move differently from the values of single-family homes. And those are mobile home parks, RV parks, and self-storage. And the one of the common things between all three of those that I found out is that you don't have to own everything. You just mostly own land and utilities. And in the case of storage, you know, freaking steel and concrete boxes, and people just pay you to rent your space. They don't, they don't pay you to rent your flooring and your toilet and the nice walls and the roof. Uh, they just want the space. And so I thought that sounds really good. I don't want to own washing machines anymore. Yeah, I got into mobile home parks because I didn't want— I wanted to keep cash flowing without owning so much stuff.

Oh, and that makes sense. So you started with single family and I started with all— basically all multifamily, started with duplexes. And I see y'all buying units all the time. How many, how many do you have again? Mobiles?

We're at 225 mobile home units in our parks. We're closing on another 21-unit in 10 days. Yeah. And we're under contract on another 80 or so that we're working on. So yeah, it's, it's, um, it's a great business. And honestly, for those of you listening, uh, you only need like one really good park to live the rest of your life on. If you find one good park, you don't have to do any more work besides managing that park. Think about that. Like, think about how many single-family homes you need before you can live a comfortable life from the cash flow of all those single-family homes? It's probably like 20, 30, 40 homes depending on your market. Uh, and with mobile home parks, like my best park cash flows, net cash flow, $9,000 a month.

Okay, wow.

So you could, you could live a modest life for $9,000 a month. You know, you're not rich, you're not like balling out of control, but with just one good park you could live the rest of your life. And isn't that pretty cool?

Well, yeah. And then if you think about it, it's like, okay, well, I mean, if you can find one deal and you've already done it, it's like, oh, at some point with your $9,000 in cash flow and more free time, it stands to reason you could buy one more park, right? Right.

Or why not one a year or one a quarter or one a month if you're really killing it, which is a lot less velocity of transaction than you need if you're buying houses.

If you're If you're buying houses, you got the— the churn is constant. And everyone I've seen in houses who actually makes money usually has cash flow problems somewhere throughout their buying. So when you're doing the houses, you're looking at a ton of deals. You're usually trying to do multiple things a month, and you're flipping, wholesaling, buying some. It is a really arduous business. What Jan's found in mobile homes, which is what I started finding in multifamily and then found mobile homes are even more passive and often higher cash flow is like they're really quite passive for what they are, and the amount of income that they can yield is insane.

Totally. Yeah, the coolest part I think is it's, it's really hard to find a good deal, and it's hard to find a good manager and put the right processes in place and get them all the tools they need to be successful. But once you've found a really good deal and a really good manager And you're kind of just cruising for 30 years. I mean, yeah, things, little things go wrong here and there, but for the most part, once we've done our initial acquisition, hiring, training, and value add, I mean, these things are a dream to operate. I literally spend more time managing a fourplex I own in Tacoma than I spend managing a 43-unit I own in Moses Lake. And why is that? Because I'm managing the fourplex in Tacoma, but the 43-unit mobile home park in Moses Lake, I can afford a full-time park manager. And that's the big difference. When you're messing around with singles and doubles, you can barely afford property management, and you certainly can't afford your own employee to manage it. But when you buy a 43-unit, which by the way we bought for $600 grand—

not bad, right?

So it's like, hey, you you could— I could have bought a duplex in Burien, Washington, or I could have bought a, you know, a 43-unit mobile home park where I can actually afford a full-time employee. And every time you can make— create distance between your clients and still make money, that's typically a good thing, right? We, we love to— we love to figure out every job that we're going to delegate. And yeah, I was doing management for a while on my own, and I was the one handing out letters and talking to tenants, but Anytime I can stop doing those low-dollar-per-hour activities and hand that off to someone that's qualified to do it, that's more patient than me, that's nicer than me, has a nicer smile than me, can be firmer than me and not get emotionally wrapped up in these things, uh, I'm gonna make more money in the long term because I can go find another great asset.

Now, how long did you actually— when you bought your first park, were you actually doing the notice posting yourself before you scaled to a point where you could hand that task off?

Yeah, usually I would go and spend at least a week at my parks when I first bought them. I think it is important to go and figure out like, what happens here? Who lives here? You know, where does the garbage truck roll through and are they ruining my roads? Like, who's causing trouble in this park, if anyone? Right? So if you spend a week or two there, you're gonna get a really good feel for things and then you can start to hand off those things, and you can say, hey, okay, now I kind of know the operating rhythm, and now I want to hand this off to my manager because, uh, they're going to be here next to the park or inside the park every day. And then I, I can go and run, run the numbers, do the permits, do the boring stuff that they don't want to do. Yeah, I can do that stuff that's going to generate me $1,000 per hour as opposed to, you know, $20, $30, $40 an hour.

Yeah. Now, what do we have coming up here this week in particular? A little while back, I had the opportunity to participate on a course with Yan and Cody talking about creative finance and mobile home parks. We were so excited about doing this mobile home park thing that Cody and I went out and bought one. And guess what? It makes a ton of money. We bought it with 13.5% debt and the thing cash flows like crazy. It's making $5,000— well, $4,500 a month. And I still have 2 evictions to do, and my debt product is 13.5% interest. That is insane. That means we bought a mobile home park on like a 19 cap. That's insane. Before we stabilize it, uh, the park itself is kind of gross. Uh, we need to redo the septic. It looks like that's going to cost $70,000 to $80,000. We've got most of that done.

What—

some of our permitting did not get approved today, so we're moving a couple pieces around. But it's like, that's— these projects are available. You can do the fixer-upper ones like I did, 25 units for $300,000 on the water. Uh, you could do Moses Lake. I own a ton of property in Moses Lake. That's where Yana owns some big mobile home parks, Grant County. You can find these things anywhere in the country that cash flow a lot. We put out a little course on how to do this, and this week is one, the end of the super discount, but two, We're launching the actual mentorship piece. We have enough people in here where we're going to start doing weekly live calls, uh, just specifically talking about the creative finance structure and what's unique about mobiles for those who want to do this strategy. We're going to be talking about that. Yawn. As someone who's done multi-family and mobile homes, I love both for different reasons. I, I've— it was a lot harder to add systems to multi-family but I have the PM company and now it's started to become a little bit more passive with what I do. Um, with mobile home parks, you went from houses right into mobiles. What do you think are the advantages that are specific to mobiles outside of anything like single family or multi-family? What's the difference between buying a 25-unit apartment complex and a 25-unit mobile complex?

Well, like I said, the biggest difference is You want to buy parks where you don't own the homes, okay? There's two different, two different types of ownership. Well, there's maybe more than two, but the main two types of ownership in a park of the actual home is the person that lives there owns the home. We call that a tenant-owned home. The other option is a park-owned home where I, as the park owner, I own a home. Let's say it's worth $10,000 and I rent that home to someone for $400, and I charge them $400 lot rent or space rent, so they pay me $800 total. Now you might say, oh, well, why wouldn't I want to make $800 instead of just $400 for only lot rent? Well, because you don't have to maintain anything because you don't own the home. If someone else owns it and they just pay you the $400 lot rent, operationally, that's a dream. How cool would it be, Christian, if, if no one ever called you because of a maintenance request in your multi-family properties? Wouldn't it be nice if you never had your property management send you a bill to unclog another toilet?

See, that kind of sounds— that sounds like the dream right there. And that's something that you— that we're actually looking at doing with our park right now, is when we bought it we own most of the units. We have this blend of mobiles and RVs, but they're all long-term leases. So effectively, this is run exactly like a mobile home park.

Yeah.

When we're doing these, it's like, some of the really beat up ones, I'm like, I would love for you to take this out of here. We had a couple where we didn't even sell to them. We're like, I don't want the maintenance on this. I'm like, we'll give this to you if you're willing to move it to a different spot for our septic system. If you'll move from spot 2 to spot 8, Somebody still had like $5,000, $6,000 of value. I'm like, I don't want the liability, I don't want the headache, I don't want to understand it. I just want to take it, that's it, move it, and transition the problems onto them. And times have been fine with that. They're like, oh, I would love to own this and I know everything about it.

And think about it from the tenant's perspective. I mean, especially if you give it to them for free. Let's say you gave someone a crappy old mobile. It's like, whatever, it's still free. Even though it's not the nicest house ever, it's free house. And guess what? Now they don't have to deal with you inspecting it every year. They don't have to deal with you coming inside their unit and being like, hey, you need to do this and that to the flooring, you need to do this and that to the paint, or I'm gonna do that, right? Move your stuff, we need to repaint this, or whatever it is. Now there's just a lot more autonomy. So it's like Who wouldn't prefer to not have to deal with their landlord coming into— I mean, if you value your privacy, you don't want other people coming into your space. I don't want anyone coming into my house. That's why I don't rent personally. I don't like someone having any sort of control over where I live. And so that's why people choose to own their homes in mobile home parks. Yes, they have to maintain it, but it's because they want that sense of ownership. They want that sense of freedom and security in their home where someone else has no right to come in. If I, if I own the home, I have every right to come in. It's my house. You just live there. You're a tenant, right? Of course you have tenants' rights, but I can give you a 24-hour notice and I can come in to fix things, to do whatever I need to do, an inspection. And so a lot of people don't like that, and for a good reason. So that's the benefit to a tenant, is as long as they're following the park rules No one has the right to come into their home because a home for, you know, most people is their sacred space to relax. They don't, they don't want someone coming in there.

Yeah, well, it's a path for homeownership for a lot of your tenants. It's something that makes a lot of sense. And many times people offer to give them back to you when they leave. Oftentimes they don't move them and they move. I've seen a lot of instances where it's like, oh yeah, I sold it to a tenant. They moved. I ended up getting it back, sold it again. There's a lot of different income streams, but what I love about the mobile home parks is the potential for passivity. There's not as many moving parts.

Totally. It's great. And what if you, especially if you find a park that has good utility systems. So Christian, you know, you found one that had bad utility systems. That's why you got it at such a discount, right?

Yeah.

But we're closing on a park now that's got, you know, public water. Public sewer, and there's not a lot to manage there. Yeah, we need to do— we need to make some upgrades to the electrical systems and the water lines, but that's like $30,000 of deferred maintenance, and that's pretty typical. But for the most part, there's not a lot that can break there. I mean, it's just we own land and utilities. And so it's just really nice to know that you're not on the hook for every little thing when you own the park. You're just on the hook for making sure You're providing someone a clean, safe, and affordable place to live that's well-managed, where the electrical system, the water system, and the sewer system work. And that's what we do. This is not rocket science. This is just the basis of affordable housing in America.

I love that. It is the basis of affordable housing. And that's what I focused on so much in my multifamily was entry-level housing. The mindset is, okay, if we have a pullback or a recession, Where are people going to go? Like, people who are paying $4,000 a month to live somewhere can cut to 2, and people who are living at 2— a lot of places like Moses Lake, you can still find places for $1,000 in Moses Lake. It wasn't even that long that rent pushed up above $1,000. So you can go down to entry-level housing. Not everyone is willing to move to a mobile home park, but a lot of people are, and the people who are in a mobile home park are certainly not going anywhere. Like, that's— there's not cheaper places to live as far as, you know, I own a mobile, it's on a park, cover utilities, it's the lowest place to live. And a lot of these parks, yawns included, they're really well run, they're really nice places to live. People don't typically do a lot of leaving, but the, the ease of management and recession-proofing from having this type of asset, that's huge. And if anyone's been watching our economy, uh, we're not necessarily trending up over the next 18 months. I don't, I don't think anyone's calling for massive market increases in the short term. It's a great time to get into these. They're stable, they stay stable. Uh, you were saying something on our podcast that I thought was really interesting. Uh, you had mentioned that they're not, uh, like, they do not move with the market like housing does. They, they move in their own way. Can you shed some light on how these things operate in down markets?

Sure. Well, you know, personally I haven't been through a down market, but I can look at data. And if you look at the data from 2008 through 2010, you'll see that obviously single-family homes got absolutely demolished and crushed and everyone lost everything. If you own single-family homes, multifamily didn't do so hot either. But mobile home parks either kind of stayed flat or some— of course, some of them may continue to have increased revenues or they took the smallest losses out of any other kind of commercial real estate. And so that if you look at the REITs, so the really big conglomerates that own thousands of units, tens of thousands of units, all of those big, big conglomerates continue to show quarter-over-quarter revenue growth. During the greatest financial recession that is likely to exist in our lifetime, especially, especially because it tied directly to real estate. And so while everyone else got crushed, mobile home parks did pretty okay. And if you think about it, you know, like Christian was saying, from $4,000 to $2,000 a month, from $2,000 to $1,000— if you live in a $1,000 apartment, your next step down might be homelessness. If you can't afford— if you can't afford that, you're either gonna have to go live in— move in with parents or family, and that's, that's a fine option. That's going to catch a lot of people. Uh, you need to become homeless, which people are willing to fight really hard to not become homeless. And so what are— what's their next best option that's still housing, housing that's less than $1,000? Well, I've got literally, you know, spaces in my mobile home park that I'll rent to you for as low as $360 in Washington State. That's my— that's one of my lowest lot rents, I think, is $360 per month. So what are you going to do? You're going to become homeless or you're going to say, I'm going to figure this damn thing out and I'm going to start doing some odds and ends and labor work and figure out how to come up with $360 a month so I don't have to live on the street. And that's, that's what most people are going to opt for. So theoretically, we would have more customers in a recession because more people are looking for the cheapest housing possible. So we're kind of the catch-all at the bottom of the pyramid, and theoretically we should have more customers. Now we'll see what actually happens in the next big recession, but, uh, that is what I'm banking on. And that's another reason I got into mobile home parks was not just lower operational input, not just better cash flow, but also that recession, recession resistance where we are truly the kind of the bottom, the catch-all for people that are going to need bigger options. Because what is your— think about this for yourself— what's your number one biggest expense on a monthly basis? Every month, what is it? Housing. It's either rent or a mortgage. For me, I know that's what it is. My mortgage is pricey. These interest rates are high. Okay, I don't have any— my insurance doesn't cost that much, my car doesn't cost that much, my food doesn't cost that much. My house costs that much. And so the first thing people look at if they get in a serious pinch is, how do I reduce my housing cost? And this is kind of the bottom of that pyramid and the bottom of where people are going to start looking for. So I think, you know, if you own a mobile home park, if you start getting into it now before the big recession— because it's coming, it's not, it's not if, it's when is the next serious recession where Everyone's going to be struggling for a few years. It's when is that? So the perfect time to learn mobile home parks is now. The perfect time was 20 years ago. The next best time is right this second. Start now. And guys, for $1,500, we'll teach you everything we've learned about mobile home parks. And Cody and Christian will teach you everything they've learned about creative finance, which is a lot. They've learned a lot, and I've learned a lot about mobile home parks. And we've condensed it down into bite-sized simple chunks for you guys to understand. And not only that, but then join us on calls every single week in perpetuity for months on end until you figure this thing out. And we're going to give you all the tools you need to get there. So now is the right time to start learning this stuff. Christian, would you agree?

I, no, I absolutely agree. And we'd love to have you there. I have a lot of fun coaching. I, I do this all the time with, with my multi-family group, and this is a It's unique enough where it's fun to have a different project. Yan is the expert in operations, and you should see some of the stuff he put together in the course and the actual preparation, the way he underwrites and runs the operations. It is plug and play. This isn't something where you could just come and be like, well, I can buy a mobile home park and I'll figure it out. You can just take what Yan does and run with it. Yan puts all of it in there. Creative Finance, we got you covered. That's— Jan's done a lot of seller financing. Cody and I, of course, have done a ton of seller financing, hundreds of units seller financed, both mobile home parks and just conventional. Like, we did resorts, we did mobile home parks, we did multifamily. I've done option agreements, seller finance, land contracts. Like, we can get you through all of it. But if you're starting without money, it's a way to play the game. I'd love to see you there. I'll post a link here, by the way. MX Parks Academy. .com if you're watching on anything but Instagram. That just appeared there for you. If you're on Instagram, we love you too. I see you guys over there. It's mhparkacademy.com. Um, we do have a question here in the chat. Uh, when you were starting off, did you worry about getting the real estate— or sorry, the right legal contracts and have it done right for the right price with no money at all? Okay, so Jan didn't start out rich. I didn't start out rich. You can check out his backstory on the podcast because it's freaking awesome. Um, how do you go about doing the right legal contract when you really don't have any budget and you're getting started?

Well, look, Luke, great question. You absolutely need to protect yourself contractually. Uh, you need to, to have the right contracts in place. And the cool thing about, um, getting started with this course is that I'm actually going to throw in for free, only to people that sign up, uh, this week, all of the legal contracts that you need to do your first 5 mobile home park deals, guaranteed. I will personally provide those templates to you. And some of the templates that you're going to need are a cash-out purchase and sale agreement specific to mobile home parks, a seller-financed specific Mobile home park purchase and sale agreement. You're going to need a promissory note. That's a promise to pay the seller if you get seller financing. You're going to need a promissory note template. You're going to need a deed of trust template that secures the note. Okay, you're going to need an operating agreement to operate your company. Does this sound like a lot? It is a lot. Okay, I've spent $20,000 on legal, on all these just contract templates and revisions over the last 4 years. And I'm going to provide those to you included with MH Park Academy, only to people that sign up this week. And so yeah, it's 100% important. You don't go on LegalZoom. You need to have state-specific legal contracts that are going to protect you. Do not go on LegalZoom. Do not go on free template online because it's, it's not going to be specific to your state. Okay.

Uh, even, even with YONDs, by the way, uh, and I, I tell everyone this, there, there's a lot of state-specific stuff. There's a lot of deal-specific stuff, especially if you are using creative finance. A boilerplate operating agreement, no matter how perfect it is, if you are doing anything custom, if there's some agreement on this is how cash is going back to the investor, this is what everyone's roles are, still find a lawyer to review it. I mean, if you have no money, this is the thing where you're like, I don't care, put it on a credit card. Like, you get the templates as a starting point for sure, but find a lawyer who reviews all of it and gives you feedback. And I think this lawyer should be someone who owns real estate themselves. Doesn't even necessarily need to be mobile home parks or multifamily, but someone who is a real estate investor and a lawyer and have them look over it. You can save money by having them drafted, and if you're requesting a review That is a lot different than coming to them and saying like, hey, can you just draft all these documents for me from scratch? Use everything that Yon gives you as a starting point, then get your own legal counsel behind it. That is going to save you a ton of money and still going to give you a bulletproof contract that is correct for your deal.

100%. Start with a template. Okay, I'll provide you the template. You pay a lawyer $150 for half an hour, for them to do a final review. And that's all you're going to need if you have a great template from someone that's in the business. Um, and yes, it's— a great lawyer is worth their weight in gold. Yes, they're worth $300 an hour or $500 an hour if they are actually tearing up your contract and making sure you're protected. It's going to save you so much headache, so much litigation, so much, um, heartache that it's worth it.

Now, I, I— the only ones I can't put on the screen are the Instagram comments. But for those on Instagram, I do have a comment over here directed specifically at me, but it says, Christian, uh, with all that you do with multifamily, what have you noticed is the biggest difference in the mobile home park that you purchased? So for me, the number one thing that I have noticed, besides like, yeah, this actually is a little bit more passive— I did pick up one that is a project, so I'm doing a lot of ongoing projects. The one thing I've noticed, the tenants are super simple to work with. A lot of them basically want to be left by themselves. They really don't want a lot of interaction. They want to pay the rent. They, and besides that, they don't really reach out for much. I've transitioned a lot of the ownership of the actual mobiles to the tenants, so I'm not responsible for their repairs. So I don't get those calls. Biggest issues that I, because you worry about the utilities there. I had one person who was upset with their neighbor. And what they were doing is they were starting to run their water all night to like basically just like drain the water for the rest of the campus. That was just them being a jerk. Um, that was handled with notices. Um, but the biggest thing that I've noticed is that minus like small intertenant disputes, I don't have to deal with anything else tenant related. Like sometimes it's like, and there's a few partners on this, I have a partner named Eric who will also come in and get on the phone and And set things straight. But sometimes occasionally daddy still needs to come in and lay down the rules. That's happened a couple times. Outside of that, I don't hear much from my tenants. They're happy. It's a lot more passive as opposed to on multifamily. The stove goes out. I have, say I have a contractor who can bring in a new stove in 4 days and you have a tenant who is bugging your team and you every single day. This broke. You guys don't care about me. Why isn't this fixed? It's like, it broke on Friday night. The company's not open on the weekends. We scheduled it on Monday. It's coming out on Wednesday. Like, that's pretty darn good. You get people who get pissed about that. I'll say the same thing about my seller finance resort. I've had staff, and I have on-site staff, like they're tenants at the resort. A branch fell And they're like, you guys hate, you guys hate us. You don't care about the safety. You guys don't care. I'm like, you live in the Olympic Rainforest. We have an arborist out there every year. And I just spent $11,000 on tree removal. And they're like, hey, you guys don't care. A branch fell. It's like a branch will in fact fall. I have not had a mobile park tenant complain to me about like, I live in a forest. We understand there are trees. There's just something different about your tenant mix where they are people who do not expect as much from you.

And that's, and that's fair because they're not paying as much, right? Yeah, that's reasonable. That's reasonable.

Yeah, it doesn't mean that I'm a lazy landlord, right? When there's a problem, we fix it. We had that water thing, we were all over it. We called, we got to the bottom of it, we talked to the person. Like, we did the thing. It doesn't mean it's passive. Uh, mobile parks are not passive. Real estate's not passive. It's just more passive. It's notable in my mighty 25 units of experience. It's, it's absolutely noticeable. I'm like, I'm like, shit, we gotta do more of these.

Yeah, yeah, heck yeah.

I think John's on to something here.

Let's buy some together, man. We'll do it together soon.

Oh, I get this question all the time and I don't have the answer for it. I'm curious if you do. Um, Mr. Medina, are 55 and over parks, uh, better to buy and deal with than an all-age? I've got a bunch of feedback from people saying like, oh, just do the 55 and up parks. I own exactly none of them, though I don't think I rent to anyone under 55. Uh, my park has a bunch of very old people. Uh, Jan, do you have experience with this, or do you have— what's your feedback on this?

Sure. Yeah, I do not own any 55 and up, 55 and up parks. However, they are definitely better to deal with much easier, as you can imagine, to deal with a consistent tenant base, old folks that just want to live in peace. Of course, that's easier. And as with all things in life and real estate, the less work it is, the lower return it's going to be, right? And so, yeah, we've underwrote many of them and we've offered on many of them. And guess what? It's always way more expensive to buy a 55 and up park because more people want it. Why? 'Cause it's easier. So higher demand means higher price means lower return, less work. So you just have to think about where you are in your investing career. Obviously, if an amazing 55 and up park smacked me in the face or we could get a good price for it, yeah, I'd buy it tomorrow. I'd buy it yesterday. But the problem is they're easier to manage. And so people bid them up and we are looking for more value-add projects. Where not everyone else wants to buy it. Not everyone wants to swap out a septic system because it's a headache. Well, guess what? I'm young and I have energy and I have— I can put together money, and so I'm willing to deal with the headache as long as I get a big discount. Usually the 55 and up parks, not as big of an opportunity for a discount. So you have to think about, do I want a discount or do I want something easy that I have to pay way more for?

So for the mobile home park community, if we're comparing this to multifamily, it's kind of like buying turnkey Class B as opposed to buying a Class C value-add property. Uh, you have— you were looking for projects with more upside. If you have an easier tenant mix, 55+, it's considered premium, which means there's usually going to be a premium on the pricing.

Sure.

Or added passivity.

That's it. Yep.

If you're getting started, this is what I found in multifamily. I think this is true in mobiles. You're probably going to start finding the most opportunities with the most upside on parks like the one that I found where it's like, oh my gosh, $300,000. This is amazing. I can, I can knock this one out. It wasn't with my money. I spent exactly zero of my money on it, but I can knock this park out creatively financed. We can go ahead and stabilize it. And now I have a boatload of cash flow, refinance it into cheaper debt. Now I have a boatload more cash flow. On a boatload of cash flow.

Correct.

You'll see less of those in the 55-up community. You start playing with those like you do in multifamily. As you get a little farther in the game and you actually have more of your own money to play with, that's where you buy these parks where you're like, I don't want any headache, I don't want any project, I don't need the million-dollar return. I'm fine with making $300,000 on my $300,000. I'm gonna go ahead and buy, you know, a more passive park with a little lower return because it's less work and you grow your money.

That's it. Got options.

Oscar Pena: How do I make sure someone doesn't steal my deal? I have my lawyer make the contract too. If I have a passive investor, brokers loan me money, what can be done to prevent them from stealing the deal? Well, I usually don't— if we're just— we're talking about like the— you're finding investors and legal, that's all on a deal that's under contract. And so what protects you is your contract to purchase the property. I do see this happen. Never happened in any of the courses or mentorships that I've been involved in, but I have seen it happen where someone will post or talk about a deal that's not under contract yet, and then someone else just writes it up. They're like, oh yeah, that looked like a good deal, I'll go ahead and swoop in and snag that. Uh, quickest answer for me is you put it under contract, purchase and sale agreement, and you start doing your due diligence during that time. I follow deal, debt, equity. Find the deal. When you have the deal that you love, put it under contract, and then you start working on other pieces. And then as you talk to investors, they can't take the deal because you have the exclusive right to purchase it. That's the best I can think of. Yan, anything to add to that?

That's really the brunt of it. If someone wants to start trying to go around you, you better have some legal protections in place. You better have followed a process. That specifies, hey, we have an exclusive right to work with the seller. We have it under contract. If you do anything that marginalizes that or something that could put this in danger, then we will pursue legal action. So people have to know where you're coming from. You have to set that boundary up front and say, this is a— I'm sharing this with you in confidentiality. If you want, you can also have people sign a non-compete, non-disclosure agreement. And that's another great way to weed out people that aren't willing to sign a simple agreement. Okay, so you need to have a process. You need to make the disclaimer that, hey, this is our contract, we will pursue legal action. And if you want, you need to protect yourself with an NDA. And if you do both those things, you're not going to have a problem because there's probably only going to be 10 people willing to jump through those hoops to see your deal. And guess what? Then you can track those 10 people that actually signed it before you show them the deal. And if one of them screws you over, cool, it's one of them, one of those 10 people that did it. And now you know who did it, and now you can go figure out how to deal with that. So we've never had a problem if we follow our process. Guess when we have a problem? People going around us when we don't follow that process. And we have had problems because we didn't follow our own process.

Isn't that funny how that works?

That's it.

I, I've definitely done that multiple times where I'm like, oh, I know not to do this, and I tell people not to do this, I did it and it bit me immediately. Uh, that does happen.

Follow your process, Troy.

Hey, yawn. Uh, what do you recommend when trying to purchase a park? 20 to 30 unit, 40 to 60, less than 20? What's the right size when you're getting started?

Yeah, so look, I started with a 26-unit park for $450 grand. And I grew from there. Now we're trying to buy bigger parks all the time. For you, it's really just, it's not about the size. It's about, is it a deal and can I afford it or can I afford it with other people's money? First of all, is it a deal? So if you find a really good deal that's a 20-unit, you should buy it. And if you find a really good deal that's a 60-unit, then you should also buy it if you can, if it's a really good deal. How do you know if it's a really good deal? You, you put your basic numbers together using my quick analysis template, which is provided to you in the course, and then you bring it to one of our calls, or you bring it to me personally, and I give you feedback. And I tell you, yes, Troy, that's a great 20-unit, or no, Troy, that's a really shitty deal on a 60-unit, you're going to lose everyone's money, stay away from that. So you need to have a mentor that's giving you feedback. Why do I say that? Because I have mentors that are far further ahead of me in the game. And when I'm about to make a multimillion-dollar decision, I say, hey, I've put together my numbers. Can you give me 5 minutes of your time to look at this and tell me if I'm being smart or if I'm being dumb? And they do that. So, uh, In short, anything you can afford and that's also a deal, that's what you should buy. But I will say it's going to be a lot easier for you to get your foot in the door with a 20 to 30 unit park because the big operators are not looking at that as closely. Okay, only smaller operators. So if you can act quickly on a 20 unit, that's great. You're going to find some of those screaming deals like Christian found a 19 cap. Okay, I found 13 and 17 and 20 caps as well when I'm looking at smaller deals. So that's the benefit of you looking at smaller deals. When you're looking at 60 units to 100 units, I'm also looking at that, and I'm a bigger operator than you are, and so I'm probably going to be able to pay a higher price than you are because I have better access to capital, I have better access to systems and, and keeping my costs low. And so you have the best likelihood of getting a great deal under 30 units. But that's not to say you shouldn't look above it. It's just that there's more and more competition above it, which is funny because it's not quite like that in multifamily.

In multifamily, you have so much competition for mom-and-pop investors who want to buy duplexes through fourplex in your pockets. Your biggest competition and hardest deals are your smallest ones. Then you hit the sweet spot of mid-sized multifamily where it's like, oh yeah, we buy like a a 5 to 20 unit building, it's all gravy. But then you hit the same thing on the back end, like the big buildings. All the biggest operators want the most units, and it's— that is true across the board. Mobile home parks, smaller may have more margin, but look for the deal. Deal first. If you, if you have no money and you find a 100 unit mobile home park and it's a screaming deal, I absolutely believe that you're like, wow, we're gonna make $2 million on this, that you can raise a million dollars. Like, you will find the money to make a million dollars. You'd be amazed what you can do with 7 figures on the table. It's like, wait a second, find the deal. If you want to figure out how to close the bigger ones, that's why you would be in a course or mentorship, and you'll— we'll see you on MH Park's Academy. All right, we have 2 more questions, then we're gonna call it a day because I have to hop into a meeting, and Jan's been awesome giving us an hour of his time. Uh, for Mr. Medina, when you refinance— oh, I actually don't— it's a good question for y'all. When you refinance, is it better to have more park-owned homes or tenant-owned homes?

I would say 100% of the time it's going to be better to have more tenant-owned homes, and the reason is— it's a little complicated, but I'm going to try to break it down for you in a simple way. The reason is, technically speaking, I'll say it the technical way first. You do not capitalize park-owned home income. That is the reason that you don't want park-owned homes in your park. If you're trying to get new debt, you do not capitalize park-owned home income. What does that mean? I'll explain it now simply. If I was selling a duplex, Christian was selling a duplex and I was trying to buy it, and Christian told me, hey, look, I've got this real estate, it brings in $2,000 a month, from the real estate. But wait, there's more. I also have a Honda Civic that generates another $2,000 in revenue per month, and it's included with the sale, and it's right there in the front of the house in the, in the, in the little, uh, shed there. And I'm, I'm selling this duplex that brings in 2 grand and the Honda Civic that brings in 2 grand on Turo. I rent it. I'm selling all of that and I want you to give me credit for $4,000 a month of rental income. I would say, Christian, you are off your rocker. I'm buying real estate and your real estate only generates $2,000 a month, right? And so that is, that is the reason you don't want park-owned homes, because park-owned homes are personal property. When, when I own a park-owned home, which I do— I own about 10 homes still out of hundreds, okay, that I'm trying to sell. I own that home, and it's not real estate. It's actually not affixed to the ground. It is set on— right, it's set on like a concrete pad or on, or on top of like tie-downs and piers, right? And so it's not actually real estate. That's what people don't realize. It's actually personal property, just like a car. So If the bank is looking at my park and it says, hey, John, I see that you have $50,000 of rental income from your renting your tenant-owned homes, uh, renting the space, the real estate, right? That is real estate income. And I see you have another $50,000 of park-owned home income. Well, guess what, John? Sorry, that's not real estate income. That is personal property income, and we cannot use that value. We cannot use that to value your asset. We're only going to give you credit for the tenant-owned home income because that's what the real estate brings in. Now, I thought I could refinance with $100,000 of revenue, and I can't. I can only get credit for $50,000 from my tenant-owned homes. And that is why you don't want those park-owned homes. You ideally want to sell those. You don't have to maintain them like we talked about, and the bank is not going to be confused and, and be wondering why you're trying to get real estate valuation from renting a personal property like a car or a mobile home. Okay, so does that— hopefully that makes sense. And that is why you want mostly tenant-owned homes in your park.

That is really helpful. Thank you, Jan. And this is why Jan is the master. That makes perfect sense. Oh, I'm really glad I'm giving all my tenants my stuff. I don't want to deal with that. Less problems, easier time with the bank. Correct. Tenant-owned homes. So the mission on a park— that is actually an improvement you can make. Then you buy one that has a lot of park-owned homes. Part of the mission of stabilization is how many of these can we not own when we're stabilized?

Correct. Okay, how many of them can I get to good tenants that are going to maintain them, that are going to pay their lot rent on time? And so that's why we sell park-owned homes at a discount. So Another cool thing that you don't get in multifamily is that I, not only do I want seller financing and all of my parks currently are seller financed 'cause I just sold one, a 44-unit that was my only bank finance, all the rest are seller financed. So we do practice what we preach, okay? We do mostly seller financing. And even though I love to get seller financing, I also love to give it. And with mobile home parks, when I sell a mobile home, if the person is a good tenant, they live in my park-owned home that I own, and I want, I want to them to become a homeowner. Guess what? I give them a seller financing on that home. I say, look, I know you only got $5,000 cash. Even though I want $25,000 for this, I'm going to give you a loan for $20,000. You give me your $5,000 down payment. I'm going to give you $20,000 at 10% interest over the next 5 years. And guess what? Their monthly payment now has decreased. I can lower their payment and make them a homeowner. Okay, currently they need to pay me, let's say, $400 for, for the home rental, $400 for lot rent, $800 a month. I can sell them the home, get their— get the $5,000 down payment, which helps me, so I can use that money to improve the park further, and I can make their payment $750 or $725. They have a lower monthly payment, and at the end of it, they own the home. Then they can sell it for— guess what? If a $10,000 home is kind of like a $10,000 Honda, they pretty much retain their value. Like a $10,000 home, if you maintain it, is still going to be worth $10,000, sometimes more, um, when they sell it. So it's like now they're actually paying into equity instead of just throwing it away. And because these are personal property, also on the upper end, right? If you buy a brand— if someone buys a brand new home, it's going to depreciate like a car often. Um, so if they buy a $100,000 home, the next year is probably going to be worth $80,000. But if they buy a nice old used home from me seller financed, then it's probably still going to be worth about $10,000. That's, that's what I've seen. So it's just a great way for them to save money and become a homeowner, and it's a great way for me to get a nice little check and a monthly payment from them while also getting rid of the thing I don't want, which is that park-owned home that's going to confuse the bank.

Love it. And we'll end on this question: what do you find is the biggest hurdle When adding value to a park, I'll tell you what was hardest for me so far in my mighty one park, because I've had everything that go wrong in multifamily. In my park, the hardest piece for me is taking over a mismanaged park is turning around the tenant base just to get them to even believe that ownership cares enough to do anything. There was a lot of people who just were like, either they're not paying or they're not participating. We brought in a whole bunch of dumpsters to throw out just a ton of trash. Some people are like, oh yeah, they're not going to do anything and they don't care. And it was us physically being down there, even as owners. Like, I had— every owner has been down there to the park, knocked on the door and said, here, this is what we're doing to improve the park. We need you to cooperate. So like, I have a notice here to post that says the penalties for not doing this, but really I just want to help clean up this place. This has not got a lot of love. Being able to— and it took multiple trips, but getting the communication to the tenants of this place is getting nicer, owners do care, and things are going to change. And also, if you don't participate, there are penalties. The mix of those two things, I think that was the hardest piece for us. And then once we finally got the message through, all of a sudden we don't have any non-pays and people are participating and we're building community. But that was not easy to do because when you're talking value add, I'm just like, you usually have a community of people in a park that needs value-add that is very apathetic towards the park and the ownership. Turning the culture around, I found that was the hardest part. Yawn. How about you?

For sure, that's— that is a tough part. And another thing we do is try to, you know, also like not just make it about all work all the time, but also start building more of that sense of community. So we will host, uh, a small picnic. Look, for $250, $300, you can buy a lot of hot dogs and a lot of soda and a lot of cookies and have a nice little barbecue for everyone. All right, it's free food. People don't say no to free food at the, at the mobile home park. I promise you, they're going to come out. You're going to get to hear their stories. You're going to get to hear their problems. And that's a nice way that we bridge that gap and get to know folks there, figure out what the problems are, and actually start fixing the problems they tell us are there. So in terms of other hurdles, I mean, you name it. I would say that, and I know Christian's going to agree with me on this one, and this is why I raised way more money for my current park I'm closing. But we don't, you don't realize how big some of the problems get or how costly. So not raising enough money to do the improvements has been one of ours, or just raising enough to do the initial improvement you thought you needed to, and then realizing, dang, we could really use another $150 grand here. To make this really a lot nicer.

It is so awkward to— even if it's a fantastic deal, it's so awkward to have to go back to investors and be like, great news, everything is going well, collections are out of the park, uh, however, we all need to put more money in. Like, that's just— it makes you look like a doofus is what it does. Uh, and I've had to do that on a few projects where I'm like, we raised enough to close the darn deal, and, and that was the big thing is we're gonna focus on let's just close it and we can figure out everything else. And then the figuring out It's way harder to raise capital for, hey, we're fixing a problem, even if it's really lucrative, than it is like, hey, we have a new opportunity.

Correct.

Your easiest time to get money is at the front end. Raise more than you think that you need. Correct. And make sure your numbers work with that new raise. And I've started doing that on every deal. I'm knocking out a 176-unit in Texas. Like, we're raising a lot of extra money. I don't think we'll need all of it, but it's a lot, lot of extra money. Like, we should probably start with, you know, half a million dollars of bonus liquidity. I guarantee you that money will find a way to disappear in your first year of value-add. If you're doing value-add, it's the— those little expenses. There are things that you're not going to find in due diligence that will break and will come up. Have money. If you're starting with no money, definitely raise enough money, because having no reserves and no personal money makes for an uncomfortable conversation. So everyone, if you want to join and learn more, we're going to be doing this on Thursday live every week. We're just going to do, we're going to do an hour talking about mobile home parks. We have a course, a little over 100 videos, and we'll be consistently adding to it. I just learned recently that I forgot one video, so I'll be filming that one. But so we have 99 fantastic videos in there for you guys, soon to be 100. But really excited to launch this. It's at a huge discount right now because our focus is let's go build the community and get our first wave of people in. So if this is something that you've looked into, something you're either adding to single-family or multi-family and you want to get into mobiles, this is a project that it's an honor to get to do with you on. Check it out, uh, link is right here on the screen, mhparkacademy.com. We'll see you guys all on the next episode.

Thank you for joining. Thanks, Christian.