EP 585 – Why You Should Invest In Mobile Home Parks With Kevin Bupp

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This is the no Closers show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Notes, Scott Carson.

Hey no Nation, thank you for listening to the no Cliff show podcast. As always, Scott Carson here. Really excited for this episode. After some rescheduling back and forth, we're honored to have my buddy Kevin Bupp join us on here. Maybe you guys may know him from years ago and fix and flips and rentals in apartment buildings, but Kevin has really been investing in lately the asset class of mobile homes and actually parking garages, parking lots as well too. So I'm really enjoying this episode. Really enjoyed. Took a lot of notes. If you're looking for some alternative classes of investments to look into some high cash flowing, low labor intensive assets, you may want to listen into this episode on mobile home investing and parking lot investments. I was really blown away by this episode with Kevin. Took a lot of notes and I'm sure you will do the same thing as well too. So if you see anything out there non performing on either these two asset classes, hey, this is the episode for you. Good morning, good afternoon, good evening everybody. Welcome to this episode of the no Closure Show. As always, Scott Carson. Excited to be here with you today. We've got a very special guest, somebody who I was on a podcast years ago, one of the first podcasts I was ever on and I'm glad to have him on today because he's doing some amazing things out there that I'm sure many of you will want to take some notes on. You probably want to follow up on this guy as well because I know a lot of people are looking for affordable housing out there. A lot of people are looking to invest in that aspect class, that asset class along with some other things that this guy's got rock and roll on. So this guy is the founder and CEO of Sunrise Capital Investor which invests in mobile home parks, parking lots, apartments, offices and single family homes all across the United states. He has 16 years of experience in an up and a down market before in educating investors to locate, acquire and create higher than average returns from the widely misunderstood niche of mobile home park investing. He shares his expertise through the Mobile Home Academy and also as the host of the Real Estate Investing for Cash Flow podcast. You want to definitely check that out Wherever you listen to podcasts at, that podcast has become one of the hottest real estate podcasts on itunes or wherever you listen. So we're honored to have the man, the myth, the mobile home investing legend, Mr. Kevin today. How's it going, man?

Scott? I'm doing great, bud. Thanks for having me, man. Very much looking forward to this. And it's funny, I need to update that bio first off. Now, I've aged since I think I wrote that. And so I'm going And, I think, 19 years now. And I can now honestly say that I've been part of the rollercoaster, Right. I've actually played the up, crashed, gone down, come back up again, and now we're going back down, hopefully, you know, not back down too, too far. So I've been through a now two cycles, I guess you could say, or we're not really into this one yet, but I think it will be a cycle when you look back at history here in a couple of years. So in any event, man, I'm glad to be here. Thanks for having me.

Hey, man, glad to have you as well, man. And where's home for you again, Kevin? Where do you live?

I live in Clearwater, Florida.

Clearwater, Florida. Gorgeous area, that neck of wood. As I say, God's waiting room most of the time. So For Florida. But anyway, let's dive into this a little bit. So we were talking beforehand, just kind of catch up a little bit. You've been through an up, and you were saying something about 2008, kind of handing your business, handing your ass to you. So a lot of investors, and you and I have seen this a lot before, I think same thing. I went through a rough time back then being in the mortgage business and the fix and flip side and having my ass handed to me as well. What lessons did you learn from that? More so than anything else that helped you rebuild, and it's something that's helped you kind of maybe sleep a little bit better now that we're probably going to see somewhat of a downturn.

Yeah, that's a great question. It's one that I've reflected on many different times over the. Over the years. One was to tamper my damn ego down. Right? My head was pretty big. I was in my mid to late 20s at that point, and I only knew things going really well. Right. And I don't come from a big education. I mean, I literally went to community college, grew up in a small town, attended bar through community college, grew up in blue collar family. Right. And so we had everything we needed. We didn't have a lot, we didn't have a little. And so I'm not going to play the whole poor role here, but we surely didn't have a ton. And so when I started making a lot of money on my own, I was very proud of that. And my ego got in the way and I felt like that I couldn't be beat. And I got my, as you put it, my ass handed to me in 2008. And there's a couple things that ultimately played out. And Florida was a. All my investments were in Florida. Florida was kind of ground zero. It was one of the ground zeros. There was a couple other throughout the country. But it got hammered quite severely. And I was heavily invested in single family homes. I had a fairly large single family home, portfol and then also a multifamily and a few other miscellaneous commercial assets. But the single family stuff just. It's what I had been taught originally and it's what I kind of built a system around. And we get complacent things once we see things going, you know, very good, we get comfortable, we're making money, the system's working. However, I knew that there was a couple weak points in buying large portfolios of single family properties. And a couple of those were in my business at that time, were the inefficiencies. You know, we own stuff in like five different counties. It was spread out, Our maintenance crew running from one house to the next house, our leasing guys running from one house, the next house. I mean, it was a very inefficient model. And in addition to that, how our debt was structured, we had a lot of cross collateralized loans. Typically we'd get private money, we'd buy eight to 10 homes and then go get a commercial loan or line and basically pay off that private money, cross collateralize those eight or 10 homes. And we had a bunch of different tranches like that of commercial debt. And so number one, inefficiencies with the single family model. Number two was the cross collateralization. And also the type of debt we put in place. That was one that really hit home once things started going south. Fairly low leverage. I mean, across the board we're at like a 66% loan to value. And so in the grand scheme of things, we were pretty safe. However, Florida, most of our properties within like eight months literally were negative equity and they lost all that value. But really the part that hit us hard was the type of debt we put on. Most commercial debt is it's got a five year balloon or reset in place. In addition to that, it's shorter amortization terms and just those factors and the timing of it all. A lot of our loans were coming due right around that time and there was no equity there. We had some, some terms in a few of our loans in place that if, you know, the values fell below a certain point, they could call loan due. So we just had a kind of a disaster in our hands. And so just really getting more privy on loan terms was a big thing for me. Really identifying those inefficiencies in the single family home side of things was a big part of it, of just the learning experience. And you know, the funny thing about this is, is that the inefficiencies I identified a few years before all this went down and we started buying multifamily properties. But I never stopped the single family machine just because it was there and it made it to me, it made sense. And on paper it looked like we were worth a ton of money. Right. And it just never, it was never as stable as my multifamily or commercial properties. And so just looking back, I wish I would have made the hard decision and made a shift and got away from my comfort zone and actually put all, not all my eggs in one basket or another basket, but actually, you know, shifted or pivoted when I knew that the time was right. I just didn't want to get out of that comfortable complacent zone. And so those are some of the things that made myself aware of. Another one was just really being honest with yourself about are you a cash flow investor? Like everyone talks about passive income and investing for cash flow, but if you make up your own definition of that, are you being honest with yourself? I think that I found myself in a situation where we did cash flow, but to my standards today, it was nowhere near sufficient. It was not in a position to where there was any hiccup that that cash flow wouldn't quickly go to a negative state. And so more so, I think I fell in love with the equity and what I was worth on paper, at least on the single family side. Gosh, I've got $30 million of equity that I built. I've done such a great job and I' cash flow. However, when there was a little bit of blip on the radar screen, things went south very quickly and turned to essentially instead of making cash flow, we were making up the negative debt payments and our complete model imploded on us. And it was a very, very ugly Time. So anyway, the last thing here before we can move on is this, the scalability of single family homes. What I realized was that I wasn't married back then. I had a lot of time on my hands and I enjoy what I do and I really loved hustling back then and the amount of energy it took me to put together a portfolio of like 100 when things crashed out. 122 single family properties that I owned. The amount of energy in many years it took me to put that together. I could have just literally spent a couple months and going to buy 120 unit apartment complex and accomplish the same thing. And so I look back at how I could have better spent my time as far as scalability and vowed to never do that again. Right. Moving forward that I was going to invest smarter in a much more scalable business model. And you know, that's ultimately how we found out about mobile home parks.

You showed up, got the scars and the T shirts to go along with that, huh? Right?

Yeah, yeah, yeah, a couple of them still.

Don't we all, man, don't we? But that's the thing is that I think you learn more about yourself and we all fall in love with those ego metrics, as we like to say, you know, oh, equity values on the thing there. But when it comes down to it, you're right. We don't really shift off of center unless we've got to get off outside of our comfort. Unless we're having something affect our comfort zone. It's very comfortable to keep doing business as normal. You know, I talked to a lot of investors, a lot of people, same thing, and they've been doing the same thing and they're wondering why I can't find single family homes. The REOs aren't there anymore. What do I do? I'm overpaying now. And when you see you start adjusting your numbers to try to find deals, that's really the kiss of death. You've got to adjust and evolve to something. So you evolved into the commercial side, the apartments and the mobile homes. Let's talk about that. Because I think that's such a valuable asset class to be in, especially right now with affordability in homes being difficult to find, people struggling. But it's a, it's a really great business. Let's talk about kind of your pivot to the mobile home side.

Yeah, yeah. Well, I mean there's, there's always been a shortage of affordable housing in the U.S. right? This isn't a new thing. And that's Even all the single family portfolio or the apartments owned back then was all B minus C class type stuff. So it was all workforce housing, whether it was single or multifamily. I like that space. I understood the demographic that we were serving and I felt very comfortable and I knew how to manage that. I guess you could say a little bit more challenging tenant base or it could be a little more challenging with tenant base. At least it is to those that are used to managing high end newer properties, A class type things. And so number one, I took a couple of years away from real estate. I wish I wouldn't have, but it was really damage control for a couple of years, just going through the court system, judgments getting served on a daily basis. I mean it was just an absolute nightmare. And as we know, the courts are so backed up that this thing just drug on forever. And so I took a couple years away from real estate and I started a few other businesses non related to real estate just to make money and keep my head straight. But about 2011 I just got the itch, man. It just never left really. And the fire was still burning and I knew that I wanted to get back in and I wanted to I guess rebuild this empire that I thought I had. It really wasn't an empire because it crumbled pretty quickly. So I wanted to build something a little bit more of a stable foundation. And looking back and reflecting, the one thing that seemed to work were my multifamily properties. The only reason that we had to get rid of them is again, we had a lot of local bank commercial debt on them. And when those notes came due, I'd already defaulted on a lot of single family stuff and I literally couldn't get new debt. Number one, debt wasn't really available. Number two, my credit was shot by that point in time and we pretty much had to fire sell them. So we had to get rid of them. We were forced to. But looking back, I realized that that was a much more efficient business model. And so that was the plan, that was the original plan is to actually get into multifamily. And what I had done for a period of like a year, 2011, 2012, I went out and I just spent as much time as I could with not only folks that were multifamily that had kind of made it through the downturn, but folks that had maybe just started getting into the space post recession phase. I wanted to learn how the game had changed because when I say that I stepped away from real estate, I literally, I didn't Pay attention to anything other than damage control and just keep my mind straight. Like, you know, lending had completely shifted. Everything was, it was a new world. And so I spent a lot of time educating myself on what this new world looked like and just how I was going to create, create this business plan and move forward. And during that educational journey, I guess I was introduced by a good friend of mine to a gentleman by the name of Randy. And Randy was a local, had been a banker for like 30 years. And he retired from the bank and bought, ended up with three mobile home parks, fairly large mobile home parks here in Florida. And my friend was like, you know, you should just go have lunch with Randy. He's a smart guy, maybe he can give you some insights. He's been a banker for many years. It wasn't really to learn about mobile home parks. It was a school. Meet Randy, he's a good guy and I love meeting new folks and, and as they say, your net worth is your network, right? And Randy had been quite successful in his time. So I had lunch with Randy and that two hour lunch, basically it turned into a why mobile home parks and why they make more sense than multifamily and why I'm stupid because I want to buy multifamily. I should be buying mobile home parks. Anyway. He's a really nice guy, funny guy, but he just basically he piqued my interest with many different things about that niche that I had never even considered, I'd never considered as an investment. And he, and he just opened my eyes to something I had never realized before. And so after I left that lunch meeting, I vowed that I was going to buy a mobile home park. I either wanted to prove or disprove how great these things were. And this is 2012. And that's what I did. I left that lunch, kind of gave myself 12 months. I'm of the mind that if you're going to pivot and get into something new, even if you're an experienced real estate investor, if you want to go from buying multifamily to self storage, you should pretty much allow yourself a year. And this is like deep dive, like boot camps, reading as much as possible. And if it happens sooner, great. But like this shit doesn't happen overnight. I mean, it takes time. And that's what I did. I dove in and it took me 14 months to buy the first property. I bought one in Atlanta. And that was again, that was actually, it was end of 2012 when I bought that first property and still own that one today. And Worked well, bought the next, bought the next, and we built a business out of it. Now we own parks in 13 different states. And that's been a core business over the last, I guess, seven years. Nice.

That's a beautiful thing. Now, let's talk about those a little bit. You said 13 different states. Obviously. I'm sure Florida is probably your favorite because it's there closest to you. Yes or no?

You know, I love Florida, and I would love to own more in Florida. We do own one in central Florida, but Florida's very, you know, for the grade of asset that we like to own, for the quality and for the type of returns we like to receive, it's very hard to buy that quality here in Florida and get the type of returns that we're seeking. So we only own one in Florida. I'd love to own all of them in Florida. It'd be much easier. However, that's not the case. So we have stuff all the way up in the Northeast, New York, Michigan, We've got stuff as far west as Oklahoma and Kansas, and then we've got stuff in the southeast, Alabama, Kentucky, Georgia, North Carolina, things like that. So we're kind of all over the eastern seaboard, and then we do venture out west a little bit, but no further than Oklahoma.

What makes you excited about mobile home is there? I mean, when somebody's seen a park, what's some of your things? You're like, I really like this. Or these are the things that really kind of get your blood flowing.

Yeah. So one of the interesting things that Randy brought to my attention, this has changed a little bit over the last seven years. Our niche has gone from being under the radar to very much above the radar to where now over the last couple of years, lots of private equity, institutional players are not just tiptoeing into our space, but they're coming in with hundreds of millions of dollars trying to deploy it in this asset class. So it's definitely shifted over the years. But anyway, back then it was very much still a mom and pop, unconsolidated niche, meaning that there weren't many large operators that owned a majority of a market or of the market in general. And so a lot of these mom and pops, either they were first generation or second generation. A lot of these folks were just had a decent Idea, you know, 40 years ago, 50 years ago, probably their friends probably made fun of them when they built these things. And ultimately they turned into cash cows for them. They owned them free and clear. However, what we ran into is a lot of these mom and pops just didn't do a great job of being a business owner. Right. You know, some did, but a lot didn't. Right. They didn't really view it as a professional business. Their expenses were out of whack. They, the rents weren't anywhere near the market of where they should be because they became friends with the residents, what have you. And there's been many parks we bought that hadn't raised rents in like 15 years. That was a very common, very common theme. And so one of the things that attracted us to the space was this fragmentation of this niche and that we could buy assets that had a lot of value add potential from these existing owners that were at this point in time in their life where they're aging out of them. Right. And so the average age of owners that we've purchased from, at least in the first five years, was like 82 years old.

Wow.

Either they're at the point where maybe they're having some health issues or maybe they're just tired. So a lot of these owners, they worked in the parks. I mean, they just didn't own it like you and I might, as a professional business. They were out there like unclogging drains and they were the Roto rooter guy. They were mowing the grass, they were collecting rents, they were doing everything. And a lot of them were just getting tired. And so I saw that as the biggest opportunity back then. Even then, multifamily was still very consolidated by a lot of large institutional players and professional operators. Mobile home parks weren't. So I saw that as a big opportunity for us to get in and buy assets that we could add value to very quickly. We could fix those very minor problems and buy something that truly cash flowed and offered a much higher return than that of a traditional apartment complexes. So that was one of the big things is if you took any city in the US this is kind of the example Randy gave me that really piqued my interest. You could. So Tampa, Florida, for example, 100 unit C grade apartment complex. What type of return you might be seeking there, you might be paying back. Then it was a 7 cap for that, that same 100 unit mobile home park, same grade C grade in the same area. You could expect to get that for anywhere between a 9 and 10 cap. Again, this is seven years ago, so different game today. But you're talking a 300 basis point yield spread on average as far as returns are concerned, from multifamily up to mobile home parks. And that was very intriguing to Us, I like returns. And seeing for the same effort, I could get higher returns. To your original question of when we see a park, what excites us? That's it. That's one of the big things I know that I can go in. And most of the problems in mobile home parks are fairly small and easily fixed. For example, infrastructure. Back when a lot of these parks were built, water and sewer wasn't very expensive. And so the traditional model was when these park owners built these communities, the people would move their home in. You know, the residents own their own home, so they just paid to rent the lot. And included in that lot rent was also the water and sewer charge. Back then, the infrastructure was brand new. Water and sewer wasn't very expensive. Nowadays, water and sewer is incredibly expensive. The infrastructure has aged as well. So not only is water and sewer much more expensive, people abuse it, but now you got like pipes that are leaking and water that's going into the ground and not going through a faucet. So I could easily look at a P and L and say, gosh, I could literally save that park $100,000 a year by doing two things. Number one, fixing the leaks, which might cost me $10,000, and number two, spending about another $20,000 and installing sub meters at each one of the lots and billing the residents back for their usage. And typically we'll see anywhere between like a 34% reduction right then and there, because now they're having to pay for what they use. And so little things like that that are, they run rampant in our niche that are easily fixable. And they also, they excite me when I see that in the P and L, because I know that we can fix it, fix it super easy.

A couple points there, mom Paul. We see that a lot of places where people get excited about having a business they're gonna retire from, and then that business ends up money, and they never end up retiring because they're working a job all the time. Similar in the self storage industry, a lot of mom pops are running self storage facilities. It's turned into a job versus a hobby for the most part.

Yeah, I mean, you bring up a good point. Self storage, I'd say that that was like the original mom and pop frontier. Mobile home parks were very similar in nature, and both of them have been consolidated greatly over the past seven or eight years. But there's still a lot of mom and pops out there. I guess the one challenging thing or the one big difference with mobile home parks and self storage is that in mobile home Parks, it's the only asset class that has a diminishing supply. That creates a very pent up demand from supply demand economics. Literally the number of parks is decreasing every year either due to redevelopment, because when it was built 50 years ago, it was not in the path of progress, it was out in the middle of nowhere. And now the city, city has built around it or the path of progress is running through it. And so there's a higher and better use of that land. Developer buys it, builds a shopping center or something of that nature there. And then also a lot of parks just, they kind of fizzle out. A lot of operators are bad operators and they just, they run them into the ground so bad that it's just not worth building back up or restarting again and they just go away. And so it's. Everyone's fighting for the, the same number of parks that are, that are in existence today. And so it makes a little bit different than self storage. Self storage has gotten new inventory coming on the market each and every year. Lots of it, you know, lots of it being built.

So is there a unit or a number of pads in the mobile home park that you kind of limit that you guys are looking at or are you looking at all types or.

Yeah, and our business model has evolved over the years. I mean we, the first one that we bought, which we still own today in Atlanta, that one's a small one, it's like 30, 34 lots today. We won't really consider anything that's less than 100, you know, unless it's. If it happens to be near one of our other communities, we'd probably consider smaller. But 100 is about the minimum that we'd be looking at. The bigger the better. You know, you just scale scales of economy and lots of efficiencies with a larger operation that makes sense.

Now you talked, we were talking a little few minutes earlier about how you're also looking, diving into a little bit different asset class that kind of falls in that. Let's talk about that kind of evolving here. What is that?

Yeah, no, no, absolutely. So, yeah, we are still hot and heavy on mobile home parks. We intend to own and operate them for the foreseeable future and we'll continue buying them. But one asset class that it came to my attention about three years ago, I interviewed, interviewed a guy on my podcast that not only owned and operated, but he was a very large, I think the largest broker, transactional broker in the niche. And it was parking lots. So parking lots and parking garages basically. And it was a very intriguing interview. It was one of those things where you know when you hear an idea or you talk to somebody and they give you a piece of knowledge that you just didn't know before. Like, you literally, it just never goes away. You forget. Literally someone tells you something, next day, you forget it within two minutes. But this one thing just sticks in the back of your head and it never goes away. That, that one thing gnawed at me for a good year and a half and we were never in the position to pivot or add a additional asset class into our business model. But last year we prepared for it and we really started digging our heels in and learning as much as we could about that niche in that industry and got our first couple of parking lots under contract now. And so there's a couple intrinsic benefits that exist in that niche that were incredibly attractive to us. Number one, it is even more fragmented than mobile home parks were. So 70% of parking lot owners own one parking lot.

Wow.

So that means lots of mom and pops. There isn't anyone out there that has really gone through and consolidated that niche. One of the other big ones is that 99% of the folks that are in this space are on the operational side and they don't own the actual lot. And so most of the folks that are out there, like if you go park in a downtown area, wherever you might live or where I live, most of the time the individual running that parking lot is a management company. And the management companies don't own these lots for the most part. There's a few that do, but for the most part they're just management companies and they don't own the real estate. It was very bizarre to me so much that I literally went to the largest parking lot expo in Orlando last year. 20,000 attendees. This is huge. The expo hall was massive. There was like 500 vendors there. Not one of them, not one of them had any outbound focus towards the owners of parking lots. It was all technology driven, all geared towards operators, management companies, you know, creating a more efficient, dynamic pricing model for parking lot operators, what have you. But no one was talking about the ownership side of things. There was one breakout session, one out of this whole four day event, one breakout session that was basically saying, if you guys are out there operating these parking lots, why aren't you getting options on these things? Why aren't you buying these things? Right? You should want to own the real estate. And so, so here's the beauty of the business model. There's a couple different models that are in place. But the one that attracts us the most, and the one that is the most prevalent is we buy a parking lot and basically we find an either local or regional or national operator that operates in that marketplace. And they typically will sign a five or ten year lease and they handle everything literally all the day to day. And typically there's a 2 to 3% escalator in there on an annual basis. And it truly becomes a passive investment from our perspective. And the beautiful thing about this being that a lot of these mom and pops own these parking lots. There's still a lot of the mom and pops that still operate these things themselves. I know you've probably seen those, they call them honor boxes, where you like to like put your dollar through the slot and things like that.

Throughout downtown 6th street we have honor boxes.

That's it. That or maybe there's a parking lot and tenant in the summertime's collecting money. Half that money's not making it to the owner. Right. I mean there's a lot of just like value add and multifamily value add and mobile home parks. That's value add in the parking lot niche. And so I'll give you an example of a park parking lot we have under contract right now in North Carolina. It's, it's owned by Doctors, owned for 11 years. He bought it for about $300,000. It's at a signalized corner in downtown Wilmington. Phenomenal market, right on Restaurant Row. I mean it doesn't get any better. It's like, it's pretty small. It's like 20, I think 24 spaces, 25 spaces in total. And his son was, was running it for, for many years. His son, based on his P and L. Is that the most he ever made on it on an annual bas, like, you know, $40,000 gross or something like that. And I'm sure his son probably even took some of the money, used it as spending money, and then he handed it off to a local mom and pop operator. So there's also management companies that are very mom and pop oriented. They don't use technology, they're just old school and they still have the same issues that the old owner does. Right. As far as operations. And that operator made him about another $20,000 a year. Well, that. So today he basically he's selling it for 695,000. That's what we have it under contract for to him. Right now he's making $2,700 a month on a lease on a year to Year lease. You didn't want to sign a long term lease. I basically took that to the biggest operator in that marketplace. They manage like 30 parking lots there. They use technology and they know exactly. They can very quickly look at that and they can assess what they would be comfortable paying on annual lease. And we got an LOI before we even tied up the lot. We got an LOI for $75,000 a year on a lease with 2.5% escalators because they're going to come in, they're going to put a digital payment system, they got enforcement, they're going to find people when they go over their limit or don't pay what have. And so basically the upside there was more than double of what it's or I guess what's that work out to be about double of what he's currently being paid today just by really introducing technology. And I talked to that operator about. He wasn't supposed to tell me. I was like, what do you guys think that you're going to make? Because anything above that $75,000, that's your profit. Right. So they're expecting that lot to do anywhere between 105,000 and $120,000 of gross revenue a year based on they manage like, you know, 600 parking spaces in that area. So they can do the quick calculation. So anyway, there's a lot of opportunities just like that in the parking lot niche. And for us, we don't have to add any operational team to our business to add that to our portfolio. We can go buy $20 million of parking lots and we wouldn't have to hire a person, we don't have to hire another person or property management team. We don't have to do anything. We just have to find an operator, sign a lease. Just like owning a triple net CVS or Walgreens. It's a beautiful thing. So yeah, that's worthy of a. Enough rambling. But that's, that's why I'm not rambling, brother.

I think everybody listening to this episode is like, what?

Yeah.

Basically you're saying we. Look, if you do some quick math on that, you're saying that the doctor was getting ready. Yeah, it's a 10K. It's a 1011 cat for you. And he was getting about a four cat, four to five.

He's right. He's ripping us off based on he thinks he's getting us. I mean to him he is stung at the right. He's a very smart guy. I just don't, you know, some of These, they just, they get stuck in their ways and no one can do it better than them or the current company that's doing it. And they don't believe that people don't carry cash anymore. You know, I literally never have cash on me. I just have a card. I've been that way for years. I probably should have some cash for, you know, just in case, but I just never do. If I can't pay with a credit card, if I go to a. I hate restaurants I go into where it's just cash. It drives me crazy if they just accept cash because I want to pay with my card. Right. And so, so they're leaving so much on the table right now. And there's a lot of other parking lots just like that or just again, there's other operators that might be running them that are just mismanaging the heck out of them. So we're super excited about it. At the end of the day, most parking lots, this applies about 90%. This is assuming that's in a central business district, downtown area. This isn't out in the middle of nowhere. This is in the core of a downtown market. As it sits as a parking lot, there was no lower use than what it currently is today. And so although we're not speculators, we're not going to buy for future development value, it will never be worth less today as a parking lot than what another use could possibly be, such as a high rise, office building, retail center, multifamily, what have you. This current lot, it's got height zoning up to 80ft. So I mean, you can go vertical with it. And we're not really in that game. I don't have an interest at this point. We're going to buy it and use as a covered land play, make cash flow, very secure investment for our investors again. And most of the time it's a double or triple net. So it's a very clean, easy deal to manage. And then 10 years from now, if a developer wants a joint venture and go build something and help us even more multiplier money, then we might be open to it. But in the interim, we're going to own a piece of land in a core part of downtown that unless you're just buying in Detroit, like a declining area, like the wrong side of Detroit or something like that, then you should do pretty well in the long term because they're not making any more land, especially in downtown areas.

That's the truth. Now, are you financing these, the parking lots with private money or are you Looking for institutional debt as well on that to finance it.

Yeah, that's a great question. So how we've always done our business, at least over the last four years is we typically do it in a fund structure. So we've just closed out our second fund last year. It was all mobile home parks. And so we've only bought mobile home parks up to this point. But we are working on another offering right now which will be rolling out here in the coming months and we always do reg D506Cs and this offering will be a little bit different. It'll be what we're going to call as a hybrid offering. So it's going to essentially have mobile home parks and parking lots. Now, as far as the debt's concerned, I could tell you what we've done in the mobile home park space. Depending on the deal, we've used agency debt. So Fannie and Freddie, we've got some CMBS loans and we got some bank loans. Depending on again the deal, location, size, what have you. We keep very low leverage as far as the parking lots, smaller lots like the one I just gave you an example of our intent based on how we're buying it. We're just going to buy it all cash. I mean how we feel and knowing our investor base. The only thing that kills real estate, it's not a downturn, it's not the lack of your rents coming in, it's your debt. Right. The debt is really the only thing that could take a real estate investment down now, if you get to like the bare bones of it. I mean, I guess if you had no one paying and you couldn't pay your taxes or what have you, then that could possibly take it away as well. But for the most part, debt is what upsets a real estate investment. So. So our initial intent, we haven't fully figured it out, but for the most part we intend, unless it's a huge asset, 10 plus million dollars. Our intent is to buy the parking lots all cash and not put any leverage on them and then put the normal type of leverage that we would on our mobile home parks. And the blended two together should create a great deal of low risk investment for our investors and offer us a lot of flexibility as well in the future, should we want to recapitalize or tack on a line of credit, what have you. It just gives us a lot of flexibility to run with. So I love it. Don't know the full answer to your question yet, but that's what our intent is.

That's a full Answer.

Yeah.

Now you also we talked about this in your buy a little bit. You've got the mobile home academy and are you still teaching classes on that stuff?

Not so much. I still have a podcast so I have a dedicated mobile home park podcast. Still still do the show. I think there's over 100 episodes up there. I don't do it as often as my main commercial real estate show. You know we, we got really busy a couple years ago. We launched at Academy and I, we still sell it. You have to kind of dig for it. I don't advertise it a bunch help people on a monthly basis and we still have students. But it became a little bit of a, I want to call it a burn but it pulled us the opposite direction of what we need to be going with our business. And so I found it very difficult, maybe I did something wrong but I found it very difficult to run two full fledged businesses. Educational and also the investment side. I know other people have done it very successfully. I didn't do it all that well. I didn't feel. And so I just scaled back. The educational side totally makes sense there for you. Now you do both. So I should probably just talk to you about how the heck you do it.

Systems, it's just like your business. You got to run systems and be dedicated, you know that. But you got enough friends in the space that do a good job and you just learn. You're right though. When it comes to making hay sometimes you've got to put the educational side to focus on the deal flow because that's it gets hot and if you're with what you're doing mobile homes it's totally makes sense because that's. That is a hot market. I mean it's gotten even hotter the last couple years because the big need for that and I mean we see that in here in Texas. We see that in other areas. We see that from the different banking relationships that we have as well. Whereas you know the mobile home class was a portfolio style loan with institution, stuff like that. Now banks are looking for that kind of stuff. They're looking to add that. They see the value.

Absolutely. Yeah. I mean the first couple of parks we bought, you know, it was either us having to buy it all cash or get a hard money loan or you're getting to owner, owner finance it because it was like beating your head against the wall to get a bank to understand that niche. I mean I remember going through that struggle and now the banks are throwing money at that asset class which is kind of interesting how the tides turn a little bit. In a good way, right? I mean, in a good way. It's a beautiful thing right now.

With everything going on in the market being these days, how are you kind of using what you've learned in the past and seeing what's going to happen? We talked before. We probably won't see a full fledged three or four year recession. We'll see definitely a 12, probably an 18, maybe 24 months at the max, I think. What are some of the things that you and your team are looking to look for more as opportunities in this market?

Yeah, no, that's a great question. And yeah, I mean, first and foremost, we're just making sure that our current portfolio makes it through these rough couple of months or however long it might play out to be. I don't want to call it damage control yet. And so I'm going to be optimistic and just think that everything is going to work itself. But however we got the plan in place and we've been really strategizing behind that. We never want to get caught in a state of fear right to where you're just paralyzed and you're only day to day. This is going crazy. I want to use this time and that's what we've done over the last couple of weeks. Our team has really used this time to strategize this parking lot endeavor. You could say it's not the right time. You could say that we have a million other things going because now we really do with what's going on in the world. However, we know that this will pass as with everything else out of this, I think there will be opportunities, there will be pain. Unfortunately, I think everyone's going to feel a little bit of pain, some more than others. Businesses that were already somewhat on unstable ground will get shooken up to the point where they might not be able to fully rebound. Surely don't wish on anyone. But we know the old adage is you want to buy when there's blood in the streets and we'll probably have a couple of drops of blood here and there, but we want to look for those opportunities to deploy capital responsibly and find things that we like buying below market value. We like buying great opportunities. But I will say I want to make sure that people understand this though. I see Facebook feeds left and right. I'm a part of many different groups just like you are. And I see people literally for the past like two years have been keeping money on the sidelines, which I'm not going to say it's a bad decision for them. But I'm of the mind that you can find great deals if you know exactly what you're looking for. You can find good opportunities in any market. You just have to look a little hardy. You might not find the volume like the last two years that you could have five years ago. You just got to work hard. And how I've always felt is that if you can get really good at finding what it is you're looking for and creating good, awesome deals in really hard markets where there's a lot of competition, then when things happen like we're in right now, we're experiencing, you should be, in theory, you should be able to absolutely crush it when things loosen up a little bit and it kind of weeds out, you know, some of that competition, like the bottom competition, that was already unstable and they were just creating competition for competition's sake. Right. So, anyway, anyway, I'm excited. I'm optimistically excited about the coming months. I wish everyone the best health and I hope everyone can pull through this. And our economy, the people, what have you, will bounce back. But I'm looking forward to what opportunities might come out of it. And we'll be ready to roll. We'll be ready to deploy capital and buy deals. Parking lots and mobile home parks. That's what we'll be looking for.

There you go. What's the best way for our listeners in not nation to tap into you, to follow up with you or connect with you? What's the best way?

Yeah, so my website, kevinbup.com you can go there. You can listen to my pod, my main podcast there, Real Estate Investing for Cash flow on that website. I've also got links to our company website, which is Sunrise Capital Investors. So you can get there. You can get to all the different things that I do from my main website and then obviously find me on Facebook or LinkedIn as well.

Awesome. We'll have all those links in the show notes over@weclotheners.com or the podcast guys. But take some advice from Kevin there. You know, if you've been through a downturn and gotten kicked in the teeth, you can recover. Like, you know, a lot of people went through rough times. Some people are going through rough times right now. But don't just sit there and not keep moving forward, not taking action. As we said, there's opportunities in both markets. We've said that before. Like, hey, instead of sitting there griping about that there's no deals, why don't you get out and market a little bit or change your marketing up a little bit, get things rocking around, rolling. So, Kevin, thanks so much for coming on the Note closure show. Really appreciate it. We're gonna have to have you on in the in the future again. Talk some more about some of these different asset classes, too. Does that sound cool?

Yeah, absolutely, bud. Thanks for having me here. And I need to get you back on my show as well. It's been way too long.

I think, like June or something like that when you. Awesome. Thanks so much for coming on, Kevin. All right, guys, go out, take some action, and we look forward to seeing you all at the top. Everybody.

Bye.