Ep # 131 – Kevin Bupp on Mobile Home Park Investing

  • Involved in over 1000 lots in mobile home parks.
  • Mobile Home Parks vs. Apartments.
  • There will always be deals.
  • Mobile home parks rent is similar to D class properties.
  • Mobile Home Parks have the lowest default rate of any commercial asset type.
  • Average lot rent for mobile home parks.
  • Why mobile home parks have a bad reputation.
  • Managing mobile home parks.
  • Should mobile home parks own the homes?
  • Mobile home parks are the only real estate asset that has a diminishing supply.
  • Returns are higher for mobile home parks.
  • What size mobile parks to look for.
  • The biggest thing to look into when investing in mobile home parks.
  • To contact Kevin visit http://www.kevinbupp.com/
  • Connect with me on Facebook at Rod Khleif.
  • Text Rod to 41411 or visit RodKhleif.com for a FREE copy of my book, “How to Create Lifetime Cash Flow Through Multifamily Properties.”

Watch on YouTube!

Do you want to learn more about Multifamily Real Estate Investing? Work with Rod in the Lifetime CashFlow Academy's Multifamily Course & Coaching Program

Full Transcript Below:

Ep # 131 – Kevin Bupp on Mobile Home Park Investing

 

Welcome. This is the Lifetime CashFlow Through Real Estate Investing Podcast. This is where you’ll learn strategies to help you achieve lifetime financial freedom through real estate investment. Your host, Rod Khleif, has owned over 2,000 homes and apartments. And he brings experts in all aspects of real estate investment and management on to the show. Now, here’s your host, Rod Khleif.

 

Rod Khleif:               A couple of quick things. We are now at over 1.3 million downloads for this podcast, and it just continues to grow. I just wanna say thank you, sincerely. Everyday, seems like I get an email or handwritten thank-you card from someone. I’ve even got this bulletin board in my house where I put them on the wall. All I can say is thank you, sincerely.

 

Now, I’ve spoken with or communicated with close to 1000 of you and adding value to you guys has honestly made me reconsider my own mission and purpose in life. Now, many of you have asked me for coaching or mentoring, or to create a course or some training materials.

I want you to know I never started this podcast with the intent to do that. But after so many of you have asked me for it and I’ve gotten so much pleasure out of it, and gratitude out of it, I finally decided to go ahead and do it.

 

In a few weeks, I’m launching an awesome course and coaching program. My goal is to shorten the learning curve for you guys and help you crush it in your lives, and in this business, and build your own lifetime cash flow. If you wanna get some information on my course and coaching when it becomes available, text the with the CRUSH, C-R-U-S-H to 41411.

 

Also I wanna mention my book, it’s still free. Not much longer, I know I’ve been saying it but it is done. It is getting the final editing done right now then it’s going on Amazon. I’m gonna have to charge for it. Every review I’ve gotten for that book has been fantastic. It’s 200 pages, if you haven’t gotten the copy you must get it, ‘cause it’s really gonna add value to you. So just text the word Rod to 41411, or you can even go to my website rodkhleif.com, k-h-l-e-i-f.com, direct download it there.

 

Lastly, I’ve a favor to ask you. If you’re getting value from this podcast, if you feel like I’m adding value to you, I would be very grateful if you took, literally, two minutes, went to iTunes, and left me a 5-star rating and review. The reason being is, it makes a huge difference in our ranking, and our ability to get great people for me to interview. So I wanna thank you in advance if you do that for me. Alright, let’s get to it.

 

Rod Khleif:               Welcome to another edition of How to Build Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif, and I’m thrilled you’re here. Today we have a rare treat, I will tell you. The man were interviewing today it’s one of my best friends. He is guy that got me into podcasting actually. I kind of gave him a hard time about it when he got started. We actually have worked together, and we were working together when he got started.

 

He has just built something extraordinary. He’s got two of the top-ranked podcast on iTunes, Real Estate Investing For Cash Flow with his… and his name is Kevin Bupp, and his other one is MHP Academy. I’m sorry is that what it’s called?

 

Kevin Bupp:             It’s Mobile Home Park Investing Podcast.

 

Rod Khleif:               Mobile Home Park Investing Podcast. So he’s got one specific to mobile home parks, and one for commercial real estate. They’re both top-ranked. Kevin, welcome on the show, buddy.

 

Kevin Bupp:             Thanks, Rod. Thanks for having me man. Looking forward to it.

 

Rod Khleif:               Likewise.

 

Kevin Bupp:             This is long overdue, right?

 

Rod Khleif:               Way overdue.

 

Kevin Bupp:             [chuckles]

 

Rod Khleif:               Kevin owns… he’s involved in over a thousand lots in mobile home parks. A 12 to $14 million value, and adds a ton of value. Now he’s got an incredible course and coaching program that he just rolled out. I wanna introduce you a little more Kevin, because I kind of got fumbled there one on the podcast names.

 

There are people in your life that you meet, and this gonna be a little gushy but it’s the truth. I want people to hear this, there are people in your life that you meet that you realize have total integrity. I can tell you in my life I’ve only met two or three of those people. Kevin is one of those people. I wanna throw that out there, number one.

 

I promise you that as we get into what Kevin offers, and what he does, I give him my highest recommendation. But the bottom line is Kevin and I worked together years ago. Kevin has gotten into the mobile home park space in a big way but he’s also done office buildings, land, and other real estate.

 

We’re very lucky to have him on the show. Today, we are talking about mobile home parks guys. We typically focus on apartment buildings and that portion of multi-family. I’ve been waiting to talk about mobile home parks. I am buying mobile home parks. Very interested in mobile home parks.

 

Kevin and I collaborated in the mobile home park space years ago. And Kevin took it much further than I did. But I’ve been waiting to talk about this until I had Kevin on the show.

 

So here you go, guys. You do not wanna miss this episode. Trust me on that. Let’s have you talk about your history, and how this all came about. Then we’ll get in the specific nuances of mobile home parks.

 

Kevin Bupp:             Sure. Sure. Going back to the, I guess, year of 1998 or1999, I was 19 years. I think that would be the right time frame. I got introduced to real estate, Rod, back then. It was a unique situation, ‘cause I honestly had no interest in real estate. I didn’t really know what I wanted to do with my life at that point in time. I don’t know how much of this story you actually know of me. I don’t know if you’ve ever heard my real story of how I got introduced in the real estates.

 

Rod Khleif:               No. I haven’t.

 

Kevin Bupp:             So you’re gonna hear it now.

 

Rod Khleif:               Alright. Good.

 

Kevin Bupp:             I was really a poor student in high school. Just went to community college after high school. Just having fun, tending bar, going to college. Community college in a small town in Pennsylvania, and had no direction in life. Didn’t really know what I wanted to do. Knew I didn’t wanna go away to school ‘cause I would’ve waste my parents money. Just, again, I wasn’t driven. Didn’t really know what I wanted. Just wanted to have fun at that point.

 

I was very lucky to have someone come into my life just unexpectedly. Was a girl I was dating; her mother had recently been divorced. She started dating a gentleman. He ended up being a local real estate investor. He was 20 years my senior.

 

Somehow, long story short, I had a boat at the time, and during one summer day, I got stuck out of my boat with this guy. It was suppose to be a group of us, and I felt bad, I invited him out in the boat. I got stuck out in the boat with the old guy.

 

We hit it off. We formed a great relationship. I found out what he did, much more in depth. I think he maybe saw like a struggling 19-year-old kid. I didn’t think I was struggling at that time, but in his eyes like, “This kid needs to figure something out with life.” He introduced me to real estate. He invited me to a Ron LeGrand boot camp.

 

Rod Khleif:               [chuckles] That’s really funny.

 

Kevin Bupp:             Yeah. Yeah. In Philadelphia… You know Ron LeGrand.

 

Rod Khleif:               Ron has stayed in my house.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               I know Ron quite well. He’s a character.

 

Kevin Bupp:             So I went to this boot camp, to learn how to fix and flip homes. Spent three days there in Philadelphia. After, I left there I realize that there was about 20 people that I had interacted with during my time there. Out of the few hundred that were there and very single one of them were doing deals. If they could do it, I can do it. I don’t know how to do it yet but I can figure out how to do this.

 

That was really my entry into real estate, and I followed this individual around. David is his name. I followed him around, literally, for a year. Went to his house, followed him to real estate appointments, followed him to his rehabs he was working on, followed him to collect rent, sat in his home office when I wasn’t in school or wasn’t tending bar. Listened to him talk in the phone.

 

Rod Khleif:               Where was this? Where was this?

 

Kevin Bupp:             This is in Pennsylvania. Still in Pennsylvania.

 

Rod Khleif:               Okay, still in Pennsylvania. Okay, I know that’s where you’re from.

 

Kevin Bupp:             Yeah. Yeah. I ended up doing a few deals up in Pennsylvania. Bought a few really low-end row homes in Harrisburg, Pennsylvania. Really rough areas, didn’t really know too much. He kind of guided me but I probably wouldn’t buy those properties again, to save my life.

 

Rod Khleif:               Sure.

 

Kevin Bupp:             But I learned a lot, cut my teeth, and I move down to Florida when I was 22. And Rod, that’s when I met you. Moved out here and jump back into it. Opened up a mortgage company, at that same time met you, started buying real estate, and that led us all the way up to the crash. Right?

 

Rod Khleif:               Right.

 

Kevin Bupp:             I mean 2007-2008 where, basically the world ended for us.

 

Rod Khleif:               Yeah, it did. And we were on that same sinking boat. Trust me.

 

Kevin Bupp:             It was really a challenging time, and I took a few years away from real estate, and focus on a few other business ventures that revolved around health and fitness, which I’m a huge fan of. And just really didn’t want to think anything about real estate for a number of years. ‘Cause I didn’t think that there was much money to make that point in time.

 

I just reallt didn’t wanna give it any effort because it had drained my credit, ruined me financially. Now I look back, Rod, I wish I would have dove back in right away, because that’s when the opportunities poured in…

 

Rod Khleif:               Oh, trust me. We have the same feeling, buddy. Same feeling.

 

Kevin Bupp:             It will never happen again, not on the second time around for me.

 

Rod Khleif:               No, ‘cause it was an opportunity. But when you go through that you’re in such fear, and stress, and lack, and your focus is deluded. You’re thinking about how bad things are, it’s difficult to push forward.

 

Kevin Bupp:             Absolutely.

 

Rod Khleif:               When it would have been the best time to push forward.

 

Kevin Bupp:             I know.

 

Rod Khleif:               But hindsight’s 20-20, I was the same way. I got into completely unrelated business. Luckily, it grew into something great but I didn’t, and don’t love it. And so… Same, same, same… So please continue.

 

Kevin Bupp:             There’s a lesson there. Yeah. There’s a lesson there, though. Because if you can get really good in the type of market that went right then, if you can get really good at finding deals and uncovering good opportunities whether on market or off market. We specialize in off market deals.

 

Rod Khleif:               Right.

 

Kevin Bupp:             But if you can get really good at it in a really tight market like we’re in today, you can clean up shop.

 

Rod Khleif:               Right.

 

Kevin Bupp:             When we go into another down turn.

 

Rod Khleif:               When it get’s tough.

 

Kevin Bupp:             Absolutely. Absolutely.

 

Rod Khleif:               Yeah, no question. If you’re able to find deals in this market then you can clean up. Your course is really groundbreaking on that subject. But anyway, continue.

 

Kevin Bupp:             Moving forward, as I went into like a re-build stage, I know Rod, you and I started brainstorming about real estate… I don’t know, 2010-2011, and the interesting thing is you had brought up mobile home parks to me and it was kind of ironic because I had purchased… I was kind of researching myself and I had purchased, Frankie Davis the online…

 

Rod Khleif:               Sure. Sure.

 

Kevin Bupp:             The home study course probably eight or nine months before you’d kind of brought it to my attention. Like, “Hey, how about mobile home parks and so that was kinda the…

 

Rod Khleif:               We attended that. We attended that course together…

 

Kevin Bupp:             That’s it.

 

Rod Khleif:               Later on.

 

Kevin Bupp:             That’s it.

 

Rod Khleif:               We both attended the live event. Actually went to a couple of them.

 

Kevin Bupp:             So that was it. That was the introduction to real estate, or the mobile home park for me. I think there was just a lot of things that were unique about mobile home parks that piqued my interest. When you start comparing them to apartment buildings, or single-family homes, which I would never buy again.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Except as my own residence, so here we are today,

 

[00:10:00]

 

Kevin Bupp:             However many years, six years later, we’re buying mobile home parks full-time. That’s all we do. That’s all we focused in. I have bought a few other types of properties over the past, I guess, five or so years. But mobile home parks are the focus 100%.

 

I think that they are hands-down, my biased opinion, the best type of commercial real estate that you can invest in. They’ve got the best returns and there’s limited supplies, and barriers to entry, the pros go on and on, and on about why I love home parks so much.

 

Rod Khleif:              I don’t disagree with anything you just said with the caveat that there are some great apartment deals out there too.

 

Kevin Bupp:             I agree.

 

Rod Khleif:               But I will tell you that I’m looking at mobile home parks. We are honing mailing lists, and mailing mobile home parks, and that’s why I wanted to have you on the show. So we could talk about it, and introduce people to you, and what you’ve got going on. Let’s get into some questions, some details.

 

Kevin Bupp:             Sure.

 

 

Rod Khleif:               ‘Cause I know my listeners are gonna to have questions because this is kind of new ground. So why do you like mobile home parks versus apartments and I’m not gonna let you beat up apartments too bad… [laughter]

 

Kevin Bupp:             No, no. I’ve nothing against apartments. I think apartments are wonderful and in today’s… There’s a deal everywhere.

So please take what I’m gonna say with a grain of salt. Because you can… There’s always an opportunity out there.

 

Rod Khleif:               Sure.

 

Kevin Bupp:             Every, in any, I don’t care how tight the market is. I don’t care how compressed cap rates are in multi-family. There are opportunities everywhere. You just got to lift up heavier rocks to find them. You got to dig a little deeper to find them.

 

Rod Khleif:               No. You have to. You have to do what other people aren’t willing to do. I mean a couple of my students literally hand mailed 300 letters, and they just created a 10,000 a month of cash flow. So I mean if you’re really willing to do what other people aren’t willing to do. I know that’s what you talk about in your stuff.

 

Kevin Bupp:             It’s all timing. And I’ll say it’s all timing.

 

Rod Khleif:               Yeah.

 

Kevin Bupp:             We do a lot of off market marketing, I don’t wanna digress here too much but it’s really about getting your message, whatever that message is. A direct mail or a cold call, it’s all about getting your message in front of the owner when they either need…

 

Rod Khleif:               At the right time.

 

Kevin Bupp:             Or when they want to sell.

 

Rod Khleif:               Right.

 

Kevin Bupp:             That’s the magic part right there, they either need or want to sell. You could send them 20 letters, call them 20 times, the 21st time could be it. So you just got to keep your messages in front of them. There’s always opportunity because people run the situations on their life. They have to sell or they wanna sell.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Many different reasons why.  There’s always opportunity out there. I don’t care how tight the market is.

 

Rod Khleif:               Right.

 

Kevin Bupp:             How much competition there is, you got to be in front of the seller at the right time.

 

Rod Khleif:               That’s right. There’s a lot of people that don’t…

 

Kevin Bupp:             That’s it.

 

Rod Khleif:                           A lot of people don’t pay attention to what’s going on in the market, and there are deals in the hottest of markets.

 

Kevin Bupp:             Yep.

 

Rod Khleif:               A lot of you are scared because I talk about a contraction, and Kiyosaki was just quoted saying, “It’s already started.” Another economist Harry Dent, that I track, is saying it’s already started and that’s okay. Because there are still deals, and there are gonna be incredible deals once it crashes again.

 

Kevin Bupp:             That actually leads me into one of the reasons why I really like mobile home parks.

 

Rod Khleif:               Alright.

 

Kevin Bupp:             Yeah, it does. Because when we go into some of the downturn, a recession where people might lose jobs, they might get wage cuts. People tend to… There’s a trickle-down effect that happens in the affordability of living, where you can actually afford to live in.

 

Rod Khleif:               Sure.

 

Kevin Bupp:             So let’s talk about apartments, and I’m not gonna beat up apartments, but it’s just part of my example. A-class can’t afford to live in A-class, you move to B-class. Can’t afford B-class you move to C-class. Can’t afford a C-class, your option after that’s a D-class, which in my mind is like a war zone. You better be packing heat to collect the rent, right?

 

Rod Khleif:               Sure. Right.

 

Kevin Bupp:             Your option at that point in time is either go to an apartment building where your family is very unsafe, or for the same price, or potentially even less you could probably live in a very safe clean quiet community, a mobile home park community.

 

Rod Khleif:               Right.

 

Kevin Bupp:             To where not only will you be basically paying the same price or maybe even less of what the D-class low-end apartment would be, but in most mobile home parks, you have an ability not to become a home owner.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Which is unheard of in the apartment space. I mean you’re never gonna own the apartments space, you’re just gonna keep renting. So we offer a unique gift to those that are in seek of affordable housing. In my mind, if the economy goes down we still have a huge demand ‘cause we got this pile of people that are keep… They keep trickling down the ladder into mobile home parks.

 

Rod Khleif:               Sure… I agree completely.

 

Kevin Bupp:             And also, mobile home parks, I don’t know where the statistics came from, I can’t really like take it back anywhere, and give you a real source of it, but I’ve heard many times in the industry, from the industry experts, is that during the time frame of 2008 and 2011, I think is when they measured it, mobile home parks had the lowest default rate of any commercial asset type.

 

Rod Khleif:               I’ve read that somewhere too. I remember seeing that as well myself.

 

Kevin Bupp:             I wish I had the source but I just don’t.

 

Rod Khleif:               Yeah.

 

Kevin Bupp:             But I’ve heard of enough industry experts say it. And I believe it.

 

Rod Khleif:              Right.

 

Kevin Bupp:             So when the market’s good there’s still need for affordable housing. When the market’s bad, there’s even more of a need for affordable housing.

 

Rod Khleif:               There will always be a need for affordable housing which… And there affordable housing does exist in apartments as well.

 

Kevin Bupp:             Sure.

 

Rod Khleif:               We’re talking about mobile home parks today and I will tell you, there are some incredible opportunities in mobile home parks. Now, of course, when he’s talking about home ownership he’s talking about that person, that’s in the affordable space buying the mobile home, and of course then they’re gonna pay lot rent to whoever owns the mobile home park.

 

Kevin Bupp:             Yes, so let me… I’m gonna finish that thought process there. Now, they’re living in a mobile home park, they have the ability of homeownership. There’s lot’s of creative ways out there, like in our parks, we do easy qualifying rent-to-own programs, where they can basically pay over a period of time and own that home, free and clear between three and maybe 10 years at the most. But most the time it’s three to five years.

 

After they own that home, now there’s paying lot rent. The average lot rent across the country, obviously, there are some areas that are probably eight or $900 a month, and some areas that are $150 a month, but the average, across-the-board is between three and 350 a month. There is nowhere in any remotely attractive place in this country that you could live for three or $350 a month, in terms of renting a place.

 

Rod Khleif:               Sure, some of these homes are three bedrooms two baths.

 

Kevin Bupp:             Exactly. Exactly.

 

Rod Khleif:               And you’re paying three to 350 a month to live there.

 

Kevin Bupp:             You might be able to rent a room, in a boarding house for $300 a month.

 

Rod Khleif:               Right. Thank you.

 

Kevin Bupp:             But you’re not gonna be able to live with your family.

 

Rod Khleif:               Yeah.

 

Kevin Bupp:             I guess, you ask me why I like it, and that’s one of the big reasons. We got to talk about recession and down turn. I like it because I think it thrives in a market like we’re in today. I can tell you that our occupancy rate is 97%, across the board.

 

Rod Khleif:               In any market, mobile home parks are a safe bed. Which is why I got my spotlight on them as well. I know they have a bad rep and I wanna talk about the bad rep right now. People think mobile home parks, and jokes like if you mess with me you mess with the whole mobile home park and that… but they have a bad rep.

 

In some cases, now there are some that are the dregs, just like any D-class property. There are some that are hell on Earth but that’s not the norm. So let’s talk about that for a minute.

 

Kevin Bupp:             Yeah, so the thing we look for, and we typically buy distressed assets, Rod.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             A lot of times, we do buy stuff that has a lot of bad reputations. They’ve got that negative stigma attached to them but the thing we look for is we buy them in markets that are surrounded by good.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Because if you’ve got bad in a concentrated area but it’s surrounded by good, that means if you can get rid of the bad, you’ve got good people to pick from to pull back in.

 

Rod Khleif:               I like it.

 

Kevin Bupp:             So typically, we’re looking for things that have distress like that because we know we can turn them around. And we know, after our market research, we know that there’s a demand for that affordable housing. We might deal with a bad element for a period of time, but we can quickly get them out. Again, we’ve done our homework and our due diligence. We know there’s good people around that want that housing, that there’s a demand for the housing from good hard-working folks.

 

Again, temporarily we’ll work with the bad people. Get the bad eggs out but typically not a big deal. I mean at the end of the day with the parks that we own, we don’t own, five star parks that have shuffleboard courts and three swimming pools, and palm tree-lined streets…

 

Rod Khleif:               Like the aged type. Here in Florida, we’ve got that. We’ve got parks that truly are, frankly, on caliber with A-class investments. They’re that nice.

 

Kevin Bupp:             That’s lifestyle living. That’s a life style choice.

 

Rod Khleif:               Exactly. Guys, we’re not interested in those, just so you know. Those are institutional owners, those are big, big, big, big money. We’re talking right now, about your working class parks.

 

Kevin Bupp:             Yes.

 

Rod Khleif:               Let me ask you a question, Kevin. I love your analogy where you’ve got this park that hasn’t been managed well so there may be drugs or maybe some bad eggs in there. But if you look around and the community’s nice you’ve got the opportunity to take that and turn it around.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               But let me ask you this, let’s say you… This is digressing a little bit or drilling in a little bit. Let’s say you’ve got a somebody that owns their home in that park, and you know that there’s a problem with that person. How can you get them out?

 

 

Kevin Bupp:             Every state is different with eviction laws but we have evicted people… Let me back up a little bit, typically, most of the parks we take over don’t have annual leases in place. Most of time they, literally, haven’t had a lease re-signed especially on those that own their home. The owner hasn’t re-signed releases for years and years.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             So it’s essentially a month to month. So depending on that particular state, most of the time…

 

 

Rod Khleif:               You just terminate the lease.

 

Kevin Bupp:             Yeah, we just do a non-renewal. We just do a non-renewal but then if they don’t leave, then you typically, if you do non-renewable lease and they don’t leave, then you have to so still through the eviction process.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Every state’s a little different. All the states that we own in currently, it’s a pretty simple process to where we basically evict them out of the home, the judge will give them a certain period of time to do move the home; a couple of weeks. Most of the time they can’t move it, and basically abandon it. Then we go through an abandoned title process which can take anywhere between six weeks and six months depending on the state.

 

Rod Khleif:               Right.

 

Kevin Bupp:             But a lot of times, it doesn’t get to that point, Rod. That’s literally, happened to us one time, the guy live there forever like look, “Let us buy it from you. It would make it easy. Give us the title. We’re evicting you.” He just ignored us. So now, we just got the title back. It’s been sitting there empty for four months. Shame on him…

 

Rod Khleif:               So you got it for free. You basically, got the home for free.

 

Kevin Bupp:             Yeah, well it cost us about eight hundred bucks to go through the process.

 

Rod Khleif:               Okay, but still… But still.

 

Kevin Bupp:             But we would have rather bought, so what I’m getting at is, typically, what happens is that someone’s really in dire straits and they cant make up that $300 a month payment or they’re a pain in the ass.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Like we need to get them out there, we’ll just offer to pay them for their home, not much but we’ll give them something to move on, give us the title. That way we can go in and rehab it right away and get it sold again. That’s our preference.

 

Rod Khleif:               Let me back up again, let’s say…

 

 

[00:20:00]

 

Kevin:                        Let’s say you find this park that’s in the tough area… The area is good but the park itself needs work. I would guess that the work here is really front-loaded. Once you turn that thing around, and you’ve got management in place, then really as not a big a deal to manage any longer. Is that an accurate statement?

 

Kevin Bupp:             Yeah, yeah. To a certain extent.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             I mean, the management is the big key component there, your on-site manager. What we found is that we’ll go in, and we’ll front-load. Do a lot of work. You’ll clean up any deferred maintenance force our rules on the residents that live there. Make them fix their skirting, make them wash the outside, make them paint the roof, clean up the five tires they have laying next to their home, the broken down cars. But if it doesn’t stay… If the manager doesn’t do a good job of monitoring that stuff, it gets out of control very quickly again.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             So there is a little bit of a Big Brother, Big Sister component that has to take place. I have found that we’ve got a few managers that do a really good job at it. And the few that do a terrible job, that we basically have to micromanage that manager.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             They’re good at everything else but they’re really bad about keeping on the residents. A lot of that, I think, is a result of, all our managers live in the community, and I think they become friends with people.

 

Rod Khleif:               Sure. Sure. Sure.

 

Kevin Bupp:             They never wanna be the bad guy.

 

Rod Khleif:               They don’t wanna… Yeah, no, I get it. I get it.

 

Kevin Bupp:             You kinda outweigh the good with the bad. Like we have a manager in our North Carolina Park. I was just up there, a month ago, to solve, literally, like at least 15 homes that have major infractions.

 

Rod Khleif:               Wow.

 

Kevin Bupp:             Gave her heck about it. It’s fixed now. It’s good. We’re good to go but I’m gonna have to stay on her a little bit tighter than what I was.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             She’s lived in that park for nine years but she does everything else great.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Her collections are phenomenal.

 

Rod Khleif:               Okay. Okay, I got it. I got it.

 

Kevin Bupp:             You know, take the good with the bad. I’ll keep her. I’ll keep her.

 

Rod Khleif:               Sure. Sure… Okay. I know that when you’re looking at parks, you’ll find parks where all the homes on the park are owned by the individual people and that would be all lot rent, it would be called. Then you’ll find parks that maybe the park owns all or some of the homes. Now, what is your strategy if you find a park where the park owns all or some of the homes?

 

Kevin Bupp:             Yeah, so our strategy is to, first and foremost, our…

 

Rod Khleif:              And so, hold on. Hold on. Let me add one thing there.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               So basically, what that means, guys, is if the park owns the homes, they’re just renting them like they were an apartment, for example.

 

Kevin Bupp:             That’s a horizontal apartment complex. Essentially what it is.

 

Rod Khleif:               Yeah. There you go. Alright. So when you encounter that, it can have the appearance that this park is bringing in a ton of revenue… And I want you to talk to what’s on the flip side of that.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               I’m gonna let you speak to it, ‘cause I know it, but I wanna have you explain.

 

Kevin Bupp:             Yeah, I’ll hit the first question that you had about what we do.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             Like what our plan is going in. We don’t like rental homes.

 

Rod Khleif:               Right.

 

Kevin Bupp:             We’re not opposed to buying a park that has rental homes. We bought a couple of parks that have had 100% rental homes which isn’t the preference but if you buy them right, and you’ve got a plan that you know you can execute, it could work out. It’s a lot of work but it can work out.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             The big plan is to convert to a tenant owned home community, meaning, that we want to sell every single one of those rentals, and convert them. Whether it be the residents that are living in them now, or not renewing leases and bring in people that are gonna buy those homes, that wanna buy the home and actually rent the lot

 

Because we find that the turnover is much less, when they actually own a home, they got a pride of ownership. They’re a little bit more involved in the community versus just being a transient renter…

 

Rod Khleif:               Sure.

 

Kevin Bupp:             That’s gonna come and go every couple of months.

 

Rod Khleif:               And you don’t have maintenance expenses.

 

Kevin Bupp:             And you don’t have maintenance expenses. That’s a big one.

 

Rod Khleif:               Which are very, very high in mobile homes.

 

Kevin Bupp:             Yeah, it’s a lower end clientele, some are worse than others, but yeah. I mean, it’s kinda a difference of like an A-class and a C-minus class. The tenant base is just typically harder on the unit.

 

Rod Khleif:               And you guys, those of you that are listening, that have owned single-family homes in C-minus or D-areas, you know this. I mean it’s the same thing. They don’t take great care of the properties. The yards go, the water will leak forever and they don’t care. And so the same dynamic occurs and that’s why it’s such a huge advantage to convert these parks to lot rent. All lot rent. Sell those homes, and then it’s a very stable, much easier to manage.

 

You’re really then just managing the rent collection, and you’re managing taking care of the common areas. I mean that’s it then.  Enforcing the fact that they take care of their homes, and don’t turn them into trash dumps.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               What do you feel like, are the unique benefits to mobile home parks that don’t exist in other asset classes? We’ve touched on some of them. Obviously, the fact that they outperformed other assets during the crash, the fact that there’s always gonna be a need for that asset, for that type of housing. In fact, there’s a huge crisis in this country with affordable housing, period. But are there any other unique benefits?

 

Kevin Bupp:             There’s a lot.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             To name a couple of them, number one, it’s the only commercial asset type that has a diminishing supply. In fact, it’s the only real estate asset type that has a diminishing supply. They’re being taken away faster than they’re being built. I don’t keep track with… As of a couple of years ago, there were only like maybe three or four built a year, and most of those are probably higher-end lifestyle type communities. Not the type of parks we buy.

 

A lot of these parks that were built 50-60 years ago, back when maybe that piece of land didn’t have much value. It was outside of town. Now, it’s inside of town, and it’s got a higher and better use.

 

You’ll find a lot of these parks, the older ones, are in the path of progress are being torn down. That’s a barrier to entry. Number one, we’re not to worry about new developers buying a plot of land down the road from us, building a new park…

 

Rod Khleif:               And competing. Yeah, and competing.

 

Kevin Bupp:             Yeah, and competing.

 

Rod Khleif:               Yeah. Right.

 

Kevin Bupp:            So we don’t have to worry about that. So that’s nice. Just if you could compare apples-to-apples which is hard to do, so if you have a two and a half star Mobile Home Park, which is probably the equivalent of a C-plus class apartment building, let’s say, the same size, same market… Again, hard to do an apples-to-apples comparison but if you could, then you’d probably see that there… You could expect probably a two to three point yield premium, meaning like a return.

 

So if you’re gonna buy the apartment at a six and a half cap, you could probably buy that same park at a nine and a half cap. So the returns are significantly higher.

 

Again, it all depends how you buy. I see people over pay for mobile home park just like I see them over pay for apartment buildings but…

 

Rod Khleif:               Sure. But overall, overall, you see that disparity.

 

 

Kevin Bupp:             If you could compare apples-to-apples… Yes. Yes.

 

Rod Khleif:               Right. I got it. And I could see this. Some people think it’s a much better quality of life. You’ve got a yard. You’ve got your own space.

 

Kevin Bupp:             Absolutely.

 

Rod Khleif:               You’re not right next to somebody. There are a lot…

 

Kevin Bupp:             You wanna put Christmas lights out. You wanna put flowers in the front yard.

 

Rod Khleif:               Right.

 

Kevin Bupp:             You build a floor to room on your unit, absolutely.

 

Rod Khleif:               Right.

 

Kevin Bupp:             You put a deck outside, grill.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Everything. I mean, it’s…

 

Rod Khleif:               Things you absolutely can’t do in an apartment complex. There are big advantages. And a lot of people, because of the stigma, they think negatively about these parks. But some of these parks are absolutely beautiful. You can take one that’s run down, like you said, and turn it into something you can be very proud of.

 

Kevin Bupp:             A couple more things, real quick, I wanna head on, Rod, is the turnover rate is extremely low. This is assuming they own their own home, which is our goal. If we go in and we wanna convert any rental units into resident in owned homes, but once they own their home, that is the most valuable asset that they have. So that’s first and foremost.

 

So the turnover rate is very low because now they really can’t go anywhere else. Other than in another mobile home park, because there’s paying a lot of rent.

 

Rod Khleif:               Right.

 

Kevin Bupp:             So there’s nowhere else they could go, to live cheaper and less expensively than what they’re living, and now, there’s a unique caveat that goes along with that.

 

Rod Khleif:               Right.

 

Kevin Bupp:             You don’t have to worry about necessarily moving to another mobile home park ‘cause it’s very expensive to move these homes.

 

Rod Khleif:               Right.

 

Kevin Bupp:             A single wide trailer cost between, about three or $4,000 to move it, but that doesn’t include the cost of actually setting it back up, blocking it, tying it down, leveling it. Skirting it again. You’re talking literally, $78,000 to basically…

 

Rod Khleif:               To move a home.

 

Kevin Bupp:             Well not that. The moving part’s not that expensive, three or four grand.

 

Rod Khleif:               But all in?

 

Kevin Bupp:             All in, $78,000. It’s very expensive.

 

Rod Khleif:               $78,000 to take your home from one park to another park. Guys, you raise the rents… Yeah, they’ve really got to think about whether or not they wanna move because, obviously, you don’t wanna do that in a nefarious way, but…

 

Kevin Bupp:             I’ll give you an example, that you make a good point. We bought a park in North Carolina, the market rents in that area. There were a couple of parks, over 250 a month. The park we were buying was at 165.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             So you’re talking about a $95… Or $85 difference there. That’s a big number. That’s basically a 50% increase over what they are used to paying.

 

Rod Khleif:               So, hold on. Just so I get these numbers ‘cause I wanna share this with my listeners. I wanna actually show them what the increase in cap rate is, or if you can… I’ve got a calculator here…

 

Kevin Bupp:             Yeah. I can do the math here for you. But anyway…

 

Rod Khleif:               Alright, so how many units was it?

 

Kevin Bupp:             It was a 52-space park.

 

Rod Khleif:               52, and the rent spread was?

 

Kevin Bupp:             The rents were 165, when we bought.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             And within three months, we raised them to 250 .

 

Rod Khleif:               You raised them to 250. What is that difference?…

 

Kevin Bupp:             That’s $85

 

Rod Khleif:               $85 times 52, okay.

 

Kevin Bupp:             That’s all day everyday at nine-cap park in that market.

 

Rod Khleif:               Nine-cap. Okay.

 

Kevin Bupp:             And I’m being conservative when I say that ‘cause it’s surrounded by quarter million homes everywhere.

 

Rod Khleif:               Okay, and that…

 

Kevin Bupp:             In three months, we added 600 grand in value.

 

Rod Khleif:               $600,000 in value in three months, guys.

 

Kevin Bupp:             Here’s the unique part about that that was the biggest rental increase we’ve ever done, in terms of…

 

Rod Khleif:               Sure.

 

Kevin Bupp:             Proportionally speaking, and we were nervous.

 

Rod Khleif:               And there were probably a lot of unhappy people paying a big chunk, a big increase like that.

 

Kevin Bupp:             What we did, the rent letter that we sent out… Number one, we did improvements first in the park. Went in and fixed the roads, cleaned up the place, got rid of the idiots that were living in there. We made improvements before we actually increased the rent.

 

Rod Khleif:               Right.

 

Kevin Bupp:             But when we sent out the rent increase letter, we also included the other competitor parks in the area. Their addresses, their phone numbers, and what they charge for lot rent. Just basically made it clear to them that, “Hey, consider this…” We didn’t say this, but in other words, consider this a gift.

 

Rod Khleif:               Right.

 

Kevin Bupp:             It’s like, “You received a gift for the past 10 years because you’re previous owner, just never raise your rents. Now, we’re just bringing it to market. We’re not gouging, you might think it, but we’re not gouging. We’re just bring it to what everyone else, all your friends that live in the other communities, that’s what they’re paying.”

 

Rod Khleif:               So what was the end result?

 

Kevin Bupp:             We didn’t lose a person.

 

Rod Khleif:               No kidding. Didn’t lose a single person.

 

Kevin Bupp:             We didn’t lose anybody. We lost a trailer a couple of months ago, but it was, they got a piece of land given to them from a family member…

 

Rod Khleif:               Oh, yeah.

 

Kevin Bupp:             And they moved the trailer to a plot of land.

 

Rod Khleif:               Yeah, okay.

 

Kevin Bupp:             We’ve never lost anyone. ‘Cause here’s the thing, you might get people that grumble, moan and when whine about that but if they really… If they wanted to try to prove their point…

 

[00:30:02]

 

Kevin Bupp:             And move their trailer, and go to the neighboring park that was also 250 a month.

 

Rod Khleif:               Right.

 

Kevin Bupp:             They’re never gonna recapture that expense of moving the trailer.

 

Rod Khleif:               No. What’s the point? I mean, there’s no point to it.

 

Kevin Bupp:             Even if it was cheaper by $30 a month…

 

Rod Khleif:               It wouldn’t matter.

 

Kevin Bupp:             They’ll never recapture that. Yeah. It just doesn’t make sense.

 

Rod Khleif:               Even if it was a $100 a month, frankly, it really… It doesn’t.

 

Kevin Bupp:             Yes.

 

Rod Khleif:               It doesn’t equate out to it. It doesn’t equate.

 

Kevin Bupp:             Yes.

 

Rod Khleif:               Okay. If somebody’s interested in looking at parks, what do you recommend as, say out-of-state, obviously, not in your backyard. Let’s say you’re buying a park out-of-state, what’s the minimum size you’d consider? And maybe the size is the wrong question, maybe it should be based on income.

 

Kevin Bupp:             Yeah. Income and size, yeah, but you both kinda look at them equally as much. For us, that number keeps going up a little bit. Only because we just got some different infrastructure in place now. We got to be a little more selective with what we buy and where it is. Now, our minimum is probably about 60 spaces now.

 

Rod Khleif:               60, okay. What was it before?

 

Kevin Bupp:             Probably 40. 40 is about the nor-… Although we do own one park, it’s our smallest park, it’s 35 spaces, and it’s one of the best performers. Although that wouldn’t be in our radar today…

 

Rod Khleif:               Okay.

 

Kevin Bupp:             But it kicks butt. I mean it’s in an incredible deal that most people could take down. Anyone that’s a new investor could have taken that one down; with how much it costs us to buy it. I think it depends. Like that 35 space park, Rod, I’m telling you about you mention something about should you look at the size, number of spaces, or the income that it produces.

 

Rod Khleif:               The rents. Right.

 

Kevin Bupp:             That one, it’s in Atlanta, so the lot rent is 350 a month.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             So although it’s just 35 spaces, it’s got really high lot rents with it, and so that one…

 

 

Rod Khleif:               So you could support some infrastructure. You could support to pay a manager.

 

Kevin Bupp:             We got them all. We got a full time manager.

 

Rod Khleif:               Yeah.

 

Kevin Bupp:             That’s what you really need to look for. You need to look for like, do I have the ability to be able to afford an onsite manager? Like give them free housing, pay them a salary, and get someone of quality. You get what you pay for. So that’s one of the big considerations of the size of the park.

 

But also if it’s far away, you’ve got to look at how much income does it really produce. Forget about cash on cash returns at this point in time. Like how much money, after all the expenses in debt service, like what does that dollar amount actually look like? I don’t care if it’s 100% cash on cash return, if that’s only $2,000 a year, right?

 

Rod Khleif:               Right.

 

Kevin Bupp:             Because one trip to that park in airplane ride and hotel, and some food, can completely wipe out your NOI for the year.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Those are the considerations that you really need to have based… To determine like the size that you should be looking for and the overall price point that you need to be buying. But 40-space is what I recommend to people that are looking to buy their first park. It might be a little smaller.

 

If you’re looking at 10-space parks and 15-space parks, I don’t think it’s a very smart flag.

 

Rod Khleif:               Yeah. That’s not a good move, guys. Don’t do that.

 

Kevin Bupp:             What the challenge is, even one major capital expense item, let’s say a septic tank goes, on a 40-space park, it’s kind of just a blip on the P&L. But on a 10-space park, it’s catastrophic.

 

Rod Khleif:               Right.

 

Kevin Bupp:             It literally could be your NOI for the entire year. Then on the flip side of that, the other thing to consider with a small park is, they’re very hard to finance.

 

Rod Khleif:               Right.

 

Kevin Bupp:             You got to think about your exit strategy, like who’s gonna be your end buyer? Always think about your exit when you go in, and so who the heck is gonna buy that from you.

 

Rod Khleif:               Right.

 

Kevin Bupp:             It’s going to be some small-time local Schmoe investor that probably needs you to finance it. Banks not gonna finance it.

 

Buy something bigger, you get the scales of economy, you get to get some onsite quality management in place, and then you’ve got a better exit as well. Because you’re gonna have more sophisticated buyers lining up to purchase your asset from you.

 

Rod Khleif:               Agreed. Agreed. Agreed. Now, guys, I don’t want you to think that the buying criteria is the same as an apartment complex ‘cause it’s not. There are some specific nuances that you need to pay attention to. I think, probably the biggest one is the utilities.

 

Because some of these old parks have some very, I’m gonna use the word unique, water and sewage systems. Some of them are very dated, and particularly in the sewage side, well even the water side, both.

 

Kevin Bupp:             Yeah.

 

Rod Khleif:               If you have to replace them or hook up to County Water and Sewer, or if the sewage system goes out you could have a real problem. Let’s talk about that for a little bit.

 

Kevin Bupp:             Yeah, that’s the biggest catch. People ask me like what’s the one big thing? What’s the one ‘gotcha’ in this business, and there’s multiple but like that’s the big one. You make a mistake on the front end, doing your due diligence, and you don’t account for a potential infrastructure failure. Whether it be a water system or sewer system, or both, you could be in…

 

Rod Khleif:               Or maybe even electrical in some remote…

 

Kevin Bupp:             Yeah, absolutely.

 

Rod Khleif:               You can see that sometimes, a very, very, very dated electric that just can’t handle air conditioners anymore. Because some of these parks are, literally, 60 or 70 years old, is that right?

 

Kevin Bupp:             Absolutely. Yeah, I mean, 40s and 50s. Yeah.

 

Rod Khleif:               Yeah, right.

 

Kevin Bupp:             Absolutely… Probably like 60s, and 70s is the more common. That was the two decades where a majority were built.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             But yeah, there’s some that date back to the 40s.

 

Rod Khleif:               Right, and if they haven’t updated it… Yeah. Anyway, continue.

 

Kevin Bupp:             Yeah, yeah. Anyway, so the utility and infrastructure, you’ve got basically two ends of the spectrum. You got city supplied water and sewer, and then on the other end of the spectrum, you got private, meaning like a well.

 

Rod Khleif:               Right.

 

Kevin Bupp:             And then a private sewer system, which either could be could be septic tanks, it could be a lagoon system, which is basically big cesspool of feces.

 

Rod Khleif:               Sewage.

 

Kevin Bupp:             [chuckles]

 

Rod Khleif:               Right. I just looked at a park in the middle of Florida here, and that’s what it was, two of these lakes. They look like lakes but trust me, you don’t wanna swim in them.

 

Kevin Bupp:             Yeah, no, you wouldn’t wanna do that.

 

Rod Khleif:               [laughs]

 

Kevin Bupp:             Then you got packaged plants are well, which are basically a miniature version of what our local counties and cities use to treat the sewage.

 

Rod Khleif:               Sewage system plant. Sewage treatment plant, right.

 

Kevin Bupp:             Yeah, you got to be careful with those things. We could go really deep here, I don’t want to…

 

Rod Khleif:               No, I don’t wanna go deep. I just wanna flag that.

 

Kevin Bupp:             But I wanna give an example. I wanna give an example because… It’s a great example. It’s a park we own we did our due diligence. We knew the all the potential hazards that existed with it. It’s on public water but it’s a private sewer system. It’s a large septic system that feed this entire park.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             So basically, it means that it’s not one septic tank per home, to where one septic tank goes out you’ve only got one home down. This is if that septic system fails, the entire park has nowhere to…

 

Rod Khleif:               Has no water.

 

Kevin Bupp:             No, sewage.

 

Rod Khleif:               I mean, you’re out of commission.

 

Kevin Bupp:             We did our due diligence, we did our phase one inspections, we had a septic company come out and inspect the septics. We would not have bought the park if we didn’t have the back-up plan of county sewer being at the front of the park.

 

We knew that ahead of time. We got a hold of engineers, got the estimate of cost. What’s it gonna cost us should the day come when we have to connect into it? What the fees are gonna be?

 

Rod Khleif:               So if the septic went out, you… You guys, if you’re doing this, you go out, and you find out what it’s gonna cost to connect to the sewer system.

 

Kevin Bupp:             Yes.

 

Rod Khleif:               You have to hire engineers. You have to have plumbing bids. I mean, it’s all the different components.

 

Kevin Bupp:             We factored that in. We said like, “Let’s go ahead and assume that’s gonna happen the first five or ten years. This is the big-ticket item. Let’s assume that risk on the front and that’s what’s gonna be part of the negotiations.”

 

We don’t know too much about the septic. We do know that the county will not let us fix the septic. We know that for a fact. They won’t let us fix it. They won’t let us put a new leach field in.

 

Rod Khleif:               Wow.

 

Kevin Bupp:             And so we’re in a big pickle, and there’s a lot of risk here because if we have to incur this, the $300,000 that was gonna cost us to connect to the city sewer in the first 10 years, any time the first 10 years, it was gonna be a big hit.

 

We used all that in out negotiations. We assumed very little risk. We only put 10% down. We only paid 200 grand for the park.

 

Rod Khleif:               Oh, wow.

 

Kevin Bupp:             We got it for next to nothing. We didn’t sign any guarantors in the loan and guess what happened?

 

Rod Khleif:               What?

 

Kevin Bupp:             Three months into this deal, I get a call, my cell phone. The DEP called me, an inspector from DEP called me and said, “Mr Bupp, at the back of your park here,” at you know, whatever drive or street it is.

 

Rod Khleif:               Right.

 

Kevin Bupp:             “Walking around, you got some graywater that is being shot out in the back of your property into the neighboring farm. It’s two 6 inch PVC pipes.” I’m like, “What are you talking about? I had no idea. We got inspected. I don’t… “ He said, “Well I followed it to where it would probably lead to you and it leads right to your septic field.”

 

As we dug deeper and inspected, we realized that the owner at some point in time probably had a failure in the leach system. The county had been pressuring him to connect, and he said, “No, I got it fixed.” And they never inspected or did any further research.

 

Rod Khleif:               He just stuck a pipe in there to get a little more leach field.

 

Kevin Bupp:             No, he stuck the pipe into the side of the tank so it like never made it to the leach fields.

 

Rod Khleif:               Holy cow.

 

Kevin Bupp:             So all the graywater is actually going out in the back of the property.

 

Rod Khleif:               Wow.

 

Kevin Bupp:             So we’re like, “Okay. Well… “ We debated at that point, should we walk away from this thing? Like here’s what we have into it, or… ‘Cause the guy says, “You need to cap this.” We said, “We’ll cap that.” We got one day of capacity, we’d have to pump. There’s five tanks there. We have to pump all five tanks everyday, and it would cost us literally, $1,000 a day…

 

Rod Khleif:               Wow.

 

Kevin Bupp:             To pump these, and to go from point A to point Z, on like getting connected to the city, like with engineering and all that. It’s like an eight-month process. So it’s not quick. Doesn’t happen overnight. But again we assumed our risk on the front end, and we knew that going into this thing, we knew that was there. We knew there’s a skeleton in the closet that was going to blow his bony head out…

 

Rod Khleif:               So what’s the end result?

 

Kevin Bupp:             Yeah, so now, we’ve got the private, best environmental attorney in the area. He’s been incredible. And for whatever reason DEP’s, they know we’re making progress, we’re working with a state run… It’s a …

 

Rod Khleif:               So you’ve got it under control, and you’re gonna fix it.

 

Kevin Bupp:             Yeah, it’s a funding program.

 

Rod Khleif:               Okay.

 

Kevin Bupp:             But they’re not breathing down our necks. They could. They literally could shut us down right now, if they want.

 

Rod Khleif:               Guys, let’s bottom-line this. Because I know we went real deep on this particular instance. The reason I wanted to highlight it is because if you do get in to this space, for one, I highly recommend that you get Kevin’s course. Kevin has just created a course. I have seen it. If you’re interested mobile home parks there is nothing like it on the market.

 

Kevin and I personally attended other people’s courses and this thing is 10 times better than that. We’ll have the contact information for that in the show notes for sure, if you’re interested in that business.

 

But that is probably the biggest red flag. It’s to watch out for in and Kevin goes into exhaustive detail about what to do, and what to look for.

 

Kevin Bupp:             But if you can get good at identifying those problems, and you can be the fixer, like I knew what the problem was.

 

Rod Khleif:               Right.

 

Kevin Bupp:             And when we’re done the connecting, like the things gonna be very valuable when we’re done connecting. The park, conservatively speaking will easily be worth eight, $900,000, we’ll have 500 into it.

 

Rod Khleif:               Okay. There you go.

 

Kevin Bupp:             We got really low debt.

 

Rod Khleif:               Right.

 

Kevin Bupp:             The first is a 30-year amortization, 10-year balloon, 5% interest rate fixed.

 

Rod Khleif:               And you were able to negotiate that…

 

[00:40:00]

 

Rod Khleif:               Because the owner didn’t know how to fix the problem. Guys, in real estate, period, you are a problem solver, period.

 

Kevin Bupp:             Yes.

 

Rod Khleif:               As it relates to apartments, as well. But the only way you can be the problem solver is with the knowledge. So don’t go off, please do not listen to this podcast and go off half-cocked, and buy a mobile home park.

 

Get the knowledge. Either learn from Kevin or educate yourself because it is different than apartments. So how do you find park that are for sale?

 

Kevin Bupp:             We typically go off market, so we go direct to owners. We’ve spent many years now, building a pretty thorough database. We’ve analyzed hundreds of markets in the country, based on job growth, based on population, based on what we see as a demand for affordable housing there.

 

We basically, built our own internal database of those parks, and who the owners are, what their home phone numbers are, their mailing addresses, and that’s how we get 90% of our parks.

 

We do have one in contract right now that was an actual listed park but actually, I think we’ve only ever bought this park if we buy it, then one other one that was listed. All the rest have been off-market deals. Direct to owners.

 

Rod Khleif:               Well, that’s what you have to do guys, and that’s what you have to do in this market, and in apartments as well. You have to set up a system…

 

Kevin Bupp:             Absolutely.

 

Rod Khleif:               To find off-market deals. Be it mailing, be it outbound calls, be it looking in places that other people aren’t looking.

 

Kevin Bupp:             Well the challenge is, if you’re not willing to do that then, once it makes the market, in this kind of market everyone’s willing to pay a little bit more than you are.

 

Rod Khleif:               Right.

 

Kevin Bupp:             Okay, you’re willing to get 7% return, you know what, I’d be happy to get 6.25% return.

 

Rod Khleif:               Exactly.

 

Kevin Bupp:             Everyone’s always willing to pay a little bit more. You don’t want that competition. Once it hits the broad market place, forget about it. I mean, it just, you’re not gonna get a good deal. You’re gonna pay full retail, if not above retail.

 

Rod Khleif:               No, I completely agree. Well listen, I wanna bring something else to my listeners’ attention because I know you guys have heard me talk about my Tiny Hands Foundation and we’ve fed 50,000 children for the holidays. We’ve done thousands of backpacks filled with school supplies to children here. We’ve done thousands of teddy bears to the local police departments.

 

I have to publicly thank my friend, Kevin Bupp, who has raised, I’m guessing around $60,000 for my foundation, maybe more over the last several years. Kevin does a bike ride called 72 Hours to Key West, where he rides from Fort Myers, Florida all the way down to Key West. It’s an incredible experience.

 

Number one, in fact, it’s coming up pretty soon, isn’t it?

 

Kevin Bupp:             November, yeah, November.

 

Rod Khleif:               November, and so guys if you’re a cyclist, this thing is extraordinary. You’re riding across those bridges between the Keys… Is this the fourth year?

 

Kevin Bupp:             No, this is the sixth or seventh year?

 

Rod Khleif:               Sixth? Oh, yeah… So thank you.

 

Kevin Bupp:             I think it’s the seventh year, yeah, seventh year.

 

Rod Khleif:               Seventh year. Wow… So anyway, my message here guys, is you’ve heard me talk about the difference between success and fulfillment. And I know many people that are millionaires, even billionaires that are unhappy because they’re unfulfilled.

 

Kevin has embraced fulfillment and contribution, and I hope those of you listening do the same thing. Even if it’s not as big a project, it can grow into as big as what Kevin has done, and what I’ve done. But start now.

 

I don’t care if you’re in your 20s. Start now. Get in the habit of giving back, get in the habit of caring about your community because I promise you, it comes back to you tenfold. It’s cliché people say it happens it, it absolutely happens.

 

Anyway, I just publicly wanna thank you my, friend.

 

Kevin Bupp:             Thank you, Rod. I’m glad to be a part of everything you’re doing, man.

 

Rod Khleif:               Thanks.

 

Kevin Bupp:             You kick ass.

 

Rod Khleif:               Thank you, buddy.

 

Kevin Bupp:             Yeah, I’m honored. I’m honored.

 

Rod Khleif:               Thank you, buddy. It’s been a great relationship and friendship. It’s awesome to see that the value that you’re adding with that incredible course you put together for mobile home park investing.

 

Guys check him out at Real Estate Investing For Cash Flow, and what was the name of the mobile home park one? He has two podcasts.

 

Kevin Bupp:             Just the Mobile Home Park Investing Podcast.

 

Rod Khleif:               Yeah, they’re the number ones. You put in mobile home park, you’ll see him on iTunes or Stitcher, wherever you search him.

 

Kevin Bupp:             You could search by my name, and you can find the podcast there as well. But yeah, it’d be pretty easy to find.

 

Rod Khleif:               Right, and tons of value not selling anything, just tons of value. So highly recommend that. Thanks for being on the show, my friend.

 

Kevin Bupp:             Thanks, Rod. I appreciate it, bud.

 

Rod Khleif:               Absolutely. Alright, take care, man.

 

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Thank you for listening to the Lifetime CashFlow Through Real Estate Investing Podcast. If you’ve enjoyed the show, please subscribe, and then take a moment to visit iTunes and leave a five star rating and review. For more resources to connect with us further, please visit our website at lifetimecashflowpodcast.com. Tune in next week for our next show.

 

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