Sam is a Private Equity Real Estate fund manager with over $300M AUM and Founder of the Saratoga Group, focusing on revitalizing Mobile Home Communities. With a broad background in distressed assets, land development, and various CRE asset classes, he has been active in real estate since 2009. Passionate about affordable housing, Sam is dedicated to community service, serving on the Auburn Economic Development Council and the board of Auburn Sutter Faith Hospital. He holds an MBA from Wharton and a BS in Chemical Engineering from BYU.
Here’s some of the topics we covered:
- Rich Dad Poor Dad and Its Influence on Sam 00:00
- How Sam Began Investing in Mobile Home Communities 7:49
- Mobile Home Creative Financing 18:51
- Dealing with Non-Payment Issues in Mobile Home Parks 24:05
- The Disappearance of Mobile Home Communities 29:49
- Understanding Fannie Mae and Freddie Mac Debt in Mobile Home Parks 33:48
- Must-Hear Advice for Aspiring Investors 37:01
- Hiring Managers for Mobile Home Parks 41:12
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below:
00:00:26:23 – 00:00:46:27
Rod
Welcome to another edition of Lifetime Cash Flow through Real Estate Investing. I’m Rod Cleef, and I am thrilled you’re here. And I know you’re going to get tremendous value from the gentleman I’m interviewing today. His name is Sam Hills and he hails from Knoxville. Sorry, I couldn’t resist. And, he’s in the mobile home park space. And you might be thinking, why are we talking about mobile home parks on a multifamily podcast?
00:00:47:02 – 00:00:59:05
Rod
Well, you know, actually, mobile home parks are multifamily if you get right down to it. But, I love the asset class. And he’s been involved in lots of other asset classes as well, which we’re going to talk about. So we’re going to have a lot of fun today. Welcome to the show, brother.
00:00:59:07 – 00:01:02:00
Sam
Okay, Ron, glad to be here. Thank you so much. Yeah.
00:01:02:00 – 00:01:14:09
Rod
Let’s have some fun. So, why don’t you give us a little background in your words? you know, why real estate when you got into real estate, you know, some of the things you’ve done, and. Yeah, let’s start there.
00:01:14:11 – 00:01:37:16
Sam
So, I’m sure probably all your listeners are familiar with Rich dad. Poor dad. Of course my dad was. And no offense, dad, but he was poor dad. I mean, orthopedic surgeon. When I decided right after college to buy my first house, he vehemently tried to talk me out of it. said he’d lost money every time he bought and sold a house, which was true.
00:01:37:19 – 00:01:44:25
Sam
I just figured it could be different. And, so it kind of started with that first house, and my wife and I were were there.
00:01:44:25 – 00:01:45:17
Rod
Was this for me.
00:01:45:17 – 00:01:49:20
Sam
This was in, kind of the outskirts of the San Francisco Bay area.
00:01:49:20 – 00:01:50:13
Rod
Gotcha. It’s like a.
00:01:50:14 – 00:02:11:08
Sam
Fairfield, if you know that area at all. so anyway, so we we this home, we, we tore carpets out and we were, you know, on our hands and knees refinishing floors and all the rest of it, and kind of forced equity on that property and then, and then saw how well we did there and then started kind of buying single family homes.
00:02:11:08 – 00:02:17:06
Sam
I was a, I was in the tech industry, in the Bay area, in the Bay area. so kind of doing that is the main job.
00:02:17:06 – 00:02:19:08
Rod
And then like, and when was this what year?
00:02:19:10 – 00:02:25:19
Sam
Let’s see. So that would have been we bought that home in 2001 okay. So it’s been a little bit.
00:02:25:19 – 00:02:29:20
Rod
So you bought you bought some real estate up to the crash. How’d you fare in the crash?
00:02:29:22 – 00:02:35:01
Sam
I yeah we had bought and sold mostly. So I really had like three homes at that point.
00:02:35:01 – 00:02:36:16
Rod
Because California got crushed.
00:02:36:16 – 00:02:37:01
Sam
California.
00:02:37:01 – 00:02:39:04
Rod
So I mean, so did I mean, I got absolutely.
00:02:39:05 – 00:02:50:23
Sam
Yeah. Yeah. Absolutely got crushed. So, and then we, it really a lot of it had been this sort of, you know, forced depreciation where we were, we were, you know, renovating and putting a bunch.
00:02:50:23 – 00:02:52:26
Rod
Of kind of flipping is what you were doing basically. Yeah.
00:02:52:26 – 00:02:56:06
Sam
We, we would exit with a lease option. Okay. How well, I was I did.
00:02:56:06 – 00:02:56:20
Rod
A ton of.
00:02:56:20 – 00:03:21:08
Sam
That. Okay. Time. Okay. Yeah. So that that’s okay doing anyway and really kind of whet the appetite for doing more. Went and got an MBA. And my sole purpose in doing that was really focus. I wanted to to start a private equity real estate fund. when I got out, and was able to do that, and that was so that was in 2010 and basically right after, you know, the crash was.
00:03:21:08 – 00:03:22:15
Rod
Able to raise money then.
00:03:22:17 – 00:03:35:01
Sam
Yeah, really. So it was interesting because my partner, who I went to MBA school with, was from China and so was actually a Chinese, national company that wanted to put money in the U.S..
00:03:35:02 – 00:03:51:29
Rod
Oh, okay. So that’s how you got your first seed funding? Yeah, yeah. Because, I mean, everybody here had had their asses handed to us and nobody wanted to invest in anything, which is, you know, obviously counterintuitive. Yeah. I mean, if I hadn’t been hiding under a rock, I’d be on the back of a 300ft yacht right now. Yeah, no, but the opportunities were incredible.
00:03:51:29 – 00:03:52:27
Sam
But it was it was crazy.
00:03:53:02 – 00:03:54:18
Rod
So what were you buying back then?
00:03:54:20 – 00:04:01:18
Sam
what? And that was going. Yeah. I mean, we were buying single family homes in Oakland for like, $180,000, you know, I mean, just.
00:04:01:18 – 00:04:02:18
Rod
Like.
00:04:02:20 – 00:04:05:23
Sam
We didn’t we didn’t I mean, just everybody thought, like, the market would never.
00:04:05:23 – 00:04:07:24
Rod
Know what those homes would be worth. Now.
00:04:07:27 – 00:04:09:07
Sam
800, 800.
00:04:09:07 – 00:04:10:14
Rod
Yeah. Yeah. Right.
00:04:10:14 – 00:04:27:26
Sam
Okay. actually, that might be down a little bit right now. Okay. 802 years ago. Wow. but, I mean, we’re just looking at it and saying, well, look, if we can rent this for 20, 200 a month. Yeah, like the cash on cash, regardless of what the value is. Right. Because it was there needed to be price discovery.
00:04:27:28 – 00:04:37:07
Sam
we were just looking at those multiples and figuring, hey, you know, just the cash flow alone, even if it never went up in value. Yeah. Was made. It made it worthless. So that’s kind of where I started.
00:04:37:08 – 00:04:57:14
Rod
That’s where you start. All right. Well, then, I mean, I know, you’ve done some industrials, some office, socket. Let’s talk about each one of those. Talk about the industrial stuff. Yeah. I’m actually love the industrial space. One of my warriors just closed on a 150,000 square foot building. interesting. Yeah, yeah, yeah. And there’s their home run.
00:04:57:14 – 00:05:04:08
Rod
Major home run. I just interviewed him, actually, on my other segment of my podcast, which is just my warriors. But talk about your experience.
00:05:04:08 – 00:05:20:21
Sam
Yeah. So, so basically all those things that on there industrial, some office of boutique hotel, that was all me trying to figure out what I wanted to do after the single family homes. so the industrial went fine. Okay. what type.
00:05:20:22 – 00:05:21:16
Rod
What type did you do?
00:05:21:16 – 00:05:33:08
Sam
Yeah, this was a single tenant. but it was it was basically a huge warehouse for, like, garden or an irrigation supplies. Gotcha. so you.
00:05:33:08 – 00:05:34:10
Rod
Already rented or.
00:05:34:12 – 00:05:34:29
Sam
Already rented?
00:05:34:29 – 00:05:37:04
Rod
Already rented. So you just bought a stable asset.
00:05:37:06 – 00:05:53:03
Sam
Basically as well. And it was we were able to buy it distressed. So this is like 2012 or so. so, I mean, it turned out to be a great deal. Yeah. We did the same thing. It was a lease with an option to buy. Oh, back to the tenant. Oh. so, you know, I’m pretty secure. Pretty pretty safe.
00:05:53:03 – 00:05:57:26
Sam
Wow. Interesting. okay. But but, you know, that was like, one one industrial deal.
00:05:57:27 – 00:06:02:13
Rod
You didn’t love it. You didn’t love it, so you moved on. You did some office. Thank God you’re not in office now. Oh my.
00:06:02:13 – 00:06:14:12
Sam
Gosh. Yeah, we we sold the the large office building that we had in Northern California. and that sale went through about three years ago. And I thank my lucky stars.
00:06:14:15 – 00:06:33:01
Rod
That, my God, you know what the Bay area right now, I think it’s like I think it’s I think it’s sub 60% occupied. the whole frickin Bay area. Yeah. It’s an office. Yeah. I mean, you know, I keep talking about a crash here, and I’d love to get your thoughts on it, but I actually think we’re headed for a real.
00:06:33:03 – 00:06:42:20
Rod
You know what? And you’re right, you know, and, you know, I mean, a third of all commercial real estate debt is held by small and regional banks.
00:06:42:20 – 00:06:44:16
Sam
That’s the problem. Yeah, that is that.
00:06:44:22 – 00:07:01:16
Rod
Well, that that’s not just the problem that that could be it could be a really big problem if they fail. Right. You know, and and you know, luckily now I’ve got most of my money in a, in a bank that spreads the money across 80 banks. And the only puts like 249 in each bank. So they’re covered by FDIC.
00:07:01:16 – 00:07:09:26
Rod
Yeah. There’s banks that’ll do that. Yeah. But but yeah. So, so yeah. Thank God you’re out of office. hospitality. Was that the boutique hotel.
00:07:09:28 – 00:07:11:03
Sam
Still owned that still.
00:07:11:03 – 00:07:11:11
Rod
Have a.
00:07:11:11 – 00:07:20:02
Sam
Where. Yeah, that’s that’s up in Auburn, California, which is, kind of between Sacramento and Lake Tahoe. Oh, nice. Real nice area. Oh, yeah. you know.
00:07:20:02 – 00:07:21:04
Rod
So that’s just a fun thing.
00:07:21:04 – 00:07:26:08
Sam
It’s just a fun thing. Yeah. It doesn’t make that much money. No, to be honest. Yeah, it’s still cool.
00:07:26:08 – 00:07:34:18
Rod
You have hotel. That’s still cool. Okay. All right, well, let’s get let’s get to the belle of the ball here. Mobile home. what? What got you going into mobile home communities?
00:07:34:18 – 00:07:54:05
Sam
So after kind of this run with the single family homes, of course, prices went up quite a bit from where we bought them in 2011, 2012 and that sort of thing. and, and I suppose that was great. But as a business model, it wasn’t great because now what we’re looking for, which is the cash flow was, was hard to come by.
00:07:54:06 – 00:08:04:04
Rod
Not a single family ask me how I know that’s kind of my catchphrases. We give T-shirts away, they say hashtag, ask me how I know my boot camps. Okay, that’s one of them, because I, I’ve had, you know, I’ve owned 2000 houses.
00:08:04:04 – 00:08:04:24
Sam
Yeah, yeah.
00:08:04:24 – 00:08:13:13
Rod
And and they don’t they don’t cash flow. Yeah. They just don’t, you know, individual taxes, individual insurance. You know, you have a turnover, you lose. You can lose two years with the cash flow.
00:08:13:14 – 00:08:30:28
Sam
That’s absolutely right. Well and just the inefficiency of like the traveling to one from one roof to another roof. And so that was really kind of where I started as far as like look, I need to find something that’s more efficient or where I go to a property and I can see more than just 1 or 2 houses.
00:08:31:00 – 00:08:36:25
Sam
Right. and obviously some people have saw that buy you know, these build for rent communities, right. which.
00:08:36:25 – 00:08:39:03
Rod
Is kind of cool. I guess the model is kind of cool.
00:08:39:07 – 00:08:59:29
Sam
Yeah. Yeah. But but to me, the other thing I was worried about is just economic downturn. Again, this is like 2017. Like sure. You know, I mean we’ve had a nice run since then for sure. But well we can get more later. Yeah, we’ll talk about that. But anyway, so I was looking for something that was going to be relatively recession resilient.
00:09:00:01 – 00:09:21:19
Sam
And I started to as I started doing research, I came across mobile home communities and come to find out, I had heard that the two major, reeds that that owned mobile home communities, Ells and Son, that since they had been listed, which at that point had been almost 20 years, they had had positive same store NOI growth every single quarter.
00:09:21:20 – 00:09:43:03
Sam
They just became more profitable quarter over quarter. And and I was able to get some data and verify that that was true, you know, because that’s like they were listed in, 1998, I think both of them, over that 20 years, you had you had the.com bust, you had the great Recession, right? There’s a chattel crisis in the manufactured housing industry.
00:09:43:07 – 00:09:57:09
Sam
There was I didn’t know that. Yeah. And so, so through all of these to to exhibit every single quarter, growing profitability from the quarter before that sounded astounding to me. Right. and so that was that was really, I think, one of the big things.
00:09:57:09 – 00:09:58:05
Rod
That that got you going for.
00:09:58:12 – 00:10:03:00
Sam
Me to say, hey, let me dig into this, see what this is all about. I really knew nothing about it at the time.
00:10:03:01 – 00:10:05:26
Rod
So where’d you buy your first, community?
00:10:05:28 – 00:10:15:17
Sam
Bought the first one in northern California. Oh, no. It wanted to be close to home. Wow. that was the only community we’ve sold. it was about 62.
00:10:15:18 – 00:10:31:04
Rod
62 units, I believe. Yeah, just just so, you know, in the space, you do not want less than 50 because you can’t have onsite management. I mean, maybe now with rents gone up, maybe you can have a little less than that. But that’s about the minimum, isn’t it? Yeah. So that’s the only one you’ve sold. what other states do you have communities in?
00:10:31:06 – 00:10:53:06
Sam
We’re most of ours are in either the southeast or parts of the Midwest. So, big state for us is, North Carolina. That’s actually our biggest state in North Carolina. South Carolina is pretty big. Georgia’s big, Alabama is big. We have six communities in Florida as well, mostly kind of northern Florida. Closest one to you’d be, Lakeland.
00:10:53:08 – 00:11:03:12
Sam
we have a park there. Love that park. and then we’re in, like I said, Midwest, Illinois, Indiana. Kentucky. Tennessee. and then over to Texas.
00:11:03:15 – 00:11:19:26
Rod
You got a big portfolio. Good for you. Yeah. You know, let’s talk about why we love mobile. Because I love mobile home parks, too. I just got wrapped up in multifamily, and, you know, I only wanted me to go around. If there was two, I would definitely be sitting where you’re sitting doing what you’re doing. Because I love the communities.
00:11:19:28 – 00:11:39:01
Rod
Yeah. I just got, you know, sidetracked with apartment complexes. And I love that too. But I absolutely love the asset class. Like I was telling you before we started recording, I had, I had I was going to get into it in a big way. And I’d hired six Vas and had mapped the whole country, because a lot of mobile home parks are misclassified in the county records.
00:11:39:04 – 00:11:55:11
Rod
And so I would have, these vas fly around on Google Earth and look for the mobile home parks. They geocode them. Then. Then we, you know, we’d find who the owners were. We’d got their phone numbers, we got their mailing addresses, and we were all ready to go. And then I changed my mind, and,
00:11:55:14 – 00:11:57:02
Sam
And I might need to buy that list.
00:11:57:05 – 00:12:07:07
Rod
Yeah. You know, because, you know, that’s funny because because, I actually, I can’t say publicly what I did with that list anyway. Yeah. So so let’s talk about why you love it.
00:12:07:10 – 00:12:09:07
Sam
Yeah. Oh, gosh. I mean.
00:12:09:09 – 00:12:10:07
Rod
Let me count the ways.
00:12:10:07 – 00:12:28:17
Sam
This is my favorite topic. Okay. Sure. in probably part of it, we could kind of compare it to other sectors of real estate, but, Yeah. Well, for example, one of the, one of the things is you’ve got a very sticky resident base. Very sticky tenant base. I mean.
00:12:28:19 – 00:12:32:27
Rod
You don’t find any stickier than that because they really they want to move. They have to take their home with them.
00:12:32:27 – 00:12:33:07
Sam
Yeah.
00:12:33:07 – 00:12:34:24
Rod
And it’s not eat cheap or easy.
00:12:34:24 – 00:12:56:17
Sam
That’s right. I mean the I, I like referring to what we do as a land lease community because I actually think it explains a business model, a little better grid. We own the land and the renting the land, but it’s our home. It’s a partnership between you and the resident. if you do the right things and you fix up the community and put new roads in, and we like to put playgrounds in, we like to put solar lighting in.
00:12:56:21 – 00:12:57:21
Rod
Oh, nice.
00:12:57:24 – 00:13:13:19
Sam
The residents have no reason that they’re ever going to want to leave. If you make it a community that’s nice and that they can see progress and they can see that you’re going to maintain it, they’re never going to want to leave, even if they leave their homes not going to leave, and they’re going to turn around and sell their home to kind of the next person.
00:13:13:19 – 00:13:23:16
Sam
You’re not going to miss a beat. You’re not going to miss a payment like every single month that the rent is going to get paid. I mean, that’s very unusual across any sort of integrated real estate.
00:13:23:18 – 00:13:24:07
Rod
Agreed.
00:13:24:10 – 00:13:51:11
Sam
Another thing is we I don’t know any other type of real estate where you can almost programmatically buy significantly below market rent property. So if I look across our 7000 pads that we bought, the average rent is somewhere in the range of 225 to 250. Yeah. And the market is 450 plus at least. At least. Yeah. I mean for a.
00:13:51:11 – 00:13:59:21
Rod
Rental now, you know, and and the other thing is and I don’t know how aggressive you are what, 225 but that’s.
00:13:59:21 – 00:14:01:12
Sam
Low. It is.
00:14:01:14 – 00:14:21:14
Rod
It is. You just don’t you don’t push that envelope at all because you can obviously. And because you’ve got pretty considerable leverage now you’ve got to have integrity, obviously, and some compassion and all that. But, you know, our mutual friend who we were talking about before we started recording, I know he made the cover of the of the paper up there and got slammed because you raised some rents.
00:14:21:14 – 00:14:22:08
Rod
Were you aware of that?
00:14:22:08 – 00:14:31:26
Sam
No, no, but it happens. And that’s to me, that’s one of the biggest risks in the industry is actually kind of the bad press. So we’re we’re very cognizant and we’re very careful about. Yeah.
00:14:31:29 – 00:14:46:20
Rod
Well even the way you’re describing it as a partnership and things I mean that’s, that’s I get it. And that’s, that’s smart. And, and and when you come at it really from that angle and you take care of people and you and you make the place look nice and you, you make it a community where people want to be there.
00:14:46:20 – 00:15:01:15
Rod
That’s right. And then then, you know, it makes all the difference in the world. Now, if you would explain the model because, because, I mean, I know it, but my listeners may know. So you may go in and buy, a community. Yeah. And it may have a lot of park owned homes.
00:15:01:17 – 00:15:02:05
Sam
Right? Yeah.
00:15:02:07 – 00:15:30:03
Rod
Okay. And they’re typically in horrible condition because, you know, this is the lowest demographic typically as far as a renter goes. you know, you’ve heard the expression you mess with me, you mess with the whole trailer park. Yeah. That’s the but but but anyway, I’m just trying to be funny. Failing miserably. But anyway, the, that when you buy a community like that, talk about what you do, because that’s kind of the business model.
00:15:30:09 – 00:15:54:00
Sam
Yeah. No, it’s, if there is a way to invest in mobile home parks and not invest in mobile homes, right? I mean, there would everybody would be buying a mobile home park, right? That is the hard part of the business, right? Sure. I’ll give you an example. So we bought a community in Fayetteville, North Carolina, not far from Greenville, where we have a huge portfolio.
00:15:54:02 – 00:16:12:05
Sam
and we paid $80,000 a pad. We would never pay that much in our lives, a la. The reason is it every single one of those pads had a brand new home. Well, on the pad, and they were all rented. They were all park owned home. So. So actually it’s like, okay, what? We buy an $80,000 pad.
00:16:12:05 – 00:16:33:00
Sam
But you know what? What’s the value of these homes? Well, we bought it three years ago when home prices had had escalated significantly. And and the guy that had kind of developed it, you know, he’d bought these homes for like $22,000 each. We knew at that point for us to go out and install new home. We were probably looking at 55, 50.
00:16:33:01 – 00:16:33:27
Rod
50, 60 grand.
00:16:33:27 – 00:17:00:28
Sam
Yeah. So, so, so now we’re paying $25,000 for a each fully occupied lot. The fully occupied lots are probably over 65 anyway. But what we do is we we go and then we figure out, okay, hey, we’ve got all these, these homes are getting rented out. Hey, the cash flows pretty good, but it’s not going to last forever if you keep them as park owned homes, you’re gonna don’t put a cap rate on those homes because they’re gonna they’re not made to explain to.
00:17:01:01 – 00:17:03:19
Rod
Explain why they I mean, they get beat.
00:17:03:19 – 00:17:10:09
Sam
Up. They do. They get beat up and they’re not made. They’re not made. I don’t want to say they’re not made that well. They’re not made as well as a stick built.
00:17:10:11 – 00:17:13:17
Rod
Well no, they’re no, they’re made as well as a stink build home. I mean.
00:17:13:23 – 00:17:15:29
Sam
I buy four exteriors instead of two by sixes.
00:17:16:03 – 00:17:35:19
Rod
Sometimes even like, two or not that, maybe not two by four. I just a digress for a second. back. gosh, probably 20 years ago, I bought some waterfront lots down in front of Gorda here on on direct access canals up to the ocean. Okay. Out to the Gulf of Mexico. 50 grand apiece. I’m like, why isn’t anybody buying buying these things?
00:17:35:19 – 00:17:51:03
Rod
So I bought, like, I don’t know, 5 or 6 of them, and I, and I bought some prefab homes to put on them. But these were nice. Okay, okay. I mean, they weren’t like something you’d see in a mobile home community. In fact, we hinge the roofs. So when they came together, it was a higher pitched roof. So it looked like stick built.
00:17:51:03 – 00:18:04:18
Rod
Yeah. And we stuck on it. But me and I walked in and their floors were spongy. Yeah, yeah. And it was like, man, I, I’m not doing this. And so I backed out. But anyway, back to the why you wouldn’t want to keep park owned homes because they they wear out.
00:18:04:18 – 00:18:10:26
Sam
They do they wear out. So so you know you can have those brand new homes and you can kind of rent them out for 2 or 3 years. And it’s like, hey, this is great.
00:18:10:28 – 00:18:11:03
Rod
Right?
00:18:11:11 – 00:18:22:09
Sam
But then but then things start breaking, right? And suddenly when you’re turning those units, you instead of spending $500 to spend a $2,000 or more. Yeah. And all of a sudden that erases, you know, like we were talking.
00:18:22:09 – 00:18:23:15
Rod
About with.
00:18:23:17 – 00:18:32:19
Sam
Our single family, I come from that world. I didn’t want to be in that one. Right. Yeah. So, so that that basically what we do is, is we’re going to, we’re going to sell off those homes.
00:18:32:19 – 00:18:47:24
Rod
To the people that are in them to the right, and you’re finance them and everything. Correct. Right. Yeah. That’s right. So that’s how it’s done, guys. I mean, you know, let’s say they’re paying 225 and lot rent. Well you financed that 60 or $80,000 home for them and you give them a decent interest rate. And if they they pay a down payment typically.
00:18:47:24 – 00:19:02:20
Rod
Correct. I’m guessing you you know and and and so you finance that home but then they’re first of all you no longer own it. So you’re no longer responsible for the maintenance. and, and they’re going to hopefully take better care of it than if they didn’t. Yeah. If they were just.
00:19:02:22 – 00:19:22:01
Sam
Looking to be a better citizen of the community. Yeah. Let me let me clarify one thing, rod. So, so actually when when we buy a community and there’s a lot of park owned homes, what we find is that, for whatever reason, the mom and pop seller and this is, I can’t think of an exception to this, but they will always have the lot rent low and the home rent high.
00:19:22:02 – 00:19:41:24
Sam
Right. So so your example the lot rent will be 250 and the home rent will be 450. Right. You know so it’s the resident knows they’re paying $700 a month. The rent in this place. we look at it and say, well, these are flipped like the the lot rent should be 450. Let’s, let’s kind of we come in and we just kind of reallocate their payment.
00:19:41:24 – 00:19:49:18
Sam
Maybe it’s still 700. Right. And that but then we go to them and say, hey, you want to buy the house like your payments only to 50 or 300 a month.
00:19:49:21 – 00:19:50:06
Rod
Well got it.
00:19:50:06 – 00:19:50:18
Sam
That.
00:19:50:23 – 00:19:51:01
Rod
That’s.
00:19:51:08 – 00:19:53:22
Sam
Further incentivizes sure to buy the home.
00:19:53:22 – 00:19:55:07
Rod
And and you’ve ramped your lot rent.
00:19:55:14 – 00:20:03:01
Sam
Yeah. And you’ve kind of instantly taken your, your lot rent to market without really impacting them. Right. The the residents too much.
00:20:03:01 – 00:20:18:09
Rod
You know again what’s great about it is you really do have a tremendous amount of leverage that you wouldn’t have for somebody just to pack up their bags and leave an apartment community because, you know, they can’t. What’s it cost to move a home? Typically?
00:20:18:12 – 00:20:25:23
Sam
I mean, it it’s way more than it was, you know, I mean, 75,000. Yeah. We used to say it was 5 or 7, right. It’s more than.
00:20:25:23 – 00:20:26:19
Rod
That. It’s more than that now.
00:20:26:22 – 00:20:44:04
Sam
It really is. Because. Yeah. to get it, it’s one thing to move it. So even if you’re moving it across the street, right. That might, you know, maybe get someone to take the truck in and pull it over for a thousand bucks. But you’ve got it. You’ve got to hook up to the utilities again. You’ve got to, you know, reinstall skirting, you got to reinstall decking and.
00:20:44:07 – 00:20:46:27
Sam
Right, it’s a lot 10,000 or more.
00:20:46:27 – 00:21:09:06
Rod
Yeah. Yeah. So I mean it’s just not feasible. And so, now, you know, the thing about mobile home communities is, is it’s almost impossible to build new because nobody wants them in their backyard. Exactly. You know, and so, but, you know, the I’m sure you would agree, especially with frickin inflation. You know, I’m single now, and I actually buy my own groceries.
00:21:09:06 – 00:21:37:12
Rod
I’m like 150 for that. Are you freaking kidding me? Yeah. And, you know, or or takes 150 to fill up my truck. Yeah. How do people afford that? Right. And so, you know, you’re in a demographic that. Well, it’s kind of a double edged sword, too, I suppose, because that is the lowest economic demographic. So they’re going to be heavily impacted by inflation, but they’re able to live less expensive than like someone in one of my communities.
00:21:37:20 – 00:21:38:20
Rod
Correct.
00:21:38:22 – 00:21:40:15
Sam
Is that in an apartment community?
00:21:40:16 – 00:21:41:26
Rod
An apartment community. Yeah. Yeah.
00:21:42:00 – 00:22:06:25
Sam
No, I actually that’s one of the. Yeah, a couple points there. So that’s one of the things we look at is, when we’re looking to buy, mobile home community in a new, in a new area that maybe we’re not as familiar with as much. We’re less interested in what other mobile home communities are charging for lot rent, and we’re more interested in like what is a three bedroom rental cost in this market because that’s there’s not enough mobile home communities.
00:22:06:25 – 00:22:33:29
Sam
So so nine times out of ten, if somebody is looking at your mobile home community, they’re probably looking at other forms of housing, rent, renting another single family home or apartment or. Yeah, like that. And so, if you think about it, when we, when we talk about rent growth over the last because it’s been tremendous, right, the last five years or so, if you take a 10% rent growth in a lot of our markets on an apartment, and you went from 1500 and now you’re at.
00:22:34:02 – 00:22:34:22
Rod
16.
00:22:34:22 – 00:22:57:09
Sam
50, right. Thanks for the help with math. You’re in 1650. That’s $150 more. Whereas, you know, we went from 350 to 400, right? That’s actually more in 10%, maybe, but it’s only $50. Right. And so so actually what’s happened over the last few years is the gap in affordability between manufactured housing and other alternative forms of housing has increased.
00:22:57:11 – 00:23:15:12
Rod
I believe it, oh, I believe it had we had 30% rent increase here in the Tampa MSA. I by the way, MSA is metropolitan statistical Area would be a big geographic area, like a Denver or a Phenix or a Tampa. and, yeah, 30% rent growth. two years ago, it was it’s crazy.
00:23:15:12 – 00:23:16:05
Sam
That’s incredible.
00:23:16:05 – 00:23:33:24
Rod
Yeah. And so, but, so the other thing is like, let’s say they don’t pay their rent and, or their or or their payment, right? you evict them like you would a normal resident. Correct?
00:23:33:26 – 00:23:34:22
Sam
yes.
00:23:34:22 – 00:23:44:13
Rod
Yes. But but and then you have to you have to do something to take possession of the, of the, of the actual home. Right. You have to do something.
00:23:44:13 – 00:24:11:02
Sam
That’s right, that’s right. And we can almost think of it a little bit of, of a tree diagram or something. Because basically, if somebody stops paying the rent, yes, you, you go through the standard. Right, you know, notices and, and that sort of thing and an eviction if they own their own home, it gets a little complicated, a little messy, because if it’s if it’s a nice home, maybe they figure out a way and they and they and they take their home with them, but likely they, they weren’t paying their rent because.
00:24:11:05 – 00:24:27:05
Sam
Right. They could they were paying their rent because they, you know, for whatever reason, they couldn’t. So a lot of times what happens is they’re not bringing it’s an older home. They’re not going to bring their home with them. Right. So now you’ve got this empty home. It’s not your home, right? At least not yet. It’s sitting on your lot, which you can’t now rent.
00:24:27:05 – 00:24:28:29
Rod
What’s the process to take it over?
00:24:29:02 – 00:24:33:16
Sam
It depends, on the state a little bit, but it’s basically an abandonment process.
00:24:33:24 – 00:24:36:20
Rod
In a typical time frame. And if you have to average it.
00:24:36:20 – 00:24:45:02
Sam
Oh, again, it’s. Yeah, it’s going to be a little longer than that. It’s more it’s more like, you know, 4 or 5, six months. That much. Yeah. Okay.
00:24:45:04 – 00:24:56:08
Rod
another question I have. Do you find, you, since you don’t pay attention to what other people are charging, do you ever find that, other mobile home park communities will poach your homes?
00:24:56:11 – 00:25:05:15
Sam
Okay, no, I didn’t, I may maybe it came out wrong. I didn’t want to say. We don’t pay attention what other people are charging. We definitely do. Okay, but I’m just saying, like, what is more important to us, right?
00:25:05:19 – 00:25:06:21
Rod
Got gotcha versus you.
00:25:06:27 – 00:25:09:27
Sam
Bogged down the street. Yeah, exactly. It is kind of you know.
00:25:10:00 – 00:25:15:09
Rod
What do you find? Does that ever happen where they’ll like, homes, you know, I’ve heard that that that is. Yeah.
00:25:15:12 – 00:25:29:06
Sam
Like, it can. And we’ve had it happen in, in a park that we own in Wichita, Kansas. Wichita. It happens to have probably the, the highest percentage of mobile home parks of any. Oh, really? Oh place in the country. Yeah, I would think so.
00:25:29:08 – 00:25:32:28
Rod
Freaking Lakeland, Florida, Florida, Central Florida would be that.
00:25:32:28 – 00:26:01:13
Sam
Yeah. Okay. Yeah, it’s it’s actually Wichita, Kansas. And and so we are we have a nice big community there, 300 something spaces next to another very big national operator. And they and what we call as a call paper in the community, you know, they came in, put fliers out for free, whatever. And, we, we just we knew some people over there and let them know, look, if we want to do tit for tat, like we can do that and we’re like, we’ve got a team on the ground, like we we can be.
00:26:01:13 – 00:26:03:09
Rod
Aggressive, knock on doors. Yeah, yeah, yeah.
00:26:03:11 – 00:26:06:19
Sam
So they basically, you know, rescinded it now okay.
00:26:06:22 – 00:26:08:21
Rod
Smart move, smart move.
00:26:08:23 – 00:26:10:02
Sam
So nobody wins there.
00:26:10:02 – 00:26:27:04
Rod
No no absolutely not. So what happens when you buy a community that has empty pads. Do you typically try to find used homes or do you have you been bringing in new homes? I know Warren Buffett owns, what’s the name of the company that makes them Clayton Clayton Homes? Yeah, biggest, biggest, largest. management.
00:26:27:05 – 00:26:28:19
Sam
Right up there. Yeah, because I’m in Knoxville.
00:26:28:19 – 00:26:30:04
Rod
And Warren’s not a stupid guy.
00:26:30:07 – 00:26:30:16
Sam
Yeah.
00:26:30:22 – 00:26:39:04
Rod
So, you know, there’s something to be said for that. Yeah. Right. not. Doesn’t he also does he involved with a read as well, or is it just the manufacturing. Maybe it’s just the manufacturing, you.
00:26:39:04 – 00:26:51:14
Sam
Know, he. Yeah. he well, actually, I’m thinking of Jim Clayton. When Jim sold to to Warren, Jim had a whole bunch of mobile home parks. He, he divested of all those. And that was a requirement that Warren Buffett had when he, when he bought the.
00:26:51:14 – 00:27:02:22
Rod
Company to get out of those home. Yeah. Those parks. Interesting. Yeah. So he’s very conservative. So so back to your my question. Do you buy new or do you try to find used or what do you do. Yeah.
00:27:02:23 – 00:27:29:23
Sam
So we like both I mean, because there’s, there’s certain people that they just can’t they be a great resident, but they can’t qualify and can’t can’t pay for a new home, I see, but so, you know, last quarter, we did about 50 new homes. Okay. but but a lot of we’re still, you know, depend on when we bought certain parts, we’re still working through some used home inventory.
00:27:29:25 – 00:27:46:16
Sam
and so, you know, I’d say probably three fourths of what we sell is still the used homes. Now, sourcing used home is has been difficult, right. Because it’s been a tight market. Right. That’s starting to change. Oh it is yeah. Interesting actually right now we’re working with a couple lenders that are starting to take back homes.
00:27:46:16 – 00:27:52:26
Sam
Oh, perfect. So perfect. You know, these are three and four years old and perfect. And that’s that’s actually it is it is absolutely.
00:27:52:26 – 00:27:54:29
Rod
Exciting because handsome as well.
00:27:54:29 – 00:27:57:02
Sam
And they provide the financing. So it’s just gonna.
00:27:57:02 – 00:28:17:05
Rod
Be a lot of that guy’s just you know, what he just said is that, you know, these lenders are taking back these these these modular homes, mobile homes and they cannot afford to hold them on their books, so they will finance them. And that’s going to happen in our business in the multifamily space as well. Just wait. You know, this is one of the things I tell people in my bootcamps is to build relationships with local banks and regional, small and regional banks.
00:28:17:05 – 00:28:33:16
Rod
Not the big ones, not the B and TS or the B Avas or Chase or any of them, but the small and regional ones. Because you can. I mean, back in oh nine, ten, 11, a lot of people got deals that were financed by the lenders that they they took back. And so it’s a fantastic way to get into deals for low down.
00:28:33:16 – 00:28:37:15
Rod
What does a new one cost these days? Just out of curiosity, a single.
00:28:37:16 – 00:28:44:29
Sam
Single exact single I kind of right above the very, very basic would be around $50,000. Greedy.
00:28:45:01 – 00:29:00:17
Rod
So greedy. You know what? Wow. that’s, Yeah, because they don’t cost that much to build. I know lumber has gone up, though. Yeah, I know the. Have you. I’m sure you’ve been to one of their factories, right? Absolutely. Oh, it’s so cool. It’s so cool to see. I went to one when we were doing these homes down in Punta Gorda here.
00:29:00:18 – 00:29:04:16
Rod
And, just to see the kind of the assembly line of a home being built.
00:29:04:18 – 00:29:12:09
Sam
Kind of cool. Yeah. No, it’s it’s, you know, the really, especially, you know, Clayton, from what I’ve seen a lot of automation that they’re doing there. Oh, really? Yeah.
00:29:12:12 – 00:29:12:27
Rod
Oh, wow.
00:29:12:27 – 00:29:14:20
Sam
Cool to kind of see that. Well.
00:29:14:23 – 00:29:25:04
Rod
You know, I wonder because of the. The lack of the ability to build more of these communities.
00:29:25:10 – 00:29:26:04
Sam
Right.
00:29:26:06 – 00:29:39:13
Rod
Or what Warren’s mindset was with the diminishing I mean, maybe it’s not diminishing, but my view that the possibly could be the diminishing need for these modular homes.
00:29:39:16 – 00:29:55:01
Sam
No, I, I can talk about that a little bit. So, and you’re right, like every year, from what I’ve researched, there’s more mobile home communities that get turned into Home Depot or whatever. Right? Right. Versus new communities are built. Some some are built.
00:29:55:06 – 00:29:56:05
Rod
Really rare though.
00:29:56:05 – 00:30:18:04
Sam
Yeah, it’s mostly in Texas. Oh, really? Okay. Honest. Yeah. Okay. get approved and built. and there’s expansions that happen. We have a number of expansions that we’re working on and that we’ve done. but but the funny thing is actually two thirds, as I understand it, two thirds or maybe even more of Clayton Homes and Champion all the rest of them of their business is a land home package.
00:30:18:05 – 00:30:19:05
Sam
Okay. So so they’re.
00:30:19:05 – 00:30:20:01
Rod
Selling the land down though.
00:30:20:02 – 00:30:31:19
Sam
It says. Yeah. And the and it’s one they may not even be selling the land. Right. They’re just selling the home to a homeowner who owns a piece of land. Yeah. Yeah. So so that and that that market I think is growing because.
00:30:31:19 – 00:30:52:06
Rod
Yeah, I actually have one of those I own one of those in, in Orlando just sold by, remnant of my, of my disaster in 2008. Nine. I’ve got one left that’s a double wide, home on a lot. Yeah, but, and I think it’s actually in Lake Wales. You know, it’s funny, I, I, I did a speech at one to Kevin or my friend Kevin.
00:30:52:06 – 00:31:19:11
Rod
Bob who, you know, really was one of my best friends. but he, he had me come speak at, when he was selling, training on how to how to buy mobile home parks and his own training program. He had me come speak to one of his events, and we went on a bus tour, and he went to a I think it was like a 200 pad mobile home park that he owned that he found by having a relationship with a residential real estate agent.
00:31:19:11 – 00:31:41:06
Rod
And somebody had put that in the MLS for residential. What? And because, you know, if somebody this is a ninja trick by the way guys okay. If you if you know you’re going to buy in a market, have a relationship with a residential like single family agent or broker and let them know if anything ever hits, that’s multifamily at mobile home park or, or apartment complex.
00:31:41:08 – 00:31:58:11
Rod
Because, because if someone owns one of these, they’re going to go to a realtor not realizing that there’s a difference between residential and commercial and residential, agent sure as hell is going to take it because they get a commission. Hello. And they haven’t got a clue what to do with it. And and so I just thought that was that was astounding.
00:31:58:14 – 00:31:58:26
Rod
Yeah.
00:31:58:28 – 00:32:18:24
Sam
Rod. So that, that yeah that that has been our experience. That’s our favorite place to buy. No kidding. So so real quick anecdote on that. Yeah. we in this case, it, it was, it was a realtor who had who had at least had the, the knowledge to put it on, I think at the time was loop net.
00:32:18:24 – 00:32:38:03
Sam
Oh, okay. but we looked at the listing, we’re like, they don’t I don’t think they know what they’re talking about. And it was in a market that we were interested in with Greenville, North Carolina. Right. call up the the realtor and and if I remember the conversation, I called him and he’s like, man, I’m so glad you called.
00:32:38:03 – 00:32:46:17
Sam
He said, I’ve got I’ve got all these trailer parks that people want to sell, and I’ve got nobody that wants to buy them, which again, this is like a year ago.
00:32:46:17 – 00:32:48:11
Rod
And you’re on a plane the next month. Well.
00:32:48:13 – 00:32:58:19
Sam
Yeah, I’m like, yeah, exactly. I’m like, okay, I’ll be there. And and we’ve now we’ve got 13 communities in in Greenville now, most of them through him.
00:32:58:19 – 00:33:00:22
Rod
No kidding. Yeah. Wow.
00:33:00:22 – 00:33:05:11
Sam
Yeah. And watch that on front porches with wow 8085 year old.
00:33:05:11 – 00:33:06:10
Rod
Yeah. You know.
00:33:06:13 – 00:33:06:25
Sam
And yeah.
00:33:06:25 – 00:33:25:05
Rod
I was going to I was going to buy a mobile home park. I forgot where it was and it was in Florida here. And I went to this, the seller’s home, and his filing system was about a foot of paperwork on his desk. I’m like, oh, God. Yeah, I didn’t end up doing it. I don’t remember why, but, sounds familiar.
00:33:25:07 – 00:33:41:10
Rod
Let’s talk about how to finance them. How do you finance a mobile home park? Because it’s it’s different than an apartment community. Now, I believe you can get conforming debt. You can get Fannie and Freddie debt. But but but it’s got to have curbs and sidewalks and paved roads and probably city water and sewer and so on and so.
00:33:41:10 – 00:34:03:21
Sam
Well, no, no rod. We’re actually going through that right now. So we write as of today. And I had to I had think there’s really yeah. We do not own any communities that are financed by Fannie and Freddie. Wow. So we’ve never bought a park that on the outset right. Was conforming enough. But but we’re now in the process and we’re about to close our first one, the end of the month.
00:34:03:24 – 00:34:18:12
Sam
It’s a Fannie refi. It’s actually three parks. and you know what? They don’t have curbs. really? They don’t have gutters either. They’re on septic. I mean, some of the things that you. Yeah, that, you know, we we all think about. Wait, wait. Hold on. I’ll show you.
00:34:18:15 – 00:34:33:04
Rod
So, so, I mean, I hate to ask you this publicly, but it’s probably not the best time to be putting long term debt on with the rates where they are. I’m just curious, what’s your mindset on? Yeah. Did you have some bad debt you needed to.
00:34:33:07 – 00:34:35:20
Sam
No, no no I hey I’m happy to talk about it okay.
00:34:35:20 – 00:34:35:29
Rod
All right.
00:34:35:29 – 00:34:37:04
Sam
These these are.
00:34:37:06 – 00:34:38:19
Rod
Because we can cut this out if you want.
00:34:38:20 – 00:34:58:01
Sam
Yeah yeah. No no no no. We’re we’re good okay. These these are actually large cash out transactions. Oh. Okay. you know, like I said, it’s three parts. One of them seller financing of, like, a $300,000 note. The the take out loans are going to be like 1.5 million okay. Right. So it’s a and yes, the rates are elevated.
00:34:58:01 – 00:35:01:25
Sam
Right. I personally don’t think they’re going to come down any soon. Yeah I time.
00:35:01:28 – 00:35:22:08
Rod
So you know the head of head economist at Citi said that we’re going to see four rate drops. But then you see today inflation still to the moon. So you know, what do you believe at this point. And you know, and people are like 7%, 8%. And I love to say, you know, when I started in this business in 1978, rates were 18%.
00:35:22:10 – 00:35:25:10
Rod
And now they’re, you know, when they hit seven, we’re like, holy crap.
00:35:25:12 – 00:35:26:27
Sam
So yeah.
00:35:26:28 – 00:35:27:23
Rod
But
00:35:27:26 – 00:35:51:19
Sam
And over time they I think they have to come down just because the balance sheet of the federal government. But but yeah, but in the meantime it’s like, well I don’t know when and, and whatever. And it’s like, okay, we’ll just kind of dollar cost average. And so we’ve got a, you know, two years of like, hey, we’re just going to methodically start refinancing these properties, doing cash out, returning money to investors and all the rest.
00:35:51:21 – 00:35:53:04
Sam
and, and just kind of, you know.
00:35:53:04 – 00:36:16:17
Rod
Yeah, I it’s it’s a real quandary for us, you know, right now to refinance with bridge or refinance with conforming just because, you know, who knows if the rates are going to come down right now. Because when you do conforming debt, you’ve got stiff prepayment penalties. You know, typically they’re stepped out. Step down 5% 5% 443321, which is significant amounts of money if you decide you want to refi or sell.
00:36:16:19 – 00:36:25:01
Rod
But okay, okay. So, you know, I have a lot of listeners that know they need to go out and do something.
00:36:25:01 – 00:36:25:25
Sam
Yeah.
00:36:25:27 – 00:36:47:09
Rod
and, you know, they’re listening. They’re during a W-2 job. They want to create a better future for themselves and their families. and, you know, they like this real estate game. Maybe they’ve read Rich dad, Poor dad, but they just haven’t taken a taking action yet. Yeah. Can you speak to them?
00:36:47:12 – 00:37:14:17
Sam
Yeah. it’s, And it I know, I know probably the, the advice would be to, to, to go out and do it, but I, I’d qualify that. I mean, I would first of all get listened to as much as you can, read as much as you can, listen to podcasts like Ron’s, go back and listen to a whole bunch of episodes.
00:37:14:19 – 00:37:15:03
Sam
Hack. If you.
00:37:15:03 – 00:37:16:21
Rod
Better yet, get your butt to one of my boot.
00:37:16:21 – 00:37:31:17
Sam
Camps. There you go. Yeah. so so so I, you know, definitely get educated. I mean, I feel like right now is a great time, like over the next 12 months, spend that time getting educated. I feel like the buying opportunity 12 months from now are going to be. I mean, they’re starting to get interesting.
00:37:31:17 – 00:37:33:04
Rod
Oh, no, closed on us, but I.
00:37:33:04 – 00:37:33:23
Sam
Think 12 months.
00:37:33:23 – 00:37:53:22
Rod
You know. Yeah, yeah, I’m a year from now. I think I’ve seen some incredible deals because I’ve been screaming that from the rooftops. So you heard it from someone else who obviously knows what they’re talking about, but, yeah. So get educated, bottom lines, get educated. Make sure, you know, make sure you can love it in my opinion as well, you know, because when you love what you do work is play.
00:37:53:24 – 00:38:07:01
Rod
Yeah. but, you know, another question I like to ask that I’d love to get your answer to is, you know, in this big journey, I mean, you’ve been at this now for, what, 25 years? What is it? So you said you started in ten.
00:38:07:03 – 00:38:11:17
Sam
Know quite well. Yeah. I mean, I bought my first one back in 2001.
00:38:11:17 – 00:38:35:03
Rod
2001. Yeah, 25 years, 24 years. So? So, you’ve had a lot of ups and downs. I’m sure you’ve had a lot of what we call seminars here in this room. I can’t, you know, I don’t like the word failure and only failure. If you give up, you’d, you know, you don’t learn the lesson, but, we won’t talk about that, but let’s talk about any epiphanies that you’ve had in this journey of yours.
00:38:35:05 – 00:38:43:11
Rod
I’m assuming one was when you looked at these mobile home park receipts and you’re like, Holy cow, look at that. These big community sun is huge. And they still around sun.
00:38:43:11 – 00:38:46:08
Sam
And oh, absolutely. They’re still around. They’re still the big behemoths. Yeah.
00:38:46:09 – 00:38:54:25
Rod
Okay. beyond that, any other any other moments or epiphanies that you that come to mind and this journey.
00:38:54:25 – 00:39:20:08
Sam
Yeah. That’s I’ll tell you, I think one thing that I could say with my experience, and this is hopefully doesn’t sound trite, but, it definitely is about the people and the people that you surround yourself with. Yeah, I as we, as we started again, keep in mind, I mean, I went from, hey, we had a single family home portfolio and we had a little company kind of built around that.
00:39:20:08 – 00:39:38:06
Sam
Right. And then basically cut that, like within three months of owning that first mobile home park. I’m like, this is what we’re doing, this is all we’re doing, and we’re going to stop doing everything else that we’re doing. So to kind of make that pivot, I lost kind of most of my people, had in there also moved from California to Tennessee.
00:39:38:06 – 00:40:05:08
Sam
I mean, kind of had to start start all over. but so it was hard. It was super hard, like going from 500 to 1000 to 2000 in just it’s like I didn’t have enough management coming in to really hire the people that I wanted to hire, right? That I, that I, you know, right from my perspective, needed to, I had to feed the company for, for years, until finally I could start getting a paycheck and that sort of thing.
00:40:05:09 – 00:40:06:23
Rod
Oh, no kidding. Oh no kidding.
00:40:06:23 – 00:40:26:05
Sam
Yeah, absolutely. And so and and now, you know, we’ve got enough management for you coming in that where I’ve got a team, right, that I can come down here to Florida and write and have this podcast and hang out on the beach and whatever. Right. And it’s like, man, things go better when I’m gone. I mean, they all joke about it, but it’s actually true.
00:40:26:05 – 00:40:31:27
Rod
Yeah, I’m sure my team would say the same thing. Yeah. But so,
00:40:32:00 – 00:40:35:27
Sam
Oh, God. But buddy. Yeah, just kind of surrounding people with the people.
00:40:35:27 – 00:40:56:25
Rod
Yeah, yeah. And it’s all about the people I know. I’ll tell you. I know, you know, my brother, worked with Kevin for a long time and managed, all of his parks for a while, and, and, and, and he owns his own parks as well. So he’s, he’s been heavily in the business. Yeah. And, you know, he said that one of the biggest pieces, one of the toughest pieces is, you know, hiring managers at the park level.
00:40:56:25 – 00:40:57:16
Sam
Absolutely.
00:40:57:16 – 00:41:19:27
Rod
Okay. Because, you know, they have to live there in most cases. Yeah. And so, again, you’re dealing with a, typically not as sophisticated of a, of a demographic and, and, and maybe not even as motivated of, of a demographic and, you know, and so it’s a real people business at that level as well. And it is for us as well in our, in our, in our apartment complexes, you know, you we live or die by the quality of the onsite property manager.
00:41:19:27 – 00:41:33:21
Rod
I mean, that’s the biggest, most that’s the pivotal, you know, hire for that, for that asset. And then of course, the regional above of them. But, but you, you, you manage all your own assets or to use outside management. Yeah.
00:41:33:24 – 00:41:38:23
Sam
It’s all we do, right? Yeah. We, we manage them all. And as you know, rod, that’s pretty typical.
00:41:38:23 – 00:41:39:09
Rod
Yeah. In our.
00:41:39:09 – 00:41:41:29
Sam
Business it’s hard to find third party managers that.
00:41:41:29 – 00:41:42:27
Rod
Are any good. Yeah.
00:41:42:28 – 00:42:05:23
Sam
Yeah. And it’s, you know, this this is something that I had to learn kind of the hard way a little bit, but, it’s you from from, from the bird’s eye perspective, it kind of looks like. Hey, this you’re just renting spaces, right? Right. So it should be kind of, like, operationally pretty easy. Yeah. It’s like, it’s basically like we have 106 communities.
00:42:05:23 – 00:42:08:28
Sam
It’s like owning 106 businesses. Oh, sure. I mean, it’s.
00:42:09:00 – 00:42:09:24
Rod
Not basically it.
00:42:09:24 – 00:42:28:02
Sam
Absolutely. It’s operationally quite intensive. and so there’s just not a way to do it unless you, I think unless you, you manage and you know, there’s others that would disagree with that. But, our experience has been especially when you’re infilling, you know what I mean? Like some of that activity that’s really hard to outsource. Sure, sure.
00:42:28:02 – 00:42:30:12
Sam
So we’ve had to vertically integrate quite a bit.
00:42:30:12 – 00:42:33:07
Rod
So you’ve got movers and all that. I’m sure that.
00:42:33:07 – 00:42:53:22
Sam
So we actually have our own construction company right. Separate company. And we’re doing anything from, from moving homes, setting homes, you know, so doing a lot of home activity. Right. But we’re actually like these guys are doing full on redoing new sewer lines in the entire community. We’re we’re even we finished our first full development, in December.
00:42:53:22 – 00:43:08:19
Sam
Well, with, with that group. So it’s, you know, it’s they’re very capable group, but but that’s been part of the whole not something that I ever thought that I would do or wanted to do was have a construction company. Got it. But it’s actually become.
00:43:08:19 – 00:43:33:19
Rod
Kind of a must, honestly, when you get your size and level and, you know, you vertically integrate like that, certainly, you know, private equity likes to see that for sure. Yeah. And and they like to see that vertical integration. We’ve been looking at that. but interesting you know, and I know one of the, one of the things you have to be careful of if you’re buying mobile home parks is the infrastructure.
00:43:33:19 – 00:43:43:06
Rod
Absolutely. Especially the, the, the water and sewer piece and electrical, too, if it’s really dated, but water and sewer, you know, you’ll find these what do they call them? Those ponds.
00:43:43:09 – 00:43:45:21
Sam
the lagoon. Lagoon. Oh, lagoon. Oh, yeah.
00:43:45:25 – 00:44:01:20
Rod
They’re not blue. No, they’re, that’s that’s basically a lagoon of, you know what? Okay. excrement. And and, Yeah, it’s it’s crazy and and, you know, and you have to be careful if, like, if you’ve got a big sewer plant in one of, you know, that goes down, it could be hundreds of thousands of dollars and.
00:44:01:20 – 00:44:16:10
Rod
Yeah. And if you’ve got one, well, that could be a big problem. Absolutely. You know, and and all of that. So there’s the infrastructure is something you have to be very, very careful with if you’re going to if you’re going to explore this asset class in this journey of yours. Did you have any mentors.
00:44:16:12 – 00:44:16:29
Sam
00:44:16:29 – 00:44:18:05
Rod
Or just do it all yourself?
00:44:18:05 – 00:44:43:09
Sam
Yeah. No, no, I, I, no doubt definitely not not do it myself. I mean, I, I, I pause just because it’s like, well yeah, there’s Puerto Rico and there’s, you know what I mean? Okay. and maybe I’ll mention Joe McAdams as one of them. Joe. and he’s he’s been mentoring me only for the past four years or so, but he actually ran the RV division at Eel’s, which is one of the companies, you know, that’s a Sam Zell, company.
00:44:43:09 – 00:44:54:17
Sam
Right. And, and and so it’s just been really nice to have somebody like that, that, that is an advisor and can kind of give me some guidance and. Right, and things like that. But there’s so.
00:44:54:17 – 00:45:15:18
Rod
You believe in on it. You believe in mentors. Yeah. Me too. I’ve got I mean, I just hung up with one this morning helping me with something and yeah. So I believe in it as well. Well, listen, this has been a lot of fun. I appreciate you flying down here. to to to to join me here. And, you’ve added a lot of value and, very, very impressed with your success.
00:45:15:18 – 00:45:21:04
Rod
And I’m sure you’ve got nowhere to go but up with it. well, I appreciate that. Yeah, but thanks for coming down here, man.
00:45:21:04 – 00:45:22:06
Sam
Yeah, yeah. Thank you.
00:45:22:06 – 00:45:23:19
Rod
Yeah. Great to meet you. So.
