An Interview With Mobile Home Park Owner Chris R. From California, A Mobile Home Park Boot Camp Attendee

Chris R. is from California, but his mobile home parks are located thousands of miles away. In this event, you’ll hear his story and how he came to break through his comfort zone and buy properties in the Midwest, as well as how he found them and why he liked them. One interesting feature will be his discussion of his lessons learned so far and what he’s trying to buy in the future. If you are thinking about buying a mobile home park – or are looking at ways to improve on an existing purchase – then this interview is for you.

If you want to learn more about mobile home park investing, take the same course Chris took which was our Mobile Home Park Investor's Boot Camp. You'll learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks. The course is taught by Frank Rolfe who, with his partner Dave Reynolds, is one of the largest owners of mobile home parks in the U.S. To learn more, Click Here or call us at (855) 879-2738.

An Interview With Mobile Home Park Owner Chris R. From California, A Mobile Home Park Boot Camp Attendee - Transcript

Frank Rolfe: Welcome to another lecture series event. We've got a discussion with Chris from California. We are doing this because we think it's important to add to the narrative on owning and operating mobile home parks to include the views of many investors other than Dave and I. So Chris, are you here?

Chris: Hi, Frank. Yes, I am. Thanks for having me.

Frank Rolfe: Well, great. We're glad to have you, Chris, and we really appreciate you taking the time to talk about your investments in the mobile home park sector, time spent, lessons learned. Those type of items. So we really appreciate you taking the time. I know that people listening also really appreciate that. Let's start off with the basics. Let's go way back in time, and tell us a little bit about your impression of the industry before you ever thought about the industry. Just growing up when someone said, "Trailer park, mobile home park," were you appalled or interested? Or what was your stereotype of the product in the olden days?

Chris: Well, yeah, that's ... I mean, I guess I have two main memories actually because I grew up in California. I'm not there right now, but I grew up there. There are a lot of mobile home parks, and a lot of them very well preserved because the weather of course is hot and dry. One of my teachers, my tutors when I was home-schooled, she had an old double-wide, and she called it a coach. I was too young to know any better that there was ever any kind of potential stigma with such a home.

Chris: I just thought it was different than the one I lived in, a regular house. But it was like a 55 senior park in California. Then I didn't really think much more about parks until years later when I had ... I suppose I was, like early 20s. My family had done real estate for a long time. After I got to know you by reading an article about you in 2014 and then coming to one of your boot camps, which now seems like a lifetime ago, actually.

Chris: In 2014, the light bulb went off when I was reading about you, and I thought, "Oh yeah," because for the last 20 years before that, there was a real estate broker who had been over and over again telling people in my family, "You should look at these trailer parks, these mobile home parks. They're a really good investment." Like most other people, we thought, and I remember I thought, "Yeah, really? Mobile home park?" That was really, honestly, as far as the investigation went, I'm ashamed of myself to say that because I should have known better being a contrarian by nature.

Chris: But I came from the apartment industry, and we still have some apartments. I think like most people in apartments are, as they like to fancily call themselves, multifamily. They thought of a trailer park or just laughed and looked down on it. Of course, now, my view is completely flipped, and I think it's a great industry and a great investment and a great housing product, but it definitely took quite a bit of education and reorientation of my own viewpoint.

Frank Rolfe: Sure. Well, let me ask you, what attracted you to the mobile home park sector to begin with? At what moment did you say, "Okay, mobile home parks. This is something that I'm interested in exploring further"?

Chris: Well, like I said, I'm naturally a contrarian, so I tend not to ... I believe, usually, that group opinion goes too far in one direction. Apartments have gotten extremely expensive the last five, 10 years. The business is just fine. Apartment business is great. Everybody needs housing. But the trouble is it's such an attractive product for investors that it's very hard to find value anymore in apartments. The cap rates, capitalization rates have gone too low, meaning the buildings are too expensive.

Chris: I immediately thought ... At this age, I was a little wiser than I was 20 years ago. I thought, "Ah, trailer parks. That naturally doesn't sound so great to me. I bet the return is good." Then I started thinking about ... In fact, they're not building more of them and a vertical supply curve. I thought, "Oh yeah, this is fantastic." I mean, sorry. I was an econ minor. I mean, no matter how high the price of the parks gets, they're not building more of them, so the supply doesn't increase.

Frank Rolfe: Right, yeah. Then how many parks have you bought so far?

Chris: Well, I'd say two so far, and we have two in contract. I don't know where it will go from there, but that's where we had ... Now, I went to your camp in 2014, and I think in Seattle, maybe, or Portland.

Frank Rolfe: Yep, that sounds right.

Chris: Then I went to work with and spent ... Gosh. We didn't close in the first one until late 2016. So I spent a year and a half roughly doing literally nothing but sorting deals 40 hours a week with an assistant, hunting for value. We concentrated our hunt in the northern plains actually after thinking about what you had said. I'm from out west, and I've seen the boom and bust cycles out there, in California and Nevada and Arizona. We had done pretty okay in Oklahoma, and multifamily, and everything you said about agriculture being a backstop to unemployment in the northern plains resonated with me, and we concentrated on a tri-state search area up there and came across some stuff.

Frank Rolfe: Chris, what states are the two parts you currently own in?

Chris: Currently, they're both in Wisconsin. We have one in contract in Michigan and another one in contract also in Wisconsin.

Frank Rolfe: Got it. So, you're staying pretty much in those northern states that obviously we love so much because that's a big area that we also own in.

Chris: Yeah, yeah, I am. I'm certainly open to elsewhere. But now that I'm up here and working on it, stuff just sort of come out of the woodwork, and you get some deal flow going, and naturally-

Frank Rolfe: True.

Chris: ... happens where you happen to be.

Frank Rolfe: How did you find the two that you've already bought and then the two you have under contract? Where did those come from? Was it brokers or direct mail? Or how did those come through?

Chris: Well, I tried all of them, all those venues actually, and that was largely due to ... You had advised us to cast a wide-neck nest ... I'm sorry. I'm tired. A wide net. And so, a real estate broker I'd known for a long time had told me, "Turn over rocks, Chris," is what his last words of advice were to me when I was complaining about high prices over the last four or five years. I decided, "Okay, let's do it all." So we did outgoing mail. We did direct mailing and built a website. Actually got a decent response rate. Didn't happen to buy anything that came in to us, but I definitely believe in direct mail.

Chris: I went and flew around the country actually on a dog-and-pony tour to physically, in person, meet some of the bigger brokers in this industry, because I found it not incredibly easy to get taken seriously as someone they had never heard from before. It didn't matter a whole lot that I could send them a résumé and a balance sheet and a list of what we already had and what we'd done that they had never met me before. I finally thought, "Well, I'm just going to get on an airplane and see if people will have lunch." So did some of that, and surprisingly, I made some good relationships with some good people, but that also did not turn up our first parks.

Chris: Then, also, we were monitoring literally everything coming in on sites like LoopNet and Mobile Home Park Store and various incoming leads, systematically sorting them into Excel, literally everything that came in for over a year. Then I had somebody doing ... She would extract the basic metrics that I wanted to look at is screens. You know, the metro, the price per lot, the comparable rents in the area. What they're asking for the park, et cetera, et cetera. We did that. That still didn't happen to turn anything up.

Chris: So to be honest, after all the systematic effort, I happened to be awake at 3:00 AM one day, looking at my computer. I'm a night owl. The Mobile Home Park Store early access thing that I subscribed to popped up in my inbox, and I clicked it. There was a little foreclosure park listed by somebody I'd never heard of before. I thought, "I'll give a call." So I left a voicemail. I didn't end up buying that park, but I asked the broker, "You got any pocket listings, like you told us?" Sure enough. Yep, she did have some, and she let me take a look at them, and we went to the state and went from there.

Chris: So it was off-market, kind of semi-defective product we could add value to, but it definitely required a lot of inspection and analysis before I was comfortable with those deals that she had.

Frank Rolfe: What type of financing tool did you use, on those did you use? A bank or ... So obviously, if that was a foreclosure, that would be.

Chris: Yeah, the foreclosure one, there was a bank or a credit union actually holding it that was willing to offer pretty good terms. Looking back, I might actually have taken a run at it, and I might today. But I know you have hundreds of parks. This is all comfortable to you. It's increasingly comfortable to me, also. But 24 months ago, I was still very nervous about it, so I wanted to make sure I had everything right. But yeah, actually, we went in with all cash. So, maybe I could have gotten these two financed, but we just them down for cash because we happened to have the liquidity at the time, and I needed to place it anyway.

Chris: I'm getting ready to refi out now, actually. Pull cash out and get the leverage in the in there and then put that cash back to work. I normally of course wouldn't recommend all-cash purchases. You really have to be comfortable with what you're doing, I think, and make sure that you have a plan to get your money back out and reasonable odds of doing that to get a good internal rate of return. But yeah, I certainly wouldn't do with a stabilized product, but with the value add, I think it can be worth it.

Frank Rolfe: Are you refinancing back in the bank debt or CMBS or agency or what?

Chris: I'm actually literally getting started with that this month. We have a loan broker that we've used quite a bit out in California, but he does nationwide stuff, and he's got ... I think he told me last time he had CMBS debt available for parks. I will say that I've had bankers coming to talk ... I'm nobody, okay? But still, it's just an indication of how ... I think how rapidly the image of parks is changing within the banking world is that I've had bankers come to me lately, introduced through an attorney I've done some work with. They're looking to lend money on parks.

Chris: I saw this email string, actually, of a couple of bankers asking my lawyer if they could get the intro because they're interested in doing the lending. There's nothing special about me. I mean, I'm little, nobody, and that's actually the point that I'm making is that little old me, nobody here, and there's some ... They're not huge bankers, but they're seeking this stuff out.

Frank Rolfe: Right.

Chris: They clearly like the product. That broker I mentioned in San Diego who's done multifamily for us, he seems to have, quote-unquote, "Gotten religion. Seen the light," so to speak with parks. It's funny. Two years ago, he was very surprised you could get anything financed. He found some CMBS guys, and he was shocked that he was getting me good rates on some packages I was looking at buying. But two years later, I talked to him a couple weeks ago, and he's almost got this reverential tone now for mobile home park.

Chris: He's like, "Oh, yeah. I've been reading about that. My goodness. I'll tell you, everybody in multifamily's trying to get into mobile home parks. You've got a good thing going there." All these guys, they're trying to get out of their apartments and get into parks. Oh my goodness.

Frank Rolfe: Yeah, we've actually had banks come to boot camp-

Chris: Really?

Frank Rolfe: ... basically start networking to make loans. We had a bank out of Illinois. Oh gosh. I think about a year and a half ago, and they wanted to place, I want to say 25 or 50 million loans into mobile home park specifically. I think they've actually now achieved that. But yeah, the banking industry is definitely becoming extremely interested in the sector because it was never used to be ... Back in the '90s, nobody cared. But today, it's odd because we also get calls constantly from banks, so that makes the financing part easy.

Frank Rolfe: Tell me on the foreclosure you bought because we bought foreclosures, and they're often wild animals to say the least. I mean, we bought foreclosures where a bank cannot even provide us a rent roll or financials. Was yours that type? Or what was your more clear?

Chris: Yes, well, they were both ... I didn't actually buy the foreclosure. The foreclosure was a listing this broker had that it got me been calling us.

Frank Rolfe: Well, I...

Chris: But they were still basket cases. Yeah, these pocket listings were basket cases in the sense that ... So the first one we got was November 16, and I was in central Wisconsin, just roughly 100 lot, water, city, sewer, and a midsize town deal, maybe 70%-ish occupied. It was not officially on the market. The seller has gone back and forth on what they wanted to do I was told. There were financials, but they were about as good as dog food. I mean, they're a complete mess. But the town was good, and the area was good, and the lots were spacious. It was a pleasant-looking place. Needed a lot of work but ... So honestly, I did that mostly on pro forma because I went and my assistant went and spent a good amount of time on the ground.

Chris: We learned that some prior buyers had supposedly anyway looked at this thing and dropped it. The previous owner prior to us had purchased it from another distressed situation three years earlier and the just in the heart of the recession, and he got it for half the price, half price that we paid him. But still on my pro forma, it looked to me like there was still 400% upside once full, because he had to sell it for what was still a low price because he had no financials. What, frankly, it turned out in the end was the more time I spend on the ground staring at everything, it looked like one of these situations, it was almost ... It was like the Keystone Cops of criminal mafiosi.

Chris: It's like everybody was trying to screw everybody. I think he was trying to screw the government on his taxes. I think his manager was trying to screw him. The manager was screwing the residents. The residents were screwing the manager. The water bills were fake. The accounting was no good. It was just almost hilariously bad, and it was a situation where the manager, as is often the case, hated the owner. So if you go and make friends with the manager and just become a shoulder to lean on, so to speak, and let them get it out on how much they hate their out-of-state owner, they begin to talk and they begin to talk, and you learn things if you listen.

Chris: It's really funny how much people want to share. Once, I became more comfortable with it the more I became convinced that there was all kinds of fraud and theft going on all over the place, because then that's a logical explanation for why the financials are no good. It's like, okay, the products can still be good. Yeah, my instincts are right. The market is still good. This is why the financials suck. There's fraud going on all over the place, and that's solvable, right? So the data's right.

Frank Rolfe: Right.

Chris: Park turned over, so that person was no longer the manager. It was essentially starting fresh. I took a lot of your advice, and I'm getting tired of saying, "Frank was right." I'm going to try and-

Frank Rolfe: Well, of course, I don't get tired of this.

Chris: ... make this interview a Frank-was-right hour. But I do laugh and talk to some people. We started No Pay No Stay immediately, and gosh, darn it. If it didn't work, got 100%. The park was at 50% collections the last few months before the sale, and I got 100% on the very first one. Literally 100%, everyone paid.

Frank Rolfe: Good, right.

Chris: I came in with big scary letters and really said, "Really I don't want to have to do this. Please don't test us. Anybody pays late, you're going to get evicted. Please, please, please don't do this." They didn't. It's just like you said, there'd been no enforcement before. I did forgive people's debts, but I didn't make a show of it. There was so much fraud I couldn't figure out in the accounting who owed money and who didn't. So, I just started from zero, and I figured debtors would quietly support us.

Chris: Exactly. So, yeah.

Frank Rolfe: As far as the occupancy, are you trying to fill vacant lots with CASH program or are you filling vacant lots? Or what's the plan on that?

Chris: Yeah, the plan is to do a mix of both. Currently, I'm planning to just buy some houses and rent them. I'm definitely going to try the CASH program. We've been here about 18 months, and the first year I spent battling the residents and the local government. I did have to get some bad apples out, and that I thought I'd be there a few weeks. I was there quite a bit longer. I learned a whole lot. I don't know if I'd recommend that experience again to most people. But I'm single. I have a girlfriend, but I don't have kids, and I'm able to just ... and willing and crazy enough to just pack up and go where the money is for a while and think it's a learning experience.

Chris: It would have been hard to do it that way on this deal, I think, the first time from out of state. This was probably the hairiest thing I've ever seen. But there was some stuff going on in the park, and there were some people I think not very happy that their way of life had been messed with. As soon as any of the rules started getting enforced, 80% of the people were very glad and grateful. But that 20% put up a bit of a ruckus. I think I shouldn't have been managing it myself. I think the guy from California should not have been physically probably in that park for so long.

Chris: I think it probably enabled or engendered some feelings of resentment, especially once the people started getting evicted. Now, however, it's exactly the way you said it was. I mean, I would say if I wasn't busy trying to improve everything all the time, I'd build the business and do infill and rehabs. The actual management of the park, I started keeping a database a couple months ago because I was very curious where my own time is going. I feel like I'm working all the time, but I don't think it's all running the park.

Chris: So I started tracking my time, putting it in AIRcable, tagging it with what the activities I'm doing, and sure enough, I realized I'm only spending maybe two hours a week running the park. All the other time was going toward building software programs to expand and trying to build an internal rehab division and get a crew together to do large-scale rehabs of homes and planning infrastructure and all this stuff. The actual running of the park is just like you said it was. I don't hear from the people. If you don't rip them off, that's really all they care about. They just want to be left alone and left quiet.

Chris: Most of them are hardworking folks with jobs and want to have a decent place to live, and then a number of them have quietly thanked me for cleaning it up. You're 100% right about the turnover. There's very, very little turnover compared to multifamily. We've got nice ... I keep talking about apartments because I'm one of the few people I know who has got a toe in both worlds. So far, I have found by the way that I don't see a ton of overlap. The people I know in the apartment world, at least the ones I know don't have parks as of yet, and the park folk don't really have apartments.

Chris: So there's a lot of like, "Well, I think it's like that in that other industry." I have a little bit of experience in both. I will say that it's just like you said. We have 50% turnover at our apartments, and they're nice apartments. They're nice, Class B bread and butter near an Air Force Base. They're in good condition. But it's just the nature of the beast. People come into an apartment complex because they're transient. So it's definitely way more of a running-an-active-business operation.

Chris: The park, just as you said, there's just little to no turnover. We're mostly homeowners, and that's what people want to be. Yeah, if I was willing to just leave it as is, it would be very hands-off at this point.

Frank Rolfe: I assume that your experience was similar to mine because my first park, of course, I officed in the park every day from 9:00 to 5:00. What I found was I was getting way too involved in the often traumatic personal lives of my residents.

Chris: Yes, yeah.

Frank Rolfe: What they would do is they would all come in as the only sane person around and the only person that they could probably hit up for money, and every day, I would get five or more requests for immediate lending because car broke down, or the spouse hit them or you name it, and I didn't keep a time sheet like you did. But I realized end of a year that at least 90% of my time had been spent on being a guidance counselor and psychiatrist for crazy people. That was all I've done. So basically, I have been a non-billing, non-functioning, non-licensed psychoanalyst-

Chris: Oh God, no.

Frank Rolfe: ... for the craziest people on the planet.

Chris: No, you're completely right about that. I would not trade that experience that I had experiencing what you had. Personally, I wouldn't trade it for anything. I'm now very glad I did it. It's not just comical. There's a lot about to learn about humanity that way. I don't ever want to go through it again. Having said that, right? No, but it's like you said. I didn't get hit up for money so much. What I got was everybody coming in and wanting to tell on each other. I'm the new manager here, and there's just this parade of folks in the first two weeks.

Chris: "Hey, Chris." "Hi." "Hi, how are you?" "Hey, how are you?" "Hey, I'm going to tell you what's really going on. You want to know what's really going on here? I'm going to tell you." I'm like, "Xavier, what are you talking about? I just want your rent, man. Everything looks fine to me." "No, you need to know." I'm, "I need to know what?"

Frank Rolfe: Yeah, I used to get the exact same stuff.

Chris: Oh my God.

Frank Rolfe: It was crazy. Did any of them and even remotely turn out to be true? Because every single person at Glen Haven, they told me that this guy's dealing drugs, and this person's stealing cars. It just got to be ridiculous. One of my first Glen Haven experiences as the manager was someone came in and said that a resident was making meth in their mobile home. I was an idiot. I knew nothing. I don't even know how you make meth. I knew nothing. So I have a passkey. The whole idea is stupid, and it's a rental. So I decide I will enter the home-

Chris: Uh-oh.

Frank Rolfe: ... to see what's going on. Yeah, I don't recommend that to anyone. I obviously knew nothing about what I was doing. But as a happy ending, the person was not cooking meth. Their furnace aperture had been put on wrong from propane to natural gas, and the house was about to catch on fire.

Chris: Ooh. Ooh.

Frank Rolfe: The smell all the neighbors had been smelling was not meth. It was basically the smokey melting of the enclosure of the furnace. We probably saved the home from being burned. The crazy part was they were adamant they had graphic detail of how much drugs they were producing and how many customers they had, and it was all absurd. Then I realized, "I'm never again taking the side of the resident on this nonsense." So when people would then come in and say, "This guy's making meth or whatever," I would say, "Great. Call the police. You can get their number. Call them and tell them that." "No, I don't want to do that." "Well, then it can't be too big a problem or you'd call them," right?

Chris: Yeah. Yep, yep, yep, yep.

Frank Rolfe: In other times, they would tell me they had called, and they'd say, "The police won't do anything." I said, "No. What the police are telling you is there's actually nothing going on because they would do something if they thought it was legitimate. But yeah, I would I've been right there with you spending my time, not making money, but basically just enduring endlessly bizarre conversations." And so, I know exactly what you're talking about. So, let me ask you this. People all the time say that it's really hard managing parks from afar, and I assume there's probably some distance between you and the two parks and the two that you're looking at.

Frank Rolfe: Has the distance barrier melted over time? Are you less concerned about being there or near there?

Chris: I would say yes and no. Yes. So, okay, I haven't physically set foot in ... Just anybody's listen here in the show, I am personally still in Wisconsin, but that's mainly because we're expanding. So I'm looking at more parks and more deals. If I was staying at the two park level at this point, I think I'd be on a plane for Los Angeles again. Well, I'm not sure I ever want to live in LA after living ... Actually, the Midwest has a lot going for it, frankly, that I've now come to love. But I wouldn't need to be here.

Chris: I'm only 20 minutes away from one park and an hour and a half from the other. So, essentially, what I'm running is a distance experiment. I psychologically feel better that I'm closer to them. But I've got a manager now that is handling both parks, which I know is maybe a unique model, and maybe I'll discover it's a no-no, but I can talk about the management model in a minute that I'm trying to build. As far as distance, what I see folks getting in trouble with over and over again ... Let's see. Well, the first one was like that, the second one. The next one we got in contract.

Chris: Okay, Both of those two parks, and now a third one we have in contract involved the managers stealing from the owners who were far away. But also, both of them involved the owners being complete idiots and letting it happen. I don't say that with judgment because we were ripped off years ago by an apartment manager to the tune of over $100,000 over I think a period of maybe three years. She was skimming, and we didn't catch it. It was another distant situation. What I learned from that episode was never, never, never, never let managers touch money.

Chris: Don't let them run the books. It sounds obvious now, like oh my God. Why would anybody do that? Well, it happens over and over again. So you get somebody kind of new to the business. They come from a different world. They're kind of trusting. I think they buy something 1,500 miles away. They don't want to put in the time to think about a management system. The easiest thing to do is to start trusting the onsite more and more and more and not being firm about things, like don't take cash. Not being firm about you got to get the money.

Chris: The onsite gets more and more power. Human nature takes over. They begin to justify to themselves. Oh, the owner is rich. The owner is making all this money. I need whatever this week to survive. It's not going to hurt that person if I take 10 bucks. They probably cross that little line, and then it gets easier and easier. The common scenario is you see at least, I'm sure ... Maybe you guys must have seen as some deals you've taken over. You get a local onsite manager running QuickBooks, running Rent Manager also being allowed to collect the money.

Chris: They're the same person that's putting the bookkeeping entries in. They're allowed to take cash. They're making the deposits. I mean, it's the perfect setup for stealing, right? Then the owner on top of that, well, now they're getting ripped off. The owner is probably buying new parts further for their mobile homes, just like happens in the world of apartments, and a new water heater does get purchased at Lowe's. That's not what gets put in the mobile home. It's barely on its last legs, piece of crap. Gets put on the mobile home, and the new water heater gets sold on Craigslist because the owner isn't streetwise enough to be having the onsite taking pictures of the serial number as it goes in. That kind of thing.

Chris: I do think that with the systems available and the tech now, you don't need to be there absolutely. But I don't think, Frank, that most people thought it through as systematically as you did. You are a very unique bird, as I'm sure you've been told before. The system you lay out to people does everything. If you follow that, I think it's a great system, and everything will tend to go right. That's not how people get in trouble. I think people get in trouble because they don't do the things that you've advised to put those safeguards in place.

Frank Rolfe: Yeah, and you're correct, Chris. The worst embezzlement I ever saw, in fact, was trusting California, and in fact, and what they did was they let the manager not only collect the rent, but they controlled everything, the checkbook. All they did was they would send the owner the differential between the revenue and expenses each month and then-

Chris: Oh gosh. Oh gosh.

Frank Rolfe: ... supporting financial statement monthly, right? And so, the crazy part that I've never understood was it was a 199 space park with an additional 30 RV lots. All he was making on this entire enterprise was 500 a month.

Chris: Oh.

Frank Rolfe: Yeah, and he never questioned that. His NOI per year of this-

Chris: Oh my God.

Frank Rolfe: ... gigantic was 6,000 bucks, and yet, he never ... I mean, all you would have had to do if he had simply flown to Oklahoma and walked to the park and then the slightest amount of auditing, he would have realized that was impossible. His net income was no different than only two occupied lots.

Chris: Right, right. Wow. How long did he let that go on?

Chris: Do you know? Was that a year?

Frank Rolfe: He let that go on for over a decade. When we figured out the embezzlement, the embezzlement was in excess of a million dollars.

Chris: Oh my gosh.

Frank Rolfe: But then the crazy ending was ... So when we said to the guy, "Look," we even found the bank statements, which she had been depositing the money. What she did was ... He thought that he had that she couldn't embezzle because they only took checks and money orders. But of course what they did was ... Well, first off, she didn't follow that. Still got to cash anyway. But when people did pay with check or money orders because they thought that it was going to protect them as the customer, what she would do is she would then deposit that in a separate bank account she would set up in the name of the park, with her as the only signer.

Frank Rolfe: But that did not protect the owner since the owner was not even looking. So, she would deposit $50,000 a month of checks in a checking account, the name of the park, and then she would withdraw each month all of the cash. It's just boggled my mind. But you're exactly correct. These people, often, they just do it to themselves by virtue of not even putting any brain power into the operations. So it is mind-boggling. I don't see any young people doing it. I don't know if you have found any young people. The people that we've bought that have that stuff going on, they're typically a little on the older side, and they're more trusting.

Chris: That's an interesting-

Frank Rolfe: I'm not sure if baby boomers are that trusting.

Chris: ... observation.

Frank Rolfe: Yeah, ours are mostly greatest generation, silent generation people because I don't think boomers are that trusting or gullible. But yeah, it is a chronic problem, to say the least, in the industry.

Chris: But it's easy to correct. It's such a thing. I mean, it's-

Frank Rolfe: Absolutely.

Chris: ... so easy to fix it as soon as you do it. In today's technology world here, I know I'm a little extreme.

Frank Rolfe: Let me ask you this. Well, I want to hear about your management system. So tell us what revisions you've made or what you find works or just kind of in general the lessons learned from operating that you've got so far.

Chris: Sure.

Frank Rolfe: What have you learned?

Chris: What have I learned? Well, I've learned a few things. What I've learned is that ... I know I'm 40, and so, I grew up with computers. I'm a little on the far side of enjoying tech and stuff. I know not everybody is that way. However, I have found that these blue-collar, working-class Americans, actually, a lot of them would really surprise you at how much they enjoy technology themselves also, and even if they're not tech-savvy yet. I'm talking especially with, like online portals and paying rent online tend to be very enthusiastic.

Chris: I've only encountered literally so far like one person out of over a hundred who just is very adamant that they're going to refuse to carry a cellphone or pay rent, and that person has a job, and they're just fine, but that's a stubborn person. The rest of them I have found ... You know, they tend to all have mobile phones. There's a whole lot of internet mobile stuff. They may not have laptops and full desktop computers, but they've got mobile. So if you have a property management software program that has a decent mobile portal built into it, you don't have to go build your own solution.

Chris: You show them how to pay on it with their checking account or their credit card. If you get hooked up with even some provider networks like PayLease, I imagine you guys maybe use them. We're switching to them. They're one of the biggest out there. They have cash pay networks. So, residents can actually ... If they don't have a mobile phone even, if they have no internet, they can still ... You get a PIN number from PayLease. It integrates with many through an API with many software programs like Rent Manager. They go down to Walmart.

Chris: They give the PIN number to the cashier. "How much do I owe?" "Okay, sir, you owe X hundred dollars." "Okay, here's my cash." Boom. It goes into the accounts payable module of your software, and it's no more, like no more data entry. We're going 100% mandatory electronic payment. It's legal in the state. Here in a couple months, I'll tell you how it works out. We'll see. But basically, my goal is to attempt to automate literally every function of property management, and I don't know exactly how successful I'll be. But I've been building these out as projects and a project management tool and trying to prioritize what we're going to do first.

Chris: But if you think about it, like my goal is to have onsites just be relationship managers and salespeople because that's I think the biggest value of a human being is connecting with another human being and make them feel wanted and appreciated, and that's high-dollar value right there. But if I can have some computer or some offshored service efficiently doing all of the paperwork and the back-end stuff, I don't see why I'd ever want an onsite doing that again. It might not have been possible even five years ago. But the rise of a couple of things in, like the last 18 months even, I think it had made some of this stuff more possible.

Chris: If you take a combination of what they now call no-code software application interfaces, which is basically ... There's a raft of them out there. It means somebody who doesn't know how to program a computer can now say, "Okay, I want to build a software application that ... " I don't know. It puts a late notice on someone's door. So when onsite is walking down the street and sees that Mr. Smith has too much garbage on his stoop, that wouldn't ... not a late notice but a violation. You just point your iPad at it, boom. Take a picture. Click button for which unit it is, what the violation is. Sends away.

Chris: Literally, the process is so automated that shortly thereafter on certified mail, Mr. Smith gets a nice letter saying, "Please, you're violating rule number five. You do that again, you're getting a fine," or whatever. Then a very polite person from a call center calls him up on his telephone and also makes sure that he gets the message politely through the telephone. Now, you've saved your onsite a tremendous amount of time, and I think it enabled them to scale up how many units they can supervise. Hopefully, quite a bit. I mean, the next step of course is not even having the onsite walk past.

Chris: The next step is 4K, 8K, ultra-high-definition, constant-monitoring cameras that can serve a dual purpose, right? They monitor for crime. But also, they serve as literally your eyes on the property. If you google this stuff, look it up on YouTube and Amazon. It's crazy how good they have become. We're not talking grainy security footage. We're talking now literally cameras you can buy off the shelf that it's like you're there. You can pan. You can tilt. You can zoom. They're weatherproof. They're IP-enabled. They run off of WiFi.

Chris: You build an off-the-shelf outdoor WiFi network that's weatherproof. It's literally telepresence. It's just amazing. Then in the last year or even six months, the last six months, there's a new breed of AI/human-powered assistance services, some of which are now experimenting with providing customer service and back-office support to small businesses like us, and these outfits are very entrepreneurial. So they're totally open to the kind of thing where you say, "Okay, I want your person in Manila to log on three times a week. I wanted them to look at all the cameras. If there's a dirty spare tire over on lot five, that's the violation please. You know how to use our software. We onboarded you, and please take care of it."

Chris: We'll see if it works. I may be pushing it too far. But I have been using a call center now for inbound customer service. Not for leads but for customer service. If somebody calls their rental and their toilet breaks, or if they're having a payment issue. A customer service agent from a call center that does a pretty good job, they do all the phone calling. What we get on our end is a series of emails. We also have the company inside our project management software for ticket support. I will tell you, Frank, it has saved my butt a couple times already on being able to tell two different cities that an angry resident was just making crap up because they caught themselves in their own messaging loop telling lies.

Chris: And instead of having to be a "he-said, she-said" with, "Oh, well, my manager says that Mr. Smith is really crazy." Well, we have Mr. Smith's message history. We have the third party call center agent saying, "Well, okay, Mr. Smith hung up on me, and then he shouted craziness at me, and he said he was calling the building inspector, and he said all these units' pipes were frozen." Then our next log event is we called all the units. Then nobody's pipes were frozen, and they told us themselves, and then you've got that. You just forward it to the billing department when they call you, and you stop it in its tracks. It's just worked beautifully so far. So, I don't know. We'll see.

Frank Rolfe: You kind of in the storage industry where the storage industries now go into robotic managers, which is basically an iPad on wheels on a stick.

Chris: Really?

Frank Rolfe: Yeah.

Chris: Tell me about that. I didn't know about that. Okay, that's cool.

Frank Rolfe: Yeah, what it's doing is you put the robot in the storage facility. They're mostly testing them now at night. It has motion detectors. If it detects the presence of a human, it goes to the human, and there's a live person on the screen. So in other words, you can have one person monitoring multiple storage units, and they ask them, "What are you trying to do?" The thing has the capability of signing leases, selling locks, everything.

Chris: Really? Signing leases?

Frank Rolfe: Yeah.

Chris: Okay, that's awesome. I did not know that.

Frank Rolfe: The storage industry is very much also looking at the ability to ... Well, because in storage, really, the largest and only cost out of many of the storage facilities is the manager. So if they can find a way to get rid of live humans, because storage is different, right? When you're talking relationship manager, which is totally correct, typically, the storage, there's not a lot of relationship. It's just I want to rent a locker, and you don't want to pay. So they've been using kiosks in storage you probably have seen.

Frank Rolfe: So now, in many storages, they don't have a human, or they have a human only in certain hours. But now they're looking at making basically a mobile kiosk that moves and talks and follows you and guards. Yeah, so, no, you're kind of in keeping with the way trends.

Chris: I dreamed of kiosks. I didn't know they existed. I will look that up.

Frank Rolfe: They exist in storage.

Chris: Thanks for telling me about that.

Frank Rolfe: Yeah, they exist in storage so far. I think you'll eventually see the kiosks probably more in RV, because then, well, you could have a 24-hour-RV-check-in station. But you're definitely on the track of something because there's a lot of new things going on on that. So tell people ... Well, first of all, let's talk or a minute about Wisconsin to your Californian ... Go to Wisconsin. I mean, I recently drove from the northernmost edge of Wisconsin decks. We have a park in Sault Ste. Marie, Michigan, which is the northernest part of America. That's where you cross into Canada.

Frank Rolfe: So rather than go any other way, if you want to go to Wisconsin or parts of Wisconsin from there, you just hang a left and go around the Great Lakes and down. I'm always impressed with the state of Wisconsin. Is that what you've been finding? I mean, it's so attractive. It's upscale. People are so nice.

Chris: Yes.

Frank Rolfe: It's just mind-boggling. I mean, small towns in Wisconsin are always clean and well maintained. I mean, is that what you're also experiencing there?

Chris: Yeah, it is, and it's good that you mention it because I have become pretty desensitized at this point. But I was struck by everything you just said when I first experienced the state, because I drove Michigan, also where I think there's a lot of great opportunity as you have told everybody, and it's all true. But most of Michigan's still a little bit more worn-down looking. I don't know how to describe it, versus Wisconsin, and I drove Ohio. And again, it's the same effect. It's not that they look terrible, but you go to Wisconsin, and all of a sudden, the grass is a little ... Literally, the grass is greener. I mean, they're taking care of the grass better. Their roads are in good shape.

Chris: People take pride clearly in their neighborhoods. It's a fascinating state. I will say it's insular, I think, socially. I became so interested in it after I got here. I'm just trying to find some reading about the state. I don't have a lot of friends. I'll say that. You know, Oklahoma, I can't walk more than a block practically without getting invited someplace to a barbecue. It's a different culture. Up here, I've been here a while. People are very polite. Professionals I work with are very professional. It's a wonderful place to do business. I have gotten almost no social invites anywhere, which is okay. I mean, I'm working. It's fine.

Chris: Nobody's snooty to me. But then I looked this up, and I thought, "Maybe something's wrong with me now." Nope. A lot of other people have noticed it too. It's a very inward-looking place. It's very sticky. They say sticky in the sense that there's not a ton of inflow population, but there's also not as much outflow as you would think. People tend to stay in the state. I can't explain why or if that has anything to do with why it's so great and hard-working economically. But the other thing I've noticed up here is these family-run businesses that are much larger than we see family businesses tend to be in other states, and they're multi-generational, and yet they haven't gone public yet, and still, they're doing hundreds of millions of dollars.

Chris: I have read some speculation, some theories that creates a kind of cohesiveness in the culture up here, where the companies are not looking quarter to quarter to ring as many pennies as they can out of a public balance sheet. Income statement for Wall Street, they care about the long run and maybe pay their employees a little bit more. I know that income inequality, you know, if you look at the Wausau metro, it's 120,000. It's the northern most, big place in Wisconsin. It's a boring place, but it has a couple of claims to fame. One of them is it's the least inequal place in the United States by income.

Chris: Yeah, I've heard it referred to as a, quote, "middle-class paradise." ZipRecruiter named it last year; it won a top 10 under-the-radar city for job opportunity and tech jobs. I think it translates to mobile homes because just one of the reasons we looked here. You said in your boot camp you set up in Wisconsin, people tend to take better care of their stuff. You said when they get evicted, they don't destroy the trailers as much as they do in other states. I have to say it's all been true. That park I told you that had some bad seeds that needed to get out, yeah, they were bad seeds.

Chris: They were some bad apples, dude, but not compared to Los Angeles. You go to Los Angeles, and they'd be school teachers out there. I mean, it's not quite the same thing, but like you said, even the folks we had to evict, some of them with very bad feelings about us. They did not destroy their homes on the way out, and I was shocked. I was expecting to find feces and urine and garbage bags and not even want. They were not happy. There's a level of politeness and respect up here that I have found even in the most what you would call rough people. You know, people that may engage in criminal behavior, may have substance issues that are sort of on the margins of society.

Chris: There's still Wisconsin in them. You can see it, and you can feel it when you talk to them. If you give them respect, they'll give you respect. Yeah, it's a unique place.

Frank Rolfe: Well, we've actually had experiences in Wisconsin with people who upon being evicted will actually vacuum their mobile home, if you leave just a little note with a smiley face saying, "Sorry. It didn't work out. But maybe next time." It's kind of odd because you never see another stage. It's very unique. Although I think western-

Chris: What do you think?

Frank Rolfe: Michigan gets a bad rap because of Detroit. But really western Michigan is even perhaps more upscale still than Wisconsin. It's just amazing how different they are throughout America.

Chris: Well, tell me. You're serious. I mean, what makes these place to stay so physically scrubbed and good-looking? I mean, what is it?

Frank Rolfe: I don't know. People have been wondering that for the longest time. It's something to do with the way people are brought up there. I mean, I wonder ... I'm just going to throw out the concept that does Wisconsin have a really low divorce rate? So are the households more intact? Is there better parenting? What's odd we find in Wisconsin is even in parks where people do not have great amounts of disposable income, they still keep the property up really nicely. It's like an older car ... Wisconsin has all the hubcaps. It's washed. Possibly waxed. But the mobile home might be from 1961, but it's been pressure washed. It's been painted. It's landscaped. It's something to do with the people.

Frank Rolfe: In Wisconsin, it's something to do with just the way people are brought up there. But it is unique. I've had people ask me what the magic ingredient is because people would obviously like to bottle that and take it elsewhere in America. But I'm not sure why it's that way, but that's where the great benefits of Wisconsin is. People just act so darn nice.

Chris: Yeah, it feels ridiculously wholesome. I have had moments where I wished like, "Okay, I really need to get back to LA or New York. Need to go to Chicago and get some sin back in me because I'm just getting too clean out here, and it just doesn't feel natural. It's just a funny place."

Frank Rolfe: Well, let me ask you this. Where do you see your portfolio go at this point? What's the ultimate goal on it?

Chris: Oh man, how long? Well, shoot.

Frank Rolfe: Maybe just in general.

Chris: That's a hard question to answer. When I was 20 years old and I thought I was going to live forever, I wanted to build forever. There's something about The Big Four-Oh that slightly changes your perspective. I love building businesses more than almost anything else. But Citizen Kane is still one of my favorite movies. Then there's enough memorable lines there. He could have been a great man if he didn't have so much money. If all you want is to make a lot of money in life, it's not that hard. I like doing this. I think if you practice it enough like anything else, you can get good enough at spotting value and building value that you could probably keep going forever, as long as you don't overpay for things and you're careful.

Chris: I think in fact we are doing some good. There is a real affordable housing crisis. So, to the extent that folks like us are taking these run-down parks, filling them with high-quality rehab product and new factory quality product is built in an energy efficient way. Oh, we got a partnership with an architecture firm actually. It's sort of in its infant stages right now. We're going to try to do some so energy-efficient and high-design remodels of some older homes, make them, you know, horizontal cedar and the black-frame windows and the single-pitch roof. We'll see if it works. It's maybe a terrible idea. But anyway ...

Frank Rolfe: Actually, that actually is-

Chris: Yeah, I don't know, man. I don't know. I keep seeing opportunity. I'm like, "Well, we could buy this. We could buy that. We can keep going. I've got some things right now." I don't really know where it stops. What about you?

Frank Rolfe: Well, the energy efficiency is a really great idea because as we push rents up to the maximum level, at some point to get rents higher since people only have so much money, we'll have to find ways of making their other costs lower. One of the key costs is in fact electricity has many margins because of our energy inefficient. So that's actually a really good idea. I'd be curious on your findings on that. We've been toying around with the same stuff.

Chris: I think the key, if we can even make it work, is going to be having to educate people and provide them with a package because what I have found is just a lot of these folks, they have a job and they work hard at it. But like any of us to get home, they're tired, and they don't want to spend their whole lives on home improvement. So, I'm kicking around the idea of trying to say something. "Okay, here, well, we're not going to make money off you, sir, but we can re-insulate your walls, or we can do that better or get you some double-pane windows."

Chris: You know, yada, yada, yada, appliances. "You seem to have a good payment record here over the last X years. We think you're at decent risk. We teamed up with some agencies and some of our own funds. We're going to do it at cost because it's in our interest to not have you have a $200 a month heating bill in the wintertime. It'll be X dollars over X months to pay for all this stuff, and we'll do it for you." That's the only way I can see it is really working in scale to rehab energy-wise these older houses with people in them.

Chris: But the downside to that, as I'm sure you know, is as soon as you stick your neck out for somebody in this business, they blame you for everything that happens after that. So I'm very hesitant. That's what people tells us.

Frank Rolfe: You are exactly correct. That is totally correct. All right.

Chris: What about you for your portfolio? How big are you guys going to get? You're going to own the galaxy pretty soon if you keep going.

Frank Rolfe: Yeah, no, we have no desire to own the galaxy. I think we're pretty comfortable on our current size, and I don't think we'll grow a whole lot more from where we are. So, I don't think we're in any danger of lineups of the bulk of the parks in America.

Chris: Well, I got a question for you.

Frank Rolfe: I think it will be good. Sure, go ahead.

Chris: Well, okay, do you speculate at all that ... And I have to give you credit. I'm going to stop praising you here after a while. But I keep saying, "I'm going to stop doing that," then I do it again. But there's a number of us who think that you are perhaps single-handedly ... who is partially responsible for the renaissance of this industry in that you've just relentlessly beat this drum for the last ... I don't know. How long? You know, as long as you can to anybody who will listen that it's a good investment, that it's a housing product with a lot of need that you can do good and make profit. I think enough people are paying attention to you.

Chris: For example, okay, look. I got two parks. I got two more contracts. I'm in Wisconsin. I had a perfectly lovely life in Los Angeles before Frank Rolfe messed it up. Here I am. I'm staring at my computers now and talking to you two years later, right? No, but seriously, I'm cleaning these places up, and I know several other guys building portfolios never would have heard of the industry if it wasn't for you. I'm sure you've been told this before. But having said that, so if enough of that effect happens, and these old parks get cleaned up, run professionally, they're going to fill up, right?

Chris: We have a housing crisis anyway. So I know that municipalities don't like to allow them to be built. But look forward 10 years. Let's say they have continued to improve the image of the industry, and the parks are all filled. Do you see a wave of expansion happening? Do you ever see it turning around, and all of a sudden, now the cities are letting us build again, and there's more parks, and the industry begins to expand? Or do you not see that happening?

Frank Rolfe: Well, first, let me say that contrary to everything you just said, I am looked on not in favor by the industry as a whole, because they for some bizarre reason that my message is negative on the industry. The fact they use the word mobile home park and trailer park and not manufactured home community is ruffled feathers. There's a lot of people that don't like the general public knowing about the sector. So they feel like they could buy things at better, lower prices before I existed. So, I haven't actually had the positive feel from many of the old timers in the industry.

Frank Rolfe: I got to thinking on this drive I'm on now, and I'm out driving a whole bunch of parks this week. Really what we've been doing, I think everyone's doing, and you're doing this is basically repositioning the product. No different than someone who buys old apartments and fixes them up, makes them nice, and raises the rent. And so, that's really what we've been doing more than anything else. For some bizarre reason, we're the only industry in the world where when you reposition and improve assets, you get criticized because of the few people.

Frank Rolfe: It's really crazy because if you went in, the majority ... I was in one of our parks yesterday that we've got in and repaved the roads. We've taken out all of the garbage and everything else. I guarantee you that if you knocked on doors, 80% of everybody in there is very happy with the end result. But there's always that 10 to 20% that all they care about is the lot rent. If lot went up $1, you're the enemy, despite the fact you've made everything a whole lot better. So, that's what I think the new force of the industry is. It's just trying to clean these things up and make them nicer and more sustainable, because they're not really sustainable as these old, nasty train wrecks of stuff.

Chris: No, no, but as they get bought up ... And yeah, sure. Maybe the prices are rising, but then the exits are there also now, right?

Frank Rolfe: Yeah.

Chris: So it has to be more liquid as an exitable investment than it was 15 to 20 years ago.

Frank Rolfe: Yeah, I mean, it answered your question about expansions. Cities hate mobile home parks with a passion, right?

Chris: Right.

Frank Rolfe: We have a city right now, in fact, that's giving us grief on an old park that's been there forever because they don't want it there, because they believe that it's holding back development, because as the city has evolved over time, the location is now nice, and they view us as being the enemy to progress. If you're never going to look on this stuff favorably, the only thing I can see happening that will change the industry to some degree is that things change over time, people change over time, city councils change over time. I think that millennials of all people are fairly positive on the whole idea of tiny housing, right?

Chris: Mm-hmm (affirmative). Mm-hmm (affirmative). Yeah, yeah.

Frank Rolfe: They don't favor big stuff, and that just allowed for the micro-apartment movement. I think that same vibe will at some point in some markets filter down into mobile home parks, right?

Chris: Mm-hmm (affirmative), yeah.

Frank Rolfe: It'll happen first in California and in Seattle and those places. Maybe generationally, millennials will say, "Yeah, well, mobile home parks aren't that bad. They're cooler than departments." Tiny housing is non-subsidized, but I think you're going to have to go that far out. In other words, your typical city council, which is filled with boomers, such as myself, they're going to look at mobile home park in a very poor light because stereotypically we hate them. That's what all Americans do with trailer parks. They all hate trailer parks.

Frank Rolfe: So I'm not sure they'll ever be able to vote, "Oh, yeah. Let's build a trailer park," but I think millennials might. I think you have to get way out there, like 20-30 years from now before they might build them again. But I can definitely see ... I feel it right now. You probably feel it too. Just the way people look at this stuff, a change, right?

Chris: Mm-hmm (affirmative). Well, we have millennials in our first rehab. The first rehab I did, I went a little overboard on. I'm happy to admit that I went overboard, but I'll dial it back on the next one. But we've got a couple of ... Frankly, they look like millennial hipsters out of Brooklyn or Portland, here in the heart of Wisconsin, or not that that matters, right? I mean, everybody's money is the same, and everybody needs a place to live. But just like you said, pointing out the change in image, I mean, it's a young married couple in their 20s. The husband has a bachelor's degree from a University of Wisconsin school. He's got philosophy books on his freaking wall.

Chris: I said, "You know there's a trailer park. You're a little different from most of our other customers." He had an 800 FICO score. He was literally over 800. I said, "Why are you guys here? I'm happy to have you, but what's going on?" They said, "Look, it's pretty simple. We got approved for a great conventional mortgage. But the stick-built houses that my wife likes are above our price range. We wanted to keep it to about 100,000 on a third-year mortgage, and we couldn't find anything for anywhere close to that. What you're giving us in is really nicely remodeled mobile home ... " I mean, and again, I went way overboard. We're talking like recessed LED lights and glass tile backsplash in the kitchen and stone shower and the whole thing.

Chris: I'm not going to do that again. But I did it because I got the house for free with the park. Essentially, it was a bombed-out shell, and so, the material costs wasn't that crazy. But they said, "This is the nicest thing in the whole town, as far nicer than any apartment we could get, which would cost us 300, $400 a month more for a crappier product. So why not be here?" I was just like, "Well, that's great." That was a year ago, and they're still here, and they're still paying 850 a month plus utilities for their single-wide, and they're delighted to do it.

Frank Rolfe: Yeah, and I've seen the exact same thing in many parks. I'm seeing young people or where there were no young people before, who are kind of classy, who are dressing like a ... you know, mini cars, and it's just unique. I saw earlier today ... I don't know who the resident was, but-

Chris: Really?

Frank Rolfe: They're in their yard wearing their University of Michigan jerseys.

Chris: Okay, yeah. Yeah, all right.

Frank Rolfe: It was a nice car. I just thought, "Man, you never used to see stuff like that."

Chris: I got a question for you.

Frank Rolfe: Sure.

Chris: Are those people willing to move in and mix with the more traditional clientele or ... because I guess-

Frank Rolfe: No, I don't know. We don't track them, but I asked the passengers ...

Chris: We have to upscale the whole place.

Frank Rolfe: Yeah, I mean, as you develop that little core of younger people, they ... I'm sure they probably do hang out together, which is great because then they would attract even more younger people, right?

Chris: Right, yeah.

Frank Rolfe: Yeah, I mean, we do activities in some parts, but they're very generic, like we'll have a barbecue or something. We don't have millennial events. But there's no question that for the industry to succeed, that's the future. You got to attract those people. The good news is the millennials are what's driving the bulk of RV sales now because-

Chris: Really?

Frank Rolfe: ... it came out of nowhere. Yeah, they really like tiny spaces. They like family bonding. They did a study-

Chris: Really?

Frank Rolfe: ... on their list of likes. One of their favorite likes in the whole world is outdoor cooking. That's a big deal to millennials. They like outdoor cooking, so that's why in a lot of our parks, we're now installing outdoor grills and stuff, just like they do in roadside parks. But yeah, I mean, there's definitely a new wave coming into the industry. So I think all the things you've described, you're exactly correct. It's the same stuff that we're seeing out there, not just in Wisconsin, but nationwide.

Chris: I know you know there's a 2018 ... Back in maybe 2012, and I heard of you in '14. Started reading some of your older materials. I know at that point you were giving very practical advice, and it made a lot of sense, which is ... We were in a recession and then coming out of it. The recovery was still kind of a long ways off. Your advice to folks was, "Look, the most important thing to people is affordability. So give them something safe and clean but keep it affordable. So, skip the amenities. Close down the laundry rooms. You don't need a swimming pool. All of this adds cost. People can't and won't pay for it. That's not what they actually want. Give them what they want," which is just a clean roof over their head.

Chris: Are you still mostly on that philosophy? Or are moving back toward amenities as the economy's gotten better and people have more money these days? Or what are your thoughts?

Frank Rolfe: No, we definitely still have that philosophy. The one thing I think we've realized is that ... The big amenity we're striving for is a sense of community where the people form bonds with the neighbors, and we think that general support network is really a really valuable amenity, and it's free, right?

Chris: How do you do that?

Frank Rolfe: Once you jumpstart it. So, we've started doing a monthly newsletter in the parks where we talk about different people each month, and then we've started having ... In many parks, now, we have a regular event of ... Since sometimes an eating event, we've had home remodeling events where we get Home Depot and Lowe's and people to bring in their own free food and tables, and they try and sell skirting and paint.

Chris: Really?

Frank Rolfe: But-

Chris: That's a good idea.

Frank Rolfe: Oh, yeah, but I think that that's amenity that everyone overlooked, and we were as guilty as anybody because we didn't want to get into people's lives. But then if you really think about it, when someone is having a problem, and you know the kind of people in your own parks that blow out and walk off and leave this stuff, that support network might make the difference, right?

Chris: Mm-hmm (affirmative).

Frank Rolfe: The neighbor that says, "Hey, your car broke down? No problem. Ride with me to work," right?

Chris: Mm-hmm (affirmative). Yeah, yeah, yeah, yeah.

Frank Rolfe: Or there's another neighbor that says, "Oh gosh. Your water heater broke? I know how to fix a water heater."

Chris: Yeah, absolutely.

Frank Rolfe: We can't see any negative to that at all. And so, we really think that's the best amenity. Another thing that, and I'm sure you saw, but Harvard brought out their longest running study in history. In fact, it took so long to make that the people who started the study all died of old age. What they did was they tracked like 50 people or something of every possible position in life, income level, you name it, from early childhood until death. What they were trying to do is they were doing a study of what makes people happy. I don't know if you saw this on MSN. It's been like two years ago or something.

Frank Rolfe: What the end of the study showed, it wasn't money. They thought it would be money, but it wasn't money. It wasn't anything. What made people happy in the end was relationships with people. So, having happy relationships whether you're rich or poor was more valuable to your happiness than anything else. If you had a million dollars but no friends, you were unhappy. If you had no money but millions of friends, you were incredibly happy. That just, we think, leads us back to the conclusion that the best amenity is that support network of friends. And so, that's what we're trying to foster now.

Frank Rolfe: That's why we're now taking little pieces of earth in parks that were of no value before, and we are coming up with something on them that could be used as a group gathering area.

Chris: Okay, like what?

Chris: Tell me about that because I've got places I need to do too and I've been kicking around lately.

Frank Rolfe: Well, if you got a couple vacant lots, little expansive land, you can't put any mobile homes on. Picnic tables, outdoor grill. You got a little grassy area, soccer goals, and the list is endless. I can envision in some parks going forward, we may get into splash pads even, which are the coolest invention of all time, which-

Chris: I'm absolutely doing that.

Frank Rolfe: ... gives you the whole feel of a water park without the water as far as not ... You don't have to monitor the water. There's no coordination. It's regular, steady water that sprays in a mist out of a sprinkler head. The more elaborate ones are a full bore water park where they actually have buckets of water that tip over periodically. But that's probably the sprinkler.

Chris: I see this with splash pad, yeah. This is interesting. I've never even heard of it.

Frank Rolfe: Yeah, and I had someone go meet me in a City the other day. I thought, "Man, that looks really cool." Theirs was going to have the various buckets of various sizes that topple on your head at certain intervals and spray, spray gizmos, and little cannons where you can shoot streams of water at each other. That's what kids like, I think.

Chris: Yeah, no. You're absolutely right about that. We got a lot of kids in one of our parks, and I keep trying to think, "What else? Should we put in a playground for them? There's a couple makeshift ones the residents had built already, or is it just asking for liability headache?" On the other hand, the kids, I don't know.

Frank Rolfe: Insurance on a playground is 500 a year.

Chris: That's not bad.

Frank Rolfe: It's nothing. At least that's what it is for most carriers. We were guilty as anyone. We were just focused before on just, "Okay, let's make it clean and safe and inexpensive." Now, we're thinking, "Let's make it clean, safe, and inexpensive, and actually enjoyable to live here," right?

Chris: Yeah, right.

Frank Rolfe: So, that's like the new thing that you'll see everyone doing because there's no reason not to ... I mean, you're just an evil individual if you could so easily make people happy, and you don't, right?

Chris: Yeah, yeah.

Frank Rolfe: If you get them little piece of grass, does it really hurt you to put two picnic tables in? Think of how much fun people could have with that, right?

Chris: Right, yeah, yeah.

Frank Rolfe: "Hey, let's go sit in the picnic table. Hey, let's have a birthday party with picnic tables." I mean, is it really that bad? I mean, yeah, you might feel a little more in insurance. 300 bucks, but gosh, is it worth it? I think you make that back instantly in retention, I think.

Chris: Yeah, no. It's interesting that you say all that because I think that way in terms of apartments automatically. Yeah, we need more amenities. We need more amenities. We're in the amenity war with a Class A product. We got to get better. With the parks, I've tended to think, "Okay, I need them clean and safe. What do you mean amenity? Oh my God. I'm asking for a lawsuit. I'm asking for garbage everywhere. I'm not going to do that," and I'm guilty of that.

Frank Rolfe: Yeah, that's what we used to do. Now, we're thinking, "you know what? Is it really that big a deal?"

Chris: Well, my folks have been asking me for a basketball court forever, some of them, but I just feel ... I don't know. I mean, I got some empty glance where they was-

Frank Rolfe: Basketball court is a tough amenity because basketball courts, historically, in many parks have brought in people from outside the park and lead the people inside the park being unhappy, right?

Chris: Sure.

Frank Rolfe: I mean, no one from outside the park is going to go into one of our park playgrounds because there's much nicer ones down the street, right?

Chris: Mm-hmm (affirmative).

Frank Rolfe: So it's really only people that live in there that utilize them, but basketball court ... I mean, I don't know. But maybe in your park, maybe that does work. I think the moral of it all is keep an open mind. Try and figure out what you can do to make people happy because if they're happy, they're going to stay. If you're unhappy, they're all totally going to move. It's pretty much that simple, I think. Well, let me ask you this because we're running out of time here.

Chris: Okay.

Frank Rolfe: So tell people who are thinking about mobile home park, investing, toying with it. They're listening to this, I mean, any words of advice on it. And again, just totally honestly, just for someone who's maybe already in apartments or single-family, and they're looking at this going, "I don't know. It's kind of sketchy. It's trailer parks, and I've been taught to always think of trailer parks poorly." Do you have any words of advice you would give people?

Chris: Well, I was trying to think of what are the top two or three most important things. Gosh. I don't want to start running my mouth because then you can make it sound intimidating when it doesn't have to be that way, and I'm a very over-the-top, detailed kind of person by nature, so I know I need to dial it down for other people. But I'd say ... Okay, yeah, I'd say this. It's generic. But if at first you don't succeed, try again, and I mainly mean that actually on the very first part of it, which is finding the deals.

Chris: Despite the fact that we had a lot of long-term experience in real estate, up until these parks, I had never actually myself engaged in any kind of a serious systematic attempt to screen hundreds of deals in search of the needle in the haystack. Once I adopted a mentality where I just said to myself, "Look, there are parks out there. I'm going to have to go through 999 first before I find it, and that's just what we're going to do." It eliminated the getting discouraged feel. So, I would say, and you don't need to look for 900 of them before you find one, but make offers.

Chris: I tell people build their selves. If you're going to do one piece of technology only, Mr. New Investor or Mrs. New Investor out there, build yourself a template for, like a DocuSign template for your offers so that you eliminate your own psychological barrier to making offers on parks, which is, "Oh my goodness. This is a 40-page headache. I got to go find a word doc. I got to print it out. I got to ... I'll do it tomorrow," and then you don't make the offer. You'll be surprised at what happens when you put money in front of people and make them an offer, and you're going to have to make offers before you find the one that's priced right.

Chris: I'd also say, "Don't turn away from things that look like they're not priced right." You've told everybody. "Look at what the ... " I would tell everybody almost to a tee, I'd say, "Go build yourself a pro forma based off where rents should be," because I think there's a ton of opportunity out there right now in that particular strategy, which is looking at where the rents should be economically, not where they are. Build your cap rate based off of where they ought to be. I think personally that there's still a ton of mispricing out there, and maybe mispricing that didn't even exist 36 months ago.

Chris: It's like a new wave of it because as affordable housing in stick-built stuff has disappeared and rapidly shot up in price in a lot of metros. Comparatively speaking, lot rents that may have looked perfectly reasonable three years ago, and thus the cap rates still don't look attractive, has I think suddenly become very much out of whack again of where they ought to be in some markets, and the park owners are not all paying attention. In fact, a lot of folks I don't think are paying attention. I think even some big portfolio owners are not paying attention, which is easy to do as you get fat.

Chris: You're living someplace else. You got 20 parks. You got 30 parks, maybe. You're living in a penthouse, and you're going to a symphony and everything you do, and your income is just lovely. Your managers, on the ground, out of state, are telling you what managers always say everywhere, which is, "You can't raise the rent. Nobody will tolerate it. It's as high as it ought to be." Well, if you spend one fewer night a week at the symphony drinking cocktails with your friends and instead get online and start doing just a little bit of basic third grade data analysis of where rents are and appreciation rates and vacancy rates, your eyes might open a little bit and see, "Wait a second. There's still some stuff out there to buy."

Chris: But you got to look past the paper and do some digging. I don't know. What do you think?

Frank Rolfe: Yeah, absolutely.

Chris: I don't mean to sound too confident in myself. I'm often wrong about things.

Frank Rolfe: No, I totally agree with what you just said. The key to any asset whether it's a mobile home park or type of car or an antique or a painting, it's all in the volume, right?

Chris: Yeah.

Frank Rolfe: I mean, those who have the highest volume always win, and those with the lowest volume don't, and you can't substitute for volume. You can say, "Well, I'll do all the sophisticated screening." The guy with volume will still win because there's so much you don't control. Every time we talk to a mom-and-pop, and we throw out an offer, and it's a fraction of what they want, we don't know what they'll say. They could say, "Get out of here," or they could say, "Well, I might split the difference with you," or they might say, "I'll take it."

Frank Rolfe: All of our confidence is strictly in the volume. We know that if we make a gazillion offers, a certain percent will go somewhere. But I totally agree with you. To me, that's the most important item in any endeavor. I don't care if you're trying to sell medical devices or buy mobile home parks. You just focus on volume. Every call you make, you make your offer, and then you're off to the next deal.

Chris: Yeah, exactly.

Frank Rolfe: We would get back to you and want to do it or not, but we're always out of the next because that's what makes us happy is the volume.

Chris: Yeah, exactly. So, it'll pay off eventually. The parks don't change. The lot rents don't change as fast as they do in apartments. I think apartments are so much more liquid, and data is out there. They'll fluctuate week to week, month to month, and everybody with a CoStar subscription ... There's a new one now called Enodo. It's automated underwriting. I subscribed to that. Point is, it's out there. But the parks, they're always slower. So, I think there's always a lag, and if you catch an upwind and appreciation in the wider housing sector, you can at least hopefully, temporarily find a gap to go in and do some buys. So maybe, anyway.

Frank Rolfe: Well, Chris, I mean-

Chris: Thank you very much.

Frank Rolfe: Well, you got some great ideas. And again, you're a couple decades younger than I am, so you're not a boomer. What are you? Your generation, what?

Chris: Gosh. I think on the tail end of X.

Frank Rolfe: Generation X.

Chris: What is that? 40, I think, is the tail end of X. I'm not really quite among millennial, but ...

Frank Rolfe: Yeah, but in any rate, there's people listing who are going to want to contact you with a question or so on and so forth, so I'm not going to give out your email. But if someone does want to email in a question for you, and we forward it to you, would you be kind enough to respond if the question is decent?

Chris: Oh, yeah. I would respond even if the question is not. There's always more fun to talk about mobile home parks than to actually do real work, so I would welcome a distraction.

Frank Rolfe: Well, there you go. Okay, well, then so again, if you're listening to this, and you have any questions for Chris, by all means email those into Brandon, and he will forward them on to Chris. And again, Chris we really appreciate you being here. You had a lot of great information. I totally support pretty much everything you said. It all sounds totally correct. You're right on the cutting edge of all the right stuff: The love of Wisconsin, the energy efficiency, the focus on volume. It's all completely dead on. So again, we really, really thank you for being here.

Frank Rolfe: I know a lot of people listening in. The reason they're listening in is because they want to hear someone other than myself or other than Dave talking about buying parks, and you've definitely served the industry well by getting involved in it and giving it a fair shot. I don't think you ... Then, so, you had a lot of negative stereotypes growing up. But for many people, it's a huge stigma while you have to climb over to even think about buying a mobile home park.

Chris: Oh, yeah, and I've noticed it with my friends. You know, professional class friends I grew up with that are now physicians, attorneys, accountants, whatever they may be, and it's always there. They'll even say, "I have enough self-awareness to say yes. You're absolutely right. I think this is a stigma premium. This is totally logical. I can't explain it. I'd really rather just overpay for a ski condo in Tahoe and just rent it out on Airbnb. I can't tell you why. I know it doesn't make any sense, but this is what I'm going to do," and they do it, and that's fine. So, leave the cash flow to us. That's fine. Stay away.

Frank Rolfe: Maybe 30 years from now, it will change. But until then, you have to be a true daredevil to get involved in this.

Chris: I think the younger people ... Like you said, I'm may 40, but I know a guy in Michigan I talk with a lot that also had learned a lot from you, and he's in an earlier stage of where I was a year and a half ago. He's still living in a park. I bought his first one, got a group of his friends together. He's 30, so he's 10 years younger than I am. His cohorts with him and his investment group are 30s and I believe late 20s. They are really smart guys. They're hard-working guys. How they came to learn about this industry, I don't know, but they're using all the same logic the rest of us are. But they're definitely young blood, and it's good to see that.

Frank Rolfe: Well, that's what the industry needs without question. So again, Chris, we appreciate you being here. If you have any question for Chris just-

Chris: Thank you.

Frank Rolfe: You bet. Email those in. We'll forward them onto him. And again, this is a Frank Rolfe with another lecture series event. Appreciate everyone being here. Thanks again, Chris, and we'll talk to everyone again real soon.

Chris: All righty. Have a good night. Bye-bye.