Selling Your Mobile Home Park To The Residents with ROC

When you decide to sell a mobile home park there’s only one option, right? You list it with a broker and try to find someone who wants to buy the community at your target price. But there’s another alternative that’s working for many sellers and that’s selling the park to the residents.

In this event we discuss the basics and granular detail of this option with Paul Bradley and Angela Romeo of ROC USA – the largest facilitator of these transactions in the U.S. You’ll learn how the process works, the time involved, the benefits to selling to your residents, how to mitigate problems with the transaction, and some sample deals completed.

This event is hosted by Frank Rolfe, who not only is the 5th largest owner of mobile home parks in the U.S. with his partner Dave Reynolds, but also has successfully closed three transactions with ROC USA over the years in Texas, Minnesota and Wisconsin.

If you have a park to sell in the future, this discussion may be worth a fortune to you.

Selling Your Mobile Home Park To The Residents with ROC - Transcript

Frank Rolfe: Welcome to another lecture series event. Very excited tonight, something we have not done in the past. Our title is selling to the residents, an option most owners do not know is on the table and with me from ROC USA is Paul Bradley, president of the company, and Angela Romeo, national acquisitions manager. So are you both with us tonight?

Paul Bradley: Yes indeed.

Angela Romeo: I am.

Paul Bradley: Good evening.

Frank Rolfe: Well great. Well we're excited to have you. People are probably aware, they listen to my podcast and seen the articles on the property we recently sold to the residents through ROC in North Lamar down in Austin. But that's only the tip of the iceberg of all the good work you guys do as far as making residents in these communities not only owners of their house but owners of the land underneath as well. So we wanted to base this lecture series to give owners the ability to understand how this option works and if this is an option for them and then understand the complete process.

Frank Rolfe: So I thought we'd start of with just talking about the history of ROC USA. So where did the whole idea come from? How did ROC USA come to be?

Paul Bradley: Great Frank, well ROC USA started in 2008 but our history stems back to 1984 where the first group of homeowners in Meredith New Hampshire purchased the land under their homes in what's now the Meredith center cooperative. So some 36, 37 years ago these 13 home owners lived in a mobile home park and the elderly owners needed to sell the asset in order for him to move into the nursing home. And so, one by one those home owners went down to a local bank and one by one they were told you don't have any equity for a down payment, you don't have any experience in mobile home park operations, we can't finance the community for you. And thankfully a graduate student of a professor who's actually still on our board of directors came to school one day and said, I have a friend who has a brother who lives... I have a friend whose brother lives in a mobile home park and it's being sold and they want to buy it but they don't have the money.

Paul Bradley: And he said, well why don't they form a coop, why don't they borrow the money from the New Hampshire Community Loan Fund and buy the land as a cooperative. And so low and behold, 1984, the sisters of Mercy loaned the New Hampshire Community Loan Fund $38000 and those 13 home owners became the proud owners of a mobile home park. And that kicked off really a wave of purchases in New Hampshire and I came on in October of 1988 and began working with those cooperatives and began helping home owners in mobile home parks form coops and purchase their communities and was very content doing that in the state of New Hampshire. All the way through the early 2000s and really about 2005, 2006 it became very obvious that there was an opportunity to scale the work across the country.

Paul Bradley: We were getting phone calls from non-profits, from home owners, from community operators around the country interested in doing what we'd been doing in New Hampshire. Helping home owners buy the land as a coop and so I spent two years writing a business plan, raising capital, building a team and we launched ROC USA in 2008 to do just that, to scale this ownership model across the country.

Frank Rolfe: All right, very good. And obviously this is a concept that is very much supported by a lot of people on the federal and the state and the county, city level, but yet there are some states that the concept currently through ROC USA you can't do. Which states are you doing at this point and which ones are you not just so we can clarify that for everybody?

Paul Bradley: You bet Frank. We're coast to coast and all points in between. So all the states of New England, New York, Delaware, North Caroline, Texas. And then moving into the Midwest; Wisconsin, Minnesota, Utah, Colorado, Idaho, Montana, Washington and Oregon and California now.

Frank Rolfe: Gotcha. Okay and let's talk for a minute on the process. It's a fascinating process you all have put together on this. Can you go over with people how the process works in pretty granular detail because it's fairly clever. So how does it work?

Angela Romeo: Yeah so-

Paul Bradley: Let's have Angela go to work here.

Angela Romeo: ... Thanks Paul. So the first step Frank really is a park owner giving either ROC USA directly a call or one of our affiliates. So we pick up the phone and nine out of 10 times that park owner is just kind of curious about what happens. So the first thing that we do is we talk to the park owner to see if the community fits in our by box. Meaning, is it in a state that we're operating in, is it at least 25 sites, we get an understanding of the community, is it city water, city sewer, private utilities, what is the occupancy. And we go to town kind of doing an evaluation of what we think the value of the property is. So we'll do that at ROC USA and we use that to negotiate a price up front with a park owner before we ever engage the residents.

Angela Romeo: But I think that is one of the pieces that park owners are really curious about, is at what point do we talk to their residents and we just want them to know we're never engaging the residents without their permission and nine out of 10 times we do not engage the residents until we have an agreed upon price up front, between ROC USA or its affiliate and the park owner. Once we have that price agreed upon we will go under contract and that contract is assignable 2A resident corporation. It is that contract that gives us the green light to then finally go interact with the residents.

Angela Romeo: So the first step after we're under contract is we ask the park owner to send out a letter to his or her residents just letting them know that he is interested in selling the community, that he'd like to give the residents an opportunity to purchase it before it goes on the open market and that the residents will be hearing from an organization called ROC USA. That ensures that we are not blinding siding the residents. They know that we have permission to be on site, they know that the park owner understands that we're going to be there and has given permission. So it really makes the entire interaction a lot smoother.

Angela Romeo: So once that letter goes out from the park owner we try to time it so that within a day or two maximum our staff is on site going door to door delivering a notice to the residents inviting them to what we call a first resident meeting. And it's important that we get the residents all in the same room, as many of them as possible at least so that they can hear the same message at the same time. And it's at that first resident meeting that we say, and we let them know, hey this isn't made up, this is real, it's happened at this point I want to say 262 other times nationwide and that the owner is curious if you want to look into this process.

Angela Romeo: It's really important at that time that we don't ask them to buy the park. We're really asking them is this something that you want to look into. Is this something that you want to research and if so, we're here to walk you through every step of the process. That is the role that we play. So either at that meeting or within a couple of days the residents will kind of come together and they'll make a decision. Yes, we want to move forward collectively to research the viability of this, or no, thank you for the opportunity but we would rather pass.

Angela Romeo: So I would say I've only seen residents a handful of times decide not to move forward and look and the opportunity. So more often than not the residents are going to proceed forward and we let the park owner know. We're moving ahead and we keep the park owner involved in all the communication, we're pretty transparent about it. The next step is that we help the residents form a corporation just like any other business owner out there and then each household has an opportunity to join that corporation so that they can have a voice and a vote throughout the process.

Angela Romeo: After they've joined they elect a board of directors, usually five to seven people who represent them as residents and as neighbors moving forward. And it's that board of directors that is going to work closely with us over the next 60, 90, 120 days to do all of the due diligence to apply for financing, to create a corporate structure so that the corporation has bylaws and the community has rules and the corporation has policies on how to enforce the rules or how to collect the rent. So we work with them on really creating that corporate framework from beginning to end. We walk them through the due diligence phase and then we walk them through applying for financing.

Angela Romeo: ROC USA capital brings a couple of unique products to the table to allow all of this to happen. The number one product that allows this to happen is a forgivable pre development loan. So these residents, we're not asking them to come up with their own money out of pocket to fund the engineers, the attorneys or anything like that. ROC USA capital will provide the corporation with a forgivable pre development loan so that when it does come time for the residents to make the ultimate decision as to whether to buy the park or not, they're making an educated decision. That they know what the water and sewer infrastructure looks like, what their reserves are going to have to be on an annual basis, when they should plan to replace a septic system or electrical pedestal. So we provide a forgivable pre development loan and if the deal gets to the closing table, wraps up into the acquisition financing and if for whatever reason it does not make it to the closing table, the loan is simply forgiven. It's the cost of doing business so that everybody, the lender, the borrower, everybody makes sure that they know what they're getting themselves into.

Angela Romeo: So once the residents take assignment of the contract, it really is like any other commercial transaction. We can get due diligence done often times in 60 days. Sometimes if a phase two is necessary or something like that we'll need an extension. I think in North Lamar we wrapped it up in 60 days pretty easily. We usually request another 30 days for financing and residents request financing from any lender but more often than not, ROC USA capital is going to be the lender on that, on the acquisition itself and I'll let Paul talk a little bit later about how that financing is put together. And we get to the closing table.

Angela Romeo: So that's pretty much how the transaction works from the moment a seller reaches out to me until we get to the closing table and yeah, that's pretty much what that looks like.

Frank Rolfe: Okay Paul, so how does the financing work? I know you've got that very well constructed, how does that work?

Paul Bradley: Yeah, let me also just say in addition to emphasize a point Angela just made. We're about ready to post a new seller testimonial from a community that was acquired by the home owners up in Montana and he actually reports that the closing, the due diligence and closing process probably was easier with a cooperative buyer than it would be what he assumed with a third party investor buyer. So there are seller, we do have seller testimonials for any operators interested in hearing from a community operator. There's one right on our website today,

Paul Bradley: The financing is specially tailored, no surprise there Frank. There's not a market for cooperative financing as a general rule so we've developed our own community development financial institution. We're certified by the US department of treasury as a CDFI, community development financial institution. And these are institutions, there are about 1200 or so in the country but this one is the only one that's focused entirely on this asset class and this borrower group. So we've raised capital, balance sheet in ROC USA Capital, is what you would expect. A significant amount of equity and a fair bit of debt that we've then, we use to finance resident owned communities.

Paul Bradley: The product that we offer on the acquisition side is 110 LTV first mortgage to the resident corporation. Your listeners are going to say, where can I find some of that. Not only are you not coming up with equity in the deal, you're actually over leveraging the property. It's not available to your investor listeners, however it is available to resident owned communities that have the support of a technical assistance provider in ROC USA network and are eligible for as a cooperative borrowing from ROC USA Capital. It's a 110 LTV because it has to cover all of the acquisition price plus reserves and closing costs and therefore it's just not a marketable product in the private market place. And it is a non-profit product available specifically to these low income community groups.

Paul Bradley: And what we do with that financing is we provide that first mortgage, if we have to put it on a warehouse line we do. For lender types in the audience, we're leveraging that loan by selling off senior participation's in that to institutional investors. We have brand name banks and insurance companies, happy to name, we have obviously Bank of America and Prudential and MetLife and National Cooperative Bank. All of whom are investors and participants in ROC USA capital transactions. Any many, many more across the country. So we leverage that loan by selling off senior participation and we retain the B tranches or subordinate tranche. And that's really our role as a community development financial institution, is to retain the first loss position, service that loan on behalf of the senior participants investors and ensure that the loan is well serviced and well managed.

Paul Bradley: We also do improvement financing, so when a transaction, Angela and our local affiliates are working on has upfront significant infrastructure requirements obviously it's part of the capital improvements plan and there is financing available for those improvements when they're needed up front. If not they are reserved over time through that capital improvements plan and from operating cash flow.

Paul Bradley: So those are the three basic products, forgivable due diligence or pre development, acquisition financing and improvement financing.

Frank Rolfe: Got you, okay Paul let's talk about some success stories of ROC and perhaps the one that's nearest and dearest to our heart was the one that just recently transpired was the property known as North Lamar down in Austin. So let me give people some background on the property, on the front end and then you can also add in there color commentary of how you saw from your perspective. We bought that property, I can't remember the year, and when we bought it, it was in extremely poor condition so we proceeded to go in, we repaved the roads, redid the entry, huge amount of cleanup, like dumpster loads, and dumpster loads of debris. Went in at no cost to residents, painted a whole lot of homes, whole lot of fences, built fences back, built steps back, all kinds of items.

Frank Rolfe: At the same time we raised rents, we installed water meters, we had residents pay their own water and sewer, we got into some political hot water along the way almost from the get go because one city councilor in particular did not like the idea regardless of what all we did with the property. The very act of raising the rents he found to be, but there's not rent control in Texas, we managed around that. Went on but even from nearly the beginning the residents wanted to buy the property and I didn't look through my emails but I'm pretty confident that it was probably within the first six months or so that the residents said can we buy this thing some day. And I'm pretty confident from the beginning we said, yeah. If you can ever put it together, sure. I think I even talked to you back at that time, of course this property needed a lot of work to get it into institutional grade format that a lender would loan on it, when we bought it, it would not have met the qualifications. It was in really poor condition.

Frank Rolfe: So we kind of saw ourselves I guess at the end of the movie as being kind of the catalyst to get the people what they wanted which is they wanted to own it but it wasn't in a condition to be financed. So we kind of made it into the condition that could be financed, got the rents raised to a level at which it would be self supportive and then sold it. So to us it kind of was a Disney ending since it's exactly what they wanted. It was the easiest choice for us because we didn't want anymore political hard ship with Austin. If we'd sold that to any other party beside the home owners surely we would've been greatly criticized and condemned for that, but we found that to be an ideal ending to a fairly lengthy movie.

Frank Rolfe: So we consider this a success story because number one, we sold it at a good price, number two, we didn't get any pushback from any local governmental agency. And believe me in Austin it's very common to have all kinds of issues on almost anything potentially real estate related there. So we found it to be a win-win. At the end of the movie residents were happy, we were happy, and so to us a total win-win format. Not really certain why, and maybe Paul you can tell me or Angela, some community owners are seemingly hostile to the idea of selling to the residents but I've never been able to figure out why that would be because if you're going to sell to any party the residents to me would be a more logical fit than some outsider who doesn't know the property, who's not already a stakeholder in the property. So I'm confused why you always have some old timers who say, oh gosh, I don't want to do that resident owned stuff. To me it's a no brainer. If the property meets the profile which we'll go over here in a minute, and the residents want to do it I don't know why you wouldn't do that.

Frank Rolfe: So that's my perspective on North Lamar. It was a Disney ending. What are your thoughts on it?

Paul Bradley: Yeah, well I'll say a couple things Frank and then hand it to Angela who worked that transaction, as you know, directly. So one, I think, look, to some people we and the home owners are an unfamiliar counter party for a commercial transaction. So this program as you framed it, this is a new concept for a lot of folks and we recognize that and that's why we're very careful to explain the process and we'll talk as much or as little as anyone wants through a transaction and all the examples, but I get that it's unfamiliar to people and another commercial investor is a familiar counter party although maybe not that specific buyer.

Paul Bradley: You went one step further, I remember our early phone call on North Lamar, you actually said to the home owners that you will entertain a sale to them if they work with ROC USA because you wanted somebody on the resident purchase side that new what they were doing, something to that effect.

Frank Rolfe: That is exactly correct Paul, that is exactly correct.

Paul Bradley: Yeah, so I mean, and of course we've worked with three purchases with you, three successful purchases. Minnesota, Wisconsin and now Texas which we're delighted with and hope to complete more, Frank. So that really sets it up and of course for the listeners to understand, we're not brokers. ROC USA is not a brokerage, we're not a buyer broker or certainly not a seller broker, we come at this as really technical assistance providers and lenders to resident corporation. If you are direct selling, that's fine, if you have engaged a broker, that's fine too. That's on your side of the transaction, but ROC USA brings no added cost to the seller, any type of brokerage. Our fees are all paid on the buyers side of the equation.

Paul Bradley: So, with that said, Angela, let you walk through the specifics in North Lamar.

Angela Romeo: Thank you. So yeah, Frank and Dave did a great job of queuing North Lamar up to be an eventual sale to the residents by saying, absolutely, we'll sell to you if you work with ROC USA. So that was maybe five or six years ago now and the residents immediately reached out to ROC USA and said, "We want to buy our park. Can you guys help us?" And one of the things that is real unique about ROC USA is that we only enter a market when we have a certified technical assistance provider or a certified ROC USA affiliate in that market. That affiliate provides the locals boots on the ground, face to face interaction at both the owner level but also most importantly the resident level. We can't expect these residents to suddenly all come together and be able to own and operate a manufactured housing park and navigate their way through the transaction collectively if they've never done it before.

Angela Romeo: So that's the role of the affiliate and ROC USA was getting ready to officially certify the Texas based affiliate known as CHEA in early of this year, 2020. So at the beginning of the year I reached out to Frank and said, "Hey Frank, we're ready to move forward on North Lamar if it is for sale." And Frank's response is, "Well everything's always for sale if the price is right." And it lined up with the fact that it was going on the market anyways. So we reached out to the residents and said, you know what, ROC USA is entering Texas, we're ready to work with all of you. They had a board of directors that had been organized for the past five or six years anyways so there was an organized framework for ROC USA to kind of step into and be able to work hand in hand with the board of directors. And because this had been something that they had wanted so passionately for the past number of years the community unanimously voted to submit an offer to Frank and Dave and that's what we did.

Angela Romeo: We submitted an offer of behalf of the residents, it was accepted. We went under contract and we immediately began working with the board to go ahead and execute the due diligence. All of this happened and then COVID-19 hit and we were still able to get all of our due diligence done according to the contract. We were able to secure financing through ROC USA Capital. We also figured some subordinate financing as well and the residents, they were able to vote in a rent increase. I believe they voted in a $30 rent increase in order to purchase the community and it's something that they were absolutely willing to take on to ensure that they could control the land under their homes moving forward.

Angela Romeo: So that's something we hear quite often is, what is this going to cost the residents. It's a transaction by transaction case that we need to look at. In the case of Austin, Austin is a really hot market, rents needed to go up in order for the residents to support the purchase price, but they willingly took that on in order to secure their rent long term. And so, like you said Frank, it's a Disney ending. It's something that you held to your word, you said, absolutely, I'll sell to the residents. And fast forward five or six years, they became the second resident owned community in the state of Texas which is pretty fabulous.

Angela Romeo: And the first resident owned community in a city capital which is a little unique to us. We were really excited to get one that is in such a hot metro area to preserve that longterm affordable housing for families who need it most in that area.

Frank Rolfe: And guys, was there anyone who was not a winner in that transaction? And was that not the most pure win-win, win-win-win because we were happy as seller, residents were happy as buyer, city was happy that they became owners, you guys were happy that it got done, lenders were happy they were able to help. I mean was it not just an endless chain of win-win in that transaction?

Angela Romeo: Absolutely, this was a win-win across the board and I think most resident on community transactions are. The residents, they have to be competitive in their purchase price and they tend to be competitive. So you guys walked away with a really good selling price. The residents have secured that housing in perpetuity and the city has also been able to secure affordable housing in an area that is really hard to do so. So everybody won in this scenario as I feel like most do in resident owned purchases.

Frank Rolfe: Agreed. So let's talk for a minute about what can go wrong in these transactions and how the seller can help mitigate those from happening. So on the deals that derail what are the most common things that derail the deal and then what can the seller do to help make sure it does not derail?

Paul Bradley: Well I'll step in and just say, oh I'll step in and say two things Frank and both just come back to let's just have an honest upfront discussion about the reality. Life's too complicated to not deal with reality here, so let's just have an upfront conversation about where the financials stand in the community and the infrastructure. If you're sitting on orange bird pipe, let's just all know that up front and not fuss around with it 70 days into the transactions. And if the receivables are fudged, then let's just know that up front and I can site in both of those situations we've experienced that and that's just when things get really difficult and things can fall apart. They don't always but they can. And so let's just all be real upfront and know what we're dealing with and then solve for that.

Angela Romeo: I would agree, absolutely. Where things go wrong I would say is when we're given information that isn't accurate and the best way to navigate it is to be truthful. The residents have a seasoned professional working with them to do due diligence so we're going to discover anything that might be out there to be discovered and we just encourage owners to be pretty honest and up front and we can work through almost any challenge. We have come across some crazy ones as I'm sure you have Frank, and we're able to navigate it pretty well. I would say residents have one shot at this, there's no guarantee that the next owner is going to give them an opportunity to purchase their community. So they tend to look very thoroughly, take an honest look at the property, but they want to get to the closing table. They're not going through this process to be another tire kicker, they're going through this process to get to the closing table so that they can own the land under their homes.

Angela Romeo: So yeah, I just ask owners to be pretty candid with us and we can be candid back. It can be a really great working relationship and we can navigate almost any hurdle as long as we're navigating it together.

Frank Rolfe: Okay, well now let's change around to the typical traits that make a deal possible for the residents to purchase through ROC USA and let's break it down into the five categories that we use at bootcamp. So let's start first with infrastructure, what infrastructure issues will make these properties impossible to do, are there any kinds of private sewer, private water, private meter gas or electricity or can you do non-paved roads. What are the things that right off the bat make it very unlikely you can get it done?

Angela Romeo: So we can handle any type of infrastructure. Within the resident owned community portfolio we have private, wells, we have septic systems, we have community systems, we have city water, city sewer, direct build city water, city sewer, sub metered utilities, you name it. So I'd say that there's pretty much nothing that we want to say no to. We encourage every park owner to go ahead and give us a call because we want to take a look at every deal and we will give the park owner a pretty quick no if we don't think it's something that we can move forward on and then they can go out elsewhere to find a buyer. So there's really on the infrastructure side, I'd say again, we can navigate almost anything.

Frank Rolfe: Okay, and then what about on the density side, how dense is too dense? Obviously North Lamar itself was not the least dense community of all time, although it still had a nice spacious feel, the lots were not enormously deep. Are there any certain things to watch out for that would preclude a property from qualifying on a density, space between homes, units per acre, anything you see there that might hold someone back?

Angela Romeo: Again I would say that on a density level there's nothing that we don't want to take a look at. North Lamar was pretty dense, we have communities that are on four homes to an acre and everything in between. As long, one of the things we will look into during that process is are there any restrictions to replacing homes. Should one be removed or taken out and that will just factor into our conversation around planning for future in fill and future development. But as far as on the purchase side, again, there's no density restrictions or limits that are not ideal for resident owned community.

Frank Rolfe: Okay, let's move into economics. First off, what is, at what point is a deal too small? What price point is a deal, either by price point or number of lots, too small to qualify? And then what is the sweet spot of deal size that ROC USA mostly deals on? Is there a minimum and then is there like one that's the most common or how does that work?

Angela Romeo: Yep, so ROC USA Capital does have a 25 site minimum as well as a million dollar minimum. With that being said, in some of the more rural areas such as Montana or Eastern Washington we have closed on smaller communities. If they're going to be smaller than 25 sites then we want to take a hard look at, we're probably leaning towards city owned utilities to limit the amount of maintenance dollars that need to go into private utilities. And if it is less than a million dollars, we can bring in local banks in order to provide the financing necessary. So I would say 25 sites is really the smallest that ROC USA Capital will take a look at, but if there is something smaller and it's within, it's close to the affiliates office we're willing to look at it with a closer eye just understanding that we'll have to go out and secure other financing.

Frank Rolfe: And for clarification for those people who say, now wait a minute, how big is North Lamar. North Lamar is, was it 68?

Angela Romeo: 68, yep.

Frank Rolfe: 68 lots, right. So its not like North Lamar was giant. In fact if you look at the three we've done with you, I don't know what Clark's Grove size, I can't recall how big it was, but in other words if you're listening to this and saying oh well, my property is not big enough for ROC USA that's not true. Yes, if your community has 10 lots, yeah you're probably too small, though I guess 10 lots in Los Angeles would still qualify because 10 lots in Los Angeles is more than a million dollars. But in general you guys are pretty flexible on size, correct?

Paul Bradley: Yeah, Clark's Grove... Sorry Angela, I was just going to answer Frank's question. So Clark's Grove transaction in Minnesota that the coop acquired with our assistance is 96 homes. In La Crosse Wisconsin that was 57 homes. And that actually along with North Lamar, so our average size transaction is just about 75 homes, just under three million dollars. So really the larger communities frankly are easy to transact on many fronts and so for listeners, Angela laid out the low end of the spectrum. We have done large transactions, over 400 site communities, nearly 30 million dollars on a single transaction. We've done portfolios of smaller communities bundled together. So there's, like any buyer there's some economies of scale here and certainly interested in looking at average size and larger properties all the time.

Frank Rolfe: Gotcha. And then as far as age of homes, this is one component where you're probably more or less, have a less difficult time than some buyers because the whole purpose of this is to make people both home owners of their home, but also of the land. So is age of home an issue, in other words if the home is predominantly homes from the 70s and the 80s, because North Lamar is mostly of that vintage, is that any issue or is there a certain number of new homes you have to have? Is there a certain number of double wides you have to have or how does the actual home product inside the property, how does that matter?

Paul Bradley: We take communities where they at from where they are Frank. So one of the criteria in terms of our buy box, this is an ownership model that is geared towards home owners. So one of the considerations for us is what is the percentage of owner occupied homes in a community and really we want to see that north of 75% owner occupied. And with that we want to see home owners that demonstrate a level of investment for their homes even if they're older homes. I have some friends and members in coops that are in 1960 vintage homes that are really well maintained and they would not trade those out for any of these newfangled manufactured homes and that's well and fine. This is a home ownership model and really believing in the housing stock if you invest in it and care for it, this housing stock is resilient.

Frank Rolfe: Got you. And then on the location side, how many states do you now do total?

Paul Bradley: We have coops in 17 states. We have two other states, North Carolina and California with letters of intent and purchase contracts, so that'll be 19. And then we actually serve some additional states where we have yet to see a transaction. Iowa's a great example of that. Our affiliate in Minnesota is actively looking at communities in Iowa now and a little bit in the Eastern Dakota's as well. But Iowa is their third state where they want to be active.

Frank Rolfe: Got you. So on the location side if a property would be applicable, it has to be in a state that you serve, which is easy to find out from contacting you, you can tell them which states. As far as, you know you've got two, well you've got several styles of communities out there. You have the gritty urban one in the heart of town which is what I would consider North Lamar to be, and clearly that model's fine because you closed North Lamar and so gritty urban is okay, right, in the heart of town stuff, that's good?

Angela Romeo: Absolutely. We love to look at stuff in the heart of town. We have one in Salt Lake City in metro area as well and it's great to be able to take care of the housing in those areas.

Frank Rolfe: Got you. And then you've got the upscale suburban, oh I'm sorry Paul, go ahead.

Paul Bradley: Well that's, you're going the same place I'm going. So on the other end of the spectrum Frank, in Plymouth Massachusetts we have a community where homes sell in the mid 300s. These are all multi section homes with site built garages on four foot concrete foundations with a swimming pool and a community center. Most, you wouldn't, but many people would drive in and think it's a subdivision, but it is a quote mobile home park. A resident owned community and they were delighted to have the opportunity to purchase that property because if you're invested to the tune of $300000 in your house you want control of the land under your home.

Frank Rolfe: Absolutely. And then what about the third component and it's what I see and I know that you guys see when you're out driving around, which are these communities of more rural areas where the only thing in town seems to be the dairy queen and the gas station, a few other items. Y'all even delve into that kind of really rural product or is that typically not something you would have an interest in?

Paul Bradley: Have you been to Havre Montana Frank?

Frank Rolfe: Not recently, no.

Paul Bradley: I was there last fall. Actually I spent a day in the Great Falls Airport last winter because I was snowed in and couldn't get a flight out of Great Falls after visiting Havre which is a two hour shot north of Great Falls Montana on your way to Canada. So what's interesting about Havre is it's a college town and I sat down with the board of directors there and low and behold these were, several of them, graduates of the local university. One was a nurse, one was an electrician, and they had the opportunity to purchase their community and they did. And it's actually kind of a cool town, they talk about it as for that area, where people want to live and they had no interest in moving any place outside of Havre Montana. So there's good, important, affordable housing work to be done in small rural towns and we're happy to be there when the home owners are motivated.

Frank Rolfe: Okay, so it sounds like if I take all these dots and connect them basically if someone has a property that's in a state you serve and it's roughly about 25 lots, even then not set in stone, and larger than it's a potential player and if they're interested they should contact you and you can then tell them based on the granular details whether it might work or not. But not to feel excluded from the program as long as they're basically in the states you serve and are roughly 25 lots and bigger, would that be correct?

Paul Bradley: Yeah, and I think even states we don't serve, call Angela, be in touch, maybe thinking a few years down the road. We are getting demand to be in more states than we're able to be in at this point. We have to grow and expand as best we can and demand exceeds our capacity here but we'd love to be in relationship and hearing about opportunities in states that we don't serve and we won't forget about you if you don't forget about us and we'll just try to be there when you're ready to sell.

Angela Romeo: I think...

Frank Rolfe: I'm sorry, go ahead.

Angela Romeo: We have, the residents have a community in North Carolina under contract right now and that is a great example of a community owner who reached out to me probably two years ago now. We've just sort of stayed in touch and he wasn't planning on selling at this point but things changed and now he needed to sell and it just so happened that we were expanding into North Carolina. So we absolutely welcome those calls from states that we're not in and we'll stay in touch and we can make a deal happen when we're going to be entering that market. So we encourage those calls.

Frank Rolfe: Gotcha. And now let's revisit the timeframe again. So if someone says, hey, I'm interested in this concept, what is the timeframe again? So in other words, so from hello ROC USA to the moment you get something under contract, how long does it take typically? What's the range now in the post COVID world of completing the transaction at this point?

Angela Romeo: Yeah, so from the moment that an owner reaches out to ROC USA to the point that we're under contract, that goes as quickly as the two of us make that happen. So as soon as financials are disclosed and we can come to a mutual agreed upon price, that can happen in a matter of days if everyone is kind of operating on the same wavelength there. Once we're under contract we like to see 15 to 30 days to meet with the residents and see if they're going to form that corporation and take assignment of the contract. Once they've taken up, so that 15 to 30 days is to assign the contract. From there we like to see 60 days for due diligence. Another 30 days for financing and we can either... And then we can get to closing shortly there after. So we're closing these from beginning to end in a matter of usually 120 days. But once the residents take assignment it's usually 90 days.

Frank Rolfe: All right, and guys let's talk for a minute about the industry, because Paul I know you've been in it since the 80s, I've been in it since the 90s, I'm not sure when Angela got in it. But obviously it's changed a lot over the decades that we've all been in it, so where do you see this thing heading? Let me ask you the first question which is, what do we even call what we do? What do you think is the right name for the product? I mean I like the affordable housing name, never really liked mobile home park, manufactured home community because the focus is then too much on the actual dwelling unit or the product. I feel like a manufacturer when I use those terms, but I'm not a manufacturer, I'm a community person. So is affordable housing or should it just be housing, what do you guys think the name should be of what we do?

Paul Bradley: Well I think a couple of things Frank and I don't know about the mobile home park perse. I was at my mother's community the other day, now my mom bought a new Clayton product two years ago, $71 per square foot turn key for a multi section energy star rated home. Absolutely beautiful. Unparalleled really in the single family market. But long story sort my mother encouraged me to drive past her place down the street in the coop because there was a quote new trailer that just moved in and so here's my mother having just acquired a new manufactured home calling the new home down the street a trailer. Be that as it may, for these communities we've obviously branded these as resident owned communities, emphasizing the resident ownership and the community aspect. I think, so to my mind community plays a key role in this. One of the great benefits of owning a home in the community is the density frankly.

Paul Bradley: Really detached single family homes that are modest size with small private yards is a tremendous resource as affordable housing and as a consumer preference. People like four walls that aren't connected to somebody else's wall and they like small yards and the benefit of manufactured home communities is frankly you have a driveway as a general rule. You can park right next to your entry way. So tremendous advantages. So you hear me talk about home ownership and home owners because I ultimately believe this is a affordable home ownership product and that's one of its great strengths is that low income families, retirees can acquire an affordable home and to me that's the strength of this. I think you would agree, one of the great strengths of a community business is the fact that people own their homes and have a level of investment in those homes and we're looking to expand on that investment obviously and bring greater security to that home ownership. But that's at the core of it for me, affordable home ownership.

Angela Romeo: Sounds good.

Frank Rolfe: And let me ask you this, you guys are considered to be kind of on the cutting edge of the industry? You're one of the few new ideas that's been successful. I know it's not brand new, I know it goes back to the 80s, but it wasn't done on a huge scale until more recent times. And so a lot of young people entering the industry, millennials and a lot of others, they view you guys with high esteem because you're doing something that's unusual and they like the win-win aspect. Where else do you see the industry going as far as the future? Are there any other things, you're probably seeing on the part of all community owners now, people trying to enhance the sense of community. We've been pouring lots of money into enhancing amenities, other items. We just brought out an every community newsletter. Where do you see things going? What are some new ideas you see that you're saying, wow that was a good idea or that's neato? I mean I have people call me all the time wanting to develop, for example, brand new, ground up, tiny home developments. I know there's one of those in Austin, but I mean what futuristic things since you guys are kind of the astronauts of the future for many people, what other futuristic astronauts do you see out there?

Paul Bradley: Well one of the encouraging things that I see Frank is we've brought, the industry has attracted a lot of young, very smart people. A lot of these folks coming into the business come from a finance background and what's interesting to me is of course they understand finance, no question about that. But they also have a respect for brand and I think that's something that perhaps some folks that grew up in this business with as much gray hair as I have and older, never really thought much about brand. And the fact of the matter is, brand is everything. So if your community, the reputation of your community, the reputation of the industry really matters. In this digital world where information flows so quickly it's a democratic information system, you've got to be very careful about brand and consumers are wise.

Paul Bradley: So I'm encouraged that the community sector is understanding the power of the internet and the importance of brand in terms of how they position their property and how they serve their customers. I've been a big believer that ultimately industries thrive when the customer enjoys a strong value proposition. I think you see that in industry after industry and I think our industry is due for a little greater dose of that. If we're interested in the sector as a whole and growing the sector which I hope we are because I think it's such a... Obviously I'm a believer, I help my mom in her downsizing buy a new HUD Code manufactured home and as I said, untouchable in the detached single family housing market. At $71 per square foot turn key, fabulous. So there's so much opportunity here, but I think we've got to really respect the need to build a strong value proposition and I think we do that through really attention to brand.

Frank Rolfe: Great points. What do you see as far as trying to keep communities as communities, for example North Lamar as you know was right on the edge of the wrecking ball when we bought it. I drive by communities all the time that fell the other way and are under the wrecking ball. I was just in a large one in Indiana that I guess they're redeveloping into a home depot and everyone got evictions notices, absolute anarchy. Some people had abandoned their homes, some people had erected giant signs in the yards cussing out the new owner, the old owner. I know there has been discussion about, for example, favorable tax treatments if a community owner elects to not redevelop but leave it as a community. You see any of that happening, I know I think Keith Ellison proposed it a couple of years ago, never went anywhere. Do you think at some point some of that will get traction so the government itself, I know you guys are doing everything you can to make communities owned by the residents, do you see a point at which the government will also step in and give a little help to keep maintaining these things rather than having them redeveloped?

Paul Bradley: Yeah, it's interesting. So there are some tax incentives in a few states for sales to cooperatives, to the homeowners. And so that's a related point to your question but not really the answer to your direct question. Interesting, you know would there be a property tax abatement or exemption for retaining a community as a community. I haven't seen that anywhere Frank, I haven't seen it discussed and maybe I don't listen to enough of your blogs and I apologize for that if it's something you've been promoting. But it is an interesting thought and to me it does come back to overall as a sector, really repositioning the sector in the eyes of the public officials specifically, but more broadly in the eyes of the public. And then I think taking a rightful place in the affordable housing segment would be possible.

Paul Bradley: And I know that's a 30000 foot answer to a very direct question, but I think until we come to grips with some of the challenges that homeowners face, like the community closure, which I think is right at, really the worst risk of all. If you own a home and then... In Indiana it's noteworthy, in Indiana this year I think there was a legislator proposing doubling the notice to quit period for a community closure. I was shocked to learn that the existing notice to quit period was 30 days. So the doubling would be simply to 60 days. Imagine owning a home and as a low income person and getting 30 or 60 days even that you needed to relocate that home knowing how difficult that is. Challenging for us, imagine being a low income person or family being faced with that. So I think we've got to really think through how do we as a sector how do we create greater security for home owners and communities. And in so doing the up side is that it changes the dialogue with public officials and maybe it opens up opportunities like your raising now.

Frank Rolfe: All right, and if someone's interested in talking with ROC USA more about the potential of selling their community to the residents, how's the best way to reach you guys? Do they contact Angela or what does someone do, if you listen to this and you say, oh, I want to get more information on my community, what do they do?

Paul Bradley: Best thing to do is, oh, sorry Angela.

Angela Romeo: I was just going to say.

Paul Bradley: We're always online at So I encourage people to go to There's contact information there and you're welcome to always visit for a whole host of information including that sellar testimonial I described. And then Angela can provide her direct contact information.

Angela Romeo: Yep, so my phone number is 6-0-3-5-4-5-1-7-0-4. And folks can give me a call or reach out to me at [email protected].

Frank Rolfe: Perfect. Well again, I really appreciate you guys taking the time to be with us because it's an option that many community owners do now know is out there. It's a very pure win-win option, I think that was proven with North Lamar. But again, North Lamar was our third transaction, not the first, and in all three cases it went smoothly, it went successfully, residents were very happy, and it kind of went full circle, kind of a Disney ending in all three cases where the residents not only ended up owning the homes but the land underneath and I like the fact that you guys are bringing kind of a fresh perspective, a win-win perspective to an industry that always needs new fresh ideas because the industry is at this point about a half a century old and often stuck in its ways. And it's great having new options come out that people may or may not be aware of that help advance the entire idea of having a happy resident base and a sense of community.

Frank Rolfe: I know you all are doing a lot of good for residents all over the US every time you close a deal. They basically get the Disney ending of owning the land under their home and I think everyone is well pleased with that and we hope we can include you in some more dialogues and discussions in the future because I think it's an important item. More so than ever before, that everyone talk and gives very serious discussion and thoughts to how to make these communities more successful, of higher value for everybody, and try and place them in the right spot as the stewards of many, many families in their housing future. So, again we really appreciate you being here with us tonight and we also appreciate everyone for attending this with us. And again if you have any questions or thoughts regarding your community and ROC USA, definitely reach out to Angela and to Paul, they are great about getting back with people. Very good on response time, they've done enough of these transactions, they can give you an extremely accurate picture whether your property would work for that.

Frank Rolfe: So again, we just thank everyone for being here, spending some time with us, listening to our discussion and we'll be back again with everyone again soon. So thanks a lot everybody, have a good night.