Kevin Kouzmanoff is a professional baseball player who was a member of the Cleveland Indians, San Diego Padres, Oakland Athletics, Colorado Rockies and Texas Ranger in a career that spanned 11 seasons. After retiring from baseball, he was eager to invest his money wisely, and he has turned his attention to mobile home parks. In less than two years from attending the Mobile Home Park Investor’s Boot Camp, he has purchased a property that is now worth about a million dollars more than he paid for it.
If you want to learn more about mobile home park investing, take the same course Kevin 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.
Frank Rolfe: Welcome to another MobileHomeUniversity.com Lecture Series Event. This is Frank Rolfe. We're very excited tonight to have with us, Kevin Kouzmanoff, and we've titled this event as From Pro Ballplayer to Pro Park Player. But really, you don't have to be a professional athlete to appreciate this. This is basically the story of someone who's a successful individual in another sector life and then how he segued into mobile home park investing.
Frank Rolfe: Kevin, are you here with us?
Kevin Kouzmanoff: Yes I am.
Frank Rolfe: Okay. Well, we can't have the pro ballplayer part without going over that for a moment. So tell us about your pro baseball career. How did all that work? Give us the whole story.
Kevin Kouzmanoff: Well, boy, where do I start? I went to college at University of Nevada and had a pretty good year my senior year there. I was Player of the Year in the West Conference. I was drafted by the Cleveland Indians in the sixth round. I spent three and a half years in the minors and I got called up with the Cleveland Indians in 2006. It was great getting called up because out of college, I just wanted to get drafted and play one minor league baseball game and earn a paycheck to say that I was a professional baseball player to accomplish my dream. I thought that anything more than that would be great, so once I got drafted it's like, "Okay, well, what can I do next? Maybe I can make it to Low A.
Kevin Kouzmanoff: Then when I'm into Low A maybe I can make it to Double A." I kept pushing and eventually made it to the big leagues and I think one of my biggest accomplishments of my career ... I think I have a couple of them ... But one that stands out that really has been done just once or twice in the history of baseball is my first pitch of my first at-bat of my major league career I hit a grand slam against the Texas Rangers. That was kind of neat.
Frank Rolfe: That's pretty impressive. Okay, alright.
Kevin Kouzmanoff: Yeah. I was with Cleveland the rest of 2006. I got traded to the San Diego Padres and I was with them 2007, '08, and '09, and then got traded to the Oakland A's. I went to Oakland in 2010 and then after 2011 I had a down year and I went to the minors for a couple of months. Then I ended up getting back to the big leagues but traded to the Colorado Rockies. I'm from Denver, so to come back here and play baseball in front of my friends and family and the home crowd was kind of neat. Then I bounced around in the minors for a couple of years and ended up finishing my career in 2014 with the Texas Rangers. Then due to some injuries, some lower back injuries I had to shut it down and that's kind of why I stopped playing.
Frank Rolfe: So you had a really long career, right? I mean, there's a guy in my small town in St. Genevieve who was in pro baseball. I don't think he even lasted a season and so ... That's ... I mean, you were in that thing for a long time, so that's really impressive.
Kevin Kouzmanoff: It's a long haul, yeah. I mean, injuries or ... I feel like if you can stay healthy, that's a big part of it. Because just the wear and tear of the everyday grind can take a toll on your body. I think to stay healthy ... I was very lucky. I was pretty lucky to stay healthy as long as I did and for my back to give me as many miles as I can. I feel like I was pretty lucky.
Frank Rolfe: Okay. Well, let me ask you, Kevin. Prior to your baseball career or during your baseball career, had you ever been in a mobile home park? I mean, had you ever actually driven inside one as visiting somebody who lived in one? Or what was your initial thoughts prior to when you started investing in them? What was your initial impressions of the industry?
Kevin Kouzmanoff: Well, I have been in a mobile home park. I actually stayed in a mobile home when I was in high school I was playing summer baseball for the high school team and we had a tournament out in the Western Slope of Colorado. I believe it was Montrose. My father went to college in Montana and he had a college roommate there that lived in Montrose and stayed in a mobile home.
Kevin Kouzmanoff: We had a tournament out there and we ended up staying with John for a couple nights, so that was my first taste of a mobile home park and a mobile home. But I was so young that I don't think I even noticed. I mean, I noticed walking in the mobile home and it was small and different, but I didn't think anything different of it. It was just a different place of living.
Frank Rolfe: So you didn't have the real negative stereotypes of it then going into it? You didn't think as I did on my first park, "Oh, gosh, this is really dangerous stuff and I better go by a gun" or anything? You had then actually experienced it and you knew it wasn't really that bad, correct?
Kevin Kouzmanoff: Correct, and I don't think ... Maybe it was later when I got older and it was like you mentioned, 8 Mile and trailer park boys. I think the more I was exposed to it I might have seen it could be a little rougher living.
Frank Rolfe: Right, gotcha. Okay then, Kevin, here you are. You're coming out of baseball, in baseball. What would attract you to the mobile home park sector? Why would you even think of the concept of buying a mobile home park? Where did that idea come from?
Kevin Kouzmanoff: Well, when I got done playing there's that void there of not getting up, training, and going to spring training. I traveled for two years. I just traveled the world for two years. A buddy of mine ... Actually, my business partner works in the airline industry and I was able to get on his flight benefits and that allowed me to fly anywhere on standby that his airline carrier flew. I did that for a couple of years then I came home and during that time, my parents owned a small mobile home park in St. Louis in Fenton, and I think, Frank, you have a park there, don't you, in Fenton? Or a couple?
Frank Rolfe: Yeah, I sure do, Kevin. Which ones do you have? Did they have?
Kevin Kouzmanoff: Well, it was just a small 20-space park called Arrowhead.
Frank Rolfe: Okay
Kevin Kouzmanoff: Anyways
Frank Rolfe: Through Arrowhead. We had the one called Willows ... Is our ... That's a bigger one there, but yeah. I've very familiar with Fenton. I go check that park out like every two weeks.
Kevin Kouzmanoff: Okay, alright. I got done with my traveling. My parents owned this mobile home park. I had a little bit of knowledge through them. I was over at my parents' house, was seeing them work on this thing 'cause they managed it from afar. They just had somebody collecting the rents there, but nothing really hands on.
Kevin Kouzmanoff: Your seminar came about, and because my parents went to that thing and owned a park, I decided I'd give it a try. It was here in Denver out by the airport and I decided to take that seminar. I remember halfway through that thing I was texting my friend and business partner who works for the airlines. "Hey, what do you think of mobile home parks?" We had some money put away and so did I from baseball. I didn't make enough money that I could completely retire and sit on my butt the rest of my life, so I had to do something. I've always kind of enjoyed real estate. My mother was a real estate agent for a long time and I know some people who were very successful in the real estate industry.
Kevin Kouzmanoff: I texted my buddy and business partner Chad and said, "Hey, want to work on this mobile home park thing?" He said, "Sure." He ended up doing the seminar and so it just kind of went from there.
Frank Rolfe: Kevin, how many parks have you guys bought so far?
Kevin Kouzmanoff: Just two, just two. We have...
Frank Rolfe: Go ahead.
Kevin Kouzmanoff: Yeah. We're in the smaller parks. It's been ... We're doing it all ourselves. It's been kind of tough for us, but we have about 70 spaces or shy of 78 spaces. We have a big RV component, which we try to make work, and we've only leased parks for now just over a year now. We tried to do the RV space thing this summer and it was a little tough. We upgraded everything down there. Beautiful piece of property on the lake. We're just starting off and we're small.
Frank Rolfe: Which states are you in, Kevin?
Kevin Kouzmanoff: In Michigan. Right on the Michigan-Indiana border. Right in the middle of the state.
Frank Rolfe: Gotcha. Okay, alright. What attracted you to that part of America? Why Michigan? Why not any other site?
Kevin Kouzmanoff: Well, I think the Midwest has a pretty good reputation of low rents and I feel like in Michigan our tenants have been pretty good so far. We have some cleaning up to do. We had to clean up the recess and get the drugs out of there, which was a process. But I think we have a pretty steady tenant base. I mean, it took us quite a while ... A year probably on that thing. Maybe a year, year and a half now and we're still working on it. But yeah ... Going off your advice where the rents are still low in the Midwest and behind the curve. We just started looking there really.
Frank Rolfe: Okay. How did you find each of these? What ... Did they come from brokers? Or direct mail? How did you find each of those two?
Kevin Kouzmanoff: Early access. We were ... My business partner was in ... At home in Houston. I was here in Denver. We're on the computer just going through all of these parks on the computer. I got this email, one popped up and boy, it turned out to be a great deal. This gentleman was going through a divorce. He needed to sell quick but at a pretty good cap rate. Next thing we know we had this thing under contract and it was go time. Due diligence started and it was good. It was good to have that manual, Frank, that Due Diligence Manual. That thing has been very helpful.
Frank Rolfe: Good, good. Kevin, just for clarity, when you're saying early access, you're talking about Mobile Home Park Store Early Access?
Kevin Kouzmanoff: Yes, yes.
Frank Rolfe: Yeah, and for those that don't know what that is, that's the service which Mobile Home Park Store gives you. Listings, I think it's four days before the general public sees them during that period they logged them in through the computers and stuff. Just wanted to clarify what that was.
Frank Rolfe: Okay. Park number one then came in off Early Access. Guy was getting divorced, needed a quick sale. What about park number two? Same story? Or where did it come from?
Kevin Kouzmanoff: Actually, it was a two-park package.
Frank Rolfe: Oh, it was a two-park package, okay.
Kevin Kouzmanoff: Yes. These parks are within miles of each other, within a couple of miles of each other. We did ... It was a two-part package but we did ... Yeah, we had a contract for each park in case we didn't like something about one park. We'd just go with the other one.
Frank Rolfe: Gotcha. You had one that's predominantly mobile home park and one that's got mobile home and RV? Is that how it works?
Kevin Kouzmanoff: Correct... Yeah, we're just focusing on the mobile home aspect. The larger park, it's on a beautiful lake. 47 RV spaces and which really isn't our cup of tea. I think we're just gonna try to really focus on the mobile home community aspect.
Frank Rolfe: Right. Yeah. No, RV is definitely harder than mobile home as a business model, I think everyone has learned over time.
Kevin Kouzmanoff: I mean, if we can get a couple of people in there over the summer and ... I mean, there's hookups there applied, but I don't think we're really gonna spend a lot of time on it pushing it.
Frank Rolfe: Right. Alright. How much ... Give people an idea on a given week how much time do you spend on mobile home parks. Is ... What's your normal timesheet of mobile home park time look like?
Kevin Kouzmanoff: It's not very much. We figured maybe five, six, or seven hours average a week. I'm coaching at a Division II school here in Denver called Metro and I got a couple of condos here in town. I'm running around and my business partner's flying all over the world doing his thing with the airlines. It's nice. We have a manager who lives in the park who has experience in the mobile home park industry, so she's been pretty good for us.
Kevin Kouzmanoff: But no, we haven't been really hands on and I think we need to maybe work a little bit harder. We've neglected a little bit just our bookkeeping. Our ... Frank, it's like when you say you're driving a car down the road, you're keeping an eye on your gas and your temperature and your oil and your speed. That we haven't been doing a good job of and I think we need to do a better job. I think maybe if we dedicate another hour a week that might help. But I'd say on average maybe five hours, six hours a week.
Frank Rolfe: Kevin, you said when you bought these you did ... Did you do like home renovations? Or what kind of work did you do to the parks when you bought 'em? Cosmetic things? Potholes and stuff? Or did you have to go in and do like full-home rehabs and things?
Kevin Kouzmanoff: Luckily we didn't have full-home rehabs. We had homes that needed some TLC and I think we had maybe 15 park-owned homes and we're down to I think six now. Our biggest project was ... The tree trimming was unbelievable. We actually had to do it again. Some disease went through our park and started killing off a lot of our trees. That was a huge expense of ours and we had to do that with insurance as well.
Kevin Kouzmanoff: Tree trimming ... We have a lot of land, a lot of grass, so the mowing is ... You have to keep up on the mowing because if the grass gets too high it's too rough on the machines, on the mowers for these companies, so they have to do them once every 10 days or whatever. That tree trim was a pretty big expense. The roads were in fair condition, so we left those. Maybe a couple of potholes. Just taking care of a couple of homes that needed some tender loving care.
Frank Rolfe: On the lot rents, you mentioned that you were attracted to Michigan because the lot rents in the Midwest are low and have lots of room to raise them. What was the lot rent when you bought this thing? What's the market rent?
Kevin Kouzmanoff: We were at 300 when we purchased it, which I think may be a little bit higher. 300? I have trouble thinking back now. Right now we ... With 330 now, so we just implemented that January 1st. We would like to have the rents lower, obviously, at purchase price. But I think right before we purchased the park I think the seller bumped the rents on us. But-
Frank Rolfe: What's the market like? What's your target to get it up to?
Kevin Kouzmanoff: I think around 350 is our target, so we're gonna do that increase every year, that 3% increase until we can catch up, just play catch-up.
Frank Rolfe: Gotcha. What cap rate did you this at on the front end
Kevin Kouzmanoff: We bought it at like a 15. Like a 14 and a half cap rate, 15 cap rate. It's nice.
Frank Rolfe: Yeah. When you get the rents to 350, which would be ... What year? Next year, right? Roughly?
Kevin Kouzmanoff: Yeah.
Frank Rolfe: You'd be up to like a 17, 18 cap? Or what's your projection on that?
Kevin Kouzmanoff: Well, the higher the better, right?
Frank Rolfe: Well, yeah. I was just trying to show. Within five years of rent raising, that thing would be up nearly to 20% cap rate, correct?
Kevin Kouzmanoff: Correct. Yep. 'Course, higher CAP rate the better. I have a condo here in Denver and kept going over to that condo to work out things and get ready for the next renters. This huge mobile home park that's right next to us this condo here, I decided to drive in there. There is a number on the sign and I called that phone number. I said, "Hey, do you guys have any vacancies?" She's like, "Nope. We're completely full." I said, "Geez. How many lots do you have there?" She said, "230." I said, "What's your lot rent?" She said, "$700." Wow, and Colorado's is pretty high. I mean, compared to Michigan, it's nowhere close.
Frank Rolfe: Yeah, yeah. Because we have the same phenomenon, Kevin, as much as the Colorado rents are. I think the highest between California and New York. The reason is just ... It's crazy. 'Cause if you call just an old run-down park in like Aurora, they're about seven to 750 and they're full. To us that's like the ultimate test case. Because in California where they rents are over a thousand, everyone always rationalized that that it may compete since California prices are so high and the same in New York. But in Denver, the prices are not that much different than they are in Michigan, right? I mean, you're single-family median is $50,000 more and the apartments are not hugely more.
Frank Rolfe: The whole reason ... Anyone can figure out Denver or the Colorado market is the fact that it's basically all been institutionally purchased and everyone's jacked the rents up. I think the rents were in the 300s not that long ago, and now they're in the 7s. Everyone is watching Denver to see what the breaking point is for affordable housing and they still haven't found it because the parks that are in the 700s are full.
Frank Rolfe: But then the question is, if Denver at 700s is full, then how screwed up is the rest of America? 'Cause the national average is 280, right? In Michigan ... Well, if you go to Ohio, we have parks in Ohio that are approaching 500 and they're full. I don't know. I mean, your point is well taken because the 350 rent of Michigan today may be the 700 rent of Michigan tomorrow. Nobody knows for sure. We all know that the 300s is way too low, right?
Kevin Kouzmanoff: Yeah.
Frank Rolfe: Like I thought just now when I asked you what the rent was gonna be like in the 4s, because a lot of Michigan, Minnesota, that whole area has grown up into the 4s now. But then I guess the key question is, how high can it go? Nobody knows at this point. Everyone's watching Denver to see if Denver blows up or something, but actually the occupancy has remained full no matter what they raise their rents to.
Kevin Kouzmanoff: Yeah, it's like, "How high can that thing go?"
Frank Rolfe: Yeah, well, I don't know. Maybe there's no limit to it. Of course, if that's true, then what about all the other states? That's what everyone's trying to figure out.
Frank Rolfe: Kevin, tell people what your key lessons learned are so far in your mobile home park investment adventure here? What are some things you're like, "Yep. Okay, I now know that's correct", or, "Didn't know this before, but man, that was just like a key thing I've learned"? What have you learned so far in doing it?
Kevin Kouzmanoff: Well, I think when you take your hard-earned money and you invest it into something and that's your money, I think you need to keep an eye on it. I mentioned before ... Frank, you mentioned it, it's like driving a car down the road. You pay attention to your dials. I think that's very important. I mean, if you can do that every day just a little bit to find out where your number's at ... Like I said, we neglected that a bit and we got behind and so we're doing a better job now staying on top of that.
Kevin Kouzmanoff: We ... Another thing is lot sizes. We did go through and measure. We had a tape measure and measured all these lots and ... But I think we were a little lackadaisical doing it 'cause we started to order homes and figure out, "Uh-oh, well, we can't get homes on these lots. They're just a few feet too short." I think you really need to pay attention to your lot size and what size of homes you're gonna fit in there, and then also the money for the lot preps. If you need runners or a foundation. I mean, it's not cheap, especially when we don't have an extra bunch of money laying around. You have to be very careful. We're just doing two at a time right now so we can always keep reserves in case of a disaster, catastrophe type thing.
Frank Rolfe: Have you used The 21st Mortgage Program at all, Kevin? Or how have you been filling lots so far?
Kevin Kouzmanoff: Yes. Yes, exactly. We have been using that program and we have been getting our tenants financed through that program. It's been great 'cause it gets those homes off of our books.
Frank Rolfe: You're aware you can put the runners and the foundations into the 21st, correct?
Kevin Kouzmanoff: No, Frank, I'm not aware of that I don't think.
Frank Rolfe: Okay. That's ... The point I'm asking you is that, yeah, your site preparation costs you can put that into the program as well. In other words, if you're spending $7,000 in lot preparation, they'll actually allow you to put that into the ultimate price of the home, packaged to the customer, and then they'll finance that.
Kevin Kouzmanoff: Okay. Alright.
Frank Rolfe: But they won't do that unless you ask. I just wanted to throw it out there 'cause we do the same thing. But that's all financed through, so you shouldn't actually have any out-of-pocket on your foundations 'cause every HUD state ... For those on our caller states, "What the heck's a HUD state?" HUD states are the ones that HUD has taken over the installation standards on. They're not in every state, they're in a number of states. But they had this crazy concept that people are better off in life if they have a slab, runners, or piers under the mobile home, although it is yet to be proven how that makes any sense.
Frank Rolfe: They're trying to ... Ben Carson and gang are trying to get a lot of this repealed because it was stuff that was enacted without any oversight. Basically for years the people at HUD ran wild and doing crazy stuff. Their whole rationale behind those foundations was it would keep ... That it would make the home less frequently to be releveled. But releveling is only like $200. Everyone has no realized that HUD without anyone knowing what was going on, has been requiring people to put in these five and seven thousand dollar foundations which serve no purpose but to save the customer let's say over a 10-year period maybe $400. Which makes no sense, and these are people in need of affordable housing and then you're tacking on an arbitrary seven thousand dollar premium to save a few hundred dollars. It's absolutely insane.
Frank Rolfe: Hopefully in the future all of that will end. That's what they're trying to do. But in the interim, while insanity still rules, that part of America you can counter that by putting out your 21st numbers. Thought I would throw that out to you.
Kevin Kouzmanoff: Yeah, thank you.
Frank Rolfe: I'm sorry to interrupt you there. Go ahead. What other lessons have you learned?
Kevin Kouzmanoff: Private utilities, they're eating us alive. We're on a well and we got lift stations and those have been very hands-on, time-consuming, big expenses.
Frank Rolfe: Are you rebuilding those? Or what are you doing with those?
Kevin Kouzmanoff: No, we've had some leaks. We've had to get the lines televised. Get the tree roots cut out of there, out of the lines. The water with respect to sanitation and making sure ... We don't want to do another Flint, Michigan, so it's once a month. That's an expense. Initially it was a big expense, but now monthly it's not too bad. You want those things to run properly. You want people to be able to get water on those faucet and drink a glass of water or flush their toilet and have no problems because ... That's one thing about it I sometimes stress about it are these utilities because we're providing a place, affordable living for ... A place for our tenants to live and it's our job to keep those things up and going.
Kevin Kouzmanoff: Sometimes it gets a little nerve-racking for me because I want people to be happy in our park. I want them to enjoy where they live. It's a business, but for me it's not really only a business, it's providing housing for people who need it and who enjoy being in our park. That's why we're doing the tree trimming. We're cleaning it up. We're trying to put a jungle gym in for the kids. We want to make it a nice community. Private utilities can be concerning sometimes.
Kevin Kouzmanoff: We gave this gal ... We told her, "Hey, if you pay the next three months' lot rent on time we'll give you your own home." After the three months we gave her the home and she was ecstatic. I mean, she was never a homeowner and ... Nice lady. Sometimes she's the eyes and ears of our park. I mean, she was crying when we told her that and it really made us feel good. Her daughter lives with her, so that was rewarding. We try to help people out when we can. We'll go to Walmart, buy some blinds, or ... People ... If we really think they can't afford it. We'll try to help them out. What's blinds for five bucks or something? Plus it's the park rules. If they can't afford it, I'll be happy to do it for 'em.
Kevin Kouzmanoff: We still instill the no pay-no stay, but there has been a situation or two where we've let it slide a little bit where somebody was on disability, this is my first disability check type thing. But with respect to the no pay-no stay, I mean, we're pretty hard on that. We've been in the eviction process many times, so that's been time-consuming.
Kevin Kouzmanoff: We had a ... Our closing we had an attorney who was not knowledgeable in the mobile home park sector and that kind of hurt us. It got pretty drawn out, very long, very expensive. We ended up closing the deal, but I would suggest finding an attorney who knows mobile home parks if you're gonna use one during closing.
Kevin Kouzmanoff: Let's see. I think ... Oh, we did do a good job ... I don't know how we missed this, boy, because we went through these rent rules, I mean, many times. But we had one fellow who owns close to 10 homes between our two parks. Not like a Lonnie dealer, right, Frank? But just somebody who owns whether just ... Or kind of like a landlord, right? Where they just pay on a bunch of homes in somebody's parks. That we missed. We completely missed that. I don't know how we missed it, but I mean it's close to 10 homes he's owning in our park and we hadn't realized that until after closing, so shoot.
Kevin Kouzmanoff: It turned out to work out pretty well for us. We haven't had any issues and he has a park right down the street as well. Now we're on pretty good terms. I think that's about it.
Frank Rolfe: Let me ask you, Kevin. On some of those topics ... 'Cause they're all good topics to discuss ... On private utilities, because again, we own ... We prefer city water, city sewer. But we own virtually every private utility. We even have one park on a lagoon, but there's city sewer right next to it, so we can ultimately dismantle it.
Frank Rolfe: But on the private water, now that you've got the system corrected ... I know what you're talking about because a lot of times Mom and Pop is all just patched together with tape and wire and no sense of reality at all. Then you gotta get it fixed. You've now got it down to where it's just your monthly test, which is what we do as well, right? You're not ... There's no shot at Flint, Michigan, now really because I assume your well goes to a chlorinator. From that to a holding tank, so...
Kevin Kouzmanoff: Correct.
Frank Rolfe: The only real danger you have is if a chlorinator goes out, which they're pretty hearty, dependable machines. You have that one conquered. On the lot measurements, is that from where you're trying to like build those RV spaces? Or was that on just regular mobile home spaces?
Kevin Kouzmanoff: That was on the mobile home spaces, which is another thing that I don't know how we missed that as well because we were out there with a tape measure. I think with the regulations, setbacks and stuff like that, we would have taken into account.
Frank Rolfe: Well, and you've always got to watch out at the back what your utility easements are. That's probably where you got in trouble with that is you can't go to the back from the physical fence. You gotta go however many feet back wherever the easements are.
Kevin Kouzmanoff: Sure.
Frank Rolfe: Right, so that's probably a little bit ... But many people make that mistake. We've actually done the same and ended up where the home is sticking like a foot out in the street and we had to move the home to a different lot, so I understand that one.
Frank Rolfe: The RV lots, are you going to try and convert those to mobile home lots? Or are you gonna try and reenergize the RV business there? Or what's your plan on the RV lots?
Kevin Kouzmanoff: I think we're just gonna leave as is. We have some seasonal tenants that have been there for years. We got six or eight of 'em and maybe we'll just accommodate to them. We've advertised a little bit before this past summer and got a couple of campers for the Fourth of July and stuff like that. But ...
Frank Rolfe: Did you have ... Are you like ... It's like Google in RV lots. In the town you're in, will you pop up?
Kevin Kouzmanoff: Yes.
Frank Rolfe: Okay, good.
Kevin Kouzmanoff: Yeah, I think we do, yeah. We're on there.
Frank Rolfe: You got like a website and all that stuff and ...
Kevin Kouzmanoff: No. I think it might just be on a Google Maps type thing. But we don't have a website. We don't have ... Like I said, we're not pushing that thing. We wanted to because we thought maybe we could make an extra ... I don't know ... Maybe 10,000 a year or whatever. Just some spending cash or something. I think the amperage is really low and we'd have to go in there and update those things and it's just a bunch of expenses that I think where our real money is is in the mobile home park part of it, you know?
Frank Rolfe: Right. I think...
Kevin Kouzmanoff: We're just gonna leave as is.
Frank Rolfe: Yeah, and Kevin, we do the same thing you do. We've got a project we do at our company ... 'Cause our management company's called Impact Cares and we do the same thing. What we do is on any home that needs renovations if people can't afford it because they're retired, disabled, or whatever the case, whatever the case is we actually go in and do all the repairs just like you're talking about for free just to be nice because they're so inexpensive. It's kind of a quasi-give back but at the same time benefits the community by fixing it up, so it's kind of a win-win for everybody.
Kevin Kouzmanoff: Sure.
Frank Rolfe: Kevin, what are your future plans here? You got 78 spaces in Michigan. Where do you go from here? Is it like your baseball thing where you initially just wanted to be ... Play one time in professional baseball and say you did it and you just kept advancing? Is it the same deal here? Are you actually looking for more parks? Or what are you doing?
Kevin Kouzmanoff: No, we are looking for more parks. We actually have ... I forgot to mention our third park in our contract. It's been under contract for many, many months. It's a Mom and Pop park. Really nice up in the Grand Rapids area, and because it's Mom and Pop, they've been there for years. They've got to know the tenants and the tenants have families in there so it's probably like this big family community. The seller has just been letting some of these rents go and like, "Well, we can collect $275 a month", and all they could afford is a hundred, so we decided to take that and that's better than nothing." Come to find out we've ... Only out of 60 people, only like 40 are paying. We wrote the contracts. We said, "We'll give you until April if you can clean it up a little bit and improve rent collections and we have a deal."
Kevin Kouzmanoff: But no, we would like to expand. First I think we've decided to concentrate on maximizing the potential out of the two parks that we have. We still have some lots that we're trying to prep, get up and going to bring homes on there like we talked about earlier. I think we don't want to get too far ahead of ourselves. I think we want to get our parks running at full capacity and then hopefully move on to the park that we have under contract as well and then go from there. We would like to get more parks and build. Hopefully get some maybe syndication going, get some investors and maybe through friends and family to start off with to get a track record. Then maybe go from there. But I think that's down the road.
Kevin Kouzmanoff: But we have seen the results. These mobile home parks are very competitive. I feel like the cat's out of the bag, kind of like with these storage unit facilities. I think they're a hot item right now, so it makes it pretty competitive. But yes, eventually we would like to ... We'd like to have a thousand lots, be on that top 100 list.
Frank Rolfe: Well, you only have to have 700, Kevin, to be in the top 100, so you're well on your way.
Kevin Kouzmanoff: Oh, it is 700?
Frank Rolfe: Yeah, it's been 700. Let me ask you this. As you go forward to add on, would you do another park that has well water? Or would you say, "Nah"? How has your buying criteria changed? What would you now not do? I mean, you already mentioned you probably wouldn't do a lot of RV. Would you still do well water? Would you still do lift station? What things have you now just even on these two parks say, "I'm not doing that one again"? What would that be? Or is there anything?
Kevin Kouzmanoff: I think, Frank, that lagoon thing is a dealbreaker, isn't it?
Frank Rolfe: Oh yeah, absolutely. I would ... We would never do a lagoon unless there's a city sewer line sitting right there.
Kevin Kouzmanoff: Right. That's probably something we wouldn't do just based on stories that I've heard from people and from you. But with respect to private utilities, yes, I think we would go that route again because I think it might be a turnoff for most buyers who don't want to get into it. I think it's a little more stress, maybe a little more headache. But I think as long as you stay on top of it, make sure that thing is running properly, I don't think it's that big of a deal. I think maybe if you eliminate private utilities from your buying portfolio, then maybe you're kind of eliminating parks out there. 'Cause sometimes I see a park for sale that says, "Private utilities as needed." It's like, "Nope." Then it's like, "Oh, wait a minute. Let me go back to it."
Kevin Kouzmanoff: Now, despite it being a little stressful, I would still do the private utilities and just keep a close eye on it like we're doing now.
Frank Rolfe: Otherwise, you would replicate it? Or if you had 10 properties like the ones you have now, you'd be cool with that? At least other than what you ... Well, maybe a little less RV going forward and ... The tree thing you really can't ... The problem with trees are ... We have tons of trees ... Is that trees are the only thing out there that give a park any visual appeal or character, and they're also the only thing that really gives you any shade, because we all know mobile homes are not very well-insulated. We have also done deals where the tree trimming was actually our largest single line item for CAPEX were the tree. You can't really guard against tree disease because that's just part of the way the environment's going.
Frank Rolfe: But it sounds like otherwise, so far you would continue on doing the same kind of park you have now, correct?
Kevin Kouzmanoff: Yes.
Frank Rolfe: Got it. Okay, and...
Kevin Kouzmanoff: If we could tap into city like you were saying, and we actually may have that ability with this park, with the bigger park that we're in now. But I think we need to set some money aside. I think once we get these parks running at full capacity then maybe we can look into that. But I think that might be a little out of our budget right now.
Frank Rolfe: Sure. Kevin, let me ask you. We didn't talk about it. How did you ... Is it that you did this through seller financing or bank financing? Or how did you finance the first two parts?
Kevin Kouzmanoff: We put 25% down and financed the rest of it through a local bank.
Frank Rolfe: Got it. Okay.
Kevin Kouzmanoff: We were calling a lot of lenders around and I said, "Why don't we just go local? Why don't we just stay right in the community there?" We had a meeting with this small local bank and they were able to do it. They saw our plan and we created financial statements for them. They ended up doing it, but it was kind of nice to stay in that small town right there versus going to a big corporation, you know?
Frank Rolfe: Sure. How many lots do you have occupied right now? You have 78 total lots, correct?
Kevin Kouzmanoff: Yes. We have 40 paying ... A lot of these lots are ... A lot of them are vacant and that we're getting up and going, but we have about 40 people paying right now.
Frank Rolfe: That you...
Kevin Kouzmanoff: But we got some more to do.
Frank Rolfe: Are there ... Was it 78 mobile home lots and then RV lots? Or is it 78 total lots, mobile home and RV?
Kevin Kouzmanoff: No, that's not including RV. We have an additional 47 RV lots.
Frank Rolfe: Okay. In other words I'm just trying to model that for people who aren't familiar with the industry. If you bought that at 40 occupied, not counting RV at a 15 cap with a 300 rent and you raised your rent to 350 and you fill over time the other 30 lots, you're gonna be up there in a 24 cap or something. Does that sound remotely correct?
Kevin Kouzmanoff: Yeah, sounds about right. You're the numbers guy. I'm not a big numbers guy. I'm more ... It's a great dynamic the way we got it right now because I'm the operations guy. Do all the tree trimming, mowing, water, solar panel, all that type of stuff. My business partner, he's a numbers guy. He's pretty quick at that and then Pam, who is my business partner's mother, she does the rent manager and putting all the numbers into the system. It's kind of a good-
Frank Rolfe: Gotcha.
Kevin Kouzmanoff: A good dynamic of people we got here. It's nice. But yes, and we bought this park with just ... As if there was no RV component to it. It was just kind of a bonus and with 47 spaces is a lot. I think it's a desirable piece of property because it's on this lake. The sun sets to the west over the lake. It's beautiful. I mean, there's fish and turtles and fishing. There's a beach with sand. I don't know. Right now we just want to concentrate on the mobile home park aspect.
Frank Rolfe: Gotcha. Okay. Okay, well, Kevin, let me ask you think. Dave and I have been doing this for over two decades. You've been in this only for what at this point? A couple of years?
Kevin Kouzmanoff: Just over a year, yeah.
Frank Rolfe: Two years? Okay. You got kind of a fresh perspective walking into this, which Dave and I no longer have a fresh perspective. Where do you see things going on this whole mobile home park affordable housing thing? As someone who comes into it completely out of something completely different, obviously. Where do you see things? Do you ... What's the future of the mobile home park in your opinion?
Kevin Kouzmanoff: Boy, I mean, you're only gonna have a few owners. With all these mobile home parks, it seems like a lot of things ... A lot of parks are being consolidated into huge funds. That's a great question. I don't know if I can answer that because I am fresh in the industry. I know it's very competitive. Like I said, I think that people know that this is a great business model and it's tough to get a good cap rate these days I think from what I'm seeing. I know we've talked about on these websites, I mean, the cap rates are nowhere close to what they say on the website.
Kevin Kouzmanoff: If they could call up the seller and say, "Okay, John, you're saying that when I do all the numbers of this park that this cap rate is gonna be an eight cap. Is that correct?" "Yes." Then you do it all and it's like a four or something. It's like very competitive. A lot of people are trying to buy these parks. Consolidate these big companies. I don't know. I feel like ... I get these email listings that say, "Now just sold." It's almost like the mobile home parks ... Yeah, the parks are starting to go away. I mean, they're starting to be bought up and they're starting to dwindle a little bit I think.
Kevin Kouzmanoff: I still think there's a lot of opportunity out there. I don't know what the numbers are with Mom and Pop mobile home parks, Frank. You're better at that than I am. But I think it's ... I feel like your big corporations are coming in and just consolidating this whole thing. I don't know. I'm not sure about tiny homes. I'm not sure what the next step is.
Frank Rolfe: Kevin, let me ask you this. I just read ... I read the numbers of your park through our ... Just evaluation thing. The park you bought if you can get the 78 units occupied at a 350 rent would equate to about two and a half million in value. Just ballpark, what did you pay for that thing?
Kevin Kouzmanoff: We paid 875,000
Frank Rolfe: Just ballpark
Kevin Kouzmanoff: For both of them.
Frank Rolfe: 875 for both of them and it values ... A completion two and a half million? Okay. Well, just for people who are not familiar with the industry, just wanted to give them a rough idea of values because they may be listening to this and not able to ... Know the normal formulas that are used. But that I think would be a pretty good deal then overall. I completely agree with you, the industry consolidation is definitely gonna be a theme going forward that is going to benefit people who already own parks, because with consolidation you're gonna get higher rent just like you have in Colorado. I don't know if you'll get 700 in Michigan, but you'll definitely get ... Definitely higher than 350 in the years ahead.
Frank Rolfe: The one thing I always find striking in the industry, and I know Kevin your opinion since you're coming into it in modern times, I just can't get over the fact that they can't make the outside of the homes prettier. It's always a thing I can never get over because it's like they've gotten so good on the interiors and the parks themselves are no different than a subdivision, but they can't seem to ever find out how to make mobile home exteriors look good. Would you agree with that thought?
Kevin Kouzmanoff: They all kind of look the same, right?
Frank Rolfe: Yeah, they do. It's so incredibly boring and it's just you'd think they'd put more effort on the outsides of the homes as they do on the inside. But-
Kevin Kouzmanoff: Yeah, like the...
Frank Rolfe: One item... I hope they can figure out someday how to fix.
Kevin Kouzmanoff: Okay.
Frank Rolfe: But let me ask this, Kevin... Go ahead.
Kevin Kouzmanoff: Well, some of the homes they try to go with that ... This might be an older look ... But some of that siding's got that rustic, that wood look to it that kind of almost looks like it's faded a little bit like they were really trying to go the extra effort to look like there's some contrast, some design on the side. But I mean there are definitely no bells and whistles to ... Especially just the single wides. I mean, yeah, they're all very similar. But I think they can make a difference when you put shutters on. At the entrance of our park we had a single wide that had no shutters and we got new shutters for that thing and skirting and actually looks pretty good. But the ... I mean, they all pretty much look the same, the exception of a couple of fancy lights by the front door on a front of a home.
Frank Rolfe: Right. Yeah. Well, hopefully the industry can figure that out better going forward. Let me ask you this. Any words of wisdom for anyone listening to this who has pondered a little bit possibly investing in mobile home parks? Anything you would tell somebody who's new who said, "Hey, Kevin, so what do you think about this thing?" What are your words of wisdom to people out there who are just kind of toying with the idea of buying a mobile home park?
Kevin Kouzmanoff: Well, I think you gotta be persistent and not give up. We looked for a year and a half until we found our first park. It happened to be a two-park packaged and there were times where I'm almost giving up. It's like, "Man, these things are just so hard to come by." We kept pushing. We kept reading our emails with the Early Access Mobile Home Park Store. Talking to brokers. We called brokers up and say, "Hey, we're looking for some parks. Here's our model. Got anything?" "Well, no." I'll call back.
Kevin Kouzmanoff: We finally end up getting these two parks and since then we've had several parks under contract. I think being persistent, to me, it's very competitive. I mean, everything is competitive nowadays and in this day and age no matter what you do. But just being persistent. I think persistence is key and just keep searching I think.
Frank Rolfe: Okay, let me ask you this. How many deals did I evaluate with you before you found this one? 'Cause I feel like we did quite a few.
Kevin Kouzmanoff: Oh, many...
Frank Rolfe: A lot of deals, didn't we? Many.
Kevin Kouzmanoff: Yeah, boy-
Frank Rolfe: Many deals.
Kevin Kouzmanoff: Probably eight deals, maybe? Probably six or eight deals I want to say.
Frank Rolfe: Yeah, it was quite a few. Yeah.
Kevin Kouzmanoff: Which has been very helpful. I thank you for that. It's been great to be able to run this by Quick Analysis, see what you think. 'Cause sometimes because we are fresh, we're only a couple years in, it's maybe there's some things that we just ... You can't see the writing on the wall yet, you know? It's funny because we sit there and talk about. It's like, "We can call Frank. Well, we know what Frank's gonna say." We're getting better.
Frank Rolfe: Yeah. I'm a little predictable in my judgment, that's for sure.
Frank Rolfe: Alright, well, Kevin, let me ask you this. People are certainly I'm sure are going listen to this event have questions. Would it be okay if people emailed Brandon with a question and forward it on to you and you could maybe answer them when you're not moving around somewhere?
Kevin Kouzmanoff: Absolutely.
Frank Rolfe: Okay, great. Well, then...
Kevin Kouzmanoff: Yeah, absolutely.
Frank Rolfe: Anyone who's listening to this, if you have a question for Kevin regarding anything to do with his adventures in mobile home park investing, feel free to go ahead and email Brandon and he will more than happily forward that on to Kevin. Kevin, I also want to add that one of the great things about the park industry, maybe 'cause it's just so weird, is that we really appreciate owners like you willing to for free basically talk to people about what they do and how the industry works.
Frank Rolfe: Because in many other facets of life nobody does that and if they do, they have an ulterior motive to it, so they don't want to talk about things honestly because they're always trying to sell something to somebody. Or, they're afraid of somebody competing with them. We appreciate you volunteering your time to help educate people with no strings attached just on how the business works. How it's worked for you and kind of what your thoughts and stuff are, so I wanted to thank you for that and thank you for taking the time to be on here.
Frank Rolfe: Again, if you're listening to this and saying, "Okay, well, that sounds interesting." Go on the ma2.com website. We've got lots of free content on there. We've got courses. We've have the big cap which Kevin attended and Kevin's parents, in fact, attended. But we ... Really, one of the key things we've always enjoyed about the industry is we're the only form of real estate where owners are so free and giving of their time.
Frank Rolfe: I mean, we literally ... Dave and I even now will call other park owners near parks that we're looking at buying to get their input, and they'll give us a lot of information on the market and what's working and what's not working. We actually share the names and numbers of rehabbers and landscapers and evictions attorneys and everybody. That's one of the nicest parts of the industry is everyone's so darn friendly it's kind of crazy.
Frank Rolfe: But again, Kevin, we really appreciate you and being here and for your time. Again, if you have any questions, email Brandon and he will happily forward those on to Kevin. Again, Kevin, we wish you definitely a Happy New Year and we really appreciate you being here.
Frank Rolfe: This is Frank Rolfe with our first MobileHomeUniversity.com Lecture Series Event for 2019. We'll have more throughout the year, but we thought this was a great way to start with Kevin. Thanks a lot everybody, and we'll talk to everyone again real soon.
Kevin Kouzmanoff: Thanks, Frank.
Frank Rolfe: Thanks, Kevin.