There’s no better strategy than to follow in the path forged by someone else who was successful. Biographies are books that are “an account of someone’s life” and a fascinating glimpse into the key drivers to how they accomplished what they did. In this third installment of our four-part series on “Literary Lessons Learned” we’re going to focus on learning concepts for success from the life story of several top American business people.
Who's your mentor? For many people, it's not a person. It's a book. In fact, typically, a biography. This is Frank Rolfe with the Mobile Home Park Mastery Podcast series, and we're in our third of our four-part series on Literary Lessons Learned. We're talking about great biography books and what you can learn about mobile home park business from these books.
One of my favorite books that's a biography is the biography of Conrad Hilton. It's called The Man Who Bought the Waldorf. Now, what makes Conrad Hilton so interesting is he was such a rags-to-riches-to-rags-to-riches story that it's unbelievable how resilient he was. But the story begins with him working in a small little motel, they're in Cisco, Texas, called The Mobley. It belonged to his parents. It wasn't very large. I think it had 10 or 15 rooms. Made out of stucco on one story. He was doing okay with that, but he was always unhappy because he had bigger ambitions. He didn't want to be sitting in a little motel in Cisco, Texas his entire life.
One day, his mother said to him, "Conrad, if you want to build big ships, you've gotta go out where the water is deep," and what it meant was, "You gotta get into the big markets if you want to make big money." In the mobile home park business, what that means is you want to be in metro markets of about 100,000 and up. You don't have to be any bigger than that we found because some of our best deals are revolved around markets of just that size because at 100,000 people, you're going to get all your big box real estate, you're going to get all of your really good chambers of commerce, a very stable city and a lot of diverse employers.
But you typically have to go where the water is deep. You can buy a mobile home park at a small town. Yes, they do exist all over America. Not many people in that small town. Maybe the whole metro only 5,000 or 10,000 people, and it's really hard to make as much money there simply because the rents aren't as high. Where you've got markets of 100,000 and up, that's typically where the lot rents are much larger.
Another item in the Conrad Hilton book is just the simple fact that he lost everything and he never gave up. He was the ultimate in persistence. What happened was he built his chain of hotels right before the Great Depression. During the Great Depression, he loses absolutely everything. Every single hotel he built, he loses them all back to the bank in foreclosure. He could've curled up in a ball and laid on the floor and cried for the rest of his life, but he didn't. He had a plan.
He went back to the banks and said, "Hey, banks. I ran these things, and I think I ran them pretty well, and so what I want to do now is I want to go in there and manage them again, even though you took them away from me." The banks thought, "Well, this is a very, very odd idea. Why in the world would somebody want to manage these things after we took them away?" But they didn't have any other choice because he did know how to run the hotels. They never expected to get them back, and they had to move quickly, so they basically said, "Okay, all right. Fine. We'll let you manage them, I guess."
What he did was he waited for the opportunity because he knew that everything in life runs in cycles. As long as he could be in that cat-bird position managing those hotels, he could watch for the uptick, and then, just maybe, he could buy them back. That's exactly what he did. He managed them. He watched for resurgence in rents and demand, and when he saw it starting to materialize, he went out, many of the same investors that had lost money with him before, and convinced them that they could make their money back if they would only invest in him one more time.
He was exactly correct. He hit the market perfectly. Suddenly, occupancies in hotels began to store. So did the rents. World War II hit. He was able to rent out the chairs in the lobby. That's how much demand there was for hotels at that time.
That's how he built his fortune. It was through sheer persistence. Where do you see that in the mobile home park business? Definitely when you're looking to buy a mobile home park, you have to be persistent, you have to hit a lot of leads, you have to uncover every stone because often the best deals you can find are the hardest to find, so you have to always be working it.
Even then, once you find a deal under contract, you have to do really good due diligence that takes persistence. You have to line up a loan. That takes persistence. You have to basically show up every day, at least in your mind, as far as that you're there to provide affordable housing in the best way you can, so persistence is very, very important.
Another thing in the biography of Conrad Hilton, which I thought was interesting, was a motto he came up with after losing everything in the Depression, which was never build anything; wait around for a recession to buy it for a penny on the dollar. Now, of course, he thought that because he bought all these hotels for millions of dollars, he built them for millions of dollars, and then he bought them back through foreclosure years later from those banks for a fraction of what it cost to build them.
What it really meant was buy things cheap. Buy low, sell high, follow cycles. Has it applied to mobile home parks? Oh, every day. Well, mobile home park, if you were to build it in America today would cost you around $20,000 per lot just to build it, plus the land, plus the soft cost, which are things like tap fees. Some markets the tap fees alone are $25,000 per space.
The bottom line is the typical mobile home park in America if you were to build it from scratch would cost you around $30,000 per space or more, but often, we can buy these same mobile home parks today from mom and pop for $10,000 or $15,000 or $20,000 per space, less than construction cost. Then on top of that, that already comes with some degree of tenants already in those lots already paying rent. It's the best bargain value of all time. Would Conrad Hilton like the mobile home park business? I think he would. It meets almost all his criteria from his book.
Another great biography I've read is Dave Thomas' called Dave's Way. You used to be able to get these books from Wendy's on the drive-thru, and they would only like about a dollar. It's only a paperback book. You can't get it at hardbound, and it's kind of hard to find, but I'll tell you what I learned from the book.
Number one, Dave Thomas is not who you think he is. I thought Dave Thomas only claim to fame, which is the founder of Wendy's, but that's not true. Dave Thomas actually founded something a little more important prior to Wendy's which was Kentucky Fried Chicken.
Here's what happened. He was a manager at a little barbecue restaurant. He was going nowhere, and he knew it. He was married with kids. He had lots of ambition, but he was never going to make any money managing a barbecue restaurant. The guy that owned the barbecue restaurant bought another building and built a restaurant that was a chicken restaurant down the street. It almost immediately went broke, and they closed the restaurant down.
Dave Thomas knew nothing about chicken, but he knew maybe this was his chance to get out of his rut, so he asked the owner of the barbecue restaurant, "If I can go in and reopen that chicken restaurant and turn it around, would you partner with me on it, or how could we do that?" The guy said, "Look, Dave. I tried the chicken. It was a total failure, but I'll tell you what, if you can get me what I put into that building back, you can have the whole thing," because he knew that Dave Thomas couldn't possibly make a success of fried chicken.
What did he do? Dave Thomas moved his family into the back of the restaurant. They lived in the back, and he opened the first Kentucky Fried Chicken franchise. Now, when he opened it, no one knew how to make any money or attract anyone to want to eat at a Kentucky Fried Chicken because at that time in America, fried chicken was not something that you went out to eat. Most people cooked dinner at home. They had no desire to go out and pay even bigger money to do it, so he had to come up with something that would make people want to do it.
He invented all those sides, the coleslaw, the mashed potatoes with gravy, the roll. That was all Dave Thomas' idea. He invented the red and white striped bucket. He invented the bucket on a pole that's turned on an angle so it looks like it's tipping over at all times. He did all these many things, and low and behold, people started buying fried chicken. His first fortune came from basically Kentucky Fried Chicken when he sold those off.
Then, however, he wanted more. He got bored. He wanted to do it again. What did he do? He went out and started Wendy's. What you really learn from Dave Thomas are a lot of operational things. Conrad Hilton, you learned about persistence and items, but in Dave's Way's book, he talks more about lessons he learned from the restaurant business but kind of life in general. The key one that I remember from Dave Thomas' book is the concept of riding the wave. This was something he felt very strongly about and was one of the benchmarks of his management of his restaurants. That was that a good manager knows how to ride the wave. Now, what does that mean?
Well, the example he gives is let's assume it's coming up on lunchtime at the Wendy's, and suddenly, you realize there's no pickles. What do you do? Well, the manager would have to jump in the car, drive across down, try and find some pickles, but by the time he got back, customers are already unhappy. "Where's the pickle on my burger? I've got no pickles?" The good manager, instead, would go out there and realize lunch is approaching, or even the night before, "Well, lunch will be tomorrow. Let's look and see how many pickles we have. Oops. No pickles. Better go buy them, that way, by the time lunch is here, the pickles are there."
It's kind of a technique. It's a management style that you really can't train someone. You can either think ahead, plan accordingly, and ride the wave of demand, or you can not think clearly, not plan ahead, and then all your life, you're just in reactionary mode. Never proactive, always reactionary. How it applies to mobile home parks are if you don't do good due diligence, if you don't know how to operate them, you're always in a reactive mode because all you have are problems happening every day and you spend your entire life running around like crazy like trying to go buy the pickles at the store when, instead, you should be managing that business to make the maximum amount of money with it. You always want to be a proactive person, never a reactive person.
Another thing I learned from Dave's book was just always focusing on customer experience, what customers want. He was so into testing things. When he was trying to build Kentucky Fried Chicken, he tried many difficult things, and he would try them out simply to see if they might work, and if they did work, he would adopt it. He was always morphing the business into what people wanted. Same as with mobile home parks. Mobile home park owners are trying now more than ever before to improve the customer experience. We're all out there trying to improve our common areas. We're adding clubhouses and pavilions and all kinds of things trying to make these the happiest little subdivisions on the earth. I think in many ways, Dave Thomas would definitely support that.
The same is true of another biography I read on Sam Walton. Sam Walton was another person who thought always about experimentation. It was very important to him. In that biography, what happens is he's walking through Walmart store, and a clerk sees him and runs up and says, "Hey, Mr. Walton. How come we never paint the walls anything but gray on the inside of the building?" He said to the guy, "Well, I don't know. That's because they've always been gray, but I'll make you a deal. If you want to go with a different color, go ahead and buy the paint and paint it. If it's a success, if our sales go up for a month, then maybe we'll paint more stores that color, but if they go down, you have put them back to gray." The guy tried it. I think he painted it purple. It was a bomb. They painted it back to gray a month later. The bottom line is he always kept a very open mind. He was always looking for an angle, a way to improve things. If he found that, he would immediately adopt it and stick with it.
A final biography I like reading was one called Shackleton. Now, if you've never heard of Shackleton, his name is Ernest Shackleton, he was a British explorer. In the book, which doesn't even seem believable, and you can look it up on Wikipedia, it's such a crazy story, the guy goes into Antarctica, and he's on a ship. These are those old wooden ships in the olden days. This is back in around 1900. He becomes stuck in the ice floe. Ship cannot move. He realizes it's going to be stuck there for months and months and months because winter is here, he didn't get out of Antarctica fast enough, and he's stuck. He's got about a hundred or so men. He doesn't have hardly any food, certainly not enough food to get him through the entire winter.
What did you do? Well, he has only one plan. That's he's going to try and walk across Antarctica to civilization and then bring in reinforcements to save the men. That's what he does. He basically walks across miles and miles of Antarctica, and we're talking at a time when the temperatures would be down below freezing, down below zero, and he had virtually no modern equipment. He had nothing more than a rope and an ax.
In the book, after he climbs one mountain and then comes to the next mountain, he's trying to climb this by himself with no safety equipment and no good clothing at the worst time of the year. In one time in the book, he just can't go on anymore. He realize that he'll never make it, so he decides just to try and roll down the mountain. He literally curls up in a ball and starts rolling and, just like a snowman, starts gathering snow on him, and he literally rolls down the mountain and unbelievably does not get killed.
He had the ultimate determination. He finally did reach civilization, but the sad part is they could not send the crew out to save the men still at that time of year. There was no way to get there. There's no way anyone could've walked back the way he came, so they had to wait until spring. In the spring, they went back with giant boats to try and save the men, assuming they would've all perished, and there they were, all happily living there. What they did is they'd taken the ship, cut it into pieces. They'd build little buildings out of, and they burned the rest for firewood. They learned how to fish through the ice, and they survived just fine. In fact, no one had died. The men, it turned out, has about as much persistence as Shackleton.
The key item was determination. I have found throughout my entire business career, those people who have true determination always win. That's really the characteristic of those who really succeed or those who will never, ever give up. No matter what happens, they're right back at it again. They will never give in. They will never listen to anyone who says, "You can't have your dreams," because that's not how they're wired. They're wired for complete determination.
The same would be true not only in buying mobile home parks, but also in running them. Can't get the phone to ring to sell that old, used mobile home? Well, they wouldn't give up. They had the determination to keep marching on.
Again, this is Frank Rolfe with the Mobile Home Park Mastery Podcast series on Literary Lessons Learned. Be back next time with some discussion of history books and how those relate to mobile home park ownership. We'll talk to you again then.