Mobile Home Park Mastery: Episode 293

Good Fear Vs. Bad Fear

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Webster’s defines “fear” as “an unpleasant emotion caused by the belief that someone or something is dangerous and likely to cause pain, or a threat.” However, how you react to fear can be either hugely beneficial or a roadblock that can ruin your future. In this Mobile Home Park Mastery podcast we’re going to explore how fear can be good or bad, and why its existence can be an important tool to being a successful mobile home park investor.

Episode 293: Good Fear Vs. Bad Fear Transcript

Back before I ever owned a mobile home park, I was a college student at Stanford University. And I was the teaching assistant, later the co-teacher, for one of Stanford's largest classes on public speaking. And it was in that class that I truly learned about fear. Because you see, public speaking is the number one fear of all Americans. It ranks right above death, which comes in at number two. But that's not really what I'm talking about, what I'm talking about is that there was good fear and bad fear. Now, one of the teachers of the class one time gave a terrible speech, because we gave speeches as part of the class. The students would speak, then we would speak. And the teacher, he gave one of the worst performances of all time.

I asked him after his speech why he was so bad tonight. "Why were you not on your A game?" And he said, "Well, the problem is I give so many speeches that tonight I had no fear. And because I had no fear, I put in no preparation. I didn't do anything right." And I learned at that moment that fear can actually be a positive force. I also learned from teaching the class that sometimes students, when called upon to give their speech, and the whole point of the class at Stanford was to get people up to par with their peers as far as being able to public speak, they would often run out of the room in terror, never to be seen from again. And I thought, Wow, what an incredible waste. They're at Stanford, they're in this class. The whole point of the class is to learn to be a better speaker, and they've blown the opportunity because the fear took hold of them and made them miss out on the opportunity.

Now, this is Frank Rolfe of Mobile Home Park Mastery Podcast. We're going to talk all about good fear versus bad fear. So fear in general, it comes from that adrenaline rush, that fight or flight mentality you have when you think bad things can happen to you. And yet harnessing that power, that drive, that anxiety can be a very positive feature in the mobile home park business. The first way I see it manifesting itself in a positive way is in due diligence. Now, we all know that Benjamin Franklin said that due diligence is the mother of good luck and that people who do good due diligence typically are more successful than those who don't. But you can also flip that around that not doing due diligence creates a lot of fear. Fear of the unknown, fear that your revenue or your expenses are not in line with what you think. And so fear can often drive you to really work hard making sure that property is going to work out for you. Doing good due diligence means being very thorough. It means putting in a lot more work by phone, by email, in the field than your contemporaries probably do. But the end result is if you do great diligence, typically things just always seem to work out. I've never heard anyone complain about a mobile home park that did not perform on expectations because they did great due diligence and it didn't work. And normally they are sad because they didn't do good due diligence on something.

Maybe it's the water system, the sewer system, the market demand, whatever the case may be. So having that innate human fear we all share is really a very important feature to one of the most important attributes of buying a mobile home park successfully, and that's doing great due diligence. For that reason therefore, fear is good. Now, another time that I see fear being good is the fact that we all fear just running out of time in life because we all eventually just time out. We don't know when it occurs, but we all have goals in our lives at a certain point, at a certain age, we're going to accomplish something and the clock is always ticking and that fear that you're going to run out of time is another positive attribute. When I got out of college and I had my billboard company, I had my first little plaque on the wall. I made it myself from something that I had learned. I don't know if I was in college reading a magazine or a book, but it was the old phrase, just the three words, time kills deals. I still have that little plaque. And what that little plaque meant to me is, I should never put off to tomorrow anything I could do today. I should never let a deal roll over the weekend because I was just trying to go do something else more fun. So basically I was living under a constant sense of urgency.

And if I didn't do the things I could do every day, I would potentially miss out on what might be my great opportunity. So once again, fear is a positive force because it is fear that creates that sense of urgency, that desire to get things done, to not procrastinate. So once again, fear can be a positive force. Another way I see fear being positive with mobile home parks is that your fear of failure will constantly get you to mitigate risk. And mitigating risk is one of the hallmarks of those who do exceptionally well in the industry because none of us can control all the variables. You can have an employer shut down. You can have a weather event. You can have a zoning official problem. You can have a loan problem, whatever the case may be. You've got to be resilient when those things happen. And one great way to think through the resiliency is to have a plan, a plan for whatever it is, what would happen if it goes bad. You probably have seen on television or on YouTube or somewhere, the recording of the flight that Sully Sullenberger landed into the Hudson River. And you will note, if you watch that or read about it, the reason he was so calm and that he had a plan is he always wondered what would happen on takeoff if the engines went out. So he already had his plan B ready. And then that one fateful day, it happened. The birds hit the engines. He lost all power, but he'd already thought through his plan B. He knew immediately what to do.

He didn't lose a second thinking about it. "Oh gosh, what's the plan?" He already had that plan. If you own a mobile home park and you've got any risk that bothers you, you will instinctively try and come up with a plan B to solve that risk, whatever the case may be. You lose your natural gas to give a master metered gas system. You say, "Well, if I ever lose my gas, I will immediately convert to propane." And you already have that plan B ready. You probably have a little file folder of all the propane companies, their phone numbers and what they charge, et cetera. Having those kinds of plans, things to do when things go bad is very, very important. And what pushes you on to put in that little extra credit work to run up those plans is basically fear. So once again, fear can be a good thing. But at the same time, fear can also be a bad thing. That same fear that made people run out of the room when they were supposed to go up to the podium and give a speech. It could also happen to you with mobile home parks. One big time you see fear manifest itself with mobile home park buyers is when they can never sign the contract. Despite the fact they've got a due diligence out and a financing out, they can never bring themselves to sign the contract. It is terrible because if you can't sign the contract, then what's the purpose anyway? You'll never be able to buy a property if you refuse to pull the trigger and sign the thing up.

Now, you should never have any fear of signing up a deal. Your fear should come much later after you've done your due diligence, maybe the financing. That's the tough decision. "Do I go forward or do I not?" You shouldn't have any fear of just tying something up under contract. Yeah, many people are so afraid of their own capabilities, they just can't bring themselves to sign the agreement. And that's bad fear. That's a fear that is going to knock you out of all of your potential success of the future because you just won't play ball because you simply are afraid to do it. Another problem with fear is that someone who is fearful will often drop deals, even though there's an easy solution to whatever the roadblock is. Sometimes in many deals, you will find there's something that pops up during diligence or during financing and the fearful person, they won't try and power through it. They'll just say, "Nah, well, you know, I guess this deal really wasn't meant for me. This is clearly a sign from the heavens I shouldn't do it," when that was not the right decision. They again, let fear take hold of them. Then they refuse to do the things that could make the deal potentially successful because they're just kind of fearful and they really just kind of wanted out of the deal.

We see that a lot when you've got a deal killer mentality, you just can't ever seem to find the perfect deal. But the reason is not that it doesn't exist or not that the deal wasn't nearly good enough. That's the way you subconsciously never have to exercise your conquer of fear. I used to have a banker back when I had my billboard company named Glenn, and Glenn was a nice guy, but I always felt kind of sorry for Glenn because whenever you talk to Glenn, all of his stories revolved around one issue, a Corvette. He always wanted a classic Corvette. And if you ever met Glenn back in the '80s, and no matter what you talked about, he would steer the conversation back to Corvettes and he would tell you, "Yeah, I saw this Corvette along the highway out in the country, just sitting there. It said for sale on it. I thought, Oh my gosh, this could be it. And I went to the farmer's house and I knocked on the door and he said, sure, let's go down and look at it." And then you'd say, "Oh wow, Glenn, that's great. So, congratulations on buying the Corvette. He always would then go, "No, I didn't buy it. I thought there might be some imperceptible rust back on the quarter panel," or, "It didn't have the exact engine I wanted." But the truth was Glenn was just afraid to buy the Corvette.

I don't know if it was a financial issue or possibly his spouse would have been mad at him. Not really sure what it was, but he always had a story about a Corvette that he never bought. And he probably never bought a Corvette ever. And it was kind of sad. It was the one thing he wanted in life and decade after decade, he never got the Corvette. So you don't want that to be the case with you as the buyer. So the bottom line to it all is fear can be a good element or a bad element to your mobile home park buying career. It just depends on how you use it. If you acknowledge what fear is and you embrace it and you say, "Okay, I understand fear. I understand why I'm fearful, but I'm going to do something positive to harness that, to get ahead." Then that's good fear. But if the fear takes hold in you and makes it where you can't actually do anything, you're so frozen with fear, then fear can be bad. It's up to you. It's your choice. This is Frank Rolfe, the Mobile Home Park, Mastery Podcast. Hope you enjoyed this. Talk to you again soon.