Do you have good luck or bad luck? Regardless of your answer, you’re probably wrong. In this Mobile Home Park Mastery podcast we’re going to review how buyers put way too much emphasis on “luck” without truly understanding its role in making money with mobile home parks.
Episode 407: The Role Of Luck Transcript
Webster's Dictionary defines luck as, "Success or failure apparently brought by chance rather than through one's actions." This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Let's talk about luck, because I hear people all the time who lament the fact they're just not lucky or this person is luckier than they are, and that somehow luck is the driving force to winning, and luck is the driving force to successfully buying a mobile home park and turning it around. Well, I've been in the business now for 30 years, and I've seen a lot of people who claim they were lucky go bad, and people who claim they had no luck that did very well. Here are my thoughts on luck regarding mobile home parks.
There's an old Asian parable of a farmer, and the farmer wants to buy a horse for the farm. So he goes to the trading market where you trade things to get animals and crops and household items, and he trades a whole lot of his cherished possessions to buy this horse. And when he gets back to the farm, it turns out it's not a very good horse, because if you jump on the horse, it will buck and bronc and throw you off. So everyone in the town says, "Aha, he is unlucky. That farmer has no luck because he gave up everything he loved for a horse, and the horse is no good." And everyone in the town laughed at him.
And then his son was embarrassed because everyone in the town said, "Oh, yeah, your dad, he's the guy that has no luck who bought the bad horse." The son decides to go out and try and calm the horse down to make it where it can be salvaged, where he can ride the horse. So what he does is, he goes out there and gets up on the horse, and the horse proceeds to buck up its back, toss him off, and he breaks his leg. The whole town laughed and said, "Oh, this farmer's so unlucky. He bought this bad horse, and now his son broke his leg trying to tame the horse. This man has no luck at all."
And then there was a big war, and they went around and they took all the men from the village who were in good shape over a certain age. And every one of the farmer's son's contemporaries were taken off to war to be in the army. But the farmer's son couldn't go 'cause his leg was broken. And as you're gonna guess, everyone in the village, all the men who went off to war, they all died in battle. So the farmer's son was the only man left in the village in his age group. And it then brings forth the question: Okay, then was the farmer lucky, or were they not lucky? I think we would all say, "Well, the whole town was wrong. That farmer, he wasn't unlucky. He in fact was very, very lucky."
And the problem is, you don't really know if you were lucky or not lucky until you're dead. So you can't really obsess about it, because none of us know in our daily lives when things go bad, things go good, what the sum of it will be until the very end of the movie. Yet some people get in this vibe that they've got endless good luck. And I've seen people who have this feeling that they're lucky, that they're innately successful because it's the will of the gods because they have such good fortune behind their name. Those people always end up getting in trouble. They don't fear life as those of us who don't think we're the lucky person. So, they get sloppy. And then ultimately things blow up on them. But for the longest time, they thought they were lucky. They had good luck. But again, none of us know whether we have good luck or bad luck, literally, until our movie is over.
Another thought on luck is, you make your own luck. It was Benjamin Franklin who said that "Diligence is the mother of good fortune." It's a shame that Ben Franklin was not in the mobile home park business. He would have been phenomenal at it, because he's totally correct. You make most of your luck in this business by the property you select and the due diligence you do in the selection of that property. I would say that typically, the die is cast when you buy a mobile home park, whether you'll make money or not, literally on the day of closing. Because your decision to buy that property, if correct, is what will create the value. And if you are wrong through sloppy diligence, bad decision making, then no matter how hard you work, that park will still fail.
Finally, it's always and will always be better to be smart than lucky. Some people say, "Oh, it's better to be lucky than smart." I would say that's not true at all. Because there's a basic science behind making money with mobile home parks, and it has nothing to do with luck. You might say, "Well, what is the science that will make me lucky when I'm naturally not?" Well, there's five attributes to any mobile home park that makes it successful or not: Your infrastructure, the density, the economics of the deal, the age of the homes, and the location.
There's no luck in any of those. You don't do the diligence on four out of the five, and on the fifth, you roll a dice to see which location you got, whether you're in a good school district or a terrible area. No, it's all complete science. And in the army, they say, "Hope is not a method." And yet, when you deal in luck, when people think, "Oh, yeah, I'm just gonna buy this because I'm feeling kind of lucky," that's what they're doing. They're escaping science, and instead they're relying on something else. And that's never proven successful in battle, and it's never proven to be successful in business. You've got to understand the science. You have to apply the science. And it's intellectual. It's not just luck.
If you look at Sam Zell's musings on the mobile home park industry, the late Sam Zell died a few years ago, wrote a great book called "Am I Being Too Subtle?" You will notice that nowhere in that entire book where he is going back through his life of being the largest real estate owner of all time in three categories, office buildings, apartments, and mobile home parks, never did he ever have any thoughts on luck. Because he knew that it was not luck that allowed him to grow the largest in three sectors, and it was not luck that allowed him to survive through all the various recessions and depressions, which was his hallmark. That's why they called him the gravedancer. He seemingly was the only guy in the room who knew when to get in and out of a deal before everyone else figured it out, and by then it was too late. He has no chapter in the entire book on luck. I don't think there's a mention of the word "luck" in the entire book. Instead, it's all about risk and mitigating risk and doing good due diligence.
Those are the key factors. It isn't about how you're feeling that day or what your horoscope said. So many Americans get into this mindset that all of our lives are already precast on these goofy things like a horoscope. They say, "Aha, well, I'm an Aries, or I'm a Taurus, or I'm a Libra, and therefore I've got good luck today or good luck this month." Doing well in mobile home parks has nothing to do with luck. It has everything to do with good common sense, and applying a lot of science to what you're doing, what you're buying, what you're operating, and not leaving anything to raw chance. In fact, if I had the choice between both, if I could say I have myself a big old vial of luck here or instead I have a big old container filled with understanding the science and applying it, I'm gonna go with the science.
Because luck is often fleeting. You ever notice people who say, "Oh, I'm super duper lucky," and then they go to Vegas on their big lucky streak and they end up losing everything? It really makes you wonder really in life, is there really luck? Is there really chance? Or is it mainly just the application of good science and then when people don't apply it, they're unlucky and when they do apply it, they are lucky? The bottom line is, if you don't feel like you're a very lucky person, or if you feel like you're an extremely lucky person, mobile home parks are an equal-opportunity investment for anyone. If you simply understand the science and apply it, you'll always end up winning and you'll feel lucky. This is Frank Rolfe of Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.