California Dreaming

So you think that buying and turning around mobile home parks in California is impossible? Meet Mitch from Palm Springs who has purchased four parks so far and is going to tell you how he did it on this Lecture Series Event titled “California Dreaming”. Mitch and his wife are realtors who have amassed a collection of four mobile home parks in California that are doing so well that he’s going to retire on them soon. It’s an incredible story.

We’re going to talk about how they got into the “trailer park” business, how they found and financed each park, what the turn-around strategies were, their lessons learned, how much time they spend on managing the properties – every topic and question that you can imagine.

If you want to learn skills that Mitch used to succeed with parks, attend our Mobile Home Park 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 (855) 879-2738.

California Dreaming - Transcript

Frank Rolfe: Welcome everybody. Just a nice lecture series event. We've titled this California dream and is becoming a reality. And that's because what's so fascinated about Mitch's story is the fact that he has succeeded in perhaps the hardest state in America to succeed at, and that it's in California. I get calls all the time from people who are in California and wanting to buy parks in California. I frequently say, well, you're gonna get disappointed. It's very, very hard to do it, but yet Mitch has succeeded and do it. So with no further ado, we'll meet Mitch Matthews here. Mitch, are you with us?

Mitch: I am. Hi Frank.

Frank Rolfe: Well, Mitch, we're very excited to have you here. So let's start off with the story. How in the world did you get the idea to ever even wanna own a mobile home park? Did you have any as a small child, did you tell your parents? I, well, one day dream of own a trailer park. How did this happen?

Mitch: Well, that never happened, Frank. So just outta high school. My wife and I, we got married fairly young and had children fairly young. And we went to orange county, grew up in Costa Mesa for a little bit and I did security. And that point I had a chance to work with Kobe Bryant and doing security at his home site in Newport beach. And from there we kind of just ran outta money to be honest. And then we moved back down to Palm Springs, California, Southern California. And we were tired of working for, anyone else. And we wanted to pursue a career ourselves and I fell in love with real estate, simply right outta high school. So our first deal was I couldn't afford anything. We came from nothing. Didn't have any funds to start. So I bought a mobile home inside a park. It was a 55 and older community. So I used my dad to go on title, borrowed the money from friends and family, was able to flip the mobile home and made a decent amount of change and bought our first car cash and so forth. And during that process, it took me about six months.

Mitch: And during those six months, I happened to stumble across and meet the owner of the park. This was a very large park in Palm Springs, California, is about 550 spaces averaged lot rents of about 500 bucks a month. And this gentleman showed me how much he's bringing in per month. That's why we got to know each other. And I just figured right then and there about 20-years-old that said, wow, you know, I'm in the wrong business of flipping mobile homes. I need to own the entire park. Well, fast forward, many years later, my wife and I became licensed realtors. We flipped several single family homes, graduated duplex, tried and so forth. Always wanted to get in the park business, but never pulled the trigger. And then finally took your course and took it serious. And then 2019, we went full force with it.

Frank Rolfe: Mitch, so far you have found what, four parks, is that correct?

Mitch: Correct. Four parks. All in Southern California, Yes.

Frank Rolfe: Okay. All right. So let's just jump into it. So how did you find the first park ? How did that come across your, your...

Mitch: Yeah, so once I get motivated Frank, we hit the ground running. We've had success being realtors. So at this point with our other investments, we figured, you know what? It's now time to move on to something bigger and better. So for two weeks, two weeks straight, every single day, except for Sundays, we don't work on Sundays. I hit the ground running, from basically to Calexico down by the border, by Mexico, all the way up through El Centro to Palm Springs, to banning Beaumont, everything in Southern California, I visited about 70 parks in two weeks. And during my visits, we knocked on doors. We talked to managers, we tried to find the owners. We did everything we could to get as many leads as possible. And that led to about five people giving us a call back. So not a huge success rate, but out of that five, two were serious. And one, we made a deal on. So that was our very first park we purchased. And we were just boots on the ground and got right work, you know, got right to it with just knocking on doors and talking with managers and this inexperienced manager who we still runs our park today just happened to give us the owner's contact information, mom and pop, and they were ready to retire and wanted to move on. We made a deal.

Frank Rolfe: What were any of the big diligence hurdles or surprises that you found on that first park? Anything that was outta the ordinary or just the standards fair?

Mitch: No, pretty standard. I think the biggest thing for us was really understanding and diving into it right in the beginning, understanding what the manager does, understanding the full duties and the scope of work. And what's involved just with running a mobile home park. It was our very first one, it's a mixture of mobile homes and RVs, it's 45 sites. So it was a very, very good first park that we purchased because the mom and pop actually built the park. I mean, literally the owner was digging trenches and the wife was laying pipe and this was back in the '80s and then they just wanted to retire. He wanted to fish and move on and she wanted to travel the world. And so we were able to get seller financing on that one 5% interest for five years fixed, very simple terms. They're very reliable. We're still friends to this day. And at the end of the day, you know, we bought it at such a great cap rate and it's a very low price. People will probably be shocked through some of the prices that we have in Southern California. However, mom and pops are motivated. It's easier for them just to collect a little something per month and I'd have to run an entire park.

Frank Rolfe: Yeah. Give people just a rough idea. Don't tell us to the penny, but just ballpark, what kind of cap you found park number one app. Just ballpark.

Mitch: Yeah. So ballpark was 9.6 cap. And that's because very low performing as well. So I always have that in my mind to always buy with upside, always buy potential and the potential was not all sites were filled. So there were some empty spaces and rents were extremely low. Everything was master meter. So the rents didn't really reflect all the expenses of the park. So once we increased the rent and got vacancy filled up, we actually had the opportunity to work with the county and the county had a lot of displaced families from fires, to just homelessness. And we actually were able to bring in, homes and fill all the lots and get in 100% occupied. So we almost doubled our money literally, within the first year. And obviously that raised the values as well. And plus we raised a lot rent, so there was huge upside potential with that. So about 9.6 and right now we can easily, sell up or triple the price that we bought it for. We got, as I mentioned for 675 and at this point with the cash flow, we can sell it at a seven eight cap easily in California and triple our price.

Frank Rolfe: What were your lessons learned from park Number one, anything you wish you had not done or should have done differently?

Mitch: The things that I wish I would've done differently or probably, I would say understanding the master meter a little bit better, understanding what I was getting into, how master meter electric and water works and just making sure I understand the billing and how it's being charged. That I would probably go back, it's not necessarily something I would renegotiate the deal on, I just wanted to understand it better and once I dove into it, you know, started paying all the bills, then I started realizing, okay, you know what? We need to increase the rent to help offset all expenses and once I learned offset all expenses and you have cash flow leftover, you know, that's your true net income. And so learning that, even though it sounds pretty simple and easy for our very first park, it took a little bit to understand how the billing works.

Frank Rolfe: Got it. Okay. S tell us about park number two, how did park number two come across your radar screen?

Mitch: Yeah, so this one came off of a website, if I recall it might have been LoopNet, it might have been one of the MLS links. I'm a licensed California realtor as well, so we have access to a lot of different MLS's and this one came from another gentleman that inherited a bunch of parks, I think he inherited, if I remember correctly, nine from his parents and he was operating them and running them and just wanted to get out of the business. So he has other parks he's trying to sell and we made a deal, he lives in Arizona and didn't wanna manage the park from afar anymore, so we went in there and purchased it at a very good price, it was a smaller park, but it's in the heart of the Palm Springs area. And on that one it's 21 sites and we got it for 675 and the rents were well below market value, rent haven't been raised in a long time. So we immediately followed your plan and went in there, did some infrastructure upgrades, raised rents, and now that park is pretty much tripled in value from what we've done. Plus the biggest thing takeaway, Frank, on that was most of these parks except for the master meter ones no one was billing back for utilities, so water, sewer, trash, the park was eaten in expense and so I immediately saw that and saw the opportunity to capitalize.

Frank Rolfe: Any diligence, remarkably strange diligence issues on park number two?

Mitch: No, with all the city utilities except for the, they had a septic system. But the septic system was interesting 'cause it's integrated with the city, they still have control of the streets even though it's private property, however, the septic system is very good. I spent about $3000 in Cameron, being able to camera all the sewer lines, make sure the water systems were good. And what I found out about this park is, we did such a great job with our due diligence, that during the due diligence we found out that the state actually came in and upgraded all the utility lines, they upgraded the gas lines, the water lines, they put new gas meters and water meters in as part of a grant, and I asked the owner how he was able to do this and he said, well, they actually contacted me a lot of companies are now coming in and contacting park owners to upgrade their infrastructure for free and I thought that was remarkable. So this park had that, so all the infrastructure was pretty much brand new except for the septic tanks and so that was the biggest expense and what we wanted to make sure was okay, other than that, the park is in phenomenal shape.

Frank Rolfe: How did you finance the second park?

Mitch: That was my bank debt. So we developed a great relationship with a local credit union that loves parks. I'll give them a quick little plug at Sun Community, Federal credit union. They're based in El Centro, they have offices in Palm Springs area, we're on that and they're a phenomenal bank. I built a great relationship with the CEO who does all their lending and he's more so lending on relationships and at the end of the day, if you have a great relationship with him, the numbers make sense, we did simple 25% down, we're at about a four and a quarter interest rate fixed for five years so we got great bank debt on that one.

Frank Rolfe: Great, and so the strategy sounds like a park two is the same as park one, basically boost rents, make sure people are paying their own utilities pretty much, but the standard turnaround plan, correct?

Frank Rolfe: Yeah, very standard. Yes, correct.

Frank Rolfe: So you bought it right with lots of upside, then you tapped into the upside?

Mitch: Correct. And then, the biggest thing with that one too, is we have a phenomenal manager in place. This guy used to manage mini apartments and at this point he wanted to stay at the park. He was managing it for about six months. I put him through the MHU training that you guys provide, he loved that, got a little certificate, felt accomplished, and now kind of had his park ranger badge on and he was... A lot of these managers, sometimes I've gotten to know, they think that they own the park themselves, which I'm okay with that, so do a great job. And we got really lucky with this manager and it's been a phenomenal process so far.

Frank Rolfe: Good. Okay. And then tell us about park number three, how did it come across your desk?

Mitch: Yeah, so this one was in the local MLS, I've been watching this one for a couple years and no one's ever purchased it. And I thought the price tag was too steep, the park was pretty run down, at one point they were asking about 2.1, they lowered it to 2 million, two investors from Orange County that, I wouldn't call them slum Lords, however they didn't put any work into the park at all, it was a cash cow for them. They bought it for 1.1 and they were just trying to get out of it. We ended up settling at the Indio, California, great park, 48 sites, 47 mobile homes with one stick built, and we bought it for 1.8 million and that was roughly, I got some notes right here, that was roughly about a 7.2 cap. Now, the thing that I liked about this park is all city services except for a water, it's on a well, they were not billing back for water trash sewer. The rents were extremely low. I mean, we're talking $295, $300 in lot RIN space rent. They haven't been increased for a very long time. The market easily calls for $600, $700 per space in this particular area.

Mitch: So I know we are off 50% there, had 100% occupancy, some of these residents, Frank, had been there 30, even some 40 years. Some were original when the park was built, which I just couldn't believe. So we put about $250,000 into it, we did some new infrastructure, we built a laundry room as well, everyone had washer and dryers outside, multiple refrigerators, just blowing up the electrical and it wasn't good in that aspect. So we did a massive cleanup, got seller financing on it. Interest rate was a little bit higher than what I like but they were willing to work with us. So 5.75% interest only five year fix. And we're actually doing a refi right now and it easily appraised at 2.75. We bought it for 1.8 so we almost have a 1 million in equity and we put in a quarter million into it.

Frank Rolfe: And you've had that park for how long?

Mitch: A year.

Frank Rolfe: One year?

Mitch: We bought it last... One year. One year we went from cash flow of... We have about 21,000 between space rent per month and very, very little utility income, now we're about 28,000, so we've increased it almost by 80,000, 90,000 in one year.

Frank Rolfe: And any strange diligence things that happened on that? It sounds like a fairly straightforward deal, correct?

Mitch: Yeah, fairly straight forward deal. The only thing I had to educate myself on was the well. I don't like the well, however we're working with several different departments now. It's amazing how much money California has, the State of California. We're working with the State County City Water Department to connect to the city water. They're most likely gonna fund it all. It's $305,000 just for proposal for engineering 'cause you may consider the cost to hookup, they're covering that. They want parks to connect to the city services, which is great. It will be master metered but we're okay with that 'cause I wanna get off the well, I don't wanna have to test it monthly and be responsible and the bacterial tests you can keep it up to date. It's not expensive, however, I just had to learn about the well system and how it operates.

Frank Rolfe: Got it. And then tell us who partnering before. How did partnering before come up?

Mitch: So, this one was also off the website. Strangely enough the broker of this, it might have even been MHU or LoopNet, but strangely enough it just sat there and this thing is completely just destroyed. It was full at one time, 41 sites, completely full about eight years ago. The brokers are from Florida oddly enough and the owner, one's in Texas and one's in Florida. They just ran it to the ground. There was only 15 spots left when we picked it up. We got it for 820,000. Initially in contract for 990,000 but after due diligence and doing camera work and spending a couple of grand in sewer lines and the water lines we realized it all needs to be redone. So, we picked it up for 820,000, it was roughly about a 6.6 cap, however there was 24 vacancies and we actually have a waiting list of people that wanna come in, so immediately we purchased the Park and we easily closed somewhat double the value now just by bringing in additional trailers. We're not even bringing in the trailers, Frank, they're coming in with trailers. We get pictures before they move in, obviously approve them and they bring in the trailer through each CD and make sure that's approved, and then now we're already filling up the vacant sites. So, it only went from about 8 grand coming in per month to about 15,000 that's gonna be coming in per month and we just purchased that one two months ago.

Frank Rolfe: That's incredible. It sounds like your game plan is the same one that we use which is basically boost the rents, fill the lots, push back water sewer, right? That pretty much the...

Mitch: 100%. Yeah.

Frank Rolfe: That pretty much the money making...

Mitch: All of them except for the first park, no one was billing back utility, no one was billing back water and sewer trap. And these aren't really your standard park owners, these are mostly mom and pops or they inherited the parks and wanted to move on.

Frank Rolfe: Right, so let's flip around to management for a minute. We can tell in the background obviously you've got a family, you've got kids.

Mitch: Yeah.

Frank Rolfe: I know you and your wife, I think are both realtors there in California.

Mitch: Right.

Frank Rolfe: So, [0:17:20.8] ____ your time that you devote to your four mobile home parks, roughly per week how many hours would you say that you're spending on that or how do you juggle that with the rest of your life?

Mitch: Sure, so our goal is to continue with the mobile home parks and make it bigger and better and it's that quality of life. I think you and I even touched base on this the last time we saw each other at Vegas and that quality of life is so important. So, in the beginning when we're upgrading and doing the infrastructure, again we're very hands-on. I don't look at any other states, Frank. If I can drive there and back in less than half a day that's what I want. We wanna be able to manage our managers. In order to do that we do have to spend a little bit more time. Every park is different. The one park that we have at 21 sites, I do all the financials as well. Obviously we have an accountant and bookkeeping, but honestly maybe 12 hours a month, if that. The first park probably about the same, if I have to travel down there, spend an hour and a half, but we have phenomenal managers. The one that we bought last year in Indio, I'm on that park a little bit more 'cause we're doing a lot more infrastructure, so that's probably two to three hours a week and then the last park we bought about the same. And when you add it all up maybe 10-15 hours a week. It's really not as much as people think it is.

Mitch: The biggest thing is financials and making sure all the book work is done correctly, 'cause we have a very short team. We have our attorney now that's specializing in California parks or CPA. So, roughly 15 hours per week I would say right now between the four parks, which is what you receive it's phenomenal and we have all the free time. We plan to retire next year. We're gonna be done being realtors. It's phenomenal. You can make great money being a realtor but you make a fortune owning real estate. I've known that for a long time. And by the end of 2023 we're hanging it up as a realtors and just doing partial time. And that's what's provided us this amazing life.

Frank Rolfe: So, basically 'cause in many of our interviews people talk about they spend three to four hours a week on a park, the kind of what you sounds like, there's some efficiency of scale, right? But at the same time so be your spending 10 hours a week roughly and you could spread that at any time you want. It doesn't have to be daytime hours, right? It could be night times hours, weekend hours, based on your schedule, correct?

Mitch: Yeah, absolutely. We try not to work on Saturdays and Sundays if we can, it's family days. As you know, we've got the four kids. We have three girls and a boy and between all that traveling, sports and everything that they do it can keep us busy. It's just that quality of life. I think it's prioritizing better and learning the system better. And again, I think the biggest thing I can... One of the largest things that I can take away from the parks is having a good manager in, managing your managers and setting those expectations, and even comes down to how they talk to people. One's experienced, one's brand new. The other one I just hired because I did what you did. I drove around the park and I found the cleanest lot with a decent car, and it happened to be this person, and she's been with us for a year, that's our one in Indio, we have to clean up how she treats people and hey, tell her to smile once in a while, just be friendly with them, get to know their first name, and that's been probably the biggest challenge is getting our managers to understand what they're doing for the park, and I can tell you just by the clean-ups that we do and rolling out the spring cleaning like you recommended, it works magic, people are just coming up to us and thanking us for cleaning up the parks, that's been neglected for so long.

Frank Rolfe: How about lessons learned from... I know you went to bootcamp, first question is, what did we teach you at bootcamp that was wrong or what did we miss? What have you found different from being in the business now with four parks, different than what we had at bootcamp, anything or big things or what?

Mitch: No, I attended in Orange County, so I grew up in Palm Springs, but then my parents moved to Dana Point, so I went to Dana Hills High School and all throughout Huntington Beach, Newport Beach, I know where those parks are, and we toured some of them at the bootcamp. I took everything you guys presented to heart, there's not really anything that was wrong whatsoever. I think the biggest thing for me was understanding the numbers, not taking my time and having to visit every single park that, oh, maybe I can put an offer in. I did that in the beginning 'cause I was so motivated to find my first park, but understanding the numbers, understanding how to build back utilities, understanding ratios and cap rates, and being able to talk to bankers. Yes, we're realtors and we've flipped hundreds of properties, my wife and I have done really well with that, but we're kind of over that, it's fun, it's great, but there's nothing like owning a park and you guys hit everything right on the spot, there's not anything that I can think of. I think the biggest thing would be learning more about California, 'cause I know a lot of the stuff is Midwest for you guys, but having people in California that have done it and different due diligence and tenant rules and regulations, and just being up-to-date with all the codes with HCV. That's really important.

Frank Rolfe: What about the residents? Obviously, you're a nice guy. You've got a family, what are your thoughts on mobile home park residents? Maybe stigmas you had before you got into it versus now, what do you think about your average resident or where did you might have misconceptions about people who live in mobile home parks?

Mitch: Well, I think the biggest thing was for us is just knowing the type of person that they are. We've had a lot of clients, Frank, we have a good database that people do extremely well, but that some of them are miserable. And I found that the most grateful people, very humble people live in these parks, that's something to them, such as, we try to do something every year for our residents, we support the Girl Scouts, and so we buy like 500 boxes of Girl Scout cookies and we hand them out to all our residents, our managers give it to them, yeah, it's here's a little thank you for the park. And they are so grateful just for this little $5 box of cookies. I've learned that they're very hard working, and it really is the affordable business. We're in the affordable housing business, that's pretty much what it is. And when you can treat someone with respect, you give them a little bit and then they love it, so I think I've learned just how simple life can be lived, and these people don't ask for much, they just want a nice clean place to live.

Frank Rolfe: And do you have any memorable resident stories like I have first park, it seems like a Twilight Zone episode where there's a guy in the yard with a tweed jacket on and crisply ironed slacks and penny loafers, watering his yard and it looked like I was in a 1950s movie. It looked like one of those early Elvis movies. And he died not long after that first interaction, and it was just like, oh my God, I've touched a prior era in American history, and then I also had the one time walking around the park where there were two girls, probably 10-years-old, having a tea party in the yard, dressed immaculately with such amazing China and Sterling silver, and it blew my mind, and again, I thought, I am not of this earth, have you also had any unusual resident stories as far as people who you were just so fascinated on their background? I mean, I had the Marlboro girl from the '40s living in my park and [0:25:37.4] ____ blew my mind, there's so many interesting people who live in these properties, right? Just recently, we were doing one of our events where we help people out by going around the park, fixing skirting, and there was a woman there who had been a ballerina in Russia. I mean, just crazy, fascinating stuff. Have you had any of those experiences so far?

Mitch: Yeah, we've actually had a few. So two, well, a couple I'll share is, the other day, something always new tends to come up at this park, it was our very first park, we usually have weekly calls with our managers as often as we can just to catch up and take care of business. Well, I was on a call with her and she always calls me a sir, which I tell her not to, I said just call me Mitch, but she says, "Sir, I gotta go. There's essentially a naked man standing in front of me", and I was like, "Well, okay, go hand hold that." So this guy happened to wander in the park, I guess he was visiting a friend, but he was buck naked and asking her back in the trailer, and she was asking him to put his clothes on, put his clothes on, we found out that he was definitely mentally ill, and unfortunately had a bad episode where he was not taking his medication, he didn't live in the park, he was visiting a family member.

Frank Rolfe: Just visiting... [0:26:58.0] ____.

[overlapping conversation]

Mitch: I realized too was that...

Frank Rolfe: I had it wrong.

Mitch: What's that?

Frank Rolfe: I thought you were gonna say the ending where she was sketching this person in an art class. So I had the ending wrong.

Mitch: Yeah. So that was funny. She wrote up a report about that. I also learned too that some of our parks, since we're in Southern California, close to the border and being in Mexico, a lot of these people have very nice homes in Mexico. They come here and work and they stay in trailer parks, and then they take their money home and they go give it to family. There's this one resident who has the most insane lifted truck that probably is close to $80,000, $100,000. And I'm like, "Wow, you're lives in this mobile home, that's a single wide, where this truck is so large, you can't even park it in the carport, the roof would hit it."

Frank Rolfe: Right.

Mitch: But that's what they do, and they take their money back to Mexico. So seeing the lifted amazing truck and it's something I would never buy, but well you see those things, those kind of things. And there was other times where people... I had this one guy that will not stop gardening. Every day there's something new, he's watering, he's planting, he really takes care of his space. And I ask him why he does it, and he just says, "I come out here and it's a stress relief and I can get everything done I wanna get done. But it's always new, something different every day." So it's interesting, there's tons of variety of different personalities in these parks.

Frank Rolfe: Yeah. California is known for having some of the oldest parks in America. Do you know what ages yours are roughly? Are they from the '50s, '60, '70s, '80s? What years are those for?

Mitch: Well, the first park that we have is 1980s, late 1980s. Everything else is '50s and '60s. In fact, some of them started off as an RV Park and then somewhere around the '80s and '90s converted to a permanent manufactured home park. So they're all in the '50s or '60s, yeah, from what I can see.

Frank Rolfe: Any problems from city officials, any negative attitudes you've had to overcome or has it pretty much been, they're just happy you're bringing the things back to life and leave you alone?

Mitch: Yeah. Nothing negative. They're all happy we're bringing it back to life, they're all willing to work for us and make sure that we get the permits in and approved. It's California so they want a permit for everything, even when we put in brand new park signs, they want structural engineer plans for the footing, and it's just like, "Come on guys, that's overkill." But you just work with them and it's pretty easy to make it work and make it happen. And overall no pushback, we've had great success, and we encourage code enforcement and building in safety to come out, look at our parks so we can get everything up to code, make sure everything's correct. 'Cause when we go to resell, we want everything right.

Frank Rolfe: Right. And any lessons learned on managers so far? You're managing four different people, obviously people are all different. They all have their own unique personalities, good things, bad things. Anything you've learned about managers as far as managing them or just hiring them or anything unique?

Mitch: Yeah, so training our first girl, she was fairly new, kind of more on the shy end of things. And we really had to kind of have her come out of her comfort zone a little bit and just be a little bit more assertive and enforce rules and regulations, and just let her know that she's working for the park. She's our mouthpiece, she does everything that we ask her to do. And I think just getting her out of her comfort zone was the biggest thing. Our third owner, she's never been a manager. Again, she had the cleanest space and drove a nice car, and so we put her to work and it's getting her just to slow down and not be so much of a sheriff, and pointing out everything that's wrong with someone. That we had to slow down a little bit, because people were getting a hold of me telling me that she needs to back off a little bit. [chuckle]

Frank Rolfe: Right.

Mitch: I don't know how they still find it. And then just making sure that the managers are doing good on their collections. A lot of these spaces did not have... All these residents did not have any leases, no leases signed, no rules and regulations. So right now we have a total of 156 spaces and we're almost at 100% signed leases, we're just waiting on a few more to come in. So that was really important to us, and the managers had to be educated on how to do that.

Frank Rolfe: What would you say is the single most important quality in a good manager? If you had to pick just one item, what would you say a good manager has to have as a skill?

Mitch: Dependability, consistency. If I call them, I expect them to get back to me as soon as possible. Communication is huge. So if they have those three things, I can depend on them, I can trust them, they're consistent with their work, and their communication is great, that's huge. So if I had to pick one for me, it'd be communication, communication is everything. If I don't hear from them, I have to assume the worst.

Frank Rolfe: And I know these parks because they're older, and particularly the ones that start with RV Parks, you have very little land mass to work with. I know you said on the one property, you built a laundry building. Have you tried any other amenities, even like picnic tables or anything that's worked for you or you would tell people is a good idea, as far as something to add back to the community, anything unusual?

Mitch: We have. So I know that a lot of these parks they have these really old dumpsters, and they're just kind of sitting in the back of the park. And unfortunately where we're at, we can't have single service, the trash company will not come to pick up. So what we've done is we've completed trash enclosures and it makes the park look a lot nicer. And then sometimes next to the trash enclosures on one of the parks, we did a patio, we've put a couple park bases and a full on shade structure, and that really helped just from the aspect of having people gather at one place that, or if they have kids come and gather at one place. So we wanna make sure everything is clean and operable. One park does have bathrooms that we decided to keep, and we did renovate and they really appreciated that. It's men's and women's restrooms, 'cause again, it was an old RV park.

Frank Rolfe: Right.

Mitch: And so we kept it. Another park, we had the same thing, but the restrooms were in bad shape. So we just turned them into storage units and we rented them, no problem and created more income just from demoing, and making it just a building. So we've done upgrades and enhances, we have no swimming pools. We don't ever wanted a swimming pool. We have no park places for kids and no slides or anything like that. Some of our residents are older, we don't have a lot of kids. And we've actually considered making some of the parks just 55 and older, we found that 55 and older just brings a little bit more attraction to the park as far as keeping the spaces clean, neat and orderly. And they're always the first to pay. That's what we've kind of found out.

Frank Rolfe: Well, for someone like myself from Missouri or some other states and we all have these concepts that in California everything is just insanely expensive. What would be the median home price, roughly in these markets you're in? Like how much is a house in these markets of California?

Mitch: Sure. So we're at in Southern California, I'm in the Palm Springs area. So it's two hours from Orange County, two hours from San Diego. We have 105 golf courses, Frank, just here in what we call the Coachella Valley. It's where stagecoach happens in Coachella Fest. Average medium home price down here as a realtor because I know it just increased. It's not as heavy as other places, but it's about 650 for a two bath home.

Frank Rolfe: Okay. So when someone's living in a mobile home park like yours, and they're paying $600 rent, it sounds like you're on the way there, but it may not even be there yet. That's just an insane bargain, right? I mean, what's your property tax in California? Is that 1%? Or 2%? Roughly on how...

Mitch: Yeah, so typically, it's 1.21%.

Frank Rolfe: Okay. If you had a $600,000 house, just the property tax would be more than what these folks are paying in total all in cost, correct?

Mitch: Oh, easily, easily.

Frank Rolfe: So see, it begs the question. And of course, you know where I'm going with that is because I get criticized with it continually. But what are your thoughts on where these rents end up? We are so cheap and we are literally the dollar store of housing. And in my small town, the dollar store just became the $1.25 store. It's still called Dollar Tree and now $1.25, which freaks me out. First time I went in a lady told me the total. I said, wait a minute. I have like nine items should be $9. She's like, "No, no, no. Now, we're the $1.25. Store," but yet, it's still packed. Because of the $1.25, it's a fraction of what Walmart would be, I can go in and get, for example, a thing of black binder clips, which at Office Depot would cost me $6. And they're, it's $1.25. So then you realize you appreciate the fact that they could take the price and go to 2.50, still a bargain, 3.75 still a bargain. So where do you think rents go in California? And really on the general narrative elsewhere? I mean, you look at all the parks that we own, parks you have, and these prices are stupid low.

Frank Rolfe: This isn't even the dollar menu of McDonald's. This is like the dime menu at McDonald's. So Where do you think things top out? Or where do you think the future of rents would be? 600 obviously seems silly in a market of a $600,000 house. So where did things go? When is it no longer the Dollar Tree of housing, like what do you think future rents could be?

Mitch: Well, they're gonna continue to increase, we talk with a lot of economists, especially being a realtor we have our National Association of Realtors, California Association Realtors, it's called CAR and NAR and there's Chief Economist. And so we listen to what the market is doing even though we have interest rates coming up. It's Southern California, Frank, I mean, nothing has really disturbed any of the beach cities and everyone that wants to come here on vacation even though it's 120 as you call it, a blow dryer in your face. You know, kind of weather down here. You're two hours from Orange County, LA so we have so many people coming from San Francisco area, Bay Area, buying down here, so you can still buy at 220, 250 a square foot and you can't get that anywhere else. For the quality of life that you have. We have the tennis, the golf and so forth. So directly in our area. We don't see it slowing down the average three bedroom, two bath home, the rent right now is probably $3000 a month. It's pretty high. So you can still buy, roughly it's about $600 for every $100,000 you borrow depending on your final interest rate. If you're buying a $600,000 house, you're better off paying $3600 in mortgage versus paying almost rent, I mean, the rents are up, insanely high.

Mitch: So mobile home is completely affordable. No one complains if they have a $20, $30 rent increase, and no one complained when we built back utilities because they know that we're upgrading the park as well. So I don't see it slowing down. As a realtor, I don't see...

[noise] [laughter]

Mitch: So we don't see it slowing down at all. We've seen only things increase even though interest rates have increased with supply and demand right now, plus to be qualified to try and purchase a home. I mean, it's ridiculous what they want, they want everything in your shoe size just to get qualified and to qualify for $600,000 is not easy.

Frank Rolfe: Right. You're in Palm Springs, which as I recall, there are famous celebrities who used to own parks in Palm Springs. If I read through the old historic volumes I bought on eBay and Etsy over the years, I think Bob Hope had a mobile home park. I think Ben Crosby had a mobile home park. Have you come upon any of those famous old celebrities from the '50s and '60s park out there? I think I read somewhere that Lucille Ball's brother owned and ran a mobile home park that Lucille Ball was part owner on in Palm Springs. Have you come across any of these things?

Mitch: I have not. I wouldn't doubt that's true. We have a lot of celebrities that come out here. It's kind of the playground for the presidents to come out here and golf. There's so many mobile home parks just down where I live. And a lot of them are really neat because they have actually retro parks. People have turned retro trailers, and it's a whole thing now, '50s, '60s. And so they've done remarkable jobs, improving some of these parks down here. And I'm sure that there's a lot of different celebrities that had these parks at one point because... Elvis would come down here all the time and you have all, a lot of celebrities come up for the weekend. And staying in parks was a big deal. And they can have their mobile home and come and go into Palm Springs. So there's a lot of history down here with parks.

Frank Rolfe: Right. And let me ask you this because California is such a unique housing market. They recently passed in, Was it San Francisco? You can install, basically a mobile home in your yard. They allow people to put, I think, second dwellings in, and I get calls on a continual basis, normally in California about people wanting to convert older parks to tiny home communities and things like that. And my question to you is, given California, I know you're a realtor, you understand housing. Do you envision these parks 50 years from now looking different? Can you see your four parks now, will they look the same a half a century into the future? Or do you think these things will become... Will mobile homes look different or Are we the state of the art with the whole product? Or are we basically just gonna become a parking lot for a different product someday? What do you think?

Mitch: Well, I personally think that not a lot is gonna change with the parks themselves. The manufacturing communities will improve as far as the homes coming in, obviously in 50 years, but at the end of the day, it also depends on Housing Community Development. HCD has a lot, you can say, we can't turn in a mobile home park into tiny homes. HCD will not allow it. It needs to have a seal, a decal, it needs some type of license plate. They just won't allow the tiny homes movement right now. So at the end of the day, I don't see a lot changing Frank, because we need affordable housing. We don't have enough of it in California, especially Southern California. Where else are you gonna go, that like you said, you can pay $600 in space rent. And we're honestly low. You get into Orange County, San Diego space rent jumps up to $1000 to $1,500 a month. So we're pretty low for even at $600 a month, but looking forward, I don't see it changing much. Some people have been in our park, so like I said, for 40 years, nothing's changed. So moving forward, yeah, they may improve the house or better quality of house coming out of a shipping line. But at the end of the day, we need affordable housing. There's not enough of it.

Frank Rolfe: And speaking of the future, what are your future plans? I know, obviously you are big in the quality of life as am I, so you're electing to drop out of being a realtor perhaps in the near future. And I imagine to devote that time to spending more time with your family, as we can tell by the what must be 100 photos on the wall behind you.

Mitch: Yeah.

Frank Rolfe: So, are you going to buy more parks? Are you done with parks? Just gonna sit on what you have? Where do you see yourself? Like the old interview question, 10 years from now, if we were talking to you 10 years from now, what do you imagine would be different?

Mitch: Yeah, so that's a great question. So at the end of the day we want to essentially buy more parks, 100%. The ones that we have now, we could easily turn them or the one we just required, we could flip it. So we're always interested in doing that aspect, and just buying a bigger park. We would love to own closer to San Diego and the Orange County areas. There's some massive parks here in Southern California. So I think, once we reach that certain point to where we receive X amount of cash flow, then I think we'll probably stop 'cause at some point enough is enough. But we're still gonna move forward. Even though we're gonna step away from being realtors next year, full time, we're still gonna keep our license for deals that come up. I don't see us stopping anytime soon. I have a game plan of the next seven years, I'm 38. So by the time I'm 45, we have a game plan to be done at that age. And just live off of the mobile park income. So we're giving ourselves seven years to hit the ground pretty hard, and to continue with it.

Frank Rolfe: You still have time to play the foosball table behind you?

Mitch: Yeah. [chuckle] Yeah, that's my son's.


Frank Rolfe: Right. Let me ask you this, so back in the early days, when you were doing security with Kobe Bryant, did you ever imagine you would end up owning these four successful mobile home parks and being there in the living room with all the pictures in these foosball table? Did you think that would happen or was that even at all in your thoughts at that time?

Mitch: Never me. Never. I always had an interest in real estate, never even thought about parks. Going over there, I didn't even know what a mortgage was. We were so brand new and didn't have any clue. We just wanted to try to live by the beach and get out of the heat. That was our goal, no matter what we did for work, as long as we could pay the bills, but no, it didn't hit me Frank, until we did that first mobile, 'cause that's all I could afford. And I borrowed every cent, I didn't use any of my own money. And once I saw that vision of opening up and realizing owning a mobile home can be great. But at the end of the day, owning the park is where all the money is. And for me to meet these owners and to meet some big players in California, it just opened my eyes to what can be done and it's more so the quality of life than anything. Yes, the money is phenomenal. It's great. But you know what? You can do so much with it. And who cares if you spend money to help someone fix up their mobile home? As a favor we painted a guy's mobile home, 'cause he took such good care of it and was such a great guy. Didn't have the extra funds. So we just painted it for him. Why not? It cost us like $800 and he's the happiest guy in the park and just those little things you can do to give back.

Frank Rolfe: And you're probably familiar since you are in California with the story of Jimmy Goldstein, the guy who they call the greatest sports fan in America, he has all the court side seats at Clippers and Lakers games. You've probably seen him. He's the very old guy with the long white hair who wears the leather hat. And people never knew what Jimmy did until he got sued by somebody, either a resident or a manager. And then it finally hit the fan, Jimmy was low and behold a park owner, right? Which he found incredibly humiliating because he lives in the house where they filmed The Big Lebowski there, I guess, in the Hollywood Hills. But he had always kept his source of income hidden from everyone for decades, right? So my question is, so what do your neighbors say when they find out that you own mobile home parks? Is that a source of embarrassment, pride? Are you teased? How does that work?

Mitch: No, we take a lot of pride in it. We've actually had the opportunity to help educate people that want to be in the business. Most recently, my wife and I, well, my wife's been in this gym for longer than me, but our personal trainers took a lot of interest in wanting to be in some type of investment with real estate, and he didn't even think about parks. When I opened my mouth and I tell people we're in the affordable housing business and we own mobile home parks. It took so much work for us to get here that I'm extremely happy that we're in the business. So I don't boast about it, but I have pride in saying that we're mobile park owners, we're providing housing to something that's a massive need right now. They taken back by it a little bit. I mean, once we kind of tell them all that's involved, every time we say it, they always say, "Wow, that's big time money, that's big time cash flow." They know that they produce income. They're not taken back by it at all, at least here in California. I haven't had anyone with an ounce of negativity towards parks at all. They all understand what they do and what they can bring.

Frank Rolfe: Right. Well, you mentioned I gotta tell you that I talk to a lot of people who have bought parks, a lot of people who have been to the bootcamp, my podcast and things like that. It's very, very hard to find anyone who has done so well in a short frame of time in California, so I don't know what you're doing so right. I don't know if you are just persistent, amazing people skills or what, but most people just do not understand that even in a state like California, the opportunity is there and it's not a complicated model, right? So like you follow the same model we run in Missouri and Illinois and Iowa, you're doing the exact same model, which is boost the reds, fill it up, build back water sewer, make it nicer, but you're doing it out there in old California where most people often don't even hunt because they think it's too hard to even do. So that's why I wanted to have you on here. It's just amazing to me that you're doing so well in a market that most people are afraid to even consider 'cause they just assume, "Oh, it's California, it's overblown, it's overrated." But you're still finding things by digging around your fatty stuff. That's well-priced that you can really boost. And of course the beauty in California is if you can boost it, you can easily sell and finance it, right?

Frank Rolfe: I mean, I imagine a functioning park, not a turnaround like some of the stuff you bought, but when you get it all done, that's the most liquid asset on earth, right? I mean, even in the great recession that we're entering probably, that's a hot commodity, right? So probably any park you have that you've fixed, you could sell it, you could refinance it, cash-out refi it. You have a lot of options with it. So that's the beauty of being in a hot state is when you get done as a hot commodity. So again, we really appreciate you being here, sharing your life story with us. Lot of good tips for people, lots of good lessons learned. If anyone wants to reach out an email, Brandon or myself, wanting to ask you a question, would you be nice enough that we forward the emails to you to give them an answer or something in the future?

Mitch: Well, of course. Yeah, absolutely. We would love to, we'd love to give back and help, so 100%.

Frank Rolfe: Well, then we will definitely, if anyone wants to email us, we will forward it on to Mitch. And again, Mitch, we really appreciate everything you do for the industry, not only us, just Brandon, Dave and me, but I know that all the residents really appreciate what you've done because when you improve people's quality of life, I mean, at the end of the day, life is just about quality of life, right? I mean, it doesn't matter. Money is just like how well your life goes, relationships, safety, all that, and you know from experience turning around these old parks, it gives you a good feeling at the end of the day, because you've actually helped out in the world, right? You can honestly say you've helped 150 families out enormously because you gave them better quality of life and that's passed not only through the family, through the kids, and everyone. So our head is also off to you in regards to all those people that you've helped out. So, again, we really appreciate you being here for this lecture series event, and again, Mitch, thanks for spending some time with us. Hopefully people get a lot of information from this and we will talk to everyone again soon.

Mitch: Awesome. Thank you so much, Frank. Appreciate all you do.

Frank Rolfe: Thanks Mitch.