Green Profits In Blue Collar Real Estate

Discover the tectonic shifts transforming our economy in this recording of our latest MHU Lecture Series Event. We delve into the growing significance and appreciation for blue-collar professions in recent times.

These vital jobs, including $100,000/yr welders, $75,000/yr truckers, and $30,000/yr fast food workers, are in high demand, outstripping the supply of available workers. As a result, industries catering to the blue-collar demographic are experiencing a significant boom, with the mobile home park sector being a prime example.

This recorded event features speaker and host Frank Rolfe, known for his no-holds-barred insights. He introduces an underexplored topic that's set to become highly pertinent as the U.S. potentially braces for a national recession.

In addition to the lecture, don't miss out on the unlimited Q&A session, where every question is addressed without any topic being off-limits.

If you weren't able to attend the live event, this recording ensures you won't miss out. For notifications about future events, please complete the registration form provided. Your questions are always welcome and we look forward to sharing more thought-provoking content with you.

Green Profits In Blue Collar Real Estate - Transcript

Frank Rolfe: Welcome everybody to our lecture series event. Tonight we're doing a topic we've never actually done before, although I don't know why it's a very important one. Back in high school, when you lay out your yearbook page, you had to put a quote on it. So the quote I chose was, an excellent plumber is infinitely more admirable than an incompetent philosopher. And the teachers hated it because they thought that it made fun of academics and white collar to the benefit of the blue collar. So I guess I've always been a blue collar advocate all the way back in the '70s. But I think it's an important topic that Mobile Home Parks do have a very, very strong stake holding presence in, and that is the fact that we are effectively a form of blue collar real estate in a world where most real estate is not blue collar. In fact, it's hard to pinpoint another blue collar sector. Office, retail, industrial, those aren't blue collar.

Frank Rolfe:I guess in Self Storage, you may have some degree of blue collar, but I think that is mostly a white collar phenomenon. So really, when you're talking blue collar, there really are not many options other than Mobile Home Parks, because I think that's an important attribute. We thought we would do a lecture series event on it. So let's go ahead and go in. And then at the end, of course, we will have Q&A, as many questions as you have, with no topic taboo. So let's get into it. First, what is blue collar? Well, if you look up on Wikipedia, if you Google up blue collar, it doesn't give you a very lengthy description. It says a blue collar is simply relating to manual work or workers. So I guess we define blue collar as people who do things, make things, and use their hands. I guess it is contrasted with white collar, which I guess is defined mostly as using your brains, perhaps.

Frank Rolfe:But that is why blue collar got a big breakthrough back in 2020 because virtually all blue collar jobs were classified by the government as being essential. And as we all know, if you were not an essential worker during COVID, you got basically a two-year holiday, which, of course, the blue collar workers were kind of mad. They had FOMO that the white collar workers seemed to be staying at home. But they're also separate to playing field between the jobs you can really count on and those you can't, because, of course, not all white collar employees were paid to stay at home. Many of them stayed at home without pay and were financially ruined. So the first big thing about blue collar is that it's something that we as a society have deemed to be extremely important. So while white collar jobs might be called desk jobs, they're not defined in our country today as being essential.

Frank Rolfe:So I find comfort in the fact that blue collar real estate is something that where my customers always will have jobs. They will never be told, don't come to work. 'Cause let's all be honest, there will be another COVID. I don't know if it'll come in the form of a disease, but there'll be some other national emergency that was just a trial run. And when it happens again, for whatever reason I do not know, it's nice to know that Mobile Home Park residents will, in fact, still be going to work. Now, why did blue collar get such a bad rap? Why did it go down into steam? Let's look back on the actual numbers of blue collar. So in 1970, blue collar jobs were about a third of all total non-farm employment. That's what the government tells you, but you may note there's a lie right there because farm employment would be defined as blue collar. In fact, it would be the very roots of blue collar, working with your hands.

Frank Rolfe:You can't get more into your working with your hands than being a farmer. So then what is the actual blue collar employment? I'd say back in 1970, if you added in the farm workers, you're probably talking more like nearly 50%. So about half of the country in 1970 was blue collar and about half was white collar. And then the total number of jobs that are defined as blue collar by the US government, but not including farm, which again, I think you have to count, the peak, the all-time peak in America was 1979, at which time in 1979 there were 25 million Americans that were defined as having blue collar jobs. So that is the zenith. And then in 2000, which was a goodly, the goodly time later, 21 years later, we're still right at that same number, roughly 24.6 million blue collar jobs. And then what happened? Well, in the 2008-2009 recession, it dropped all the way down to 17.8 million.

Frank Rolfe:Now why was that? Well, I imagine part of that is that home building is a very big segment of our employment picture in America. We employ more people in home building than any other country, maybe more than all countries combined. That was one part of it. But we also all remember that period in which a lot of factories were moved to Mexico, China, and many other countries. So I know myself, just we've had markets where we've had employers, major employers, who suddenly just told everyone at the factory, "Well, you know what, we can build this widget cheaper overseas, and we're out of here." So you saw blue collar decline from about 25 million, which it has happily sat at for the longest time, down to under 18 million during the 2008-2009 recession. But today, it's roared back to about 25 million. So it's a pretty steady number. So other than that one plunge, it's been very consistent as far as the employment in blue collar jobs.

Frank Rolfe:Now, what do I observe from that data that's courtesy of the government? Well, the first thing is that blue collar workers have pretty much hit rock-solid bottom and rebounded. Now, white collar, their test is about to come. It's kind of like a stress test. You tell me, get on a treadmill and see how far I can push myself before my heart rate says I'm about to explode. That's happened already with blue collar workers. But it's just about to start with white collar workers, and that is going to be the form of AI and the new pending national recession, which will happen at any time. We don't know when. Almost everyone says by the end of next year. But for all we know, we're already in the decline now. So despite all those rust belt issues of coal mining and factories being moved overseas and all that, which knocked down the employment, it's come back. And much like Detroit, where we all saw the economic data plunge like an airplane flying in the sky during World War II, being strafed by the Germans and then plunging to earth...

Frank Rolfe:We've, risen back on the blue collar side, so we've hit bottom and bounced. Also, it tells you that blue collar workers are a very precious commodity in today's market because as America has grown, that number has remained steady and that's why you, right now, there are 5 million unfilled blue collar jobs in the United States, and you see them every day just as I do, even in my small town in Missouri. What do I see? I see employment signs at every fast food restaurant. I see employment signs at the tire shop. I see employment sides and people need it at the automotive repair shop. So, the bean blue collar right now means you are hotly in demand. And you'll notice if you drive down the highway, what do you see? Lots of billboards, at least in Missouri, you do saying, "truck drivers wanted, come drive for us."

Frank Rolfe:All kinds of blue collar, never any white collar. I never see any billboards saying, "Hey, office managers needed." Never see that. Never see "junior college professors wanted," never see that. But when it comes to blue collar, particularly the trades, the more skilled trades of blue collar, there's a huge supply and demand issue, which is very, very favorable to blue collar. So again, that's very beneficial for Mobile Home Parks. Now, where does blue collar and white collar stand today? Really, because the playing field is, getting all kinds of strange. If you go down to Elkhart, Indiana where they build most of the mobile homes and almost all of the RVs in the United States, you'll find that just a welder in Elkhart right now makes over a $100,000 a year. Not just one, not just two. Pretty much anyone who can weld, who wants to live in Elkhart, Indiana is gonna make close to a hundred grand a year.

Frank Rolfe:And you probably have seen the billboards all over the highways that, "Hey, come drive for us as a truck driver and you'll make at least 80 grand a year." So you get a pretty high amount. And just a mine worker in my small town makes 70 grand a year. They make 60 grand a year just in the probationary period straight out of high school. Those are all paying more than things like a bank teller or a journalist or a math teacher or any of those other white collar desk jobs. So when it comes to actual dollars earned, that, whole difference between white collar and blue collar has been dramatically changed in recent times. So there really is not an economic difference today, in my opinion, between blue collar and white collar as far as earning potential. So if you read up on the topic and you go through all the different stories and things you can find on Google, you'll see that really it all comes down to one item. The one item that people who are white collar used to look down on blue collar workers is simply educational status. Because it is true that most blue collar workers don't go to college. For a blue collar worker to go to college they instead would go to a trade school.

Frank Rolfe:In my small town in Missouri at the public high school, they have an entire wing of people being trained into the trades. And if you're not, if your grades are not high enough and they don't feel that college is probably the right thing for you to do, they put you into the trade skills, which teach you how to do everything from weld trades, a hundred grand a year to repair cars, which makes 60-70 grand a year to go into agriculture, which makes 50-60-70, or 100 or more based on who owns the farm. But that's the big item is, education. And college was a big deal in the 1970s and that's why that's when the whole battle of blue collar, white collar began, was really in the '70s. If you look in the media and where the term even was really coined, that's where it came about was back in the '70s.

Frank Rolfe:And the media side of that, if you really look at the articles and read them and look backwards at them, it was mostly college educated journalists, some guy working at the New York Times, living in a tiny little apartment in New York City who rides a subway and owns no car, and he wanted to be superior to the blue collar guy. So he made that the most important thing in life hands down, was that the writer went to Harvard and the blue collar guy, even though he had a nicer house, he owned a car, everything was superior materially that he was inferior just because of that one item, which is basically that the writer went to Harvard and the blue collar guy did not. And I can tell you as a graduate of Stanford University, that lofty place out in California, this whole college status party is pretty much over, because with the rise of artificial intelligence, also known as AI, the amount of debt college graduates are now carrying when they come out compared to those who didn't go to college.

Frank Rolfe:And just the difference in earnings between trades and intellectual pursuits, that diploma's not what it used to be. And I think the handwriting's on the wall for everyone who sees this, you can read the articles economists today that for many of these kids who go to college, when they look at the amount of debt they have and how many years they didn't earn that, they won't be actually be able to catch up with the blue collar kids. So that's a real significant problem. But that's really what everything has boiled down to at this point, is simply who has the degree, who doesn't have the degree. And that's all we as a society can really use to judge white collar from blue collar. Now, what makes it stranger in America is that we are a country of nothing but blue collar people. We are not England, we do not have an aristocracy. We don't have lords of the manor. What we have is we all came here, every single one of us from another place, my family came here from England, yours may have come from Germany, someone else may have come from China. Wherever you came from, we none of us really started here. And when we got here, regardless of your status in overseas.

Frank Rolfe:Everyone started here pretty much working with their hands. That's what everyone did back in the 18th and 19th century, for the most part. Everyone lived on farms and worked on farms. They all did manual work. And we didn't have any stigma back then between blue collar and white collar. So it's more of a modern phenomenon. But what makes it really strange when people really want to rail and rail on blue collar versus white collar. And you'll see lots of articles online where authors get so worked up into a lather, it's unbearable. But it's kind of goofy because this is the United States where we were all blue collar, that was our, all of our early or origins. So why is blue collar the best customer base then today?

Frank Rolfe:So let's look at some of the basic facts of why blue collar customers are fantastic. The first one is, as we already reviewed, is they have steady essential jobs that you can rely on in good times and bad. So these are the people who may not have glamorous occupations. Let's just say for example, you repair engines on trucks. It's not air conditioned work, it's not heated work. You'll get grease all over yourself, but you always have a job. You have great confidence every day when you wake up. You know that no matter what happens, you can get a job because there's not enough people who do that to go around. And if we have COVID or the next catastrophe that America enters, whatever it may be, they will always have employment. Something which white collar workers don't really have. They have to go out and get resumes and aggressively work there, LinkedIn and everything else.

Frank Rolfe:But blue collar workers can literally jump from one job to the next, almost like a trapeze artist because their jobs are always needed. The next item is that blue collar workers, unlike white collar workers, are seeing a large increase in wages. And since the Mobile Home Park business is really all about raising rents to market, because we're starting off in an industry where the average lot rent is a thousand or more dollars a month lower than apartments, which makes no sense. So we're gonna definitely see rents in America at every park ultimately get into the $500 to $700 a month category. Who can best afford that? Well, people who are becoming richer by the minute, and you are seeing wages fly in the blue collar sector more than any other case in point. Back when I was in high school a common job that teenagers liked to have was working at McDonald's.

Frank Rolfe:And back then McDonald's didn't pay a whole lot. And even at recent times, if you wanted to get a job during the summer in Missouri, you could go work at McDonald's and they paid the minimum wage, which was, I think back then, 8.50 an hour not that long ago. And what is McDonald's paying today? 15 bucks an hour. Yes, a high schooler can go and make the equivalent of 30,000 a year with virtually no training, just put on the uniform, show up at the McDonald's when they open the doors, or whenever your shift starts, and you'll make 30 grand a year. That number is amazingly high. Just the idea of a welder in Elkhart making a 100,000 a year is really unthinkable. Not that many years ago you would've said to make a 100,000 a year in Elkhart, Indiana, you must be a nurse. You must be a low ranking doctor. You must be an attorney, one of those occupations. But today, the wages have risen so high in the blue collar industry that our customers have, or, have more disposable income than they've ever had before.

Frank Rolfe:And that's again great for our industry since it's all about raising rents. Also, as I mentioned, if you have a blue collar job, no matter what befalls you in life, you can always get another, again, there are 5 million unfilled blue collar jobs in America right now. That is a huge amount of jobs. We're a country that has 300 million people, and out of the 300 million people, you have roughly a hundred million wage earners, and that means 5% of all the jobs out there are blue collar and they're unfilled. So you think it'd be hard if you lost your job at Taco Bell to be working at McDonald's by later that same day? Not at all. Unless you had done something absolutely terrible to be fired from your job. If you had any recommendation whatsoever, even if it was only an average lukewarm one, you can always get a new job. Something that white collar people cannot replicate. So blue collar can literally have complete and endless stream of income for life simply because the demand and the supply is in that manner. Also, and this is important, blue collar workers are backstopped with minimum wage regulations and also union regulations.

Frank Rolfe:So if you worked at McDonald's and you made 15 an hour and we had the great depression and people were all on corners and we had 25% unemployment, you could still have your job at McDonald's. If they had to cut the cost, they could chop it back down to minimum wage, which I think is Missouri, is now 10.50 an hour. So you'd still be, you'd be making 20 grand a year rather than 30 grand, but you're backstopped. If you are a white collar person making $90,000 a year as a professional at some company, your backstop has that same minimum wage. You could fall from $90,000 down to 20, Or you could draw from 30 down to 20. 30 down to 20 might, would be survivable. You could change up your budget and still pay the bills, but you couldn't go from 90 down to 30. That isn't going to work. So it's nice that blue collar customers basically are backstopped by the government and or unions also blue collar customers just have a more workable attitude that makes being a landlord much more enjoyable.

Frank Rolfe:They get it, they understand that life is all about being happy and not sad, and they don't get worked up into a lather over the most small items, which more of your white collar customers can. We owned a park out in Florida that was predominantly all basically white collar people who had retired to Florida and they were endlessly complaining. Nothing, you can do down there ever pleases everyone, or maybe even a majority of everyone, but with your typical blue collar customer they don't get worked up. They're not type A personalities. They don't get that bothered on things. So if you'd say to them, "guys you know what? We really need to fix your skirting on your home." They're like, "okay, makes sense to me." Never any complaints, never any pushback.

Frank Rolfe:Also, blue collar customers are able to make basic home repairs and remodeling, and that's a very important item in parks that have lots of older homes in them because at some point in the movie, those old homes will have to be redone, refreshed. They can't continue any longer. At some point the floors will give out, and someone's gotta be able to go in there and do those handy things needed to bring those old homes back to life. When you go into some of the older parks in blue collar areas, let's just say some of the parks in Denver, for example, I've seen some of the best home renovations ever.

Frank Rolfe:Ones that should have their own television show in those blue collar parks. I've seen with my own eyes, a home from the 1960s, the looks better than anything coming outta the factories at Clayton. Why? Because that person had basic skills. They had an interest, and they wanted to go ahead and make their home nice and make it just like they wanted, and they had the ability to do that. So another positive of the blue collar customer base is that they actually have the ability, the skills needed to go in and get these old homes redone, rebuild, refreshed, made to look more new and made to go another 50 years or more. Finally, I mentioned earlier that the dangers to white collar workers with AI, which if you've not tried out AI, I recommend you go to chatGPT or whatever it's called, and try out AI it's gonna blow your mind.

Frank Rolfe:The fact you can ask the computer to write you a paper on something that will write you a very good paper. Three pages, single spaced in five minutes should be a little alarming because AI, I've given, I think, I've written some articles on this. If you look at the number of professions that are being impacted by AI, even as we speak, it is vast. There are so many jobs that you can use AI on. You don't need people anymore. Journalists, for example, are gonna be in huge trouble because AI can write any number of articles. AI is about to be able to produce its own videos. Actually, the computer generate videos based on stories. Now, on the blue collar side, you're not really seeing that. We thought that would be the first one that was affected. If you'd asked someone in 1960s, what's the future of employment, they'd say, "oh, we're gonna bring out robots and they'll do everything." And you saw that in the magazines and Scientific American back then and popular science. We were gonna have robots that did it all. Robots that were gonna cook your dinner and clean your house. It is all gonna be about robots, but it hasn't happened. Instead, AI has been developed much faster than robots.

Frank Rolfe:One problem with the robots are that they have great difficulty adjusting to unequal surfaces. I saw a video recently of the latest and greatest in robots attempting to help build houses. But all the robot is able to do is basically fetch tools and hold boards up. It can't do the necessary steps to actually build the house. And I would say that probably robotics will not be brought into the fold on jobs that are not super high paying. If you're going to go heavy into robotics, the first thing you would put robotics on, which they're already working on is things such as surgery. If you could combine AI and robotics, if you could create a surgery machine that could do surgery based on all of its knowledge through AI, and it can replace a doctor who would cost the hospital $200,000 a year, then that may be worth the investment of millions of dollars in that robot.

Frank Rolfe:You're not going to go out and invent a robot to wipe out a worker that changes tires. It's just not going to make any sense. Now, you might be able to get some more machinery to help someone do change a tire, but if you ever watched the guy at the tire shop changing your tire, you'll see that he's pretty much got as much technology as he can do. But there's nothing you can do as far as getting the tire off and balancing it and putting the tire back on. Those require humans, and I don't think you'll see a robot do that anytime soon. And for that reason, again, I think blue collar is pretty safe from technology at this point. Now, why are Mobile Home Parks a blue collar industry? Why are we so blue collar in our customer base and our perception? Well, that's because the US military, which is defined based on our earlier Wikipedia definition, is a hundred percent blue collar unless you're an officer.

Frank Rolfe:So 99% of the army would be defined as blue collar. That's where the Mobile Home Park business really began. They're the folks who bought the half a million homes back in the 40s. They're the folks that build all of those Mobile Home Parks around colleges during the GI Bill. So you have a very big affinity between the military, which is blue collar and Mobile Home Parks which are blue collar. Additionally, people in the Army who were living in those Mobile Home Parks and who later went on to trade schools and had blue collar jobs and continued to live in the Mobile Home Parks, well, they just brought about the idea that Mobile Home Parks were not for white collar folks but blue collar, now one of the most famous people in blue collar culture. Elvis Presley himself was a big factor in the perception of Mobile Home Parks as being probably more blue collar, because if you watch the two movies that Elvis was in, one is it happened at the World's Fair in 1963 and the at other Speedway, 1968, you'll see that it happened in the World's Fair.

Frank Rolfe:Elvis is a crop duster living in a Mobile Home Park. So a blue collar guy living in a Mobile Home Park. And in 1968 at Speedway, he was a race car driver and mechanic. Again, a hundred percent blue collar, living in a Mobile Home Park. And then of course, in real life, Elvis continued living in Mobile Home Parks, in this case, one that he owned himself. He owned about a 15-20 space Mobile Home Park there in Memphis, Tennessee. And he liked to go there on weekends. Of course, everyone else in the park, they weren't strangers, they were all his friends and family. It was his getaway thing. Priscilla says that Elvis was happier, more at peace in the Mobile Home Park than he ever was at Graceland in his house. But again, that was a pretty big icon, kind of the king of blue collar, who again, all throughout the 60s was a huge proponent of Mobile Home Parks. So Mobile Home Parks really deserve the affiliation between blue collar workers, 'cause that is really where the roots were.

Frank Rolfe:And today I would say the number one occupation of those who are working, not those who are retired, is still blue collar by nature. People who work with their hands and do things is thought to be, although there's no scientific evidence of this, but people claim that the largest single employer in Mobile Home Parks is a fast food industry. Which I think probably is true. I know that I see a large number of fast food uniforms on our residents everyday. So may it be true. It's also interesting to note the fast food industry is our fastest growing industry in the United States has been for a while now. So that's not really all bad. But the blue collar stigma that comes with Mobile Home Parks has been something that's been heavily pushed by the media for decades now. But again, there's nothing wrong with it. But Mobile Home Parks, they really are a blue collar industry.

Frank Rolfe:There's no way to get around that issue. So then, what's the downside of being a blue collar industry? If blue collar really has all these good things going on, are there any bad things about it? Well, yeah, sure there are. There's some things with being in the blue collar sector that you have to contend with. Number one, culture shock. Because if you've not been exposed to blue collar people and blue collar setting, you may have severe culture shock day one with your Mobile Home Park. I know I did when I bought my first park, Glen Haven Mobile Home Park, I had never been exposed to a Mobile Home Park in my entire life. I had never known anyone, not a friend or a family member who had ever lived in a Mobile Home Park. I had never actually been in any Mobile Home Park until I built the first the two Billboards I built at Glen Haven, which is how I knew the owner.

Frank Rolfe:And I had big culture shock. I had so much culture shock when I bought Glen Haven that the first thing I did was I went to get out and got a concealed handgun license because I had this stigma in my brain that Glen Haven must be unsafe because it's blue collar. And I had never been around anything blue collar before. Now it turned out in the end it wasn't scary, it wasn't dangerous, it wasn't hard to handle, but that was just what that stigma led me to have was kind of a culture shock. Number two, blue collar residents can have unusual ideas on aesthetics and the choices they make on what they place in their yards and the colors that they do their homes and other items. It just goes with the territory. I've not seen any Martha Stewart episodes where she's living in a Mobile Home Park.

Frank Rolfe:So people who live in Mobile Home Parks, they do do sometimes odd things. I could reel off to you any number of strange things I've seen over the last 30 years. We had a yard in a park in Kansas where the person had collected in probably 100 broken concrete statues that they obviously carefully pulled out of the trash and then painted them wild colors and placed them throughout their yard. It was almost hypnotic though. It almost looked like Andy Warhol original artistic construction, title, I don't know what. But yeah, it's a little odd. It's a little different. It's not bad. People used to drive by and take pictures of that yard and I understood why 'cause I never seen anything quite like it myself. Another item is of course, income and credit restrictions when you're trying to sell new homes 'cause new mobile homes have become very, very expensive over time.

Frank Rolfe:We all know that post covid, the price of mobile homes to bring into your parks in some areas is basically doubled. And that's a lot. So what you find is that people who have blue collar employment, particularly in such industries as fast food, they may only be able to buy used homes. You may have difficulty finding people, you may have to burn through a whole lot of people who can be underwritten to buy, for example, a $80,000 mobile home because their income is kind of limited. So that's just the way it works. And blue collar people are often notorious for having bad credit. Why? The number one reason I would say after reviewing applications for decades is health care cost. Many, many people who are blue collar cannot afford the ridiculous cost today of health insurance. So as a result, they don't have any. And what happens is the first time anything happens, they have a heart attack. They can be in a car wreck. You go to the hospital in America today, you're gonna get a bill that's gonna be in the tens of thousands of dollars. They have no ability to pay it. It really boils down to that. Do they make the car payments? Yes. Do they pay all their housing costs? Yes.

Frank Rolfe:Have they ever been evicted? No. But when you look down that sheet and you say, "What in the world happened? How can they have a credit score this low?" You see it. It's all that they owed a giant bill to Baylor Hospital for $78,000 in collections, which is really kind of unfair. The cost in Missouri for two adults over the age of 50 is gonna be about 2000 a month for your Cigna healthcare cost. And someone who works at McDonald's, they can't afford that. How can they earn 40,000 a year and pay out $24,000 a year in a health cost? They can't. It makes no sense. I can't even go in 'cause we don't have enough time to the crazy part of the healthcare industry that makes our healthcare costs the highest in the world, yet we have the worst outcomes from it.

Frank Rolfe:So we spend the most by far, but we're not the healthiest country. But that's one of the big issues is health insurance. Do I see that changing? No. So I think that credit will always be compromised on many of blue collar residents. And then a big item is that they typically always can get in trouble with their spending habits. So collections in some properties are always gonna be rugged until you help through tough love trade train residents that they have to pay their rent first. It's a chronic problem. If you go in many mobile homes throughout America, you'll see that the kitchen table or the kitchen counter looks like a Wall Street clearing house of bills. You'll see all kinds of bills and they organize them based on what's important. So in the upper left corner of the important bills, which are things like paying their lot rent on the Mobile Home Park, they'd be paying their mortgage on their mobile home, paying their car payment, car insurance.

Frank Rolfe:These are things that have very drastic impact. If they don't pay the bottom right of the whole stack you things like magazine subscriptions, things that they don't care, they lose it, that's fine. They'll get it back later. So since people are not very financially savvy, many residents, they don't have budgets of cash going in, and cash going out. They couldn't even tell you what their fixed expenses are every month, what their variable expenses are. And for that reasons, when you're in the blue collar industry, yes, collections can also be a challenge, no doubt about it. Now what are some critical mistakes that some people make regarding blue collar customers? Well, number one, people who don't understand that blue collar people have the exact same aspirations as white collar people have. What do they want? They wanna live in a safe area. I've never met anyone ever who has told me "I'm interested in this Mobile Home Park, 'cause I think the neighbourhood is unsafe." I think, We all would agree, we all like, we savour safety, so safety is paramount. You gotta be in a safe area. Number two, you gotta have good schools. Even though someone may work at Taco Bell, they will proudly tell you their son or daughter is in pharmacy school.

Frank Rolfe:Education is important to everyone. We all want our kids to do better or at least as good as we're doing. And many of them who are in those trades, they still... Because of being put down for all those years that you're blue collar, 'cause you don't have a college diploma, they still want their kids to get that diploma because they've been hearing for decades now they're lesser beings, 'cause they don't have it. And whether it's smart or not smart for them to do that, they still want good skills. When you have a good school district, your phone rings a lot. Also, they like to have access as all of us do to nice shopping and restaurants. Everyone likes proximity to nice stores, safe stores, and nice tasting restaurants. And those are the same things that you want, that I want. And these residents also want that.

Frank Rolfe:And you're really off base when you think that that's not important. There are a lot of people out there that I've talked to that I've reviewed deals with, they seem to believe the blue collar people are somehow completely different. They'll say to me, "oh, the school doesn't matter. These are trailer park people. Oh yeah, well it doesn't matter that we're in the bad part of town. It's unsafe because they're trailer park people anyway". No, that's not true. Blue collar people want the exact same thing that everyone wants. And when you start picking locations that can't deliver it, you're gonna get yourself in trouble. Next, underestimating how much cash that residents are going to have to buy homes. And in this case, I'm not talking where they don't have enough, I'm talking where they have more than you would expect. When I was at Glen Haven early on, back in the 90s, I had a home that I had brought in that was a newer home.

Frank Rolfe:Wasn't brand new, but it was the newest home in Glen Haven. It had a pitched roof, vinyl siding, a deck, pretty good home. And one day someone comes in and says, "Hey, how much is the home?" And we said, "Oh, well that home, that's $22,000". To which they said, "I'll take it". And we said, "Okay, well here's an application", And they're like, "Okay, but I wanna buy it with cash". That just sounded crazy with cash. Actual cash. "Oh yes, with cash". We said, okay. And they went away and they came back with literally a brown paper bag filled with cash, 5s-10s-20s-1s. That's what they use for a bank. So they... Every time they had any money, the way they saved it is they threw it in the sack. And over the years, they'd saved up the money to buy it.

Frank Rolfe:You would've never, ever thought that was possible. And then just in recent times, we have a park in Michigan, an area called Sue St. Marie, and it's there on the Canadian border. We had many a times somebody walks in looks like... Looked like just some construction worker say, "you got any homes for sale?" "Yeah, we have that one over there". "How much?" "$62,000". "Okay, who do I make the checkout to?" That shocking stuff. People would say, no, that's crazy. It's impossible. You'd be shocked how many cash transactions we have among blue collar customers. Or they write a check as though it's no big deal, or they bring it in a bag of cash. Many of these people, actually, since they earn a lot and they often don't spend on a lot, they actually... Contrary to what people would imagine, they do often have large amounts of disposable money.

Frank Rolfe:Also, a huge mistake that some park owners make is thinking that the very goal of the industry is to replace blue collar customers with the white collar customers. Now, fortunately, that concept, that wacky brainstorm is eroded, but back in the early 2,000s, I would say, many, many park owners were suddenly sold on the idea. And I don't know where they got it from, some talking to each other. They got it from manufacturers who for the first time said, "Hey, you can buy homes factory direct and that's what you wanna do. Kick all your old homes out." They might have gotten it from ARC. Was public now, no longer exist company. That that was one of their big turnaround plans that they told everyone is, "Oh, we're gonna kick out all the old homes and bring in new homes that don't do that." It's a crazy idea. Blue collar customers are excellent customers for all the reasons we've already gone over. You do not need to try and change the image of your park by removing them and predominantly older homes to replace them with new homes. I was talking to a park owner once and his park was probably about half full and looking at the park, and he's obviously selling it at a price that is far lower than what it would've been in the past.

Frank Rolfe:And there was a picture on the wall of his park completely full, probably dated in the '70s and the '80s. So I said to him, "Oh, is that a picture of the park in the olden days?" "Why? Yes it is. It's the oldest photo we have. And I had it blown up and put on the wall" And he said, "You notice one thing different between that park and what we have today?" And I said, "Well, yeah, I kinda do." He said, "Yeah the park is about half empty now. And you know why? 'Cause I was an idiot. I went in to start kicking all my old residents out with these old homes. And you know what didn't make any sense now when I look back, is I get the same lot rent from the new people that I have from the old people. I accomplished nothing." And it's a 100 percent true. If you have a good blue collar tenant base, the dumbest thing you can humanly do would be to try and go ahead and kick them out to make way for your perceived white colour customer with the new home, with the big mortgage. Doesn't make any sense.

Frank Rolfe:So what is the future of Mobile Home Parks with blue collar customers? Where's it all heading? Well, I can tell you right now, I'm very comfortable with where the industry stands on this topic because the relationship has worked really really well for over 70 years. Collections of Mobile Home Parks very low. If you enact no pay, no stay.

Frank Rolfe:If you retrain customers who are often mis-trained by earlier moms or pops about the necessity to pay their rent monthly, pretty soon they'll pay you like clockwork. So collections goes out the door and during COVID when so many other real estate sectors got just nuked, wiped, blown off the planet earth, never to recover. The poster child of which is we all see now is the office building market. No one goes to the office anymore, they all work from home or they already went bankrupt.

Frank Rolfe:So office occupancy are sitting nationwide at around 50% realistically. I know in St. Louis an, hour North of where I am, office occupancy is now below 50%. I think it's 35%, but we all see where that went. And so during COVID we all learned that having essential people that's just fantastic. None of us ever dreamed the government would one day wake up and say, "Okay everybody to my left and the essential jobs you can go to work, and everyone on my right the non-essential, you can't go to work anymore. You're just gonna have to stay home, lose your business, go bankrupt whatever." I don't know who actually made that list up, but the fact that we were able to collect in all of our rent during COVID when everyone else was dying, that was a great relief. So I'm very comfortable with the fact we are and are proud of the fact that we are predominantly a blue collar industry.

Frank Rolfe:And as the future Mobile Home Parks is all about raising rents. That is the tenant base you wanna have because blue collar workers are going to be earning more, a continual basis because of supply and demand and the fact that these are jobs that we have to have with five million unfilled. So people are gonna jump around from job to job each time getting to raise more disposable income. And that's fantastic for park owners. Now every time I say that people will say, "Oh well you're advocating gouging rents, you're advocating pushing rents ridiculously." No I'm not.

Frank Rolfe:But I will tell you truthfully, and you know this if you read those weekly synopsis that I do of the industry and all the news articles, that our rents in most cases are not sustainable. The rents are not high enough to make other uses not more profitable and it's becoming a big deal. There's Mobile Home Parks being torn down. It would seem almost every week to make way for apartments where you can stack apartments three stories high at $1,500 a month make $4,500 a month in revenue on each mobile home lot space. Maybe mom and pop was renting a lot for $300 a month. I would say that in the average mobile home.

Frank Rolfe:Lot rent in America is about $300 a month, it needs to be more like $600 or more. That's where you would have to have to do several things. Number one, have the money to have professional management to keep the parks up and invest in CapEx. And number two, just not to tear them down into something else. We've owned Mobile Home Parks that have been sold and then redeveloped, torn down and that's where you're at. Mobile Home Parks are not a very high use of land. It's not very hard to convert them to something else. They're just a parking lot.

Frank Rolfe:So the future of rents has to be higher. If you don't have higher rents, you're gonna have a lot fewer parks. Also parks are in fact starting to attract white collar customers. I know recently I was in one of our Mobile Home Parks sitting there on the phone, suddenly the door opened to the mobile home that I was parked in front of and out popped someone who looked like they were straight out of the LL Bean catalog. Khaki pants, top siders, button down shirt, blue blazer.

Frank Rolfe:And I thought, "Oh my gosh we must be filming an alternative universe LL Bean commercial or Brooks Brothers commercial. What in the world is going on?" And it's because as homes have changed, as homes have become larger and they look nicer and the parks look nicer we're attracting an entirely new customer base. One that we never thought possible in the past.

Frank Rolfe:I would've never dreamed 20 years ago I would see someone come out the door of the mobile home dressed like that, just I would've never pictured it ever. If you drive in many of our Mobile Home Parks and all the Mobile Home Parks you'll drive around, you'll see a dramatic change for example in the cars. You can see it right there without seeing people. Just drive through the park and look what's in the parking pads.

Frank Rolfe:I never would've dreamed I would've seen BMWs and Mercedes-Benz and all these nicer cars in those pads. So what's happening as the industry has matured, as park owners have worked on bringing these old parks back to life and injected money into such items just as the entrance, white vinyl fencing, feather flags, new sign, better roads, more professional manager, much nicer office and better looking vinyl sided shingle-roofed homes, the net result is we've tapped into an not an enormous additional customer base. We've tapped into that other half of employment.

Frank Rolfe:So we're starting to see a lot more white collar workers. Now many of them are forced into the Mobile Home Park as a possible housing option 'cause they simply cannot afford stick-built homes which are now at about $400,000. So if you have a white collar job and let's say you earn $60,000 a year as a school teacher, you will never be able ever to have the option to attain the $400,000 stick-built.

Frank Rolfe:But if you want a house of your own with a yard, then the Mobile Home Park is starting to look a lot more attractive. We all know the amazing rise in single family home prices over the last decade or so and part of the net effect of that is it is making Mobile Home Parks more attractive to that other sector, that other half of all employment that we never had before.

Frank Rolfe:Also there are a few businesses that have both blue collar and white collar demand, if you really think about it. So there are things like Costco, Domino's, those are all very successful brands because you cast the biggest net. You have the largest potential number of customers and that's fantastic. So even though the industry has for the longest time been supported by a blue collar customer base, I believe that in the future going forward you're gonna see more entrance from the white collar side.

Frank Rolfe:Remember that Mobile Home Parks are in fact parking lots. Customers come and go, the homes can come and go just like automobiles. A lot of Mobile Home Parks, not Mobile Home, I'm sorry. A lot of parking lots in downtown areas, what were they built for? They were built for mostly Model A Fords because a lot of American downtowns were built back in the 1920s.

Frank Rolfe:What are you seeing today in those parking spaces? Oh you see all kinds of cars, maybe you see Cadillac, there's a Buick, there's a Mercedes. So things change in the industry. There's nothing wrong with that, but I really like the fact that I think we're gonna start seeing a bigger change when it comes to that whole dynamic because we're gonna be able to expand our base to include both blue collar and white collar workers. And I think that's absolutely huge. And I also don't know any other real estate sector that has that dynamic.

Frank Rolfe:If you think about it. You have an office building, all you have are white collar customers. You can't go fix a car in an office building. If you have a retail center based on the retail center where it's located, again your customer base is predominantly either white collar or blue collar. Hotels are no different. So we're one of the few sectors out there that has this dynamic where we can be a appealing to both blue collar and white collar customers. And I think that's gonna be a huge force going forward to make our industry extremely stable and attractive.

Frank Rolfe:So that wraps up our lecture portion of tonight's lecture, going over blue collar workers and why I love them and why I think they're great to be an industry that is so supportive of them and so supported by them. But now we want to get to answer questions that you may have. So if you have any questions put them in the chat box there.

Frank Rolfe:I'm not a technology person. But if you can go ahead and put your questions there I will happily answer them. There's no topic taboo, there's no topic that is not important enough to warrant a question. If you wanna place your questions there that would be great.