We interviewed Ryan five years ago, when he talked about how he went to Boot Camp and then purchased around seven mobile home parks. But in this follow-up interview, we discuss his success in growing that portfolio to now around 20 parks and approaching 2,000 lots (that’s roughly $100+ million in value at current cap rates). And he did this despite 1) Covid 2) the “eviction moratorium” under the Biden administration and 3) Jerome Powell’s skyrocketing Fed funds rate. Pretty amazing.
We discuss a wide range of topics related to buying, financing, and operating his portfolio, including his top lessons learned in each category. We also discuss what he feels are the hot markets at the moment and his prediction on such things as interest rate movement.
If you are thinking about buying a mobile home park – or building a large portfolio – then this will be a great use of your time. And, as always, Frank keeps it fast-paced and fact-filled and throws in his own observations as it goes.
How Ryan Doubled His MHP Portfolio In The Last 5 Years - Transcript
0:00:00.3
Frank Rolfe: Welcome everybody, this is Frank Rolfe. About a half a decade ago, we had an interview with Ryan concerning his life in mobile home park business. We call it the Life of Ryan, kind of a parody of the Monty Python movie the Life of Brian. But we thought it'd be fun to check in with Ryan now five years later, to see where he's at. You may say, wait, I remember that interview. I remember Ryan, the guy in South Carolina. That's correct. He still lives in Charleston, South Carolina. He also back then had roughly about seven or so parks, as I recall, back in those days. Ryan, bring us up to date. Now it's five years later. What the heck are you doing with mobile home parks down in Charleston, South Carolina?
0:00:46.8
Ryan: Yeah, so five years ago I was still, I think I was in my 20s still. Now half a decade later, I've gotten married to the girl that I was dating then. Still reside in Charleston, still plan on living here for a long, long time. Love Charleston. Since then, I've bought probably 15 to 20 mobile home parks and RV parks across the Midwest and the Southeast. Still to this day, I do not own a single park in Charleston. Charleston is a unique market. If you've been here, you know there's not a ton of land and our dollars go further elsewhere. That's why we buy elsewhere. That's what I've been doing the last five years is buying parks, trying to operate them better and continue to provide affordable housing across the Midwest and Southeast. And then what else? That is... And then personally, I got married, still live in Charleston, still live at the same place, and I'm boring. I just like doing parks. And that's what I've been doing.
0:01:48.4
Frank Rolfe: I'm boring too, Ryan. I like boringness. Since you have so many parks these days, let's break it down into just percentages. Can you give idea a percentage of how many parks you have that have seller financing, bank financing, conduit financing, or Fannie Freddie financing?
0:02:09.6
Ryan: Yeah. Right now, 0% conduit and CMBS and Fannie, that is due to where we are in the cycle of debt. We've held off on either refi-ing them or we just haven't seasoned enough to where we can get new debt on them. We probably have 30% creative financing. Actually, let's bring that total to probably 60 to 70, because a lot of times what we also do is with the creative financing, is we portion that in as a seller second, with the banknote, like a local commercial lender or national lender. We've done a little bit of both. We've also done a full execution on a master lease with option to purchase, and another one that we have done that on as well. We haven't gone full circle yet. We're just still operating that park. It's probably 50-50, 50 commercial banks, 50 seller financing or master lease or some creative structure.
0:03:05.6
Frank Rolfe: And I noticed the word creating a lot... We got some terrible echo there, Ryan. Do you hear the echo now? Now it stopped. I think we're better now. Obviously, creativity has been a big part of the program. Because if you were growing five years ago, you were growing in the face of COVID. And then after Covid, we had the evictions moratorium, or in tandem with that. After the evictions moratorium, we had the judges that didn't want to give up on the evictions moratorium, even though the law said they were supposed to. They still thought evictions of any style were evil. And then, of course, you had the Jerome Powell interest rate run up. You've been kind of on a tour of Vietnam in the mobile home park business over the last five years, yet you were able to grow. What do you chalk that up to? Was it your reliance on creativity? How did you proceed when others would say, no, I'm going to wait until later?
0:04:00.8
Ryan: Number one, we were fairly aggressive in our ability to pursue parks. We didn't give up with COVID We actually kind of stepped on the gas pedal because we took a little break. We looked, see what would happen, see where the chips would fall. But then we looked up and we're like, kind of the same, it's just more of a sickness and whatever have you. We started buying more, trying to get more aggressive, and then in '21, we actually switched gears a little bit because MH had gotten really busy with consolidation, and cap rates were, 0, 1, 2, 3% in some deals. We actually bought seven RV parks in '22, leading into '23. And creativity has been a number one thing that we like to do if we have the ability to do. Doesn't always work out that way. Being aggressive and following up and calling owners, continuing to network and try to buy deals was our big thing. And then after we bought a bunch, we had to look and say, hey, how do we operate these things now? And then that was the next step is getting that house in order.
0:05:00.9
Frank Rolfe: And give people just on percentages because you have so many parks. What would you say your macro percent down is? What would you say your macro number of lots is? And then give people an idea of what states you're in and how many you have in those states.
0:05:18.4
Ryan: Yeah. Percentage wise, we're typically going in 20 to 30% down. Very typical. We've done less, we've done more, but typically we're in that 20, 30% down range, even with seller financing. And then our heaviest state is Kentucky. We have 10 parks there, including RV parks. And then we're also in Tennessee, West Virginia, part of Ohio, and then we've been in the Carolinas as well. But we sold some of that stuff. That's majority of our portfolios, basically right down I75 all the way to Charleston. It's right off major highways. It's due to mainly where we live and where we already were. That's where we are. Majority of our parks are probably 70% of our parks are in Kentucky. And then pad count is all over, majority of our parks between 50 and 100 pads, typically.
0:06:16.5
Frank Rolfe: And how long would it take you to drive your farthest away park?
0:06:21.2
Ryan: From where I live, it would be probably 10 hours.
0:06:27.5
Frank Rolfe: Then how are you managing these parks? What's your structure? Do you have a manager in each one? Do you have a district manager over those managers? Or do you go just managers directly to you? How does that work?
0:06:39.2
Ryan: In the beginning, we were like, do we hire regionals? What do we do? We actually centralized. We took a little bit of both. We have on site managers at all our properties. They may oversee one or two properties for us, and they may not necessarily even live on site. But so what we do is we have that, and then above them is our COO, and then the COO reports to me and my partner, Miles. We also centralize the collections and sales. We have a back office that handles that and works in tandem with the managers. On the 6th of each month or before, then we have one lady, one person in our office making all the sales calls, making all the collections calls, sending out notices, doing leases. If we had to train our managers to do that over and over again, they still know how to do it. But in the essence of if a manager quits or whatever have you, we're not left with that park just being nobody around. We still have a back office that can handle collections. People know the person and then also we can get notices out, leases out and stuff like that to replace.
0:07:41.3
Frank Rolfe: And how often do you physically go out to each property? Once a year? How often?
0:07:43.6
Ryan: I'm typically... I try to get to each property once a quarter. I'm a little bit more that, I used to be more. But it also depends on when we take over a park. Most of our parks are fairly stable at this point. We've done the turnaround or we may have capex project going on, but typically it's once a quarter. Me and my partner touch them.
0:08:05.3
Frank Rolfe: Got it. And you just do one big drive like once a quarter you just go to the mobile park?
0:08:05.4
Ryan: Yeah.
0:08:10.4
Frank Rolfe: Just drive once around and drive back.
0:08:12.0
Ryan: Yeah. I try to mix business with pleasure. My family still lives in Cincinnati. I'll drive all my parks on my way to see them, do what I need to do, hang out for a few days and then come back. Like I just did a huge road trip, I drove to Cincinnati and then we drove to northern Michigan. Me and my father went king salmon fishing as you can probably see some fishing stuff over here. We did that, came back and I checked my parks and did all I needed to do. I do all that, typically takes about a week or so to do all that. And I'm not necessarily in the parks, spending days there. I'm typically walking around, driving around because we have week to week meetings with all of our on site managers. We're touching base with our managers relatively.
0:08:52.9
Frank Rolfe: I noticed your portfolio is most mostly in red states. Was that by design or is that just by sheer happenstance?
0:08:58.7
Ryan: No, that's by design. I learned a long time ago that while opportunities may be, we may be able to have opportunities in New York or Pennsylvania or Illinois or even blue states. We shied away from that just because of the lulls early on when I first went to boot camp, which was actually coming up 10 years ago, the Austin boot camp where they were going to potentially pick it and all that good stuff. Yeah, that was my first exposure to that. That's coming up next month, will be 10 years and yeah, it's red states by design. And even then that's not always know a fail safe because the cities are still anti mobile home park or even the local magistrate or judge could be more tenant friendly than some others in certain counties.
0:09:45.3
Frank Rolfe: And let's talk a bit about the master lease with option. Can you explain to people how that worked? How did your master lease with option work?
0:09:53.1
Ryan: Yeah, so it only works in certain scenarios. I'm not advising to go out and do it because it's a really, really specific park or scenario that that owner may have. One example and why we did it is the guy owned it in a C corporation. And so in order to unwind a C corporation, the IRS I think says you have to have five or seven years in order to transition before you can sell the asset. Right? He's unwinding a C corp over the course of five years, with a 10 year lease. That park was actually fairly stable, didn't have a ton of deferred maintenance or anything that needed a huge fix. Relatively stable park. It was just a unique scenario for the seller. The other scenario was, what you want to really look for, is it was a good stable park as far as bones go, right, had direct build utilities, city owned streets in a growing, growing metro in Kentucky. But the owner lived right down the road and hadn't been there in five years. And he's like, I don't know what's going on. We're like, hey, we will buy this from you.
0:10:49.9
Ryan: We'll give you the price that you're asking, but that's going to be three, four years down the road. We're going to put a lower down. And then we basically just paid him. We collected all the rent, increased the rent, demoed a bunch of homes, kicked out a bunch of bad tenants, and then we brought in some homes over the years as well, which I wouldn't really recommend in most scenarios, but we did it just to increase that value. And then you have two documents, you have your lease, your master lease, which defines the purchase agreement, your terms on a month to month basis on what your payment's going to be and your deposit and then your option, which is basically where you can, you have the rights to buy it or sell it. We ended up selling that. We sold the options, we had to do a double close. Day of closing, we got one deed, we signed it, and then we sold it the same day. You can do it that way. It just depends on the title company in the state. And that kind of what dictates how you would close that per se.
0:11:44.2
Frank Rolfe: Did you have any problems with the owner signing off after you've fixed up the park and filled it? Did he then say I'm not going to honor this anymore. I want more money or any of that kind of stuff. Or was he honorable on that?
0:11:56.4
Ryan: No, he was honorable. He stuck to his word. We had to renegotiate a little bit because we ran out of our lease terms. We had to extend another year. And the reason being was we were in the middle of a grandfathering issue with the local municipality, so we were getting ready to sue them. We did not. We actually, they allowed us to have variants which then even though we were legal non conforming and we could replace all what was there, they just didn't honor state law. They thought their law was what drove that. But anyways, and he also had an underlying loan which we made sure was paid every month. We also clear it with the bank. He had a good relationship with them. It was just a distraught seller with a really, really bad park operationally, but was in one of the worst turnarounds I've probably done as far as tenants go, but was a really, really good asset and the guy that bought it from us is, there's still meat on the bone for him.
0:12:54.3
Frank Rolfe: In portfolio wide, Ryan, what would you say your occupancy and your average rents are right now roughly?
0:13:02.0
Ryan: Average occupancy, if we have a home, it's filled. A vacant lot, a little bit different. We're not big infill guys, but occupancy across the borders, if we have a vacant... We don't have vacant homes. We might have one. But typically as far as economically occupied, we're probably 99%. Physical occupancy is going to be right around 90%, 95%. And then collections, we're typically close to 100% by the end of the month.
0:13:30.0
Frank Rolfe: And what would you say average lot rent would be right now?
0:13:32.4
Ryan: Average lot rent is probably 350 to 375 across the board.
0:13:38.2
Frank Rolfe: Okay. And obviously there's plenty of room for increases on that, right? I mean...
0:13:43.5
Ryan: Yeah, there is.
0:13:44.5
Frank Rolfe: Your markets are probably what, mid fours, 500 markets?
0:13:48.1
Ryan: Yeah, easily. Some of our parks are mid fours, some are mid threes, but we don't have anything lower than 300 right now.
0:13:56.3
Frank Rolfe: Okay. And so you, like us, probably have limitations on how much you want to raise it. Even though you could raise it two or three hundred dollars in one whack and probably not lose anybody. Well, we all try and keep the pain down so people can budget. Do you try and keep it down to like $50 or something like that? Or what's your threshold?
0:14:13.6
Ryan: Yeah, basically, the biggest we've ever done is $50. It's also market driven. If I'm buying a park, like I bought a park outside of Charlotte probably when we had this conversation five years ago, lot rent was $90. That park is now for sale again. We had since sold it, and we sold it in '22. The lot runs 385 now. It's gone up basically 300. But that's a weird scenario where lot rent is very, very, very low in modern times. What do you do? Do you actually raise it 100 bucks? Because even a $50 raise is technically 50%. Yeah, we're mainly in that $50. And then from there on out, once we get close to market, we're in the 3 to 6% year over year.
0:15:00.2
Frank Rolfe: Got it. And let's talk about the RV part of it here. You were doing mobile home parks. Five years ago when we talked to you, I don't think you had any RV parks five years ago. Right?
0:15:09.5
Ryan: Correct.
0:15:11.4
Frank Rolfe: What made you start doing RV parks as well?
0:15:14.5
Ryan: Yeah, so we bought a bunch of parks, looked up, and we're like, hey, we're getting outbid by 20, 30, even 50% in some scenarios. Or they're all cut... It was crazy times, and it was good times, but it was also crazy. People were making crazy offers. And now those parks are potentially coming back around for sale because they put bridge den on it or whatever have you, or they're whatever, it doesn't matter. We looked up, we were like, hey, we want to keep growing. RV parks are in line with MH a little bit. Because some mobile home parks, you may have RV parks scattered in, throughout, depends on the state. We built a list, we started calling, and we were getting real leads. We were getting good terms. We were getting the same debt that we were getting on mobile home parks, and we were getting 9, 10, and 11 caps day one. That is why we kind of, we saw the writing on the wall, like, hey, there's a large opportunity to buy a handful of these let's go in and try to buy as many as we can.
0:16:11.5
Ryan: And we bought seven or eight, probably close to 1,000 units across Ohio, Kentucky and Tennessee. Mainly it was just pure economical. There was better cap rates. And our whole theory at the time was, if we go into this affordable housing crunch, we could potentially turn RV parks into affordable housing. Because people will live in an RV, lot rent is actually typically on a month to month basis, a little bit higher normally than a mobile home park. And so we're buying in big metros, larger areas right off the highways, close stuff by water or buy some attraction where there's always going to be a population pool, not in the middle of nowhere. We do own a few of those, but, that was a whole theory, right? If we can't operate it as a mobile home park, let's operate it as a month to month extended living scenario.
0:17:03.8
Frank Rolfe: I'm sorry, go ahead.
0:17:04.9
Ryan: I was just going to say to this day, we have a handful of seasonal, transient and month to month.
0:17:11.1
Frank Rolfe: And how hard is it for a mobile home park owner to do RV? Has that been a huge change or is it most of the same stuff or what?
0:17:20.0
Ryan: It's the same stuff. Let's say you have a month to month park. It's still the same operationally month to month or even seasonal. But for every hundred sites we have for mobile homes, we probably, if they're all tenant owned, city utilities probably have two employees. And they're probably part time. For every hundred sites we own RV, the shorter the stay, the more employees we have. We typically have between three to seven employees for every hundred sites. Because you're turning over that site maybe nightly, your attention to detail has to be a little bit greater. I always say people want to be in your mobile home parks, but they typically, not necessarily have to be. But they're looking for an affordable option, right? And that is their good option that they may have at their price point. RV parks, on the other hand, typically they want to be there, they don't necessarily have to be there. And if they owe you rent, they will just leave. And that is the main differentiator is like that, that rep can literally just pull out of your park. And it does. We've had that scenario where people just leave, they stiff us, and then what do you do?
0:18:22.7
Ryan: And you can evict them, you can do this, you can do that. But most of the time it's not worth the legal fees. You're better off just trying to replace it. If you're going to get into the business, I would buy one and see if you like it. Don't just go buy seven in the same year like we did. And then we got out ahead of our skis a little bit because we weren't built for that in the back office. You got to have a larger team in order to manage the day to day. Because there is much more to do day to day than there is for a mobile home owner.
0:18:50.1
Frank Rolfe: And how did you finance the RV parks? Because RV parks are harder to finance, not as many lenders do them. Did you use seller financing on that or bank or SBA or? I mean the Department of Agriculture has an RV financing program. What did you use?
0:19:04.6
Ryan: CMBS will actually loan on a large enough RV park too, but we've not gotten down that rabbit hole yet. Mainly it's just been commercial banks. The same lenders that we were using for mobile home parks would also lend on an RV park. They were very open to it. They were giving us the same terms, 30% down, 4 and 5% interest rates, 30 year amortization. They were giving us the same terms. We also had some seller financing deals in there as well. But typically it's just been a local community bank or a national lender that lends on mobile home parks and RV parks.
0:19:39.8
Frank Rolfe: What is your favorite property you own right now and why? And what is your least favorite and why?
0:19:46.6
Ryan: My favorite park is probably my smallest. It's 28 units, all direct build utilities. And our lot rent's 350 and we're like $100 in the market still. That is my favorite park because it is the least operationally intensive. We don't own any homes. We brought in seven or eight homes. We bought it for a good pad, per pad cost. And there's operational upside still. And we're five years into ownership and we have not done one eviction this year in that park. It's a good park. And then also my favorite park also is our largest park. Those are always some of the favorites because you can employ more people so you're not necessarily having to work in the business day to day. I'm not as worried about the asset because there's more dollars to go around. If 10 people don't collect rent, I'm not as worried about it because there's 280 sites versus 28. There's a much more in your favor as an owner on the larger. Larger is actually easier, as you know. And then my least favorite park right now is probably an RV park. I will say that MH we don't really have a bad MH.
0:20:58.4
Ryan: MH, and that's kind of why we're shifting gears back to MH again, because everybody's going after RV parks it seems like right now. We're going in the other direction. Everybody was buying MH, we're like, let's shift. And then we're going to shift again because I think that's kind of, there's another opportunity to kind of buy a handful. You're obviously paying up a little bit now. Not paying up, but prices have come up because rent's gone up, et cetera. My least favorite park is an RV park just because it's a little bit operationally intensive, the tenants are a little bit unruly sometimes. And it's just more operationally and more of a time suck. And we actually sold a property at the, earlier this year that had a 15 key motel that was by far my least favorite property because I was at one point I would let go of the manager and I was answering the phone at for a certain amount of time for the motel. I'm not a motel owner and I don't pretend to be. But sometimes with RV parks you get all these other amenities and income sources and then you're like in 10 different assets.
0:22:00.1
Ryan: It's almost like a hotel. It's real estate disguised, it's business disguised as real estate. That's really what it is.
0:22:05.4
Frank Rolfe: Right. And let's talk for a minute about your lessons learned. Let's break them into subcategories. What have been like your top couple of lessons learned on buying properties? If you looked at the 10 year ago Ryan and even the 5 year ago Ryan and the today Ryan, what are some of your biggest lessons learned as far as finding things to buy?
0:22:29.2
Ryan: Direct to owner has always been the best source of buying. And time is typically on your side. The key to the deal, and I'm not an acquisition guy, my business partner is more of the sales guy. But I still, in that just because I'm an owner and I do like deal flow, the number one thing has always been the money is in the follow up. And it may take years before they're ready to sell. And if I had to go back and tell myself coming out of boot camp, I would have said I like owned no real estate at that point. My first transaction was a mobile home park and I would have said been be more aggressive in trying to buy, and what works for somebody else may not work for you. And I tell all the other people that. There's nothing wrong with owning a 20 site park. You just got to know the ins and outs of what that looks like and why it may be right for you or not right for me. Every investor has their own story and their own progression to ownership.
0:23:33.9
Ryan: And then also I would say, focus on setting up your people first before you go out and explode growth. But it's very hard to do simultaneously. It's very hard to hire people when they're not doing anything and you're draining your bank account. But you're not buying more parks. Try to figure out that balance. But hire before you're like, we bought 14 parks in '22. That was a crazy year. And we did not have the people and then we caught up to it. But that's probably the two things, right? Be more aggressive in trying to buy because I think the park business is going to continue to grow. I think there's a lot of positives in the business happening right now. It's a good industry. And also, which I have not fallen afoot to this. That's not even the right term, but I haven't fallen in this is where we're, we still have an ethical side to us. You're providing these people housing. You have to take care of the communities. You have to take care of these people. While I may not interact with them on a day to day basis anymore, I still do care.
0:24:45.0
Ryan: And the last thing I want is our park to be closed because I'm not taking care of it. And that's probably the three things I would kind of break it into is, be more aggressive in the buying. Focus on maybe larger opportunities because larger is easier is what I found too.
0:25:04.0
Frank Rolfe: And what about the operations side? What have you learned about managing that ten year ago, Ryan may not have known?
0:25:14.3
Ryan: Not everybody wants to be a park owner. Employees just want to be employees. That took me a long, long time to learn and that was a big lesson that I learned the hard way. I had people steal from me. I've had people quit and just not even tell me that they quit. And they just want, a lot of times they just want a paycheck. They're not scared to work. People aren't scared to work. That's not what I'm getting at. If you hire the right people. But most people don't want to be an entrepreneur and a business owner. They're happy working and they just want to... And they like working for a small business. That's majority of America. And people like the flexibility that that brings too sometimes as well. It took me a long time to learn that employees want to work and they want to be paid on time and which we always try to do. But yeah, they don't always want to be a park owner. I always had that conversation with people like, do you ever want to be... I always tried to force that down other people's throats sometimes even in my own family, do you want to buy a park? Are you looking to invest? I can help you. Can't force that on people. They got to want that.
0:26:21.9
Frank Rolfe: Let's talk about the future, Ryan. You're sitting here right now five years ago, you had what, seven, eight parks, I think.
0:26:29.8
Ryan: Yeah, roughly.
0:26:31.7
Frank Rolfe: Okay. Five years later, you're up to how many parks?
0:26:34.1
Ryan: A little bit over 20. We bought and sold some, but bought and transacted over 20 plus.
0:26:40.1
Frank Rolfe: Okay. Five year into the future, Ryan, where will you be, you think? What's your program? What's the goal? Wwhat are you trying to hit? Is there a total number of lots you're trying to hit? Total number of parks? What are we heading for here?
0:26:56.1
Ryan: Also, I just saw in my reflection, I forgot the one lesson that I learned from this book, which I will brag that I bought that book for you.
0:27:06.5
Frank Rolfe: I appreciate it.
0:27:08.9
Ryan: Never selling a mobile home park, I learned that lesson the hard way, but sometimes you have to sell to free up capital, et cetera. Five years from now, it's going to be more MH focused for us. Probably 50 to 100 pads or larger. We do have a pad count, but it's more about keeping the parks that we own and looking to buy more opportunities. Total pad count is probably close to, we'd like to get to 2,000. That's kind of our magic number roughly in the next, actually two years. It's an aggressive goal. But in five years I'll probably have a couple kids, hopefully, still living in Charleston and just focus on the business of being a steward to the next people. Because I looked up and it's been 10 years, all right. Taking the next generation of what does that look like? What does that look like when I'm 40 and I'm now the old guy in the industry as far as been in the industry a while.
0:28:13.1
Ryan: Not necessarily personally old, but what does that look like to help steward the next five to 10 years of ownership? Probably 2,000 pads, probably still around the 20 to 30 park mark. And we would like to... My partner and I have the goal of to really have no investors at the end of that. Just solely own it between the two of us or just a few investors across the way. That's what that looks like for us.
0:28:41.6
Frank Rolfe: Okay, and Ryan, of all the states that you're in or states that you're not in, what's your favorite state and why?
0:28:49.7
Ryan: I like South Carolina and I like Kentucky. Kentucky, just because we already understand the markets there and we're already in it. They don't have rent control. It's necessarily easy to get rid of somebody if you need to. And tenants typically are pretty good. They have decent cash if they're going to buy a home. South Carolina I like because on the evictions you don't actually need an attorney. You can actually have your manager do it. In Kentucky, you still have to have an attorney if you own it in an entity. But I like South Carolina because of the growth. The Southeast is exploding. Charleston as a whole is grown like crazy. Myrtle Beach, Columbia, and there's pockets of South Carolina and parts of Kentucky that are very rural. And we don't necessarily chase, but that's probably my two favorite states.
0:29:37.0
Frank Rolfe: And Ryan, let's talk a moment about the values of mobile home parks in the future. And I'm asking you to predict based on just your common sense and industry experience today. You've got the deal going on right now with yes communities selling, we believe no one knows for sure because they, neither the buyer or seller have publicly admitted that they're buying or selling or even what the numbers are. It was leaked to some financial paper that it was going to be roughly about $10 billion. And if you work through and divide 10 billion by their number of lots, and we don't know for sure what the lots are, but it comes out to like 150, 170,000 a pad. And then we're seeing parks with lot rents of about $400 at about a $50,000 per pad range and $800 lots, about a hundred thousand. Six digit lots are not becoming uncommon. They used to be very, very rare. Back in the day, back in the '90s, they were virtually unheard of. They're getting kind of common, okay. Where do you think values go? Because obviously values are based on two items, rents and cap rates.
0:30:53.8
Frank Rolfe: And cap rates seem to be somewhat steady. But rents, our industry rents continue to go up better than any other sector. Mainly because we started off so low. We're laughably stupid low. It's like the hot dog meal at Costco, which is a $1.50, or maybe it's now 2.50, but it's absurd. And anyone who goes into Costco and they see the giant thing saying hot dog, chips and drink 2.50 and they know they're raping Costco and Costco does it as a loss leader to get you in the door. But of course the park business, we don't need a loss leader. That's our whole business, right? We don't, we can't sell you a refrigerator. We, all we have is lot rent. Where do you see this dynamic of rents and values going like 5 or 10 years from now? And here I'll give you my opinion. Tell me if you agree with this opinion or not. I'm thinking all your rural parks are going to be at about a 500 base. Because I think that by the time you have to make real capex improvements and old parks, even when they're rural, they still need road improvements, waterline, sewer line things, I can't see parks being cheaper than 500.
0:32:11.7
Frank Rolfe: Even old toothless Larry's park down by the river with the gravel roads, it'll either have to be scraped or at about 500 because they're going to shut him down. You already see articles now people are going to say, no, your wells no good. Your lagoon hasn't even had a permit in 20 years. I'm thinking 500 on those markets. I'm thinking $1,000 a month on your big city markets. Your Houston, Dallas, San Antonio, that's a safe bet because we've already hit or exceeded that. Denver's over a thousand. There's a ton of markets now over a thousand. And then the stuff that's in between about 750. That's how I see the future of the business is going to be if you say, yeah, I got a park in San Antonio, I will assume your rent's a thousand a month. If you tell me I got a park in Hope, Arkansas, I'm going to assume it's 500 a month. And if you're in Des Moines, Iowa, I'm going to assume you're 750 a month. Am I crazy or not? What do you think?
0:33:11.9
Ryan: I think you're right. I think there's a lot that's happening both macroly and then also in each town. 100,000 still blows my mind that some of these parks, like I saw one here in Charleston, that was quite close to 100k, a path that they're asking. And I'm like, that's in the hood. It's not even a great neighborhood. And I'm like, and that's fine if that's the new and rents reflect that. But we don't want to be the buyer that then has to make that adjustment to then justify the purchase. That is where we're not going to do it. Where does that go? Does then that lead to more Brookfields buying everything and trickling down all the way into the small stuff? It probably does, because I can't compete with them on a per pad basis. I think, if you can buy anything sub 40,000 a lot in most markets, it's probably a deal. If it's at least 50% occupied. And telling myself that five years ago, I wouldn't have have even considered that, 50,000 a unit, that's what you're paying on purchase price.
0:34:30.9
Ryan: Why? It's not a 10 cap, right? The national average is 5.17. It's actually lower than multifamily right now is what I saw. And so, yeah, I think you're right. I think there potentially will become a cap to the mobile home park lot rent in some markets. But that depends on what apartment rents do. And what affordable and what single families do. Because once you start getting into that $1000, unless apartment rents are double or triple that, then yeah, you're not really competing with it. But if it's 1500, then yeah, you're starting to compete. I still think there's lots of upside in most markets. I tend to agree with you that 500 is probably going to be the basis in most areas. Just because $500, that's still really affordable from like a dollar for dollar as far as what the national average, income wise go. Yeah, I agree with you. I think 150 is not going to be unheard of in 10 years. I think it's going to be pricing more like multifamily, which rules out a lot of people for sub 50 units because then they necessarily, it goes on a different echelon of buyers.
0:35:50.3
Ryan: When you got a 20 site park at 30k a pad and now it's 100k a pad, you're now talking about a multimillion dollar asset which used to only cost 5, 600,000. Yeah, I think lot rents and per pads are going to be close to that in the future. I don't disagree with you at all. I think there could be... What I worry about mainly is do the states start to see us preying on low income. And then rent control goes across the kind of nation sweeps it. That is a worry of mine. Also, a lot of states are now instituting, the residents have an option to purchase it before somebody else does. Maine, I think Virginia has that and a couple other states have done that to where I don't really see the positive in that. I've not been a big, as a seller, I don't really care if I'm getting my price. But for the longevity of the tenants of the business, unless it's a high end community, I just don't see it working in day to day parks long term, because private landlords typically have always been the best, conduit of making sure that the park remains a good park.
0:37:02.3
Ryan: Because when government comes in and they force their hand by having to clean it up, are you going to force the resident owned community to do that? They're probably not going to do it. I don't know. I don't know if you can hold them accountable. You can't help. Yeah, I think rents are going to continue to go up. I think the business has a long way to go. I think you're going to see potentially more development. That is something that could happen and is happening in certain areas. But yeah, I think it's a good time to be in the business. But the opportunities are coming or where all the mom and pops are dying off or selling or that is happening and it's happening in a greater bunch, unfortunately.
0:37:43.0
Frank Rolfe: And do you see the RV park industry, since you're in RV, do you see it fracturing? Because when I got in the mobile home park business back in '96, there was a RV park called Hi Ho Campground, south of Dallas. And Hi Ho Campground back then was like a futurist because it was an RV park that was nothing but permanent residency and it was people living in RVs. And back then I was Glen Haven mobile home and RV park. I was trying to figure out what the future of Glen Haven would be. And I thought that guy is a clever model because he bought that as an RV park cheap. But it wasn't an RV park. An RV park to me, by definition is people come and they go, they stop for a day or a week or maybe a month. But this is for people living their whole life. And the RV industry to me seems like maybe the RV parks that are urban or suburban or maybe even a little ex urban, maybe the future of that is to shift more of a permanent housing option. We own a couple RV parks in South Texas and we've been aggressively converting those to park models and telling people, sell your RV, Mr Ohio retired person and just live here full time.
0:39:02.6
Frank Rolfe: You don't need to be trekking your RV half of the year down here and half the year up there. Just live down here full time. And that pitch seems to be selling pretty well. But all these things that people like today, like tiny homes, you can't put them in mobile home parks. You can put them in RV parks. A fifth wheel with pop outs can give you a 16 foot wide structure at a fraction of mobile home park. You don't have any lot preparation requirements. Don't you also see like, the mobile home park industry fractured. We have the lifestyle choice, high end stuff like ELS and SUN have. And then you have the family... What they call the all age family park or the affordable housing segment. You see that also happening in RV. Are you seeing that right now in your own RV stuff?
0:39:49.2
Ryan: We have all three, we have seasonal where it acts as a secondary vacation home for somebody. We have the month to month where people live in their RVs, either for work or they live there full time. And then we have the transient where it's the in and out, there for the weekend, whatever have you. We're seeing a little bit of everything. We definitely see the swing towards people living in RVs a little bit more. It has slowed down a little bit since COVID. It'll pick back up potentially, but it's definitely slowed down since COVID as far as like people living in their RVs full time a little bit more. Because people were required to go back into the office. Because there's a lot of white collar people that had jobs, were working remotely, traveling the country and now they've been required to go back to the office. That'll come back. I think it is definitely a possibility for mobile home park owners to make that switch to an RV park that would allow you to have an extended stay type living.
0:40:49.1
Ryan: And switching to park models is an interesting thing that we've not done, but that is an interesting concept and I think that could be the future. If affordable housing becomes even larger than it is now of an issue. But yeah, we are definitely seeing it. The only issue that we found with the RV parks is a lot of times they are, unless they're like you said, urban or even suburban, they're typically by a body of water. It leads to flood risk hazards. You can't necessarily have somebody living there full time potentially if there's a flood. Especially park owners are a little bit harder to move than a travel trailer. But yeah, I don't disagree with you. I think that is, that was our whole theory on why we bought a bunch. They're just much more operationally intensive, to own and operate them because if somebody does owe you rent, they can just pull out. And that is a, we've got a... We run background checks on people, we do all the credit, same things we do in the mobile home park space and we take a deposit, but we still have people stiff us a lot of times. Actually our collections are better in our MHs versus our extended stay RV parks, believe it or not.
0:42:03.9
Frank Rolfe: And where do you see interest rates going? Because obviously anyone in the park business today is in some regard betting on interest rates and their direction. We feel strongly that rates are declining. We know we just saw the first Fed cut since Trump won as president, but I see that accelerating in '26 with the removal of Powell and the fact that the general economy, contrary to what people try and claim, doesn't appear to be doing very well. What are your thoughts on interest rates? Where do you see rates going with your big crystal ball down there in South Carolina? What do you... Where do you think rates will be within next year or the year following? Where do you think they'll be?
0:42:45.0
Ryan: I think they're going to continue to drop. I don't think they're going to be Covid levels or even after '08 levels. I just don't think that's sustainable as a country just because the cost of everything has gone up. I think hopefully they fall commercially back around 5, 6%, which is historically about normal. Right now I think we're... I know Fannie's in the sixes depending on where you are. Commercially, we're doing a loan right now. It's low sevens. But yeah, I would hope to see 5, 6. I would hope that they go down. I think they'll go down. Or they could remain flat for the next five to 10 years. I don't see that being out of the realm either. It's a weird time to be in commercial real estate because it's such an interest rate sensitive type product, depending on when or how you buy it. But I think a lot of people that are doing deals right now are plunking a little bit more down so they can be competitive and deal with that.
0:43:46.9
Frank Rolfe: And clearly you're living in Charleston, which is one of our favorite cities. That's where that happens to me all the time with the shutter and the light. I have the same problem constantly.
0:43:58.3
Ryan: I know.
0:44:00.5
Frank Rolfe: Okay, so you're in Charleston, which has some of the best seafood in America and some nice scenery, but also you're in Charleston because Charleston is a, from a legal perspective, it seems to be on the right side of what landlords want as far as rules and regulations. Even though you don't own any parks in Charleston, do you own any in South Carolina itself?
0:44:23.0
Ryan: Not at the moment. We've sold them.
0:44:25.0
Frank Rolfe: Okay, right. But in other words, you're choosing to live and own properties in red states. And whether you're a Democrat, a Republican, a libertarian, whatever the case may be, there's this thing out there called the free rent movement, which is where people want rent to be free. And it's kind of reminds me, as an older person of the free love movement. That was the big thing in the '60s. And the free love movement was not about landlords. That one was about marriage. The younger generation wanted to eliminate the concept of marriage, claiming that marriage was based on stereotypes, it was bad for women, and all this different stuff, and that everyone naturally should never get married and just have free love constantly. And of course, it didn't work. And in the end, the movement died. And all those weirdo hippie guys you see probably in San Francisco, many of those were Haight Ashbury hippies gunning for free love and the movement failed. Now you have the free rent movement, kind of similar. This time they don't want landlords. They don't want to have rent at all. They say no rent at all.
0:45:33.3
Frank Rolfe: Where do you see this politically going? Because it's like the country is literally fracturing. You have your blue states and your red states, and they used to not have hardly any differences, and now the blue state's become more radical. At the same time, I think the red state's become more traditional. It's like we're breaking up the band or something. How do you see all of this playing out? What do you... You can't be a property owner today and not read the media and say, what in the world is going on here? I mean, things are getting really radical. If someone did say, I did a interview with NPR a while back, which is obviously a very liberal news source, and the lady said, why do you have to raise rents? Why can't you lower rents? And I said, ma'am, I don't understand. Why can't you lower rents? I'm a business person. This is a capitalist country. The whole point is you're trying to maximize income. I mean, that's what our entire country is based on. But there's a portion of America that cannot grasp this.
0:46:39.6
Frank Rolfe: They think that rent should be free. How does this end up? Are we going to have free red and blue states or like, Free Love would eventually just, people will say, no, that's stupid, and drop out. What are you... You're obviously way younger than I am. I'm of the late boomer generation. You're clearly millennial at best. I mean, I don't know what generation you are. You're a younger person with a younger person outlook on how all these things will play out. Where do you see this free rent movement thing going? Your generation is the instigator of it. What's happening with that?
0:47:13.6
Ryan: I think the number one that's drawn me to my macroeconomic class back in college, was there's no free lunch. That's the number one lesson you learn. I don't see it... I mean, it could take place in a larger scale in some of these blue states, like you said. I don't think it's going to take a foot in, that's my favorite word, this, I don't even know what it means. I keep saying it.
0:47:45.0
Frank Rolfe: Don't worry. Go on.
0:47:46.2
Ryan: Anyways, I think it's going to die in red states. I don't think it has a place. I don't even know how you would run, I don't even know how the government would run. I mean, the government's not free. They collect Money from income taxes and taxes. And other forms of income. How would you even have free rent? I don't even know how that would work.
0:48:10.1
Frank Rolfe: When people try to throw out the free rent thing to me, and I have to admit, being a high school debater, I like to get in debates with people. At the airport recently, I saw some people that I thought, well, they might be a little woke in their leanings. And so I tried to figure out what their plan was. And the plan was that they would basically set it so that rents can't go up at all. They acknowledge you probably can't erase rents, but they want to freeze them. To which I simply said, well, then why wouldn't I just tear my park down?
0:48:45.8
Ryan: Yeah.
0:48:46.2
Frank Rolfe: They had no answer for that. Yeah. How can you command people to do things unless you can control their ability to leave the room? I mean, it's kind of weird, but in those news review articles I do on a regular basis, the number one article are parks being redeveloped, into uses that have no rent control. I don't know, I find the whole free rent movement a little odd because I can't figure out what the plan is. But it sounds like you being a millennial, you know better, and free rent won't work. And obviously you seem like a good, traditional guy living in one of our favorite cities. Which is a red city. But it's getting strange, is it not? As a park owner or just all real estate, not just park, apartment, you name it. The attitude in some of the blue states becomes beyond annoying, I think, starting with the entire eviction moratorium back during COVID. But even in modern times, it seems to be accelerating. The state of Washington, for example, passed rent control, and now people are saying it's not enough.
0:49:52.5
Frank Rolfe: It was CPI. Now they want to strip CPI. They're now proposing the rent control equals, you can only go up 1% regardless of the rate of inflation. How does it settle in? Just curious as an old guy to a young guy? What's our generational transfer here going to be? How does that work?
0:50:10.4
Ryan: For the longest time I was potentially on the, I could see why the no marriage would be appealing, from being, I could see how that would work. But the free rent, I don't even under, I can't even comprehend it on how that would even work. The question was, I don't even know what the question was but...
0:50:31.8
Frank Rolfe: Well, the question is, how do you see it ending up? How long are we going to be stuck in this rut of all the articles about the evil landlord?
0:50:41.0
Ryan: Yeah.
0:50:41.4
Frank Rolfe: And when does that fad die out?
0:50:45.1
Ryan: Never. There's always the bad guy. I mean, even when the landlord term came about. The king was always the bad guy. Because he had feudals living on his land. There's always a bad guy in everything you do. I don't, And people like that. I mean, look at Hollywood, there's always a bad guy. In pretty much every movie, there's always a bad guy. It's how you construe it personally. I think is like, because being a landlord can be, it can have some negative connotations towards you.
0:51:18.2
Ryan: I mean, there's plenty of negative press. I don't pay attention to it as much as far as personally. I think it's a fad to some degree. Just, I think the no marriage thing and free love in the '60s was a fad. We're at a weird time where we are in the country. You have a lot of that. You have a lot of AI, I don't even know what that moves for the business or even where we are politically. But yeah, I think the free rent, there's no real, I don't think that's going to last. And homelessness, I was just talking about this the other day. Homelessness can be solved. We know it can... On the majority, it could probably be solved. But there are so many nonprofits and people that make money from people being homeless. That's the reason that they're still homeless. I mean, it's just like anything, people are in the business to make money, regardless. Even if they're a nonprofit, they still have to have income in order to deliver that kind of message. And the nonprofit.
0:52:22.8
Ryan: I mean, even churches, they still have to have money to move forward their, or whatever religious facility. Yeah, I think free rent is a fad. I think rent control is here to stay, unfortunately. I don't like it. I can understand the premise of it because there are some people that do take advantage of people. But I don't think it serves well for anybody because that, as a park owner, if I'm only, my business plan is to kick everybody out because I want to raise rent $200 and I have a really bad tenant base and the reason I want to do that, it doesn't allow you to like it hinders your business plan. Why would I want to be a business, if I can't do certain things within certain industries? I understand the need for regulation. I'm not against government regulation. I think there is a need for it in certain instances. But rent control, there has to be a give and take and there isn't any in most circumstances. And you see it, it just drives housing costs up more in those markets that actually have rent control.
0:53:32.1
Frank Rolfe: One thing that drives me crazy about all of the different rent control arguments is that I went to the US Household budgeting calculator, which you can find online. I just made up that I was a family of four with an income of 50 grand and I proceeded to find out that my rent was my fourth highest budgeted cost. It was exceeded by health care, childcare and transportation. You just go out there and do it. How can the article say the person couldn't afford their medicine because of the rent increase instead of the person can't afford their rent because of the medicine increase? That's what drives me crazy is you have three other categories which inflate much higher than mobile home parks ever dreamed of. Health care has been going up at a compounding, it's like 12% a year for 20 years now. And even car prices all the same. Gas price, the same, car repair, the same. I don't know a lot about childcare. It's hard to debate child care because it's so fragmented.
0:54:35.7
Frank Rolfe: But do you not find it a little weird that we're, in other words, it's always they... Even though we're not, we're fourth as far as where the money flows. But we're the one denying people the ability to pay the three categories higher than we are. Seems a little ludicrous, does it not?
0:54:50.1
Ryan: Yeah, I didn't even know that was, I thought we were number one, but I guess not. Which is...
0:54:55.5
Frank Rolfe: We're number four. Yeah.
0:54:55.8
Ryan: Yeah, exactly. Proves what I know. I always thought it was number one, but that just proves what I know.
0:55:00.4
Frank Rolfe: Not anymore. One more futuristic question here. Mobile home parks today look nothing like they did when I got the business back in the '90s. The drive up appeal is far superior. White vinyl fence, new signage. People are trying to landscape better, doing a better job on the common areas. And the insides of the homes are the best they've ever looked. Because when Warren Buffett got in and started getting real designers, suddenly the insides popped. And the homes at the shows, they look just as good as a condominium or stick built.
0:55:36.3
Ryan: Yeah.
0:55:36.7
Frank Rolfe: But the outsides of the homes, those aren't very good.
0:55:41.6
Ryan: And they haven't changed.
0:55:42.8
Frank Rolfe: Do you think there's any way possible 10 or 20 years from now, do you think the parks will look different as far as the product itself? You have all these cool looking homes out there, things by Amazon and Boxabl and 3D printed and every single stinking one looks better than the best looking mobile home currently on the market. Do you think that'll change, does the futuristic Ryan think is possible? Because see that's what, to me that's what holds the industry back. And I was interviewing a guy named Bob Vahsholtz who was a designer in the '60s and he sent me this trove of designs and photos of homes they had developed in the '60s, both single and double wide. And they all look fantastic. And I said how come they never built these? He said, well, because they always went with the cheapest model. They just went the cheapest. Do you think that, well, is that not one missing component? When we're talking higher rents in the future? We're talking, obviously more high caliber customers looking towards us for the stick build experience. Do you think maybe we can achieve a better design? What do you think? Do you ever see designs and say man, that looks better or do you ever think man, I wish the outsides were better.
0:56:52.6
Ryan: No, my brain doesn't work like that. That is my wife, she is an interior designer, architect.
0:56:58.1
Frank Rolfe: What does she say about mobile homes then?
0:57:01.1
Ryan: I have to ask her because the insides I would agree with you have come a long way. The efficiencies have come a long way. I still think it's going to be cheapest product to the cheapest platform and scale. I still just think that's manufacturing 101 in a lower end product as far as dollar value goes. But a lot of them, like you could make the argument that some of these larger builders are, they use the same siding so it, what does it really look like? They kind of look the same, the siding and the windows. And I, yeah, I think there's going to be a better product in the future. At least I hope so as far as looks go. But we'll see. But it all, I think it comes down to cost. That's what they're looking for over design. But it may, some of the tiny homes look really nice, versus, or a park model. Aesthetically those are much more pleasing than some of these mobile homes on the outside. Porches on the front and different in and out spaces.
0:58:00.9
Ryan: I think it is a possibility that that'll happen. I just think it depends on what the cost is for it. And I don't even know what the product would be to help the outside look better. And I think it's really just unfortunately you may be stuck because the size of the mobile home is dictated by the park. Space maybe limitations, right. But yeah, I'm hoping for a better product as always, and more efficient, maybe more in and out spaces, a more aesthetically pleasing design. But I don't know, we'll see.
0:58:36.6
Frank Rolfe: Do you think the industry, can the industry ever get rid of its bad stigma? Do you think? It won't in my lifetime, but will it in your lifetime? Will people ever not think poorly of people who live in mobile home parks? What do you think?
0:58:52.4
Ryan: Potentially, because I think it really depends on if we can develop new communities and really do a better job in development. If you develop a lot more where it's more mainstream to live in a mobile home park or see a mobile home in a day to day basis versus thinking of just something bad, I think it is a possibility. But the reality as far as back falling back to percentages is probably 70%, 80%, that's probably always going to have a negative connotation or negative thought. And then probably the other 20, 30% that it might. It just depends on the next generation and it depends on what happens nationally. If we can get some development, a new nice looking communities, you may have that. Because apartments were 30, 40 years ago, like, you rent still and you're 50 years old, what's wrong with you? That was the old saying. Why not buy a house? And it could have been, you lived in a way better location and better amenities and now apartments are all the rage. Everybody is a renter typically. At least some people are.
1:00:01.9
Frank Rolfe: Ryan, obviously you're a super great guy to be on here a second time. One of the few people we've ever had on here twice. Very solid guy, very nice guy. If someone's watching this and wants to reach out to you and has a question for you on something, would you be kind enough to respond? In other words, if someone responds to this email. Can we forward the question on to you?
1:00:23.4
Ryan: Yeah, of course, like always. I just had one the other day, actually. I think you released my talk from five years ago is on one of the, and people are like, did you... Is that you? And I'm like, yeah, that's me and, yeah.
1:00:39.2
Frank Rolfe: The five year ago you.
1:00:40.6
Ryan: Yes, five year ago me.
1:00:43.6
Frank Rolfe: Looks no different than the current edition. Whatever you're doing, sleeping in formaldehyde or something, it's definitely working for you. Well, Ryan, we appreciate you being here and catching up. Again, you're doing a great job. You're growing very well, doing all the right stuff, and it's just exciting to see young people doing well in mobile home parks, which is basically an old person's biz. I mean, your Sam Zell book in the background, Zell's now dead. But, most of your park owners of the past, all boomers or greatest generation people. It's nice to see people doing well who are decades younger than us boomers, so that's fantastic. And again, if anyone's watching this and says, hey, I have a question for Ryan, well, just respond to the email, say, I got a question. Brandon will happily forward it on to Ryan. Ryan, thanks for taking the time to be here with us. Very enjoyable, very enlightening and thanks everyone. We know you have lots of choices with your time. We're glad you decided to spend an hour with Ryan and I and we will talk to everyone again soon.