Mobile Home Park "Sweet 16" with Tyler & Jason

Tyler and Jason started with nothing but an idea of buying mobile home parks around 4 years ago, attended Boot Camp, and now own 16 mobile home parks in Arkansas and Florida. How did they do it? How did they find them? How did they finance them? What are their lessons learned?

We’ll be answering all those questions and more during this event. It’s a fact-based review of building a portfolio of mobile home parks in a very short period of time. The host is Frank Rolfe, who has his own opinions on this topic as he started with just one mobile home park and, with his partner Dave Reynolds, grew that into one of the ten largest mobile home park portfolios in the U.S. with over 17,000 lots.

So if you find the concept of building a portfolio of alternative investments that are both high-yielding and recession-resistant, then this event is right up your alley. And if you like to hear the real-life stories of investors that took the bold step of investing in “trailer parks” and have done well with it, then you’ll truly enjoy this unique discussion.

Mobile Home Park "Sweet 16" with Tyler & Jason - Transcript

Frank: Welcome to our lecture series event. I'm very pleased to be with you tonight along with Tyler Lekas and Jason Postill, two folks who own some mobile home parks. And I always find it fascinating when we have lecture series, where we interview people who own parks. It's always a fresh perspective. I know people get sick of me talking all the time, so it's always good to have somebody other than myself giving their observations on the industry. So we really appreciate you guys being here. And so let's just kinda jump right into it. I guess we'll have kind of stereo answers. 'Cause I know both of you guys, they don't live in the same state. So you'll have your own perspective. So I guess the first initial question would be, what made you even think about buying a mobile home park? What was the origins of the idea? What was the grain of sand that created the pearl? What happened? What transpired that made you even consider trailer parks as an investment?

Tyler: Jason, you want to take that?

Jason: Go ahead, and I'll hop in, in a second.

Tyler: Okay. Yeah, I was in the financial world. I traded some fixed income on Wall Street. And I was working, I don't know, 120 hours a week and didn't really like my job. And my dad actually ended up sending me an article about mobile home parks. And he said, you know, real estate guys, they're not very good at running numbers. He goes, you could probably run circles around them. And so I started running the cash flows on mobile home parks. I thought it was pretty interesting. I thought the asset classes in general was pretty interesting. So I did some analysis and that was back in 2016. And after two years, I ended up buying a park in Florida. That's kinda all she wrote.

Frank: Okay. And Jason, what was your background initially?

Jason: Yeah, my background, out of college, I always loved real estate, but I played minor league baseball for about five years and didn't jump into real estate until about seven years ago. And I got in on the brokerage side. So once I started and I worked for some larger commercial outfits and once I started just learning the space and trying to transition them to the investment side, I was always on the apartments. And then I started looking at, well, now I'm gonna start investing and have partners investing. So what did I look and study at that I thought was the safest asset class? And then, going through trainings and universities like you've had and learning that, that's what I felt was one of the safer, especially get entry to what I felt was safe, so that was long short of how I gravitated towards it.

Frank: Okay. And you know, I have, or had when I bought my first park, Glenhaven, very negative stigma about the industry. I had been trained by my parents to believe that anyone who lived in a mobile home park was lesser being, that they were dangerous. I had a high school friend that out of college, got a job selling insurance and he went on a sales call in a mobile home park and was murdered, so I couldn't have a more negative stereotype. So that was a big hump for me to get over and buy in a park. In fact, most all of my friends and neighbors said, "Oh my God, you're buying a mobile home park. You're nuts." And they convinced me that I needed to get a concealed handgun license and carry a pistol because it was so darn dangerous. Did you guys also have kind of a stigma holding you back or were you kind of already okay with the industry?

Jason: Yeah. I mean, I had... Again, coming from apartment land, a lot of people like the shiny eight class sexy building, but again, looking at what returns were out there, the safe, just the safest asset class, that's just where I said, you know what, the stigma aside. And then once you really get into it, you see, it's not all like that. I mean, there's gonna be murderers in any asset class, right? But yeah, definitely got that. Tyler?

Tyler: Yeah. Yeah. I mean, it was... I'll never forget, when, before I took off from Portland, Oregon to Titusville, Florida, when I bought my first park down there, I had a... It was one of my friends came up to me and she goes, "why on earth are you going into mobile home parks? Do you wanna get killed? Why don't you buy hotels or restaurants, like something more sexy?" I'm like, "you know, because I think this is like safe and I'm be able to sleep at night. And so there was definitely a stigma behind that and there's been... I think in any commercial, what you realize is being a landlord, you're gonna run into crazy people all the time. Mobile home parks are not the only asset class out there with somebody that's nuts. So, yeah, I definitely had a stigma going into it. But it's... When it turns out, it's just a regular average Americans, who just... Who need an affordable place to live, so that's the... But yeah, definitely coming into the asset class definitely was a stigma. I definitely was a little nervous. I did carry a gun myself on the first property I bought. And so yeah, it's... Yeah. And it's changed since then 'cause we've gotten a little bit bigger and whatnot. So you just realize it's just average people regularly...

Frank: Yeah. Let me ask you just to dispel the myth, have you ever felt in one of your mobile home parks threatened, fearful, any moments where you actually thought, "Oh my God, the stigma is correct," or did you pretty much come to realize the signal was not correct? I mean, my answer would be on my first park, Glenhaven, I pretty quickly realized, I was more in danger of shooting myself in the leg with the gun than I was of needing it, so I pretty rapidly stopped carrying it. I still own it, but I didn't carry it. Did you find also as you got into it that it was not as dangerous as it would appear? Or what did you find the truth to be about the industry?

Tyler: So I'm... Jason does a lot of our systems and I'm a little more on the ground. We're the primary... Our primary focus or asset class, I shouldn't say our asset class, our portfolio is mainly in Little Rock, Arkansas and Little Rock has a little bit higher of a crime rate than the national average. So I have been in some pretty hairy situations out there. Some yeah, significantly hairy situations. So I've found that... But that's not really the mobile home park, that's just kinda the area where we purchased a lot of our parks. We're in a place called Southwest Little Rock and Southwest is kind of notorious for crime, so I don't think it's the parks themselves, but more the area that is surrounded by. So I have found that there's been some... Whatever I could go into the couple of my scary stories, but I don't wanna bore everybody, but it's... Yeah, I've been in some pretty hairy situations.

Frank: Sure. Right, but I mean, the industry or actually HUD had someone do a study, in fact, the University of Chicago years ago, they found that the crime in mobile home parks is no worse than the surrounding residential neighborhood, that's pretty much the case, right? It's not about ... mobile park.

Tyler: Yeah, I mean, it's a hairy area. Yeah, it's a bad area.

Frank: So you guys so far have bought how many parks total?

Tyler: 16 total assets. 703 units.

Frank: Wow! Okay, that's a lot. And you started buying them how long ago?

Jason: 2020.

Tyler: So I got my first one... Oh, you go first, Jason.

Jason: Yeah. I mean, mine, I was been on the brokerage, like I said, seven years, my investing career. And when Tyler and I partnered up was in 20... Well, our first deal closed was in October, 2020. We probably got our teeth kicked in for about a year and a half, two years prior, when we started our hunt for deals. But yeah, the first portfolio... But yeah, Tyler, go ahead. You owned some parks before.

Tyler: Yeah. So I bought my first park down in Titusville, so I... That's when I bought mine, basically after that I was out of capital, so Jason and I got together and found two parks in Little Rock, Arkansas. And since then, basically since 2020, we've bought 15 parks. So really we've done the bulk park buying in the last 24 months. Really.

Frank: I can relate, that's obviously extremely impressive, right? That's a lot of properties. So many properties that my next question will have to break maybe into tranches as opposed to park by park. But of all the parks you bought, could you just run down real quick on each one where it came from. In other words, was it a broker cold call, direct mail, online, just roughly how you did that? And then if it was seller carry, bank finance financing, loan assumption, just for a macro flavor. Let's go and go with that.

Tyler: Jason you wanna take that?

Jason: Tyler, you wanna take the first two and I'll hop in with the second five. We'll just...

Tyler: Sure. Yeah. So, we'll just kinda break them up into different categories here. So the first two properties we bought, actually, if you look behind me here, you can see that there's two, the two maps of the first two properties we bought. I got them hanging on my wall. I'm not really into decor, but I got maps of mobile home parks, so there you go. So we bought... Basically, it was a broker that I knew at Marcus & Millichap. We went direct to... Well, he went direct to the seller. It was 68 total units. We got seller financing, so we basically put 50% down. It was a 4% IO for seven years. On those two parks, we bought those at about 65% occupied $200 lot rent. So that's where the first two came from. Does that answer all your questions, Frank? Is that what you were?

Frank: Well, yeah. I mean, more or less, and then tell me on the parks, what were the initial challenges? Were these heavy turnaround parks? Are these parks that are stabilized occupancy with rent boosting? What kind of properties were you buying?

Tyler: Heavy, heavy turns.

Frank: Heavy turnarounds.

Tyler: Yeah. So yeah. So we evicted probably seven or eight people out of there. Roads, you couldn't drive an M1 Abram tank through the property 'cause the potholes were so big. We've ended up paving the roads there. We've dropped in 9... No, 11 new homes over there from the cash program. And it was a very rough park. I mean, tenants were rough, the whole nine yards. And we basically branched out, and Jason can go more into that, but we basically branched out from those two parks. We started calling all the other parks and the kinda surrounding area. But Jason, do you wanna go into that?

Jason: That led really into the next five parks. We did the first two deals and we leveraged broker relations, and that one was still even off market. But we do a lot of direct owner, I mean, coming again from the brokerage side, we're now getting our acquisition team on where the next five deals, it was a portfolio with Tyler and myself, and then we did have two other partners. But it was two separate loans for the five parks and those were sourced. It was funny 'cause Tyler says he jokes, he has the superpower of Google Maps, right?

Jason: So he'll just send a random property that maybe doesn't come up on our software and I'll research it and I'll just cold call the owner. And that's ended up what happening on three of those five was just a direct cold call. Again, I'm in Florida, Tyler's in Little Rock, so it worked out great 'cause I was just basically setting the meeting and Tyler would meet the owner face to face 'cause that's really important, I'm sure across the nation, right, or anywhere. But in Arkansas, I mean, these good old boys, they want that face time, that firm shake and get in front of them. So those five were done that way. Three, again, were just cold calls. And then the other two, I believe, Tyler, there were some city officials that saw what we were doing on the two first parks.

Jason: And they said, "wow! You guys are doing a really nice job. You should talk to this slumlord, try to get their park." And I believe Tyler, that was right, that was one of the leads we got was still an off-market acquisition. And again, those were two local banks that were we had decent debt on about four and a quarter, about a 76 LTV, I believe that had some construction. Those are also some pretty heavy lifts on those five parks that totaled 117 units, plus a little commercial building that's doubles as our office. But yeah, I mean, that one, I think, Tyler, that was 50% went vacant, when we took over. And now it's our best performer. But out of those 117, one park was full, right? 33 units. And then we wanted to convert them back to the tenant owned homes, 'cause it was all park owned homes. And we're converting those and it went vacant. So that was a big lift, but yeah, same new roads, similar to the first two. But yeah, that was the second five.

Frank: Okay, so and you got a credit facility through 21st, it sounds like as far as filling lots. How has that worked with the new higher home prices and stuff? Are you able to find people, who qualify still?

Tyler: So yeah, we don't... We actually have to do the commercial line. We don't sell them and we don't allow, we're not financing the skirting steps utility hookups as well as the home price and the delivery through 21st. We're actually just doing the commercial line, so we're paying all for the Skirting Steps utility hookups all in pocket. Because it allows us, we have so many Hispanics in Little Rock, that they've got tins and income that maybe is not verifiable through 21st. So we found that allows us to have a little more control about who the tenants that we're approving. But things in this environment have kind of underwhelmed our expectations. We thought we were going to get kind of $1000 a month, $2000 down, kind of pay off the home. But really, we're getting right now, the realistic we've...

Tyler: The reality of the situation is, we're really getting about $850 a month and about $1000 down. And so we've had to bump our term out almost double just to get to kind of break even on those houses. So it's been significantly more difficult than we anticipated. And Frank, you and I, and I know you talk to probably 100 people a day, so, but you and I were talking a little bit about kind of your lowest homes that sell in an area like the crack homes or the $20,000 houses or the $80,000 houses that you guys are saying in Nebraska that you guys were looking at, that were kind of the barometer of whether you can sell a house or not.

Tyler: And the problem with Little Rock is you can go buy a, I mean, it's not a good house, and it's in a really bad area. But you can go buy a house today on Zillow for 30,000 bucks, a 2-1. So we're directly, almost directly competing with those home prices. And obviously, you don't have to do any rehab to these mobile homes, you get, it's move in ready versus that house would be, would take $50,000 worth of work. But it's been significantly more difficult. The capital outlay from getting a used home in is significantly less. That's the reason we like the new homes and the new homes show better, they look better, they bring up the aesthetics, they bring in a nicer clientele. They do a whole variety of things, I think, to parks that are over and above just the return that you're gonna get, right? I think that there is a lot of value add that new homes bring to especially those types of parks that we own, that allows the tenants to see, wow, we need to step our game up. We can't throw our Corona bottles in our yard anymore. We got to pick up our dog poop. I mean, all that stuff that the tenants have seemed to have a hard time understanding.

Frank: You guys are in, I know your first park was in Florida, Tyler and then we're talking Little Rock. What other, besides Arkansas and Florida, are you in any other states or just those two? How many states are you in?

Tyler: No, we're just in those two states.

Frank: The two states. Okay. And being in those two states, obviously, they're very different, right? Florida is... I'm sure the Florida, your customers, your regulations, everything is very much different than it would be in Arkansas. What are some of the lessons learned bend or why do you like those two states? I know those are states that you all live in. So obviously, that's a huge element of your footprint. Are there other attributes that you like about Florida and Arkansas that makes you be there as opposed to other states?

Jason: Yeah, I mean, Florida, the migration, I mean, a lot of people are moving here. But with the deals that we have found and right now, we haven't currently been looking in Florida aggressively, just the cap rates have been so compressed and still continued. I know there's more inventory come, so things are definitely changing. But Arkansas is just, yeah, once we land those two deals, it kinda caught fire and I know Tyler always talk about the low hanging fruit, but that's just been, we have other markets we're looking at, but yeah, Arkansas has been great just because of the demand with the affordable housing and just getting the economies of scale that we're now building, and Tyler managing these contractors on sites. We've built a pretty good footprint there, so Arkansas, there's been more yield than the Florida. But yeah, I don't wanna say we put a pause on Florida, but it's been tough.

Frank: It's a tough thing, right? I mean, in 25 years, we've only ever owned one park in Florida because often we found in parks in Florida, you're competing against people, who want to sell it for the development value and not the park value. It's very frustrating, so people will say, here's my park and my number of lots, my lot rent, you run some quick numbers, you say, okay, well at an aggressive cap rate, the value would be X and they're like, oh no, I need three times more than that because you can just tear the park down and put in a building.

Jason: Exactly. Yeah.

Frank: And we're always like, we're not real estate speculators, yeah, we're mobile home park people, but that's always been a Florida issue. Arkansas, however, because it's not really a big development hub, I think the parks are probably priced more like parks like they are in the rest of the Midwest. So are there any... When you're doing these heavy turnarounds, are there any things you just won't do? 'cause we've also done heavy turnarounds for 25 years now and we'll take on almost anything if the price is right and the location is right. And we've had some really, really tough ones. We've had some discouraging ones that ultimately worked out fine, but now we had cases, where virtually nobody was paying. We knew that on the front end, we bought it cheap and the deadbeatness of the clientele exceeded all of our expectations, right?

Frank: One that I think we had a hundred people and we thought, well, we do no pay, no stay. We'll probably eradicate 20 and I think we eradicated more like 40 or 50, so almost half of the entire population ran out of the building, when we said, oh yeah, you got to pay every month, which was heresy because the former owner had never said that. They were like, you can live here forever. You never have to pay. So we had a huge adjustment, but there's still some things we don't buy. Like we traditionally, we won't buy a lagoon and we won't buy a park, obviously if you're trying to do heavy fill, where the city says, no, you can't put homes back on the lots. But what are some of the things you like that kill the deal? What are your turnaround deal killers? What's your short list of things you're like, "nah, I think I'll pass on this deal."

Jason: Tyler, you wanna take that?

Tyler: Oh, yeah. So, I mean, we've run into a couple of parks now that have been like zero cashflow in lots, but it'll be like, hey, like you got, eight acres here. We'll let you buy it for 80,000 bucks and it's got one house on it and there's trees all throughout the rest of it. For that type of deal for us, at least where we're at with our current capital situation, we wanna raise equity money. We're paying 8% preferred returns on that money and to get homes in on pads and then fill those homes up. And then with the skirting and the steps, the utility hookups and all the capital outlay, we have trouble stomaching that 'cause we just... There's no cashflow on the upfront, it's almost like a development deal. And then, you and I both know, it's not all, it's all not all sunshine and rainbows, when you get into those sewer lines, they're usually all broken, so then you got to go dig them all up and the water lines are all broken.

Tyler: And then you got to get the utility company out. So those types of like zero cashflow deals, we've just taken a pass on probably a year ago. We probably would have tried to finagle it, but we've gotten a little bit bigger since then. And it's just... It's so much time to get homes on pads. I mean, I'm sure as you know, it's just... It's ridiculous. So lagoons, we stay away from. Packaged plants, we normally stay away from. A wastewater treatment plants, we normally stay away from. Just because, again, to say to our investors, we got to put 300,000 or 500,000 or a million dollars in escrow to make this deal work. Well, they're gonna say, well, subtract a million dollars from the price. And then the seller says, well, we're not gonna do that. So we usually just stay away from those deals 'cause it's again, if we sign on a PG from a bank and thing goes belly up, guess what? We're on the hook for it, our investors aren't. So we'll just stay away from those deals. If we get a little bit bigger and we find out the right deal and we can put some money aside to go make sure that we can go fix that.

Tyler: Maybe that changes, but that's definitely a deal killer for us as well. Small metros, we stay away from 'cause we just... There's not the demand there to kinda fill those parks up and very low median home prices. There's some markets in Arkansas where you go, the median home price is like $45,000, so we just stay away from those markets as well. But I think that's it. Jason, anything you want to expand on there?

Jason: No, I think you nailed it. I think, yeah, the last couple of years, the aggressive infill was it's... Yeah, I mean, it's the value added piece, right? So we definitely like having that value added piece, but to a certain extent, we've realized that, excuse me, coming into absolutely zero cash flow and we still see those deals. We still are working through some, it just has to be an insane deal. But no, I think that now, yeah, wastewater treatment plants and lagoons, those are tough because we see just even having city utilities, there's always plumbing issues or something that arises just having a clean, perfect direct build property. So yeah, I think that covered it, Ty.

Frank: All right. And obviously you're attracted to the heavy lift turnarounds because if you do them right, they can have among the highest rates of return, right? I mean, that's why everyone's attracted to them. And clearly the parks that are perfect, there's no money in them. They're easy because they're done, they're full and they look pretty and you got a nice entry and 100% collections, but there's typically no money, when you look at what they're priced at. There's no way you can really make any money with that. Then you got this in between item, which is the park that maybe isn't half empty, but maybe 20% empty, maybe not horrible condition, not perfect somewhere in the middle. Have you seen yourself starting to transition a little like many people get in? My first park was my worst park ever. Dave's first park was probably his roughest park ever. Do you find yourself just naturally being attracted to a little less rough today than in the early days? I mean, most people to get their foot in the door, they do the really, really rough, nasty stuff, but then they long for the easier, prettier, but still profitable addition, right? Do you find yourself doing that? Or are you segwaying out of the roughest of the rough turnarounds into more of the average turnaround mode? Or are you still just totally psyched on doing this, the roughest of the rough?

Jason: Yeah, I mean, we've had... And we can touch, if you wanna go through the rest of our deal flow here, the last two properties we've acquired have been a cleaner, more around cleaner, better area, a little more stabilized. And yes, we're absolutely seeing that's a much less management intense and the problems and everything just all together. I mean, there's still challenges with everything, but yeah, I mean, we're definitely not afraid to get dirty with the rougher parks, but just these last couple have definitely seen like it's, we can scale a little quicker. The management sides a lot more efficient and cleaner. So yeah, we've definitely taken a better look at those deals. Tyler.

Tyler: Yeah, I think we've always been looking for those deals. Our problem was in 2020 and 2021, what we were finding is the only, the lowest hanging fruit with kinda the best returns, even coming into these properties. One of our turnarounds, probably one of our best deal stories ever is we bought a 33 space property, 24 were occupied, lot rents for $90 a month. This was in Little Rock, in the city limits of Little Rock, which I didn't even know that existed. And we bought it for $375,000. So, it was... We had to do, we had to build our own rent roll and we had to do some other stuff because the owner had nothing. And so I had to go door-to-door and whatever, take everybody's name down and find out where everybody lived, get them to sign a lease, all that stuff. So, and we ended up refining that deal for $879,000, five months later. So, but we would... We've always been looking for those, Hey, look, the parks run terribly. We just wanna buy it, fix the operations, raise rents and move on or not move on, but continue to kinda operate the property.

Tyler: But we... I mean, those deals were just... For what we found out there, I mean, we couldn't find anything like that, especially in Arkansas. What you find is a lot of the properties in Arkansas have just been, the reason we collected so many so fast is because nobody else was calling the Arkansas market. Also, the owners in Arkansas didn't ever take care of their parks either. I mean, so at least in the state of Arkansas, but we are looking for those deals actively and we have hired a couple more people now that we have more cashflow coming in the door, a bigger direct mail campaign, etc. So we are actively looking for those deals and if we could go buy 50 of those deals, we could do that in a heartbeat. The heavy stuff, every turnarounds are, especially when you got 10 of them and you're trying to put homes on and the tenants are still a problem and you're still trying to boot out somebody that's a hooker or a meth dealer or whatever, it gets old 'cause you got, instead of just having two problems at a property, you got 40 problems 'cause you got to... There are 10 parks. So long and short of it. Yes, we would love to buy those deals. Absolutely.

Frank: And I know other operators who have parks in Little Rock and everyone has always done very well in Little Rock, right? And people don't realize that I live in Missouri, southeastern Missouri. So I'm only, well, three hours roughly from Arkansas. And I've spent a lot of time driving through Arkansas. I don't own any properties there, but I've been through it a million times. When you look at Little Rock on paper, it is a economy that's based on a lot of great stuff, right? I mean, it's the capital, so you have big government spending. It's also seemingly the healthcare hub of the state, so you have a lot of healthcare spending. And then it's also, you've got the whole educational part of the public school system, they've got colleges and other items there. So I know the big item, which you've already identified in Arkansas is just about buying parks and taking those 90 and 100 and $120 rents and pushing them on up to reality. And the sad part is that... I think you probably get criticized as we do in almost everywhere we go that we're evil for taking rents that are just ridiculous and raising them up, right?

Frank: And just recently I got a call from another media group. They wanted to, they're doing a story that mobile home park owners have no ethics because we're an ethical industry for raising rents. And I told the writer of the article that he was a complete idiot that you can't... That is such a worn out woke message that, he's just wasting everyone's time. No one is gonna buy off. If you have, let's just look at the park you have in Arkansas. If you have $100 rent or $90 rent and the surrounding homes and apartments are what a thousand a month, probably somewhere in that range.

Tyler: Yeah, most of that, yeah.

Frank: So how do you make logical sense of $100 rent? How can you... How would any business at $100 rent make it? And then today, what is your rent in that park with your increase?

Tyler: Yeah. And it went to 250 when we did the bump and people were like, we haven't had rent raise in nine years. We're like, no kidding. This is still well below market 250. And then yeah, we're at 300 now, which is still below. And they just, they can't comprehend like, okay, rent stays there for 90.

Frank: But at 300 you're insanely cheap, right? You're crazy, stupid...

Tyler: Stupid cheap.

Frank: Blackout cheap, right? You're the hamburger joint, where the delicious giant cheeseburger with bacon is like 23 cents and you dare raise it to a dollar, which is crazy cheap and people still are yelling at you. You jerk, you jack that burger up four times and you're like, I'm still the cheapest burger by 500%. So, I mean, where do you see the rents? Little Rock, because it is kinda behind the time, even when you go through it as a tourist. And I would just there recently as a tourist, you can just tell like the modern world hasn't totally caught on with it completely yet. But if you look at other markets like Little Rock, the rents would typically be 500 to 600. I mean, pick any other state capital and just look at the lot rents. And I don't mean you don't have to go with Austin, but take any other, take Iowa, take Kansas, take Missouri for that matter. 300 rent is a joke.

Frank: It's ridiculous. That's the US average rent, which would include such notable states as Mississippi and Louisiana and areas where the rents are $75 a month in bountiful quantities, right? Where do you in your modeling, I mean, I know you can charge in Little Rock easily 500 and still be the cheapest housing in the world. Where do you think Little Rock rents ultimately will go or where should they be at this point? Just based on other housing costs.

Tyler: Jason, do you want to take that or do you want me...

Jason: Yeah, go ahead. Yeah.

Tyler: So we actually just had a... Maybe I won't say their name on here, but we had a big institutional group come basically make the largest price per pad acquisition in Little Rock Hill, the Little Rock Metro history. They bought 386 pads for $20 million. And we were actually looking at that property for 9 million back in 2020, if you can believe that. And lot rents in that property were $225 a month and they just pushed them to $425. And so from our basic research, they're top of the market right now. There's another group called, I don't think, I don't think they care, but they're called Rivercrest Private Equity Group. They own Knollwood Mobile Home Park, which is a 660 space park and their lot rent's at 415. So, and I know, I actually listened to your podcast, Frank, about why wouldn't you be the leader in a space. And as much as I would love to go at 450, kind of above those guys, we're a little scared. So, and I'm not gonna sugarcoat that for anybody. So what we'll probably do is we'll probably bump rents somewhere 50 to $75 kind of behind them.

Tyler: But I don't see why a $500 lot rent, I don't see why that's not around the corner in two to three years. I mean, they're gonna continue, I mean, if you're buying 386 spaces for $20 million, you better be, and it's only 66% occupied that park. I mean, I'm doing the math on that. That's got to be well over 500 in a couple of years or you're not gonna get the return to your investors. I mean, it's just not gonna happen. So we'll just follow behind them and let them lead the way.

Frank: Don't you guys find it interesting and just kind of weird that we're the only industry in America that is so obsessed with fear and anguish over raising prices to market levels? Have you ever seen such a silly group of people that, I mean, every other product in America and Tyler, you sold things like on Wall Street-ish kind of stuff. Can you imagine any public company that has to apologize and be ashamed for raising market levels? Can you imagine such a thing? Can you imagine Pepsi saying, we are just absolutely humiliated that we have to raise our prices a little bit. I mean, that's what capitalism is built on, correct? Is trying to do, and in our industry, particularly when the prices are so easy to handle, right? I mean, people complain about the Pharma Bro guy that took the... Whatever the shot was, he took it up 5000%. I mean, that was kind of extreme. But at the same time, our industry, our rate increases are very supportable by well-documented single family and apartment rents. And we are a joke by comparison. So even when you're paying $425 from the institutional player, I'm thinking, well, yeah, but over in Denver, the rents are 900 and in other markets they're over a thousand.

Frank: And in Florida, a thousand dollar rent is not considered to be obscene. In fact, there's rents in Florida go up into the thousands over 2000. So it's just kind of strange that here we are talking, we're all just terrified when our rates are so pitifully, pathetically low. And oh my God, it's just horrifying that we might raise them. So now Arkansas it's a state that most people don't know. You have Little Rock. You've also got Fayetteville, which is a really good market, right? You have Bentonville, which I know had its best days probably in a little while in the past with Walmart, although it's still a strong market. Do you see yourself venturing throughout the state of Arkansas over time or will you change into a different state before you will venture out of your home turf of Little Rock? Or how do you view the state? What are your thoughts on the state of Arkansas in general, like other markets like Hot Springs and there's crazy poverty written ones, right? Also even surrounding Little Rock. What are just your generic thoughts on Arkansas?

Jason: Yeah, I mean, we have actually expanded into some of it. You mentioned Hot Springs and North Fayetteville, that metro up there, we have one, Mountain Home. So we have three properties up in the northwest part. And those have been great markets and nice product and definitely different than Little Rock. Little Rock just has that demand, that 700,000 plus populate in that metro. But yeah, we are over the map. I mean, on those 16 properties or 15 properties in Arkansas, all are through the, over the map. But yeah, we definitely, yeah, Fayetteville is a pretty competitive market there and they're at higher rents. I mean, I think their average is just over 500 in that market as well. So yeah, we're definitely pursuing other markets and still trying to grow out around our Little Rock portfolio and others.

Frank: Right. So your business model basically is you're buying broken parks and sleepy areas, bringing them back to life, bringing them back to modern times. Is that pretty much the model? The same one that we do, same that really any smart investor in the industry does. It's a pretty simple model. But even despite it being simple, like what have some of your key lessons learned been, since you started buying them? In other words, what are some of the things, either good or bad, like things that seemingly, well, I'll give you an example. My first park, Glenhaven, one huge lesson learned was the sheer demand to live in a trailer park because here I was taught by my parents, oh no, trailer parks, scum of the earth, worst thing in the world. No one would ever want to live there. I buy Glenhaven, never did a test ad. I don't even know what test ad was back then. Running out of the Dallas Morning News classified section, mobile homes available, phone rings so much, I have to just stop answering it. It's impossible. Literally it rings. I answer as I'm on the phone. I get more calls coming in 24 hours a day.

Frank: It was the craziest thing because I came out of an industry where demand was very mild and I had to chase after billboard advertisers and make 100 cold calls for every sale just to get my foot in the door. And now people were chasing after me. So like that was one of my early lessons learned. What are some of your lessons learned about the reality of the business as opposed to what you didn't know prior to getting into it?

Tyler: Jason, you want me to take that?

Jason: Yeah, go ahead.

Tyler: Okay. Yeah, I think just one of my, I guess, and Jason and I were talking about this a little bit before the call, but one of my biggest lessons learned, and this is not a negative thing, just want to preface this by saying that, is a lot of people say, oh, you can spend an hour a week managing your parks or two hours a week or four hours a week. I remember Frank, you had a guy on that used to play major league baseball. I think you had him on a couple of years ago, three, four years ago. And he's like, yeah, I spent about four hours managing my park. What I found is it's a full-time job and it's even more than a full-time job. And I can't tell you exactly how much time we spend managing and how much time we've spent on acquisitions, right? 'Cause we manage a whole bunch of VAs and so it's a full-time, it's a business. It's just like you guys. But the management side is exceptionally difficult. And the tenants, and it's 90% of the tenants are awesome.

Tyler: They just want to get along and they just want to go to work every day and be fine. But those 10% of those tenants, you'll drive you to drink. So it's an exceptionally tough business and you really have to find, finding the right managers as well is a whole 'nother piece. 'Cause those guys, they burn out so quickly. They normally have to be a little tough. And what we found is the toughness and the computer savviness doesn't usually go together. And so in our Little Rock property specifically, we're struggling with that a little bit right now. It's management side. And again, the management side is so important because if the management side starts going away, the whole business goes away. 'Cause your collections go away, the property condition goes away. You start getting bad actors in there. It's a very, very important side. It's something that we've... I won't sugarcoat it, we've to continue to struggle with trying to build systems in to where we can grow this thing. 'Cause we want to get to 10,000 units by 2028. Is making sure everybody's doing their job and stuff is just, it's difficult and managing the bad tenants is also very difficult. So that's...

Frank: Actually, you support the baseball guy, his four hour a week, but most people are four hour a week, they only have one park. Right? So you got...

Tyler: Oh, I see. I see.

Frank: So you got like 16 you'd be like 64 hours a week because of the magnitude here, to be fair. The other thing is you do heavy turnaround parks, which heavy turnarounds have always been the management beast because you have to oversee not only your residents are paying rent, but also all these renovations, bringing in the homes. It's a man eating thing. Right? And what software are you guys using?

Jason: Rent Manager. Rent Manager.

Frank: Rent Manger. As are we, which we think is by far the best. And then what do you have as far as... How are you structured as far as the staff? You obviously have a manager, I assume at every park, unless you share a manager among maybe some smaller parks that are close to each other, but how built out are you on the level above that? Do you have any district managers or regional sales people? Are you pretty much just one man band and it's, as I did in the early days on my own? Is that what you're...

Jason: Yeah. I mean, embarrassingly enough. Yeah. It's been, yeah. It's yeah. We were talking before this on, we are scaling quick and that's where now, yeah. We wanted to drill that point home for your listeners, right? That it's not a, Oh, just own the dirt and collect on it. And some passive, it's not a passive investment at all whatsoever, unless you're wanting to be an LP. And that's great. That's a great thing, if that's what you want to do. We like operating, we like the asset management, probably building those. But yeah, we didn't come into growing this portfolio with a proven system and all the processes in place and everything structured to hit the ground running. We've been bootstrapping this thing from just even doing the own logos ground up. So we have about eight, seven onsite managers, one of which manages about five, six parks. But no, we're just now at that stage where we're trying to restructure, where should our DM be, how should we allocate having maybe a full-time maintenance guy now at the scale. And we're just now getting acquisitions team because it's been just, yeah, I'll call Tyler Meets and then, Oh, now we're managing the manager. It's been a lot to try to build that, but we're right in that stage that we're getting those in, ready to go with the systems.

Frank: In all fairness, you guys are like a rocket ship, right? You're like the... You're the SpaceX of Mobile Home Parks because you... How many lots do you guys have now?

Tyler: 703.

Frank: 703. So you've gone from zero to 703, right? So you're well on your way to 1000 and it values today, 1000 lots is going to be something that's worth probably $50 million in that range. If not higher, depends on where you are. We have parks that are now at 100,000 a pad. So it's a huge business. People watching this, you're saying, well, I don't know anything about parks or values. I mean, let me put it in people's perspective, a McDonald's franchise, those things typically sell for a few million dollars. A successful McDonald's is a two, maybe $3 million asset. And people think that's a huge deal, right? If you own a McDonald's like here in my small town, the guy that owns a McDonald's, it's a total stud because everywhere you go, that McDonald's man, that is everyone knows McDonald's and the values and the revenues and all of that kind of stuff. And yet your portfolio, even at 700 lots is probably worth 10 to 15 McDonald's, which is clearly a whole lot going on. Right?

Frank: I mean, the typical McDonald's franchisee has normally average is one unit, which they kind of self manage and they have a very complicated management structure of a manager and assistant managers and all these shift managers and all this junk. And so when you're at the size you're already at, that's a big business. I mean, that's probably officing out of wherever you're officing out, you're probably one of the biggest businesses in the, where you're officing at. And yet no one has any idea of that. When I talk to people about Mobile Home Parks, half of the things I'm talking about, I'm a mobile home dealer. You probably get that a lot, right? Talking to people, what do you do? Oh, I'm in the mobile home... Yeah. I got this aunt who needs a double wide for her farm. Can you give my brother a lot of deal? Like, dude, I don't even deal in that stuff. But, yeah, it is clearly Mobile Home Parks. To what kind of scale you're talking, it is definitely takes a level of sophistication, but at the same time, I don't know of any other industry where you can raise the rents so quickly and aggressively, right?

Frank: And that's what is attracting all the private equity groups and people. It's not that they're fascinated with the theory of Mobile Home Parks or the way they look. It's just all about whoever thought there was a product that was selling their product for nothing. And yet the customer is willing to pay far more for it. Not because the park owners are being mean, but simply because that's the actual market value. It'd be like a stock on Wall Street that based on all values of PE and everything else should be at $10 a share and it's at 80 cents. I mean someone would obviously buy that stock at a heartbeat saying it's massively undervalued. That's kind of like, I kind of think that's kind of where we're at. Let me ask you this, since you guys have been out doing this now for half a decade, obviously extremely immersed in it and you've seen the product up close and personal at its rudest crudest form and these turnarounds and then bringing it back live. Where do you see the product going? Like, are you happy with the product, with the mobile home product itself?

Frank: Where do you see the industry being 10 or 20 years from now? Are we still going to be Mobile Homes looking the same? Like, will the parks look the same? Will the rent still be this stupid cheap? Like, where do you see this whole crazy industry going in the decades ahead?

Tyler: Jason, you want to take that?

Jason: Yeah, and you can jump in, but I think it's going to be strong. I mean, we're the raw form of affordable housing, right? So there's all sorts of new little tiny homes coming out, all sorts of little affordable houses, but for a developer to build, I think we're still gonna be one of the top performing assets for, end of time, I don't know, it's hard to tell, but yeah, I think for the foreseeable future, yeah, rents, we're still so below market and those are gonna continue to rise and we're gonna keep in a strong asset class and we're gonna keep growing our portfolio in it for sure. So Tyler, you want to hop in there?

Tyler: Yeah, I think the consolidation, I was actually talking to Dave about this at that, the Boulder, Colorado event and I think the consolidation is gonna be insane in the next five years. And so what I think is gonna happen and whatever, I'm no macro level economist, I'm just a guy who owns metal boxes, but this is just my opinion. I think there's gonna be a lot of consolidation, rents are gonna continue to move higher and the institution, it's gonna get tougher and tougher to buy good deals. And I think there's gonna be more institutions that come into this game that make acquisitions even more difficult. Not just the current players, not the Carlisle groups and the Blackstones, but all the small guys, the regional guys below them. The wire house down the street is gonna get into this with his... He'll be able to allocate a piece of his portfolio, even he's a financial advisor into a liquid assets and he'll probably start going into Mobile Home Parks. You know what I mean? So all those little guys so, and consolidation will be pretty insane and rents will start moving up pretty quickly.

Tyler: I also think the product type, what I'm hoping for in the next 10 or 15 years, I remember listening to a podcast of yours, Frank as well. And what I'm hoping for is they don't make us the whole hitch can come off so it just can sit on the ground of the actual product itself. I know you said there was a park in Illinois, I believe you said that actually they don't see the...

Frank: Yeah, we own that park. It's called a ground set where you actually, the home is still on the trailer, but you deliberately dig down so it sits lower than the ground. So it looks like it's flush with the earth, but it's actually not.

Tyler: Yeah. And I wish we could take it off the hitch. So we didn't have to skirt the whole thing and it looked like this... It doesn't look very good. It doesn't look like a single family house. You can tell.

Frank: Yes. Yeah. And I didn't know until recently that actually HUD did that deliberately to screw over the Mobile Home Park industry. That when they took over back in '76, it was floated the idea that the homes be removed upon delivery, but someone in the government was adamant, no, no, you can't take them off the trailers that bring them out. And obviously the reason being they wanted to have a disadvantage to benefit the single family builders. It was, apparently it was just a completely corrupt deal. They made a choice, some bureaucrat made a choice, probably had a friend who built custom homes or was a framer or something. And they said, oh no, you got to keep the Mobile Home Park people in the dumpster on the look. So let's just do that. Obviously it makes no sense because if you look at the way the Mobile Homes are built, if you take the wheels and axles off, you can take the frame down. It could still be on the frame. They could be significantly lower, right?

Frank: I mean, the only benefit you have over being up in the areas and some areas are low line with flooding, you would have the same issues as you have with single family homes as far as flooding. Because right now we're on stilts. We're a couple of feet off the ground. But yeah, I agree with you. It's always annoying that we have to be up in the air so everyone can spot a Mobile Home from miles away. We're the only thing in the world stuck up in the air with a deck. Where do you guys think lot rents... Where do you think lot rents in a perfect world assuming there was no public shaming by the media, no ridiculous pushback from people who try and criticize the industry, but just based on sheer economics in a vacuum with no one around, where do you think lot rents could be or should be at this moment? Obviously the US average is 280. That's ridiculous. Do you think rents nationwide should be double that? Or where do you think, like when the institutions get done, consolidate in the industry, which will certainly occur.

Frank: It's occurred at every other real estate sector other than Mobile Home Parks in the United States. And so now you have people who they're much more focused on the value and what the rents can be more than Mom-and-Pops ever were. Where do you think those would land? Where do you think rents could or should be in, place like Little Rock, Arkansas still be a tremendous value. I mean, I see Little Rock, three bedroom rents probably up over 1000. Single family homes are probably up 150, 180. So where should rents be, do you think? Where will they be 10, 20 years from now in relation to other things? What is the future trajectory of rents?

Jason: Yeah. Like Tyler mentioned earlier, within couple of years, we feel four to 500 that we could easily be there. We're still so far below the apartment rents. And even when we're there, it's a one bedroom opposed to someone having their full size home on a Mobile Home. Right. So I think in 10 years, it's just as apartments still continue to climb. Like you mentioned, Frank, you're in Florida, 800 to 1000 for... I don't see how that doesn't spread out into the rest of the Southeast, the effect where we're at in Arkansas. So I think we'll be close in 10, 20 years. That's the question. I don't see how we can at least be right there. Tyler, what are your thoughts on that?

Tyler: Yeah, I think relatively, I think this may be a pretty bold claim, but I think relatively I think Mobile Home Parks and apartment rents in the next 10 or 15 years will almost be equivalent for a three bedroom. And the reason I think that is because with consolidation, even what I found just driving around here because we have some of those kind of those big institutions coming in and even like smaller regional players coming in. What you find is that, oh, that 50 space park, that 70 spaces, oh, it's got 10 brand new homes in it. Oh, wow, that's interesting. Okay. And so and those professional operators will fill the entire park up with new homes in that same timeframe. And everybody knows here that when you see a park that has all brand new homes or relatively brand new homes, not those 1970s with the big lip on the front and they've got a... They're 10 wide by 40 long, you know what I mean? Those don't look very good. Doesn't matter how well you paint them and everything. So I think that the new operators coming into the space will actually turn parks completely, almost completely over and get all new inventory in there.

Tyler: And with that will come this whole different tenant base that's like, wow, Mobile Home Parks are not dangerous anymore. Oh, wow, this looks like a really good park. Oh, wow, there's a whole security fence out front of here. Oh, there's speed signs and there's a professional management team and there's... I can actually get ahold of somebody on the phone and somebody is fixing my sewer leaks. And so what I think is, is that people will find that our asset class is actually more attractive and it will actually drop the stigma because of the consolidation. And so like if apartment rents in an area, three bedroom, one bath, three bedroom, two bath apartment is, we'll say $2500 in Little Rock in 15 years. I think the Mobile Home lot rent will also be $2500. But I could be wrong on that. It's a bold statement, but I think our asset class is actually more attractive than an apartment. I'm sitting in an apartment right now and I'm paying $1340 a month for a one bedroom, one bath. I think a Mobile Home Park in the right area is a significantly more attractive asset than this place I'm sitting in right now.

Frank: Right. There's a guy named Bob Vasold who, he's written about the industry for a while and no one ever knew who he was. We came across his writings and actually bought the rights to his book. I have been publishing some of it because it's so well written. I mean, he's like a Yale economist type writer of this stuff. And he always opines that, one problem with the industry is we need more natural selection. We need the really bad parks to die because they're what brings down the industry. And it's somewhat true. When I talk to people about Mobile Home Parks, they always use as the example to anything, even if a media group calls that one horrible dirt road trailer park down by the river where there's a burned up car in every yard and a hound dog and the whole thing. So I agree with you. Consolidation is great because the consolidation I think will ultimately allow for the natural selection because the new class of buyer in the decades ahead isn't gonna buy that stuff. Right? I mean, they're not going to buy a dirt road park in a bad neighborhood on private utilities where everything is already failing. The power system is gone. People are using extension cords to connect.

Frank: But I think one thing the industry needs to do is just let those things die, you know, because they really, really, really drag us down badly as an industry, the image of that. You know, you guys do obviously a lot of heavy turnarounds. You've heard all my stories, I'm sure on some of the crazy things that happened to me. Like what has been your worst day ever and best day ever? Like what was the worst day you were like, "Oh my God, you got to be kidding me. Why did I ever buy a mobile home park?" And then your best day ever. I can already guess your best day. The best day was the 37 space park that you reified for well over two times what it cost in a short span of time. Like give us your worst day and best day.

Jason: Yeah. I mean, I know just on the first park, we... I think, what was it? Maybe first day calling down, setting up utility. I got a call, "Oh, your park is condemned." I mean, we just closed... I mean, I almost threw up just all over my desk. Like what? And the lady said your park is condemned. We just closed on this. This is our first park. And we did our due diligence on the sites, certify, Tyler, we talked about that. That's coming from the 30 day due diligence manual. I mean, checking those boxes. Fortunately that turned out okay. I remember just off the top of my head, that was the first deal, the first call down to set things up and they're telling me park is condemned. We can't bring it. New homes are setting down. I was sick. I called Ty. I was like, man, I almost just threw up all over. That was pretty bad. Top off my head...

Frank: How did you fix that? How could they have gotten that wrong or what did you do to fix that?

Jason: So what we found out was a lot of the city... So as you know, talked to a lot of these cities, just hate mobile home parks. They want them out. So I believe it was a combination of a couple of things 'cause through a couple of more calls, you'll talk to the same office, four different people and hear four different stories. So that was one, just me freaking out said, what? And then another person, "Well, we don't want any homes to come in after... You know within 15 years older." And then... We just started getting new stories. And then we resolved 'cause we had the certificate, 'cause we did have one woman pressing pretty hard, like no, no homes at all. And we had the certificate from doing the due diligence that showed we can have this amount of homes and can bring in new homes if we want. And it worked out pretty well. So that might not have been the worst story. I know Tyler has been on on-site.

Frank: That's a pretty horrifying story.

Frank: Of course, it also shows this unfair advantage cities have 'cause they often spew all this crazy stuff out 'cause they have no accountability, right? That was my first shock when I was told by city officials, things like you can't use the lots and all this. And I went to my attorney and the attorney says, well, they haven't harmed you. So there's nothing wrong with them lying to you. And so then I found I would call the person back and say, can you show me that in writing? And they'd say, well, it's not really in writing, but it's just my personal viewpoint or something. And you're like, aha. So the whole thing is a scam 'cause they just didn't wanna have any more homes in the park. So they were just... Someone in the city said, yeah, just lie to the guy and tell him you can't do it. Maybe he'll just go away. I've been in the same boat.

Jason: And I think that's exactly it. They hope if you don't call, find someone else. And we talked to even some of our managers now 'cause we have a problem with maybe just something that is simple as, oh, they won't take our cash pay at the Walmart. Well, that employee just wants you out of there 'cause they don't know how to do it. So like, oh, that's wrong. And then, you know, Tyler will hammer them and say, this is... You know, just keep hitting it. Oh, it magically gets done. You know, so it's just... Here. But yeah, that was a pretty bad one. Tyler I'm sure you got a few more. I mean, the good Yeah, that reify was awesome. And then we had a good collections on probably the best thing. Tyler is gonna mention the Green Forest. Or do you have any bad? Do you wanna hop in with any more bad?

Tyler: No no no no. Mention that. I'll do my best.

Jason: All right, so... Yeah, the Green Forest, do want me to take that one? That was...

Tyler: Yeah, yeah. Go ahead. Take that one, yeah.

Frank: One of the last deals we had. We closed just this past October, it's 122 sites, and we knew coming into that, 30% delinquency. We just knew... We raised the money knowing we;re gonna spend probably 20,000 just on legal... Just to evict 30% of the non payers. And we went into that and the first month, we got everybody, it was a Hispanic, all cash, we thought it was gonna be a pretty big nightmare, just the first 90 days, not evicting people turning cash... And we converted within the first two weeks, everybody online to go pay cash pay. And 100% collect... We were actually 96% collected, 'cause we wiped the slate clean, gave them some nice little newsletters. And they saw we were making improvements and put in a new pavement, paving, and we're now 100% collected. So that was just an awesome, just, you know, just recent kind of deal story on just walking into a 30-40% delinquency. And now we're 100% collected that... That same month was pretty sweet, so...

Frank: Pretty good stuff.

Tyler: Yeah, pretty good. Ty.

Jason: Yeah, yeah, that deal story was pretty good. I mean, the 122... It was shocking that people... Yeah, that people actually paid. So I gotta agree with Jason, that was a pretty good... That was a pretty good day. My worst day was we hired a manager that basically first day on the job, I was gonna meet him. He didn't have very much money. So we were gonna meet him, get him some gloves, some tools, some other stuff. He was kind of an HVAC specialist. So he moved into one of our single family houses, knocked on his door, couldn't find him. Long story short, he ended up walking out of the house and it was... We were snowing outside, if you can believe that. And he walked out of the house, his wife didn't know where he was. And he was basically gone for like 12 hours. And so he ended up showing back up that night. So I Jason and I got on the phone with him. It was basically like, Where were you, et cetera. Things didn't go very well. And so basically, they said they wanna burn down our house that they were living in. And the wife ended up going off on us. He ended up leaving again. It was just this whole thing.

Frank: It was a Jerry Springer episode, right? That's what we're saying.

Tyler: Yeah. And then in that same timeframe...

Jason: Oh, I'm sorry, no you are right, the wife was screaming. It was 11:30 at night. But she was just screaming at us like we did something wrong. We're like, he didn't show to work and all he had to do was walk out his front steps and he's in our community. Go ahead Ty. Go ahead.

Tyler: Yeah. Right. Yeah. And then basically within like 48 hours of that, what ended up happening was we got a call from the health inspector, basically saying that like 250 feet of our line was smashed, broken up in different places. And there was a tenant that we complaining about it for a while. And what from what I understood from anyways, another one of our onsite team was that the leak was coming from underneath their house was really coming up from underneath the ground. So the health inspector was like, basically, we're gonna shut your whole park down. Start kicking people out of here, if you don't get this fixed. So we go dig up 250 feet of sewer line, replace it all, clean up all the sewage, get one of those restoration companies out there, all this stuff. And all that happened within like 48 hours of each other. I was like, I don't know if I wanna be in this business anymore. I was like, I'm gonna go, I'm gonna have a whiskey and on Friday and I'm not gonna work tonight and I'm just gonna... I'm gonna take a step back here. So it was... That was pretty rough. That was pretty rough. I was pretty discouraged. I was talking to Jason about that. I was like, I need Jason to be my therapist for that week.

Frank: You can't do turnarounds and not have that kind of a story, right? It's impossible. Everyone has... I've had stories like both of your worst day stories, so I have similar stuff. Tyler what was your best day ever?

Tyler: My best day was we had a property called Arch Estates, or we have a property called Arch estates. It was 33 park owned homes and we bought it. We basically said, "hey, we wanna convert everybody to rental." And we thought, this is gonna be great. And we we... It didn't turn out so great. We had 50% of the park leave, but the cool thing was is we got a rehab process in place, which is kinda like my main job on the ground here. And we started fixing up these units. And we like turned this whole property around from looking like a bunch of park owned homes, which I'm sure you've seen before that look like park owned homes. And this property looks... Whatever, I can't tell you what day it was, particularly, but we fixed this whole property up and like turned it into this great community and our phone rings off the hook there now. And you drive through and it's quiet and there's no trash anywhere. It's a little bit outside. It's kinda in the country. And you drive through that property.

Tyler: I'm like, man, this is completed. We did it. We got one, you know what I mean? And that felt pretty good. You know, a lot of other properties haven't kinda come to that completed stage yet, even after two years. It has taken us a little while longer, but that property is like you drive through there, the roads are paved, things are painted. It looks good and it feels good. And there's not all this riffraff and shootings and all this stuff, but it was a good feeling while driving... I get to drive through there every once in a while and it feels good.

Frank: It's like one of those war movies, where you have all the battles and stuff. And then at the end of the movie, you've got the characters and the war is over and everything is being restored and life is good.

Tyler: Walking off into the sunset.

Frank: Exactly, same deal. So where do you guys see yourself going from here? What is the plan? How big do you wanna be? Where do you wanna be? What's the plan going forward?

Jason: Yeah, I mean, I think... Kinda going back to the system, we were just talking about, I mean, we have everything in place, just we're fine tuning it, right? Getting everything right and then I think that's really where we take off, even though we've done great this far and scaled in the last 24 months. Just getting those last pieces in place to really take off. But as Tyler mentioned earlier in the call, yeah 10,000 units by '28 we feel is very achievable and then from there, we're gonna keep growing and get our systems and make... It's a good feeling, yeah, when you can turn around a property like that and feel good about it, right? I mean, we're not just like, Oh, find a property, be a slumlord and we pick these up from a lot of those properties and we don't wanna be those guys. So yeah, we're gonna keep doing what we're doing and we're happy where we are at but we know we've got a long way to still go. So, Tyler, what do you think?

Tyler: Yeah, I mean, yeah, basically, yeah, continue to grow, continue to kinda... Hopefully build a brand too, get to that 10,000 units but build a brand so that people can see, kinda like what you guys have done with impact and stuff and build something that's a legit business and that we're like, we're making an impact like, Hey, I'm in this to make money. I'm not Mother Teresa. Nobody here is, but I also don't wanna leave some park just like Jason was saying, some disaster zone. So I like both aspects of that. I like being able to make money and then also make some place safer, kinda nicer place to live. So I kinda see us, building a big mobile home park brand out there. Maybe not 60,000 lots, but a sixth of that, I'll take it, but yeah, no, that's kinda where I see us. I guess continue to kinda grow in this asset class. And we're also looking in some other asset classes right now, where actually I started listening to your podcast on self-storage. We were... Been kinda diving into that a little bit as well. I don't know if that's gonna be quite as big but we'll build the brand and get the 10,000 units. It's definitely kinda our goal and our mindset right now.

Frank: Well, you guys are off to a roaring start, right? I mean, you've done an amazing amount of stuff in a really short period of time. And again, we like to do these lecture series to allow people to get a truthful perspective on the industry. Your story is unique because we've had very few people, who had that kind of rapid growth. I mean, we have a lot of people, who bought a park or a couple of parks, but you guys are on steroids based on that, based on the number of parks you bought in the timeframe. I also want to state for the record, for those who do believe that raising rents is evil, you know, if you don't raise rents, all of these parks ultimately just get torn down. You see it all the time. I mean, there's a mobile home park apparently in Yellowstone Park, it was in the media quietly. No one wanted to talk about it, owned by the park service. Well, they quietly gave everyone a notice, they needed to get out in 30 days because it needed some utility work, water sewer line work, a little bit of power.

Frank: The government decided it didn't make any money 'cause they were charging some crazy low rent. It was like 180 or something. So it was just better off just to kick everybody out and be done with it. And that is where all these parks had... Every park we bought as a turnaround. If we hadn't to come in and bought it, it wouldn't be there anymore. No matter whether it's the parks you had in Austin, all various places, the land is land and land value is getting higher as land becomes more scarce to build on and parks are not a very high use of it.

Frank: So if we don't have higher rents, the parks won't exist. And then going back to what your comment was on the future and the consolidation and everything else, you know, to have nice mobile home parks, just like a class A apartment, you have to have professional management, good infrastructure, and you can't get that until the rents get up. Based on my estimates, you need like a $500 or $600 month rent minimum to have enough cashflow and actually hire a decent manager and to keep the infrastructure filled. I mean, people have no idea how much it costs to repave a street or rewire a pedestal and, you know, the necessity of CapEx is always out there staring at you. And if you don't have higher rents, you just can't make it happen. So, we were... I'm sorry?

Tyler: Oh, I was just gonna say, I think that was one of your best points ever. I had somebody basically telling me I was a monster about a year ago for raising rents. And I just said, the park is gonna be gone then. The only form of affordable housing out there is gonna be gone. And I think that's one of your best points ever. I've listened to all your podcasts a couple of times and I can't think of a better point. The land value is the land value. Home Depot will find it the higher and better use 'cause the NOI is not high enough.

Frank: Well, the park in Yellowstone, the question they should have asked the government is how much would the rents have to be not to tear it down? And I'm sure the government would have said, well, let's see. They'd have to be like at 330. Well, those poor people who were displaced out of Yellowstone, there's nowhere they can possibly live for 330 a month, whatever that number was. The government did it because they were so concerned about being publicly shamed, right? If they went from 180 to 330, well, they knew they'd be in the media.

Frank: So they just didn't want to jack with it. It would be embarrassing for someone at the park service. So they just kind of quietly just let the thing die. But that is... That is the truth. When you can't deliver a decent housing product as cheap as these rents are, and nor can you even make any sense of not just doing redevelopment. I mean, if you can get an apartment stack two or three high, the rent for a couple thousand a month, why in the world do you leave it as a mobile home park? And many mobile home parks right now, if you actually looked at the value of the land, the land is worth more than the park. I drive by those all the time. I assume you guys also do. These situations are total anomalies, right? There's a park in the St. Louis Metro over in a very nice residential area called Frontenac. I've been to the park multiple times, about 25 lots. It looked completely out of place. It was surrounded by McMansions, one of the highest demographic zip codes in St. Louis. And you knew it made no sense to be there, but the guy that owned it, he was adamant.

Frank: He didn't wanna displace the people. And he was trying to hang in there, but yet he would never raise the rents up to where they needed to be. And ultimately, it was recently demolished because he died in the airs immediately. He said, oh, you got to be kidding me. We can just parcel this land off to sell to McMansion developers for two times more than it was ever worth as a park. So yeah, that's the problem the industry is in, we gotta find a way to get the rents up to a fair level where people pay a fair price based on actual market economics and not on this crazy mom-and-pop pricing structure that has plagued the industry for just forever. I mean, half a century at least of mom-and-pops not knowing what they're doing. I mean if you look at the rents 50 years ago, if you talk to old timers who were around with parks in the '50s and the '60s, and there's very few of them left, right? They are not... It's really hard to find someone who's in their 90s and 100s anymore. But when you do, you'll find the rents in today's dollars were 500 a month was the average for the industry when these were built.

Frank: So we're just getting back to where we started. Not asking for much more, right? If you're at 280 rent, when it was built, it was 500 in today's dollars. And we just gotta get it back to five. Five, when they built these things, they knew what it cost because they were new, they were shiny. They tried to have a nice quality management. I assume a lot of your turnarounds when you look at pictures of it from 1965, it's all kinds of fancy. People are dressed nicely. The cars are nice. Managers had uniforms. We just wanna get back to that phase, right? That's like where we'll need to end up.

Jason: Exactly.

Frank: Well, guys, we wanna appreciate you being on here for this lecture series event. You all did a great job of bringing parks back to life, giving people nice places to live. It's a win-win story that I think not enough people appreciate, but hopefully coming off of this, more people will. So we again appreciate you taking your time to be here. We appreciate people who are here with us. We know you have lots of options with your time and we appreciate you being here with this portion of your time. It's like we just lost Tyler.

Jason: Yeah, no, Frank, we really appreciate being on here. Thanks so much for having us on here.

Frank: The productivity issues that are right here at the end so...

Jason: Right at the end. No, Frank, we really appreciate it, having us on and all the knowledge you share. It has helped us tremendously. So thanks for having us on. We were happy to be on and share our stories here.

Frank: Great. Well, really appreciate it. So thanks everyone for being here. Thanks Tyler and Jason for being here and we'll talk to everyone again soon.

Jason: Take care.