Doug and Brandon from Colorado are a father-son duo that currently own 8 mobile home parks, having also purchased, turned-around and sold 5 additional parks that turned about $2 million in capital into roughly $10 million. And they did that from scratch and starting out only a few years ago. It’s a pretty compelling story of the opportunities in American mobile home park investing today.
In this Lecture Series Event we explore how they found these deals, financed them, diligence surprises, turn-around strategies and management time spent.
If you are interested in learning more about mobile home park investing then here’s your chance to hear the real-life story of two individuals who recently entered this niche and are succeeding. And the host is Frank Rolfe who is the guy the New York Times calls “the human encyclopedia of all things mobile home park”.
The Tale of Two Men And Some Parks - Transcript
Frank Rolfe: Welcome to our lecture series event. We're very glad you can be here with us. We've titled this appropriately Two Men and a Park because it's the story of Doug and Brandon out in Colorado, and it's a story I think that we can all relate to about their journey and how they came to even consider Mobile Home Park investing, buying parks. They've done everything very, very hands on, so we're delighted they could be here with us. And although they look very stoic, they're actually very, very friendly guys once you get to know them. So, Doug and Brandon, we're very glad you could be here with us. Take some time with us.
Brandon: Thanks, Rolfe.
Frank Rolfe: So, let me ask you guys just to start off with, you know, when did you get the very first idea to invest in mobile home parks? 'Cause obviously it's an idea most people never have. Well, how did it suddenly come to you?
Doug: So, about 2016, 2017, a friend of mine came to me and said, "Do you want to invest in real estate?" And I said, "Yeah, that would be great." So we started looking around our hometown prices were, an average home was about $350,000 to $400,000. And so everything was negative cash flow. So anyway, with that being said, I went to an investor club meeting and this guest speaker came in and he was talking about how he had just purchased this Mobile Home Park. Well, the way he explained it, it was a little bit intriguing to me, and he was looking to buy used homes to fill in his vacant lots, and he was buying them from a place about 50 miles south of us. So I decided to go down to that place and talk to this guy and see how he worked and how he operated. And so then after that, it kind of intrigued me enough to get on the internet and start researching mobile homes. Well, when I researched mobile homes, guess who came up? Good old Frank and Dave. And so that's how we found the bootcamp and the rest is history.
Brandon: Yeah. The other...
Frank Rolfe: And hey, go ahead. I'm sorry.
Brandon: No, you're fine.
Frank Rolfe: Go ahead.
Brandon: The other thing too is something that Doug hadn't mentioned is that years earlier, he and his brother actually, in the early '90s had bought a Mobile Home Park together. It was about six spaces, is that correct? And so they had purchased that together and it was a horrible experience, and so you couldn't pay him enough to even get close to it after that.
Frank Rolfe: Yeah. You probably have noticed in all of the stories of bad mobile home parks, it always revolves around 10 spaces or less. Right? Dave's worst park ever was a 10 spacer in Kit Carson, Colorado. So there's something cursed about parks when you're 10 spaces in the floor.
Brandon: Oh, yes.
Frank Rolfe: Right. So, you guys had never lived in a Mobile Home Park, correct?
Brandon: I had.
Doug: Brandon did.
Frank Rolfe: You had? Well, okay, but what was your stigma about the industry when people would say Mobile Home Park or Mobile Home Park investing, did you recoil in horror or what were your thoughts on that?
Doug: So, anything to do with mobile home in every time I heard it, I dealt with them in the past but it just said piece of junk to me. Everything about it just said piece of junk. I want something quality. Why would I want to deal anything with mobile homes? That's what it said to me. Now, of course, they're the greatest things ever but at that time, it had a horrible stigmatism with me. What about you?
Brandon: Yeah, I'd heard of mobile homes and been in a few of them over the course of my life, but I didn't really have one way or the other. It was, I'd seen people in school that lived in a Mobile Home Park growing up, but I'd never really been inside of one. They looked a little dumpy to me. But that was a little bit of my perception.
Frank Rolfe: Yeah. So, it was not... It's not a glamorous idea to get into the Mobile Home Park business, right? It's not like investing in a luxury office building or a movie studio or something like that.
Frank Rolfe: So then, you had the vision. You went to the class. And then how did you find your first park? Tell us about the very first park you bought. How did that go down? Not counting the six space catastrophe park from years earlier, but the first real Mobile Home Park. How did that go down?
Doug: So, what we did is, that guy, that friend of mine that came to me, and said, "Do you wanna invest?" Well, basically we kind of got started with him, and then he brought in one other person. So there was three total in the group, three LLCs that went in and we started searching after we took the bootcamp, we came with the idea. Everybody else pitched in a little bit of something else. And we, how did we start with the... Let's see, we started looking, we actually went to Tennessee. We actually did some due diligence on a couple of parks back in the Midwest. And we ended up.
Brandon: Yeah, so it was February of 2017 is when we first took the bootcamp. And after that we were sold. And there was a park at that time that was in Wellington, Utah. And we were absolutely terrified. It was this little 48 space community and it was $425,000. And we were just terrified to even make the move 'cause it was like, oh man, that's a lot of money. Well, anyway, fast forward, we drag our feet for about two months.
Doug: Two months. Two months after the bootcamp, after we set foot home from the bootcamp.
Brandon: Yeah. And then finally said, you know what? We're gonna pull the trigger. Went down, tried to give them the contract. They're already under contract, so we missed out on that one. Then from that time to November of 2017, is when we came across the communities that we found in, they were in a little town called Albion, Indiana. And so we had acquired those. They were two communities, or actually, excuse me. The two owners were right next to each other, but they didn't own the same community. But they neighbored each other. And so we were luckily able to get both of those sellers to sell them to us. And so we had this five community portfolio with 169 lots. And that... Oh I'm...
Frank Rolfe: And you... I'm sorry, go ahead.
Brandon: Oh, you're good. I was done.
Frank Rolfe: Okay. Well, so you guys have bought so far, is it 13 communities?
Brandon: That's correct. Yes.
Frank Rolfe: Okay, so since we have so many, let's just break them down into categories. So, on the 13 that you've bought, how many of those came from a broker? How many came from cold call? How many came from direct mail? How many came from online? Would you say just ballpark? So out of 13 total, what was the breakdown?
Brandon: So eight of them came from a broker, five of them came from cold call knocking on doors, which he actually found the owner and those are the ones we have in New Mexico.
Frank Rolfe: Okay, so it's pretty much the same as us 'cause we over broker and the rest from cold calling to direct mail. Have you ever had any luck at online listings?
Doug: No, not as of yet.
Frank Rolfe: Yeah, rarely people do so anyone watching this and you say, "Well, look, I look at strictly things on LoopNet," it's really hard to find things because they're typically very, very overpriced.
Doug: Very overpriced.
Frank Rolfe: And so don't get the wrong impression on the industry for what you see online because it's typically very wrong. So, alright, so now let's break down on these 13. How many of these were mom and pop owners, how many of these were sophisticated owners? Were these pretty crude, rustic, primitive people or were they classy, fancy business people? What were they like?
Brandon: Yeah. So all of them have been mom and pop.
Doug: All of them.
Brandon: Every single one of them.
Frank Rolfe: Got it. And let's talk for a minute on the financing side. So, that's a lot of parks and obviously a lot of capital required on that. So how did you, what percent was seller financed? What percent were bank financed when you first bought them?
Brandon: Yeah, so the first five that we had with the group, those were financed.
Doug: Bank financed.
Brandon: Bank financed, and then all of the other 8 have been seller carry.
Frank Rolfe: Gotcha and on your seller carry parks, what would you say your average interest rate is roughly?
Brandon: About five, five and a half.
Doug: Five to five and a half. Yeah.
Frank Rolfe: Got it. Okay. And you [0:08:48.3] ____ been getting five and a half in a long term basis 'cause even today, you can't get a 10-year 5% CD, you can get a short one, but it won't bubble pops. Did you, right? So, okay, so let's talk about due diligence items. So these 13 parks...
Doug: Can I interrupt you for a quick second? Going back to the, how we found the parks. I just wanted to bring up something that we learned in the bootcamp and you said, "You're gonna have to go through a 100 of these pieces to try and find a park," and we just looked at that. We're like, "That's crazy. There's no way." And you also said, "You've got to build relationships with these brokers." And of course, you're a nobody until you start producing and start and then they go, "Hey, they're serious. They might buy a park from me." And that is 100% true. We literally, when we were going through those deals, we probably did close to 100 deals before we found our first one. And then we looked back and went, "Oh my gosh, Frank was absolutely right on that." So just wanted to bring that up.
Frank Rolfe: Tell them your tenacity story, was it [0:10:00.7] ____ in which you went to the guy and the guy had it under contract and tell people how that worked.
Doug: Go ahead.
Brandon: Yeah. So I actually, I tried to work with them. It was a, that one was actually a corporation who had purchased it and they were trying to unload two communities.
Doug: No, he's talking about John.
Brandon: Oh, you're talking about the New Mexico ones.
Doug: New Mexico.
Frank Rolfe: Yeah.
Brandon: I apologize. So, yeah, so he, Doug actually went and he found, he went through the community and we were trying to get one. That was one that we were looking at in particular, and he drove through, found some guys working there. And stopped them and said, "Hey, do you know who the owner is essentially?" And they said, "Well, yeah, it's this guy, John." And they said, "Oh, okay." And so he said, "Well, do you have their number?" And he goes, "Well, yeah, here you go." And so, I mean, surprisingly, they freely gave that number up and we laugh about it later because of just how it worked out. Well, he calls him up and he said, what did you say? He said, "Hey, do you want to sell your park?" Or something like that.
Doug: And he said, you know, "I'm thinking." Most of the responses you get are, no, I'm not interested. And he said, "Well, yeah, I might." I was kind of shocked. So from that time...
Brandon: Well, and then he said, "Well, if you buy one you might as well buy them all."
Doug: That's true. We didn't know he had any more.
Brandon: Yeah. And then he goes, "Well, what do you mean? How many do you have?" He goes, "Oh, well, I have five of them. And so, anyway, from that point on...
Doug: So, we went and met with him for almost a year. We went to lunch with him every single week because he said he kind of wanted to sell them, but he was so personally attached and emotionally attached to them.
Brandon: Yeah, he had them for 40 years.
Doug: Yeah, he had them for 40 years. He just couldn't let them go. And so anyway, we met with him, met with him, met with him, and we went to lunch one day on the final day and he dropped the bomb on us. He told us that he had listed it with an agent and that it was under contract. Some guy from California had it under contract. We were so angry, so disappointed. So right after that is when we went to a refresher bootcamp was it?
Doug: Okay. So go ahead.
Brandon: Yeah. And so then once we were at the refresher bootcamp, we actually told you Frank about the situation and you said, "Look, just tell them, you just stay on him and just keep letting them know. Look, hey, has it fallen out of contract?" "Oh, no, it hasn't." "Okay. Well, and just keep reminding them. Yep. It's going to fall out. It's going to fall out." And so we were on our lunch break at the bootcamp and we called him up and that's how we started it. And for about 3 weeks, I think we did that. We just constantly would call John and we'd say, "Hey, has it fallen out of contract?" "Nope it hasn't. And then by the third week, called him up one day. "Hey, John. Has it fallen out of contract?" He goes, "Well, yeah, it actually has." And so then from that point on, we were able to get in and get our foot in the door and it worked out very well.
Doug: Thank heavens to Frank.
Brandon: That's right.
Frank Rolfe: Thanks. Why did they, why did the other guy drop, do you think?
Frank Rolfe: What was his reason for dropping out? COVID?
Doug: He was from China, a Chinese background.
Doug: And he was very superstitious and the COVID just really spooked him, spooked his wife, I guess, actually more so. And so his wife said, "No, we're not doing this."
Brandon: Yeah. So they backed out.
Frank Rolfe: Wow. That's crazy, right?
Brandon: It's pretty wild.
Frank Rolfe: Okay. All right. Well, so on the, on these 13 parks that you've bought so far, give us some due diligence cliffhanger moments. So what in due diligence, did you have any things where suddenly something popped up, like the permit?
Brandon: Oh, there it goes. Oh, it's cutting out on us, Frank.
Doug: Do you like that?
Frank Rolfe: Oh gosh. I'm sorry. Hold on. Am I back now.
Brandon: You're back.
Frank Rolfe: Okay. So did you have any cliffhanger moments in diligence? Did you have any times on any of those 13 that you thought, oh gosh, it's never gonna work?
Brandon: We hadn't. For the most part, due diligence and everything like that went pretty smooth on all of them. We obviously went and got phase ones and things like that, and that everything checked out very well.
Doug: On our first one in Fort Wayne, Indiana, we did have an agent that we hadn't worked with before. Obviously it was our first one. And the funny thing about it is he told us, he says, "I am so tired of dealing with these people." He goes, "You better be serious." And we said, "No, no, we're dead serious unless short of a Superfund, that this turning out to be a Superfund site." I said, "We are purchasing this community. Period end to question." Well, he said that he had had so many people, he said, there must have been some class happening or something because, and I think he was talking about the bootcamp because he said people came and put an offer and then they would back out. They would get scared and back out. And he said he had it happen about five different times. And so we had to assure him on a weekly basis, no, short of this being a Superfund site, we're taking it. And so we finally closed on it. And that was a challenge on our side because he just didn't trust us. And once we got it, did what we said we were gonna do, then he really was good with that.
Brandon: Yeah. Some of the biggest things we've run into during due diligence is just the city or town that we're in, the zoning as far as bringing new homes into a community. We have one in New Mexico that they only require anything 10 years or less. And so we knew going into that, okay, well this community, we can't bring in older homes. These ones have to be newer, and it might limit somebody moving into the community because a lot of the people in that area have older homes. And so it'd be a matter of us having to purchase new homes and bring them into the community to fill any vacant sites and then sell those off. And then in Indiana, we had a similar issue. It's a smaller community. The homes there are old, they're probably late '60s homes. And so the sizes of them are for today's standards would be if you went and got it off the line, it's gonna, they're only gonna be able to build a one bedroom home to fit in that spot.
Brandon: And so working with the city there during due diligence to make sure that they're okay for us to bring these new homes in and the setbacks don't match and things like that was a little bit of a clincher where it's like, oh, can we make this work? And we had a community in Ohio that was just like that. And that one we ended up shutting down. We had already put in probably $15,000 $20,000 into due diligence, I think, and we were about ready to close, and then we found out that the city wouldn't allow us to bring in new homes and we'd have to cut lots back. And so we scrapped that one. But luckily the other 13 that we've had, we haven't had to scrap those, which is why obviously we moved forward on them.
Frank Rolfe: And guys, of the 13, let's talk about turnaround for a minute. How many, since inception on the 13, how far would you say you've increased rents at this point on average?
Doug: Yeah. So, in New Mexico, some of those were as low as $225 to 250 a month, and they're now at $350 to $375 a month, and then Indiana they...
Doug: They were $150, $160?
Brandon: Yeah, something like that.
Brandon: When we took over and then those are now at $300.
Frank Rolfe: And if someone said to you're evil for raising the rents that much, would you agree with them or not?
Brandon: Absolutely not.
Frank Rolfe: I mean, right? Absolutely not, 'cause at your new rents at a $300 something rent in New Mexico, what else? Where else can you live in New Mexico for $300 a month?
Brandon: That's exactly right.
Doug: Well, it just boils down to this, what you always say, and that is, it is the most affordable housing that there is available. And with that being said, the next step from here is homelessness. So even if it raises rents, it's still the cheapest that they can go anywhere and it's still under market of anything else that they could live in.
Frank Rolfe: And where do you guys think rents will ultimately top out in your market? I know it's a difficult question, but we, when we look at our portfolio, we've started out, I think in the high twos, we're in the high fours.
Doug: I would say probably, my guess would be somewhere around four.
Frank Rolfe: Hold on here.
Brandon: You're good. You're, looks like you're back with us. [laughter]
Frank Rolfe: Okay, good. Yeah. There we go. Good, we have no problem making the phone ring.
Doug: Gone now.
Frank Rolfe: I have no idea what's going on with me. But you can edit. So I apologize. I normally won't forget.
Brandon: That's all right.
Frank Rolfe: Probably. So at any rate, what do you think the ceiling may be? In other words, can the rent of 300 today be 500 tomorrow? Can it be 600? Because in most of the markets we're in, the apartments are in the teens. Single family homes are completely unattainable. They are 300,000 or 400,000 on average per sale. So do you think when we talk to you five years from now, your rents will be, is it possible it could be $600 a month in New Mexico? What do you think?
Doug: I'm thinking 400, in the 400s. That would be my guess. What's yours?
Brandon: Yeah. I would think it'd probably be high fours, low fives.
Frank Rolfe: Okay. But still, even at a high four, low five, it's still insanely cheap, right? It's still the $1.50 hot dog it costs.
Brandon: Yeah, exactly right.
Frank Rolfe: So yeah, for anyone watching this saying, "Oh man, Doug and Brandon, they're just ripping off the people." No, we're not ripping off anybody. We are the cheapest, crazy cheap, insanely stupid cheap thing in town.
Brandon: That's right.
Frank Rolfe: And then, what about filling lots? How many lots do you think you guys have filled in the 13 parks since you bought them?
Brandon: So we probably... Let's see. I bet we brought in about 45 to 60 homes across all communities.
Frank Rolfe: Okay. Let's talk about that for a minute. Were they mostly new, mostly used?
Brandon: Most people want new.
Frank Rolfe: How did you do that?
Brandon: And then a few used.
Frank Rolfe: Okay.
Brandon: New Mexico, we've had the best luck finding the most used ones. Indiana, we found a few used ones, but that one was always a hit and miss 'cause of, I mean, the humidity and stuff, if people didn't take care of the roofs, and I mean, we'd have mold problems and things like that. But the majority of those ones we've got new. We actually ended up getting them out of Tennessee and then bringing them in and filling those vacant lots.
Frank Rolfe: And are you with the CASH Program or how did you do that?
Brandon: So that one, we are with the CASH Program currently.
Doug: With the two of us.
Brandon: Yep. With the two of us.
Doug: With the group back in Indiana that we were talking about, that was not the CASH Program.
Brandon: And those ones we did cash.
Frank Rolfe: Okay. And let's talk for a minute just on the CASH Program since you're in it, for those who don't know what we say the CASH Program, it's a program through Berkshire Hathaway's 21st Mortgage in which they basically front you the money for the home. So you can like order a home and they'll pay for the home, delivery set, deck, all of that stuff and then it's your obligation to go out and sell them. And then what you end up with is you end up a home on your lot. So you get the lot rent, 21st ends up with a customer and the customer ends up with a house, right? That's the way it works. And from the homes you sold, did you do any on the used homes? I assume you did renovations on those.
Brandon: Yes, we did.
Frank Rolfe: And any where you found contractors who could do mobile home renovation?
Brandon: We did. We went back and forth. We found... It was kind of wild. The group that we were with, we decided to go with this one gentleman who supposedly did remodels and they did a decent enough job to obviously get the home sold or rented. But I mean, we came in with some outrageous bids. They were $18,000 to $28,000 just for him to come in and remodel this home. And so we did that for about a year and decided that wasn't the best way to go. And then ended up deciding to, you know what, let's scrap that idea. We're going to go to these factories, get new ones and bring them in.
Frank Rolfe: Gotcha. Indeed. What was your best, when you're selling homes, what have you found to be your most effective advertising?
Brandon: Facebook, actually. It's been very effective for us.
Frank Rolfe: Yep. I totally, totally agree. That's also our number one. Let's talk for a minute about the sub-meter. Have you sub-metered or have you moved water costs from the park back to residents based on use in any of those properties?
Brandon: We have.
Doug: Based on Frank, that's the first thing we do.
Brandon: Exactly. [laughter]
Frank Rolfe: Okay. And how has that worked out so far?
Brandon: Worked out great. Yeah. So we've, on every community other than one, one is, or two actually, one is on well and then another one is on direct bill from the city. But all the other communities we've gone in and we've used METRON because it integrates right in to rent manager and they put in all the readings for us. And so...
Frank Rolfe: Okay. And so, now you guys today own eight parks, correct? So my math is you've sold five off. Is that correct?
Frank Rolfe: And so tell us about the sale. Don't give us exact dollars, but was it good?
Doug: Oh, yeah.
Frank Rolfe: Bad? How did that work?
Doug: Oh, yeah. Well, when we were all said and done, that was the ones with the group that we sold. And it was basically three times what we bought it for.
Frank Rolfe: Gotcha. So give people just in rough dollars what that means when you say what you bought it for three times, just ballpark.
Brandon: Yeah. So we purchased it, let's see. Oh, yeah. So we purchased it in 2017, four years later, and we got it for the 2 million, four years later sold it for the 10.
Frank Rolfe: Pretty amazing on that deal, right?
Frank Rolfe: Okay. Alright. And that transpired I imagine, during COVID, correct?
Brandon: That was, yeah, it was right after COVID. We sold it in December of '21.
Doug: December '21.
Frank Rolfe: Okay. So tell people what your experience was with COVID, because a lot of other real estate got just literally shut, completely just shut. I saw giant high rise hotels that were all the lights were turned off, doors shut, piece of plywood. What was your experience during COVID? Did your collections hold, did your occupancy hold?
Brandon: They did. We were terrified.
Doug: We were scared to death. In fact, once again that portfolio in New Mexico that we ended up with, it was right during COVID. We were so excited to get it and scared to death 'cause we didn't know, nobody knew what was gonna happen, but it held extremely well. And yeah, it was the most amazing thing we did.
Brandon: Yeah, we were right when we went under contract, it was the end of March. And it was literally right about that time that, 'cause I think a week prior or something, maybe a few weeks, two, three weeks prior to that when we went under contract was when they came out and announced that the country's on shutdown and there's COVID and everything. And so we obviously jumped in, took the opportunity, and then we looked at each other, we said, "I hope this plays out well." [laughter] And anyway, as we went into it, we...
Doug: Couldn't be more satisfied.
Brandon: No. I mean, everybody paid their rent on time. We had a few bad apples, but that's given with any deal, any good economy. And so, but overall, collections were very good. And we actually used a, during COVID, there was obviously the state came in and were giving assistance to people who were behind on their rent. And we took full advantage of that. And I mean, we, there was times where we were probably out $30,000-$40,000 and the state came in and we would fill out the paperwork and they would give us the, or they would send the funds in for the tenants.
Frank Rolfe: All right, guys. I think now, oh, there you are, now you're back. We lost you for a moment. Okay. Now, you are back. All right. So we heard you great.
Brandon: Okay, great.
Frank Rolfe: Just couldn't see you there for a minute. Okay. So they say that when the tide goes out, you see who is swimming naked. When COVID came in, what part of the business did you find the most alarming? We found, we learned from that we were done with renting homes. That was all of our problems during COVID all revolved around people renting homes. Those are the ones who did not pay, people who owned their homes paid because they didn't wanna lose their homes because the rent had not been abated, just delayed. But the people who rented the homes were the worst. They would just basically hang out. And then of course, when rent came due, they threw their mattress in a pickup truck and took off. Did you guys also find that was the weak spot in the business model during COVID?
Doug: Definitely. In fact, we have a large amount in New Mexico that are park-owned homes and it's made us rethink our whole structure. And just like you've done, you've got rid of a whole bunch of park homes and only have a small amount. And we're gearing towards that same change right now. Yeah.
Frank Rolfe: Yeah. It was a real eye-opener. 'Cause up until then, home renters, although not as attractive as a economic model, as the parking lot, we would buy a park and we'd still have some home renters in there. We would not just suddenly say, get outta here, but after COVID, to us, it permanently ended any desire for rentals.
Brandon: Oh, we're losing you again, Frank.
Frank Rolfe: Oh-oh.
Doug: Oh, there you are.
Frank Rolfe: Can you see me now?
Brandon: You are back now.
Frank Rolfe: Okay. Alright. So I assume you have a manager in each park, is that correct?
Doug: Yes. We actually have supervisors, we call them community supervisors. So they do a little less, they have less responsibility. Then we kind of have a central management from Colorado that works with the supervisors. And one of the biggest things is we don't let any of our supervisors collect any funds. All of our funds, we decided from the first park that we were gonna go electronic on everything. And so from that first day we've been electronic and it all goes straight through, well, it's Zego now used to be PayLease and it goes right into the account. Nobody touches funds. So that has been an awesome thing for us.
Brandon: Yeah. So we don't accept cash or excuse me, check or money orders or anything like that. And if they do, some people wanna do cash, but obviously there's an option called cash pay that we use for that.
Doug: They go to Walmart or one of the grocery stores and pay it through that to their account.
Brandon: Oh, can you hear us okay?
Frank Rolfe: Yeah, I can. I apologize.
Brandon: No. You're okay.
Frank Rolfe: Okay, good. But I heard you, you just couldn't see me. So what about on the supervisors, how many of these supervisors live in your parks?
Brandon: So one per community.
Frank Rolfe: Right, but they physically, they don't live in a house three miles away and drive in every day for work?
Brandon: Correct. Yep. No, they all live in the community.
Doug: Except for one.
Brandon: Oh, that's right.
Doug: Yeah. They all live in the community except for the one, we have one, a different circumstance that and, but he does two different ones and he does a great job actually. And we were very leery of it because that's... We wanted to make sure they were in the community. But yeah, there's only one that is not.
Frank Rolfe: And how many of those are full-time?
Brandon: Yeah, none of them.
Frank Rolfe: None. [laughter] Right. So, do they have any difficulty holding a regular job or whatever and doing you part-time? Have you ever had a situation where they said, "Gosh darn it, I just can't get my mighty workload done in a given day and I need more time?" Or is it pretty much just truly a part-time job?
Brandon: Nope. Yeah, it's truly a part-time. We have one girl that has a very demanding job. She works at a grow house and I mean, they're constantly just working. And she still has time to do notices or do whatever we need to look through the communities and things. And so, yeah, it is very low impact, low maintenance for those supervisors.
Frank Rolfe: Okay, and let me ask you this. Let's talk about you and your management time. How much time would you say you guys spend a week not on looking for new parks, not on talking to lenders, none of that stuff, but just you physically managing those managers? Do you have anyone in between you and the managers? Or is the hierarchy just basically you up here and the managers here? Is there any person between these two spots?
Brandon: Yep, yeah, we have one girl who's in our office that takes care of the supervisors themselves. She's "your district manager" if you will. And she's...
Frank Rolfe: Got it.
Brandon: Over all of them. She'll check in with them, answer phone calls, emails. She'll work out the details. But on average, I bet we probably spend three to five hours a week just kind of managing everything. And when I say managing, it's mainly our secretary. She'll call and say...
Doug: Answer questions, yeah.
Brandon: Hey, what do you think about this? So-and-so's got a problem in this community. What do we do about it? Oh, we'll just do A, B, and C or shooting a text. But that's probably the vast majority of everything is a phone call or text between her. And then she'll reciprocate that to the supervisors.
Doug: Well, and that's one of the interesting things, Frank, is that what we've run into when people ask us, well, do you have a community? Where is it? Oh, it's in Indiana. Indiana? You're in Colorado. How can you run that? And it's interesting because from day one and the experience from the five previous parks that were with a partnership, we knew from day one we were gonna dial it in. Whatever it took, we were gonna dial it in and make it so that it was as absolute maintenance-free as possible so that you could run it from a distance and not feel guilty, not feel bad about it, and it ran properly. And so that was our goal from day one.
Frank Rolfe: Okay. And how often do you go out to the parks since you're in Colorado?
Doug: Oh, we lost you again. But typically speaking, we try to get out there at least once a year. And if we have other big projects, then we try more than that.
Frank Rolfe: Okay. And so let's now talk a little bit about the markets you selected because since you're in Colorado and you're in New Mexico, and were those markets that you just fell into or is there some kind of structured strategic plan here? I mean, Colorado didn't work out 'cause everything was so expensive. But do you like those parts of America? Let's talk about those two states. Do you like New Mexico? And if so, why do you like New Mexico as an investment area?
Brandon: Yeah, we actually love New Mexico. We're obviously close to it, so we've been able to kind of see what the economy's done over the years. And they've had, especially the area we're in, they've had a high oil company.
Doug: Yeah. It's a big oil field.
Brandon: Yeah that'll come in and do stuff.
Doug: And it's boom and it's bust. For years, that's the way it's been. Oil field boom, oil field bust, and real estate follows that same cycle. It's been, it's very cyclical town or city. And so with that being said, it's been kind of interesting though, but since COVID, it's a bust oil field in that town, but yet real estate is going crazy in that town. And so it's been an amazing place. It's been stable over the years. I mean, besides the boom and the bust thing, as far as rentals, 'Cause we've been in that real estate market for a lot of years, since 1990, I believe. And so it was a very comfortable fit. When we ended up finding those there, it was just, it was very comfortable because we knew it well.
Brandon: Yeah. And then going on to Indiana, that's where the first five communities were. And then we continued to purchase a couple more properties there. And we actually really love Indiana.
Doug: Yes, it's been a good one.
Brandon: The laws are very landlord-friendly. Laws in New Mexico are landlord-friendly too. We haven't had any issues there getting tenants out or working with attorneys or things like that. It's just been very easy to work with.
Doug: And you've told us the laws in Arkansas are the most friendly. So now we have to go look there.
Brandon: That's right.
Frank Rolfe: Well, guys, you remember back in the olden days, and Brandon, you may not be old enough to remember this, but there was a time in which all Americans thought if you weren't in California or on the East Coast, you were a loser. That right? And everything in between, those polar opposites was just lesser in every regard. Lesser people, lesser opportunity, lesser real estate value. You either had to be investing in California or New York, Florida, the Eastern Seaboard. Are you feeling a sudden shift here because all I see are articles on California stakes and you're seeing nothing but net population migration away from the coast, more into the center. We've just never seen any big money in the coast. I don't know how we missed out, but when someone says to me, hey, California is where is the place you ought to be, like, Jed Clampett. All I think when I think of California is overpriced, crazy tenant laws, just miserable.
Frank Rolfe: When I... And rent control, and when you think of New York today, you think of rent control, probably number one, net migration out. No job formation. Terrible laws. Just awful. So going forward strategically, you think you'll stay in the middle of America? Do you have a desire to go to the coast? What are your thoughts?
Brandon: Yeah. We do have a desire to go to the East Coast. And but most of it we've found over kind of our research and stuff is that there is some glamor to the west side meaning Idaho, Utah, Arizona, Colorado, New Mexico. They for whatever reason, a lot of people are drawn to that area. And there's obviously higher prices paid there which is the downfall. But there is a good tenant base there as well. But as far as the Midwest, that's probably our favorite area is the Midwest.
Doug: Loved it.
Frank Rolfe: Yep. Same as us. In fact, our portfolio is so similar to you guys because we also park, we've sold it in Fort Wayne. We had parks in Indiana, parks in New Mexico. Our park in New Mexico one time was our sales leader back when we were filling lots of all the states we're in. That was number one. So we share your interest in those states, definitely. So what's the path forward now? Are you guys going to try and...
Brandon: Oops, we lost you again.
Doug: You froze.
Brandon: But in answer to your question, our path forward is we're still looking to acquire more communities. We actually just had a discussion yesterday about another one that we're looking at putting a letter of intent on just to see on getting that one. But yeah, it is growing. That's our desire is to grow. We'd love to get to 1500 to 2000 units, is our ultimate goal. And continue to grow that. And we're, our whole idea is kind of separating ourselves from other communities. And so we're, we actually have specific plaques made up for each home. They're aluminum plaques and they have the name of the community on it. It'll say it on the top, they're kind of oval. And then it'll have the unit number, and we designate the unit number by the name of first two letters of the name of the community. For example, we'll have like Autumn Crest and it'll be AC. And then number one. And so we have that, and then that'll match our signs and our speed limit signs. And things like that just to keep that continuity. And so that's our ultimate goal is just building our portfolio and making it so when somebody drives through, they say, "Oh, that's a crash pad community."
Frank Rolfe: Right. And guys. I mean, you won't, I've always felt one of the best parts of Mobile Home Park ownership is your freedom with your time. Right? You don't have it... You don't have a set desk job. It's not a restaurant where you have to open every day at 6:00 and close down at 10:00.
Frank Rolfe: Or any of that. So how attractive have you found the fact that, I mean you're only spending roughly five hours a week or so on management, so how much fun is it having basically infinite, fully controlled on your own terms time?
Doug: It's absolutely incredible. And we have people, friends that are starting businesses, that are buying businesses that are running businesses. And each time we hear, we discuss with each other, "Oh my gosh, I can't believe they're doing this." And the hurdles and the roadblocks that they run into, and we both look at each other and go, "We love our mobile home parks. No thank you. We don't want any part of that."
Frank Rolfe: Right. And guys, obviously it's a lot of fun for you as a father and son duo to work together. I've always had the dream ultimately to work with my daughter 'cause it just, it sounds fun. Talk for a minute about the, just kind of the family dynasty attributes of parks, because a lot of moms and pops, that was their sole asset. A lot of people we bought from were like postmen or workers in other industries who had had the park. And that was always what they had to fall back on the ponder. And of course, today parks are much more valuable. Back then they were a side hustle mostly. But today they're, just an average Mobile Home Park today is worth more than a McDonald's franchise. Some of them are worth as much as office buildings. There's some out in, wanting in say, in the Bay Area that I think it sold for $240 million last couple years. So what do you like about the fact that you could own a Mobile Home Park and literally run it through the family for decades? Is that an attractive feature to you? I know a family out in your home state of Colorado that they are third generation owners and basically the entire family tree generates their income from the park. So what are your thoughts long-term on the parks just as a generational asset tool?
Doug: Yes, no question about it. That is a huge draw to know that we can get these parks dialed in, get them to a point, get them operating as smoothly as possible, and then have children, grandchildren involved in that to learn that and to pass that wealth down. It's a huge factor.
Frank Rolfe: And what do you guys see as the greatest threats for the industry going forward? Obviously, rent control is one and that's why we obviously prefer red states that never even mention it. There are some blue states in the whole US, of 50 states, only five have rent control and that's over 100 years now. So, it's that's not a super popular issue.
Doug: We lost you again.
Frank Rolfe: Well, now we've lost connection there. Now we're back. Yeah. So what...
Doug: You're gone again.
Frank Rolfe: Sorry about that, guys. What are the threats that the industry face? Anything that can derail the need for affordable housing. Or putting this a different way, do you see America suddenly becoming rich and no one needs mobile home parks anymore? Everyone just is buying a custom McMansion on the top of a the mountain. Is that a scenario or where do you see things?
Brandon: I personally see things. I can't see a world where parks completely are non-existent. I think over time and the more publicity they get in a good light that the more people are going to want to live there, the more obviously these mom and pops, they've had them for years. They haven't taken very good care of them in some cases. And so for somebody coming in and breathing new life into it, that becomes attractive for a different caliber of people. And so what we've seen is there's going to come a time where the economy is not going to be booming like it is right now. We're going to go into recession. And as that recession happens, there are going to be people that lose their home and they're going to have to go to the next step down. Maybe they're not at the million mark, but maybe they're at the half a million or $300,000 home and they lose that. And the only place that's more affordable than that is to buy a mobile home and move into a community. And so the nicer the communities can become, the more attractive it is to that caliber of buyer or tenant and it just brings a different light into the community. And so I don't see a time where they would completely go away. I just see other than maybe a specific one or a few here and there that get redeveloped. But overall, I just think that they'll become more valuable and more appealing.
Doug: So I think, Frank, that in answer to your question, that there's only one other thing than the rent control, and that would be some kind of a zoning regulation or some kind of a city thing coming in and saying you can or can't do this. But as far as the appeal, anything to do with that, I don't see there's any negatives to these parks, because once again, we're at the base. We're at the starting point, and there is nothing else more affordable than what we have. It just goes to homelessness from there. And so with that, I think there will always be a heavy high demand.
Frank Rolfe: And Brandon, let me ask you a question, roughly...
Brandon: Say that again.
Frank Rolfe: Brandon, how old are you roughly?
Brandon: I'm 33.
Frank Rolfe: Right. So you would be in the millennial group. Correct?
Frank Rolfe: Right? So, in other words, and Doug, how old are you roughly?
Frank Rolfe: Okay, so, Doug, obviously, your stigma against parks, I assume, is much greater than Brandon's. Because most of your Andy Park television and humor was of the '70s and the '80s and the '90s. So Brandon, you're like, your stigma against it is much less.
Frank Rolfe: I assume. Right? 'Cause you you lived in one at one time. Right?
Frank Rolfe: So, do you see the stigma wearing off? I don't hear, to be honest with you. Rarely do I hear people say the word trailer trash anymore. Very rarely. Used to hear it all the time. Doug, you remember back in trailer trash, popular term in culture from back in the '80s with Jeff Foxworthy. He was rocking '80s and '90s trailer trash. Every magazine had trailer trash in it. Never hear it anymore.
Doug: No, I think it's wearing off. Dramatically.
Frank Rolfe: Yeah. So, I'm just wondering, I mean, when, Doug, when you talk to people of your age about OD Mobile Home Parks, I'm sure they recoil in horror like you have leprosy or something.
Frank Rolfe: 'Cause it's... Really? Tell me about it.
Doug: They are, people are so intrigued. It's, it's now become this mystified thing. And so when you talk about trailer parks or mobile home parks, they literally are like, oh my gosh I was wanting to do that. People want to get into it because it's been so glamorized, the investment part of it. I have, that's probably the majority of the responses I get these days.
Frank Rolfe: Okay. And Brandon, back to you. Do you think this, do you think in one more generation, the stigma will fully wear off?
Brandon: I think so. Yeah, I really do. I think it's going to change a lot and it's going to, it's going to become a thing where just like that, he has a lot of people asking about investing in it. And I do too. Or people will ask, oh, what do you do for a living? And we'll have a conversation about it. And they're like, oh my gosh, that sounds so neat. I want it. I'd love to get involved. And the fact of the matter is, it's not for everybody. And so it is glamorous until they get into it. Not that it's hard, but it's just different personalities may do it a little better than others.
Doug: So, and just to give you an example, one of the parks that we bought, we allowed some family members to get in on it to see if they liked it, to see if it was interesting. We kind of called it our school park to show them how the process works. And some liked it and some didn't like it. So just like Brandon said, it's not for everybody.
Frank Rolfe: Alright. And guys, let's talk for a bit just about what I call the fellowship of park owners. I mean, you're there I assume at your house and you're nice enough to come on here and talk about the industry. Do you find most park owners pretty nice people? Like when you talk to these moms and pops, would you categorize them as being nice, mean, what do you think about park owners?
Brandon: Yeah, very nice. Everybody is. I haven't met, well, I shouldn't say that. I've met a couple who are a little ruthless, but for the vast majority of it, I mean, everybody is just very even keeled, down to earth, willing to share ideas with each other on how to make things better, what they do and what works, what doesn't work. And so, yeah, it is overall they're very nice.
Doug: So it's two-sided, Frank. So number one is the park owners that we're going to purchase from. That's one sector. And I would say we've had very good luck with that. Very nice, reasonable down to earth people. But as far as the other sector would be the ones that we meet up with at the investor's club or the bootcamps, no, we've had nothing, just incredible people. Just willing to give anything, willing to share anything. And of course we are as well, we're willing to help. We were there once and we've got ideas, and if somebody wants some ideas, we're happy to share those. So, yes. Overall, great people.
Frank Rolfe: And you guys have been in other businesses. Have you ever seen any other business where the people are as friendly as in the Mobile Home Park business? 'Cause I was in the billboard business and it was the ugliest, nastiest [laughter] group of people ever. I mean, if someone told you in the billboard business, they gave you a significant wrong and it was designed for you to fail.
Frank Rolfe: Right. So if someone told you, oh, yeah, no, the key to billboards is you put them an extra 50 feet off the road so the dust is lower. Well, they're trying to make your sign even farther off the road so their sign would be more valuable. I mean, it was just nothing but endless backbiting, backstabbing stuff. But do you guys find this industry a lot more pleasant and enjoyable from the people aspect than other businesses?
Doug: No question about it. In fact, I was in, I was a real estate appraiser for 30 years, and that at one point in time in our town there was so much backbiting and so much because they were competitors, they were the competition. So I had, we had one appraiser turning another appraiser into the state. The state comes down, investigates, I mean it ruined people's lives. It was so vicious and no, this is just incredible. Complete polar opposite of that.
Frank Rolfe: And guys, what was your worst day ever and your best day ever? What was your worst day ever as a park owner? And then what was your best day ever as a park owner? I already knew know your best day. The best day was when you deposited the check for [laughter] the five parks sold.
Brandon: Exactly. Yeah. That was...
Frank Rolfe: Yeah. What was your worst day ever by comparison?
Brandon: The worst day ever...
Brandon: There hasn't been a real bad, bad day. The worst day ever is when we've had a tenant sue us.
Frank Rolfe: Yeah.
Brandon: Recently. And it's like we're trying to navigate that, but that's probably the worst thing that's happening. It's not even...
Doug: That. And we had a sewer lift station down at one of our parks that the pump, we were having issues and the sewer overflowed, and it did it multiple times because we were working on it. We had to end up getting a whole new system eventually. But the EPA was coming out to us. Well then we found out, we started reading some articles. There was a park just down the road from us that the owner had neglected and was actually in a lawsuit, and the state was charging her or fining her $250,000. And so this was happening all at the same time. And so that kind of stressed us out, oh my gosh, our thing overflowing. Are they going to do the same thing to us? Well, we ended up finding out there was a lot of different variables and she had neglected for months or years that their pleas. Anyway, that was a little stressful time just going through that. But really, other than those hard times, we really don't have any bad days. We love, in fact, people go, oh my gosh, doesn't that just drive you crazy when you have to deal with that? No, no. That's part of the business. But even though we have challenges from day-to-day, we love this business. We love it. We're passionate about it.
Frank Rolfe: Yeah. You know what? Speaking of lift stations, I once looked at a mom and pop park and I was walking around the park. Their lift station, the top of the lift station for those that don't know what that is, that's a, basically a cylindrical tube goes in and then there's a pump that pushes it up to a higher level. It's how you get sewage up to a city's main line. Her lift station had collapsed, it followed... And the power had been cut off to it.
Frank Rolfe: So she was running the park with the lift station. It must've just literally been leaking in the ground for decades. And so, yeah, when you see some of these articles in the media of a park owner who's getting fined by or has city or state issues, and you look back on them, the length of time that they festered is phenomenal. Right? It may be that their very first notice about the failing septic field was in 1998 or something, and they just let it roll. And the government lets them roll like that. And of course, that's the whole part of us new guys as we bring those things back to life, and fix it.
Frank Rolfe: But, and then tell us about the best day ever. So how did you all celebrate when you sold the park at a multi multimillion dollar profit? What happened that night? Did you go anywhere special? Did you order an extra shrimp cocktail? What happened then?
Brandon: We did actually. Yeah. So we had just sold it and we went out, celebrated for dinner. And then one of the neatest things that we were able to do was we, 'cause that was our first park, and we actually had a private investor who had put some trust into us and had said, "Here, I'll help you get this thing." And so they had helped us with some CapEx that we needed for the property. And so one of the things that we had discussed is when we got that is we were going to go and we were going to take that check up to her and we were going to give her a big hug and say, "We couldn't have done this without you." And so we took her out to dinner, celebrated it. She wasn't expecting it. Gave that check to her and she was just in awe. And since then she was just wanting to do more investments. But that's...
Doug: Do you know what the funny thing was though? When we handed her the check, she's like, "What am I supposed to do with this?"
Brandon: Yeah, that's right.
Doug: She didn't want her money. She loved the investment.
Frank Rolfe: Yep. That's a great story. So basically overall then, guys, are you glad back in '17 you jumped in and started buying parks?
Doug: Oh, you know what? The only part I'm mad about or frustrated about is it didn't happen 20 or 30 years earlier.
Frank Rolfe: Right. Well, although the business 20 years earlier was a lot more difficult. You couldn't get financing and there were other hurdles. So you actually hit it well, and COVID was one of the best things that ever happened to the business as far as people suddenly realizing detached housing is where it's at. And having a yard is cool. And I've never seen the demand as high as it is right now, ever for this stuff.
Frank Rolfe: Well guys, we're out of time. But again, we really appreciate you being here. It's a... The fellowship of park owners that you're willing to come on and just talk about the business openly, honestly, how it works. And really, really always enjoy seeing you guys at different industry events and items because you're just, you're super nice people to begin with. And then I'm also, I think, fascinated because I love this relationship with you two guys. The father and son duo battling, tackling the Mobile Home Park industry 'cause it's something I envy that ultimately I can do with my daughter. So I think that part of the narrative is also really cool. So, again, that wraps up this series event, Two Men and in a Park. But again, we appreciate everyone being here. We know you all have lots of choices with your time and we're glad you're able to spend an hour with us.
Doug: Frank, thank you for everything you do and thanks for having us on.
Brandon: Appreciate it.