The Timeless Science Behind Mobile Home Park Investing

Mobile home park investing is a strategy that stands resilient in good times and bad. In this special Lecture Series event, we delve into the science behind mobile home park investing, demystifying why it's possible to generate profits regardless of interest rates and the direction of the U.S. economy.

Our speaker for this session is none other than Frank Rolfe, hailed by the New York Times as “the human encyclopedia of all things mobile home parks.” As part of the 5th largest portfolio of mobile home parks in the U.S. and with over 400 mobile home parks to his name, Frank offers an unparalleled range of knowledge on this fascinating subject.

This lecture was delivered live, allowing viewers to visually understand the numbers, providing a richer and more tangible perspective on mobile home park investing. Whether you're a seasoned investor or just starting out, this recording offers valuable insights to help you navigate the promising world of mobile home park investments.

Don't miss out on this insightful exploration of a robust and unique investment strategy. Watch now and empower your real estate investment journey with practical knowledge from one of the industry's most experienced voices.

The Timeless Science Behind Mobile Home Park Investing - Transcript

Welcome to our MHU Lecture series event. We're very glad you could join us. I know you have lots of competing things you could do with your time right now, so we'll certainly try not to disappoint and give you just strictly facts and figures and let you decide what you wanna do with that information. Let me say on the onset that when we discuss the science of mobile home parks, I am setting aside all politics. I am setting aside all media mentions. I don't care about anything but the industry itself because science does not go through filters. So as we discuss this, which is a presentation basically just based on numbers and a lot of thoughts that coincide with those numbers as we analyze risk and timing, I'm not doing that through any filters at all. So this is just unfiltered, the good, the bad, the ugly on how the industry works, the science of the industry, and why now is just as good a time to buy Mobile Home Park as any other time in American history.

So let's start off with a topic which may seem ugly to some people, sensible to others. I have an economics degree from Stanford, not that that means much, but I did have to study the cyclical nature of American economics. And let's just talk for a moment about the recessions over the past 40 years, since I'm sure you watch the news earlier today or watch it maybe every day. And whether you watch Fox or CNN, it doesn't matter that in fact you're probably very alarmed at the way America is heading, particularly economically. 'Cause we all know behind the media trying to gloss over the realities of life. Things aren't going well. We all know when we go to gas up the car, it's $4 a gallon, which is up tremendously. We know everywhere we go the costs are exceedingly high.

And we see all kinds of strange sites like the grocery store where there's no items on some of the aisles because they can't get the items. And we see that there's shortages now of medications and all kinds of problems. But let's go back historically 'cause America's had problems in the past. So let's just look back on those eras. So since over the past 40 years, if we go all the way back to 40 years ago and just look at each recession, let's just start there. So the very first recession you have is the 1980, 1982 recession. That was the recession that is most tied to the era of Jimmy Carter. I was there during the Jimmy Carter era. I was actually in college at that time, but I had summer jobs and my summer jobs told me things were bleak. I saw, I worked at an ad agency in Dallas. I saw people being laid off and just much mass unhappiness.

And then the next recession after that was the 1990 to 1991 recession. Which tied kind of to the Texas savings and loan crash. But the important item is the span. So between the end of the '80-'82 recession and the start of the 1990 and 1991 recession, we had an eight year period between those two. And then between the 1990 and 1991 recession and what is known as bust, which is what they call the 2000 recession, we had a nine year span between those two events and then from bust to what is called the Great Recession, which occurred during the era of Obama 2007, 2008. We had a shorter span. We only had a six year span between those cataclysmic events. So you had two extremely rough recessions with only a six year span between them. And then you have the distance from 2007 to 2008 and today 2023, that's a 15 year span. That is a bigger span than any of the other two periods combined.

And we have not had a recession. Now some would say, wait a minute, yes we did. We had a recession right during COVID, while the government says that wasn't a recession and if it was a recession, it would've been the shortest lived recession ever. So I'm not sure we can really count that. I'm not sure how we actually count much of anything during COVID. There was so much manipulation of numbers and things. I don't know if we can even believe in any of that entire period. But all I know is the government tells us, no, we didn't have a recession then. It was just a figment of everyone's imagination. But it's been 15 years since we had one. So the question is, are our current leaders really that good? Are they the best in the history of America? Because if you haven't had a recession in 15 years, yet we've always cycled as a nation having them nearly once every decade.

Have we finally beaten the concept of recession? Is it that we are just that much more brilliant than any of our predecessors? Do you honestly believe the current American administration, Jerome Powell and everybody else who's in charge really is that good that they're the greatest economic leaders and players of all time? Or instead, are you a believer that we're gonna have one heck of a recession? Because when you don't have a correction like we normally have as a nation every 10 years, like we almost always have, and you stretch that rubber band to 15 years, we're gonna have a doozy. So that's the most likely scenario here. Something really terrible is about to happen. Or on the converse, you may just say, no, no, you're completely wrong. We have now ended recessions.

They'll never occur again. We are so good now. We are so smart. We have eradicated it. And the nation has eradicated some things in the past, right? We eradicated polio for the most part. Jonas Salt came out with his vaccine, everyone got it and it seemingly ended, it was a nightmare scenario back in the 1930s, I think, and maybe '40s before the advent of that inoculation where people just would get polio and have terrible ramifications. And we did beat that, but we're not gonna be able to beat economic cycles. Just not going to happen. Part of the entire free market enterprise is.

The factors, the forces that lead us to have what is seemingly a very predictable recession every 10 years. So you only have two paths. You can either say no we're never gonna have another one or yeah we're gonna have one soon. It's gonna be a real doozy. So what happens when the recession hits? Because I am in the camp of those who believe it will hit I read constantly everything I can get my hands on, newspapers, magazines everything online and all of the good economists say yeah we're doomed. We're gonna have it. And the people who always say no we're not gonna have it. They're trying to sell you stuff for the most part. So when some economist at a major US bank wants to tell you no no we won't have a recession. I don't think that counts when some person from a large stock exchange says no no we won't have any more recessions. Buy more stocks. I don't think you can count that. Maybe we should look no farther than Warren Buffet who is the largest owner of mobile home manufacturing and financing in the US. A while back. He said it's probably been 60, 90 days ago that the glorious period of America has now ended.

Okay. That was a little gloomy. And then you probably saw recently that they started to release some of the projections and things from the various businesses that are under the entire Berkshire Hathaway label. And many of those were showing sales declines of 10, 15 even 20%. And if you look at the forecast from Walmart forecast from Costco they're all pulling in their horns. They all think something terrible's about to occur. I tend to go with them. I'm more in their camp than people who are trying to sell me stuff. So I think we will definitely have one. So what's gonna happen when that recession ultimately hits? Well number one the stock market's gonna collapse. Perhaps that's why Warren Buffett recently sold $8 billion of stock I believe in the last few weeks. And he isn't buying any back because he knows things are gonna go down and then he is gonna buy things at depressed prices. Look at what happened in 2007, 2008. Look at what happened in 2000. It's just to give in America that when we have these bus cycles stocks go down. It's just completely natural.

What's another thing that happens when you have a recession? Well you're gonna see interest rates go down. How do I know this? Because they have in every recession over the last 50 years. I gave a lecture series discussion on this I don't know a few months ago. And if you recall what I showed it was, go down normally about two to three points from the recession to the next cycle. So basically if we had a recession today or if you look what happened in 2007 and 2008 and the Great Recession the interest rates went down significantly. Now 2007, 2008 went down more than two to three points. In fact that was the largest point decline of any of the recessions in the last half century. Will they go down again so much this time? I don't know. Our nation adopted quantitative easy. We took interest rates down to almost negative numbers almost following the course of Japan. But it's a lead pipe cinch that if we have a recession and you average all the recessions of the past even though they might go down even more you're gonna talk a two to three point decline.

And why that's important in this part of the conversation although we'll touch on it again later is that a lot of people right now think the way to invest is CDs. Let's just Put all of our money in CDs. We take all the risk off the table unless the government goes bust which it really is insolvent and that that's the way to go. And that would be true if CDs did stick at 5%. The problem is I've seen this cycle before under Ronald Reagan CDs went to 10% and everyone said, "Oh my gosh why do I bother to invest at all?" Why even put it in the stock market? I'll put it in a nice safe 10% CD. What happened? Well it totally dropped down a ton real fast. So probably given the normal nature of interest rates when the recession hits and the interest rates decline that 5% CD will drop down to probably around 2%. So that's not even going to keep you on pace with inflation. In fact right now even at 5% CD rates that's still not even keeping you on pace with inflation. Another casualty of the big recession will be real estate based.

You are going to see and you are already seeing a cataclysmic decline in office values, retail values, hotel values, self-storage values, and industrial values. And there's a very simple reason why, because all of those things rely on a strong economy. None of those are necessities. Now office already had problems going in as we all know because people don't go to the office anymore. And even before COVID accelerated it, you were already seeing people who were saying why do we need this big fancy office? It's no longer important to our company. Let's just downsize or let's get rid of it altogether. And then came COVID and you had to shut your office down. You really didn't have any kind of choice and people just aren't going back. You see that constant headline businesses saying please come back. And employees say no I don't wanna come back. So office is really pretty much doomed. How do I know? Well I live an hour south of St. Louis and St. Louis's largest office building recently sold for $4 million. It cost around $100 million to build it and it sold for $4 million.

You might say why so low? Because the people buying it know that there's no demand for office in St. Louis so they're gonna convert it into apartments. They intend to spend a $100 million rebuilding it into apartments. So the value less than that of the cost to do it took the value of the hulking structure down to about $4 million. And you saw recently there were some other defaults I think Starwood Corporation they defaulted on some of their loans. And in each case the values had plunged significantly from what they had on their notes. Retail we all know is doomed. You can go in any modern American mall and walk around and you'll see nothing but vacancy everywhere. And you'll see stores that were just open last time you were there, few months ago and now they're gone too. So retail's got real problems. And of course lodging's in a mess. Ever since COVID it's just never really recovered. But was it really even doing that well before COVID? I'm not even sure. You saw giant markdowns at most every hotel, you can go and stay in Chicago with the finest hotels. You could go stay at the Drake Hotel in Chicago on Michigan Avenue. Well I don't know for maybe $100, $150.

Probably down about 2/3 of what it was at one time. Self storage's problem is an identity problem. Is it a necessity or is it a luxury in more of your suburban exurban markets, people are hanging in there because they view their storage as being important to them and they have the money to still pay it. But in a lot of your urban core areas of America, you see nothing but declining rents and declining occupancy as people sell their stuff on eBay and shut off that extra piece of their budget. And then of course, industrial real estate gets killed in recessions because businesses close. And unless you have an A grade tenant, and even if you have an A grade tenant, there's no guarantee that they may not declare bankruptcy and wanna rework leases or walk away from these commitments that they have. In my opinion, the only real survivor you're gonna have when the recession hits, the only industry that's still gonna have demand and people are still going to pay is housing and particularly affordable housing.

So you have two components to affordable housing, apartments and mobile home parks. So I would say of all the different investment vehicles out there, stocks, bonds, CDs, and every other thing known to man, the only two you can really count on, and I think most people would agree, is affordable housing. There's been many articles written recently by different economists saying exactly what I'm telling you, that's where you'll kind of wanna be. So let's just analyze for a minute the science differential between apartments and mobile home parks. Let's start out with the stability of your tenants. The average tenant in a mobile home park. We are told, bear in mind, nobody tracks this data. We don't have any national association that tracks any of this, but it sounds legit to those of us who have been in the business for 30 years, is 14 years. So the average mobile home park resident, like in that mobile home right there in the picture, we would estimate them to be living in that home for roughly 14 years. In apartments, however, your average tenant is only there normally a year. So there's a 14 for one stability quotient between mobile home parks and apartments.

Now there's a good reason for that because the person in the mobile home in the picture, they own that mobile home. That's an old 1980s home. They own it free and clear. They're never gonna leave. We'll never find a three bedroom, two bath home where they can park by their front door and have no neighbors knocking on the walls and ceilings and have their own lot. They're never gonna find that, ever again at that low price. 'cause right now they're just paying lot rent. So they're not gonna leave that home unless something catastrophic happens. And apparently in our industry, something catastrophic tends to happen every decade and a half to those residents. But that's a big difference right out of the chute. When you buy a mobile home park, you have a very good predictor of the revenue. You do not have as good a predictor in apartments because you have such constant turnover.

Next, the ability to increase rent. So we're gonna talk about that in a little more depth, but we all know the answer on this one. Mobile home park rents are ridiculously stupid low. I'm constantly criticized for pointing this out. People in the media say, don't tell people that. They might realize how stupid low they are and raise them. Well, you know they're stupid low. If you look at a mobile home park and you look at the apartments in the single family in that market, let's see what you see. Typical single family home in the US is now about $400,000. Average apartment's $2000 a month. US average lot rent is $300 a month. It doesn't take a rocket scientist to see the problem there. There's no way you can rationalize why Mobile Home park lot rents would be at $300 when apartments are at $2000. Many people prefer the mobile home park products.

So it can't be, Apartments, they are way nicer. No, that's not true. It all revolves around something we called mom and pop quantitative easing. Mom and pops have never kept up with the times on increasing the rents. They went decades without ever increasing them in line with inflation. How do I know this? Well, if you just buy some old nostalgic bit of trivia on eBay or Etsy on trailer parks, if you ever happen to get one of the old brochures, most of the mobile home parks were originally constructed using $50 and $60 per month lot rents. The early brochures will say, Come stay at Big Oak Estates.

Our lot rent's only $50 a month. Well, if you inflation adjust those rents you would find today, that would be about $500 a month. So what happened? Well, mom and pop never increased at that little 2% one year and 3% one year. And then when you got into the later times, 7% and 8% and right now you'd be going up 9% and 7% and 5%. They never did that. Was it because it was too complicated for them to calculate? Probably not. They probably just thought, well you know what? My 30 year mortgage is based on this much payment. And bear in mind that mobile home parks always were side hustles for the early pioneers that built them. So they weren't trying to live off the mobile home park. Often they had regular jobs like a mailman who then happened to go out and build a mobile home park on their farm. But it was always just side money to them it was never that serious. But as a result, our rents are crazy low. When apartments are at $2000 a month, it's hard to imagine you can increase them a whole lot and still find any customers. When Mobile Home Park lot rents are $300, could you go to $400? Of course $500, yes. $600, yes. $700, $800, $900. Absolutely. Just look at around you. Look at some of the other markets.

Denver, the rents are almost at a $1000 a month. They're completely full. So I'm not saying everyone should jump right now from $300 to $1000, but clearly that's in the realm of possibility in the years ahead, that mobile home park lot rents are going to go up. At least enough to make sense against their biggest competitor, which is apartments. Next, you have CapEx demands. Now what do I mean by that? Well, I'm talking capital expenditures required to keep your property going. So when you own an apartment building, and we've owned some that came with mobile home parks that we bought, and we've never been big fans, it seems like with apartments, every time you think you're gonna do good, you're on budget. Something terrible happens. That's how it always works. Water pipe busts in the upper unit floods the upper and the lower massive cost. Right. There goes the roof. The roof starts leaking, gotta re-roof, and there we gotta do the foundation. You don't have those kinds of things in as much frequency with mobile home parks, yes, we do have some items we're required to have. We've got roads, we've got water pipes, sewer pipes, power pedestals. But in that photo, what are we not responsible for? We're not responsible for that house. And that's where all your repair and maintenance comes in.

So, apartments tend to have lots and lots of capital calls for big items. Mobile home parks don't. Most park owners budget those big items on the front end when they buy it, and they rarely have another one until they go to sell it, if they ever have another one. Then you have your cash-on-cash returns. Typical mobile home park buyer, as we'll see in a minute, is striving to hit about a 20% cash-on-cash return. That's the return on your down payment. The average apartment buyer is looking for half that. And that's simply because the cap rates on apartments are lower than the cap rates are on mobile home parks, and your ability to push the net income on apartments is not as much as you have on mobile home parks. Then you have the management complexity. A mobile home park, the word park in mobile home parks stands for parking lot. That is what it's all about. Well, you're basically a parking lot for mobile homes. So when you're just a parking lot, what do you have to do? Well, I have to keep the road there in front of that home. I've got to have that where it's passably paved, and the water and sewer flowing, and power going, and that tree in the background, I've got to cut out any dead tree limbs or dead tree.

But that's where my job ends. The person who rents that piece of land from me, which in the picture is the green stuff, the grass around the home, but also the parking pad where the pickup truck is parked, and the sidewalk out in front. As long as those things are in is a good working order, my job is done. That person pays me rent for the right to park their mobile home on my property. But when you own an apartment complex, you have tons more management issues. Every time a resident leaves, you've got to rehab their unit. Every time they call with something broken, you've got to fix it. And since they're churning at the rate of an average of once a year, you constantly have things you have to do. The average park owner, and if you listen to some of my other lecture series where I interview people, like just last month, the average park owner spends four hours of management per month. I'm sorry, per week, not per month, although there are some parks that might be per month. You will never be able to hit that amount of time spent on an apartment complex. It's going to gonna come in way more.

And then finally, the ability to get in with limited capital. When you look at apartments, for the most part, it's always priced in the millions. Mobile home parks are typically priced, and they are a wide range. You do have the ones that are very expensive, many, many millions of dollars that are typically the bastions of private equity groups and the larger players. But on the smaller side, you can get into mobile home parks in the thousands. And that's a big difference. So you can find mobile home parks in your market. Many of them that will be priced $200,000, $300,000 $400,000 $500,000 those kinds of price points. They don't exist in apartments for the most part, just because of the apartment rents and the cap rates.

So you don't have to invest in mobile home parks, is what I'm telling you in this presentation. You can also invest in apartments, anything that's affordable housing related. But I can guarantee you right now that if you don't invest in mobile home parks or apartments, none of the other traditional options are going to work. They're just not. They haven't historically, and they won't in the future. Look at any economics textbook, and it will tell you who does well in each period of recession and boom. And you'll see that affordable housing is always a solid granite foundation in times of trouble, whereas stocks and other items do not fare nearly as well.

So now let's move on to the simple science of mobile home parks investing. So how does the whole thing work? Why would you even wanna do it? Well, let's just use an example, because it's much easier just to use an example to illustrate what we're talking about here. So we're gonna assume you've got a 100% occupied 40 space mobile home park located in anywhere USA, because they abound anywhere throughout the nation. The only place you don't find mobile home parks is Hawaii. And the lot rent is $250 a month in this example, and the park pays the water and sewer. So everyone has it. We've got a 40 space park that's 100 occupied. So we've got 40 occupied lots in our parking lot. And they're all paying a parking lot fee of $250 a month. And that parking lot fee includes their water and sewer. So we have 40 lots times $250 a month times 12, and that equals $120,000 a year of revenue. And then the standard expense ratio when the park pays its own water sewer is 40%. So we take 120,000 times 0.6, and we come up with an estimated net income of $72,000.

Now let's assume you buy that income stream of $72,000 a year at an 8% cap rate. So you're gonna buy that park then for $900,000. And let's assume you put down 20%, which is pretty standard with financing. So it means I'm going to put down $180,000. I'm going to borrow $720,000 at 7% interest. And that gives me a one point spread between the cap rate and the interest rate. You might say, why do you put that on the slide? Why do I care about this spread concept? Because spread is what creates the extra powerful return levels in real estate as opposed to people who buy businesses and other things. Because we're using leverage as a tool. And as long as your cap rate is higher than your interest rate, it boosts your yield. If I bought that Mobile Home Park for $900,000 cash, let's assume you could just write a check for $900,000. Would you? Should you? No.

Because, if I buy that $900,000 with all cash, I will only have an 8% total return. However, you'll see in a moment, if I just have a one point differential, assuming 80% loan to value, here's what happens. My day one cash on cash return is going to be $72,000 of net income, less the loan interest of $50,400. So my after interest net for my cash on cash return calculation is $21,600. Everyone see that? You take $72,000, which is your NOI, net income, I take out the loan interest of $50,400 and I end up with 21,600.

Now $21,600 on $180,000 down payment means I have hit a 12% cash on cash return. So what's that tell us? It tells us that instead of getting 8%, which is what I would have if I did not use leverage and bought it with cash by using leverage at 80% loan to value that 1.0 differential between the cap rate and the interest rate got me 12%, it boosted me up 50% higher on my return. So I would've been 8% in the absence of leverage. But with just 1.0 spread on normal leverage, I've jumped to 12%.

Now what do I do after I buy this thing? So I bought this 40 space park, it's a 100% occupied. What do I do with it? How do I make it worth anymore? What am I gonna now do? Well, the first thing you do with any mobile home park is you enact what is called no pay, no stay collections. And that simply means that if you don't pay the rent, you gotta go. It's not mean. All it is is running a business. You cannot have people that come to your restaurant, for example, and then walk out and don't pay. You won't be in business very long, right? So in our industry, which is a parking lot, if you wanna park your trailer on one of our lots, our only requirement financially is that you pay your parking fee every month. And if you don't wanna pay your parking fee, I can't make you, but I can't let you live there.

That's how it works. Now, sometimes when you buy mobile home parks in a 40 space park, you may have four people who have not paid their lot rent in years. Why? Because mom and pop typically has befriended many of the residents, they don't like the idea of having to go to court. And so they just tell the tenant, Hey, you know what? I know times are tough. Just pay me when you can. And of course that message gets spread through the gossip mail throughout the park. Basically the message is, you don't gotta pay your rent anymore because hey, mom and pop, they're not gonna evict you anyway. And next thing you know a whole bunch of people aren't paying rent. So many mobile home parks we buy on the front end, we may have an entire third of the park that hasn't been paying the rent.

At least paying it every month. And what do we do? We go to the residents and say, look, we're the new sheriff in town. You have to pay your rent every month. We may forgive what you have not paid in the past, but starting right now, you have to pay every month. And if they don't pay you, you have to file evictions. And if they file, they get to know that you mean business that you will evict them, if they don't pay, then they start paying. You can typically plow plough through and fix the collections issues in most mobile home parks within a couple collection cycles.

Now, why is it? It's because they can't find anywhere else as cheap. That's the issue. It's not 'cause they can't move the home. It's not for any other reason. It's simply they cannot find anywhere else where they can have their three bedroom, two bath home and only pay $300 a month on average. So as a result, if you say you're gonna have to leave and they go out and they price apartments and they're a $1000 a month, $1200 a month, houses are completely out of their ability, then they're gonna pay you 'cause they got nowhere else to go. Number two, you enact rules. Now, what do we mean by rules?

Well, every place has rules in America, every city has, I live in a small town in the Ozarks. And yes, we have rules. There's things that are allowable and not allowable. But a mobile home park is private property. The city inspector rarely goes in it. So the park management is responsible to enact the rules of the park. And yet many moms and pops fail to do so. So you may go in a lot of mobile home parks and you'll see non-running cars everywhere. You'll see giant dangerous breeds of dogs roaming the streets, trash, unmowed grass, home a complete disaster. And we have to go in now and fix that. We have to go to those residents and say, Hey, we're trying to bring this mobile home park back to life. And here's the situation. You can't have three non-running cars with trees growing through them in your yard. That has to go.

Then you go to the next lot and say, okay, here's the deal. We love having you as a customer, but you have to seal that rusted roof, it's hideous. And you just basically go lot by lot around the park to let people know what is and is not allowable.

Then you install professional management. And let me tell you, most customers love professional management. 'Cause many moms and pops played favorites. They just did. They often saw their residence as their friend network and some were friendlier than others. And some got to go eat dinner with them and go fishing with them and others didn't. And the ones who didn't, never got treated the same as those that were their personal friend. So when you say, hi, mom and pop are now gone, and we are the new professional managers out of a 40 space park, 38 people are gonna love it. And the only two that are not, are what the people that mom and pop perceived as their best buddies. Which in fact, we're only pretending to be their best buddies to get away with murder and not pay any rent. So most people like professional management.

And then we make all of the needed repairs to the park, whatever that case may be. Maybe the park has got some serious water breaks, we gotta fix that. Maybe we have some caved in sections of the sewer, we gotta fix that. So whatever needed to be done to make that parking lot functional, that must be done. And then we're going to typically install a nice entry and signage. In our case, we love three rail, white vinyl fence down the frontage with attractive new feather flags spaced every 50 feet. And a brand new sign sometimes with an all new name in front of that mobile home park. And then we do what's called streetscaping. Now what is streetscaping? Streetscaping means you just sit there and ponder, looking down the street, what are the top 10 most annoying things going on here visually? And then you seek to fix those. So streetscaping typically will revolve around some of the biggest eyesores.

The rusted roofs are huge. Homes that are not painted properly, homes that are covered in moss or mung of some type, non-running vehicles, old dilapidated sheds, those type of items. And you'll find with streetscaping, you'll start off with a list looking down each street of your top 10 worst. You fix all those. Then you come up with another five or six and you keep repeating the process till you make the thing look really, really nice. And by doing everything I just mentioned, you jumpstart pride of ownership because one problem in many mobile home parks going all the way back to my first park, Glen-haven, the residents are not proud to live there. Lemme give you an example from Glen-haven. So I originally self-managed Glen-haven, but I had someone who lived in the park named Stephanie, who minded the store when I was not there, nights and weekends.

And we had to go fix some decks and some other items. So Stephanie and I went down to the Home Depot store to buy some lumber, some paint items like that. And so they then said, so what's the address? And I said, Oh, the address is that, she cut me off. She just says, sent it. Oh right. Knocked me completely out of that loop and said, Oh yeah, our address is like, 12 605, South Earl Thornton Freeway or something. And I thought, that's weird. But she was so intent that we not give them the address of the park. I thought it was kind of weird. So we left the store, I said, Stephanie, why did you not give them the park address? What address did you give them? And she said, oh, I gave them the address to the Baptist Church next door.

I said, but you're gonna have to hand carry all that heavy lumber from the Baptist Church to the mobile home park. Plus you're gonna have to watch for the truck to know when the lumber is there. She said, oh yeah, I have no problem doing it. I would much rather go and watch for the truck and then when it arrives, go and sign for it, and then haul it over board by board of the park than let anyone know I live in that mobile home park. That's how embarrassed I am to live there. Well, you can't operate a good business like that. That doesn't work. When you go in to mom and pop's creation, which was once maybe a wonderful place to live, but often has gone down the drain. You've got to get that pride back and you get that pride back by making people make improvements.

And by fixing common areas and by having a general attitude of we are not gonna tolerate people who are bad neighbors any longer, if you wanna live here, you gotta have to care. And that is called pride of ownership. And it's a very powerful force. Once you get pride of ownership going, it's like a perpetual motion machine. The more people fix up their mobile homes and yards than more other people do, it's just basically keeping up with the Joneses.

Now, as we clean up this park and make it nice again and bring back pride of ownership. Now we have to straighten out this whole saga with the rents, because in this case, the rents were crazy stupid, idiotically cheap at $250 a month. So I'm gonna elect to raise the rents $42 a month annually for three straight years. So my rents are still crazy stupid, make no sense cheap. I'm at $376 a month instead of $250. Don't worry about the percentage increase. Percentage increase means nothing. The Dollar Store recently went from a $1 an item to $1.25 nationwide. If you go to the Dollar Store, you'll know it's true. I go to the Dollar Store in my small town all the time, that's a 25% increase. So you might run the headline, Dollar Store goes up 25%, we need to go on strike and cause a revolution. No, they went up from a $1 to a $1.25.

So don't just try and spend things based on percent, that's not fair. It's not accurate. So in this case, yeah, the rent has gone up significantly up to a whopping ridiculously low, $376 per month when the apartment down the street is $1400 a month and the nearest house is worth $250,000. Is that really expensive? No, it's crazy, stupid, cheap. If someone from another planet landed, you can never explain to those aliens how in the world you came to be so much less than your competitors, which really aren't that much better. So it's still crazy, stupid, insanely cheap.

Now what happens? Well, now we have 40 occupied lots times $125 a month, which is how much we've raised the rents over the three year period times 12, which is $60,000 a year. And that all goes to the bottom line for the most part. There's not a lot of costs coming out of that, if any. The only adjustments on cost might be, now that the park is looking nicer, your property tax might go up, but at the same time, your insurance might go down because it's deemed to be a lower risk. So in the case of what we're talking about here, we're just going to assume that it is neutral on cost and it's just all going to the bottom line. So I add that rent increase to my day one after interest net of $21,600. Remember from the earlier slides, and I now have $81,600 a year as my after interest income on this mobile home park.

I take that and divide that by my down payment of $180,000 from day one. And I've now leaped to a 45.3% cash on cash return. You might say, well, wait a minute. Now that is such nonsense. What am I watching? Some wacky infomercial. No, it's called math. There's nothing unusual, nothing special. If you can find a problem in my math, please post it. When we go to the Q and A session here, that's just how the numbers work. In this example of this one little park. So now I add the two together, my original $72,000 of net income before interest. And I add to that my $60,000 of net income that I have got from my earlier number. I'm $132,000 a year now of total net income.

If I then value that at a 7% cap rate, and you'll say, wait a minute, how come it's not 8? Well, I would use seven for two reasons. One, because the park is nice now. A more institutional owner is willing to reward me for making it nice by lowering the cap rate. And number two, because I'm gonna assume we'll be in a big old US recession by next year and the interest rates will start to decline. So I'm gonna say 7% is prevailing cap rate three years out, as opposed to in this example, eight. And the value now is $1.9 million. Again, it's not rocket science. It's not any kind of strange magic. It's just basically taking your net income and applying a 7% cap rate takes you to $1,900,000. If you recall from the start, I bought this mobile home park for $900,000. So my net profit's a million bucks, which I generated in just three years time. Now Sam Zell, who was the largest owner of mobile home parks in the US until he passed away here a couple months ago, he was always obsessed with risk versus reward. That was his mantra. That's what kept him out of trouble.

That's why he was known as the grave dancer, because he seemingly could spot when he needed to get out of assets and then when he should get back in again. So if you read his book, and the book is called Am I Being Too Subtle, one of the best business books for mobile home parks ever written, you'll see that his way he looked at everything in life was risk versus reward. Now it is kind of odd that he also liked to ride motorcycles. I'm not sure how that risk equaled the reward, but I've never ridden a motorcycle. Maybe it is worth that much risk. But let's examine what the risks are to everything I just said on that turnaround plan on that mobile home park. How could I go wrong? How could I screw it up? Well, number one, what if there's a bunch of CapEx requirements that I missed, that I didn't know? Well, the good news is if you do really, really great due diligence, you'd know that. So you would know that the water lines were shot. You would know that the electrical system needs to have some new panels put in. But if you did a really lousy job, then yeah, you might truly screw that up.

And if you screwed it up enough, if that park needed a whole bunch of CapEx, then you rate of return might not have gone up at all. Because even though you were raising the rents, the cost to fix the park up, that additional cost might exceed the benefits you'd had by increasing the rents. Number two, not having a legal permit to operate. One of the scariest things I found in 30 years of buying mobile home parks is how many mobile home parks out there do not have the legal permits to operate. First time I ever hit that was a park over north of Fort Worth, Texas. It was a big park. It wasn't small. It was right in the heart of town. I went to the city and I said, hey, I'm just coming in to check on the permits on this mobile home park. And they said, "That's not really a legal mobile home park. That thing is something that this guy built decades ago. And we never stopped him, but he doesn't have the zoning for it. So what we're gonna do is the first person who buys it, we're going to make him shut it down because no one wants to tangle with the guy. He's been here forever. He knows everybody. He's very litigious. So we're just gonna let him slide until he ultimately sells it."

So if you bought that 40 space mobile home park with no legal right to be there, yeah, you're gonna be ruined. Next, the rent is already at market levels. Now when we say the US average rent is $300 a month, roughly, that's not to say that that gives you any room to increase necessarily. There's some states out there, mainly in Mississippi, where you'll see lot rents as low as $100 a month. And if your lot rent was $250 and everybody else in town was at $100 it might be a whole lot harder to raise them than the normal trajectory, which is your rents are at $300 and the rest of the market's at $500 and $600. So you have to make sure you've comped your rents properly because if you can't raise rents and everything I just went over is negated. Next, if there's limitations on the ability to increase rents, for example, in California, you got rent control. In fact, you have rent control in other places too, Oregon's got it, right? And then in Florida, they make you do a thing called a the prospectus. This is a forward looking rent forecast that tells people what the rents will be five years into the future.

So if you want to raise them, you can't raise them until the next rolling year after those five years. So if you have no legal ability to raise them, well, then you couldn't do anything I just discussed. And then if you can't attract or retain customers because your park is ugly or it's on the wrong side of town or it's just in a bad market altogether, that would kill you because as you raise rents, people just run off. That won't work for you. Not having the ability to collect the rent because your customers are just too screwed up to pay you. And now it's impossible if you look at it that a customer could not pay you rent in a mobile home park because all earnings are backstopped by minimum wage. So in most states, I think in Missouri, for example, the minimum wage is 10 or 11 debt bucks an hour. So what does it mean? Well, there's 2000 working hours in a year. So that means in Missouri, if you hold a full time job, you have to make $20,000 a year because if you don't, then your employer is breaking the laws of minimum wage. And even at $20,000 a year and you break that up into what it's about $1600 a month roughly, you can certainly afford $300 a month of lot rent.

So there really is no excuse not to pay lot rent when customers tell you, "Oh, I can't afford to pay it." That's nonsense. There was an article I recently reviewed in that weekly thing that I do. If you're not getting it now you should, where I basically review all the industry articles to pick the pieces, all of them. They're so fraudulent. The media so hates mobile home park owners that they just love to write the most ridiculously stupid articles. And apparently the American public is so dumb, they actually read and must believe it because the journalists never seem to lose their jobs regardless of how dumb it is. And I read one where someone had a lot rent of $250 a month and was trying to tell the writer that they'd been on the same job for 17 years and now that the rate had gone up $30, they couldn't afford to live there anymore, they couldn't afford, they had to choose now between food and rent.

Hold on a minute, if you've had a job for 17 years, and if you'd worked your way up to minimum wage over 17 years, you could easily afford to pay $250 month. The article made no sense, but we see stuff like that all the time, but if you did have residents who just don't make enough, can't hold a job then you'd have problems that you would, of course, recycle those residents. Right. When you start doing no pay no stay collections, they would have to leave, but nevertheless on the front end, yes, you might have some residents, you can't pay the rent. Same with rules violations. If you go to the resident say, Okay, you can't have a giant pitbull running free in your yard, you can't have a pitbull in the park at all, and they say, Well, I'm not gonna live here without my pitbull. Okay, well, fine. So now they leave. So your rules violations has on the short-term basis, cost you to not hit your target, you're no longer at 40 occupied or 39, but of course, you'll be able to refill it assuming the park is in a good position 'cause it's still the best value in town for housing.

And the ability to obtain or retain debt, as you recall, we were talking about date at 80% loan-to-value ratio, that's pretty normal, it's pretty stable and conservative, and mobile home parks have the lowest default rate of any form of real estate in the US. But nevertheless, if you couldn't get the debt on the front end or you couldn't retain it, well, that would be a risk to this business model.

And then estimating the final cap rate incorrectly, let's assume we just go down the pathway of Venezuela and inflation goes to 1000% a year, and you know interest rates follow suit, and our 7% ending value wasn't very accurate, we had to be 7000% maybe, but I'm assuming the country isn't going to end, although I'm a Domesday kind of person, a huge skeptic who firmly believes we'll have a recession by next year, I'm not assuming the end of it all, I'm not assuming that the US basically goes down in flames and we become a hunter gatherer society. But if you do, if you say, Oh no, interest rates are gonna be 50% three, four years from now, then my ending CAP rate is wrong.

But the good news is every factor we just talked about on the risk side, you can pretty much get a handle on that, with some good practical thinking and doing really good due diligence, so I don't think there's anything really there that's gonna escape your ability to comprehend it. Alright, so what are some other benefits to this model when we are comparing mobile home parks and apartments, what are some other things that we don't normally talk about, people in the apartment industry, they have a certain set of mantra why they like apartments, and I'm seeing apartments will be just fine in the recession just the same as mobile home parks will, but what are some other benefits that people don't talk about a whole lot.

Well, one is the mode. And we all know the mode is a saying that came from Warren Buffet, and if you read his long and original quote, basically it says that all good businesses have a mode that holds off competition, and if you look at what he invests in, he likes to invest in businesses, you cannot even comprehend how you could compete with it because of the scale or patents or other limitations. Now, mobile home parks have probably the best mode of all, I think mobile have better modes than probably most of the virtual half of my holdings, because they've not allowed new mobile home parks to be built in about a half a century. So when you own a mobile home park, there's one thing for sure you never worry about, that's someone building one next door down the street, and that's a problem with the apartment industry, the storage industry, every other kind of industry in America, cities like development. If you wanna do almost anything anywhere, you bet, you wanna build a strip shopping center on every corner in the whole town, oh yeah, they'll totally give you the permits. We are the only industry in commercial real estate that you can't get the permit, and that blockade of new construction is very valuable, it makes all of our permits rare.

Now, there's 44,000 mobile home parks in the US, but the number decreases annually, 'cause more actually get torn down for redevelopment then get built new. So that's a huge issue, that mode issue alone is a huge difference between apartments and mobile home parks. And then you had the simple impossibility of trying to build cheap single-family homes. People tell me all the time, Well, it's only a matter of time till they can figure out how to build a $100,000 single family home. Well, I actually heard a guy, believe it or not, the University of Texas down in Austin, they have a professor of like single family homes, which is kind of crazy, but you remember that Texas is a huge... Maybe the biggest in the United States single-family home development state, and the guy in the speech and bare in mind, the speech I listen to is at least a decade ago, said that they will never again be able to build new homes that have a one on the front. Right, they're all gonna be in the 200s and up. And the reason is not the cost to build them, now he gave the speech long before COVID. And COVID has in many cases doubled the building components. The problem is that the average lot in the US is $80,000, so when you're starting off your average lot at $80,000, you're gonna blow right through the 100 price point real real fast.

So when we have a mobile home park we offer detached house in that market. There's no one who will ever be able to compete with us with another detached Housing Project or products, it's impossible. In my small town down at Ozarks, we are trying to bring and foster new subdivisions in the town, they've not had a new subdivision in probably about 30 years, and so the city has some land, it's very well located to be a single-family development, and the town dreamed, they hoped they could get the price point down into the twos. And they found out that even by artificially suppressing the price of the land and offering grants and everything else, they still are gonna have price point starting in the 300s, that's just the reality of single family today, so it's not something we'll ever compete with mobile home parks. Then you have the rising rents of apartments.

You know, mobile home parks are always going to be the ugly stepchild of the apartment industry. If you ever go to the Mobile Home Park Convention in Las Vegas and the apartment convention, you'll come away saying, wait a minute now, the managers of the apartments seem classier and smarter than the mobile home park owners. The door prize at the Mobile Home Park Show is if you roll a beach ball into a toilet seat, you win $500. This is the truth. At the same event, at the apartment symposium, the door prize was a brand new car filled with, I think $50,000 in cash. So the apartment industry is on a whole different scale than we are, and it will always remain such. We are never are going to ever approximate apartment rents. I do not think any mobile home park rent will ever hit $2000 outside of the few parks in Malibu.

So we always have that issue, which is not only are we infinitely cheaper than single family, we will always be infinitely cheaper than apartments. Then you have the very poor condition of Class B, C, and D apartments, which is a mega trend that's been going on for some time. In fact, if you ask most of our customers, why do you like living in the mobile home park? They'll say, oh, it's such an incredible value, and the apartments are so nasty. You know we always think of apartments as being those beautiful class A brand new ones. But what happens to apartments when they get older? What happens to 50-year old apartments? Well, they don't tear them down, they just fall down a few notches of quality and they become really bad. And the other problem is, many of your big apartment owners, they tend to sell those aging apartment complexes to people, moms and pops who don't have any money to fix them up.

So at the same time, most mobile home parks in America are getting nicer, most apartments are getting nastier. Then you have just a simple desire for detached housing. This is a COVID related phenomenon. That's where we saw a real big shift in the American attitude between attached and detached housing. So when COVID hit, suddenly there was a premium put on detached housing because when it's detached, you have a yard to hang out in and you don't have any neighbors knocking on your walls and ceilings. And it seemingly during COVID was a safer way to live. Now the problem is people liked it. A lot of people suddenly realized, wait a minute, I don't like my apartment. I wanna be detached. I don't wanna have noise. I wanna have privacy in my own yard. So we saw coming out of COVID, stronger demand from mobile home parks than anyone has ever seen before.

And that was one of the reasons, once people had the taste for detached housing, they didn't wanna go back to attached. Then you have the simple US demand for affordable housing. It's something that America is doing a lousy, lousy job of providing. I dare you to show me any new development in America that is a price point lower than something in the 200s. And even then most of those are pretty bad. So why can't we create affordable housing in the US? Why can't we come up with a third thing to compete with apartments and mobile home parks? Well, one reason is the price of the lots and the other is just the simple fact dynamics of what houses cost to build and because we don't want cheap housing in the US. It goes back to the affordable for, I'm sorry, the uniform building code, the UBC. Basically what the UBC has done is it's changed the way that our country looks at housing. We no longer are on the cutting edge of things. Today, the entire single family industry fights everything.

You saw the mobile home park industry for a while was promoting something called cross mod. The cross between a mobile home and modular construction. How did that go over? Terribly. I don't know if they sold any of it. Why? Because nobody wants it. They don't want it in their area. The single family industry is giant in the US and has stranglehold on all of your local ordinances and permitting processes. And even though we now have things like 3D printed homes, people building homes in storage containers, tiny homes, we don't allow any of that in the US legally. So that's something that maybe over time will be relaxed. I don't know how many decades it'll take before they start allowing more affordable products to come into play. I don't even know then how much affordable they will be. But if you look at magazines from other countries and look at how their affordable housing is structured, you'll see they're doing a better job of it because they're realizing the limitations in the old stick-built model. And so they're allowing things like 3D printing of homes and things like that, right?

Also, the mobile home park industry and the apartment industry share this. They're both nationwide in scope. You know, there's some things that if you want to invest in, you're never gonna find them near where you live based on where you live. For example, if you said, well, I only want to invest in boat marinas, okay, but you have to have a body of water to have the boat marina. So you might say, well, gosh, the nearest boat marina to where I live is 12 hours drive away. Okay, well then that's how far away it is. But in most cases, you can find plenty of mobile home parks and apartments within a four to five hour driving radius of where you live.

Also, and this is a big deal to me, is that mobile home parks and apartments also, we are built on the science of numbers and not perception. That's what always bugs me on single family homes and single family home values, is they're not based on math. They're not based on net income. If you were to rent the house out, let me give you an example. I was in Chicago years ago just walking down the street and I saw a three story brownstone building off Michigan Avenue and it said for sale or rent. So I, being someone who's always infinitely curious, I called up the real estate broker and said, Hey, I'm just kinda curious. I'm standing out here on the street looking right in front of your brownstone that you have for sale. So if I wanna rent it, how much is it? And they said, oh, that location, that's a hot location. Rent of that thing is $6000 a month. I said, okay, what if I wanted to buy it? Oh, if you wanna buy it, well that's gonna be like three or $4 million.

I said, now wait a minute here, fella, I'm not in the brownstone business but I am in the housing business. If you rent that for $6000 a month and you take out your property taxes and your insurance and your repair and maintenance and all that, you're not netting more than a couple grand a month, $24,000 a year at a 10 cap, $240,000 at a one cap, $2.4 million. So how in the world does that make any sense? To which they said to me, oh, you don't understand houses in Chicago. They're always just going up, up, up. If you buy that thing, it'll go up another million dollars of value in a couple years. And we have seen a lot of that in a post COVID world. We've seen some neighborhoods and markets in the US where home prices have soared from point A to point B, but it doesn't tie to anything.

It's just perception. It's just the same as if people like or are interested in classic cars and they say, oh, 67 Corvettes, I want one of those. And they go to the auction, they bid the thing up to $250,000 and years later people say, ah, I don't like those Corvettes anymore. And it plunges down to $70,000. That's because the value was always just based on perception, just what people thought it was worth. Mark Cuban, the guy on Shark Tank, who I know his story 'cause I'm from Dallas and it's not exactly the story most people think, it was kind of a build a business and sell it to a sucker kind of a business career. But he has this mentality to me of always thinking kind of weird outside the box. And he said a while back that the value of everything is just based on perception, right?

Well, yeah, except for things that are actually built on math of net income. So sure, the stock market is built on perception. It doesn't tie to any price to earnings ratio anymore. And the value of single family goes all crazy and cars and everything, but they're not tied to anything. How many stocks do you know in America that are tied actually to even making a dividend? Hardly any. What's the dividend on Tesla? What's the dividend on Amazon? All these companies are so highly rated. Look at Tesla. Tesla is worth more or was than like most of the other US car companies combined. Is that based on earnings? No, it's not based on earnings. What's it based on? Perception. Everyone thought, oh Tesla, it's cool. It's gonna go up in value. And mobile home parks don't share that attribute. They're based just on how much money they make.

So if you don't believe me on any of this, look back on some of the lecture series that I have done in the past. So I've been doing lecture series for about 15 years and I try and do a park owner every other lecture series and you'll hear about them and their stories, they bought the park and here's what they did with it. And I typically try and only interview people who've actually then sold their park or one of their parks because I hate things that are based just on the theory of the perception of value. I'm only interested in stuff where it actually mathematically ties. That's one of the reasons that mobile home parks and apartments will do well in the recession is 'cause they actually produce money and the money stream doesn't end. That's the key item. But a lot of other things they're not even built on the concept of actually making money.

Alright, let's talk for a minute about timing, right? So where are we at on timing? Well, life is a timed event, sadly for most people. So if you look at some of the things you see on TV, some of the different sporting events, there's some that aren't timed and there's others that are. So if I'm gonna track meet, that's a timed event. So if I don't hit a certain time, I lose. But then there's other things that you do that they don't really seemingly have any time. Like if you're in school and they say, okay, well you got, you have the entire summer to write this book report, that's kind of a non-timed event, right? You have infinite time to do it, no pressure. But unfortunately everyone has a time clock and it's just ticking away.

So if you say to yourself, well you know what? I'm not even gonna look at mobile home parks until the recession is behind us. You're gonna lose a lot of years and you might've found something during that period because unfortunately that's not the way we're wired. You don't, no one has the luxury of just saying, oh, I don't care about time. I'll just sit this one out, sit that one out. Oh, I'll revisit it. It's like someone who goes to Hollywood and says, oh, I wanna be a movie star. At some certain point it didn't happen, right? I mean, maybe when you hit the age of 40, you need to say, you know what, I'm not a movie star, so maybe I need to move out of Hollywood and start a different career.

But you always have that time clock that's attached to you that if you don't do something, you're gonna run out of time. Also, if you buy parks right now, one thing's for certain, you're probably gonna benefit from interest rates going down. If you believe my premise that we're gonna have a recession and that rates go down in recessions, which to me is science. But if you think we're gonna take a different path, then so be it. Because we all at the end of the day have to invest based on our own personal beliefs. So if you think there is no recession coming and you think that interest rates are never going to decrease, then this comment I'm completely off-base on for you. 'Cause you don't believe in that. I believe it, it doesn't mean you have to believe in it, but I will tell you that if you bought a mobile home park where the cap rates are higher because the interest rates are higher and the interest rates then decline, you look like a genius because your one point spread at purchase maybe has now grown to three or four points simply because interest rates declined.

Then you have the fact that sellers are getting really, really old. So this is just a fact that most of these mobile home parks are owned by what's called the greatest generation or the silent generation. And they're all typically old, 80s, 90s, and so they're not gonna be around forever. And the problem is as they die out and it goes into the hands of heirs, those heirs are not going to wanna carry any paper. They're just gonna want the cash up front. And they may not be as easy to work with as moms and pops who are typically very nice, good natured people. So that's another problem.

And then you have the advent of consolidation in the industry. Our industry is so weird. Everyone is so politically afraid of their own shadow. The industry's started to pick up as far as consolidation and then suddenly out of nowhere, Elizabeth Warren sent a letter to every private equity group in America, a circa about 2018, 2019, saying, "You better not buy a mobile home park, or I'm coming after you." As if she has any political power to go after anyone is issue one. It was obviously just a PR stunt. Didn't make any sense. Why would you single out mobile home park owners and not payday lenders or any of these other people? The whole thing was totally weird, but it scared a lot because as we all know, America has become just the strangest place in the world now.

People make decisions all the time in businesses. They're not based in anything but optics. We, pander to one group, pander to another group, terrified of our own shadow because oh gosh darn it, we don't wanna be in the middle of a cancel culture moment. So a lot of private equity groups then said, ah, I think we better sit this out. It's getting a little wacky, got this wacky letter here. I don't even know what I'm doing with. So our consolidation is still never ramped up. Now many big private equity groups have now entered the industry. You can't name one that's not in it now. You have the Carlisle Group, which is the biggest in the US and then you have many others. Invesco just jumped into the game. You've got everyone, Apollo, you name it, they're all in it, but they haven't really gone on a big buying frenzy yet. I dunno if they're just kind of testing the waters or what they're doing. But when consolidation finally does hit it'll move fast.

When I was in the billboard business and I sold my billboard company in 1996, within a two year period when I sold that billboard company, the number of billboard companies in Dallas declined from 60 down to about 10. That's how fast consolidation hit. And then finally, there's so many US megatrends that are to the betterment of mobile home parks right now. I don't really see that as timing out, but more people are gonna figure it out over time. So what megatrends am I talking about? Well, I'm talking about the advent of the baby boomers retiring at 10,000 a day because many of them downsize and move into mobile home parks. I'm talking about the megatrend of millennials liking living small, which tends to steer them towards mobile home parks. I'm talking about the COVID related issues such as the desire for detached housing. There really is not any US megatrend that doesn't help our industry. And then a theater near you is the coming recession depression, which is gonna cause even more demand for affordable housing and also make interest rates go down.

So the bottom line to it all is that the mobile home park industry has some terrific attributes. Apartments also share many of those strong, sensible attributes. So the whole moral to what we've just discussed is that mobile home parks and apartments will do well during the coming recession. Personally, I prefer the mobile home park model to the apartment model, but between the two, at least do one of those two and at least do that in some meaningful way. Because what'll happen is when the recession hits, if you're in traditional investing, you are more or less gonna be in trouble.

Frank Rolfe: Alright, now we're gonna do some question and answers. We already have a ton of them here, and I will try and answer them to the best of my ability and we'll continue on until we run out of them.