In honor of the start of baseball season, our next Lecture Series event is titled “Three Home Runs” and it’s the story of Nevelle from Utah’s fantastic journey from zero mobile home parks before Boot Camp to now three deals purchased. And equally important, each of these deals has proven to be a home run. In this event, we will dissect how he found them, financed them, manages them, and lessons learned.
If you want to hear the story of one person’s success in bridging the gap from traditional investing to owning “trailer parks” then this is going to be an exciting discussion. As always, Frank will serve as host and keep the conversation lively and on-topic.
Three MHP Home Runs - Transcript
Frank Rolfe: Welcome to our lecture series event. We've titled this Three Home Runs in honor of the baseball season, but also because that's what we're here to talk about; three great deals that Nevelle from Utah has been able to do in a relatively short period of time. And we wanted to go over not only his story, but the story of the deals, how we found them and those type of things. So Nevelle are you here with us?
Nevelle: I am.
Frank Rolfe: Well, great. We are very pleased to have you. So first question would be, why mobile home parks? Where did you get the idea to even think about investing in mobile home parks?
Nevelle: Well, I think it started a long time ago when I first got into real estate. I had a real estate agent introduce me to some apartments that I first bought, and he used to be a mobile home dealer a long, long time ago, and he had a mobile home park at one time. So I kinda had that idea in my head, just hearing from this guy's experience, and I was okay with the idea, and years later I came across your information, and my biggest regret is I didn't sign up right away. I waited four years or something like that before I enrolled in boot camp. But I just always kinda had mobile home park investing in my head, I think from that first initial contact with that realtor.
Frank Rolfe: Did you have any stigmas against mobile home parks or trailer parks just from growing up, or were you kind of neutral? You're in Utah, correct? And I think as you go more northerly through America, the stigma kind of wears off. But there in Utah, I know from my childhood, my parents always had horrible stigmas against mobile home parks. If I had been invited on a play date to mobile home park, I would've been forbidden as a kid. So did you have the same stigmas, or was it hard for you to overcome that hurdle, or what were your thoughts on that?
Nevelle: No, I guess I never really had any issues with that. I don't know what it was that or why, but I never had an issue with it. [laughter]
Frank Rolfe: Okay, well, no. That's perfectly fine, 'cause in some states it's a big deal and some states it's not. So basically, the mobile home park wasn't some nasty thing, it was just some benign other form of real estate investing, correct?
Nevelle: Yeah, yeah, I knew the concept of multiples through apartments, and I was perfectly fine with that idea, so no problem with it.
Frank Rolfe: Got it. Okay, and then you got in the business. You went to boot camp, remember what year you went to boot camp?
Nevelle: It's maybe five years ago, maybe a little longer than that.
Frank Rolfe: Okay, so you... And I have to ask you, did your thoughts behind the kind of park you would be looking to buy change after going to boot camp, or was it pretty much in line with what you expected, as far as the type of property before you went?
Nevelle: Well, when I first got out of boot camp, I was looking in the Midwest, which is pretty far away from me, and I didn't really find much success that way, maybe it was just the distance, and getting the first park. And so once I started looking kinda closer to where I'm located, then I started finding a few things.
Frank Rolfe: And tell people how you came upon your first property, just the great generalities. Is it a big property? Small property? How did it get on your radar screen? They come from a broker or how did you find this?
Nevelle: Okay, so it was kind of funny 'cause I called the person, and I was driving to Idaho to look at that mobile home park. And on my way back, I stopped in a town, and I went and drove through a few parks. I wrote down the manager's phone number, it was through a management. And I actually decided to call the manager, he said, "No, they're not wanting to sell." And so I found an owner's phone number and I called it, and I left a voicemail, and surprisingly, the next day he called me back. And from there, I sent out a contract, he wanted a certain price, and I gave him a different price, and then about three weeks later, I decided, "Well, hey, I'll just pay your price." And I sent that offer and he's like... Kinda his attitude was like, "Parks are super hard to get financed, but what the heck, I'll give you a shot and kinda see where this goes." And I just started calling local banks and presenting, I found one and they did the financing on it.
Frank Rolfe: And then how large just in ballpark terms was park number one?
Nevelle: So this one's an 18-space park with a house on it, it has a two-bedroom house, and city utilities, the rents were super low, they were 200 a month. The market at the time was 250, and it's higher than that now.
Frank Rolfe: Right. And then just in a 5000 foot elevation roughly, what did this first part cost you? What did it cost you to buy 18 lots with a house?
Nevelle: You want a rough estimation or do you want...
Frank Rolfe: Just a rough estimate I mean, not to the dollar but just ballpark 'cause I think that's part of what makes the story interesting.
Nevelle: Right. It was a couple hundred thousand dollars.
Frank Rolfe: Right. Which is amazingly cheap because if you were to build the park, it would cost you at least 360,000 for the park spaces. And then the house, let's say another hundred, so your 460,000 that doesn't include the land. Then you had to get the land, and the permits and the whole deal. So basically you're buying this thing for a fraction of replacement. You're paying about a third of replacement, if not less than that, correct?
Frank Rolfe: Super cheap, super cheap. Okay. So then people are gonna ask, why so cheap? I mean, why was the guy willing to part with something that would cost $600,000 to build for a couple hundred grand? What was the story behind that?
Nevelle: Well, he came out and said, "You know, the NOI on this place is 15,000 a year." So I know it's only worth 150. And I kind of offered around that at first and then later I was like, "I'll just give you your price." And that's how that happened.
Frank Rolfe: So the lesson learned is let the seller shoot themselves in the foot by coming up with the price based on their own economics that obviously were not optimal. I mean, if the guy had gone to a broker, it would've probably been a lot more, right? Probably? Don't you imagine?
Nevelle: Yeah. All the ones I bought were what the seller wanted as far as price.
Frank Rolfe: Right.
Nevelle: And I gave them their price.
Frank Rolfe: Got it. And then what is the lot rent in that park today?
Nevelle: It's 250 right now.
Frank Rolfe: Okay. So you went from two to 250 in lot rent and what is the house rent for?
Nevelle: Well, I have it managed by that same management company but I think it's like 500.
Frank Rolfe: Okay. But anyone on here who knows basic math, a mobile home parks will tell that that is a mid teens cap rate, correct? At the end of the movie.
Frank Rolfe: Yep. Okay. So I think we would all agree that is a home run deal, right? So that was a great deal. Alright and so then you have that one and then how do you come upon number two?
Nevelle: So the second one was the one... The first one I went down to see. It took longer to close. It took me like a year to actually close on that one. So the...
Frank Rolfe: Why did it take so long? Why a year on closing that one?
Nevelle: Well, just 'cause the seller's taxes didn't show a profit at all.
Frank Rolfe: Right.
Nevelle: And they owned it free and clear and had no profit to show for it on their taxes.
Frank Rolfe: Right.
Nevelle: So the bank didn't wanna lend on it and I kept telling them it's a great opportunity. It also had a ton of water leaks, so it's a 33-space park with 30 occupied. And it was using a million gallons a month in water.
Frank Rolfe: That's a lot of water.
Nevelle: Yeah, it was. So it was all those hurdles. And I thought the deal had gone dead. I didn't hear from them for several months and they sent me an email kind of adjusting the price it was like, "Do you think your bank will lend if we put it at this price?" I was like, "Well, of course I'm still interested let me talk to them." And my bank still didn't wanna lend on it but the funny thing is between that time period where I didn't hear from them, it could have been like four months or so, I listened to one of your podcasts and I heard of a loan broker that does loans under a million dollars. If I remember his name is Brad, is it pronounced right?
Frank Rolfe: Brad Reimer. Yep.
Frank Rolfe: Yeah.
Nevelle: So I called him up and he had a relationship with the bank that did the loan on the first park. And so basically he was working with them and really all it took was a phone call from him and his relationship he had with that bank to get that loan approved.
Frank Rolfe: Okay. That's good of him. Give me the numbers on this park number two. So you got 30, how many lots?
Nevelle: So really there's 30. The other three are not... You shift homes around and...
Frank Rolfe: So you got 30 lots and your lot rent is what? On park number two?
Nevelle: So when I purchased it, it was 250 and then I haven't raised it but I bill back water and sewer.
Frank Rolfe: Gotcha. Okay.
Nevelle: So I did that.
Frank Rolfe: Okay. And then what did you pay roughly for park number two? Just ballpark.
Nevelle: Under 400.
Frank Rolfe: Okay. So you got this habit of buying things really cheap, obviously, right? So park number two look fed, to build that would've been about 700 grand. So again, you're buying it a fraction of construction. And it's kind of the same MO in the movie here, right? Because you got the seller who is his own worst enemy, he's got the million gallons a month water leak, no net income, but yet doesn't try and tie the value to replacement or what it would be if you fixed the leak, but is willing to sell it to you just kind of as is. So he kind of thinks he's getting a real deal, like you're dumb because you're paying him based on his income, which is zero, in the astoundingly high price, 'cause zero cap is zero. So it's kind of a weird win-win story right? 'Cause he thinks, "Man, I got... I'm doing great on this sale." And then you're thinking, "Oh my God. All I have to do is buy this and fix the water leak." How many water leaks did you have to fix? Did you re-pipe the whole park or how did you cure the million gallons?
Nevelle: It had to be 15 leaks. I wish I would've found the big leak before the very first repair, but it, of course it was like the last repair.
Frank Rolfe: Right.
Nevelle: I put a pump under that trailer and it took a half hour to pump all the water. The water under the trailer that been sitting there all at that time. Pump it out so you could work on it. Took a whole half hour to get all that water [chuckle] outta there.
Frank Rolfe: So that guy had kind of underground pool. Were you charging extra for the underground pool with that lot, that seemed like an amenity, right?
Nevelle: Right. Yeah.
Frank Rolfe: Spring fed pool. Okay. So, alright, so park number two, obviously, anyone doing math can see it's the same, it's the exact same movie, you got the same high cap rate, low purchase price. So let's go to park number three. So how does number three happen? Park number one and park number two are kind of affiliated. You're on the way to park number two and you buy park number one off a cold call, where does three come into the movie?
Nevelle: Yeah, so this one actually I got off of a postcard, which was great 'cause I never had very much up till that point from the postcards. So I had a phone call and I was talking to her and she was discussing the park. There's 39 spaces on that one, and she's telling me the price, I'm like, "Okay, that works." And, to my surprise... Well, I was kind of talking about getting financing 'cause I just assumed, that's what most people want.
Frank Rolfe: Sure.
Nevelle: And she actually said, "I would actually like to finance it." And I was just like...
Frank Rolfe: You were depressed about that, right? You were just saying, "Oh gosh, darn it. What a bad turn of events." Right? Okay, So then what?
Nevelle: I'm like, "Okay, what are you thinking on that? Like what terms?" And she's like, "Well probably about 5% interest rate and a course over 25 years and no balloon," which is also another surprise.
Frank Rolfe: Right.
Nevelle: I'm just sitting here thinking like, "Is this really happening?" These are the stories like I hear in boot camp. And I'm just like, "Wow, I wish I be one of those people or what would it take to be one of those?" And, there was a lot of hurdles that come over. She was really worried about taxes, things like that. And, I tell her I'm not a tax guy or attorney or anything like that. But here's some things I found on YouTube, maybe that can help you. But she never found a CPA that was like, that gave her a good answer, what she'd have to pay in taxes.
Frank Rolfe: Right.
Nevelle: So I kinda... And then she spoke to an attorney who kind of really almost screwed the whole thing up and I had to overcome all those things as well. But in the end I basically said, "Well, I know you wanna know what you're gonna pay in taxes." And this was like December, 2021. And I just... I told her, "Well, we're gonna close on January 2022. So you have that entire year before you're gonna have to worry about taxes and you can talk to a good CPA and figure all that out." And that kind of put her in the mindset of, "Yeah. Okay. I have all that time to figure this out. We'll sell the park and I'll figure out my tax burdens later."
Frank Rolfe: And so park number three, how many lots is it again?
Nevelle: That one's 39. There's 38 occupied.
Frank Rolfe: Okay. And what's a lot rent on that one?
Nevelle: The lot rents are 225.
Frank Rolfe: Okay.
Nevelle: And they build back water and sewer already.
Frank Rolfe: Okay.
Nevelle: But this sits in a market where the lot rent or the market should be like 375.
Frank Rolfe: Okay.
Frank Rolfe: And what is the ballpark price on park number three? Just ballpark.
Nevelle: It's like 800,000.
Frank Rolfe: Okay. So once again, you've followed basically the same model of you're not paying any premium, buying these things for less than construction based on Mom and Pop's own pricing decisions, based on their own operational decisions. Correct?
Nevelle: Yeah. I just kinda ask them all the questions of the park and then say, "And what price do you want for it?"
Frank Rolfe: Right.
Nevelle: And let them come up...
Frank Rolfe: Now you didn't say on park number two, right? You were driving to park number two, when you cold-called park number one. But how did you come to know of the park that became known as park number two? Where did that park come from?
Nevelle: Yeah, that came from a cold call as well.
Frank Rolfe: Okay. So your scorecard is two cold call one direct mail.
Frank Rolfe: Okay. And so now you've got these three parks, and I assume you have a community manager in each one, correct?
Nevelle: I actually don't. I'm self-managing them right now.
Frank Rolfe: Tell people how that works. How do you self-manage? How far away are these parks from your house?
Nevelle: One's like four hours away. One is five hours away and the other one's six hours away.
Frank Rolfe: Okay.
Nevelle: So when I still have the management company on, that's when I bought it. They had that and I guess I decided to keep them on.
Frank Rolfe: Okay.
Nevelle: The other one had... The owner self-managed that one. So they're all tenant-owned homes. So I don't have really all that many repairs. The only repairs I get are, if any more water leaks pop up or most mainly it's just sewer clogs.
Frank Rolfe: Yep, okay.
Nevelle: And I just call a plumber in town or another plumber that's nearby and they go and clean it out.
Frank Rolfe: What is your rent collections method? How do you get your rent each month?
Nevelle: They had a certain bank. The previous owner had a certain bank where the tenants would just deposit right in that bank. So I set up another account in that very same bank, because changing people's habits is sometimes difficult, and they just go in and I have since learned that cash isn't the best way to pay rent, but they put it in cash and on the deposit slip, they'll put their trailer number on there. And the tellers know that with that property, they're required to put a trailer number on the deposit slip.
Frank Rolfe: Okay, now that's on... Which part number is that? That one, two or three?
Nevelle: This, number two.
Frank Rolfe: Number two, and then what do you do for rent on one and three?
Nevelle: For one, is with the management company, they collect rents on that one.
Frank Rolfe: Got it, okay.
Nevelle: Three, we do the same way, except they're required to use a check or money order, that way if the teller forgets the trailer number on the deposit slip, we can just call up and you can see it right on the money... Or you can see their name on the money order or on their check. So that's a way to kind of...
Frank Rolfe: And then how much time would you say, a week, do you spend managing? Obviously, number one's got a management company, so you're mostly two and three, but how much time, in hours, would you spend a week on two and three, you think, ballpark?
Nevelle: Yeah. Not very much. It's been quite a bit on the third one 'cause we just purchased it, and we had a lot of phone calls come in, but we're on month number three now, and I've noticed that the phone calls have really died down, and then just getting our systems in for billing and invoicing, where we weren't invoicing on the other park all this time, and I think that's a good idea to do.
Frank Rolfe: Yeah, I agree.
Nevelle: I don't know, maybe in total like six hours, month. My wife really [0:22:00.2] ____ a lot of that side of this. [chuckle]
Frank Rolfe: Okay. How often do you drive down there? How often do you get in the car and drive the four, the five, or the six-hour down to take a [0:22:09.5] ____?
Nevelle: So, the ones I have, the first two, I probably went once a year to check on things, and that's just 'cause I was originally from that area and I was going there for other reasons and decided to drive through them, [chuckle] so there was really no need to go through them. The third one's been a little bit more, just 'cause I went there a few times to install Metrel meters, so we don't have to have someone read the meters anymore. We're eliminating any need for a manager to justify his worth, I guess.
Frank Rolfe: Well, yeah, you're just basically trying to run these in a manner in which you don't have to have people around, right? It sounds like that's the plan.
Nevelle: Yeah, 'cause that's the thing. When I went to buy that, they had a manager and we were letting him know, which we didn't have any reason to let him know what was going on, but he threw a fit, saying, "Oh, no one's telling me what's going on," and it's like, "Well, we have been," and it just caused a lot of issues at the end for the previous owner. We didn't hire him, is all, because of that. We're kind of...
Frank Rolfe: That makes your life as lot happier, right? Because you don't have to call and talk and waste time talking to the manager there.
Nevelle: Right. Yeah, I think it is.
Frank Rolfe: What makes that possible is these are all tenant-owned homes, correct? So that's part of the [0:23:54.0] ____ also.
Nevelle: The first one, I had a couple homes, but they were in contract to sell when I bought it. One of them has been sold so I think I only have one there. The second one has zero park-owned homes, and none on contract. The third one has a few, four that are on contract to sell.
Frank Rolfe: Got it. Okay, and so in all three parks, do you have any private utilities or you... City water, sewer on them, or how does that work?
Nevelle: They're all city water and city sewer.
Frank Rolfe: Gotta love that.
Nevelle: Which is awesome, yeah. [chuckle]
Frank Rolfe: Yeah. You have at least one vacant space, though, in at least one of them, don't you? I know, number one, it sounds like you're sold out, do you have any... What do you have and, you have any vacancy at all?
Nevelle: Yeah. The first one has a vacancy, I think an abandoned home, so I gotta, probably, help the management company figure that out, get a home in there. The second one, there's really no more space for any more homes, and the same with the third one. They had a trailer that came with the park, that was for the manager. We might just sell it or do a credit system on that one.
Frank Rolfe: Okay, just on a very macro level, don't name the cities, but in general, what kind of markets are there? Are these big population, small population? What kind of markets?
Nevelle: Yeah. They're all... The ones in Idaho are in a good metropolitan area, and yeah, over 100,000, one might be a little less, but I'm from that area, so I didn't have any concerns about it at all. And then the third one is... It's in New Mexico, with over 100,000 in population. Actually, the demand... Or the test ad resulted in more than 20 calls in two days, so I just decided to cancel it 'cause it was driving me nuts. [laughter]
Frank Rolfe: Yep. I know the feeling, and so basically and obviously, you love both those states, correct?
Nevelle: I do, yeah.
Frank Rolfe: Yeah, okay. So it sounds like the lessons learned on the buy side is that cold calling and direct mail is the way to go, because if a broker had been in the loop on any of the three deals, the price would have escalated substantially, because there's no way the broker would advise someone to sell it based on their own performance and not what it could be with a new owner making some minor adjustments. Right?
Nevelle: Right. Yeah, I've tried brokers, but nothing has really come about.
Frank Rolfe: Yet?
Nevelle: Yet anyway.
Frank Rolfe: And it wouldn't with those kind of prices anyway, right?
Frank Rolfe: There were also, those deals were just to the size where brokers don't like to mess with the stuff that's not seven-digit, so they would be probably not really, maybe even taking the listing or working it very hard. And then it sounds like the other lesson learned on them is that the sellers don't run their stuff very good, because particularly the guy losing a million gallons a month, you know that's stupid, that... I can't imagine the guy gets a water bill like that and, I can't imagine the city itself wasn't freaking out.
Frank Rolfe: A million gallons is a lot of water.
Nevelle: It is. Yeah.
Frank Rolfe: It's crazy.
Nevelle: Yeah. I hired a leak, American Leak Detection, kinda wash what they did there, and did this, went to work fixing it all. [laughter]
Frank Rolfe: Right.
Nevelle: It's basically under control.
Frank Rolfe: Right, basically, what I hear the story is, you basically took advantage of the simple fact that a lot of owners are not good operators, a lot of times if you let them set their price, the price is crazy low, and then you cut out the middle man by doing it yourself, doing cold calling or direct mail, so there was no intervention by somebody else to say, "Wait a minute, you can't sell it with a million gallons a month loss, let's go to American Leak Detection and fix it, and then let's see your net income, and then let's season it, and they will get whatever the price will be, two million or whatever it would be.
Frank Rolfe: You basically just took advantage of the imperfections of the system, just like when Warren Buffet buys a stock that's undervalued, because the people haven't figured out what the enterprise value is, if they were to break it up, you'd kind of opportunistically did kinda the same thing, correct? And then on top of that, for me, another lesson learned is most people that we talk to would have at least a manager for property, but you're taking advantage of the fact these locations are strong enough, so without park-owned home, who needs it? And see, I often have the same problem even our own properties, I'll pull into a property, and all the manager basically does is watch TV.
Frank Rolfe: And then you're wondering why? Why am I even bothering? But of course, we're always like, "Well, we have our own systems, so we know the way we're set up, we kinda gotta have it," but yeah. In private, there's lots of demand in private homes, who needs people.
Nevelle: Well, on the third part, the manager did do a lot more, like he would snake the sewer lines, I think he'd even dig down and repair the water lines, but what I found out is that, real close to the water lines was the electrical lines and gas lines and stuff like that and... [chuckle]
Frank Rolfe: [0:30:06.1] ____. He thinks he's cutting into the water line and it's a gas line, you blow the whole park up.
Nevelle: He mentioned that, he is like, "I almost... I thought of cutting this pipe down there, and found out it was an electrical line." And I'm like, "Oh my gosh." So even If you could justify saying, "Well, he does those things." Yeah, but the risk of having someone get killed is just maybe not even have one and then call the professionals to take care of that stuff.
Frank Rolfe: Yeah, totally agree. With city water, city sewer, relatively no park-owned homes, what's your worst day ever that you've had? What was your scariest moment that you've had a call in from someone or something?
Nevelle: I remember having kind of an uneasy feeling when I bought it. [laughter] I bought my first one and I was sitting there doing the math and I'm like, "Did I really make a good decision?" But the math confirmed what choice I was making, so I think I was okay there. Let's see, I'm not sure if you're there, Frank. You might have... Looks like you're reconnecting.
Frank Rolfe: Now I got back. Odd, that never happens normally. Very good. So, I'm sorry, go ahead.
Nevelle: I'm not sure where...
Frank Rolfe: I'm not sure either. That really freaked me out when I lost the signal there.
Frank Rolfe: I think you cut at what your worst day ever. You had crazy guy who was out digging around with gas and with electric and not knowing what he was doing, and that's...
Nevelle: Yeah, when I was doing my due diligence, he was telling me about that. So that was with the previous owner. I never hired the manager.
Frank Rolfe: Oh, I know. Yeah, I understand, I'm just saying that that's pretty scary gong's on.
Nevelle: That's a scary thought, because guess what, the first month that I own the park, we had a big water leak and the company dug down and even the plumber was like, "Yeah, that's the scariest one I've ever worked on," 'cause of the power line or the powers right there, like a foot away. Now I know, let's just call the plumber on that one.
Frank Rolfe: How did you... Oh, I'm sorry, go ahead.
Nevelle: But I was just gonna say, other than that, I guess the most, or I guess the worst days ever is when you get someone who doesn't pay. They have paid. So it's been good. I found other property before where they just don't pay and you gotta evict, but usually in this industry, they have something that they're going to lose if they don't pay, which is their home, and it seems like eventually they come around and they end up paying. That's what I've experienced.
Frank Rolfe: How did you further in COVID, during the evictions moratorium? Did you still get paid or how did that go?
Nevelle: Yeah, all my rent... Well, I didn't own the third one during that time, but the other two, they came in basically like normal.
Frank Rolfe: Okay. Okay. And then Idaho is clearly a red state, correct? To me, but New Mexico is a blue state theoretically, I think. Have you had any pushback in either state, problems with any state? City person who harasses you or anything, or is everything fine, politically?
Nevelle: Yeah, I haven't had any issues like that.
Frank Rolfe: Okay. And then what is the future? In other words, you're a three-park, you are obviously not very old I can tell from the video here, is the plan to try and buy more? Are you gonna stop where you're at? What's the plan?
Nevelle: No, I would buy more, I'm ready. I got my down and I'm ready to buy another one. [laughter]
Frank Rolfe: Okay, so you're just gonna keep it going. And do you own any other real estate besides mobile home parks at this point, or you just do mobile home parks?
Nevelle: I've been in real estate for 12 years.
Frank Rolfe: Okay.
Nevelle: And I mentioned at the beginning of the call, a realtor who helped me buy some apartments, they were just all like eight units, but that's when I got started when I was like 24. And then ever since then, I've just been buying. Well, not anything. I did buy some single family homes and duplexes, stuff like that, but really now, since Utah's appreciated so much, I'm wanting to do 1031s into mobile home parks.
Frank Rolfe: Got it.
Nevelle: And the first one I bought, I did do a 1031 into that one. Basically, bought it cash, and then the next day went to the bank, and then they... Basically, I guess you could say is a refinance after one day. So they would count for the 1031 and then I would get my money back out.
Frank Rolfe: Okay. And what do you think since you had apartments and mobile home parks, what is your thought between those two asset classes, which do you like better, and why?
Nevelle: Well, obviously, the mobile home parks. It seems like even though if I go do a bunch of work on it, it's still less work than actual physical work, than what just a single-family home would be. You get the tenant move out and you gotta fix it all up, and basically all your cash flow that you had on the single-family home goes kinda back into it, fixing it up when a tenant leaves. So I totally wanna convert them all over to mobile home parks.
Frank Rolfe: Got it. And you know what I think is interesting in this story is, we've had on lecture series before Shaun of the Dead, and that's the guy up there in the north east that is such a tough negotiator, and he buys parks that are in such poor condition that he can buy them at insane discounts. But the problem is, after you buy them, you have a property that on the front end has got some tough things going on. But in your case, what you've done is basically buy things cheaply, that are in great condition. It's like, again, and people watching this are gonna say, "Wait, this guy is kind of reminiscent of Shaun of the Dead, but it's not really that story, 'cause Shaun stuff... " Which Shaun would be the first to admit has got a lot of hair on it. Your stuff with city water, city sewer and no park-owned homes doesn't have a lot of hair on it. So your story basically is just finding things that are under-appreciated because they're income property, so they weren't producing much income but they could've, and mom and pop just weren't, and yet mom and pop didn't tell you on the front end, which happens frequently, they'll tell people, a park has no income.
Frank Rolfe: Well, but you can make 50 grand a year with it, so I want 800 grand, and then you'd be saying, "Well, but gosh, how do I get a loan because you're showing zero." In your case, you've been pretty fortunate that they've been pretty realistic on the pricing. See, I've had the same kind of the experiences. A lot of times, mom and pops, you can't get that unless you do direct mail and cold calling, because when you get a broker involved and the broker kind of like an attorney, it's kind of a deal killer, and as much as he'll say, "No, no, no, no. You can't price it like that, you gotta price it based on what it could be, not what it is currently," so that's pretty interesting part. And then also your banks are pretty brave, right? As far as making loads on park one and park two, and the numbers didn't even match and weren't even enough to make the loan make any sense that's... So part of the story, one of the good guys in the story are the banks, because the banks really kinda help you out on that, because that would be hard to get a bank that would step out like that.
Nevelle: Yeah, yeah, definitely. And they didn't wanna do the second one, and I went to 14 different banks myself, I got really... I just spent all day calling banks, and they all told me no. This is a terrible cap rate, no. And I just kept pushing it. But shout out to Brad Reimer again, because he made that second one totally happen, and I was more than happy to pay his commission on that. Super happy to get that one done.
Frank Rolfe: What was your honest bank meeting? Did you have any where the guy literally just said, "Get out of my office?" I had one once where I drove out to the park with the bank. We were halfway there, and the banker said, "I don't wanna do this. Take me back." And I was like, "What?" What was your freakiest bank experience so far?
Nevelle: Well, I called them, I didn't go into the banks. But I remember one that has done several mobile home park loans, so I knew they were comfortable with mobile home parks. And they said... He said that I was denied from experience. [chuckle] If you say a normal career is 30 years, and I have more than 10 years in real estate, I don't know what they're looking for as far as experience.
Frank Rolfe: Yeah, I think that was an excuse. [laughter]
Frank Rolfe: It's like he got a list of ways to get out of it, and that was, either... That was excuse number nine, and he just jumped on that one probably.
Nevelle: And then another bank said, "Well, we're comfortable with the park", but they didn't qualify my personal income or something like that, I don't know. I think they were all excuses.
Frank Rolfe: Yeah.
Nevelle: But I get it, it didn't... It's current state, didn't make very much money, and they're not making any more money taking on more risk.
Frank Rolfe: Right. Are you... When you expand going forward, are you going to just stick with things you can drive to in five, six hours, or do you think you'll ever get... Go beyond that, or are you just happy being within that five to six-hour radius?
Nevelle: Well, actually, I've been sending out postcards and stuff like that at a 10-mile radius. Just so happened that one was six hours away rather than 10 or 12 or whatever.
Frank Rolfe: Okay, so you would have no problem going farther out if a deal came up or something like that.
Nevelle: Yeah, I'm sending them out already in other states. I don't... I really don't know what I could do to replicate what I'm already doing. But I think if I just find a few more states, send out more post cards, I think I might stumble upon something.
Frank Rolfe: Right, got it. Well, Nevelle. We really appreciate you being here on this Lecture Series Event because again, it's always refreshing to have people who are having such great success at such a young age. You look like you're 18, I know you're older, but [chuckle] you don't look that old at all. And so I'm really happy that it's worked out so well for you so far. It would be hard to screw up now, 'cause you already got basically three homerun deals, so it's... I don't know how you could... You could do the next three awful and you'd still average out to good, so it's kinda good position to be in, right?
Frank Rolfe: But again, we really appreciate you being here sharing your wealth and knowledge on the industry and how you've progressed. So it's a great story, it's inspirational story for many people, I know people are watching this going, "Man, I wanna be more like Nevelle." And yeah, I don't blame you as we all try to do our deals like that, because when you have... When you buy a deal really good like that, there's no pressure because you know you can't screw it up. Not my first deal, Glen Haven, but my second deal where I bought a park like yours, 17 lots and a stick-built three-bedroom two-bath house for 65 grand. I was like, "No way I could screw this up, right?" So it's always a good feeling when you know something is worth more than what you paid at the day of closing. That's always... It's always good.
Nevelle: Yeah, when it's so good like that, you know you can make the payment by donating plasma every month.
Frank Rolfe: Yeah, something like that. You're basically getting an entire mobile home park. And really in all cases, you got a mobile home park for the price of a house. Right?
Frank Rolfe: For probably less than the average home price in the market, which is insane, right? So you got like in park number one, you got 19 income units for the price of one stick-built, which is pretty amazing. Again, we really appreciate you taking the time to be here. Oh, it looks like we've now lost Nevelle, but... Oh there we are. We got him back. Well, again, we really appreciate you being here, Nevelle, and...
Frank Rolfe: And it's a great story, and thanks everyone for being here on this Lecture Series Event. We know you have lots of options with your time. But hopefully you learned a lot from this evening's presentation, and we will talk to everyone again soon.