0 to 80 in 4 Years: The Amazing Story of Keaton from Wisconsin

In all the years of the Lecture Series, we had never had a guest that grew at such phenomenal speed as Keaton from Wisconsin. He had started buying mobile home parks in 2019 and had already amassed nearly 80 properties, focusing mainly on the Midwest region. On top of that, he was only 26 years old.

It was roughly an hour discussion on how he got into the business, how he found his deals, how he financed them, what he had learned about owning and operating mobile home parks, and 101 other topics of interest.

The host was Frank Rolfe, who kept the conversation fast-paced and fact-filled. Frank asked all the gritty questions with no taboo topic, and there were many lessons learned from the answers. If you were considering getting into the mobile home park business – or just growing your existing portfolio larger – then this was a discussion you did not want to miss.

0 to 80 in 4 Years: The Amazing Story of Keaton from Wisconsin - Transcript

Frank Rolfe: Hello everybody, this is Frank Rolfe, we're gonna have a very interesting discussion with Keaton Schultz. He's a very interesting individual, now, we've been doing lecture series events for a long time, but I don't think we've ever had anyone who has grown so large so quickly as Keaton, and we thought it would be fun to interview him to see how he's done what he's done get some tips, lessons learned that he's found along the way. So Keaton, are you here with us?

Keaton Schultz: Yeah.

Frank Rolfe: Well, Keaton we first gotta start off by acknowledging the magnitude you have grown to... You started in, I think, what, 2019 buying parks, is that correct? And you have now, 80 parks, is that correct?

Keaton Schultz: Yeah, between 70 and 80 parks.

Frank Rolfe: Seventy to 80 parks your... I think it was like 3000 or 4000 lots, is that correct? Okay, well, that's just an amazing accomplishment there, so let's just start from the beginning of the movie. So how did you think of going into parks? Give people some idea of your background of how you came to buy the first park, what happened... Just give people some background on that.

Keaton Schultz: I'm 26 now, when I was 18, I was taking college classes at a local university where I was going to high school, and all business classes, 'cause I like that, and really... Right when I turned 18, I bought a few student rentals through a land contract, and I had a whole life policy my parents had, and my parents were all about being responsible, so then when I turned 18, I was like, you guys are paying for my own whole life policy that's I need to be responsible. So I got it in my name, took a loan on the cash value, put that down on some of the homes, and I got my real estate license, so I was selling stuff, buying places, and in 2019, someone told me they were like, Hey, you should buy this park, it was a small 10-lot park in the middle of nowhere in Wisconsin. And there were two vacant lots, I was like, I don't know, and then he's like, I'll hold the second mortgage. You buy it. No money down. What's the risk? And I was like, That's fair. And then I looked at the numbers and I was like, this is pretty attractive.

Keaton Schultz: One of the lots there was a house there that he was gonna sell prior to us, prior to me taking the deed, and within two weeks, he called me and he's like, Hey, I sold it for 10 grand cash. You can just run with it. At closing, here's how you fill out this stuff, so I'm like panicking 'cause I don't know how to turn over a deed and whatnot, but it was just the excitement of oh we just sold that, I just made an extra 10 grand. So that was kind of the first one that started. And then I kinda got addicted to having, like I said, like a business within a business, you can move homes, if somebody wants to move out, you can buy the home, you can resell it, you can make money. I quickly learned, you can't make a lot of money doing RTOs, so then developing relationships with retail lenders and all of that, that really escalated stuff to help with our growth.

Frank Rolfe: Right. And Keaton you have so many parks normally I go through it with people and just say, Okay, on your first park, how did you find it, how did you finance it you got between 70 and 80, so we're gonna have to put them in batches... Alright, give people a range of ideas of all the parks you've found, of all the 70 or 80 parks you have, what percent would you say came from brokers, what percent from cold calling, what percent from direct mail, and what percent from online? Give us just a ballpark percentage [0:04:07.1] ____.

Keaton Schultz: So probably from brokers, probably like 10%, 15%. Not a ton. I've never tried direct mail yet. A lot, I would say probably 80% from cold calling, and then that other 10%, just everything else, looking on Craigslist, stuff like that, but almost all of it from cold calling.

Frank Rolfe: You show up... Okay, and without giving away your secret tricks, what's your favorite cold-calling opening line, if I'm the seller and you're Keaton and I answer the phone, Hello, what do you say.

Keaton Schultz: Normally I just, I cut straight to the chase. Some people have it where they'll call and they'll say, "Hey, I'm curious on what your lot rent is I'm doing an inventory or whatnot," and I'll just say, Hey, I was driving past your park and whatever, I call it, and I'm interested in buying it. Can we have a conversation...

Frank Rolfe: Oh. Keaton we lost connection for a second there, we lost connection for a second, say that again, We lost connection... How you used to do that.

Keaton Schultz: I'll just hit it kind of straight on, so I'll say, "Hey, I drove past your community, I am interested in purchasing it, can we have a conversation?" And my betting is normally 90% on that normally... And if it's a no. Then I'll normally shoot them a text saying, "Hey, here's some people I have bought parks from, Why don't you shoot them a call," and... That's worked out really well. The cool thing that we do is there's... I send a gift basket to everybody during Christmas time every year of everyone we have bought a park from, so it's kind of like... And then I normally get a lot of leads from people, 'cause most people know their friends that own a park or they went to the association meetings and they have a friend, so that's helped with a lot of leads too.

Keaton Schultz: But it's kinda just being... I've come around just being straightforward and especially if I drive through it, sometimes the owner is just working on something and I just get out of my truck and just have a quick conversation with them the worst they can say is, take a hike. And that's happened a few times too.

Frank Rolfe: Yeah. Right, yeah. That's exactly the same pitch I do, I hate the flowery intros where some people think they're trying to get in the door by saying things like how's the weather and to me that when I get calls like that, I always know it's a salesman, and so I already think... I don't like this, I wanna hang up. So I agree with what you're doing on that. What part of America are you focused in? I know you're in Wisconsin, but of the portfolio, when you're out cold calling, what areas are you focusing just broadly, like which states or regions or whatever.

Keaton Schultz: Yeah, Wisconsin, Minnesota, Illinois, Arkansas, and I'm just dabbling into Ohio and Indiana.

Frank Rolfe: Okay, and I guess, you let me ask you, if you had the same thing we have from being in those same states, the northern parts, customers similarly are a little more affluent pay with much greater regularity, fewer problems, is that kind of what you're finding also, like a Wisconsin customer versus an Arkansas customer is kind of a night and day difference as far as... Just the way they operate. We don't know why. No one knows why they're just wired that way. Is that what you're finding?

Keaton Schultz: But I love Wisconsin and Minnesota, there's... The political climate is definitely a little different, but Wisconsin is definitely, it also helps owning stuff in your backyard. It took a while for us to... And I don't think we've mastered as much as we have in Wisconsin, but out-of-state stuff is just a little bit more difficult than when it's within driving distance, within a day. Just when you can get on-site, if there's an issue it's like, Alright. Let's hop in the car. Let's take care of it. There's something to be said for that. When I first started, I knew I wanted to grow, and I knew I really wanted to race up to the top, and there were two ways I could do that when I was calling people that... There's a guy that mentors me that was on the Inc. 500 list in 2018 or 2008, they had a real estate company, and their three-year growth average was upwards of 20,000%. So I was like, How can I just run with this? And he's like, "Well, you can focus on management or you can focus on deals," he's like, "If I could do it all over again, I'd focus on management first, and then roll... "

Keaton Schultz: 'Cause he's like, "That's the way to do it." And I was like, so we did that. I focused on building my team around management in the beginning, we definitely grew a lot slower than what I would have loved, 'cause it's cool taking down deals, meeting with people and the art of the deal and all that. It's a lot of fun. But now looking back, it's like I am really happy we started with management... When we have anybody start at my company, they have to start as a property manager besides if you're in the accounting department, but otherwise everything else, even my sales manager for a year, he was a property manager, 'cause I think you have to understand the foundation before you really advance, I just hired an asset manager, he starts on the 24th of this month, and he's gonna start as a property manager too, 'cause I think if you don't have that solid foundation, you can't understand how the nuts and bolts work within a community, or you can't tell an on-site manager hey, just go and tell this person to pay their $1800 that they're behind... Right when we take over, even when we take over, there's some type of value add that has to happen... And if you don't understand the basics, I don't see how you can be massively successful.

Frank Rolfe: Right, and what have been some of your key lessons learned on managers, obviously getting successful managers. It's hard to find them. It's hard to keep them. Any lessons learned or thoughts on Mobile Home Park managers as far as where you get them, or just things you've found all the ways to make them perform better?

Keaton Schultz: When I first started, I thought on-site managers were... I thought I could reinvent the wheel, right, so I was like, Let's have a core office in the middle of the state, and let me have regionals and we won't have anybody on-site, and we tried that for a while and eventually... 'Cause we made a little bit more money, but then some people, we had turnover because some people were getting stressed 'cause it was just a lot. So last year we thought, Alright, let's roll with a bunch of on-sites, if we can afford an on-site at a community, let's make it happen. And it was like night and day. So then I was like, if you don't have to recreate the wheel... Why recreate the wheel? So now we just... We have a lot of on-sites, if they can cover multiple parks, we do that, we pay them appropriately. We put normally some type of incentive structure in place for collections, collections is the most important thing, 'cause if you don't collect, you can't improve. So that's normally... There's someone good on-site, normally in a large enough community, even in some of our communities that are 25 to 40 sites, there's normally someone decent on-site that will take the reins and they'll do the basic stuff, and the most important thing...

Keaton Schultz: Once you find someone that's decent, it's just giving them a short list that they can do, don't give them a marathon list, 'cause no one's gonna be able to accomplish that, and just holding them accountable to those four things... Those three things that you want them to do every single month, and then they'll be successful.

Frank Rolfe: If you think of your best manager you have in the entire organization, what was their background, what is their basic MO, where did they come from, how old are they, what's the whole deal on them? Like the best manager you've got.

Keaton Schultz: Like a regional or on-site?

Frank Rolfe: On-site.

Keaton Schultz: Our best one that we have is probably like a small business owner, he lives in the park and he runs a landscaping company, he's probably our best. A husband-wife duo. They kill it. There's four parks I bought in an area that have a bunch of storage units with them and all that, and they've killed it. It's totally night and day. And then probably in close second, probably someone in hospitality... Anybody in hospitality? Some of my regionals don't have... When they started with me, they had no real estate background at all, one was a clerk, one was a bartender, but it's that hospitality vibe with wanting to make people happy, wanting to see it through the end dealing with difficult people at times, it's this... Once you have the hard work down, then it's easy to train on how to manage and operate parks, it's not rocket science, but I think some people over-complicate it. That was my point when I was trying to get at don't try to reinvent the wheel if you don't have to.

Frank Rolfe: Now let me ask you this, we have found now that so much of the business has gone to software like Rent Manager, collections like ACH are most important skill of a manager are people skills. Do you find that also. I would rather have somebody who can talk to someone, listen to them, strike a relationship. We find that's the glue that holds the tenants in place, that's the attraction for people moving in, do you find that also is people skills your number one priority, or what are your thoughts on managers of people skills.

Keaton Schultz: Oh, yeah, 100%. The amount of issues you can deescalate just by answering the phone and just having a calm collected conversation will always outweigh anything else in my book. To... Now some of the technology is just so easy that it's like all the rents we still have those mailed to Wisconsin, some out-of-state stuff gets collected there and then they deposit in an account and then we do a bulk ACH back to the corp office, but everything in Wisconsin just gets sent to our main office, so the on-sites are really... They log into our software. They see who's behind and they post a notice and they can stay on it and as long as they have good people skills, we notice the people that actually wanted to succeed their collections are always at zero by the end of the month, and they can deal with that person that had... Hey my car broke down, I have to show up to work, yada, yada, whatever the excuse is, they'll work through that and they won't make the person feel inferior. Which is perfect.

Frank Rolfe: What are your thoughts on filling lots right now, obviously, homes would become much more expensive, at least new homes and used homes as a result. So the vacant lots you're filling, what are your favorite ways to fill lots, do you, are you bringing in homes and selling... Are you bringing in used homes? Are you fixing worn RVs? How's that going down?

Keaton Schultz: This year was a big year that we're focusing on infill, 'cause you look at everything we have outstanding, it's like well, some municipalities want you to do an expansion, we've actually had four or five municipalities contact us to expand our park. So I'm focusing on that, and we have some people in our sales department that were just... They're focusing on selling new and used homes. I used to think that having park on homes as rentals was the key. Now, I learned, I'm like, this is way easier if we would sell these. I would challenge anybody, if you do have that, if you look at what you're paying for maintenance and increased staffing cost, do you really make more money? Some instances you might for sure. But I would say most of the time you probably don't, or it's really, really close, that if you took that capital out and infilled more lots, you would arguably make more money. So depending on the market, we're moving used homes that we find on the Internet, we'll buy them, we'll move them into our sites, we have an internal setting crew, so they'll set it, skirt it, we sub out the moving, and then we have our sales staff that will put a sign in the yard.

Keaton Schultz: We'll sell it. New product too. There's a community right in my town here that we just purchased that we're infilling it's a 100-lot park, about 30 homes. So we're now with our concrete guy today that we're gonna be pouring a bunch of sites and then filling that with all new homes.

Frank Rolfe: Keaton, do you think that park on home is the biggest benefit? As it burns out moms and pops to wanna sell? How many sellers have you bought from... When you distill down why they're selling it boils down to the rentals, Like we've bought so many parks where the guy, he's got a 100-space park, he's got 10 rentals and he's selling this entire park because of the 10 rentals 'cause he can't keep them full and they keep shunning tenants. And he's sick of it. And I'm just thinking, dude, just give them away. Do you find it also...

Keaton Schultz: I can... There's probably 15, at least communities that we purchased or I purchased that it was the mom and pops are like these rentals, it's like a husband and wife owner and wife does the books, the husband's doing the repairs on the homes and he's getting sick of a tenant moving out and the home gets trashed and he has to redo the windows, he has to redo some of the skirting, 'cause they ripped up stuff when they were moving out, and then I'd take it over and I underwrite it just on the lot rent. I don't underwrite on any home rents at all, and it's like, well, we can sell those 12, most banks don't take leans on the homes, most, so then I'll get that few hundred thousand dollars back from selling the homes and then let's utilize that to the next deal or whatever we need to do.

Keaton Schultz: I think the key is when you're underwriting that to not over inflate certain things like over inflate the home rents in your analysis and being real about your costs, and just looking at the lot rent. I think some people look at the home rent and the lot rent and then if you need to sell some of the homes, all of a sudden your mortgage won't support it. So underwriting is definitely an important thing, but that's bounced around from what you said.

Frank Rolfe: Alright. Talk to me about the sellers themselves and their circumstances, we often in the past have looked down our sellers and the trigger as to why they sold, it's normally a mixture of illness, divorce, rental homes. Do you find those same things and then also in the absence of those kind of drivers, how do you build a sense of urgency with a seller to sell? And obviously, if a seller goes to the doctor, the doctor says, I have bad news for you, you have stage four colon cancer, you have one year to live, that builds a sense of urgency, right? He's gotta sell, he's got one year, but on someone who doesn't have a health issue or a divorce issue, how do you light the fire? How do you create the urgency to sell?

Keaton Schultz: For me, it all starts with rapport. So I feel like it's really hard to connect and get them to share maybe that underlying reason that they wanna sell, but maybe they don't tell anybody else if you don't have that rapport. And sometimes it's that extra little bit that nobody else does that'll help you build that rapport like after you meet them at the community, send them a quick hand-written letter, I don't know anybody else that does that. But then, especially for some older sellers, they'll shoot you a phone call on their landline, and they'll say, "Hey, I got the card, I appreciate that," that's they're welcoming in a conversation that helps just build the rapport.

Keaton Schultz: Sometimes I like to move a million miles a minute sometimes, and some of the transactions just take, they just take time. So I've grown to accept that. I think once you develop that rapport, you can figure out what the underlying solution would be, and sometimes it's... We just wanna slow down. We just wanna truly retire, like John's always at the park, always. I can never get him to stay home, whatever it is, then you can figure out what that actually is.

Keaton Schultz: A lot of it is health issues, and a lot of it is mom and pops just wanna be out of the business, they've been in the business for 20, 20 plus years, and they're actually looking to retire, and I think the connotation is still in the industry that who wants to buy a park, which keeps some people out, which is fine with me, 'cause people can fight over apartments that are trading at five, four or four to six caps, somewhere in there, when you can still buy parks in the 10 to 12 cap range.

Frank Rolfe: But let's poke around to finance for a minute, again, you have so many parks, we can't go park by park, just break it down into tranches of all the parks, of the 70 to 80 parks you own, what percent were seller carry, what percent were small town bank, what percent are bigger bank, what percent are conduit and what percent are Fannie Freddie. Just break it macro into those buckets.

Keaton Schultz: Probably half had some type of seller carry involved, where there was a second mortgage, full seller carry, something around that, probably about 10% to 15% were just full cash purchase, once I got a little bit more established then installed water did some quick changes, then went to a local community bank and said, "Hey, here's signed leases," when I bought it, it was... The lowest lot rent that I acquired was $90 a lot, and then you bring it up to market, and the funny thing is, the first time we did that, especially with that community, everybody in the office was like, "People are gonna... There's gonna be a riot."

Keaton Schultz: And when we went door to door, nobody said anything. Half the people were like, "Well, we were expecting this." So then bringing that package to a local bank and saying, "Hey, there's increased equity," and normally they'd bring it up to 75% LTB then I'd use that cash and do that again. Then the rest were just normally some type of 20% down, and then I normally try to build in some type of, "Hey, once I infill all these lots, let's do a second mortgage and let me try to get my money back." Some of these I'll do a bank, you have some vacancy and you say, "Hey, I'll actually increase the rents, and I'll actually infill the homes, it's not this fake equity where I just do a rent increase and don't improve the value at all when you're actually infilling lots and getting leases and putting homes on sites, that makes a huge difference to a lot of banks. I haven't done anything with agency or anything with any regional banks, I just got introduced to some regional banks, about two or three weeks ago, so I'm starting to explore that a little bit more.

Frank Rolfe: Have you done any conduit lending deal so far? No, so you basically just were in working seller financing.

Keaton Schultz: Yeah.

Frank Rolfe: And local banks. They're pretty much correct.

Keaton Schultz: Yeah.

Frank Rolfe: Okay, so let's talk for a minute, very first deal was seller finance.

Keaton Schultz: It was at Credit Union, yeah it was a 20% second mortgage and then the bank financed the other 80%.

Frank Rolfe: Right, so basically, from early on, just as Dave and I did, you learn the power of seller financing, which is like the coolest thing in the world, because I don't know any other industry where you got seller financing. I was in the Billboard business, it does not exist, like I never heard of the word seller financing until the mobile home park business, because there just was not any other type of financing on my radar screen other than going down to a bank.

Frank Rolfe: So let me ask you on seller financing again, without giving out your secret tricks, but anything you tell sellers to try to urge them on, we typically just trying to educate them on the benefits, the fact they can get higher interest than they can in a CD. Of course, now we're CDs up a lot, that argument has been gutted to some degree, but what are your thoughts on just getting a seller to carry papers as opposed to say no I won't match.

Keaton Schultz: Recently, what's helped is I have a CFO in my office, he has a CPA, so that helps. If I need a little bit harder of a sell, I can have him show up and he can kind of present a few different options, and he comes from that CPA background, so that's helped quite a bit. Further before I hired Jordan and he joined the team, my only really good angle was developing that rapport and trying to figure out, do they really need the money, or, what are you gonna do with the money? And once I heard, "Well, we're just gonna put it in the bank. We wanna just be done with this." That was my first inkling.

Keaton Schultz: Sometimes if it's hard to get to a purchase price, sometimes I'll say, "Well, here's two offers, here's full cash, you're done, and here's some seller financing, and they're like, "Well, I don't like the price on this full cash, and I'm like, "Well, I can't get there, but I can get there, if you wanna hold paper for five to 10 years somewhere in there," and normally that the whole conversation with the offer and everything, that normally opens up the door.

Keaton Schultz: Very few times am I competing with someone. Because I'm doing that cold calling. Every deal I've done with a broker, I haven't really been able to go about that seller financing route, 'cause it's hard to develop that rapport with the seller when there's that intermediary in between.

Frank Rolfe: And let me ask you this, 'cause where I'm almost 40 years older than you are, right? So you're like the young generation of park buyer, do you ever use the word manufactured home community ever, or do you just use mobile home park and trailer park.

Frank Rolfe: Yeah. So in our office, if we use the T word, we come down on the person pretty hard. So sometimes it's hard with tenants 'cause they'll just say, "Well, it's... Call it what it is, it's a trailer," and it's like... I try to take the approach that, well, it's someone's home. So we'll say manufactured housing community. A lot of times, we just shorten it up and just say a community. Some people are like, "What does that mean?" So then we just say park. So some of those words are interchangeable, but I got into a little argument over on Facebook, which I normally try not to do 'cause it's hard to prove anybody wrong, but I think when you... Trailer park has such a negative connotation that it might arguably be what it is in your generation. But it has such a negative connotation. I think when you use it nowadays, it doesn't do the community justice really.

Frank Rolfe: And let me ask you the... Have you come up with any better terms that you like? I like using the verbiage, although I know it's cheesy, high density, high density community or high density subdivision, 'cause that's kind of what the things seemingly are. Do you have any new terms, do you have any new ideas of what we should call it 'cause the industry has failed miserably for the last half century in the title of this stuff, right? They can't... Nothing, nothing sticks. They tried the manufactured home community, land lease community. Everyone just always retreats, in fact mobile home park is 98% of all Google searches for the product. Are there any new ideas and new names you have come up with yet for this stuff?

Keaton Schultz: Not really and to go off your point. I think the issue is in a lot of zoning codes, it still says Trailer Park zoning and whatnot, so that's... I think that's part of the issue. When we do ads, for Craigslist and whatnot, you have to put mobile home park below otherwise for people that are searching, they're... We don't use trailer or anything like that, but you have to put mobile home park or a mobile home on there because that's what people are searching for nowadays.

Frank Rolfe: Do you ever have any old sellers who call mobile home coaches?

Keaton Schultz: No, no.

Frank Rolfe: Ever had these old guys that'll say, "Yeah, I got 40 coaches that I carry." Maybe they're all dead, but when I got in the business all your 70, 80-year-old guys called mobile homes coaches, which was so weird. The guy I bought my first park from, he described the park as having 80 coach lots where it's like 40 coaches in it.

Keaton Schultz: What is this?

Frank Rolfe: And I was like what are we talking about here fella? But that's a way old term clearly. Let's talk for a bit about rent increases because obviously that's the biggest driver to the industry, making money, we get horribly unfairly criticized on rent increases, I don't know about you, but in most markets we serve, we're a thousand a month under apartment rents. We feel our rents are really stupid, crazy low, and I know some people would say it's not a fair comparison because the apartment person, they get the whole unit and all you give them is the ground, but in most of our parks and 80% of our parks, the homes are owned free and clear.

Frank Rolfe: There are homes from the '60s, '70s, the '80s, they got no mortgage. So the comparison truly is living in our park for 500 a month or the apartment over there for 1500 same size or often apartment is smaller, yet the industry is always very concerned on raising rents, but that at the same time, that is our big profit driver, we don't have anything else, we're not like an RV park where you've got glamping and sell some propane and sell potato chips. A lot of rent is pretty much it. We're a parking lot. So where do you see rents as being? Like what are your thoughts on how much you can raise rents annually, what are your thoughts on the future trajectory of rents, what would you say your average rent is portfolio wide right now?

Keaton Schultz: The difficult part that I had to learn as we were growing was that I would look at what the current rent is, and I would do it based on a percentage, I wouldn't take into account what is market, 'cause I kinda went through the school of hard knocks. I didn't really... I listened to podcasts and all that, and I didn't think about it too much, I was just focused on growing more, so we would take something that's 120 and be like, Oh, let's bring it up to 220 or something like that. Even though in the market, the average lot rent might be 350. So now that I'm a little bit more out of day-to-day management, I look at our portfolio wide, and I'll look at what other surrounding parks are charging and what their value is, and I'll look at what our value is, and that helps give an indication, but really I look at what our costs are, if we're installing new roads, well, I need to increase rent, if we're installing a new septic system, I need to increase our water and sewer charges, and a lot of that in...

Keaton Schultz: All of our parks were getting to be in that 300 range, there were some that we purchased that were at 90, 120. The funny thing is a lot of those have high density of park owned homes where the owner... This is what the rent is, it's like, Well, you're charging $500 a month. Your lot rent's 120. I don't know how you... I can't make money on that, especially what you have to acquire that. So it really depends on the area. I've seen stuff in Wisconsin is getting more to market, stuff in Minnesota is rising a little bit higher than what I thought, and then down in the Carolinas and in Arkansas raising up a decent amount too, 'cause it's funny, I've gotten a lot more calls on my stuff in Arkansas recently, than anything. So people are in favor of that south, and I don't mind Wisconsin, people don't like plowing snow and whatnot, it leads to maybe a little bit higher cost, but you can pass on the charges, which is fair.

Frank Rolfe: What do you think the... Again, there's no right or wrong it is based on the market, but what is roughly in your opinion, the correct amount of increase per year in monthly rate, in other words, we try and cap it normally at 50. We've done more than 50, but normally it's fairly rare, once we're at market, we drive down to more maybe in the 20-30 rate, what you're doing, where you've seen a differently?

Keaton Schultz: Recently, we're being a little bit more aggressive on just getting it to market, if you raise it up incrementally, it's gonna take you seven years to get to market, and people are gonna be complaining the whole time, and you're not gonna be able to afford improvements that you wanna do. Myself as much as the residents that are living there, we all want new roads, we all want a new sign, new mail boxes, I wanna own a community that looks awesome, but I can't pay $450,000 for new roads if my average lot rent is still at 250. So what we're doing now is we're getting everything up to market, and then we're doing those slight increases and we make sure there's some value behind it on what we're doing when we do that large increase with something meaningful inside the community. But once we get it up to market. Yes, it's somewhere in that 10 to 35 dollars a month increase, something there.

Frank Rolfe: Have you been attacked by the media? Yes. Have you had any news channels, TV, Any newspapers pick on you saying your rents are too high, or you've raised them too much, or do you not say that so far?

Keaton Schultz: The thing that I love my business and our company is we've flown under the radar on basically everything, so I haven't really gotten any media coverage. The only... We were in Inc. Regionals zone hopefully we'll be in Inc. 5000 this year for our growth, but that's... And I've been in the paper a few times 'cause I bought communities from municipalities, that was a few neat transactions. So that's really the only time that we've really ever been in the media. Normally, when we do a rent increase, we don't just send it on the mail, my team goes door to door and we talk to each of the tenants when we do it, which is a little bit more manual labor on that side, but it normally leads to a lot less questions, a lot less anger around it. Most people come out saying, "Yeah, this is fair." And normally, we try to make it somewhat fair, there's always some people that never see it that way, that you can never make happy ever, but you just kinda gotta accept that in this business, and that's true in a lot of other businesses as well.

Frank Rolfe: Right. And typically, the unhappy people that you can never make happy are tiny fraction of the population, maybe it's like at a 100 space park, you might have between one and three, that it doesn't matter what the rent could be, you could say, "Hey, we're dropping the rent from 200 down to 50."

Keaton Schultz: It's about time.

Frank Rolfe: And they would still complain and say, "Well, how come you didn't take it down to 25?" Right, yeah. We've had the exact same thing, it's very frustrating 'cause you obviously want all your customers to be happy, but I've learned, over 30 years, I can't make everyone happy. Literally, there's some people, if I gave a million dollars, they would say, "Well, why didn't you give me more?"

Keaton Schultz: Why this happens to me?

Frank Rolfe: Right? Or, "Why did you pay me in a different currency? I didn't want a dollar. Why didn't you give it to me in Yen?" Or some other deal. So let's talk to me about the markets you like, and we went over the states, but in general, when you're looking into market, whether it's in Wisconsin or Kentucky, anywhere, what are some of the basic stats in the market you like as far as size, and home buys and that type of thing.

Keaton Schultz: I'm gonna be the outlier, definitely way over here. I haven't found a market yet besides one market, Marshfield, Wisconsin, that I don't like. Marshfield is just really hard to sell homes there, but every other market, small treasury area markets that are out in the middle of nowhere, out to some suburbs of larger communities, I've had really good luck in all those, you just have to understand your market and understand, "Am I gonna push used homes here? Am I gonna push new homes?" If we do find a community that we can push new homes in, then we'll try to take those old homes and as trade in and we'll move those to other communities. So it's kinda like a reshuffle almost, but I haven't found... I think every community can benefit from affordable housing, and we've seen that to be true in basically every community that I own own Parks in.

Frank Rolfe: And why do you think that is? We've had to say an experience, we had a Park in Black River Falls, Wisconsin that, not a big town. Nothing glamorous going on there, I'm not aware of anything that ever happened from when we bought it to when we sold it that ever would have made the paper. I don't remember any businesses opening, big plans, big factories. Yeah, we remained completely full. Completely collected throughout, raised the rents up significantly, had no complaints, no pushback, never made the paper. No issues. Why do you think Parks work in even tiny markets, and we've owned Parks in cities as small as 5000 in some states, which I will admit is very small. In some states like Colorado, a 5000-person market, you can easily stay completely full, raise the rents. Perfect collections. Why are we unique like that? 'Cause you can't... Well, let me ask you, you've done some multi-family, does multi-family work in markets that small as well or are we just unique? Obviously, retail doesn't, I know. I live in a small town of 4500 and our mall is a catastrophe, so if someone wants to buy a mall if it was the half empty, we always have one available. Lodging, worthless. Office beyond, worthless.

Frank Rolfe: There's no demand for anything. You can have Mobile Home Parks and tiny, tiny markets that stay full, fully collected, looking nice. Why? Why can we handle the tiny spots of America when all other sectors fail in them? Why do you think that is?

Keaton Schultz: I think... 'Cause I have some communities that are... It's 500 to 700 population, and I still do well there. I think in some of those outlying communities, there's still a need for some housing, and the location, at least in Wisconsin, a small community is normally by something else in some way, shape or form. And there's also that level of affordability. There's a lot of people that move out of larger towns that they're sick of paying a large amount of rent. Or they wanna move back to where they used to live. They're going back to their hometown. I think there's a lot of different options, I think for apartments and whatnot that I used to have in rural treasury markets, it definitely was a lot harder to fill. Mobile Home Parks, it takes a little in really small areas, around a thousand for population size, it takes a little bit longer to move to move the homes, but once you do, those people normally stay, they're not moving and wanting to sell their home in a year or two, they're gonna stick around or stick around for a job or whatever it would be, and even in the small towns, there's something that made that town be created out of...

Keaton Schultz: For a thousand people, I just... If I have one vacant side, I just have to get one person, so if we try to fill up something, we'll send a mailer out to the tenant saying, "Hey, we have a new home moving in here, help us fill it, here's our incentive and whatnot." So it's a good question. I think it's just providing affordable housing for apartments, they don't really know if they'll do it, but I can put a home on a lot and I can get all my money back. It's worth the risk, really.

Frank Rolfe: Do you think part of it is the... Obviously, the US Megatron people are leaving cities after COVID. They don't like crime anymore, 'cause most big cities of crime is just untenable. They learned in COVID the desirability of more privacy in space, and then could just couple with better values. I imagine that, I don't know of any market in America where you cannot get... If you're willing drive an extra 30 minutes out of town, you're gonna clover in home price with a much better deal, those who live closer to downtown. That's just kind of the deal. But then also, it appears to me maybe younger people are kind of enthused with small town living, just in the same function where they're finding... People are finding with shock that millennials are buying lots of RVs because they just like simplicity and grassroot stuff. It would appear to me people in the big cities or desires, the small town, which is great for our industry, 'cause almost all parks are in suburbs and exurbs. So it's like it's probably a very, very good trend. What other mega trends are you seeing out there that would relate to parks? You've got the movement of the population, obviously COVID brought on people not liking attached dwellings as much as detached. We're seeing that.

Keaton Schultz: Yeah, I think coupled with COVID and people moving out of cities and out of apartments, I think people, especially in the younger generation or focusing more on... They wanna focus a little bit more on experiences, they wanna travel a little bit more, they wanna do those items, and having affordable housing allows you to go do that. A lot of people wanna move back. We have a lot of people that buy homes in our communities that wanna move back by family and their family lives in the Park, so those are really easy sells, especially if we have a really good relationship with the residents. So there's that, and I think in a lot of the communities that I'm in, they're just having been homes that have been brought there really, it's a mom and pop that was tired, that, "I don't wanna get my dealers license." Even though it's fairly easy. They didn't wanna bring any homes inside, so you have a 50-lot park, 20 lots full, you start adding five, all of a sudden people that wanted to move to the area now, they can do that. So I think it's just demand that was always there that just never got realized is probably a good part of it, of why we're moving homes and then people moving back to the communities. I think a lot of it is COVID, and then again, a lot of it could be just demand that was always there, that just never got fulfilled 'cause there wasn't the inventory.

Frank Rolfe: Are you seeing a lessening in the stigma against Mobile Home Park living? I know in Wisconsin and Minnesota, very rarely does someone say they live in a Mobile Home Park, they identify themselves as living on a certain street at a certain address, they never talk about park, nor do I hear anything negative from the general population because they have so many relatives, mostly seniors that live in parks. Can you see that going down? 'Cause when I got the business in the '90s, 30 years ago, the stigma was so strong that it was hard to find managers because they didn't wanna have their name even associated with a Mobile Home Park, because it was considered to be so gross, it meant that they were a lesser citizen. I remember when I did The New York Times article, the writer walks into my office and tells my manager, "So what's it like being a nobody that lives in the lowest form of housing?" That was his opening comment. [chuckle] I was like, "Holy shizz, fella, you can't say that." This is before our political correctness apparently existed in America, so which they had a very good report, the manager said to the reporter, "Where do you live?" He said, "I live in Manhattan."

Frank Rolfe: She says, "Do you own it?" "No, it's a rental." And they said, "Well, then you're more worthless than I am because I own my Mobile Home and you don't know anything." Which is a good retour, but I don't see a lot of that anymore. I see most right now people, that that stigma is somewhat diminishing over time, are you also seeing that in your markets, are you feeling people not branded with the big trailer park stigma from buying the homes? And if that's true, why do you think that is? Why it's a stigma going... Why is it evaporating?

Keaton Schultz: Yeah, I think it's definitely getting a lot more accepted as a type of housing, I think with the tiny home movement and people, minimalistic living and whatnot, that probably has a certain amount of help, but I think, again, it's just there's... We're providing housing. There's an option, it's cheaper, and how these are built nowadays, if you walk into a new home, it's not like what they used to be, I mean, it is night and day. There's a few plans that we order homes from, and you walk into it, it's really, really nice. So that coupled with affordability, I think it's just getting more and more accepted and stuff keeps increasing in price. It's a really, really good option is to shoot with some of the amenities, some offer. I think It's just plainly just become more accepting.

Frank Rolfe: And Keaton, let me ask you this, right now you've got 300 to 4000 lots. So in the list of the 100 biggest tenants, you must rank probably in the top 50, I don't know where, you may know your placement in the list, what are your future plans? How big and you try to be ultimately... Are you nearly there? What are your thoughts? You're not very old. What's the... You got less than 160,000 lots. What is your game?

Keaton Schultz: I'm coming for Sam Zell. No, Kind of what I was... I used to have a number attached to it of what I wanted to grow to, and then I thought about that and I thought that that would encourage me to do deals that I otherwise normally wouldn't do.

Keaton Schultz: I wanna keep growing. Obviously, that's a lot of fun. But right now, we're selling a lot of our apartments focusing on this industry, and I don't really have a number. I used to have a number, I wanted to be in that 10 to 15000 site range. And that's definitely is still the goal, but it's not driven so much by that as much as what the deal looks like. What some community sell for nowadays, it's like, "Well, I like the community, I like the area. I like those things but I wouldn't pay that price." So I think as I've grown, I've become a lot more sophisticated with how I purchase and I get a lot less FOMO Fear Of Missing Out, and I didn't get that deal in my hometown or, "RHP, but bought X. I really wish I could have bought that." Well, RHP has a nice head start on me and all that, so I can't really compare to what I'm doing. So once I got out of the comparison game and I'm like, "Well, I'm 26, I'm doing pretty well."

Keaton Schultz: Let's just keep doing what I'm doing, and then we can see where it ends up. We still have monthly goals on selling homes and whatnot, and now I'm less emotionally attached to some deals that I may or may not get.

Frank Rolfe: Got it. Well, Keaton you know what, we really appreciate you taking the time to be here because again, we know you got a busy schedule, but it was a fascinating story of someone your age who has grown so large, so quickly, so I wanted to go ahead and get you on here, because you don't meet a lot of people like you, and obviously you're very personable, and that's reflected as people can feel from conversation, which is why you've done well, because really our industry is a people business, you have to get along with people, whether it's sellers, managers, customers, where the people biz, it's basically the people satisfaction business, and we're not in the business of trying to unscrupulously raise rents or force people to live in this or that. We're just trying to make people happy. And obviously, you're doing a great job with that, that's why you're being rewarded with being able to buy a lot of stuff and keep your tenants and everything else. So we really, really appreciate you being here, giving your perspective from a larger community owner as someone who's done it very rapidly. So we commend everything you've done, and we really appreciate you taking time to be here.

Keaton Schultz: Thanks.

Frank Rolfe: Yeah, we also appreciate everyone who is here with us tonight just to learn more about the industry. Again, it's a fascinating industry as you hopefully saw reflected from Keaton, and we highly urge you, if you're interested, take your interest and explore further and see if this is something you wanna be in whether you've been in it for a handful of years like Keaton or nearly 30 years like myself, and there's others out there, but in 50 years and more in Sam Zell has been in it, I guess about at the same time as we have in real estate much longer. But as you can see, there's many faces, there's the old face of me, the young face of that guy, it's a very, very, very creole. So it's kind of all inclusive, if you're interested in the concept of being in the Parking Lot business for manufactured homes, then it's very fascinating to mention. So again, Keaton, we really appreciate you being here, we appreciate everyone for spending the time with us tonight, so that kind of concludes the lecture series event, but again, we appreciate everybody for being here, and we will talk to everyone again soon.