End Game: To Thine Ownself Be True
Editor’s Note: Welcome to the companion article to Episode 1 of the MHP_IRL podcast! The purpose of this article is to expand your podcast listening experience with additional content. Companion articles will unpack larger concepts that we talk about during each episode that will give you practical and most importantly, actionable advice that you can apply to your MHP investing journey.
“The more we learn, the more clearly we can focus the lens through which we see the world”
-Stephen R. Covey
Meet John and Sam, two investors ready to start their mobile home park investing journey-- both with wildly different goals for their lives.
Sam is a comfortable middle-class banker and family man looking to replace $100k in annual income. Sam has a modest amount of capital to invest and he wants to use MHP investing to free himself from the grind of the corporate ladder to spend more time with his daughters.
John is a bit more of a mover and shaker, with $2 million in investment capital at his fingertips. John is looking to replace $500k in annual income with MHP investing.
John and Sam have the exact same investing strategy--each of them wants to own 2,000 pads in 5 years to accomplish their dreams.
Using this strategy, which one of these men will build the life of their dreams investing in mobile home parks?
My answer?
NEITHER.
To which you might say, “Ryan, how can you say that neither of them will be successful? It seems that they have a plan, and they’ve both got some capital to invest. Surely one of them will make it work?”
And you’re right-- both Sam and John do have a plan. The only problem is, their plan is not in the best interest of John OR Sam.
Because their plan is based on someone else’s goals and ambitions and does not take into account the individual wants, needs, and desires of these two men.
In this article, I break down how you can avoid the trap of being like John or Sam, and how you can create your own unique deal criteria that will help you build the life of your dreams.
Cookie-cutter deal strategies are killing your dreams
Everyone wants a template these days. We want to cut to the chase, cut out the middleman, and get to the point. The mobile home park investing space is no different. In the industry’s desire to create content that is easily digestible for the largest number of people, there have been sacrifices made along the way.
It’s incredibly easy to subscribe to someone else’s version of success. In 2021 we don’t have to look very far to see in vivid detail on social media exactly what someone else has done to breathe their dreams into life. It’s easy to see someone else’s highlight reel and think “I have to start doing what they’re doing”.
One major blight on this industry is a singularity of thought. The idea that there are only a handful of ways to be successful and that everyone must take the same predetermined paths with their mobile home investing strategy.
The biggest problem with this way of thinking, however, is that it leaves out your personal goals entirely. I don’t think there’s anything wrong with incorporating new habits and taking action. But as Tim Ferriss says in The 4-Hour Work Week:
“There’s a difference between being productive and just being active”
We jump to take action hoping for the same results without filtering ANY of the information through our own personal lens.
Or without stopping to first ask ourselves “is this going to serve me?
“Will this create the life I want?”
Because a template strategy doesn’t care whether you want more time with your family, or whether you want to spend weekends in Fiji with your model girlfriend. A template is just that, a basic, bare-bones way of thinking that is interchangeable to everyone.
Remember John and Sam? In the podcast episode, I break down the actual math of how the strategy applies to both of their lives (hint: it doesn’t work out for either of them). But what’s most important for our conversation here, is to remember that both of them do share one thing in common:
Both John and Sam would have wasted time and energy chasing deals that were NEVER going to serve their goals.
What John and Sam needed was a quick and efficient way to analyze deals--they did NOT need another boilerplate investing strategy.
John and Sam needed deal criteria that was specific and unique to their personal life goals. They needed a brand new lens to filter their investing decisions through.
Starting out with the end in mind
The very first step in creating your own unique deal criteria is to understand exactly what your end game is.
When Ian and I first started the Archimedes Group, we shared something similar with John and Sam.
We wanted our careers in mobile home investing to act as a medium to deliver the kind lifestyle that we were both desperately seeking.
If we take a closer look at the example of John and Sam we can see how both would have wound up deeply unhappy with the results that their strategy produced.
Sam would have realized that the income generated from his investing strategy actually drastically exceeded his desired $100k goal. At first blush, this sounds like a huge plus right? But for Sam to sustain the earnings generated by his investing plan, he would have had to work just as many hours as he did in his corporate job (goodbye family time).
John would have realized that despite his significant startup capital, that the math just didn’t work out in his favor. He would have spent every dime of his $2 million startup capital to STILL fall about 1,600 pads short of what he would have needed to replace $500k in annual income.
For other people, with different circumstances, the cookie-cutter investment plan may have worked like a charm. But for John and Sam, it was a dream killer. And if John and Sam had set out to copy that cookie-cutter template, they would have set themselves up for years of disappointment, frustration, and possibly financial ruin.
This is why starting with the end in mind is so critically important when you are creating your unique deal criteria.
During the episode, I mention the book “7 Habits of Highly Effective People” and how that book profoundly impacted my thinking. Author Stephen R. Covey devotes an entire chapter to the concept of beginning with the end in mind. One of the biggest takeaways from the book is that knowing yourself incredibly well should be a foundational component to any endeavor that you embark on in your life. Stephen says that we should make it a practice to take a personal audit of what we do and DON’T know as a way to understand our personal weaknesses.
He goes on to say that:
“The ideal, of course, is to create one clean center from which you consistently derive a high degree of security, guidance, wisdom, and power, empowering your creativity, and giving congruency and harmony to every part of your life..”
That’s exactly what your aim should be when creating your unique deal criteria. To create a center that is focused on the kind of life you want to build, and to constantly make sure that each investment you make is driving towards that goal.
Starting with the end in mind doesn’t mean racing haphazardly towards some rigid and fixed goal in the future. To do that would limit your ability to integrate feedback from your experiences and the insight you gather along the way.
The beauty in starting with the end in mind means that by constantly filtering your decisions through the lens of your ideal life (your endgame), you’re actually giving yourself the flexibility to quickly and effectively kill anything that isn’t helping you to achieve that lifestyle.
Starting with the end in mind is actually an exercise in fixing your mind on immutable core principles that define your life and personal mission statement. Those principles then become the lens by which you filter all of your investing decisions.
When you adjust your mindset to put your dreams first, you have a sense of mission about what you’re trying to accomplish and you become ruthless in your decision-making to protect that vision.
To take a huge expansive concept and make it as simple as possible:
If you know exactly what you WANT, you can figure out exactly how to get there.
And by keeping things simple, you’ve just unlocked a brand new superpower.
The Hedgehog Concept
This concept is made up of 3 intersecting circles:
1- What you are deeply passionate about
2- What you can be the best in the world at
3- What drives your economic/resources engine
Jim Collins uses the hedgehog theory in his book “From Good to Great” as a way to highlight this important concept:
“Transformations from good to great come about by a series of good decisions made consistently with a hedgehog concept, supremely well-executed, accumulating one upon another, over a long period of time”.
The Hedgehog Concept is not a strategy to BE the best, but rather a strategy to understand what YOU can be the best at. For the Hedgehog that means focusing on its natural ability to curl itself into a tiny impenetrable ball of spines and spikes, rather than spending its energy trying to outwit the cunning fox.
For you, it means simplifying the world around you and focusing all of your energies on the things that you are passionate about. It means asking the RIGHT questions that are at all times prompted by the 3 intersecting areas of your passions, your unique gifts, and your personal access to resources.
I don’t know about you, but there’s nothing that I’m more passionate about than waking up every single day knowing that I’m living the life that I want.
Mobile home park investing can be the land of opportunity, but if you’ve spent any time in the real estate world you know that the window of opportunity for smoking deals does not usually stay open for very long. To capitalize on those diamond-in-the-rough deals (especially in a frothy market) you’ve got to move FAST. This means it’s absolutely critical that you’re able to create your own unique deal criteria and effectively use it to analyze potential MHP deals.
By creating deal criteria that are focused on your endgame AND have been simplified against the core principles of passions, your unique gifts, and your access to resources you now have an efficient and effective way to analyze deals.
Let’s take a look at John and Sam again:
Sam, now armed with the information he needs to create his own unique deal criteria, comes to an exciting realization. He doesn’t actually need to work himself into the ground attempting to secure 2,000 pads. Because by focusing on his endgame Sam quickly realizes that raking in hundreds of thousands of dollars a year isn’t actually his goal.
Maintaining his current standard of living and spending time with his family is Sam’s endgame goal. By starting with this in mind, and reverse engineering his unique deal criteria, Sam realizes that he could totally achieve this in 5 years (or less) by owning just 2 or 3 mobile home parks. Furthermore, Sam realizes that he could accelerate this by understanding that his modest access to resources (hedgehog concept) meant that he should be looking for deals that are turn-key or offer seller financing.
John’s story on the other hand, is a classic case of confirmation bias. John knew that he had money to invest and that 2 million dollars was no modest sum. John also knew that MHP investing was a viable way to build wealth because John had seen people all over Instagram who were absolutely killing it in the market. “I’m a smart guy with money to spend, I can make this work for me,” thought John. Everywhere that John looked seemed to confirm that all he needed was money and drive to be a successful MHP investor.
But thankfully, John is a smart guy and he decided to pump the brakes for a moment, forget what Instagram was telling him, and apply his own unique deal criteria to the situation. He is smart enough to start with his endgame in mind. He knows that he wants to replace $500k a year in annual income and that he wanted to use MHP investing to get there. But when John applied his unique deal criteria and reverse-engineered his endgame, he quickly realized that the numbers just didn’t add up.
For John, being an owner-occupied operator didn’t make sense. Not only did the numbers not work in this frothy market, but when he paused and considered the kind of time investment this would take, he realized that he needed to change his MHP investment strategy. John enjoyed his golf on the weekends, and had worked too hard in his life to go back to the nitty gritty of living in and actively managing a mobile home park.
John decided that he was going to diversify, by splitting his $2 million in capital down the middle. John used his unique deal criteria to only invest in 1 or 2 diamond-in-the-rough deals so that he can get his foot in the door with MHP investing. He decided to hedge his bets by investing the other half of his capital in the stock market (an area he knew very well and had made significant wealth in already). By focusing on his endgame of $500k from MHP investing, John focused on finding the right business partner. John linked up with Joe, a young up-and-comer in their area who had seen great success in MHP investing already. The kid seemed to have a midas touch, and a hell of an eye for deals. And better yet, Joe handled all of the operations, while John collected interest on his money and kept his hands out of fixing toilets.
By applying his unique deal criteria, and keeping his endgame in mind, John was able to reverse engineer an investment strategy that gave him the return AND the lifestyle that he desired.
Use your unique deal criteria to guide your decisions
The beauty of mobile home investing is that it is a numbers game. Once you figure out exactly what you want MHP investing to help you accomplish you can literally reverse engineer that into a math equation to support those goals.
By creating your own unique math problem based off of YOUR core principles you’re able to create a deal criteria that is the builder of your dreams. Now, armed with this information, you can move forward confidently analyzing deals quickly and efficiently that serve your biggest and loftiest dreams.
If you copy a cookie-cutter strategy, you’re in a race to the bottom, and your only ace-in-the-hole is to offer the highest price. It’s your only way to stand out.
There will always be competition in this market, whether it is frothy or not, MHP investing will always attract savvy investors with cash to spend. The numbers of MHP investing are simply too attractive for investors to pass up. And this is why it is that much more critical to create your own unique deal criteria to serve the lifestyle YOU want.
Create an investment strategy that supports your personal goals, and you will effectively carve out your own corner of the MHP market.