Editor’s Note: Welcome to the companion article to Episode 12 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.
With mobile home park investing, you don’t just get in there, turn the key, and the cash starts flowing out.
Even though this is what most people think happens, it’s so far from the truth that it’s not difficult to understand why first-time investors are disappointed. Some even walk away from MHP investing altogether.
Let me tell you, mobile home park investing, unless done right, can totally knock an investor out of the game...before they even start.
Back in 2018, I spoke with Andrew Keel, park owner, operator, and downright hustler. If I know one person who did MHP investing correctly, it’s Andrew. Now, I’m not saying it was all rainbows and sunshine. Certainly, Andrew and his family, as you’ll read, made sacrifices, but in the long run, were rewarded.
Even though it’s been a couple of years, the four topics Andrew and I talked about are still things I believe in today, even in 2021.
#1. You need spousal buy-in.
If you’ve listened to my podcasts or read any of my blogs, you know that I believe spousal buy-in is incredibly important.
You can be as passionate about mobile home parks all you want, but if your partner isn’t...will you really be able to jump all in?
When it came to Andrew and his wife, Katie, and including her in his plan for investing, he said it didn’t take much convincing. “She loves spontaneity, the ability to pick up and go.”
Because of the nature of mobile home park investing, if you’re married or are planning to be, you need to get your spouse on board. In my discussion with Andrew, he made it clear that MHP investing takes a lot of hustle, grit, and there are daily struggles that need to be taken care of.
Because his wife was his number one supporter, it was extremely important for her to be by his side.
For me, I am right there with him. If you’ve read my wife’s article, Spousal Buy-In: Battle of the Sexes, you’ll know that MHP investing was the straw that broke the camel's back for us. In fact, she specifically said that in the early years, our inability to communicate and listen to each other fully came out when I ran home to tell her about my new plan. For us, we learned to work on our communication and listening skills. Years later, even in 2021, we continue to work at it.
For Andrew and his wife, they’ve learned to communicate and listen. They take nightly walks when he’s not traveling. During our discussion, Andrew said, “On the walk, I vent. I talk about everything that happened that day, long-term goals - she hears everything. Sometimes, she plays therapist.”
#2. Sacrifice in the short-term to get long-term rewards.
As an MHP investor, you won’t be a stranger to sacrifice. Whether that is working a part-time job until you can make it full-time, moving to the property, or selling your own assets to come up with cash, these are decisions you have to make.
I, like Andrew, firmly believe that short-term sacrifice can turn into long-term gain. In one way or the other, we have both experienced all of the sacrifices I mentioned above.
Parting ways with your assets.
Andrew, being a hot commodity on the interview circuit in 2018, told me something he never told anyone else.
“On my first park, I originally wanted to put down a $1,000 deposit. The seller wanted me to put down $10,000,” Andrew recounted. “I sold my truck to put down that deposit. But, I didn't have the money to buy this park and until I had met some higher players in the mobile home park space, I didn’t know I could buy parks without my own money.”
“On the first park I bought, we bought it for $1.34 million. Sixteen months later, we just got the appraisal back. The appraisal came back at $2.4 million. We have Fannie Mae, non-recourse loans. It’s the best debt. We’re just stoked. It pays off,” Andrew said.
Had Andrew not sacrificed his truck in the short term, he wouldn’t have learned valuable long-term lessons.
Sacrifice can be the line between getting the MHP or not.
Investors can be helpful.
“You meet people when you put yourself in the right places. Whether it’s conventions like SECO or MHI, or a boot camp, you meet people when you get inside of these events and I think that’s been incremental to my success in this space,” Andrew stated firmly.
Working odd jobs because you can’t go full-time.
It’s no secret that I wasn’t able to do MHPs full-time when I first started out. In fact, I worked multiple odd jobs from working for a Carnival cruise line, a car dealership, to Wells Fargo. I couldn’t tell you how frustrated I was. At the time, it was frustrating because I knew what my dreams were. But in retrospect, I am incredibly happy that I had those experiences. I built skills that have made me successful today.
Andrew had the same experiences. From selling websites to realtors to flipping houses, these, he said, helped him tremendously. But, there was one thing, above all else, that helped him the most.
“There was one thing that I did before I was a full-time MHP operator. I was a Lonnie Dealer. I read the book, Deals on Wheels by Lonnie Scruggs. I feel like this is the best thing you can do to educate and prepare yourself for what you’re getting into. Go and get the book and learn how to do deals on wheels.” Andrew recommended, “Buy a mobile home in a park, do some minor rehabbing and try to create and sell it on a contract. You’re going to learn quickly if you can market, sell, and talk to less affluent operators. It’s a good intro into dealing with the clientele that we deal with.”
Doing this helped Andrew build his resume and got him to the next step and then to the next step again.
“I am a religious person, and I think you have to believe in the process. I am not a patient person, but I feel like God puts you through struggles for certain reasons. I’ve been through deals that I wanted to work out, but didn’t. I needed to go through that struggle to learn what things cost and go through that due diligence,” Andrew said.
Andrew recounted a story to back up his claims. “I had a friend in Iowa and we were working on a deal. It was intense. We already put money down. We were going through the process. Then, we went to renegotiate with the seller because of what we found. They didn’t even know some of the things that were wrong with their park. The seller said no, he was not coming off of his price. Right then and there the deal was dead. We couldn't get a deduction and we couldn’t meet the rate of return that we were promising our investors. We had to cancel. Someone said you wasted all of that time and money. I said, no, the money and time was worth way more than any tuition I could have paid at college.”
I have to say this, canceling a deal is one of the worst feelings ever when it comes to MHP investing. But, it is necessary.
Here’s what I believe...there are three types of buckets that they fit in - the givers, takers, and matchers.
Matchers believe that when they give you something, you should give them something of equal value in return. Overwhelmingly people are matchers. My wife is a big-time matcher. When she gives you something, she wants something of equal value.
Takers won’t give you anything, they’ll just take what they want.
Givers will give, give, give - all without wanting anything in return. I believe that Andrew, like me, is a giver. To put yourself out there, to make sacrifices, and then to walk away with nothing in the short term, hurts. There is no getting around that.
I remember when I spent a couple of thousand dollars in due diligence and then backed out, my wife was like “why do you do this to yourself.” And I said, “honey you're a matcher. I’m a giver. I’m going to throw seeds out there and as long as I have a good garden, I don’t need to get every seed.”
#3. When looking for investors, don’t look to fund the deal. Look for interest.
One thing that I noticed quickly about Andrew is that he has the ability to find quality investors who are sold on him. Not just the investment, but they are sold on him as a person.
I said this to Andrew, and he advised, “You don’t want to be the weird guy going around the room, putting people into profiles to see how much money they have. And then trying to only approach the people who have money.”
For Andrew, it’s more about finding the people who are interested, not the people with the most money. “Regardless of where I am, I can tell when someone is interested in MHPs. When I talk about MHPs, I am very passionate about them. And when people ask questions, I try to answer them. Through doing that, I feel like they can tell I am passionate.”
Andrew also recommends building rapport with people. “Before we even talk about MHPs, we’re talking about them, about their families, about their weekend plans.”
Then, Andrew says, when they’re ready to talk or are interested in learning more, he lets the players come to him. This way of bringing in investors can have long-term benefits.
“In the end, when you get your investors really good rates of return, they don’t want the money back, they want to do more deals. So once you do execute, there is an abundance of money there for you.”
#4. Always be thinking about the next step.
For anyone who has hit critical mass like Andrew or myself, we don’t just give up. Critical mass is when we’ve made it to working full-time. The feeling is overwhelming, I have to say. It’s like you’ve achieved all of your dreams and more.
But truthfully, even if you’ve hit critical mass, it’s not over. You must always be thinking about what the next step is.
“It's a great feeling. And like you said, it’s not over,” Andrew said, “I started out doing Lonnie Deals, and then I asked what’s next. What do I need to learn to get to that next level?”
With the next steps, comes risk. There are going to be things out of your control that you’re going to have to be okay with.
Andrew said, “Analysis paralysis is real. People know enough but are too nervous to pull the trigger and execute. That is a valid concern that many people have - am I really ready?”
To those people, he says, “You’ll know when you’re ready. I recommend everyone go listen to as many MHP podcasts as they can. Dive in. After you get through the first 20 episodes of each of them, call me. If you're not willing to put in that type of time and be passionate about it, you’re not ready.”
Are you ready to take the next step?