Editor’s Note: Welcome to the companion article to Episode 9 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.
Mobile home park investing is like going through high school. As a freshman, you know nothing. You roll into sophomore year slightly better. By the time you get into your senior year, you're a well-oiled machine.
As everyone knows...during your time in high school, you’re going to trip up and make mistakes. But you know that that’s okay because you won’t make the same mistake twice.
Going through high school feels the same as going from one mobile home park to two and so on. The more you invest, the more you make mistakes and learn.
Unfortunately, a lot of investors don’t make it through the first step - they pass deals, with the excuse that, “I don’t have the connections” or “I don’t have the experience.”
How do I know this? Because I did the same thing. Those excuses were my excuses.
The lightbulb came on for me one day when I took down a deal and doubled that property’s value within 90 days. I started asking myself “what else have I missed out on?” just because I was too afraid to jump in and get the experience that, truly, only comes with time.
When I liken the MHP investing experience to high school, I also like to talk about the process of going from unconscious incompetence to conscious competence.
In ninth grade, we are unconsciously incompetent. It’s our first year in a possibly new and larger school with people who have been playing the game for at least two to three years. We don’t know what we’re doing, kind of just showing up and seeing what happens.
In tenth grade, we are consciously incompetent. It’s our second year and we’ve learned the rules. We’ve got a place on the board at least, but it’s on the outer edge and we’re still getting hit.
In eleventh grade, we are unconsciously competent. By the third year, we’ve learned the unspoken rules of the school. We’ve advanced on the board, and life is pretty sweet.
In twelfth grade, we are consciously competent. We know the lay of the land, who our friends are, what teachers we like, and the ones we don’t. By all means, school is second nature to us.
To be honest, I felt exactly the same way when Ryan and I first bought La Costa. I had never done property management before. And, even though it was my third mobile home park, it felt like my first.
I’ll pause here to say if you haven’t read the first article in this two-part series, stop now, and go read it. There are six valuable lessons there.
Anyway, back to conscious competence….
Let’s just say, when Ryan and I got to La Costa, we had idealistic hopes and dreams. Those were quickly stamped out at 8 AM on our very first day.
Between maintenance staff who only spoke Spanish, it being rent collection week, and encountering individuals who made it their job to get out of paying rent, I can say (now) without a doubt we were in the unconscious incompetence phase.
We had gaps in our knowledge that we didn’t even know about.
The good news is that by month six in my mobile home park experience, I was at conscious competence. La Costa was a well-oiled machine. Ryan and I had...
Met a lot of connections and influencers in the area
Became conversational in Spanish
Built a solid team of fix-it people
Filled all vacancies
Monetized vacant pads with about 20 RVs
Corralled collections
Fixed problem areas like roads, lights, trees, and more
But, the one thing that we learned that was more valuable than anything else was learning how to handle people.
If you’ve followed me for a while, you know that I pride myself on being a psychology guy. I thought I knew how to handle people, especially in a mobile home park setting.
I was wrong. But, in making the mistakes that I did, I learned three incredible lessons.
Actions speak louder than words.
As landlords, we don’t want to evict people. We’re not assholes. However, there is going to come a time where tenants not paying will cost you money. This is where you don’t have a choice. You must evict or non-renew your tenant. In my experience, you do this with one tenant, and the others will fall in line.
You can negotiate with tenants to leave.
Sometimes, you’ll have tenants who get through the eviction by paying half of their rent. You can’t evict them. This is where negotiations come in - you can offer something for your tenant to leave.
We have paid people to leave. This includes canceling their payment, giving back their security deposit, and more. To date, we’ve had more people leave peacefully than trudging through eviction court.
You can not be overly friendly or overly mean.
I know that this sounds like a very fine line to walk, and in many cases it is. However, if you become overly friendly with your tenants, you will not be taken seriously. In a lot of cases, tenants will think they can walk all over you.
On the flip side, if you are overly mean, there will be a breakdown of conversation. You will not get anything out of talking to them.
My advice? Humor always wins. Humor can break the tension with your tenant. Egos can be soothed over.
So, how do you get through to people without being overly friendly or overly mean? You have to be direct, firm, and above all….repetitive.
Have the courage to be confrontational when necessary.
Have the character to not argue back with people.
Sound like a broken record, and use the legal leverage you have as a landlord.
In learning how to meet the gaps in our collective knowledge by living at La Costa, Ryan and I were able to double the value of our next property in under 90 days.
That’s when I learned that we, as people, believe we use the power of free will...but in actuality, we use the power of freedom of will not. And that my friends, is conscious competence.
When thinking about the freedom of will not--think about this…
Our bodies do so much via subconscious processes. We as decision-makers are inhibitors, not initiators. When you are proficient, you have created the right habit and your body acts on it without having to use brainpower.
Here is an example: Have you ever gotten home and then freaked out because you don’t even remember driving? You don’t have to remember because you instinctively know how to drive a car if you’ve been doing it long enough.
When we invested in a property right after La Costa, I remember not sleeping well that night because I wasn’t sure if we made the right choice.
At the end of the first week, I knew it was going to be okay. And, I was right. At the end of the first three months, Ryan and I had the property stable and at full capacity.
The skills I cultivated by throwing myself headfirst into La Costa….it brought about the formation of the right habits. Those habits freed up processing capacities, which allowed me to make more complicated decisions.
Here’s the thing….other investors passed on this property, even with the ability to pay less than what I did.
Why? Because they didn’t see the potential.
If you remember my podcast interview with Sam Kline you’ll remember the story of the property Sam showed one hundred times before one investor saw the potential, executed a plan, and exceeded expectations.
Ryan and I saw the potential of this property. We were willing to roll up our sleeves and do the work.
Here’s the takeaway: find the opportunity where you can add value that others can not.
For us, it was sacrificing our lifestyles to live at a property and spend mega hours on site. Then, we were able to apply those skills from the front lines to other properties. We wouldn’t have been able to do this if we hadn’t been out on the front lines.
What if you don’t have time to drop everything to go to the front lines? That’s okay, but realize you will be leaving money on the table. You will pay for the knowledge gap.
Can you learn this business remotely? Absolutely yes. As I mentioned, we already owned two other properties for nine months. The thing is, even with two properties under our belt, we still really had no idea what we were doing. And it wasn’t until we started with La Costa that we did start learning things. You can’t beat dedicating yourself 24 hours to the cause.
If you take nothing else away from this article, please remember this: Mastering a skill comes with frequent oversight and failures. But, in the long run, hard work and dedication will pay off.