Editor’s Note: Welcome to the companion article to Episode 13 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.
When it comes to mobile home park investing, there are two types of people.
Group A is slow and steady. They build their portfolios organically and always strive to stay in control.
Group B is first and foremost, money raisers. They bring in money quickly and snap up properties just as quickly.
Which one is better? I always ask myself. Is the old adage true? Does slow and steady win the race? Or do you need to be fast and overconfident?
A good friend of mine, Mike Conlon, sat down with me in 2018 to discuss his experience. For those that don’t know, Mike has achieved what many MHP investors want to achieve - owning 5,000 lots. He got there by growing organically, firmly placing him within group A.
Growing organically from zero to 5,000 lots comes with a lot of lessons.
Just because you’ve reached 5,000 lots doesn’t mean you’re done working.
I’ve talked to many operators who dream of retiring once they’ve hit 5,000 lots. While I'm not saying life wouldn’t get easier, the work is never done.
Due to the easy-going, passive air that MHP investing has been branded with, many get into the industry and forget that this is a job like anything else. Decisions still have to be made. Rent needs to be collected.
As a person who has reached 5,000 lots, take it from Mike. “It’s been a great run for us since 2011. We sold all five parks with the anticipation that all of the distressed stuff would hit the market in 2012. It took a while but recently we purchased about 7,500 lots and we’ve sold about 2,300. We sold our way up, mostly distressed stuff, worked it hard, built it up and then sold it to buy bigger, higher quality stuff. We’ve bought over a thousand spaces. There are still some deals out there, but it’s more difficult than they were.”
But Mike’s success didn’t just come down to him, it also came down to the team he built.
“A lot of people love my lifestyle. The cash flow is fantastic. I think the biggest thing I did was put the right people in the right place. I put Chris Barry as my chief operations guy. Just hired another regional guy for Atlanta who’s been a friend of mine for 20 years. We have great financial people. We have great managers,” Mike told me.
And the story didn’t stop there, Mike continued on discussing how his team was able to be successful. From starting out in the apartment business to realizing what type of person he was, Mike did a couple of things right.
“When I first started, it was just Chris and me. We were in the apartment business back then. I was behind the desk. I was driven by acquisitions. I am a big picture guy. Most of the people around me are detail guys. It’s a really good place to be at 5,000 lots. I don’t have to do anything tomorrow. I don’t have to show up for a month and everything is going to stay the same. It takes a long time to get there, but it is doable.”
You might be wondering, “how do I know I’ve made it?”
Owning and operating a mobile home park is a full-time job, and is never easy. If you’re just starting out, your first deal will be the toughest and the first couple of years will be the hardest. That’s when you’ll sweat the most, which is okay.
This is the point in your career where you figure out what works and what doesn’t. What do you like about this industry and what don’t you like? By the time you’ve got one or two parks and a couple of years under your belt, life tends to ease up.
For Mike, there were a couple of indicators of when he knew he had made it, “When you can hire someone like Chris Barry, it takes the pressure off. When you feel like you don’t need to be on the property everyday, when you have someone who is handling the work, and when you have someone else do your accounting.”
For anyone who is just starting out, that might seem like a tall order. It is.
Remember that mobile home parks, for all their passive messaging, are tough work. A lot of work and planning are required for long-term satisfaction.
That’s why I encourage all my readers to think about how they want to grow their business - are you group A or group B?
In talking to Mike, anyone can clearly see he is firmly in group A. His strategy for his life was built on a slow and steady plan. Not only did Mike start out in a completely different industry, but even as an operator he has maintained majority control in all of his parks.
Mike first started out in wealth management. Then, after he had moved into the apartment space, he found mobile home parks. Throughout his experience, Mike has applied one rule - get your ducks in a row before going all in.
“The reason I did that is because, being from the midwest, you tend to be more conservative. In the apartment business, we bought one eight-family building. That was all we had for about six months and we figured out “do we like this business?” Once we determined we did like it, I felt like we could grow it. We sold the financial planning business,” Mike stated. “On the park side, we bought one 80 lot park, and said “let’s try this for a year. If we really like it, we’ll start to buy more.” That worked out well for us. We got to experience it and say “here’s what we don’t like.” Before we got 5,000 lots, we were able to say “here’s what works and what doesn’t.” It was like a test case. That made our lives a lot easier because we weren’t going to make the same mistake on 5,000 lots.”
If there is one thing that you should take away from this, it’s that experience matters.
Mike didn’t waltz into the MHP industry, sit down behind his desk, and get to where he is now. In fact, quite the opposite. Now, not only does Mike still have a leg in the game, he is also a CEO, which has helped him grow the skills he already had.
“My skills were already good for this kind of thing. I am more of a big picture guy. I am okay with the details but I am much better at thinking about “where do we want to be two years from now or five years from now.” I read a lot. I try to be aware of what’s going on so that I can anticipate. The sign of an entrepreneur is that you try to anticipate what the next big obstacle is that you have to get around. But really, when you look at it, you have to be able to make decisions. You are always going to make better decisions having been in the park.”
But, he went further to say that being a CEO first will not prepare you the same as if you jumped into your park, “I’ve had a lot of conversations about clients and residents that come in and all of the crazy stuff that happens. You don’t really appreciate it until you’re sitting behind that desk. If you start out as a CEO, you have no relation to what’s going on. It’s a different business.”
You may be asking yourself, “how do you get to where Mike is?”
I have one word for you - endgame. If you aren’t sure what you want your end result to be, you won’t know what steps you need to take to get there.
Do you want to only work 25 hours a week? Figure out how much it’s going to take to get you there.
Do you only want to make $100,000 a year? Figure out how many parks you need to know to get you there?
For me, it’s all about the endgame. If you know that, then you can reverse engineer how to get there.
Mike’s story is similar, “Initially, we bought a lot of distressed project portfolios. We bought a Bank of America park portfolio that had about six parks in it. We still have a couple today. We sold some of them and reinvested the money. We bought a Tixuz portfolio - it was their only MHP loan. We got some of those.”
Mike and Chris did that for a while, and then something changed. “ Someone said to me, ‘Now is the time to get rid of your C MHPs and buy more A and B stuff in prime metro areas.’ That’s what we’ve spent the last three years doing. Cleaning everything under 100 spaces out and buying bigger stuff. We have seven parks over 200 spaces now. It’s very nice. Those parks are very profitable. The end game for me is...the more quality you have, the more big buyers want your stuff.”
But, what if you're a part of group B?
Snapping up deals quickly is a different business, and there are usually investors along for the ride. While this isn’t a bad strategy, it is a risky one.
“I think with any business if you grow for growth’s sake, you get into trouble when the market turns against you or something in the industry changes. I think you need to be very careful. I get that when you’re a money raiser, you get paid fees when you place parks. The problem with raising a bunch of money, it puts a gun to your head and says “these investors expect ROI on their money. So you have to go buy something. It may not be your best deal, but you have to buy it.” And you’re saying, “if I want to get paid, I need to buy something.” It is a conflict of interest that you’re buying to just buy.”
Mike suggests always trying growing organically first, and if you have to raise money, keep within a small group.
“I was always leery of going to outside people. I have about 15 people I’ll go to if I need the extra money. I would strongly suggest you have money to work with, but if you can grow organically it’s a lot easier because you can keep control. I am the majority owner in every single deal I have. I have the final say. If I need to get something done, I can get it done in five seconds. You have guys who are money raisers. It’s a little bit of a control issue. You have to go back to the guy with the money to get decisions made. I just never wanted to set myself up like that,” said Mike.
Mobile home park investing comes with A LOT of tough decisions that might not show results for years to come.
Do you want to be a part of group A? This slow and steady group can see far into the future, results that are yet to come, and most importantly (to them), they remain in control.
Or, do you want to be a part of group B? This fast and confident group will surely bring a return on investment for their investors and learn a lot of lessons along the way.
Which one would you rather be?