4 Quarters of Real Estate Investing with Jeremiah Boucher

INTRODUCTION:

Join host Derek Vick in this episode of the "MHP Show" podcast as he interviews Jeremiah Boucher about his experiences and insights into mobile home park investing.

KEY TAKEAWAYS:

1. Transitioning from Real Estate: Jeremiah discusses his journey from being a realtor to investing in mobile home parks, highlighting the challenges he faced along the way.

2. Importance of Relationship Building: He emphasizes the crucial role of building relationships in the real estate business and how it contributes to long-term success.

3. Finding Problems to Solve: Jeremiah shares insights into the necessity of identifying problems within the industry and how solving them leads to profitability and growth.

CONCLUSION:

Discover valuable insights into mobile home park investing from Jeremiah Boucher's experiences and expertise, and gain a deeper understanding of the challenges and opportunities in this sector.

WATCH IT IN YOUTUBE:

TRANSCRIPTION:

[Music]

00:06

hey everyone welcome back to the MHP Show podcast on the MHP show we talk about anything and everything that has to do with Mobile Home Park investing operations crazy stories and crazy things that we see in this business and that's what we talk about here on the MHP show but before we get started I want you all to go check out if you go to Derk vicks.

00:28

com slm masterclass webinar you can get access to my free webinar Master Class where I started from the basics of Mobile Home Park investing all the way up to finding your first deal so if you go check that out you can literally watch that entire thing and learn everything you need to know about Mobile Home Park investing so go check out that webinar so now without further Ado I have a very special guest with me today Mr Jeremiah bue he's the founder and CEO of patriot Holdings and he is the author of how to win at the game of

01:04

commercial real estate investing well finding your Edge that's how to win at the game of commercial real estate investing I had to switch that up and got that right but welcome to the show Jeremiah thanks Derek yeah you're you're a trooper man a full-time mobile home park investor and not for the Fain of heart yeah it's definitely not not for the faint of heart and so uh you know getting started here I actually you know I mentioned to you before had started reading the book we're actually

01:32

listening to the audio book and for for those of you that haven't I recommend you get this because Jeremiah's actually reading the book himself and uh it's just a really great book it's it's easy to read and you make it simple to understand you know what's a you know a so-called complicated thing um as far as real estate investing and and things but I I've I've listened to this part of the book and I want you to share what your first entrepreneurial Journey was with our listeners yeah yeah well I mean my my in

02:04

terms of uh my model was my dad you know so he had a Paving Company in New England and I I grew up you know working for him and that was not what I wanted to do right to be on a a Paving back of a paver for the rest of my life so I was in doing house flips like a lot of your your staff or a lot of your listeners there and and what the journey you've gone through uh I was a realtor and that Realtor process was was rough you know I was in he Heyday a little earlier than the Heyday of of Las Vegas real estate

02:34

or just the whole you know Big Short four five six catapult of real estate values where the young young kids these days don't know how how bad that crash was and then you know losing everything in 0 08 really 0708 uh with lots of foreclosures and that whole process was not fun so I was pretty much a real estate investor from day one but um but it was a rocky road yeah yeah yeah for sure and um I know you talked about how you know you were cold calling door too in a business you were cold calling on the phone and

03:09

that's how you got into to Mobile Home Park specifically but I I tell people all the time if you can if you don't know what you're gonna you don't you want to do right now like get into something where you have to make cold calls yeah because I'd love for you to share like as painful as it is I know I learned a lot from doing that like what did you learn and how did that that doing that actually develop you into the entrepreneur you are today yeah I was an ADT uh door to-door salesman for security systems in college and that

03:40

was brutal working with a lot of EXC convicts and anybody that there is no resume you just if you want a job you get it because there's commission base so we would go to the east side of Vegas and rough neighborhoods and hit doors from three to seven at night or whenever it got real dark and that I don't know man I think it's like the master class in business 101 because if you pull your listeners I would suggest if they have a business they would probably rank sales as being number one so if you're

04:11

listening to this if you have no sales you have no business so it seems like that's a necessary function of learning the entrepreneur game and uh you got to get out and get people to buy something or get your message out there so they do a transaction so for me uh it was rough I mean I I looked really young I didn't know what I was doing I wasn't the schools in Vegas aren't the best out here so it wasn't like was super educated and I was a knucklehead like I was having fun doing you know doing

04:38

sports and I was a wrestler and rugby and all this so I didn't want to grow up but it forced me to you know be able to present to talk to be to slow down to understand how to listen and uh and take a ton of rejection so I I just really wish that you know if you're not joining the military then you should join door Todo sales and just it'll really polish your the rest of your life because you'll be a lot kinder to people when you understand how hard it is to be a Salesman like that yeah for sure and there was one

05:10

thing that you had mentioned um in in the book about that that really resonated with me and I never thought about this like this but it is a test of being able to maintain your positive energy and your high energy even when you're getting blown up every day yeah because you're getting your teeth kicked in every telling you don't call me back don't call me back but you still have to maintain that positivity and I I truly believe that's where I've gotten a lot of my persistence and ability to persist

05:37

through all the [ __ ] that happens when you're dealing with mobile home parks because of that yeah and uh it's huge it is huge and at the end of the day if you actually are an operator and we get in the whole business side of things uh I I gravitate back to it I don't mind it I like it that's a simple part of the business it's ones and zeros either you got the deal or you didn't either you made the call or you didn't I mean my acquisition team we have five departments I still run the acquisition

06:06

team and I have a a manager with me that manages their kpis but it's real simple on my end I mean we wake up and it's pretty singular focused you know you make contacts contact equel contracts and and it's a relationship building game and that's what I said in the book I mean all the data all the good tools that you can text people and email and I still do good oldfashioned you know regular mail snail mail uh you got to build a relationship and I think there's an opportunity because if someone's

06:33

listening to this podcast MHP is not easy to manage I mean that's the other part of the business so there is someone out there that is tired of managing it like myself in certain aspects of of my career and I'm you know heavily into Self Storage right now and not that I don't like mobile home parks it's just a transition of my business plan uh you you will find pain points that will create the need to sell and that relationship will give you opportuni so so there's a lot of opportunity out

07:01

there but it's not easy yeah no for sure and I know you know in the book you talked about when we'll get into mobile home parks but you talked about how long it actually took to build a relationship with some of these sellers and I I cannot harp on this enough because all people in my inner circle program they get frustrated they're like Derek I've been calling for four months I've been calling for five months and I don't have a deal I'm like you know that's probably about right I mean if you're making the

07:27

number of calls every day but you probably still have a pers effective list of people that could potentially sell that's massive but these people have owned the parks for 20 25 30 40 years in some cases like they're not just gonna let it go it's not you know like a boiler room cold calling type thing no exactly yeah and you got to touch on pain points so you're probably in the beginning if you're a value ad investor which most of us all are now you know following your podcast uh you're going to have to get your hands

07:56

dirty right there's got to be some problem you that's why why my book's called Finding Your Edge and I think about this a lot and there's a lot of YouTube content and people are interested in real estate investing but if you think about the essential aspect of the business that's going to create upside or profit or a long-term gain for you and your partners there has to be a problem you like if it's a stabilized asset you know information's too freely available where someone's just going to sell the park at

08:26

a huge discount not knowing what the value is that that doesn't exist anymore so what you got to do right is get get in there and do what you teach and get the get all the old homes out get new homes in get the utilities cleaned up get the renters paying their rent you know might have to do some creative financing for some people so all these things your tenants I mean that these these take time and focus and energy the sales part of it if they if they're educated with you and that's what I talked about in the book is I spent a

08:55

lot of time when I wasn't succeeding or when I was working with partners and helping refer deals or just being a limited partner in the deal is just learning like a ton because it this asset class you need to know so much to be successful yeah yeah for sure and I've seen you know and and I've heard Rumblings from from guys around the industry guys that came in in 2020 and 2021 oh mobile home parks are a passive investment Let's Go full board at this asset class and now they're like oh [ __ ]

09:25

the operations are pretty [ __ ] tough oh wow this isn't it's not mailbox money right no no it's not and uh you know unfortunately I think there may be some opportunities with guys like that coming up in in the years that are just like hey dude this was a little bit more difficult than we thought let's get out of this for sure yeah well if you come to Vegas and you hold one of your events I'll help te you know I'm happy to stand up there and teach with you so I'm I'm here and I I think it's well needed and

09:56

the industry is Shifting where you got to really watch out for getting burned with old infrastructure obviously regulation right where a lot of these states are going to be regulating with rent control and what you can't and can't do if someone doesn't pay and then most importantly is you you got to sell homes as you know you gotta buy homes and sell homes and used homes are pretty much uh and at least and I love to hear what you say but but pretty much dried up anything that's quality so there's a

10:26

lot of work to fix up the old beater homes and it that I've really deduced I'd rather just put a new home uh get and there's different classes of homes that are cheaper or more expensive but at the end of the day if you're GNA I would have a long-term and I do have a long-term asset uh outlook on my investment thesis on the parks that I'm keeping and my energy and capital and time is being focused on improving the infrastructure and improving my homes in these Parks yeah yeah I mean I mean it's

10:57

a big deal the home quality is a big deal and you'll be you know you'll be kind of fascinated with some of the the crazy business models that we've had so we bought parks with entirely 70s and 80s models Park owned homes some of them not even livable and we would actually sell those off for like 500 bucks and give the dude free lot rent for four months he'd come in and fix it up you know because we're investing in super strong markets where there's actually big demand for that you know Orlando

11:26

Tampa big markets in Florida and they come in and fix it up and do all the work and all we're taking a hit on is three or four or five months of free lot rent and so we've brought in some used homes but we've actually now there's some downfall to this process for sure people screw up the home they don't pay they whatever out of the house but um generally 90% of the time it it it's worked um oh yeah so so how how did you actually find mobile home parks in that asset class what was the question Derek well

12:04

no how did you find mobile home parks and how did you discover the the asset class I bought a c i well I took a property course like an investment course called commercial Academy it was a creative commercial academy by Scott shield and then that got me excited about actual investing in commercial commercial real estate because there was the ability to be creative for know learning about owner financing and M leases and and allowing yourself to leverage the asset quite a bit with the seller seconds and all that stuff and

12:36

partners that you can bring in and you have levers that you can add value versus single family homes so that was exciting but then I just didn't have an edge in any of the other asset classes because that was in the early 2000s when you know the core 4 Apartments industrial office and multif family were pretty much that was commercial right MHP wasn't really looked at as anything or Self Storage so at that time I um I just just did my homework online and found uh Dave and Frank's book there that you know mobile home park store the

13:04

102010 book and that really opened my eyes just real clear and simple on this is the business plan and you got to get out there and go talk to owners and find find a deal so I could learn the operations and that's what I did I went out there and got all excited and actually called those guys up and built a pretty good relationship with them and we uh we hit it off well and I I was living in a foreclosed home I was really struggling with the you know losing a lot of my credit and my uh my money and everything else I had homes with the big

13:37

the big crash um I went out there and sourced those guys like 8090 deals over almost 100 deals over like eight years and and was able to help build their fund and then help me get a lot of experience and and equity and fees that I could build my company yeah yeah and and that's awesome and that's why you know I I really loved your book in the beginning I'm about 3 hours into the audio now because you're you literally started here and just kind of marched your way up and what you said about living in the foreclosed house

14:08

wasn't that like this big fancy like awesome house that overlooked the strip I think you said yeah it was pretty nice house I mean yeah I was like I sold a house to a guy in Minnesota and he's a friend of mine today and uh he want asked me to watch it and left a key for me and I ended up like using it a lot more than he thought and then I eventually you know he let me stay but yeah it was not a bad place but I it was weird when you're living in someone's house and they don't know you're

14:35

there I can imagine so I can imagine so so you you know I talk to people you know quite frequently and they're they talk about yeah I don't want to bring on any Partners I want to own the deal 100% myself I have to own it 100% so I know my viewpoint on that and after listening to your book I think I know your viewpoint on that but I I'd love you to elaborate on that yeah yeah just depends on your goals right I mean it just depends on what where but I think the the thing I learned over 20 years is you

15:08

know real estate is a business first and then it's an asset class so if I mean mobile home parks storage facilities these are operating businesses you know apartment complexes and these aren't traditional assets that you can just hire someone and take on that asset and everything's handled unless you have a you know festar community in Florida owned by El right and the the biggest company out there one of them so I think my my take on it is you know from where I came from if we're talking about the

15:38

book you know not having any Financial education not having any money not having any assets I mean just normal middle class guy I could I had I did not have the resources to get to the goals that I had Without Partners and it depends on and I talk about in the book again if you want to keep bring bringing that up I'll bring it up the the four quarters of investing when you talk about these different phases you know and I break it down into four different quarters of a career in terms of your the maturity of of what you're able to

16:06

take on and how you can grow in that first quarter you know when you don't know anything you don't even know what you don't know and you're broke and all you know is I want to own real estate that's the game that I'm playing to get it over the goal line I mean that was a lot of mistakes made and and like you said incremental small steps to get to where I wanted to go so I needed people I need Partners so I could learn so as mentor I needed partners for credit I needed partners for operational

16:32

expertise I needed Partners to understand Construction in this game I needed Partners to you know help me raise money or bring in the money so yeah and my whole take on that book was my Edge was the ability to take on be persistent take on rejection um learn through just frantic analysis of deals all over the country and learn what a good deal and what a bad deal was and then bring those to my partners now if you're in a different stage in your life and you think that you you have the cash you have the credit you have some

17:05

expertise in real estate and you still don't want Partners that's fine but if you do not have the infrastructure to hire a staff that can manage your Park and not only your Park but other real estate assets because one Park's not going to be sufficient to cover the cost of all of the duties needed for to to have a high level of operations where M you know just managing maintenance in your vendors no no on-site person is going to be great at doing that you're not going to lock out with that managing

17:34

your bookkeeping and your bills right and budgeting you know and also managing the actual Leasing and the property management yeah you might have a manager on site but you're GNA you got to do your rent increases and they're getting very scrutinized now with the regulating bodies uh you have to make sure that you're you know just all all of the little details of property management are in place so if you want to own a job and and or if you want to scale and you're willing to invest a ton of cash

18:02

into a a company that's going to run Parks then yeah you don't need Partners but 80 90% of us need Partners to to be able to grow in the speed that I think most of us want to grow at yeah for sure for sure and I think one thing you said there is important because this is one thing that that kicked me in the teeth when I got into buying these value ad Parks is the project management and the construction management aspect of it because even you hire these freaking contractors and they're like I mean you

18:33

have to be on them like hey is there two inches of asphalt on the ground yeah otherwise they're gonna screw you and and unfortunately I've I've gotten screwed over many times by contractors and I think you know people in the business um have but it exactly what you said you cannot hire a property manager and give them free lot rent every month and they're going to be able to handle that competently it's just not gonna happen no no so you your wife your family somebody's going to have to do it or employees and that

19:06

was my big problem is that the true cost of running these handful of parks at one point was so heavy on my when I did own them all individually when I didn't have a partner um that I had I had to restructure the business and either grow and I had to buy more Parks or sell off some of these parks and I I got into storage but to to your point I mean I I'm you know beat Paving because I grew up doing it and it's very easy to uh rip people off for lack of a better term um you can hide a lot with just slapping a

19:36

little assphalt over the top and and it's all about the grade it's all about the drainage it's all about the material that you're putting down is your your base and your subbase um that's what matters and you're right if you don't know what to look for and then two if you don't if you don't read the scope of work and have someone check on it um it's so easy to get ripped off because there's just not a huge flood of young people work in trades that you can you have a pool of good good people out

20:03

there that'll do the work it's just a gap in American economy so yeah we're we're in a tough spot right now for so you know I guess my lesson around that is don't be afraid to pay more money do not go with your cheapest bid nine out of 10 times right it's all about the scope of work you know make sure you pay for Quality absolutely absolutely pay I tell people that all the time get don't pay Johnny at Lot 10 to come you know fix the electric like oh you got I can fix anything in the park you'll have your

20:37

your trailer dogs there that that say they can do that and there's little things that they can do but not uh in any big work like that I I would leave that to the Professionals for sure for sure yeah um and you mentioned something you you know before I think you were just referencing when you own those Parks yourself you didn't have Partners you saw all the oper operational inefficiencies I think that's important to you know to talk about a little bit more because I talked to people that are new in the business are like hey I want

21:06

to build my my portfolio I'm G to go in the Park's going to cash flow the um Property Management fees I'm going to pay staff and higher Staff but you know even in my experience your 5% property management fee you know you got to be really scaled for that to actually handle you like you said the bookkeeper the on-site property managers and so I just would like you to comment on that a little bit more in that you just need to make sure your expectations are correct when you're getting to these things

21:36

because the property management company is not going to be profitable until you're operating at scale it's just not or or if at all never yeah yeah yeah I mean we it's it's a necessary evil of owning assets that you control you have full control over the standard that you want to operate the property and you control the systems in place yeah it's it's an important lesson for everyone out there um I think that like but I think what you touched on was readjust your expectations um look

22:08

at the model and I just you know it's it was exciting where you could buy a park you could raise the lot rent quickly you could make some quick improvements and you could sell it and make you know half million dollars or whatever million dollars and um I would say you know I'm not in it as much as you now but I would say those days are far and few you know I don't know if that's as as prevalent as as it was 10 years ago and it didn't happen overnight I mean it it took time to do that it wasn't like we just did

22:34

you know jacked up the rent and that was the end of it um so for me I think uh longterm outlook you know a five and 10 really 10year is really at least owning these parks for 10 years so if you know just like the Buffett model if you knew that you could only buy a handful of assets and you were going to hold them for the rest of your life what would you look for in that asset that way you make the right decision um because I think your students will learn more from being picky and you're going to deal with

23:06

problems no matter what we're in this like this is this industry is just full of them it's it's an old infrastructure with a lower income demographic and that inherently creates tons of problems I mean it's so if you're going to deal with problems deal with problems on assets that have a substantial uh intrinsic value over time that it's in the right area or the right type of housing uh and there's a need for it if you do that and and what you're doing in these good markets that have long-term good

23:35

projections then you're at least you're swimming with the current you're not fighting the current you know where I've had and I still have parks in Michigan Ohio or and it's just some of these markets are very tough to move the needle on so on the property management side of things and you know overall for me is again it's my heads at you know how do you make the home sales work so not only only do you have a property management company um look at markets where you can work with 21st Mortgage or

24:04

Trad or handful of these companies or your local bank that's you know financing the park and trying to get a line of credit where you can buy three to five Homes at a time and then at end turn you know get those homes out on the lot you know work with your team and get people qualified and sell those homes to people where you might even have to stay on the financing like these some of these Finance Company programs have uh in in place but you know once you get someone that puts a good down payment they got decent Vehicles they got jobs

24:36

they they're they're making their payments um now you got leverage now you know that was the spirit right that we got into at the beginning of this business is now you own the land they have a nice asset on top of the land their mobile home they have a vested interest and a lot of time and energy in that home and now I mean those are the generational shifting wealth assets those those are the parks where if you got 20 30 40 new homes in there and you got you know 50 even smaller Parks 40 50 60 Lots up to a couple hundred Lots I

25:08

mean those assets when those lives of those homes are are you know another 30 years um you're not going to you're not going to have a lot of issues because these are good tenants at the end of the day remember who is your tenant and if you're dealing with the lowest of the low tenant and they cannot even go into an apartment is that the type of Park that you want and if I could go back you know a few years and change my mind on a few Parks I would have reminded myself don't don't buy this park for that

25:35

reason yeah I I I would agree with that I mean the tenant base is important and it can turn a a bad Park even worse very quickly it can make your it's just can be a lot more of a pain to deal with when you've got a you know a lower tenant base in there which is sometimes what you get and it inherently comes in some of these assets but um yeah you know if if if you're bringing people into new homes that's that's great because you're going to be able to get the tenant that you want in there

26:06

yeah and there's nothing long with really low-income tenants that's fine it's more about um pride of ownership right yeah exactly I mean if it's an absolute Pig pin and and they just do not respond to the rules and and you know One Bad Apple right I mean they just you could it's like a cancer in the whole park when you cannot get people to IDE by the rules it it just there's some unspoken um tolerance that then the rest of the tenants feel like no rule I mean needs to be followed right why why worry

26:41

about my water and sewer leaking why pay the rent on time it looks like trash you know he they don't put time and energy into keeping it clean there's something about you know right it's like the environment being orderly tidy clean and the psychological mindset about people's expectations about living there there yeah yeah for sure for sure and I mean it's it's so true and if for anybody in this business knows that if you've got one person that's got a freaking you know cars up on Jacks in their lot

27:09

they're you know that I drove into one of our Parks one day and the residents this is before we build back for water they had a like one of those inflatable water slides up a pool filled and sprinklers going and they have like the whole neighborhood this like you know water park outside in the front of the park and I'm like yeah okay if they pay I mean hey if you want to enjoy your time that way but yeah you're right take responsibility and pay yeah absolutely absolutely so so you had you had sold your portfolio that

27:44

you had after you got out with the Frank and Dave stuff right and then you made a pivot to Self Storage so talk about a little bit and what why you did that yeah that was uh was it 19 four years ago that was as a like right now know um I I did that because of a what I talked about there it's just that property management I lost some key staff I had a lot of challenges because I was so into the deal side of things and I was probably overdeveloped as a salesperson and underdeveloped as an operator and business person and I needed to reset uh

28:20

my bearings of where I wanted to go with my career and I already started to see the momentum of parks in terms of the values you know starting to get out of control and I um and I wanted control too where I I wanted to be able to um control cash flow in a sense of a lot of the parks that I had you I'm sure a lot of the new guys in this that follow you you got to buy these parks that have a lot of deferred maintenance I mean that's just because that's where the challenge lies to get an advantage and

28:49

for you to find a good deal and when you take that on you know I'd say the lesson that I have for people out there through it is you you know you probably are underestimating the amount of improvements needed for the park and you better tally up those funds somewhere somehow from Partners or from you know other liquid sources of cash because you know I underfunded a lot of my deals just because I didn't have money so I had to find I just bootstrap everything and it wasn't fun because you know when

29:20

you're living and dying off the cash flow or you're doing improvements off the cash flow and you don't have Partners um then you know one water leak for you know 4,800 bucks in Vegas you know because you can't find cheap staff for or vendors you know that eats up that month's cash flow or you know like the hydrant breaks or Health Department comes in you know multiple times and you got to fix certain issues or you got to demo a home that's another you know at the time of five grand and nonstop it

29:48

was like you know so my return on Equity was so low you know at the time I had roughly 10 you know $10 million that I wrote in there with all those years I built up of all that equity in the parks that I had and I literally was struggling to to distribute $120,000 to myself I was getting one 1.

30:11

2% on my money you know I was like oh my God on my equity and and I uh this was pre-co right two or three months before covid hit and um I just I didn't care though I didn't care that the assets went up after I sold them I had to restructure my business so I could put the right people in place so that I could scale and grow instead of just being reactionary and just always trying to find the next good deal and that for me um helped me reset and then it made me a much better investor and business owner for doing that and did you sell all your

30:45

everything did you sell all the parks or did you keep any um no I did I kept a a few of them back in there and you know that that still weren't mature enough but really pretty much sold the majority and uh that's when you know Self Storage was an opportunity that I felt was still undervalued because some of these Mom and Pop I saw the same parallels to Parks right where you just had Mom and Pops that owned assets and the industry was going through a transition with more institutional buyers or more experienced

31:18

buyers buying in secondary and tertiary markets and the values were starting to creep up but it was still early and I had that background in Paving and site work and understanding about drainage and and understanding you know obviously operations and real estate investing so I thought you know by jumping on with a a key partner two key Partners one for construction and one in operations next time around I was able to create a more predictable stream of cash flow without a lot of the big Capital expenditures

31:48

and then decide to you know dip my tow back into mobile home parks now that I had a little more money to invest in and I SA acfic some of the returns to get a higher quality Park that I wanted to invest in but I still bought a few really rough ones that we're still dealing with because I just didn't want to pass a good deal up but you're like oh it pulled you back in it did it did my staff's gonna kill me on some of these but now I you know it's over like we've already we're dealing with it and

32:15

they're they're pretty much there yeah yeah and just like infrastructure and code enforcement type stuff Health Department utilities and just uh the evictions and old homes yeah yeah they can be uh I think I said on One show they can be uh soul shattering the Super Value ad deals you know we we have one park that we did really well we made a bunch of money on but you know we have a $1.

32:47

1 million sewer tie sewer and water tie in that we have to do now yeah and granted we killed it on this park so it's it's fine yeah but regardless that's still our money that has to be spent on that and it's just it's it's it's tough it's tough it is I had to do the same in Virginia that's uh I have a to build a new system and I the sep the the sewer system was in such disrepair that I had to build a new system and there wasn't enough land and I just so I just got on the phones and luckily bought a a joining piece of land

33:22

that I would have enough acreage to be able to build that new septic system with the leech field to be able to keep those lots because there city sewer wasn't available yeah and there wasn't I guess the setbacks and stuff weren't didn't meet so you had to do something completely different than what it was or something well no I just the parcel that the park occupied was already utilized there was too many homes on that and there wasn't any leeching capacity left in the soil so I had to find new soil to

33:54

leech into and I needed more space to engineer it and design it so I uh I was in a tough spot luckily bought some land cash and then also you know about million dollar plus you know with the land especially included yeah to build that new system yeah yeah I mean it can be tough and you mentioned the Deferred maintenance now and like most the especially the parks that are well-located you know most of the parks that we have they were developed in the late 40s one of them was 50s and the infrastructure is inevitably

34:28

going to go bad and so what what you had mentioned is I talk about nonstop if you have a deal and the bank wants a million bucks down for it that is not all you need you need to go and you need to walk that property yeah you need to in addition to your improvements the utilities you need to capitalize well the anything else on there that you think that you're going to have and that just comes from from experience and you know making mistakes like I have and I'm sure you have so you know and you know

35:00

new investors into this space when I talk to them and I'm like Hey we're doing this value at deal they're like well why are you bringing this much extra money to to the table and I'm like well let me break it down and explain to you and I just think that's a super important thing for for people to know and I can't stress it enough and I'm glad you touched on it you need to capitalize these deals because we bootstrapped one in the beginning and it's not fun yeah because every month

35:25

you're like oh okay like where are we gonna be where the account gets down to like almost nothing and then rent comes in and then you spend it on something else and then you sell a house and oh work great and then right it's just a constant battle yeah yeah go out there when it rains or just talk to people about when it rains too I mean if that those water issues if if they're draining back into people's homes or it could be a nightmare or just in the wrong area and it it's yeah drainage is

35:53

important but when you walk the park I mean look at those electrical pedestal and all the lines and you don't have to replace them right away and I know if you're you know you're not paying electrical for the tenant but a lot of these electrical companies these utility companies going to make you come in and improve the infrastructure in the actual Park itself where you know your tenants are hooking up to it uh and and man getting a plumber getting a plumber to do that leak detection test and looking

36:19

at those water bills every month and if you see a big fluctuation of gallons you know where you know average tenant should be using 3 to 5,000 gallons a month and and so if you have you know 100 tenants you know you should be using 300 to 500,000 gallons uh and they're using you know I've seen I've had way over a million gallons used that month so you know like that you know that that there's leaks in there and they it could be the tenants but it could be that just the lines are leaking like crazy yeah

36:50

yeah yeah we had an issue at a park um in Florida that we didn't I don't know how we would have found this in due diligence but we had some vacant homes and some vacant Lots we were going to bring back online so the utility infrastructure these homes had not had electric to them for a while and so we brought an electrician in there and we got with the city because the city was like the electric company there and they made us we had to replace we had to basically take all the lines that were the electric lines that were

37:18

above ground and put them underground and move all the pedestals from the back of the lot to the front of the lot yeah and all this cost was on it wasn't the city so it was like I I guess there were some things that we could have done in due diligence but but now on my list it's like hey call and make sure there's not any weird ordin ordinances that if you're turning electric on you don't have to do any of this crazy Maneuvers to to make that feasible because that you know if we weren't well

37:49

capitalized on that deal I mean it it could out yeah oh yeah take out yeah and call the city in call Zone right I'm sure you've had issues where some of these towns do not want you to replace these mobile homes with other homes you know that and then you better get in writing that your grandfathered in that this is a usable lot and you don't have to abide by the new setback requirements because they're all really big so you can't put a home on these older Lots if you weren't grandfathered in the old

38:18

code right right right um I wanted to you I wanted to shift back because you were talking about um something on Self Storage I wanted to ask you are you are you developing storage now yeah yeah I've been doing that the last six years or so yeah and and what's what's that like obviously you've been doing it for six years so it must be doing well yeah yeah I mean there's pros and cons to it it it's some markets are over supplied some are under supplied but you know if you're going to not I I brought on a

38:50

partner that I grew up with in high school that has a construction background uh a minority partner but would say you don't need a construction background I think storage of all asset classes is the most uh friendly to develop I would think versus the others um so overall if I had to give you a quick lesson on it it would just be you know get a good civil engineer that's everything and then deal with a good Building Company like track D or um betco and those ones they'll pretty much um once you have a design plan and from

39:23

your engineer and you know it's approval use I would I wouldn't try to fight a town and try to rezone something I would I would go with a parcel that's actually has the commercial industrial use for storage and even then you have to you have to get a special use permit at least in every single Market we do business in except for you probably Texas Oklahoma or some of these that are more liberal where you can just pull a building permit typically you got to submit it and the town has to you know the town board has to approve it and

39:52

residents get their opportunity to speak about it but through all that if you can if your engineer can design a good site and you can build more than I would say you know 30 40,000 ft is minimum to to really make it pencil out to make sense by the time you get all your contractors out there and mobilize and do the site work and buy your buildings um then it's great I think it's a you know they can set you up with a erection company or general contractor and those guys can help you know it's going to be a little

40:21

more pricey but paying that extra 5 to 10% on the project is worth doing and if you're patient I think the same thing the the flip side of things are right now is you know number one make sure you build in the markets it's not over supplied because storage is not as essential as mobile home parks so you know that you're you can get real trouble if there's tons of units put on the market because then it's just a price war and everyone drops their prices and you can't fill your units but

40:49

in the end you know if you got if you got some Capital that's patient or your own Investments that are PA you're patient um you're not going to be able to build for any cheaper than you will be able to right now everything continues to inflate not only land but materials labor and the building codes get tougher and tougher with sprinklers and setbacks and uh facade requirements the way it should look so all these things uh will create barriers for people to build in the future or they're going to have to

41:19

spend a lot more money but if uh but it the last point on that is you're going to have to have a big capital reserve ve you know at least 100 to 200 Grand to feed the interest in order for that construction loan to be paid while you're waiting for these tenants to slowly start to fill up your units because you know you'll see with storage you know our average tenants about three years the life of it but that's only 60 70% of them 80% of them you're going to get 20 anywhere between 15 and 30%

41:54

that's quick you know quick turnover so you know you're not it's not really a like oh I just filled up I'm good no it's a it's a business you're G to get that 30% turnover so you're just wa you're you're constantly trying to attract the longer term tenant and that's what's going to help you stabilize the property but that takes you know years that takes two three four years when you're building a brand new one yeah yeah well interesting because I've always been you know I'm interested

42:22

in storage I haven't you know taken the time to really sit down and like research a lot of it I've done done some of it but it's an interesting um asset class I think the one of the things for me it's like and I'm sure there's different markets and things I'm like okay well I have this facility here Jeremiah can come build one next door and you know then we're in a price War it puts me out of business and then I have a churning of of tenants but you probably don't have that much of like

42:52

management operations in the thing it's probably mostly automated I would guess I mean You' think it sounds good right yeah it's it sounds like it's a like people will buy that business plan but there's a lot of moving parts I mean just like anything but I think the way if I were to give all the listeners and you advice on from a mobile home park investor standpoint they're awesome complimentary asset classes so if number one if you have vacant land which a lot of these Parks I know you're buying in

43:22

pretty good markets core markets so you don't have a lot of vacant land but if you're buying in tertiary markets you have vacant land first things first buy Portables and those Portables are a 50 to 100% return on your investment so those are very very strong because you're already complaining to your tenis to get the stuff out of their yard yeah yeah so and you can get those through box boxwell those are good guys out of Indiana and um boxw well.

43:51

com I so I bought from them so you that's number one number two is if you have vacant land and you have Frontage uh on your Park definitely defin it's an easy ask because the town will typically uh I would push that you can get outside tenants and have an outside access because if you build you know just for the residents that's fine but you're going to limit the exit value of of your storage facility right but if you can get you know a budding parcel or the parcel you have um like you said you're already dealing with the systems you're

44:25

already dealing with rent collection management um locking unlocking locking units I mean you got somebody doing something at the park already you can train them that's a great way to enter the business and it's and the land's already there I mean you you just got to monetize it yeah and these portable storage things I think I know what you're talking about they're basically like little containers basically that they wheel onto the to your property yeah yeah and they're personal property

44:52

they're not real property so you don't have it doesn't increase your real estate tax but overall um they they're not getting moved I mean I would not keep I wouldn't move them I would just let them be and you you're set to go yeah interesting interesting so I wanted to um you know talking about the uh the mobile home park side I always like to get some some crazy stories as far as mobile home parks so please share with us your your craziest one or two stories you know I I was list listen to

45:27

the book where you met with the the lady and she was a little whacked out yeah that one was a good that was a good one yeah so that was down in LC Texas you know you know Texas West Texas or something and uh there was a woman in her got to be 70 and she was like the nice sweet lady and she had about like 40 pads and there was a lot there was probably 40 or 50 Park owned homes though so you knew you didn't know what you were getting into but on the surface it sounded like it sounded like good price because you know you see all that

46:04

income hit when you're renting those homes and that's a that's such a enticing you know when that thing's bringing in $600,000 whatever $50,000 a month and you're you're like wow you know I can get this for two or three million doar this is an amazing deal so you go out there and uh uh then I like we go out to dinner with this woman and her son and we went to this little Mexican restaurant in town and it was very like normal type of meeting and then the next morning when I'm going to

46:33

inspect the park we show up in the rent of car me and a partner at the time and it was like 7 in the morning and it was so weird because we pull up next to the the truck it was a pickup truck the maintenance truck and the maintenance man obviously we could tell was driving the truck and then then it was just him but then the older woman's head pops up like into the window and she was like her head was down and she had like white powder all over her nose and it looked like she was eating a powdered doughnut

47:00

and they were talking a mile a minute and you know they were you know you could tell they were gums were their lips were all over their gums and it was just a she was doing cocaine and on at the park at 6:00 a.m. with the maintenance man when we're doing our inspection the same day and they were it was like they they they were just so chaotic and it was just the weirdest it blew my mind blew both of our minds like we were like I cannot believe we just saw this like it can't be real yeah did you buy that Park no no thank God thank

47:35

God I mean it's it was just such a rough rough Park I'm sure that was one of those ones that you know I mean maybe they could you know when they pay weekly and those people are in and out and they got two or three maintenance staff just keeping these homes together because you got the next person coming in the next week when they don't when the last person doesn't pay yeah and for me no no no there there's like we were looking at buying from a guy he's literally got I don't know I think 150 pads or something

48:06

he's got people paying weekly bi-weekly monthly like people paying like three months the craziest operation you've ever seen and I'm like how do you even like run that through your head every month how do you manage collections there like I just don't know I don't either I can't do anymore yeah yeah what's give give us another crazy uh mobile home park story that you had well the one that I talked about in Oklahoma where the um you know the first time I got one of the deals with Dave uh where the owner financed me

48:44

and when I went out there uh he this was an old tough guy and he he would just always either hang up or he would just be real Gruff on the phone and he had like 50 or 60 pads and uh and he finally said you know I wouldn't give up I just kept calling the guy over and over and then he he was he had a health issue and he finally said yeah I'll sell it and he and he goes but I need a handshake deal you know do you know I'm sure you've heard that you know a lot with these guys so you got to go out there and meet

49:12

him in person before he signed before you sign the contract which is such a big risk because you could waste so much time and energy which I've done in so many places for sure you show up and it's nothing of what they described and this was even right at the beginning of Google Maps but you couldn't get much info so you don't know what you were getting into and when I went out to Oklahoma um and went in to the guy the guy had a single family home on the front of the park so he lived at the park in a in a normal home and i' go

49:41

inside and uh you know it just smelled and it was full of cockroaches like I've never seen it and full of rice I mean mice and rat [  ] and like I was is like what is going on so like I had I sat down on the couch and he was on his like chair watching TV and shut it off and there was like Roaches on me and rat [  ] it was on on the couch and on the counters like there was no like open space anywhere there was coke and cookies and Big Macs and snacks and every single every single surface area had something on it and it was like

50:24

animals all throughout this house like it was it was the worst and I had to like buckle down and just get to the end of the meeting and the guy ended up selling it to me you know for like 300 Grand with 30 grand down and but no one else would buy it I was like the only guy that would buy it so that was a brutal process so I got it and then I did you know we completely rebuilt the park made it nice finally turned it around and then a day before closing I'm at the gym in Las Vegas I had a little office basing next door was the the

51:00

fitness center and I'm on the treadmill and I see on the Nightly News ABC Nightly News this is before cell phones I saw the picture of my park with a tornado like one of the homes in in the power lines wrapped up in the power lines and it said Terror hits this town that it was in and the park was destroyed with a tornado and I the buyers back out and I I lost out on the transaction and and I felt bad for the people I mean too we had damage control we had to help people you know get housing and just figure out what what we

51:37

were going to do and then uh FMA came in and helped and Red Cross but it was just devastating where I I worked so hard to get to this point and at the very end it fell right apart and I actually read Sam Walton's book and then and I was just like I was at the same time reading that same book and that happened to him for his first Walmart and it ins inspired me where it's like well I can't give up I mean you just buckle down do it again and it's going to work you just got to keep pushing forward and he did that and

52:06

obviously you know I I wanted to be a successful investor too so we we got it worked out but uh it was the funny thing at the very end of that story was that like two weeks later on Sirus radio um Howard uh stern was talking about that story and he's like what idiot buys a mobile home park the middle of Oklahoma it's like a magnet for this type of stuff and I was like [ __ ] you Howard like I was just on my way to uh to the to the office and I heard him out of the I was just getting over it we're turning

52:36

things around and I'm like I can't believe I just he talked about what happened there on on his Morning Show you're gonna see him one day like Howard [ __ ] you man I remember that you dissed me on your show I know I know we we made it work yeah yeah well Jeremiah dude I I appreciate you uh coming on man is there anything uh anything you want to leave our listeners with before we get out of here no I um I think we need more better operators we need better education in the space I think mobile homes are the

53:12

best form of affordable housing in the country hands down I I've looked for myself I I bought a modular home up in in New Hampshire for my second home I think it's uh it's the future and it's been the F it's been it's it's just been Foundation that no one talks about for affordable housing and uh I I hope you know keep doing what you're doing and I think for people if they want to learn more just go to Amazon finding your Edge Jeremiah bue you know and that's my book on there uh try it on Audible and I yeah

53:43

that's that's everything I've learned to this stage so I hope other people get good lessons out of it and they stick with this and don't get impatient right stick with the long-term and just don't get greedy and don't let don't compare yourself to others that you have to have thousands of pads and tons of capital under management that's not what it looks like on the surface having one or two good partners having a handful of parks that are really high quality parks that you're paying down with good good

54:13

all it checks all the boxes of what we talked about here and then having those for uh a legacy for Gen Generations that's to me that's what this is all about at this stage yeah yeah well that's awesome jerem again thank you and uh thank you all for watching the MHP show we are on every Monday please like And subscribe we're on iTunes Spotify everything we're on we're on everything you can find me on social media Jeremiah you can hit him up I think you're on LinkedIn you're on Instagram or anything

54:43

oh patre holdings.com that's my company yep and I'm on the whole thing uh j links.com j r l i n ks.com and then yeah all the social media stuff's on there awesome awesome well thank you all and we will see you next week [Music] peace

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