SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. In this episode of the Passive Mobile Home Park Investing Podcast our host Andrew Keel interviews Mike Nissley, founding member, Vice Chair and National Director of the Manufactured Housing & RV Group at Colliers.

With an estimated $100 billion in manufactured housing community sales, consulting, valuation, and financing under his belt, Mike Nissley brings a wealth of experience, including high-profile assignments for major MH industry players like Parkbridge, Keystone, Carlyle, Sun, RHP, ELS, Inspire, Yes! Communities, and CAPREIT.

Recently, Mike Nissley led the sale of a $200 million, 24-property Canadian manufactured home portfolio, marking the 2nd largest portfolio acquisition in Canada’s manufactured home and RV resort sector. He also successfully closed major deals in Florida, including a $114 million and $86 million mobile home community (MHC) portfolio in 2022 and 2023, respectively.

During the conversation, Andrew Keel and Mike Nissley dive into critical topics such as:

• Key steps for determining the value of mobile home parks
• Challenges and opportunities of park-owned mobile homes
• Mobile home park due diligence essentials
• How institutional investors evaluate mobile home parks
• Building a winning team in the mobile home park sector

Mike Nissley also shares his personal journey into mobile home park investing, offering actionable insights for both seasoned investors and those just starting out.

If you’re looking to deepen your knowledge of mobile home park investments, this episode is packed with expert tips and strategies to guide your success.

***Andrew Keel and Keel Team Real Estate Investments (Keel Team, LLC) do not endorse any interviewee. This interview is for informational purposes only and should not be depended upon for investment purposes. ***

Andrew Keel is the owner of Keel Team, LLC, a Top 50 Owner of Manufactured Housing Communities with over 3,000 lots under management. His team currently manages over 40 manufactured housing communities across more than 10 states. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities. Check out KeelTeam.com to learn more.

Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews:  https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy, Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at AndrewKeel.com.

Book a 1 on 1 consultation with Andrew Keel to discuss:

• A mobile home park deal review (get live feedback on your own deal!)
• Mobile home park due diligence questions
• How to raise capital from investors for mobile home parks
• Mistakes to avoid in mobile home park investing, and more!

Click Here to book the 1 on 1 consultation: https://intro.co/AndrewKeel

Are you getting value out of this show? If so, please head over to iTunes and leave the show a quick review. I have a goal of hitting over 500 total 5-star reviews, and it would mean the absolute world to me if you could help contribute to that. Thanks ahead of time for making my day with your review of the show.

Would you like to see value-add mobile home park projects in progress? If so, follow us on Instagram: @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions.

Talking Points:

00:21 – Welcome to the Passive Mobile Home Park Investing Podcast

02:00 – Mike Nissley’s journey into Mobile Home Park Investing

08:06 – Building a Winning Team at Colliers

12:14 – How Institutional Investors View Mobile Home Parks

15:30 – Key Steps to Determine a Mobile Home Parks Value

21:06 – Institutional mobile home park Buyers and Park-Owned Homes (POH’s)

25:35 – Mike Nissley’s Most Challenging Deals and Major Hurdles in Mobile Home Park Investing

29:29 – Essential Due Diligence for Mobile Home Park Investments

32:23 – Why Beginners Should Avoid Park-Owned Homes

33:50 – Strategies for Passive Mobile Home Park Investing

35:50 – The Gold Standard in Mobile Home Park Investing

38:13 – Understanding Rent Control Regulations

42:44 – How to Reach Out to Mike Nissley for Expert Advice

43:27 – The Importance of Partnering with a Good Mobile Home Park Operator

43:51 – Conclusion

SUBSCRIBE TO PASSIVE MOBILE HOME PARK INVESTING PODCAST YOUTUBE CHANNEL https://www.youtube.com/channel/UCy9uI3KGQmFgABsr9lUtRTQ

Links & Mentions from This Episode:

Colliers: https://www.colliers.com/en

Mike’s email: Mike.Nissley@colliers.com

Mike’s phone number: (555) 479-1588

Keel Team’s official website: https://www.keelteam.com/ 

Andrew Keel’s official website: https://www.andrewkeel.com/  

Andrew Keel LinkedIn: https://www.linkedin.com/in/andrewkeel 

Andrew Keel Facebook page: https://www.facebook.com/PassiveMHPinvestingPodcast

Andrew Keel Instagram page: https://www.instagram.com/passivemhpinvesting/

Twitter: @MHPinvestors

---

TRANSCRIPT

Andrew: Welcome to the Passive Mobile Home Investing Podcast. This is your host, Andrew Keel, and today we have an exciting episode with a very special guest, Mr. Mike Nissley from Collier’s Manufactured Housing and RV Group. Welcome to the show, Mike.  

Mike: Thank you very much, Andrew. I appreciate the time you spend with me.

Andrew: To dive in and give a little background on Mike, he’s the founding member of the Manufactured Housing & RV Group at Collier’s where he serves as Vice Chair and National Director with over a hundred billion dollars in commercial real estate transactions under his belt. That’s a billion with a B. 

Mike’s experience spans sales, consulting, valuation, financing, and appraisals for major names like Parkbridge, Keystone, Carlyle, Sun Communities, RHP, ELS, Inspire, and Yes! Communities and I could keep going. There’s more on this list here, but Mike is definitely a veteran in the space.

Most recently, Mike closed a 24-property Canadian Manufactured housing community portfolio that sold at nearly $200 million, which was the second largest Canadian manufactured home/RV resort portfolio acquisition for a large Canadian pension fund. Also in 2022 and 2023, Mike closed a $114 million and $86 million mobile home community portfolio in Central Florida.

Mike, excited to dive in and kind of get your perspective. Would you mind maybe just starting out by telling our listeners a little about how you got started in manufactured housing?  

Mike: Yeah, it’s interesting. My family got into the business in the early 80s and they were buying small mobile home parks out of the Tampa Bay, Florida area. I was in school at the time but my grandfather used to drive me through the parks and tell me what they were doing. He was more of the money, but he wasn’t the operator, but he was proud of his venture. He was a retired Wall Street investment banker. He would drive me through.

Then after I graduated from college, they had accumulated a nice little portfolio and my grandfather died, I can’t remember the exact year, but he had died. Then my uncle had taken over the family business. I think it was 1999 or 1998, my uncle died. Then my grandmother tapped me on the shoulder and said, I need your help. I was working for one of those dot-com companies in Miami. I just dropped everything and went into the business and had to learn everything because I didn’t know anything.

I met some key people at the beginning. People like names that you’ve heard in the business, like the Newby family, the Newby management. They were one of my first contacts, George Allen, and some of the other kind of founders of the industry. They introduced me to other good people that got me educated. 

That was the beginning of all of it, but I had to learn about my family’s portfolio, we had a partner. I had to learn about the operations and financing and everything and acquisitions and personnel and just all the park-owned units and rehab and all that stuff. The family member that was the owner was my grandmother. She was the boss but she was passive and so I was sort of representing the family’s interest. It was just a great start and a great opportunity to learn. 

Pretty early on, I decided that it wasn’t going to work for various reasons and so there’s friends of mine in the business that were like hey, why don’t you just do what you’re doing and just be a broker and come over to our firm. Someone at Grubb & Ellis recruited me and I came to Grubb & Ellis, started their group and everybody laughed at what I did and said, haha, mobile home parks. I got all the typical kind of teasing about the asset class because everybody else was doing all kinds of fancy stuff where they could dress up and I was doing the other stuff.

Maybe 18 months later, I still made nothing. Finally started closing deals shortly after. My wife was, along the way, like are we making a good move here? We left it for sure. Eventually deals started closing and things started working. Then year three, four, five, I became the top producer at Grubb & Ellis in Florida for all of those three years. Then maybe one or two of the years I was in the top 50 of the whole company. At the time it was one of the biggest companies, public companies. That was fun and it happened fairly quickly. 

I was married with three or four kids at the time so it wasn’t like a 21 year old that started. I was probably 30 something and so I had a lot of responsibility, but it felt good to have that success. I met a lot of people in the industry in the early days, some of the people that are like legends now. I saw them when they were starting off and humble so it was a great experience.

Towards the end of my years at Grubb & Ellis, I started looking around because people started calling me and they heard about what I was doing. Some of the big firms were all interested because none of them were in. The only other firm that was in it was Millichap. 

Andrew: Just to pause there, they didn’t have an MH division, like a manufactured housing division at all. 

Mike: None at all. They were in the office. 

Andrew: They were more multifamily, more traditional?

Mike: Then it was just all the little independent brokers. It was sort of the beginning of institutional brokerage. I made the jump from Grubb & Ellis to CBRE, which is the biggest, most well known firm in the world. I said this is going to be exciting. I talked to people and I had offers from other groups that were good offers and I was like wow, this is pretty cool. Sign on bonus, kinds of stuff.

I just thought CBRE gave me a big platform to leverage and so I made the jump to CBRE, started the group there, hired people, and got it in a nice, large team around the country and had a lot of success. I did my expectations where I want to see what the biggest deals are and the most sophisticated firm. I think it fulfilled all those goals and objectives. 

After about 10 years or so there, I’d been trying to recruit Bruce Nell, who works for Collier, who is the top appraiser in the world and for MH and RV. We couldn’t get anything done at CBRE. Then Bruce was like why don’t you come over here? There were some things going on at CBRE, some changes that were going on that weren’t as appealing to me. 

I went with Bruce to CBRE, started the group there and he had been already doing the appraisal work and so I started the brokerage platform and the debt platform. I’ve been at Collier’s for maybe seven or eight years and built a great team here. 

Some of the best guys in the industry Richard Knapp on my team from Carlyle and Blackstone and Wharton grad, super smart, one of the best underwriters in the industry. Michael Barnett, a University of Miami grad, works for Richard. Kari Pell, is a Wells Fargo alumni, and she’s great out of Charlotte. There’s scattered around the country. 

Then I’ve got some of the some of the most experienced brokers that were also owner operators in the Tampa Bay area. Bill Haldane and his brother have had a big portfolio throughout the years. It’s invaluable to have someone with that experience because they’ve done all the work. They’ve done all the things that you do every day, the good and the bad. When you’re advising a client, having that experience is not just a spreadsheet. It’s a lot more than that. 

I think that having people on my team that have operational and some more depth, I think is super important as an advisor. Then we’ve got a marketing team headed by Ashley out of Austin, Texas and then Chris Clay, who’s been with me for many years. He does debt and he’s also been one of the leading brokers. He was with me at CBRE and came over to Collier’s as well. We just have a very strong team. 

Kristen Nistley, my daughter, does public relations for us. David Nistley does brokerage and marketing. We’ve got teams. Colliers is like the top team in the UK that specializes in mobile and RV.

In Australia, we used to have the top team and they got recruited by one of the big operators in Australia so we still have people that work there, but they’re being gobbled up by some of the operators.

Andrew: We don’t hear much about that. The global MH platform that there are caravan parks and mobile home trailer parks in other countries. That’s interesting. How much do you have your hands on in that business?

Mike: It’s very interesting. When my family started, we couldn’t get a loan for a park. None of the banks were really liking that type of loan. For the first 10 deals, we bought seller financing. There’s been a long, long path since then that institutionalized the asset class MH in particular and RV is moving in that direction as well. But now you’ve got Fannie and Freddie and all the banks and insurance companies and so it’s a very well-understood asset class, stable, one of the best, it’s performed the best probably over a long period of any other.

Anyway, it’s evolved and that’s in. The global asset class has always been there. But it’s always been locally owned and it really hasn’t left its neighborhood. As far as cross-border investment, there hasn’t been very much, but in the last probably 10 years or less, it really accelerated.

You’ve got US people investing in Australia and the UK and broader Europe and Canada. Then you’ve got Canadians in the US. There are a lot of Canadian pension funds that are funding the MHC. You’ve got the UK investing in the US. You’ve got private equity that sort of has their fingers in all of it globally and so it’s just and pension funds are very, they like the asset class because it’s a safe asset class. It sort of follows the demographic bubble of senior and affordable. 

Those are the two great bubbles to invest in. I think they’re smart long-term investors so they’ve identified this asset class as one of the best. 

Andrew: Excuse me real quick. I know you, you work a lot with institutional investors. The pension funds and other big REITs and so forth. How would you say they look at the asset class different than maybe some other mom and pops or smaller operators like myself. We own quite a few communities, 3000 lots, but we’re small potatoes compared to ELS and some of these other big operators. 

Mike: Yeah, I think all of them started humble the same way you did all of them. Sam Zell, all of them. But as they evolved, they started buying larger and having more economies of scale and refining the quality. I think it’s a normal evolution and you start off in anything, your entry point might be the subpar two-star parks and that’s where you enter. You get the highest yield. 

Then as you harvest your profits, you step up and get the nicer assets and that are more passive and you don’t want to work as hard and you don’t want to struggle through so much CapEx and park-owned units and all the things you got to do at the beginning. Then you evolve into more passive. 

But I think those guys are already there. Money is less of a constraint. The individuals are always looking to get good financing. RVs are probably more of a challenge than MH, but I think it’s still when they’ve got the lowest cost of capital and sort of unlimited capital, I think they have a big advantage and they think about it, their investments differently. 

Andrew: Maybe you can touch a little bit on that like what features of a mobile home park itself make it institutional quality?  

Mike: I mean the typical things that people have said over the years have been 200 plus sites and public water and sewer and good MSAs and those types of things. But I think as the supply gets gobbled up and more institutionalized and consolidated, I think the larger owner operators are willing to sort of buy smaller and maybe more tertiary than they were just because supply is constrained. We’re not building enough parks to keep up with the demand. Therefore, if you want to keep buying in the asset class, you probably have to buy smaller. 

We had some recent trades where the average deal size within the portfolio was maybe 50 to 75, but 2000 lots and all clustered where they operate efficiently, it’s sort of like you’re buying zip codes rather than worrying about how many units are in the park. 

I think that’s a different way of doing it, but it’s also addressing maybe the difficulty to compete with some of the institutional investors. I think communities of scale can be achieved in other ways. 

Andrew: Definitely. Let’s talk more about the sales side. What would you say are the essential steps that you take in evaluating a mobile home park? You and your underwriting team, from your time in the space, what specifically do you look at to determine value and what matters most obviously besides the income that it’s generating.

Mike: Generally we’re representing sellers majority of the time. Sort of our mission has been to help  the mom and pop sellers. Even institutions as well or family offices or some, but they need help. Oftentimes they’re really good at managing, operating the day to day, but they may not be in the selling business so it’s like a different business than operating the park. 

When you’re buying, it’s one game. When you’re operating, it’s another game. When you’re selling. It’s another game. We understand the selling game really well. What we try to do is help them because I think that they’re often at a disadvantage and they’re not maybe underrepresented and so we’re trying to make sure that they get a fair deal. 

There’s been a bunch of stories where people didn’t get a fair deal and it’s sort of their one shot in life to cash out. It’s a sad story when you hear about that and they weren’t represented or they wanted to to avoid paying a commission, but they lost $5 million instead of paying $200,000 in commission. I think it’s a good deed to help the sellers with that process and to make sure that it’s truly a market deal and that’s what we try to accomplish. 

Just starting off with the very basics and depending on the sellers and their level of sophistication there’s some basic things. Sometimes they’ve got things in their expenses that are CapEx or just things that don’t belong there that are understating the NOI because their financials they provide us are for the purpose of minimizing taxes, not for selling. We often have to help them with those basics. 

But then you’d be surprised the larger guys are also, for whatever reason, so big. They’re just machines and maybe they’re leaving something on the table as well. Recently, we have a very large transaction that is closing in the fourth quarter and three-quarters of a billion dollars and a big institutional owner that had some major things that we identified. 

It wasn’t really on the financial side, but it was on the operational side and it was not like heavy lift operational. It was just like stuff that they weren’t doing and they’re sort of in a different business. It’s not their primary business. We helped them and we created significant value by just identifying six or seven of the major upside pieces there that allowed them or allowed us to articulate what the opportunity really was and it wasn’t just the NOI.

Andrew: Because that’s the piece. It’s telling the story. It’s just not the NOI. It is a large buyer. This is not their main competency. They got in here and maybe their management expenses are double the average management expense because they don’t have a big enough portfolio to have the scale they need to have enough people so they have higher management fees.

Then you come in and say hey, when you’re selling that to a new buyer, this is really supposed to be about 3%–4%  of gross, not 10% of gross. Is that the kind of stuff you’re talking about? 

Mike: Yeah. We go through every line item and not everything falls within a certain range because different properties operate differently and they’ve got different characteristics, but we sort of have a good feel of where payroll should be. 

One of the things that we run into with some of the mom-and-pop operators, and maybe in particular in the RV space we may have a family that’s all been working for a long time there and may have a payroll that’s off the chart. A million-dollar payroll. It probably needs to be a third of that. Two-thirds should be cut off. Sometimes we have to almost argue with them on why we need to present it in the proper way because they’re just running way too heavy.

They’re like I don’t know if you can do that. But eventually, they understand because the day after closing, the buyer is going to cut all of that and so they’re basically gifting the buyer a lot of money. We try to, within reason, not try to overprice things but we want to make sure it’s a fair deal and that everything’s being looked at. 

We take the job of representing our sellers seriously. Some of the people listening are like buyers, and they’re like oh my gosh but, someday they’ll be sellers and then they’ll probably want to talk to me because I’m not just introducing you to my friend. I’m running a full process and so not only do we get to the value and underwrite it properly. We also expose it to a huge audience to make sure there’s  plenty of market participants making offers and there’s a competitive process. 

Andrew: Talk about park-owned homes. Do institutional buyers add value to those who are valuing them? I think it’s UMH, they have large straight rental communities. I went to one of them that was like the community of the year in Memphis. Memphis Blues, I think it’s called, and it was beautiful. Scraped the whole park from what it was and just bringing in all new homes, all new roads, all new everything, and they’re all straight rentals. Maybe you can talk about that for a minute just how they look at park-owned homes and kind of maybe how your opinion on park-owned homes has changed or hasn’t. 

Mike: When we started, we had a very high percentage of park-owned units, my family. Over time, we became more passive and, and sold them to the residents and just tried to stick to mostly lot rent. I think that most people evolve to that. There are some operators that do a great job at park-owned units, but it’s a hands on business. It’s more like an apartment but the revenue is very attractive. 

If you can manage the expense side, CapEx and turnover, then I think it’s a good business, but you have to work for it. I think that some people do it very well. I would say the majority of the people are looking to park-owned units and the goal is to sell them off at some point.

Andrew: That’s probably for the financing benefits. Agency wants to see you with a lower percentage of park-owned homes and they’ll give you better terms accordingly. 

Mike: Yeah, and management intensity, right? I think just managing park-owned units is not necessarily easy and if you don’t pay attention for a little while, it can sort of spin out of control quickly. It’s capital intensive and so some of the investors are syndicators, going back to their investors and asking for more money because they got behind on park-owned units never is popular. I think when you don’t have those, then you reduce the amount of potential capital call situations. 

Andrew: Totally. Mike, what has been the most challenging mobile home park property that you’ve ever sold during your career and why?

Mike: There’s lots of challenging ones, but I don’t know. There’s a lot of them. It’s just that some of them are overpriced. Some of them have all kinds of dynamics. There’s probably some entertaining stories, but I don’t want to call out any individual properties.  I’ll get in trouble somehow. 

Andrew: Is there due diligence? Because we wholesale some parks and not many, but we have a sales team for our own acquisition funnel. If we’ve come across something that doesn’t quite meet our criteria, for some reason, we’ll wholesale it. We also wholesale some self storage stuff.

I would say the self storage stuff, we sell probably nine out of 10 deals that we send out. The mobile home parks, we’ll get nine out of 10 under contract to sell them, but then half of them fall out in due diligence. Because you’re talking about 50 plus year old utility infrastructure and if you want to find something, you can find something to get scared of. I’m sure as a broker, it has a little more variability there with the deals that get done. 

Mike: A 100%. I don’t know a lot about the assignment business, but I could imagine that the level of due diligence that you do on assignment versus something you’re going all the way to the finish line with will probably be a little less. Then probably the risk on that transaction would be a little bit higher for you guys and for the buyer because they don’t fully know what they’ve got. They’ve got to do a full due diligence. Self storage is probably less variable to be concerned with and so I can see that. 

I think during the last three years since rates have gone, and we’ve seen this happen and other times in 2008, there’s the economy and rates and banks, I think that sort of makes the overall business hard. Individual properties, there’s a million stories of sewer and somebody hiding money or just all that kind of stuff. We’ve seen all that through the years.

But I do think that in this current market, it’s just the disconnect between the buyer and seller and value just because of rates just made everything come to a halt for a while. I think now we’re starting to see a little bit of movement in the right direction. At least Canada lowered the rates two or three times and it looks like the US is ready to do it sometime soon or after the election, sometime soon. 

Anyway, people are a little bit more optimistic now and I think people are starting to transact more and pricing is  maybe getting closer. Buyer and seller getting closer to consensus. 

Andrew: Maybe. Spoken like a true broker.

Mike: We’re maybe getting closer. There’s more. 

Andrew: They’re transacting. Sellers are realizing, hey, we got to do something if we want to get this thing sold. Mike, what do you think is the toughest hurdle that people need to overcome when it comes to mobile home park investing?

Like the normal operator, what’s the toughest hurdle that they have to, if it’s a newbie and they’re going out to buy their first park, what’s the biggest hurdle that they’re stepping into that they might not be aware of?

Mike: I just think some of the people that we worked with started off maybe too aggressively buying something that was a really big heavy lift and they got themselves way over their skis early on. It sort of hurt their moment. 

I know some other guys that sort of bought some basic deals that are not too crazy and then built slowly and then got comfortable with more value add or could take on some things along the way. I think getting off to that good start is helpful because then you build confidence in your capital and your capital wants to give you more and then it works. But if you have a couple of difficult ones at the beginning, then raising money gets harder.

I think that I’ve seen a lot of people through the year start up and I think most of the wise ones are just trying to get like a vanilla deal to start with and just get the ball rolling. Build a team where you have excellence on your team and accounting and reporting and operations. Initially probably when you started, you had to do it all yourself, right? 

Andrew: Totally. Yeah. No, I think that’s great advice, Mike. It’s like Frank Rolfe says at his boot camps. He’s like hey, for your first park, just buy a park with city water and city sewer. Don’t go buy a lagoon in your first park. Don’t go buy a wastewater treatment plant in your first park. Go for a solid base hit and then you can build up some momentum. 

I think that’s like  some of the best advice on this podcast, because I’ve seen it time and time again, like you said, where people go in, they bite off this huge infill project because the numbers look really good on the spreadsheet. If you can fill every lot for $25,000 and lot rents are $500 a month, it looks really great. 

A park we just looked at, 125 lots, 82 occupied, went and looked at it, looked good from afar, you get on site, all of the concrete pads have erosion underneath of them. The community’s not allowing any homes to go in on all these vacant paths because they’re eroding. The pads have cracks in them. The foundation wasn’t set properly. 

I think that that kind of carries into my next question. Due diligence and the importance of that. What would you say are some key things that people need to look at in due diligence right away?  

Mike: I just think the obvious things are park-owned units. Sometimes it doesn’t show up as park-owned units. Sometimes it shows up as notes or it shows up as a private owner that owns 10, 20, 50 homes within the community or where it’s titled and it’s somehow related to the owner.

Those are the things you always want to understand and the complications that come with getting the title and getting control of your community, if you’re going to buy it. Water, sewer, roads, electric, park-owned unit CapEx. Those are all the big CapEx items. Making sure all those things are not ignored or missed. 

A couple of times when my family was buying early on, there was a sewer permit on a private sewer that was coming up and we didn’t really give it weight on how that was important and what the ripple effect could be. Sewer permit came and the DEP came and they said oh you’ve got to upgrade your retention pond. [inaudible 00:30:53] retention that costs a lot on unknown CapEx, unexpected CapEx and then the ponds were not percolating. Then we were in trouble there too.  

I think that just besides you got to know the condition of the plant and you got to know what the regulatory bodies may ask you to do when that permit comes up, because I think that’s something. If it’s two years away, you still have to look at it because even though you don’t have to spend money day one, in year two, you may need to spend that money and there’s no certain areas that are getting more strict. Water and sewer plants, and they keep on requiring a higher level of CapEx. 

I think those things and I think some people don’t really appreciate the electrical side too because there’s always people who have rigged some of their things. If you don’t really hire a professional, you may not see it, and so we have people that have the electricity shared between multiple units and their breakers are always going off. It’s probably a safety hazard for fires and stuff. I think that people should not try to save money and go cheap on CapEx because it’ll cost you later.

Andrew: Cost you in the long run. 

Mike: Yeah, for sure. 

Andrew: That’s good. What mistakes have you made, Mike, in a mobile home park investing that we could learn from?  

Mike: Sewer, that sewer situation. I’m trying to think of what else. I think just early on, on the spreadsheet, the park-owned units just looked very enticing so I think that it looked good, but when you had to actually do the work and really stay on it, it was more difficult than anyone anticipated. 

I won’t elaborate too much on that. There’s some very colorful examples that Frank Rolfe usually tells in his seminars. Park-owned units just adds a lot of management intensity and the CapEx required and getting the CapEx done in a timely fashion so you can get it rented again is just a lot more involvement than should be necessary. 

Andrew: Like you were talking about earlier at scale, that only compounds the issue. I’ve said this before, but a lot of people don’t realize that manufactured homes, the windows are different sizes. The doors are different sizes. The drywall is a different size. You can’t just go to Home Depot and get this stuff. You have to special order it if you want to do it the right way and so that adds a layer of complexity to renovating these units and the costs involved. Good insight there, Mike. 

I’m going to go into a little lightning round here. Just four quick questions and you just fire off what comes to your mind first. 

Mike: Alright, sure. 

Andrew: If you were going to invest passively as a limited partner into a mobile home park deal, what are the things you would look at in the deal? 

Mike: Passively LP. I would look for a large high quality in a growing market. In some of the high population and job growth markets, if it’s MH. If it’s RV, it may be a little different, more destination oriented, but Texas, Florida, Southeast, all these fast growing states where everybody’s moving for jobs and for climate, I think those are the winds at your back so you can make mistakes and it’s more forgiving

If you’re in some of the other states with the population growth and job growth and rent growth is lower, all those things are harder to cover up mistakes. I like those places from an LP investor, then whoever the GP is and the operator, they’re probably less likely going to make a mistake and my money will be safe.

Andrew: No, it’s always nice to have the wind at your back. That’s for sure. I started out in tertiary Midwestern markets, did well, the value add kind of hustle but as we mature in our kind of buying criteria, we’re looking at better markets, higher median home prices. It’s nice to have maybe a little bit more rent growth than you planned on, it is always nice so that’s good. 

Mike: I think as you get older, you want to be more passive. I think everybody in the industry that I know is kind of in that direction just because it’s a lot of work. It’s a lot of work when you have the less passive investments and tertiary, you’ve got to hustle. I think that as you get older, you probably established and created some wealth and success and so it’s time to sort of change the profile. 

Andrew: I’m more reliable, less turnover, that kind of stuff matters quite a bit, for sure. Mike, what do you think the perfect mobile home park looks like in your eyes and why? 

Mike: I think that in senior parks in places like Arizona and Florida, you’ve got a lot of wealth in those two areas that are coming from New York or the Northeast wealth and you’ve got California and West Coast wealth going to Arizona and some Canadian wealth going to Arizona. I think those two states are sort of probably the gold standard in investing. I think there’s lots of other good states, but those two have traditionally been highly desired by all the institutional guys for those reasons because disposable income and high housing prices and that type of thing always work in your favor. 

Andrew: That’s huge. My wife’s aunt lives in an all-double wide community in Huntington beach in California. Literally she said, we don’t want to live anywhere else. This place is immaculate. It is like a pool. It has all of that. They’re walking distance to the downtown strip where all the restaurants and the pier is. That is such a high quality life. Your lifestyle is just so great and it’s a different type of park than what people assume when they think of mobile home parks or trailer parks. They don’t even know. There are such high-quality assets out there like that in great locations. 

Mike: If there’s no rent control, that’s sort of changing the profile of the investment, but you just have the gap between the cost and the affordability issues is just such a positive thing, and some of those high rent high sales markets that as long as rent control is not too restricting, I think it’s great. 

Even California has some great parks and you just learn how to play that game, I think. Those owners have learned how to do it and some of the people from the East are like I’d never invest in California, but the people that own there, they love it.

Andrew: They love it. They still transact at pennies because I think it’s something like if you invest a certain amount of CapEx, then you can go above the expectation. There’s definitely a good game there.

Mike, what do you think the biggest threat to mobile home park investing is?

Mike: I think regulation, rent control hurts it. I think that most of the time when they put these things in place, just like every regulation, there’s always loopholes and there are always the smart guys who figure it out. But I think it puts a little bit of a damper on it. If everything was rent-controlled in the US, it wouldn’t be as attractive as it is. 

I do think one of the other things is there’s not enough development going on right now so I think that the aging of the existing communities, you’ve got a lot of them that were built in the 70s and 80s and they’re past their useful life. Now we’re not rebuilding enough to replace them and as the urban core keeps growing out and out, we need to build in those right on the edge of the urban core, and that’s kind of, you know, we need more development. 

Financing for development, I think there have been little booms through the years, but nothing like it was back then. I think that efficient financing for construction and the homes themselves will pave the way. If we had Fannie and Freddie that was financing the homes, then that would be a game changer. 

Andrew: Huge. I talked to one mom-and-pop and they said that they were able to build their park back in the 50s or 60s with a government loan. I don’t know if it was HUD or an agency. They were able to build their park with 3% down. So 97% loan from the government to build the mobile home park and they built it out in phases. We need something like that to get more of this happening. But I think the zoning restrictions are just super prohibitive right now. 

Mike: I mean, zoning in any of the urban centers are going to say no. So then that means you’re going to be pushed out into outside the urban service boundaries, which means private utilities. That’s the new growth. We’ll probably have private utilities. If you don’t have the zoning problems there, you’ll have the utility problems.  

But I think there still needs to be growth and so I think that’s the threat. If it’s too difficult to develop, then I think there’s not enough supply in the industry and there are so many people getting into this great asset class that they may go look elsewhere because storage has more construction. Even RV probably has more construction than MH. All the other asset classes, they’re adding supply to hotels and apartments and maybe not office buildings right now, but traditionally through the years, all the other asset classes have had a steady supply of new products.

I think it’s a good thing for our industry to have constricted supply because that ensures that if you own something you’re in good shape and not going to build next door and dilute you. But I do think if we don’t build more, it’s going to cause a problem eventually. 

Andrew: I heard this threat yesterday from a friend of mine and I’m curious with your thoughts on it, because you’ve been through multiple cycles, 2008, all of that, but he said artificial intelligence, he fears is going to displace a lot of the low income workers factory manufacturing jobs and over the next 15 years they will have trouble finding more consistent employment potentially, and any worries that that could hinder the asset class’s ability to consistently keep up with their occupancy and everything. What are your thoughts? 

Mike: Man, that’s above my pay grade, but I do think that some of those demographic shifts are going to have an impact on all housing and then the fact that we’re providing the lowest cost housing. It’s probably a good place to be no matter what happens, because again, that’s in a $500,000 house made downgraded to a manufactured home because his circumstances changed. We’re probably in the safest place. 

Andrew: Well, dude, thank you so much for coming on, Mike. This has been fantastic. If any of our listeners would like to get ahold of you, Mike, or check out Collier’s platform for MH and RV, what’s the best way for them to get ahold of you? 

Mike: Okay. Somebody told me a generic one, but I’ll just give you mine because I don’t remember the other ones so mike.nissley@colliers.com and my phone number is 561-479-1588. 

Andrew: Awesome. And we’ll put that in the show notes and you’re based out of Boca, correct? 

Mike: It’s in Florida. 

Andrew: Yes. Awesome. Fantastic. 

Mike: We cover the whole country. We cover North America. I’ve got team members all around.

Andrew: That’s a fantastic one last question. What’s one last bit of important advice you would give an interested passive mobile home park investor before we sign off? 

Mike: Make sure you have a good operator that you partner with. If you’re equity, that’s looking to invest rather than do it yourself, partner up with someone early on to avoid those missteps and keep your money safe. Then later on, if you feel more confident, then you can go off on your own. But I think you need a good operator to partner with. I think that’ll ensure that your first experience is more positive. 

Andrew: That’s great, Mike. Well, thanks again for coming on the show. That’s it for today, folks. Reminder, if you got any value out of this show, which had a lot of golden nuggets, please leave the show a review that helps us get more views and lets me know you’re listening. Thank you all so much for tuning in. 

Mike: Thank you very much.