Why Mobile Home Parks Can Be Recession-Resistant Investments
Economic downturns often bring uncertainty to investors. However, some asset classes perform relatively well even during recessions. Mobile home parks may offer […]
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Interested in learning more about Passive Mobile Home Park Investing?
Interested in learning more about Passive Mobile Home Park Investing?
Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-byron-sellers-of-mobile-home/id1520681893?i=1000508282837
Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. On this episode of the Passive Mobile Home Park Investing Podcast, Andrew talks with Byron Sellers of Mobile Home Elite Investors. Byron is a mobile home investor and educator based out of Chicago, IL.
After listening to a real estate podcast featuring a segment about mobile home investing, Byron Sellers and his partner, Sharnice Williams, decided to dive in deeper to mobile homes. The couple was very interested in real estate investing but just didn’t have the cash needed to get started. After learning about mobile home investing on the podcast it made them realize just how great of an opportunity it would be to get started, with very little money needed upfront. Together, they studied the mobile home investing space and raised enough capital to launch Travae Scott Investments LLC in 2018. They have been taking the mobile home scene by storm and growing at a tremendous rate including becoming mobile home community owners in 2020. Byron and Sharnice also have an education program teaching people how to invest in mobile homes at a large scale.
***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 100 Owner of Manufactured Housing Communities with over 1,500 lots under management. His team currently manages over 20 manufactured housing communities across ten states – AR, GA, IA, IL, IN, MN, NE, OH, PA and TN. 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.
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:
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00:21 – Welcome to the Passive Mobile Home Park Investing Podcast
01:58 – Byron’s history and journey with mobile home park investments
04:50 – How passive investors get involved in mobile home investing
06:49 – A technique on how to find operators
07:44 – $50,000 business plan scenario
09:43 – Working with mobile home park owners
10:50 – The best ways to find mobile home deals
12:13 – Average purchase price for mobile homes
13:36 – The process of a “typical deal”
19:10 – Average lease with an option to purchase
20:11 – Dodd-Frank and SAFE Act
21:15 – The biggest risk factors in mobile home investing
24:00 – Case study for a passive investor who wants to flip homes
25:17 – Byron’s perfect mobile home park
27:40 – Cast study example of a recent deal
30:10 – Getting a hold of Byron
31:03 – Backstory of Andrew and Byron’s relationship
32:05 – Conclusion
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Andrew: Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel, and today we have an amazing guest in Mr. Byron Sellers of Mobile Home Elite Investors. Before we get started, I want to ask a quick favor, would you mind please taking 10 seconds to rate this podcast over in iTunes and leave us a five star review? This helps us to get more listeners and it also encourages me to know that you’re tuning in. Thank you guys for doing that.
All right, let’s dive in. Byron Sellers and Sharnice Williams listened to a real estate podcast featuring a segment about mobile home investing. The couple had been curious about real estate investing for a few years, but this nonsexy way of investing caught their attention. Together, they studied the industry and raised enough capital to launch Travae Scott Investments LLC in 2018. Assembling a strong team, they have been taking the mobile home scene by storm and growing at a tremendous rate including becoming community owners as of late.
Why mobile home investing? The couple decided to take the nontraditional route and discovered how affordable, reliable, and very motivated mobile homes truly are. Their mission is to provide affordable homes for families so they can live the American dream. Byron, welcome to the show, brother.
Byron: Oh, man. Thank you for having me.
Andrew: Excited to dive in today. Maybe you can start out by telling us your story and how you got into manufactured housing.
Byron: For sure. I had 10 years in the transportation industry where I worked right outside of college. Just like some people, I really didn’t enjoy what I was doing, but I learned a lot. I want to get into real estate starting about 2015. I really wanted to tap into real estate, so I started going to some seminars. I really started diving in Rich Dad Poor Dad. That book really changed my life and gave me a different perspective.
I was actually going to close on multifamily here in Chicago, and I remember March 2, the day the inspection before it closed, the basement flooded of the property. We tried to negotiate but they weren’t really willing to budge. Then I went to work the next day, March 3, 2017, and I was fired. Now, I’m like, oh my goodness. This whole time I’ve been trying to get this mortgage. I’m trying to get my credit or everything, what am I going to do?
I was really tapping into personal development. At that time, I had a life coach. I’ve been in a life coaching program. But at the same time, things just started to get tough a few months later. I’m talking about September. My cashflow ran out and I began driving Lyft.
As I was driving, I was listening to a podcast and I came across a podcast, again like you talked about—mobile home investing, and it really sparked my interest. But my passenger was like, hey, can you turn that off? We just want to listen to music. I’m just like, okay. So I sent it over to Sharnice and when I got home, I’d never seen her so excited about anything. We were just, okay, cool. Let’s sit down. I think this is cool. This may be our entryway into investing.
We heard about the low cost and low risk. We went on the traditional route. We tried to go to family and get money, but nobody really was on board. We went to LendingClub and took out a high-interest loan of $10,000 with a 24% interest rate.
Andrew: Oh, wow. This is like double hard money.
Byron: Right. Almost shark bait, man. We believed in ourselves and we took that $10,000. We were able to find two mobile homes that we negotiated down to $4300. We ended up putting $3000 into one. In 45 days, we sold one for $9500 and then the other one we sold for $10,000. That right there was a catalyst, and we knew this is the industry that we’re going to be in.
Andrew: Wow, that’s fantastic. Maybe you can tell us how passive investors could get involved in mobile home investing without going out and hustling and finding deals like you and Sharnice.
Byron: Yeah. It’s definitely several ways. One way I love is you have the Bird Dog technique, right? This is something that you can make a few dollars on depending on who needs homes, but there are a lot of park owners, we need homes. We need good quality homes, but sometimes we may not have the boots on the ground. Willing to pay investors just to go out to find a home if they have some time, and that could be making some money, putting some money in your pocket.
We educate thousands of people. You have a lot of investors now who know the how-to, they just don’t have the capital to actually get started and mobile home investment. They may not have that $5000 or $10,000. You have these hungry people that if you just have some capital laying around, you have people that are willing to work your money and bring you back higher returns. Sometimes high as 30%, 40%, we’ve seen people bring back on these deals.
Andrew: That’s what I’m interested in right there. That’s what I want to dig into is, hey, I got the money. Go give me 30%, Byron. How would they go about doing that?
Byron: Oh, man, several ways. In states like Georgia, we always encourage people to put out […] signs. If you go anywhere, you see we buy mobile home signs, you need to take that phone number down because that is an investor that is active in the field. They are ready, they are hungry to make some money. If you tell them, hey, I have the capital, you build the relationship with them, they will go out and literally give you whatever you need.
Andrew: Okay. That’s one technique to find the operators that will go hustle and find the mobile homes. What would be the leverage on behalf of the person giving the money? Would they hold the title or something like that? How have you done it in the past?
Byron: For sure. Holding a title is very important, but also making sure you have some type of agreement in place. You can get your attorney involved just to make sure you know the person. The one thing I would encourage you to do is run a background check. There are a lot of people out here who want to become mobile home investors, but you still want to know who you’re doing business with. That is something you can do as well.
I would definitely encourage not only that but just build a relationship. Find out their motives. Are they money motivated? Are they willing to solve the affordable housing price? Really find out their motives and vet them out. Don’t take the first person that you see just because you call it the sign and they’re hungry, but you definitely want to give yourselves options.
Andrew: Okay, say I got $50,000 and I want to invest in mobile homes. From my experience, it’s very difficult to deploy that much capital into mobile home investing. We’re not talking about the land, just the actual mobile homes. To my knowledge, basically, if you or someone that you’ve trained would then take the money and go buy 10, 20 individual mobile homes, and then they would sell it on contract. Sell it for monthly payments with a down payment to generate a return. Am I right in the thought process of the business plan?
Byron: Yes, you do have that as well. I mean, more so the long term—like I said for that passive. You also have markets where there are cash buyers where you can actually go and flip properties and bring you back the return a little bit much faster.
We’re starting to see the southern markets are starting to become more heavy with cash buyers. Texas, Georgia, Florida—we’re starting to see way more cash buyers and people are actually getting quicker returns. But definitely, the one thing when it comes to the passive, I tell people you really want to not know. The longer terms are five years up because we understand the lot rents do fluctuate.
Depending on the actual tenant-buyer, sometimes for them, that lot rent increase can slow payments depending on the situation, which we just saw with the pandemic. But things are starting to trend up. You should start seeing more people being able to get more job opportunities and begin to pay.
Andrew: How do you work with mobile home park owners? How is that relationship?
Byron: The biggest thing is you want to come in and just really add value. You want to ask, what are the gaps? What do they need? We have to encourage people. Don’t come in just saying, hey, I’m an investor, can I invest in your park? That’s just not the lingo to really use. It’s really seeing what a park manager needs, what a park owner needs? Are you struggling to fill your houses? What’s your vacancy right now? I can help you.
We encourage our students to create a buyers list. Have people already lined up that you know need homes so that way they can leverage that. You can come and tell a park manager, a park owner, hey, listen, I have a list of 50 people that are looking for homes in this price range. If you let me come in and renovate some of these homes, maybe we can work out a deal or one month, two months off on the lot rent. Now, I can help you fill these homes up much faster. It’s a win-win situation for myself and you as far as getting a lot rent.
Andrew: Yeah, totally. What are the best ways to find these mobile home deals—to find deals that you can purchase.
Byron: One thing now is the Facebook Marketplace, that is huge. I tell a lot of people, a lot of times, your deals aren’t on the Zillow and the Redfin. You have MHVillage, Craigslist, OfferUp. We tell our students, drive dollars. Go to a park, look for sale signs. When you call in a park, managers ask them, do you have any homes for sale? Do you have any tenants that have homes for sale? That is an incredible way.
Then also, if you have a friend that’s a realtor, ask them. Can you send me what you have on the […]? Those are just different ways to continue to get yourself leads. We buy mobile home signs. You’ll be surprised sometimes people are looking to get out of their situation and you might begin to get phone calls from there as well.
Andrew: Totally, and then you find a home. Before we started recording, you said that the sellers are typically motivated because if they’re moving to a new house or somewhere, they don’t want to get stuck paying a lot rent over here and a rent or mortgage payment over here. Maybe you could share what the average purchase price is that you pay to acquire mobile homes.
Byron: For us, here in the Midwest, we weren’t paying over $5000 for any homes, but every market varies. I’ve noticed—we did some homework—our Northeast region, you’re looking anywhere from $15,000-$25,000. The Southeast region can be as low as $4000 upwards to $12,000. Your Southwest, you’re looking at prices around from $10,000-$20,000. If you go to the West Coast, those are your premium markets. You’re looking at $20,000 and up.
In the Midwest, for us, we’re seeing homes as low as $4000-$10,000. It really varies per your state, your region, but also it’s all about location. There are parts of Illinois where there are $200,000 mobile homes and there are parts of Illinois where I can get a mobile home for $500. It’s all about location as well.
Andrew: That makes a ton of sense. Maybe you can walk us through a typical deal. You find a home that’s in a community and it’s $5000. What does that process look like? If you could walk us through kind of the make, ready, and then getting it up for sale?
Byron: Yes, for sure. The first thing, like I said, if I get a house for $5000, the first thing I want to see is, is this a cash buyer’s market, or is this more so payments? I can get that information from the park manager or the park owner. From there, I can determine. Normally, for us, we put out two different posts.
Marketing is huge. We tell people all the time we’re in the marketing business. As soon as we get this house, we’re taking good quality pictures, and then from there, we’re blasting into all the online places that I talked about—the Facebook Marketplace, Craigslist, OfferUp, eBay. We’re putting it in every place we can get visibility.
From there, the first thing we determine is what’s the average rent? What is the average rent going on in the area? From there, let’s say I get a house for $5000 and the average rent is $950. I know I can charge even less than that to get a quick buyer. I can go maybe about $900, $925, or I can tap on an extra $50 because I’m going to offer a seller finance. Now, I’m going to allow the buyer to own the house in maybe—just like a car—three to four years.
Once I gauge that, I also asked the park managers, what are used homes selling for in your community? If this house sold for $5000, and if they’ve had some used mobile homes go for upwards to $8000-$10,000, now I know I could possibly find a cash buyer in that price range as well. Now I begin to truly market the home.
The biggest thing for us, we collect data. What we do is we create these JotForms where we’re asking for everything from what’s your credit score? Where do you work at? How long have you been working? Because for us—here’s the biggest thing—as the park has to protect themselves and see who’s coming in their community.
We want to find out from our park managers, hey, what are your requirements? What credit scores are you looking for? What background are you looking for? So that way, we can be in line and we’re sending buyers. We’re vetting out and we’re seeing serious buyers only because in this business, you’ll get a lot of people, unfortunately, that will be interested in the home, but they may not have the capital to take down.
For us, once we have that system all in that post, they can click it, fill out the information. We know who is getting serious buyers. What we begin to do is instead of doing open houses, we just have a lockbox. Once you fill-up the information, we have your information, you schedule a phone call with us, and we’ll allow the potential tenant-buyer to go see the houses themselves on their time. It just builds trust too.
A lot of times, once they do that, they’ll ask what’s the next step? We’ll email them the application for the park, and we also explain what’s all included. As an investor, you want to understand what does that park offer and what is all included in the lot rent because you’re going to get these questions. Because sometimes it’s their first purchase.
Once they’re ready, we explain that we’ll send that information, and we’ll encourage them. Hey, go fill out the park application because one thing, as an investor, you never want to sell a home if someone has not been approved by the community.
You have to look at it as a partnership. You want to bring in the same type of person that the park requires, but you want to bring that type of buyer in—make it a win-win situation. Once you have that, again, let’s say I market at $10,000 or I’m marketing on payments for $950, the lot rent out of the park is at $400, right? Now I know that’s my cash flow. If I said $950, that remaining $550, that’s my cash flow that I know I can make each month for a term.
We also do a non-refundable move-in fee. Whatever the final price is, we normally do 8%-10% of that. That’s what we ask for a down payment because we want to make sure we have a serious buyer. If we find a serious buyer, the buyer gets approved by the community, everything looks good on our end because we run a credit and background check as well, and I’ll give you guys a gem. We use a free software called cozy.co. It’s very simple and you can actually collect payments on there and do run background and credit checks.
Once we get someone, we’ll get them approved, then we finish up the steps. We have our title. All we need is a bill of sale. We have our title. We make sure the taxes are paid up by having our tax certification from the county clerk’s office. From there, we do our sale. We have them fill out the lease with the park, then we make a trip to the motor vehicle department, secretary of state, or whatever that is in your state, and then we do our title transfer. There we have it, we have a transaction.
If they’re on payments, we have a leasing agreement with the option to purchase, or if we’re going to flip, we just have our bill of sales, and then that’s what we’re able to do the title transfer from there.
Andrew: Got you. On the ones where you sell them with a lease with an option to purchase, what would you say is the average? I guess what happens when you have a move-out? When someone just is like, hey, I don’t want to buy the home anymore. I got a job elsewhere and I’m leaving town. What happens in that situation?
Byron: In that situation, normally what we’re doing is we’ll just give them 30 days to leave the premises. We understand that the value of the home, we’re going to be able to do this again. We understand the cash flow that we collected.
Normally, I think when we first started, we’re a little bit stricter. But nowadays, we allow them to break their contract. From there, we’ll get the cooperation that we’re going to begin showing the home even while they’re living there. That way, for us, we don’t want to miss any gaps. As soon as we put it on the market, we normally will send a shootout to our list of buyers that we already had in the past and just really work on filling that space as soon as that person moves out.
Andrew: That’s great. Are you familiar with the Dodd-Frank and the SAFE Act? Does that have any repercussions for doing this?
Byron: Honestly, when we first started, we were really really making sure we pay attention. We didn’t want to get predatory. We made sure our rates were definitely lower than the—I don’t want to call them the shark rates, but lower than these people that charge in the 20%. One thing we learned was this past administration had actually loosened the strings up on the Dodd-Frank Act. We still want to make sure we were still in line, but I can’t allow more investors to have these payments and systems in place.
We definitely paid attention, and with the new administration, we want to make sure we fall in line. We just keep our ears open and just follow that.
Andrew: Cool. What would you say, Byron, are the biggest risk factors in doing this? What are the horror stories? How have you guys been burned, if at all, through doing this?
Byron: This industry, I would say if you buy a home that needs rehab, not contracted, but we call them handymen in this industry. Sometimes, finding a reliable handyman is really tough. You want to be in line with the community because sometimes communities require, hey, this guy has to be licensed. He has to be insured. I understand the reason why.
We’ve been burned from plumbers, from people who specialize and work from mobile homes because sometimes these guys know that there’s not a lot. They can kind of get away with a few things, and they know that you may need them. We’ve had people run off with materials, just do half jobs. That’s why now we really encourage people to really start looking into becoming handymen and learning this industry.
Also, when you’re dealing with affordable housing, at times, you can get a lot of excuses. It’s really big about vetting your potential tenant out. I’ve been blessed. We’ve only had to evict one family, and it wasn’t even us. The park unit had acted on our behalf because they were behind on lot rent as well. They end up getting an eviction, but it was just excuses.
We didn’t know who ended up living in the house and things. You just got to be really, really cautious. I would say homes, you really want to get your homes inspected at times because sometimes these houses, you’re talking about a 1980 house or something. Something that’s been sitting there 30 years plus and it may have underlying problems that you may not be able to see on the first visit if you’re not knowing mobile homes.
It could be costly but not to the extent of what a single family home will cost. But still, if you have a budget, you still want to make sure you get your things are in line. Those are a few things that we saw. But all in all, it’s still a low-risk industry that we love.
Andrew: That’s great, that you’ve only had one eviction. Let’s go back to the passive investor side of this. What would be the best way a passive investor—say they find an operator like yourself that’s buying mobile homes and flipping them or maybe it’s one of your students that they find. Would it be better for the passive investor that’s bringing the money but doesn’t want to do the hustle part of it to act as a hard lender? Is that a hard money lender? Is that what you’ve seen in the past? Maybe you could give a case study or something like that?
Byron: Yes. You could definitely first put the percentage that you want upfront rather than having the operator tell you what percentage that they’re going to give you. You can definitely do that as well because honestly, […] you put more pressure, but you have a more firm stance that this is what I need back. I think that is a great way to do it.
Also, I think for someone just being passive, like I talked about earlier, just that relationship because you can have one person or several people that are (we call it) boots on the ground for you with your money. In the terms, you can’t command more money than what a single family house because of the margins that are in this space. I can say, hey, I want 18% back on my money. Honestly, somebody can really bring you that back and still be able to be rewarded very largely on their end as well. You definitely have those options.
Andrew: Wow, let’s see here. What does the perfect mobile home look like in your eyes, Byron?
Byron: Oh, man, move-in ready. Someone just moved out of it. It is clean. Maybe I just have to send a housekeeper in there just to really make sure everything is functioning perfectly. The stove, the fridge, there are no visible holes. I don’t have to do any cosmetic work. That is the perfect mobile home. I mean, literally, I could just clean it out, transition over to someone new.
Andrew: Is there a certain year? Is it vinyl siding, shingle roof? Is it metal on metal? Is it five minutes from your house? Is it a couple of hours away? Any of those factors ring a bell?
Byron: Honestly, I want to say when we started, I was really strict on just the vinyl siding. I didn’t want to do anything in 1985 or older. Even on the roof, I wanted to make sure the roof had been repaired within the last ten years. Those are some of the situations that I was looking at.
Nowadays, I think I look at the quality of the home. I’ve come across 1976 homes, and if anybody’s listening, anything 1975 or older are pre-HUD homes. Those homes, you basically want to get them up to HUD standards, and it’s not a hard thing to really get those homes up.
The biggest thing is we’ve been finding a lot of people want the DIY. They just want a place to live. They’re not being picky nowadays, especially with what just happened to pandemic and things, people are really looking to downsize. They’re just looking for that affordable house. I’ve sold homes to a lot of guys who are handy. No, you don’t have to do anything to it. I’ll do the rest, and that’s been working in our favor as of lately.
Andrew: That’s great. Maybe you could give us a case study example of a recent deal that you’ve done or maybe one of your students has done.
Byron: Let me think of a good one because I promise, we get new ones like every day. Let’s see. The last deal I would say that I’ve done was in 2020. It was a home that a park manager’s brother had purchased. He was just like, hey, you know what? I live in Texas, I’ll sell this home. I normally don’t pay that much, but I paid exactly $5000 for it.
It needed some work. I ended up having to put another $1500 in there for the plumbing. I ended up getting it cleaned out, floors. All in all, I was in that home right at $9500. Luckily, I was able to find a lender who was looking to pretty much take a note over.
We found a family that really loved the home. What we dealt with, we had a cat odor smell that lingered in the house. This was like my Achilles heel in this house. I had to show the house to probably at least 20 people, and they would just always say the smell is bad, the smell is bad.
I had my guys go in there and they finally were able to get the cat smell out there. The park manager actually had given me a lender who they used to finance their homes. Originally, I was just only trying to sell the house for $14,000. The lender I was able to come in and we were able to get the house. I boosted it up to $20,000. They went and appraised it, and they were able to get the family for $18,000.
I was able to get more money on this house just from a mobile home lender. The house is a 1994. It wasn’t a Schult. It was a 1994—I cannot think of the model of the house. But we were able to get $18,000. When I went and took over the […] and they cut me to check, that was my last deal in a park. I had never used a lender to finance a mobile home. People always had their own cash.
Andrew: Wow, $8500 profit on that one deal.
Byron: Yes.
Andrew: That’s great, man. That’s a great return percentage.
Byron: Thank you.
Andrew: Well, Byron, thank you so much, man. This has been fantastic. I really appreciate you coming on the show. If our listeners would like to get a hold of you, what’s the best way for them to do so?
Byron: If you’re on Instagram, follow us at @mobilehomeeliteinvestors, same thing on Facebook. If you like to email us, if you have a question about either how you can invest, you can send us an email at info@mobilehomeeliteinvestors.com.
Thank you so much for having me on here, man. It’s definitely a pleasure. I love seeing your journey from sitting back and it’s just motivating, man. Every time I see that you close on something else, that gives me more hope to say, okay, let’s do this. My man, Andrew, is killing it. This is where my guy that I met early in my career. Again, I really use you as motivation as we continue to grow because you show me that it’s possible.
Andrew: I really appreciate that, Byron. Maybe we should give the listeners a little back story of how we met. I was living up in Illinois at the time, working on a portfolio of five parks that we syndicated. I was looking for used homes to fill some vacant lots. I had some ads up on Facebook Marketplace, and I was reaching out. I think I reached out to a home that you had listed, that you were selling. Man, I’m so glad that our paths crossed and we’ve stayed in touch since then. That was pretty cool.
Byron: Yeah. Andrew was the one who gave me the courage because I would never move a house out. He’s like, hey man, you know you don’t have to be tied to that house. I was just like, I don’t want to mess up the relationship. He’s like, all right, brother. I’m here if you need to do it, man, without a problem. Again, thank you. It’s just awesome to see your growth and to see where we are now. I’m just looking forward to the next five years in this industry.
Andrew: Definitely. Well, thank you so much for coming on the show. It was a pleasure. That’s it for today, folks. Thank you so much for tuning in.
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