Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-edwin-byler-of-blue-state-capital/id1520681893?i=1000577081077

SHOW NOTES

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 Edwin Byler from Blue State Capital. Edwin and Andrew discuss getting started in the mobile home park business, the learning curves experienced as a new investor and how to stay well informed on the journey of becoming an active investor within the mobile home park industry.

Edwin Byler is a commercial real estate broker and mobile home park investor. Starting at age 19, Edwin began investing in real estate as a means for additional income while still working his W-2 job. He has since built a portfolio of 60 mobile home park lots and just over 25,000 sq. ft of commercial mixed-use space. Edwin continues to invest throughout the state of North Carolina (the blue state). He enjoys using creative financing, including zero money down and building long term relationships to get deals done.

Edwin is also a two-time world record holder for deadlifting.

***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 2,000 lots under management. His team currently manages over 30 manufactured housing communities across more than ten 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.

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 deal review
• Due diligence questions
• How to raise capital from investors
• Mistakes to avoid, and more!

Click Here: https://intro.co/AndrewKeel

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Talking Points:

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

01:40 – Edwin’s story and the story of Blue State Capital

03:30 – Edwin’s first mobile home park deal

06:16 – From a 6-unit to a 51-unit

09:43 – The process of closing on a MHP property

15:00 – Utility preference

18:30 – Mistakes to learn from

21:17 – The perfect mobile home park for Edwin

22:00 – The most important things passive investors need to look out for

23:23 – The future for Edwin and Blue State Capital

24:05 – Getting a hold of Blue State Capital

25:00 – The history of Blue State Capital’s name

25:20 – Deadlift world record

26:12 – Conclusion

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

Links & Mentions from This Episode:

Edwin Byler, LinkedIn: https://www.linkedin.com/in/edwin-byler-771867170/

Edwin’s Email: edwin@bluestatecap.com

Blue State Capital: https://bluestatecap.com/

Blue State Captial, Instagram: https://www.instagram.com/bluestatecapital/

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

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TRANSCRIPT

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. Edwin Byler from Blue State Capital.

Before we dive in, I want to ask a real quick favor. Would you mind taking an extra 30 seconds and heading over to iTunes to rate this podcast with 5 stars? This helps us get more listeners, and it means the absolute world to me. Thanks for making my day with that five-star review of the show. All right, let’s dive in.

Edwin Byler is a commercial real estate broker and investor based out of North Carolina. He started at the ripe age of 19 investing in real estate as a means for additional income while still working his W-2 job. He has since built a portfolio of 60 mobile home park lots and approximately 25,000 square feet of commercial mixed-use spaces.

Edwin continues to invest throughout North Carolina. He enjoys using creative financing—including zero money down—and relationships to get deals done. Edwin also, as a side note, has two world records in the deadlift, so I’m excited to learn a little bit more about that. Edwin, welcome to the show.

Edwin: Hey, thank you so much, and thank you so much for the phenomenal introduction. It was excellent.

Andrew: Maybe you can start out by telling us your story and how you got into manufactured housing communities. I know you’re still relatively new, but I would love to learn how you got there.

Edwin: Absolutely. I’m 100% a newbie. I began real estate investing, I think the way that all people do through learning about Bigger Pockets, diving into that. That’s how I began learning. Then after a certain period of time, it’s just about taking action on that, so I started with a single-family flip and used the money from that to hop into a single-family rental.

I found myself owning that one outright after buying, rehabbing and all of that. And then came the first mobile park opportunity. The progression was a kind of single-family flip, single-family rental, 6-unit mobile home park, 51-unit mobile home park, and then on with some other investments.

Andrew: That’s fantastic. Tell us about Blue State Capital. What are you targeting, what size, and so forth?

Edwin: Blue State Capital, I think I found a lot of value, obviously, in being able to raise private money for these deals. Naturally, mobile home park investing is a high cash flow asset, for the most part, depending on which rounds you take on it. For the most part, it’s a very high cash flow asset so you have the ability to raise private money and be able to pay that back with ease.

Blue State Capital was honestly formed more so to be able to present a company and a brand to potential investors. We started that a while back and the target with Blue State Capital is anything mobile home park, multifamily. The target was not actually industrial retail. I just found a killer deal, so we bought it. We happen to own that one. Apart from that, the target is primarily mobile home parks and multifamily.

Andrew: Let’s talk about the mobile home park side of things and the two deals that you’ve bought. The first one was a six-unit. When did you buy that one? What type of work did you do to it? Tell us about the deal.

Edwin: It was a small little six-unit mobile home park. There were four units rented and two units vacant. I worked a full-time W-2 at the time. I worked at an automotive shop and there were relationships I had built just through working there. I started there when I was 15, so I had been there quite some time at that point.

I was 20 years old and they came to me and they said, Ed, we’ve got a six-unit mobile home park. We want to finance it. We need $35,000 down, $170,000 purchase price. Four units rented and two units vacant. I had the $35,000, but it was all tied up in my single family that I was doing at the time. That money had not yet been pulled out via refi.

I went to a friend of mine and just said, hey, can I have $35,000 for about 4–6 months? He said, yes, absolutely. Settled on the interest rate, and I purchased it with private money down payment, owner-financed the rest. Then obviously when the refi happened on my single family, it’s when everything paid off. I use that money to also do the value add on the property.

Andrew: Very cool. I love the creative financing and no money down on your first one of your own cash. What type of value add did you do? There are two vacant. Did you bring in homes for those lots or did you just rehab the ones that were already there?

Edwin: The two that were vacant, I just rehabbed the homes that were already there. They were honestly, structurally a shell, but they were good condition shells, and they weren’t that old. Both of them were newer than the 1990s, so they weren’t super old. They weren’t new at all, but they weren’t crazy old. I rehab those.

Honestly, a big part of it as well, Andrew, was just kicking out the bad tenants and rehabbing their homes as well. It was most certainly an old-school landlord type of purchase where they would just let anybody move in. These were all park-owned homes, so I still own all six homes.

It was a process kind of happening together, honestly, but part of it was kicking out the bad tenants, rehabbing, and then renting at a higher rate. The other portion of it was getting those two vacant units fixed up and rented.

Andrew: Very cool. That was your first deal and that was two years ago?

Edwin: Yeah, actually almost right at.

Andrew: Nice. I think you said prior to recording, that you’re looking to sell that one now. That’s more of a flip.

Edwin: Yeah, I’m actually hoping to sell that one and we can hop into what I want my portfolio to look like and the reasons for the sale. I’m looking to sell that one right now.

Andrew: Very cool. Tell us about the next one. You went from a 6-unit, jumped right up to a 51-unit, is that right? With expansion as well?

Edwin: Absolutely. After that, to be honest, I think the whole no money down and kind of how it works, clicked pretty hard for me after that first deal. That was my first true no money down deal and I realized the potential cash flow now that that park stabilized. My little 6-unit, performs currently at 28 cap, 26.5 cap, and 28 cap. To be honest with you, it’s been the first year since I figured out the numbers.

I’ve realized the cash flow of those and I said this is insane. It showed me how to do no money down. There was a property that was actually sent to me by a gentleman that actually lived in one of my units and he was doing a bunch of work for me at the time, helping rehab and stuff like that. It was listed on the Facebook Marketplace. He was wanting $2.4 million and he wanted $750,000 down, owner-financed the rest at 5% interest.

To be 100% honest with you, I had been looking at 12–20, 15–20 somewhere in that range type parks. This was substantially larger than what I had, but we got to talk and I found it on Facebook Marketplace. I’m a huge believer in never saying no to an opportunity. I was 22 years old at the time, I’m looking at this deal, and I’m saying, man, how on earth do I buy this thing? Where do I get $750,000 from? I don’t have that, for sure.

I had some investors that wanted to partner on some deals, but definitely not for the $750,000 mark, which is not a large capital, but for me at the time, it was huge. The first step was just to call the guy, a natural North Carolina old-school landlord style, we met at a local barbecue joint in Lexington and chatted for a while.

I think at that point I realized this is actually something that could happen. Price was largely moveable. Terms were largely moveable. I looked at it. It was 51 units and there was a 15-unit expansion along with it. The expansion had already been approved by the county. The appeal period was passed. He had letters from Energy United, which is the electric provider. He had everything lined up. It just needed to be executed.

When I saw that, I said man, this is a massive value add. A bunch of the leg work is done. We can buy this, execute a plan, and that’s it. There’s no hey, I hope the city approves. It just made me take a step.

Over the course of about three months, we ended up negotiating back and forth. A lot of what happened with this was relationship, him wanting to help hey, you’re a young investor. You’re hungry. Let’s settle on this. Let’s settle on that. Huge thanks to him. I’m blessed on that perspective. Huge thanks to him. We ended up settling on a $1.4 million purchase price, $300,000 down with 0% financing, fully amortized.

Andrew: Wow, that’s amazing. I love how you met at a barbecue joint, North Carolina style. Let’s sit down, have some barbecue, and work out a deal. That sounds like a lot of fun. Tell me where are you in that process? When did you close on that one and what have you gotten done since you closed on it?

Edwin: We closed on that property on July 27th of last year, so it’s been right about a year ago when we closed on that property. We had a lot of issues. Honestly, it was a huge learning curve. The property is on city water, but septic, and I didn’t know enough to do all the due diligence that’s required in a septic park. I didn’t do nearly enough due diligence.

Naturally, with a 15-unit expansion, it’s raw land right now. It had been somewhat cleared as far as big trees were taken out, but apart from that, just raw land. I had the plot map drawn out and then we had to hop into getting the septics approved and all that. Permits were not yet pulled for those septics. We had soil reports from soil scientists and such, but they were not actually approved by the county.

The day after closing, I went ahead and called the septic company. Actually, it was the Monday after, but a couple of days. I called Davidson County Environmental and said, hey, this is what we’re looking to do. Let’s go ahead and get rock and rolling, and we got it.

There was a solid 7–8 months of us calling the county, trying to get them approved. Hey, you have a leak here. Hey, you’ve got an issue here. Hey, you have a gray water issue here. Running around the park for months. It’s hard to get a hold of them in the first place.

There was an issue upon the issue before ever getting them pushed through and that was my fault because I did not do property due diligence on the front end of the purchase of the park. It’s a huge lesson I learned.

Eventually, we got them pushed through so we have the first three approved and good to go, and we’ve got the next. We have homes moved on them. They’re hooked up and good to go. We’re doing the next phase, which is the next six right now, then after that, we’ll complete it.

Andrew: Very cool. I mean, such a big project expansion on your second park. That’s pretty awesome. What’s the occupancy look like on that one? You said it was 51 lots?

Edwin: Yeah, it’s 51. As far as tenant-owned versus park-owned homes, or are you talking about occupancy, historically?

Andrew: Just heads and beds. How many paying tenants?

Edwin: Yeah, absolutely. Obviously a little bit fishy as we started to move some bad tenants out and put good tenants back in it. As of right now, we are 100% occupied on all 51 units.

Andrew: Wow, that’s fantastic, man. Super cool. You said you made a mistake on the septic due diligence. Maybe you could tell us, what did you do to get educated on mobile home parks? I guess you said you listened to Bigger Pockets. I’m sure you heard Brandon Turner and his mobile home parks fund and different things he’s doing with mobile home parks. How else would you say you got educated on mobile home parks to kind of know that this was a good asset class to invest in?

Edwin: My older brother John, he was getting into them at the time. The same people that sold me my park had sold him a park prior to me purchasing the little six-unit. When I purchased that park, quite frankly, I was very new to real estate in general. I had been learning for quite some time, but actually investing. I was very new at that point.

When I bought that park, as soon as we’re done signing papers and everything—obviously I went to their house multiple times and I’m building relationships as best I can—I just asked them. I said, hey, I’m new to this space. When I have questions, can I call you? They said yes, absolutely. You’re more than welcome to and that was literally my source of knowledge for most of it.

I did the exact same thing on the 51 unit. The sellers, after the transaction, I would just tell them hey, this has been a pleasure. Love you guys. Thank you so much for everything you’ve done. I’m brand new. When I have questions, can I call you? They would say yes. I have utilized that more times than I can tell you. I would call the previous owners all the time.

Almost all my transactions have been relationship-based. It’s been like an elderly couple that has owned it since the 70s or the 80s or something and then I come in. There’s a really cool dynamic that happens when there’s a young investor because they want to see me succeed as well and they see somebody young and hungry and able to perform.

Andrew: Especially when they finance it, they’re invested.

Edwin: Exactly, especially when it’s owner-financed. Obviously, there’s even more motivation at that point because they need to see it succeed so I can make my payment. To be honest with you, most of my knowledge, some of it came from my older brother John, and then a lot of it came from Google, just to be frank. The largest portion most certainly came from the owners I purchased from.

Andrew: Very cool. I highly recommend, not sure if you’ve thought about it or not, but there’s this thing called the MHU Bootcamp. It’s a three-day boot camp. They do it virtual now with Frank Ralph. I’ve been there a couple of times. I think I’ve been there four times now and a lot of our other operators have been there. One little tip to someone just starting out.

Tell me about your utility preferences. I know you said this big one has city water and septic. What does your small one have, and do you have a preference when you’re looking at utilities?

Edwin: The small one is on a well and septic. I try to avoid well as much as I possibly can. Septic is definitely not preferable, but it’s not going to be a deal breaker. Well, usually I won’t touch that at all and I’ve learned throughout that it’s not so much the repairs on the well. At least in my area, if there are reports of contamination in that park, then a mandatory monthly inspection has to happen through the environmental department, and it kills cash flow.

I’ve been fortunate to not have to do that, but I have spoken to some people that have. Naturally, of course, your bill is going to be less if you don’t have a well to deal with. I’ve spent a good bit of money on my six-unit well, but fortunately, I don’t have the issue with the environmental department.

I have spoken with some people that have so I wouldn’t say it’s completely a deal breaker, but it definitely sways heavily for me on that front. Septics, I much prefer, obviously, all city utilities, but I wouldn’t say that as much of a deal breaker just because I’m dealing with so much of it right now on the ground up. What’s the solar going to be approved for, what the leach fields look like, all that stuff that I feel like I have a better idea of what to look for on that.

Andrew: You’ve probably been forced to learn what all that looks like so you know what to look for next time. Then I know you said in your six-unit you still have all of those as park-owned homes. Is that the model you prefer is kind of just renting them out?

Edwin: As of right now, yes. The reason that I started purchasing parks in the first place was high cash flow, and once again, my six units perform between a 26½ and a 28 cap.

Andrew: With that, are you capitalizing all of the income that it brings in?

Edwin: Yes. All of the income, like true cap rate. What it brings in versus expenditure, including all expenses, and then also factoring in the rehab on the mobile homes toward the purchase price. Figuring that difference, it performs there.

Andrew: Our model is different. We prefer tenant-owned homes just because of the financing. We’re going to bigger banks and the banks prefer the tenant-owned home model. That’s a big factor once you come to refi and things like that. I’m sure, man, if you can rent those things for $1000 or so a month, they really cash flow, especially if they’re not older, beat-up homes.

Edwin: Absolutely. I think, once again, the model was cash flow continues to be as of right now, but scalability is most certainly not there with park-owned homes. That is beginning to switch. I’m working on buying a park in Lincolnton right now. It’s park-owned homes, but the plan is to switch to tenant-owned as soon as possible. That is 100% the goal. It’s just in the past starting out, cash flow is king and if that meant doing extra work, I was okay with it.

Andrew: Got you. Tell us, what other mistakes have you made that you think other newbies could learn from?

Edwin: I think one of the ones on the first park that I purchased was not checking title to homes. When I told you I was new when I bought that, I didn’t know anything, Andrew. I knew nothing. Not checking title to homes, not understanding the risks involved is something that I’ve learned a while back, understanding just general due diligence items, really.

Septics. There’s so much that goes into septics. If they were installed 30–40 years ago, then what do those lines look like? Where do they cross that? Where do new leach fields go if you have to replace one? Is the current soil contaminated if it is a septic?

Looking at all that kind of stuff, there are a lot of due diligence items that you can talk about all day, but I think it’s primarily learned once you run into some of those issues.

I think another mistake that I made primarily on the six-unit is taking everything at face value and just saying, okay, this is what the owner said. Obviously, this here is what the case is. That’s a terrible mistake to make, but it most certainly did happen for me. I just took it at face value and said, okay, obviously they’re telling the truth. Obviously, it’s exactly what they said it is. That was definitely another big mistake for me.

I think, in reality, not allowing my mind to expand to okay, how do I buy more? Just saying oh, no, I’m 23 years old. I’m a young investor. I’m 22 years old, I’m a young investor. No, I can’t buy something that big. Not allowing my mind to expand into larger purchases and say, okay, I know I’m too young, but how can I? Then finding a solution and then presenting a solution to set up to see if we can make a deal happen.

Andrew: I love that. I think one thing going back to the due diligence, when we started, we just used the handbook from the MHU Boot Camp. He has a 30-day due diligence handbook that he gives out, and we use that, and it was a great starting point. Through buying 33 mobile home parks, that list has tripled in size, so our due diligence list today is three times as big as it was on our first park that we bought. Every deal, we’ve added stuff to it to make sure, okay, we need to check this next time we need to check that.

Agreed, I think you learned by doing, but you definitely want to try to catch the big stuff, especially with the utility upfront due diligence. Tell us, Edwin, what the perfect mobile home park looks like in your eyes and why.

Edwin: Perfect mobile home park for me, as of right now, would be anything like I’ll say 40 units and up, city utilities complete. I would want city septic and city water. Yes, city septic water, and city electric or county electric. I would actually want a split unit mix so about 50% tenant-owned, about 50% park-owned homes with extra land approved for expansion. I know that’s rare, but that would be what I’m looking for right now.

Andrew: Wow, lots of value add there. Let me ask you this. What are the most important things passive investors need to look out for when investing into mobile home parks or investing into an operator like yourself? What do you think they should look at?

Edwin: I think one of the most important things if you’re investing into an operator or investing in the company, is to look at the person’s track record, obviously, and see how many projects have they truly pulled off and are they hitting deadlines as planned. If somebody is looking to purchase a park themselves, I think being able to call somebody that has already done the deal and just say, okay, listen, what’s the checklist? What do I need to look at?

There are so many variables in parks whether it’s tenant-owned homes, park-owned homes, city utilities, private utilities, or roads. What do the roads look like? You know much better than I do, quite frankly. You’re much more experienced than I am, but there are a million checklist items and just like you mentioned, your list tripled.

Just being able to call somebody and learn about a lot of the things, some parks, you may have to check this box, and other parks that box isn’t really relevant. Just being able to do all of that, I think it comes down to due diligence, really, if you want to shorten it.

Andrew: Definitely. What does the future look like for you in Blue State Capital? What are you guys planning to do with mobile home parks moving forward? Are you looking to still acquire those? Are you looking at other asset classes? What’s your focus?

Edwin: We are open to other asset classes. Our focus is still on multifamily and mobile home parks. We are open to industrial, retail, and mixed-use spaces, but the focus is still primarily on mobile home parks and multifamily. The goal from here is really just to expand. I want to buy a bunch of other parks that I can get closer to automation on via tenant-owned homes.

Andrew: Cool. How can listeners get a hold of Blue State Capital?

Edwin: First of all, you can email me at edwin@bluestatecap.com. We’re on Instagram. If you google us, it will pop up. Blue State Capital will pop up on Google. My partner, Brandon Glover, you can reach out to him. It’s brandon@bluestatecap.com. It’s the same thing. We’re on Instagram, Facebook, LinkedIn, anywhere. Shoot us an email or google us.

Andrew: Yeah, and maybe you can tell a little bit to the listeners. Blue State Capital, I kind of gave you a little riff for that because we avoid blue states. We want to buy in red states so tell us how you came up with that name.

Edwin: Just for clarification, this was an oversight on my part, Blue State represents North Carolina as a blue state in terms of sports teams, in terms of the Blue Ridge Mountains, the Blue Ridge Parkway, in terms of all of that. The state as a whole. It is not a political statement in any way, shape, or form.

Andrew: Before we sign off, tell us about the deadlift world record. I think you said you have two world records for the deadlift?

Edwin: I do. I have two worlds and two nationals. My one world record is in the deadlift. The other world record is total. In powerlifting, you have three lifts—your bench, deadlift, and squat. All of that was me as a teenager, to be honest. I didn’t drop it, but I stopped competing at a high level, I should say soon after my 20s. That was a big part of my teenage years—16, 17, 18, 19. A big part of them was competing in powerlifting, trying to lift as much weight as possible. That was it.

Andrew: Wow, man. That’s pretty awesome. Well, congrats on those.

Edwin: Thank you.

Andrew: Thank you so much for coming on the show and being interviewed. I really appreciate the time you took.

Edwin: It’s been an absolute pleasure. Thank you so much for having me.

Andrew: Thanks, Edwin. That’s it for today, folks. Thank you all so much for tuning in.