Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-jeff-flynn-of-aspen-ridge-capital/id1520681893?i=1000678306133

SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. In this episode, Andrew Keel sits down with Jeff Flynn, a Navy veteran and founder of Aspen Ridge Capital, to discuss his remarkable transition from military service to mobile home park investing.

Jeff Flynn’s journey began during his final year in the Navy, when he worked as a mobile home park broker. Just three days after leaving the military, he fully immersed himself into his first mobile home park acquisition. In a short span, Jeff Flynn scaled his portfolio to eight mobile home parks and continues to focus on expanding his business.

Join Andrew Keel and Jeff Flynn as they explore the strategies that drive successful mobile home park investments. Topics include:

• Transitioning to MHP Investing: How Jeff Flynn moved from the military to owning mobile home parks within days of completing his service.
• Portfolio Growth and Syndication: Insights into scaling to eight parks and leveraging syndication effectively.
• Strategies for Raising Rents: Proven methods for increasing rents while maintaining resident satisfaction.
• Remote Management Success: How to manage mobile home parks from a distance using virtual assistants and on-site teams.
• Scaling Challenges: The risks of growing too quickly and strategies to avoid common pitfalls.
• AI Integration: How artificial intelligence has helped Jeff streamline operations and improve efficiency.
• Networking and Learning by Osmosis: Gaining valuable knowledge through conversations and investor connections.
• Creative Yet Disciplined Buying Criteria: Balancing flexibility and structure when targeting parks.
• Value-Add Opportunities in Smaller Trailer Parks: Why Jeff Flynn focuses on small- to mid-sized mobile home parks and works closely with mom-and-pop owners.
• Exit Strategies: Crafting a clear plan for long-term success in MHP investing.
• Septic Systems vs. City Sewer: Weighing the pros and cons of each system for mobile home parks.
• Infill Hacks and Niche Strategies: Tips for optimizing mobile home park occupancy and adding value.

This episode is packed with actionable insights for anyone interested in mobile home park investing, uncovering value-add opportunities, or scaling quickly and effectively in this niche market.

Listen now and start your journey toward passive MHP investing 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 MHP 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 – Introduction to The Passive Mobile Home Park Investing Podcast

01:00 – Jeff Flynn’s inspiring journey: From serving in the military to investing in mobile home parks

06:30 – Building a strong mobile home park portfolio: Jeff Flynn’s experience with syndication and scaling his investments

13:20 – Proven strategies for raising rents effectively in mobile home parks

17:00 – Remote management success: Utilizing virtual assistants and on-site teams to streamline operations

19:45 – The risks of scaling too quickly and how to avoid common pitfalls in mobile home park investing

21:30 – Leveraging artificial intelligence (AI) to optimize mobile home park systems and processes

26:00 – The power of networking: Gaining valuable insights from mobile home park investor conversations and learning through experience

29:18 – Striking the balance: Creativity and discipline in mobile home park buying criteria

30:50 – Unlocking value-add opportunities: Targeting smaller to mid-sized mobile home parks and building relationships with mom-and-pop owners

42:20 – Crafting a solid exit strategy: Why planning your endgame is crucial in mobile home park investing

45:00 – Septic systems vs. city sewer: Weighing the pros and cons for mobile home parks

47:07 – Creative infill strategies and niche tips for optimizing mobile home park occupancy

53:00 – How to connect with Jeff Flynn 53:30 – Closing thoughts and takeaways

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

Links & Mentions from This Episode:

Jeff Flynn on LinkedIn: https://www.linkedin.com/in/jeffaflynn

Aspen Ridge Equity: https://www.aspenridge.info/

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

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

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

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

Andrew Keel’s 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 a special guest on the show in Mr. Jeff Flynn of Aspen Ridge Capital. 

Before we dive in, I want to ask you a real quick favor. If at the end of the show, you get some value out of this, please leave us a review after listening. This helps us get more listeners and support the show. 

All right, let’s dive in. Jeff Flynn, founder of Aspen Ridge Capital, is a Navy veteran who began his journey in real estate as a mobile home park broker during his final year of service. Just three days after leaving the Navy, he transitioned full-time into mobile home park ownership, quickly building a portfolio of eight mobile home parks. Jeff, welcome to the show. 

Jeff: Thanks, Andrew. I appreciate you having me. 

Andrew: Yeah, excited to dive in here and get to know you a little better. Maybe you could start out by telling us a little bit more about your story and how in the world you got into investing in mobile home parks. 

Jeff: I always like saying that I’ve ever since I was a little kid, I dreamed of one day owning mobile home parks, and everybody always laughs because obviously that’s not something you grow up doing. But for me, it was really a lot of luck, and it’s easier to get lucky when you’re working hard. 

But looking back, I knew I wanted to get into real estate, especially as my time in service was dwindling down. I just got lucky that somebody I knew, knew somebody who was running a mobile home park brokerage, so I ended up working there and it ended up being a really good paid education in the industry. 

Andrew: Awesome, which brokerage firm was that?

Jeff: At that time when I started, it was Delta Group. Then, it became MHP Brokerage, and that’s what it is today. 

Andrew: Very cool. I know those guys on the email list looking at deals and things like that. How long were you in brokerage then, while you’re in the service. Was it just a couple of years?

Jeff: It was just a couple of years. My first real estate transaction was actually as an investor. I was using the VA loan. I bought a condo that I was house hacking, and that was about the time that I got into the idea of hey, I need to make some extra money because I can only do a zero down deal one or two times. That’s when I realized I needed to get going on it.

Andrew: Very cool. You bought your first park literally three days after getting out of the service, is that right? 

Jeff: That’s right. It was touch and go for a while because at that time I was working in a skiff, and I couldn’t answer my phone. I couldn’t even have my phone on me for an eight-hour shift. I was just a little E5 enlisted guy in the Navy. I was trying to go out to my car when I could, and I’d see all these voicemails from bankers, vendors and all this stuff I was supposed to be doing. It would always be after hours by the time I called them back.

It was stressful, but to me it was one of the things like I’m not the type to sit around and figure it out. I’m just going to go. I knew that being in the military, I had a pretty steady paycheck getting out. I had to do something. To me, it was just a matter of let’s get it going.

I checked out on Friday, moved from Colorado to Alabama on the weekend. It was driving into U-Haul Saturday, Sunday, and then Monday was the first closing. It was one thing right into the next. 

Andrew: That’s so cool, Jeff. What year was that? 

Jeff: That was 2022. 

Andrew: Awesome. You’ve built up a nice little portfolio here in just a couple of years. Tell us about that first park. How many lots, what did it look like? What type of market was it in?

Jeff: It was a 34-lot park, your typical mom-and-pop deal. The guy had never thought about selling it. He had a septic company 40 or 50 years ago so he just built one lot at a time. It was one of those things. It was a small town in Alabama. It’s in Tallassee, Alabama. It was an area I was familiar with because I had lived in Auburn, Alabama for a while, and one of my best friends lived in Tallassee.

I knew that it was a better market than it might seem on the surface, and it was just a place I was familiar with, which allowed me to really connect with the owner. Even though I was living a flight away, I was talking to him about it like I was a local, because I had been at one point. 

So it was just months and months of following up with the guy, and eventually he just said hey, here’s my number. If you could take it, I’ll sell. He was asking $620,000, so it was a pretty good deal on the surface. Just like the week prior, I was looking at parks and where I lived in Colorado. I went to a seven-lot park where the guy was asking $600,000. It’s apples and oranges, but at the time I was like, okay, this might make sense for me to try to buy this and move down there. That’s how it came to be. 

Andrew: That’s so awesome, man. Good for you. Then did you find this just cold calling, just doing what you were doing at the brokerage firm? 

Jeff: Yeah, that’s exactly what I was doing. As a broker, it’s difficult to do smaller deals like that, just because you’re going to do just as much work as you would do on a multimillion-dollar deal. And it’s honestly probably going to be more work because a lot of those sellers are not super organized. You’re going to have to do a lot of digging and hold their hand along the process. 

For me, there was one or two that I had known about that I had stumbled upon when I was cold calling, and that was one of them. It was just a case where I tried to look him up on the GIS, but I couldn’t find it. I saw it on Google Maps. I went to the street view, saw the park, signed on the street view, and called it. Sure enough, it was the owner. 

Andrew: So smart. Just getting on Google Maps and driving through the streets, calling the number on the sign, taking that extra effort instead of just skipping tracing it, not getting a good phone number and not getting a hold of the owner. A lot of the best deals are found just with that extra little bit of effort, so kudos to you, man. 

One thing I want to say, Jeff, thank you for your service. I think all of our veterans, we just had Veterans Day recently, really thankful for your service. I’m glad that you’re into real estate and you’re doing well. 

Jeff: Of course. I appreciate that. 

Andrew: Awesome, man. That was your first park, and then tell us about your portfolio. Now you’re up to eight mobile home communities. What does your team look like? Is it just you? I know you’re managing them in-house, but maybe you can just tell us about your portfolio. 

Jeff: The first one I had a partner. I had two partners on and one of them was an experienced operator going into it, so it was really nice for me. When the bank was asking us our questions, it was more directed at him. I probably wouldn’t have qualified just on my own, and experience-wise I didn’t feel comfortable going into it by myself.

I had two partners on the first six deals we did. Then that was around the time that the market started to get much tougher. In 2022, you could pretty much throw a rock at a deal and probably find something worth buying. It just got tough because the rates got higher. That’s when I had officially completely left the brokerage. I had unofficially left a little bit. 

Both of my partners at the time were like, hey, deals aren’t really penciling out as well right now so they wanted to pivot and do other stuff. But I really enjoyed the parks. I really enjoy the operations and finding deals. That’s when I decided to find a way to keep going. I’d never heard the term syndication, but I just figured, hey, there’s got to be a way to keep doing deals because I know so many guys as a broker that I was talking to that are just doing deal after deal after deal.

It was after a certain amount of time, that I realized, okay, this can’t be all their money. Somehow they’ve got investors or something. I’ve done two deals now as a syndication, so I really have enjoyed that process; that’s been a ton of fun. It’s been really cool to share the experience with other people who don’t want to spend the time and get involved in the nitty gritty like I do, but that’s where it is today. 

It’s 8 parks, it’s 250 lots. Most of them are in Alabama. There’s one park in Mississippi, but I’m relatively uninvolved in that. My partner pretty much does everything on that one because it’s close to him, but that’s where it is today. 

Andrew: Very cool, man. That’s so awesome. We syndicate as well. Tell us about those two syndication deals. How’d you find them? What do they look like? What type of markets are they in? You said they’re all in Alabama and then there’s one in Mississippi, right? 

Jeff: Right. 

Andrew: How’d you pick that area? Were you moving there just on your own and just decided that’s where you want to own or how’d you decide on Alabama and Mississippi? 

Jeff: I think it started when I was a broker. We all had regions. I had started calling all over the place, California, New York, Michigan. I just always gravitated toward the Southern states simply for the fact that the owners were really fun to talk to. I would try to find people wanting to sell their parks in California. Usually, I’m not selling click-buy, but Alabama, Mississippi, and Georgia, I could really get a conversation going.

That really attracted me to just continuing to work in that region. I wish I could say it was more economic-driven than that, but that’s really how it started. Before I had joined the service, I went to Auburn University, which is in Alabama, so I was very familiar with that area.

When it came time to actually talk to sellers on the phone, that familiarity really really helped. That’s why Alabama was my primary focus in the beginning. At this point, I’m looking pretty much anywhere in the Southeast, but just haven’t come across anything yet outside of that. But hopefully, I will soon.

Andrew: That’s fantastic. Those two syndication deals, how many lots are they, what did the deal look like, and so forth? Was it value add, stabilize, that kind of thing? 

Jeff: Yeah, both of them were value-added. They were what I would consider your typical mom-and-pop. Both of them had built their own park years ago and were the only owners. 

One of them, the first one, was actually really nice and huge. I would think about a third acre per lot. It was a subdivision that the guys had inherited from his father who got it plotted out as a subdivision, but never did it. It looks like a neighborhood, but it was just a case where 10 years ago, he just figured I’m not going to fix much more, I’m getting tired, and I’m not going to charge much more in rent. That’s where he left it. 

Fast forward, we’re going through just 10 years alone, but the inflation today is way below. It was about half of what I thought the market should be charging, and the other parks near there weren’t quite as nice as this one.

It was about two years of following up with the guy just once a month, calling on him, seeing how he’s doing. At one point I had it under LOI two years ago and then he just decided I don’t know what I would do if I sold it, and that’s where it left. 

Then eventually it got to a point where he just wanted to travel the country and he wanted to be totally done with it, so got it moving. It was 44 lots, all tenant-owned homes, which I’ve learned is the only way I want to go in the future. It was a pretty quick turnaround. We submetered it. No infill really to do other than one lot now that we’ve got to fill up. That was the first one. 

The second one was very similar. It was the 32 lots, and just like the first one I had been following up with the owner for years really. Just by coincidence, one time I had been talking to him on the phone and looking back, I should have realized something was not quite right. But every time I talked to him, we had the same conversation. He’s like, yeah, I don’t know if I’m ready to sell it yet. Just send me a letter so I’ve got your info. 

I probably sent the guy 10 or 15 letters. Come to find out that he had been suffering from dementia. His daughter had become the power-of-attorney, and she just overheard one of the calls. Called me outside and said hey, we’ve been looking to sell this. If you want to buy it, let’s get something together. 

In both cases, it was just follow-up, follow-up, follow-up value-add deals where the bones of the park were fine. It was just a case where the owners really hadn’t kept rents up where they had to be. As a result, things had started to slip. So I come in as the new owner, fix the obvious stuff, run the properties as professionally as I can, and then just keep moving it from there, keeping a nice, smooth transition through the tenants. 

Andrew: That’s awesome. What do you do on a deal like that? Because I see those sometimes where market rents are way higher, $150 or $250 higher. How do you go into those deals? Obviously the sub-metering is a piece of the value add, but how comfortable are you raising rents? How much in year one and how much in year two are you comfortable raising? Then have you seen any issues, any kickback from the tenants or anybody that moves out from those rent increases? 

Andrew: I have never had a home move out from a rent increase with the exception of probably one. But that was a repossession a few months after the closing. I think what has helped with that is going door to door to all the tenants after closing and explaining to them like, hey, I used to say owner, now I say manager so they don’t ask me for every single little maintenance request, but that’s usually the process. 

I found that really really, effective because on the outside, you might think, hey, these people don’t want their rents to go up, which is true. Nobody wants to pay more in rent, but they also want to make sure that the community that their home is more or less stuck in is continuing to be maintained.

When you go there and say, hey, look, I know I’m charging you more for rent. I’m trying to keep it affordable, but here’s XYZ. This is what we’re going to do. We’re going to do landscaping. We’re going to trim the trees. You’ve got a manager’s request, the owner hasn’t dealt with it for months at a time, we’re going to take care of it. 

That has led to a little bit of a sticker shock, usually after a closing, but within the first quarter, I think normally most tenants have realized, okay, this is more, but we’re getting more value for it. These guys are actually addressing issues when they come up when other tenants are causing issues, like loud music or stuff, they’re addressing it. I have found that tenants are really, really excited to have a new owner most of the time. 

Andrew: That’s awesome. And what do you think that’s worth? How much year one are you guys bumping rents and how much year two are you guys bumping rents?

Jeff: Usually the first year it’s a lot, and then after that it just tapers off. I’d say on average, it’s probably about $100 a month in the first year. Normally, it’s just so low to begin with. The most recent one I did, they were charging $160 a month. The problem is you can’t maintain anything. You start seeing the trees overgrow and the roads start to go to hell. That’s usually what it looks like year one. 

Then from years two-on, it’s really just a steady $30–$40 increase. Honestly, it didn’t used to be, but this year it was almost required. Even doing $100, we’re breaking even just because we’re trying to make sure that we can cover the note, and in the first year, that’s when most of your expenses are going to come up. It really is just a process of getting it to where it needs to be. When it’s so far behind, I don’t want to come in there and double it, but it takes time. You have to be strategic about getting up as quickly as you can to make sure the property improves.

Andrew: That’s interesting because I guess you’re of the mentality like hey, let’s just rip the bandaid off. Let’s get it up there instead of slowly going through that. It doesn’t seem like you’ve had much turnover. I’ve had some other experiences where literally five tenants moved out after we increased rent, and we didn’t even go that much.

We went $60 in the first year and we had five tenants move out. So I think it’s market-specific, it’s demand-specific, like hey, are there other parks in the area that they can move their homes to? Is it an affluent population where they can buy private land and move their homes out to private land? I think it depends on so many different factors, but it’s good that your properties have been performing well. 

Jeff, it’s all vertical, like you guys do the property management in-house. Tell me about your team. Tell me about your operation and what that looks like. 

Jeff: My properties are what I would consider small to medium. The biggest is 62 lots. The smallest is 15. I wouldn’t do another 15-lot. It has just not been feasible really in retrospect, but the management in the beginning was one onsite manager at each park who reported to us and did XYZ. Then all the backend stuff like the property management software, leases, we did all that. 

I ended up scrapping it just because it tended to invite more management drama than it actually produced. Looking back at the conclusion I came to is if I’m buying a park because I don’t think it’s managed well, I should not keep the managers that were there when I bought it. Even if they’re great at this point. 

The last one I bought, they did have somebody who helped on site, but I’ve just found that it’s better to just do it our way. Come in, we manage it, and then a year later, if we want to have somebody on-site to assist, then we revisit that, but I think just setting the tone that things are different, we run things this way, this is how it goes, that has been a lot better. 

At this point, the team is really just me and a full-time virtual assistant. We have an onsite maintenance guy for all the ones in Alabama, they’re all in about an hour-and-a-half radius. He’ll go around with a 360 camera and he’ll report back to us just by taking a bunch of shots of the property.

We can look at it and see the property as if we’re there, make notes of skirting that needs to be fixed, all that stuff. All the onsite stuff that we are, you have to be on-site to do. There’s no other way to do it, but then all the backend stuff at this point is just done virtually. 

Jeff: Very nice. I think virtual assistants are great. We have several on our team, and it just helps you be in more places at the same time. But it’s tough. I think we reached about five parks where it was myself and an assistant, and then we reached our capacity. We needed to hire people and build the property management company out just because there are a lot of touch points. But that’s awesome. You’re at about 250 lots, is that right? 

Jeff: That’s right. 

Andrew: Very nice. That’s awesome. Given that, what do you think is the toughest hurdle so far in mobile home park investing that you’ve run into?

Jeff: One of the pros is that you can scale quickly, but the downside to that is for a relatively low dollar amount, you have a lot of scale, which I think can actually be a negative in some situations. We have 250 tenants to deal with and that’s scale. It’s happening quickly, but it’s still 250 people that we have to keep track of. That has been very, very difficult. That’s one of the biggest challenges. 

Secondly, I would just say consistency. As an entrepreneur, we wear a lot of hats, and there are months when I have the time to sit down and do what I need to do. Then there were months when I forgot about it. For me, I think just setting up the systems and processes and having somebody else responsible for absolutely every single thing that needs to happen, that has been the biggest challenge.

I’m finding ways to go about that. I think AI has actually been really helpful in helping me do that, but I would say number one, it would be ongoing management operations. It just doesn’t stop. Every month you got to do collections, and you got to stay on top of it. If you don’t, people get too far behind to catch up and then you’re really in trouble. That’s definitely one of the struggles. 

Andrew: I’m smiling a little bit because I totally see where you’re at. I remember like I said, being around five parks and trying to use the management fees coming in to hire people, but realizing like hey, this isn’t going to go very far, and realizing all the things that needed to be done.

It gets easier as you keep scaling, you’re able to get help and then you can have specialization where people get good at doing certain things. It gets easier, but you’re at one of those crucial levels that’s really tough. Two hundred fifty lots to 500 lots is a big jump. It involves adding team members, but it’s a fun ride, man. You’re in the right asset class. I’ll tell you that much. 

Jeff: That’s right. It’s a chicken and egg scenario. That’s what I always tell my wife. It’s like, there’s something I need, but I don’t have what I need to do it yet, but I still got to do it. But that’s being an entrepreneur. You just got to figure it out. 

Andrew: You got to figure it out. Some days you’ll be opening the mail. Some days you’ll be taking out the trash. Some days you’ll be changing the ball valve underneath it. I’ve done all of it. 

Tell me about how you’ve integrated AI. You said that that’s helped you with the management structure and things like that. And I’m always curious because I love artificial intelligence. I love learning new things. Curious how you’re implementing that in mobile home parks. 

Jeff: I’m trying to implement it anywhere I possibly can, but I think the biggest thing is basically just helping me teach somebody else the nuances without it taking months. What I mean by that is that we have an AI that I have sat down and taught every single little difference about each property. 

If one property has a city sewer, but the city line stops at the road, and we’re responsible for it all the way back versus another park where the city maintains it throughout, those little nuances, you hire somebody. 

I’ve gone out and fixed problems that we shouldn’t have fixed like city sewer lines that we pay thousands of dollars to repair. But it’s hard to teach somebody who’s not you to do all that. What I’ve done at this point is our standard operating procedures and the specifics on each property and the goals for each property are all in a central AI.

Our assistant, when she has a question, that’s the first place she goes to ask it. If she asks it and it says, okay, in this property, you need to do XYZ, blah-blah-blah. Here’s who you call this in the process. That has been life-changing for me. Because even with somebody whose full-time job is to work for you, a lot of times you’re going to have to call and ask you questions on everything because everything’s so different. 

That’s just one small example. Of course, we have some homes where they are park-owned homes and we converted them to rent-to-owns. We’ll get maintenance requests and we’ll go out and do them. It’s like, no, maintenance on a rent-to-own is their responsibility. It’s hard to teach all that. That has been something that I have really leaned into to really just help ensure that we get consistent results to people. 

When tenants ask a question about something, it references their lease. Our answer is consistent with their lease to make sure that we’re doing exactly what we agreed to. That has been really, really helpful just in terms of consistency across the board. 

Andrew: Very cool. Is it similar to ChatGPT? Do you have your own AI bot that you’re training to be aware of? I think that’s really awesome. Because we have all of our SOPs written down. They’re written down, we use Google Sheets, we use Trello, and we store them there. 

But what we’re finding now is we have so many SOPs that people are not reading them. It’s searchable. If you go and you search, you look in and you can find how to do XYZ and understand the sewer system and understand where the clean-outs are and things like that. 

But it’d be easier for the end user if they just had to type in, hey, we have a sewer clog between lots 10 and 13. Where’s the nearest cleanout? It just shot it back to them, it would be way easier. I’m curious how you do that and what platform you use to set this up. 

Jeff: It’s ChatGPT. It’s the paid version. You can make your own custom version. Ours doesn’t reference the Internet. It just references our PDF. 

Andrew: Which is what you’ve uploaded to it.

Jeff: Its instructions are basically hey, only give an answer directly referencing the standard operating procedures. If you cannot figure out an answer from the SOPs, it’ll just say, ask Jeff for clarification. 

At that point, we’ll go in and we’ll make over time. Those situations just don’t stop. There are always random situations that come up. But it’s relatively easy. The ChatGPT that’s custom just references the PDF. Every week or so, we update it and it has the new version that it references. 

Our SOPs at this point are not just, hey, this is what we need to do. But in a given task, Jeff is responsible for this. The VA is responsible for that. When they ask the question, it knows who’s asking and it tells them what aspect they need to do so there’s no confusion. There’s no like oh, I thought you did that part. 

Andrew: Who the owner is. There’s one owner that you’re going to differentiate between. You got three people on the team. You got Jeff, you got the virtual assistant, and then you got your AI bot. Kudos, man. That’s fantastic. 

I wanted to go back a second. How’d you get educated on mobile home parks? Like to know the utility infrastructure, complete due diligence. Take us back to that point. Was it podcasts? Was it a book? Was it YouTube? How’d you dive in and get educated? 

Jeff: I was very lucky in the fact that the brokerage I work specialized in. My education was really just conversations with other investors all day long. As a broker, you have to be good at finding the deal and you can get started quickly just knowing how to communicate with sellers. 

But when you start sending deals to buyers and they start kicking it back because XYZ, over time I just learned through osmosis like hey, this is what you should look for. This is how this should go. But that stops the day of closing, and I learned that very quickly. I didn’t know anything about what happened after the day of closing. It was like a panic attack for me. 

In the beginning it was podcasts like Frank Rolfe’s. I listened to him a ton, just listened to episode after episode after episode, and that was super helpful. But even that, it was more geared towards the really nice part, not all, but he’s been doing it for a while. They were back in the day when I’m not to make light of it because they’ve definitely accomplished a lot. But parks were selling for like 10 caps. You could just buy 100 lots of city water so we’re pretty easy. I’m not dealing with that. 

Andrew: One of the things he says that I always give him crap about is he always says oh, you can just rehab a vacant park-owned home for $4000 and get it back rent ready. I’m like oh, not anymore, Frank. Not anymore. 

Jeff: Yeah. A lot of it was just learning through just sitting down and figuring out what am I doing that’s working and what am I doing that’s not. Unfortunately, a lot of it’s just learning on the job. I was lucky that in the first couple of deals, investors weren’t involved. It was just me and my partner, so when we made mistakes, we just owned it and moved on. We didn’t really have to answer it. 

That was when I finally felt comfortable like okay, I’ve done enough of these that within reason, I know what’s probably going to happen, and I know the best way to handle a situation, like you said in a vacant park-owned home. But most of it, I would say, is three phases. 

Learning just from the broker side of how to find them, close them, what to look for. Then it was a podcast to learn the operation side. Then you have to take other people’s opinions with a grain of salt, even if they’re the best in the industry, because your niche, like my niche within mobile home parks, is small- to medium-sized. I don’t always have onsite managers. I don’t have all the things that you normally could to make it work, so you have to just figure it out. 

Andrew: Totally. There are a lot of different niches, and one of the things I have, it’s a sticky note right here. It’s a Sam Zell quote where he’s like hey, what does the deal hinge on? What’s the biggest risk? Just trying to identify that first before anything else can just save you so much time, and knowing the utility infrastructure is probably one of the biggest things you need to get comfortable with before you do any phase one, any survey, anything else. Figure out the utility infrastructure and obviously the rent roll. But that’s really awesome, man. Kudos to you. 

I wanted to go in now and talk a little bit about higher interest rates and how you guys have pivoted around that to get deals done in the last few years. 

Jeff: Honestly, a lot of it has just in some ways opened up the avenue for more creativity, more seller financing, more whatnot, but it has definitely made me more rigid on buying criteria. Because with interest rates, everybody had an opinion. When they went up, they’d come right back down. 

Now in hindsight, we can see that’s not going to happen. To me, I don’t try to make deals work. They have to just work on the surface level. If they don’t, maybe a tiny bit of stretching here or there.

The toughest part has just been, I think, the lending requirements. They’ve tightened down. That’s been the toughest thing of all. There are still sellers who want to sell, probably more so than there were two years ago, but now they realize they missed the boat. Even a deal that was great two years ago, it’s going to be hard to close today because the NOI has to really perform.

Honestly, I take the opinion that if I can get a deal done today and it cash flows year one, that’s a property I want to own for a very long time. Two years ago, when you were getting 5% or 4% rates, most deals worked. Nowadays, if a deal does pencil, it’s probably a really, really solid asset. 

Andrew: Totally. It works with a 7.5% interest rate, it’s going to really work a few years from now after some value ads and some rent increases. I agree with you there. 

Tell me about your strategy, Jeff, and how it originated. It seems like your strategy would be to target small- to mid-sized parks, value add, going direct to mom-and-pop owners, which I think is a really good niche right now. 

Even our criteria is 50 lots or more, and with that we’ve seen that that cohort even gets more competitive. Because I think some of the bigger private equity firms that used to only buy a hundred lots or more are now coming down and getting comfortable with 50 lots or more. I think below 50 lots, you can really get some good deals. 

At the end of 2023, we bought 2 parks that were back around 30–35 lots at 12 caps on actuals. Those opportunities are out there. If you were looking at a 50-lot park, there’s no way that you could get a 12-cap on actuals. It’s unheard of. Maybe you can talk about your strategy. Is it just focusing on those smaller parks and getting off-market deals, or what high level are you looking to do? 

Jeff: When I call cold-calling, there are not a lot of parks out there and you realize that very quickly as a broker. You’d make 100 calls a day. I’d go through the entire state of Alabama in 10 days, there are about a thousand parks there. If that’s your full-time job, it’s tough, but I pretty much call everything if it was 15 lots and up. 

At the time, I didn’t really understand that hey, if I close a 10-lot park and get a 4% fee, that’s not going to keep the lights on. I knew of a lot of deals available like this. To me as a buyer, they make a ton of sense. I’m like, okay, I’m looking at what this can do. Cashflow-wise, it makes a ton of sense. 

There is a downside. They’re harder to manage. You don’t have as big of a buyer pool on the back end. If you can get your hands on a 50-lot park or above, pretty confident you’ll be able to turn around and sell that for a good price. 

Some of the market fundamentals like cap rates and stuff, start to break down when you go underneath those parks. Sure, that park might appraise for a seven cap, but can you really get a buyer to pay a seven cap or something like that? 

But to me, it was just a matter of everybody I talked to at the time, 100 lots or more, major city, 100,000-plus population, which I get that makes sense. But some of these other parks, they’re just so cheap. They do still make sense. 

Another big thing that I was looking at was at the time, the notion I was hearing from other investors looking were like, they would look at the cost of a single-family house in that area. Where I’m at in Alabama, it’s not that expensive. A lot of people would pass on it just for that.

But when I lived there, I came to this realization that houses might not be that expensive. But nobody’s building houses at all. If you go anywhere, everybody lives in mobile homes, whether it’s a private lot or a park. The demand for these parks is still pretty strong. That was what led me toward that path.

Obviously, I’d love to get my hands on a big park in a nice city. You’re just going to be paying a different price. For me, at this stage of my career, it’s a much better return on my time to do a smaller deal, that I won’t have a lot of buying competition, I don’t have that many tenants to deal with, and I can turn it around pretty quickly. 

Andrew: That’s a good strategy because you’re very hands-on with it. Because you can be. You can go door to door to all 44 tenants, meet them, and talk to them about the rent increase and what they’re going to get for it. That’s awesome. That’s the level of personal touch that with scale becomes unachievable and it gets a little bit tougher. That’s good. 

What mistakes Jeff, have you made in your mobile home park investing that we could learn from? 

Jeff: I guess I’d have to explain a little bit more about my strategy. With these smaller parks, I wouldn’t go buy one out just in the middle of nowhere by itself. But if there are a couple in an area, that was what part of my strategy was. Two or three small parks in a big area in the same area work. But on the same token, sometimes I put too much value on a park just being close to another one I have. In retrospect, it’s not that much different to manage. 

There’s really one in particular I think I overpaid for. It was mostly park-owned homes, and it was just one of the situations, yeah it cash flowed a lot. I knew it wasn’t worth much more than what I was paying for and wouldn’t be worth much more than I was paying for it, but it was local and it was part of my portfolio, so I figured it makes sense. In retrospect, that doesn’t really do that much. Maybe when I go to sell, I’ll change my opinion on that. But that was one mistake. 

The other mistake was just I knew never to value park-owned homes, but I underestimated how much work they are. Dealing with 10 park-owned homes in my eyes is the same amount of work as closing on a 50-lot park of all tenant-owned homes. It doesn’t stop. You have to keep working on it. Whereas those tenant-owned home parks, if you’ve got the right systems in place, you can turn it around and then more or less be hands-off. 

I’m still dealing with park-owned homes from some of the first parks I’ve bought, even the ones I’ve converted to rent-to-owns. That doesn’t just wipe your hands from it. People still leave those homes and you’ve got to do something to them so somebody else wants them. 

That has been a part of it that has really just bogged down my personal time. Looking back, it’s like, man, I would’ve been so much better off passing on those deals and just going and trying to find more that fit exactly what I was trying to do. 

Andrew: That’s huge. Even six months ago, we were looking at our portfolio and looking at our tenant turnover rate. Our parks that have more park-owned homes had higher turnover rates, because even though you sell something on a rent-to-own agreement or a rent credit agreement, there are other comparable housing options when someone’s paying $650 or $750 a month lot rent plus their home payment. 

I think that tracking tenant turnover is really important. What we realized is, we’re going out selling these homes on a rent credit program, and trying to maximize purchase price, maximize what we can get in terms of monthly revenue. But we’ve switched our mindset on that recently where it’s like hey, let’s make it more attractive to the tenant, and to really get them to be a tenant-owned home faster. Because what we ended up doing is we had all these RTO agreements, and then we would go refi, we try to refi as quickly as we can.

Our model is like buying with a local credit union and then trying to refi into agency financing. We’d go to refi and the bank would say your proceeds are going to be capped because of the number of park-owned homes you have. If you could go in and give the titles away to the 10 or 15 homes, your proceeds could be higher and your loan amount could be higher.

We’re like, instead of having to do this on the back end, why don’t we do this on the front end. When we’re selling the home, like say hey, this is a $12,000 home. Instead of selling it with $1500 down, can you do $6000 cash? Call your grandma, call your aunt and uncle, call your mom and dad, call everybody you know, because you and I both know that this home is worth $12,000 and I’m going to sell it to you for $6000. 

Lo and behold, sometimes they come up with $6000 cash and it’s an instant tenant-owned home, which is much more preferred instead of waiting on the back end and then just having to give out the title. We’re doing some stuff like that. 

Then also with some of our park-owned homes that are straight rentals, they were paying $800–$900 a month in straight rentals. We said we’ll just give you the title, and then you just have to pay $550 lot rent, where market lot rent maybe is $350 and $400. We can lock them in at that higher lot rent amount and then they’ll just own the home. It’s been more of a win-win, but we’re still trying to figure it out. 

There are a lot of ways to skin it, but I agree with you. Park-owned homes can be trouble. I think for investors listening, park-owned homes, the cash flow will look great. It’ll look like you’re buying a 14 cap if you’re counting and capitalizing all of the park-owned home rental income, but banks don’t treat them that way. Banks will only value them based on what the lot rent portion of their monthly payment would be. It’s something to know and to just add into your tool belt, right Jeff?

Jeff: Yeah. The people I’ve seen who make the park-owned home parks work are the guys who have handyman experience. They live 10 minutes from the park because for them it does count. Like the guy we bought it from, he’s cash flowing like crazy. He goes over there once or twice a month or once or twice (probably) a week and fixes something small. For me, sending a guy out there is $200. And if that happens, it just doesn’t work.

I think what I’ve also found, yes, you can spend $15,000. For me, the number is about $15,000. If I want to go totally rehab a home that it’s like a true rehab, it’s $15,000 on the low end. I can rent it for $750, but I could also just give away the home and rent it for $400. It’s not in my spending $15,000 to make $750, or can I just spend nothing and get $400? It works much, much, much better. There’s not all the constant dealing with rehabbing used homes and all that kind of stuff. 

The problem with used homes is if you don’t have experience with the mobile home world, some of the people I talked to are like why don’t you just sell the home for $20,000? Someone will buy it. That’s what I thought. I thought we put $15,000. We’ll make $5000, people really can’t buy them. They’re used. There’s not really a good loan program for them. So you’re stuck doing a rent-to-own, and it takes you so long. I learned that too slowly.

My realization was Home Depot called me to congratulate me on being the number three spender in the town. I said I’ve got to stop. This is not what I’m supposed to be doing. But yeah, I found the best way is to just give the tenants a great deal because it turns around and makes your life easier. 

On top of that, you get a tenant who cares. That’s so much less maintenance and management on the back end for a tenant who goes through. We give away homes now and they’ll go through and do all the rehab work themselves.What we get are just people in the community who care. They take pride in ownership and they don’t want to leave. That’s what we’re looking for. It’s huge. 

Andrew: And they’re sticky. They stay a long time, so that’s what you want. Jeff, we’re running out of time. We’ve got a few more questions for you. If you were going to passively invest, you were going to be an LP in a mobile home park syndication, what are the top things you would look out for and why? 

Jeff: I would look out for what is the exit strategy. I’m a huge fan of the buy it, refinance, and hold strategy. The reason I think that’s so great is because you can do this cost segregation study and really save a boatload on your taxes. But I see that get pushed by a lot of guys who are planning on selling the property. You got to look out for that because you’re going to have to pay more in taxes somewhere down the line. 

Hopefully, they can 1031, but that’s something I would look out for. Are you getting a tax benefit and does it stay a tax benefit, or are you just pushing it down the road five years and you’re going to have a really hefty tax bill then? That’s one thing I would look out for. 

Secondly, I would just look at operations. A lot of park owners get so big that they stop really maintaining their parts the way they should be. It doesn’t take much, but it does take consistent work on the deals people have done in the past to make sure that they stay good. 

I’m guilty of it, too, where it’s really exciting, you close the deal, the first 90 days are great, then after that, you’re like, who’s calling? What tenant is that? What park? I don’t want to answer that. That’s another thing I’d look out for. I don’t know exactly how you’d check for that, but maybe talk to investors. 

Andrew: Drive through. 

Jeff: Yeah, drive through and see how they’re doing.

Andrew: Literally pay someone $50 on Craigslist to go drive through some of our parks before they invest with us. I thought it was the smartest thing any of our investors have done to vet me. Say hey, how do your current parks look? If I’m going to invest with you in a new deal, let me see what they look like, and if they did invest with us. But I think that’s just an easy step people could take if they have the time.

Jeff, what do you think the perfect mobile home park looks like in your eyes and why?

Jeff: The perfect mobile home park is just the one that’s got good bones but the owners just stopped charging rent years ago, or stopped charging the rent they needed to, where you can charge less than what the market is, but it’s still drastically more than what it was when you bought it. You can increase value still, give a huge value proposition to your tenants, and allow you to refinance. Hold your cash out of the deal, but still own it. 

I’m a big believer in holding parks for the long-term because they’re really not building more of them. I look at a park like this is going to be a 20-year-hold. I want to make sure that it’s a park I want to keep for a long time. 

Andrew: That’s good. There are no minimum lots. There’s no perfect utility infrastructure you’d look for. It’s just, can I refi and pull the capital out? I love that. That’s the end in mind. 

Jeff: I might be different than most in this. I prefer septic over city sewer. 

Andrew: Whoa, hold on here. 

Jeff: I’ve just found that I can operate so much quicker. I do a lot of used home infill, and to me I love parks that are outside the city limits but they’re really close to the city. Those have been my best performers. To me, 25–50 lots right outside city limits where I run it the way I need to run it.

Andrew: How many leach fields have you replaced thus far? 

Jeff: To date, I think three field lines we’ve gone through and completely replaced. 

Andrew: Okay, so you know that process, because it’s not cheap to replace things.

Jeff: It’s not cheap.

Andrew: Then I think what the issue is, at least for me, is that the tenants will flush t-shirts down the toilet and then it clogs up the tank. Then you have to get them pumped and stuff. It’s just more maintenance. But if you have a guy that knows what they’re doing, that’s able to fix those types of issues and get the distribution box on there to make sure that it doesn’t clog up your leach field, it could be good. 

Obviously, p-traps under the home are a big piece to make sure that stuff doesn’t get into the septic tanks. I think you’re the first person who said they prefer septic tanks over some of the other sewer options. 

Jeff: You got to keep in mind, too, that for me to say that, I’m not in these major metros where people are just moving in their own brand new mobile homes in droves. If I’m filling up used lots, I’m going to have to get creative, get used homes in there and sell them. 

That’s the part that’s next to impossible in a city. They’re skeptical of mobile homes in general. Typically, they don’t want to use them coming in, even if we’re going to go through and fix it up. 

That’s part of if I’m looking at a completely stabilized, completely full park, city sewer is easy. I’ve got parks in both and that part is definitely nicer that I don’t have to worry about maintaining it. But I’m always looking at value-add deals that typically there’s an infill component, which I’ve just found quicker and easier in counties. 

Andrew: What’s your secret when it comes to infill? What’s your secret? Just real quick. How many lots have you infilled, and what do you think are some of the tips for those that are looking to do an infill project? Because it’s a lot of work. 

Jeff: It is a lot of work. I have found that used homes, at least in the markets I’m in, I can get those. I’ve never done the cash program. I’ve started the process and I’m eager to try that out. But for me, it’s mostly been used homes that I can get from mobile home dealers or mobile home movers. Probably once a week, they send me homes like hey, you want this house? And they’re literally free a lot of the time. 

What I have found is I’m paying out-of-pocket to move it in, so I’m looking at about $3500 to get it set, but then I’m going to market it for $500 and I’m going to wait. I’m going to screen my tenants thoroughly, check their resources, look for somebody with some construction experience, and then we find somebody who’s going to go through and do the project themselves. 

We don’t give them the title until they’ve done a checklist on the outside, like new decks, new skirting, new paint, new cool seal, all that kind of stuff. Once they do that, the insides are their problem, but it makes the park look phenomenal. That’s something I have found. 

Andrew: That’s a little tip. That’s a little niche because what’s your average cost all-in to get a home brought in that way?

Jeff: $3500 to move it. 

Andrew: Yeah, to move it. Then to set it. Do they block level, tie it down? 

Jeff: Yeah. For a single wide, about $3500. 

Andrew: Okay, to transport, block, and tie them down.

Jeff: Because what it is, it’ll be like these mobile home dealers, people are doing trade-ins. Basically, the mobile home dealers will give these people cash for their houses so they turn around and use that as the down payment on their new house. They’ll basically call me and say hey, can you just move this? 

What will happen is if I don’t buy it, they’re going to have to pay $2000–$3500 to move it to their site, and then someone’s going to have to… so then it’s just it adds $2000–$3000 process if we get it direct from where it was to our park. 

Obviously, we have to check them. We have to check them to make sure the homes are worth rehabbing because a lot of them are not. A lot of them, we pass on probably 10 for everyone that we do. But when we do it, I’ll sit on a home for six months before it goes to a person just because I know if it goes to that right person, it’ll be good and I’ll get it filled. On the low-end, I think that adds $35,000 to the value of a park. 

Andrew: That’s what I was going to say is the value of an occupied lot at $350 lot rent is probably $35,000 or $40,000 and you spent $3500 to make it happen. I think you’re going to go down in history as the cheapest infill. You found a niche there for sure. That’s a hack. 

Jeff: For a brief period of time, I actually had a side company, a friend of mine, where we were running a company that specifically did all the exterior stuff for brand new mobile homes getting delivered. There are a lot of these institutional parks. They’d bring in 5–10 brand-new houses. We’d go skirt them, put decks on, connect the utilities, all that kind of stuff. It was $8000–$10,000 a house for a new home. I think what those park owners were doing, they had a fund, but they were paying for it.

Andrew: That’s what we do. We bring in brand new ones and we get it all set up. We’ll try to sell it with a chattel loan on site to someone that will actually get a loan. Then they’ll pay lot rent plus their loan payment on the home. We’ll just try to get what we have into it, out of it. Obviously, it’s market-specific. Some markets are better than others. There are a lot of different ways to skin the cat in the mobile home park game.

Jeff: That’s right. 

Andrew: What do you think is the biggest threat, Jeff, to your mobile home park investing model? 

Jeff: I’ve thought about this a lot and one of the things that made me really sit down and think about this was, I’m currently in the master’s program at the University of Denver, and we had the opportunity to go tour a vacant office building in downtown Denver. I sat there and thought, who would have thought that this building would just sit here empty? It’s economic factors outside of your control. Nothing on a pro forma those guys who bought that would have shown up. That’s the part that keeps me up at night. 

I think mobile home parks have a lot of things going for them. Somebody has to live somewhere. But I think the biggest threat to my portfolio would be something along the lines of a new government program that gave super, super great financing terms to people who typically wouldn’t qualify for zero down houses, things of that nature.

That is something that’s just outside of anything anybody can prepare for. I don’t know how realistic it is. Personally, I really don’t think it is realistic, but I think that’s something. Then outside of that, I have everything in one state for the most part. It’s a great state, but is it a great state 20 years from now? It’s hard to tell. People in San Francisco, probably 20 years ago, thought it would just always be great and it has a lot of problems. 

We do a quarterly assessment of the market to just look for anything that’s anything like is there anything in this town or the city going wrong? We’re in a lot of small towns, so we have to be particularly careful of that. But most of the really big factors that could really throw a wrench in my portfolio would be external, like economic factors and things of that nature. 

Andrew: Yeah, that’s a good assessment, Jeff. Thank you so much for coming on today, man. How can our listeners get a hold of you if they’d like to do so? 

Jeff: I’m pretty active on LinkedIn, so you can look me up. A lot of people look for Jeff Flynn. Then my website, aspenridge.capital. It’s currently down cause we’re making some improvements, but depending on when people listen to this, it should be up and running. Reach out to me either of those ways and I love to chat. 

Andrew: Awesome, Jeff. Well, thanks again for coming on the show. 

Jeff: Appreciate it. Thanks for having me. 

Andrew: That’s it for today, folks. Reminder, if you got value out of this episode, please leave us a review. Thank you all so much for tuning in.