Demystifying Mobile Home Park Syndications: Key Investor Insights
Investing in mobile home parks through syndications can feel overwhelming for first-time investors. With so many industry terms and structures to understand, […]
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Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-john-squartino-of-keel-team-real/id1520681893?i=1000587301391
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 his business partner, John Squartino of Keel Team Real Estate Investments. Andrew and John discuss a few things including: park owned home sales within mobile home parks, rent collections protocols and the management of capital expenditure projects within mobile home parks. Andrew and John also talk about some of refinancing difficulties they have experienced this year during the FED’s interest rate hikes, how value-add manufactured housing communities are their chosen investment strategy and what a perfect mobile home park looks like from a Chief Operating Officer’s view point.
Born and raised in Orlando, Florida John Attended the University of Central Florida graduating in 2013 with a Major in Marketing and a Minor in Sports Business Management. Upon graduation, John landed a job with a start-up sports technology company where he assisted in product development, marketing, and customer support. After four years of employment there a life-changing event occurred when he ran into a childhood friend; Andrew Keel. After a couple conversations revolving around mobile home parks, John decided to put a bow on the sports tech career and take this journey with Andrew in the mobile home park space. Fast forward 5 years, they have been able to acquire 34 mobile home communities and employ over 40 people across the world in their mobile home park property management company.
***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.
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00:21 – Welcome to the Passive Mobile Home Park Investing Podcast
02:11– How John got into mobile home parks
04:36 – Frank and Dave MHU Bootcamp
05:31– Preconceptions about mobile home parks and the STIGMA
07:20 – Their first mobile home park
09:30 – The toughest hurdle for most operators in mobile home park ownership
10:37 – Comparisons of other asset classes: Apartments vs self storage vs mobile home parks
12:33 – Hardest value add component in mobile home park investing and the story of Norfolk MHC
18:12 – Best opportunity or strategy in the marketplace right now for mobile home park investing
21:18– Mistakes he has made in mobile home park investing
23:50 – Most important things that passive investors need to look out for when investing into mobile home parks
25:07 – John’s perfect mobile home park
27:28 – The future of mobile home park investing according to John Squartino
29:11 – Getting a hold of John
00:00 – Conclusion
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Andrew: Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have an amazing guest and my friend, Mr. John Squartino, who is the COO of Keel Team Real Estate Investments.
Before we dive in, I want to ask you a real quick favor. Would you mind please taking an extra 30 seconds to head over to iTunes to rate this podcast with five stars? This means the world to me, and it also helps us get more listeners. Please leave that review. Thank you for doing so and making my day. All right, let’s dive in.
Born and raised in Orlando, Florida, John Squartino attended the University of Central Florida graduating in 2013 with a major in Marketing and a minor in Sports Business Management. Upon graduation, John landed a job with a startup, sports technology company, where he assisted in product development, marketing, and customer support.
After four years of employment there, a life-changing event occurred when he and I met at the gym and started a conversation ultimately around mobile home parks. I was able to convince John to basically put a bow on his sports career and take a journey with me in the mobile home space.
Fast forward five years, we’ve been able to acquire 30+ mobile home parks together and employ over 40 people across the world in our mobile home park property management company. John, welcome to the show, dude.
John: I appreciate the introduction, man. It’s an honor to be here with you today. We see each other not often anymore. We’re all so busy, but it’s really cool to finally link up with you on the podcast.
Andrew: We’re in the same office today, so there’s no excuse. We need to get lunch later.
John: We do. It’s a long time coming, for sure.
Andrew: Awesome. Can you tell our listeners your story and how you ultimately got into manufactured housing?
John: I think you touched base on it a little bit. It’s such an interesting story. The world does things in very interesting ways. Sometimes it doesn’t make sense, but eventually, all roads lead to making sense of things.
As you had stated, Andrew, you and I grew up with each other. We went to middle school and high school together. We played basketball with each other. We were always up at the park. You went off to college, I stayed here in Orlando.
We were Facebook friends. We still connected with each other on Facebook. I think it was, gosh, probably about 10 years after you had graduated from high school, came back home to the States. I had seen that you were selling mobile homes on your Facebook.
I wasn’t sure if you were crazy or if you were crazy, but I’ll leave that for another conversation. But it was intriguing. Your passion for what it is that you were working on, whatever it was, was always something that I admired.
When we were able to connect with each other at the gym, we started breaking the ice a little bit on what you were working on. You told me a little bit about the MH space and where your vision was, and what you were working on, and it was intriguing. At the very least, it was intriguing.
As you’d stated, I was wrapped up in the sports world. I had been there and rooted for a very long time. Real estate had always been something very, very intriguing, but wasn’t something that was confident in making that leap of faith.
After talking with you, you gave me all the confidence in the world. What you were building and what you were working on was something that was very special. I ended up like you stated. I put a bow on the tech sporting world, and I jumped on board with you. Day one, we went over to Frank and Dave’s boot camp, and we hit the ground running.
You taught me everything that I know to this date. You’ve put me in positions to learn all about the mobile home park industry, and I’m grateful for that. I wouldn’t be where I’m at today if not for you. I’m blessed to be part of this special journey that we’re on.
Andrew: Dude, give me a fist bump, dude. Give me some love. Man. I remember that. Yeah, it was very lucky. Right when you started in January, Frank and Dave came to town, and they put on that boot camp. Literally your first week, we went to the Frank and Dave boot camp, and then we went back, didn’t we? I think we went a couple times.
John: The next years, yeah.
Andrew: We went back to Frank and Dave again and just learned some more, networked, and that was fantastic. That was 2018, wasn’t it?
John: I think it was January 2018, right after the new year. We went to the boot camp. I was learning everything I could. You slapped a textbook on my desk as I walked in.
We drove off to the boot camp. I think a couple hours later, we were stepping foot in a mobile home park here in Orlando. I think, to be honest, that might have actually been the first ever mobile home park I stepped foot in. From that point on, it was done. I was over. It was over.
Andrew: Tell me this. The stigma of a mobile home park is super strong. Before that, before stepping into a mobile home park, what did you think of mobile home parks?
John: That’s actually a really good question. I think this is something that is just so misunderstood across the United States. It is that stigma and that stereotype. Unless you’re either in it or you know about it, you have this misconception. We actually moved up to one of our acquisitions in Ohio.
I will be honest, it was overwhelming. I wasn’t too sure what to expect, and how to handle the residents and, and what way to go about communicating with people, and how to treat things. I then find out really quick, it’s as normal as everyday life. It is a normal life. It’s actually really good to have that boots on the ground experience to truly feel and understand the operations of a community.
The tenants are like a family. It really is like a family. It’s similar to a neighborhood as you would have down here in Orlando, but very more tight knit. I love that aspect of the mobile home parks.
Andrew: Cool. So would you say that before working with me, you had one idea of what a mobile home park looked like, felt like, existed? And then after working with us, after living in one, you have a completely different mindset on what a mobile home park is?
John: Night and day difference. I think that immediate sense of uncertainty has now gone to it just being a normal lifestyle. It’s a normal feeling.
Andrew: A normal community. It’s just a community of people where people live. I remember the first park that we moved into, Deer Run up in Ohio. I remember we went up there a few days before closing and we were getting dinner. Do you remember this?
John: Oh, I remember the story like it’s yesterday.
Andrew: I was so nervous. We were talking to the waitress. At the time, it was called something else. The park wasn’t called Deer Run. We said, hey, do you know that mobile home park over there off, I think it was Salem Alliance Road? Do you know that park? And she’s like, oh, you don’t want to go in there? Oh, just full of drugs. Just whatever you do, stay away from that place.
We were like, oh my goodness. What did we get ourselves into? Because there was a home in the front of the park. It was actually a nice brick home. It was older than we were going to live in.
My wife was moving. She was going to fly up the week after we closed on it with my one-year-old daughter at the time. We were going to live in that house in front of this park, and there were like 19 vacant mobile homes that we were going to rehab and we were going to oversee it. I remember that. That was such a rush.
Before then, I was nervous. Like, oh my gosh, what did I get my family into? What did I get you into? Then we started meeting the tenants, and they were the nicest people. It was just a community of people, of regular people that we became good friends with and still keep in touch with to this day.
Just that stigma, I think, people are caught off-guard by what they shouldn’t be. It’s just a normal community where people live. Just affordable housing.
John: I think that was a groundbreaking moment for you and I after leaving that dinner. We left that dinner saying, I don’t know if this is something we can do. I remember that. Then the next day, we went back to the community. We still had that sense of uncertainty, and then we looked at each other and we were like, if we can turn this place around, if anybody can do it, it can be us.
To this day, I think Deer Run is probably one of the more proud… I mean, we’re proud of all of them, but Deer Run is a very proud one because of where it came from and where it is today, for sure.
Andrew: Totally agree. What do you think is the toughest hurdle for most operators in mobile home park ownership?
John: I think one of the biggest hurdles has got to be just the managing of the property, property management as a whole. The operations, making sure that you’ve got a good staff on your hands. Collections are a huge process, obviously a huge component of the operation.
Home sales. The only way to really increase occupancy other than general rent increases is through the continuation of occupying units, keeping them occupied, and making sure that your team has a very good grasp on that business model, and understanding what the true task is at hand. That’s creating a great environment, having a great living arrangement for your residents.
Quality of life is as high as it can potentially be. In most cases, that really revolves around management. I think management and the operations of the property is probably one of the biggest hurdles that we’ve had to face. I think we’ve done a very good job at it, but it’s always going to be a work in progress at operations.
Andrew: It’s different compared to other asset classes. Apartments, there are a lot of good third-party property management companies that you can hire to manage an apartment complex. Even for self-storage, which I’ve dabbled in, there are very good third-party property management companies that you can hire to run your facility. But in mobile home parks, it’s a different story, right?
John: It is.
Andrew: The average, I think there are a couple of third-party managers, but they’re minimum charges don’t really work for the parks that are below 100 lots. You have to have a good internal system for this. It’s a lot of work, quite honestly. It’s a lot of work.
John: It is a lot of work. In conjunction with that, I think just the management of the capex budget and what it is that you’re setting out to do. What’s your end goal? What property projects are you working on? Is it an infill project? Where are you allocating the capex funds and the management of that process from start to finish, making sure that you’ve got not only everything in line from a financial aspect but also from a timing aspect?
Timing sometimes can be the hardest thing to overcome and stay ahead of. That’s why you and I know, we try to stay so far ahead of schedule as we possibly can, because we know at some point in time, we’re going to hit some crossroads. We’re going to hit a hurdle and it’s going to set us back. But if we at least stay one step ahead when that hurdle comes, we’re at least where we should be or hopefully still right ahead of that.
Andrew: That’s a great point, especially with us buying a lot in the Midwest. You’re coming across this big thing called winter. That really shuts down a lot of capex projects. To piggyback on that, I know you’ve managed a lot of value-add mobile home park projects. What would you say is the hardest value-add component in mobile home park investing?
John: It’s got to be the infill side of things. Infill has got to be one of the hardest things, mainly because of there being so much red tape. Just because you do something in one community doesn’t mean that you can do it that way in the next. You’ve got to comply with your local code enforcement officers. The utility providers sometimes can be very difficult to work with. You don’t have an option, really. You’re at the mercy of the one provider.
Andrew: It’s a monopoly.
John: Yeah. The electric company or the gas company is slow to the punch and getting either the meter set or maybe it’s new construction where you need to run new lines. We’ll get to you, we got you on schedule, don’t worry. Hearing that, it just boils my blood because the sense of uncertainty is just so underwhelming.
Knowing that we’ve got goals to meet and we’ve got expectations to hit and timelines to keep track of, when you’ve got third-party vendors that are hindering your ability to continue and make progress, it’s quite frustrating.
I think we’ve actually done a really good job in coming up with tactics to be able to reach out to those third-parties and try to convince them that they needed to put us ahead of schedule. It’s not easily done.
Andrew: Tell them the example of Norfolk. We just finished an agency refinance. But during that process, three homes were found to have gas lines running underneath them, and Fannie Mae was not going to give us the loan because that was a hazard. Basically, walk through the process of how you attacked that.
John: This was definitely a little bit of a gut punch right at the finish line of getting this refinance tied up. As soon as we were getting ready to finish, we got the news from the lender saying that there was a gas line that was lying underneath a couple units, which is ultimately a life safety hazard and it needed to be fixed.
I’m in a panic. I don’t know what the best course of action is. I called the city. I’m calling the building inspector. How did this happen? How did you guys install these homes over top of these lines? This isn’t something we had done. These homes have been set for 20+ years, and now we’re the ones that are getting the left hook here.
At the end of the day, I was able to develop a really good relationship with the gas company and explain the entire story to them. Gosh, it might have been around March or April time, so the grounds were still frozen. There was going to be no digging, there was going to be no excavating.
The only solution that was presented to us was, let’s relocate these homes, and it wasn’t an option. I think we know how hard it is and the difficulty of putting axles and tires under a home, of fixing the hitch back on, taking the skirting down, disconnecting the utilities, all for what would’ve been about four inches.
Andrew: Yeah, four inches.
John: Four inches. What we were able to do is, the gas company again, just continuing to work with them, begging and pleading, and stating my case. I escalated it to a point of life safety. When you put people’s lives, I guess you would say, in the eyes of the utility provider, now things change a little bit.
The gas company was actually able to push our project ahead of schedule. They were able to actually fulfill the entire relocation of the utility lines. I think it was within six weeks, if I’m not mistaken, from the time of notification to relocation and completion of that relocation. At first conversation, I thought it was like, yeah, it’s March now, we might get to maybe June, maybe June–July.
Andrew: And it was a maybe. We couldn’t close on this and interest rates are rising. I think one of the biggest things though is you had a high sense of urgency. You went from talking to the call center rep to their administrator, then to the administrator’s manager. And then from the manager, you went to the regional construction engineer, who then was able to expedite this.
I think just having that hands-on sense of urgency is what helped us get this refinance done while interest rates were still below 5%. We were able to get the deal done. That’s just one example of, hey, you’re at the mercy of a third-party utility company to get something done, and they don’t move very fast.
You have to call multiple times. You’re not just going to call once, you have to find your person, and then you have to follow up consistently. You did a great job of that, and you consistently do that. I think that’s one of the ways we’ve been successful with our value-add projects.
John: Agree. That actually is a good point. The hierarchy of going through the phone tree, and finding ultimately the guy who makes the decisions, and not getting up there. We see it too often more than not, where you get a sales rep and, oh, sorry, yeah, we’ll put you on the list and then you wait for a phone call back, and you wait, you wait, and you wait. You’ve got to be tenacious with it. The sense of urgency has got to be high. Thank goodness we were able to get that done in such a short amount of time.
Andrew: Definitely. Where do you feel is the best opportunity or strategy in the marketplace right now for mobile home park investing?
John: Good question. I got to say the value-add communities. They have got to be the ones that have the most meat on the bone if you know what you’re doing. The kick there is knowing what you’re doing. As previously discussed, the infill side of things is definitely one of the hurdles that we’ve had to climb.
I think we’ve done a very good job at truly understanding what it takes. Sourcing homes, bringing them in, what set requirements are, making sure that you have those relationships with the local building inspectors to where you can set these homes seamlessly and get the occupancy permits as quickly as you can.
At the end of the day, if you’re bringing homes in and you want to increase your bottom line, it’s got to be through infill. You’ve got to increase your number of units. You’ve got to increase the amount of beds that you have in your communities to increase that bottom line.
In addition to that, your utility billback. I think utility billbacks are a great initiative, not only as far as minimizing cost and expenses but also implementing that green footprint. I can’t count the number of times that we’ve taken on a community that doesn’t have the billback initiative. We’ve had to put business proposals in place, sit in front of the board, and tell them, hey, this is what we’re doing, why we’re doing it, and we need your blessing to do that.
In addition to obviously cost cutting from the business standpoint, it’s also a green footprint and cost saving for the city and the municipality. When you’ve got metered utilities, people become way more conscientious of their water consumption. Being able to have that conservative mindset is a positive impact not only in the community but for the city as well. I think we’ve had a lot of success there as well.
Andrew: I completely agree. The infill is the greatest opportunity, but it’s also the hardest value-add. And it can be labor-intensive. There are a lot of moving parts to it. It’s not rocket science. It’s not figureoutable, but there are just a lot of moving parts, and you have to have, again, that sense of urgency like you did on that Norfolk project to get it through the finish line. That’s just something that I’m really thankful for to partner with you on, because you do a great job of that.
John: I appreciate that, man. I do appreciate it. You’re right, the infill side of things, sometimes the greatest reward comes from the most amount of work. I think that we’ve seen that time and time again. Some of the more successful projects that we’ve worked on have equated to some of the projects that require the most labor-intense and cap-intense projects.
Not shying away from those, I think, is something that is really cool about what we’re capable of doing. Seeing projects in communities that might have a lot of uncertainty and being able to have a process in place of confidence with our due diligence, played a huge role in the communities that we’ve acquired to date and the success that we’ve had too.
Andrew: Definitely. Let’s ask a little tougher question here. What mistakes in mobile home park investing have you made that our listeners can learn from?
John: I think our due diligence process as just previously mentioned. It’s been forever evolving now that we’ve matured and learned so much over the years. I think that’s one thing that you and I can both hang our hat on. We’re continuing to expand our knowledge base, learn more about this industry, learn more about this asset class, and the infrastructure of these communities. At the early onset, we read the book. You take what you read, and you put it to action.
I will say, we definitely ran into some hurdles that we now know today to avoid. Our due diligence process has now become a very bulletproof staple process in our acquisitions. One community example, one in Indiana, we didn’t scope the sewer lines. We looked down on them, we said that they looked pretty good. We asked the tenants how well their sewer system was. Everyone gave us a thumbs up, and we took their word for it.
A couple of years down the road, we find out we’ve got some sewer issues, and we’ve got some rude intrusion. Now we’ve got to go ahead and rod the lines, we’ve got to jet the lines, and clean out the system. Now we’ve got a maintenance schedule to avoid that from happening down the road again.
In addition to that, it’s now added to our DD process. One thing we know is true and true, we get a plumber out there and we hammer every single line throughout the community to make sure these lines are clear, they’re clean. If they’re not, then we make sure to address that before any acquisition does happen.
I think that has definitely been one of the hurdles or mistakes that we’ve experienced, but I think we’ve rectified those. I’m proud of the process that we have in place today. It’s more time-consuming, it’s more extensive, but I think we’ve learned so much over the mistakes that we have made, what to look for, and what to look out for.
Andrew: I agree. I was speaking with someone the other day and they said, in the early days, our due diligence checklist was right out of Frank and Dave’s book that he provided. Now it’s grown to, I think there are over 400 items that we need to check for a new property. The due diligence has just gotten much more extensive, and that has saved us a lot of money, a lot of mistakes.
What are the most important things that you think passive investors—we’re talking limited partners here—need to look out for when investing into mobile home parks?
John: I think we hear that more often from investors now than ever. I think that’s the confidence in the operator. Looking for an operator that you know and trust, that’s probably one of the hardest hurdles to climb. Just finding that operator and partner.
At the end of the day, you’re a partner. You’re in it with us. You’ve got to have confidence in that individual to know that your investment is secure. I think we’ve seen time and time again, guys presenting spreadsheets and showing, this is a property I found and this is the expectation of it.
At the end of the day, anybody can build out a pro forma and tweak it to have projections that generate great returns, but can you actually execute on that? I think that’s the most important thing. Can you execute on what it is that you’re forecasting? Normally, it’s based on the operator. Can you trust that operator? What’s their track record? That is something that I would look at first and foremost when looking to invest in a mobile home park asset class.
Andrew: Smart. I agree. What does the perfect mobile home park look like in your eyes and why?
John: I like this question. I do like this one. I think 100 units is a sweet spot. I think 100-lot park is an absolute sweet spot. The kick here is it’s got to have direct billed utilities. If you’ve got direct billed city water, city sewer, utility, newer vinyl, shingled, peak roof homes, paved roads, driveways, am I painting the perfect picture of a mobile home park? I think I am.
Andrew: Yeah, and buying it at a 10-cap.
John: And a 10-cap . Especially now. I think the direct billed utilities have just got to be one of the things that we look at first and foremost, making sure that you don’t have a private utility system, a well, a treatment plant. We’ve seen some guys have great success with them, and we’ve heard some horror stories. I know we’ve definitely steered clear of each of those utility infrastructures.
I think if you’ve got that direct billed dynamic, if you eliminate a lot of uncertainty as far as expenses, not owning the underground lines and having to repair leaks, and then you request leak adjustments, and if those slight leak adjustments don’t get granted, your expense ratio can get flipped a little bit, and from one month to the next, you’ve got to get leak detection out there and your expense ratio goes even higher, I think that direct billed component in a community of about 100 lots is where I would see the perfect painted mobile home community.
Andrew: I agree. On our KPI call the other day—we were looking at some of our parks—looking at the expense ratio on our direct billed parks, literally, I didn’t think that was possible, to get a 25% expense ratio.
It just shows you. Those direct billed parks, when you’re not having to worry about the loss from the billing back that you’re going to experience, it’s day and night difference, so I agree. That would be in my perfect mobile home park as well, a direct bill water-sewer.
What do you think the future of mobile home park investing looks like, and how do you see mobile home parks fitting in with the direction the economy is going?
John: What we proved, especially with Covid, you and I, we were sitting in the office every single day just uncertain, what are things going to look like tomorrow? What right hook are we going to hit or is going to hit us?
We were calling the banks and making sure we had money lined up if we were uncertain about rent collection, and making sure that housing was going to help out our residents, and contacting our banks to let them know that we could potentially be in a problematic position. It proved or should I say, we weathered what we thought was a storm.
Covid really proved that the affordable housing market is here and it’s here to stay, because during Covid, people from an income standpoint, were running into some financial hardship. These big time mortgages were not able to be afforded anymore, in some cases, in some of the cities that we were around.
We ended up seeing our occupancy climb. Our mobile home park occupancy started to climb because people were looking to get rid of those big, long-term liabilities. I see the mobile home park industry sticking around and sticking around for the long haul.
I don’t see mobile home parks going anywhere anytime soon, especially in the market that we’re in today. If anything, it’s going to get better for us because of the state of the climate of the industry as well and the world.
Andrew: Very cool. I hope you’re right.
John: I hope so, too.
Andrew: Yeah. John, how can listeners get a hold of you if they’d like to do so?
John: We’ve got our website. I think the Keel Team website is the greatest resource to be able to connect with yourself and myself, and learn a little bit more about the company and some of the case studies. I think the case studies button is a really cool feature that we’ve got on the site to at least get some further information on some of the projects that we’ve been working on here in the past.
Andrew: Awesome. That’s just keelteam.com.
John: That’s right.
Andrew: Awesome. John, thank you so much for coming on, dude. I really appreciate you taking the time.
John: Absolutely. It was an honor being on here with you today. I look forward to continuing on this with you, my man.
Andrew: Awesome, brother. That’s it for today, folks. Thank you all so much for tuning in.
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