SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. On this episode, Andrew talks with veteran mobile home park owner and operator, Julio Jaramillo. Julio shares his thoughts on the future of the manufactured housing industry as well as the responsibility that comes with being a socially aware mobile home park owner. Julio imparts his knowledge surrounding apt leverage and he also discusses how his mobile home park investing strategy has changed over his many years in the business. Julio does a deep dive on how he establishes a successful mobile home park and provides wholesome advice for passive investors. Julio also shares some of the salient lessons he has learned throughout his mobile home park investing journey. Julio’s passion for the mobile home park industry is exhibited in his enthusiasm to help others and impart the invaluable knowledge he has gained over the years.

Julio is the Founder, President, and Managing Member of Evergreen Communities, LLC, and its affiliates, the owner and operator of more than 4,000 mobile home sites in 12 states. He formed the company in 1999 with a $5,000 investment and has built it into a $325 Million privately-held organization employing 75 Americans. In his off time, he is an avid cyclist and Ironman triathlete.

***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 2,500 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

Are you getting value out of this show? If so, please head over to iTunes and leave the show a quick five-star review. I have a goal of hitting over 200 total 5-star reviews by the end of 2023, 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 five-star review of the show.

Would you like to see 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:

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

Links & Mentions from This Episode:

Evergreen Communities: https://www.evergreencommunities.com/

Reach out to Julio Jaramillo via email: julio@evergreencommunities.com

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

---

TRANSCRIPT

Andrew: Welcome to The Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have an amazing guest in Mr. Julio Jaramillo from Evergreen Communities.

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

Julio is the founder/president and managing member of Evergreen Communities and its affiliates, the owner and operator of more than 4000 home sites across 12 states. He formed the company in 1999 with a $5000 investment and has built it into a $325 million privately-held organization employing 75 Americans. In his off time, Julio is an avid cyclist and Ironman triathlete. Julio, we’re excited to welcome you to the show.

Julio: Thanks, Andrew. A pleasure to be here. Looking forward to talking to your guests and sharing my story. I’m excited.

Andrew: Before we get into the juicy stuff, we have to talk about the Ironman thing. Those that know me know that I do those as well. I do one or two a year. How many have you completed thus far? When did you get into doing those?

Julio: First, I’m going to tell a lot of your listeners that what you do and having some kind of a lifestyle like that is just so beneficial for your business. I’ve been an avid cyclist since I was 15. I was born in Medellin, Colombia, where we’re known for our climbing. We do it in the Tour de France and many other places. The Colombian climbers are always there. That’s always been my passion.

Years back, we started doing these annual trips. I’ve ridden my bike in France, Spain, Colombia, Armenia, and Central America, all over the world. We followed the tour in an RV back with Lance in 2005. We rode up Mount Ventoux and Alpe d’Huez. One of my buddies said, hey, he’s doing a marathon. Let’s do a marathon.

I did my first couple of marathons, and then they dragged me into Ironman. I was telling you earlier, I’m not a great swimmer, but I’ve gotten a lot better. Now, whether it’s an Ironman, or we’re into gravel riding, mountain biking, we just did a trip in March to Columbia in the Andes. We went over 14,000-foot elevations and through the jungle. It’s just amazing experiences.

That’s where I do a lot of my best thinking. That’s where I’ve met a lot of my best investors. People that are going to work and put the time into their body and into their mind are going to be the kind of people you want to hang out with. It’s part of my everyday life. This morning I rode, yesterday I swam and rode. I feel it keeps me young. I’m 55 years old, and I’ve never been in better shape.

Andrew: Wow. I won’t embarrass myself by saying what my time was on my last 70.3 because I think you got me beat. When I saw your Oregon 70.3 time, I think you had 5 hours, 24 minutes finish time, which is absolutely amazing. I mean, a 28-minute swim at 55. Dude, you’re crushing it, man. I love it.

Julio: Thanks. The course helped me a lot, but I’ll take it. You got to always know you’re competing against yourself and your own body because there’s always someone better and faster. I just enjoy it.

Andrew: I love it too, man. I think one of the things you mentioned that was we skim past it, but it has helped me so much in my business. You don’t really think about it, but to do those triathlons, you have to be very organized. You have to go into the race to set up your transitions.

There are so many things you need to remember from a bike pump, to your hydration, to your nutrition. There’s so much that goes into it and my mind just thrives on that, and then also just the motto. Anything is possible. It has pushed me literally because I was a chubby kid.

People don’t know this, but growing up, I was the chubby kid that played football. When I was in Little League, I was like an O lineman. But now I’m in shape, I’m thin, and people are like, holy moly, are you just born this way, or how did you get this? No, I was pushing through that mental block. I love it, dude. Has it helped you that way as well?

Julio: Absolutely. I love what you mentioned, the organization, the discipline. If we’re doing a big ride on Saturday night, I can’t go party Friday night. I’d go out with my wife and drink until 2:00 AM. I’m like, all right, I got to take it easy and get to bed. It helps organize your life.

You appreciate the celebration times and the other things that, like you said, you feel good about. I can eat what I want and know that I’m going to burn it off the next day because I’m going to kill 2500 calories on a ride or a long run, so I recommend it. People just got to find their passion, whether it’s hiking, surfing, or whatever. Just find something that gives you that balance.

Andrew: Totally, dude. Let’s dive into how you got started in manufactured housing. I’m interested in learning about your story.

Julio: Sure. I’m one of the veterans in this business. It’s great to see all these new people coming in and the young guys. I started in 1989, I was at UCLA and just went and picked up a job, put myself through college, and picked up a job at the UCLA placement center for The Carlyle Group, which was Ron Singer, not the hedge fund. This was Ron Singer’s group out here in Beverly Hills. Went in as an accounts payable clerk, and just inputting bills for these trailer parks. I’m like, what the hell are these, but I’m just inputting the bills.

I’m always just meticulous, and I like to teach. I go to my high school, Burbank High, my alma mater. I set up a scholarship because I was like, hey, I want to show these kids that I don’t care what you are, what size, color, race, gender identity, I don’t give a shit. You can make it in this great country. Quit beating up the country and the system.

If you want to complain about it, get in line with all the other haters, or figure out how you can make it. I did that. I was valedictorian at my high school. I went to Cal Tech and hated it, and then transferred to UCLA, and then ended up working for Ron Singer.

So much is talked about race and this and that. I love the diversity being, hey, I’m Hispanic, I’m Español. I was born in Colombia. I love Colombia, I love my country, but I love the US, and I love our free enterprise, and I love our system.

There are going to be losers and winners in any system. You got to go find it and then take care of that help, and develop and download to the people to make it happen. That’s what I did. I was in putting these bills. I was inputting these water bills at one of the properties that Ron owned, and it was $4000 a month, and you just start seeing the trends, and then it shot up to $7000. I’m like, what the hell is this?

If you’re just going to go in there and do your job and just plug in the bill like a robot, you’re going to be replaced by AI. I was like, no, something’s going on here. I took it into the CFO and showed him, and he’s like, oh, shit, we got a water leak, and this and that. He’s like, we got to put you to better use. He promoted me to a staff accountant.

I changed my degree to accounting which UCLA didn’t have, so I went to school at night at Cal State LA here in Los Angeles. It took me eight years to finish my degree. Here’s the valedictorian who went to Cal Tech, full scholarship. I had a scholarship to MIT. Now I’m at Cal State LA taking eight years to get my degree, but I’m like, hey, it is what it is.

I learned the business 11 years under Ron, became a CFO, director of acquisitions. We were buying parks at 10, 11, 12 caps. Nobody knew what these were. These were trailer parks.

In 1999, I went on my own and formed Evergreen Communities. I said, all right, I’m going to give this a shot. A few months before I was getting married, I’m like, all right, I don’t have kids yet, this is my chance, let me see if I can do this.

I bought my first park up in New York. I got some investors. All my money’s just been one on one syndications, friends, families, people that they’ve brought in that said, hey, this stuff is working, what are you doing? Let me in.

I learn the system there. I still do go out to the properties, walk the property, see what’s going on, see what your competitors are doing, see what’s going on in the market, see what’s happening around you. Don’t go in there and think, oh, this is a cash cow and I’m just going to make all this money, and it’s going to be on autopilot, because it’s not. You’ll quickly find out. As you and I both know, you’ll quickly find out stuff comes up from the city, from your sewer system, from your this, from you that.

I just learned it from the ground up that literally, one one deal at a time, one decision at a time, one transaction at a time. I never had any goals or aspirations to think, oh, I’m going to own or portfolio, and I’m going to be this. I thought, hey, I’m going to be some executive right hand man for some owner and be their CFO, the money guy. I dream numbers all the time.

I got thrown into that and said, all right, let’s run with it. That led me into this industry well before the hedge funds, back when Sun Communities, there was Chateau, they were just forming their first REIT and all this. It’s interesting to see how the industry has changed.

Andrew: Oh, my goodness, yeah, it’s changed so much. That’s such an amazing story. I think a lot of operators fell into this after single family. They got into single family investing and said, hey, let me scale up. That’s so interesting that you were fortunate enough to just jump into this right through UCLA and working with Ron Singer. What were interest rates like back when you’re buying these 10, 11, 12 caps? What was that like when you first got started?

Julio: They were in the 7%–8%, 6%–8%. I know we’re seeing a spike in rates now. What I can tell these people, again being now 30-something years in the industry, is we’ve seen it all; 2008 and 1996 recession. There are so many different things. You got to adjust, but it’s all going to come back. It’s all cyclical.

I’m enjoying buying properties. We’re closing a deal in North Carolina at the end of this month, and then I have another two in the hopper that better seller financing. I’m realizing that, hey, this is great because once I stabilize these deals and I have a five-year window to look at where rates are going to go, I’m going to refinances. Who knows? Rates may be back down in the fours or the threes.

I don’t know if we’ll get back in the twos like some of the deals that we locked in. You got to look long-term. I’ve been seeing some of these guys get in trouble or stretching the buy and pounding their chest, I got this many sites and I got that many sites. You know what? No one really cares.

To me, I’m happy with the amount of sites I have. We buy one or two deals a year, and we do them right, we treat them right, and we visit them every quarter. I go out once a year and walk the properties. From the first deal we own to the latest that we’re going to buy, you just got to take care of these things.

You got to realize that they’re just flip and burn, cram a huge rent increase down, and pull the money out. You’re not only screwing the resident, you’re screwing yourself. You’re getting a town, and everybody’s visibility on you, rent control, and everything else. Being a responsible owner has been my most beneficial reward. Not like, oh, you’re so nice, Julio. It’s like, no, it’s helped me financially being a responsible owner.

Andrew: Totally, because you get that sticky tenant. Let me go back to what you were talking about, like the recessionary times, 1996, 2008. I wasn’t in the business until 2017. There’s a lot of new blood in the business. It’s been rolling strikes every deal since 2017 till now. I would love to learn about the recessionary times and what you learned, what you did with your operations during that time to get through.

Julio: A lot of those times, you still do well because of where we’re positioned in the housing stack. We’re affordable housing. We’re, I think, better than apartments if you provide a good service, a clean park. You don’t have neighbors below you, beside you. Covid even helped. It’s like, oh, I don’t want to get an elevator and some high rise in downtown Charlotte. It’s like, okay, come out to our park, you have your own parking spot, and you could pull up.

We had to adjust, operations-wise, into working with tenants. If some had to, at certain times, get onto payment plans, just keeping on top of your operations. You can’t let it go. You still got to keep the property looking good. You still got to reinvest, you got to take care of your roads, and you got to do all these things, while also realizing, okay, people are losing their jobs, or this plant just shut down here right outside of Youngstown, Ohio, or we have an issue, 30 of our tenants are being furloughed.

You got to remain nimble but really staying on top of it. You can’t just begin that autopilot and think these things are just going to fix themselves because they’re not. You got to put effort into it, and try not to get over-leveraged. Some of these guys think, I just want to get in there.

Andrew: What is the proper amount of leverage do you think?

Julio: We used to buy back in the GE Capital lending days. They would do 80% LTV. If you can get in for 20%, and again that helps you return, so I get all that. Take the proper leverage that the lender could give you, but then properly capitalize yourself.

You have reserves. If your occupancy dips, you have some reserves for property improvements. Okay, hey, I’m on a 10-year loan here with Fannie Mae. They’re going to my capital reserves each month, but I’m going to need $300,000 in this reserve fund for roads or for other improvements.

What I’m seeing in some of the younger people and some of the people that come in here is they just think, hey, I’m going to get by with this as little as possible. Get in, flip, and sell this thing out in five years. It works for some.

Some jack up the rent, sell it, and I’ll look at the property like, oh, man, I saw that 3–4 years ago. It was going for $3 million, now they want $8 million. The rent’s double and everybody’s pissed off in the property. Their delinquencies. I wouldn’t sleep well at night knowing I’m just creaming the residents that need the most help.

Andrew: Fragile tenant base. Yeah, it’s fragile. Yeah, totally. I totally agree. The leverage question varies. If you’re going into refi, is that your model—buy, fix up, refi, and hold on to it? Or is it buy, fix up, and sell?

Julio: We don’t like to sell. We’ve sold a few properties. Another operate I ran into, he called it trimming the tree areas that you weren’t getting to well enough or you couldn’t build around. We’ve sold a handful of properties. It’s funny because everyone I’ve talked to, the buyers of all those properties at the events, they’ve all done well with them as well.

That’s the beauty of this business. You can make your money, sell it to someone else, and they can take it to that next level. We like to hold long-term. We like to take our rents right below market but over a long-term plan.

I spoke at one of the George Allen seminars. I said, I don’t care if you’re $200 under the market. Those residents living in that community are rather on fixed income, they’re living check-to-check. They’ve already adjusted to that rental amount. They don’t care if you think, oh, well, your rents are $300, but everything’s $500, so I’m going to give you $200 rent increase. It’s not going to happen.

Andrew: Julio, what’s the most you would raise rents on a group of tenants in year one?

Julio: I’ve tried to stay under that $50 range, $40–$45. Especially in your business plan, I’ve given them something like, hey, guess what we’re doing? I did do one in New Hampshire recently. We were $200 under rent and we put in a $75 increase, but we repaved all the roads. We spent $200,000 on roads.

We brought in dumpsters. We cleaned stuff up. The residents were actually thankful that somebody cared about the property. Anyone new coming in, we adjust them to market. If you’re going to resell your house, they’re not going to get to stay at $325 when everyone else is at $500.

Andrew: I’ve had the same experience where you reinvest, you put the capital in, and then when you do the rent increase, people are grateful. I’ve really seen that. There’s only been one instance where I think it was just the tenant base that we didn’t have a good response, but it was only 10% of the people in the park that we’re upset about it.

I think that’s reasonable, especially because if you don’t increase the rents, there’s going to be a higher and better use for the property. As you’ve seen, mobile home parks are disappearing right now. There’s more being torn down than there are new ones being built. At some point, you got to increase the rents, otherwise the investment won’t make sense.

Let me circle back to this and ask you, because I know in the past six months, you’ve attended the city of Burbank council meeting twice and called them out once for rent control, and then twice for the water and power increases. You speak against the council from a renters point of view and how they’re hurting the renters’ pockets. Maybe tell us about that and what you’re trying to accomplish with those meetings.

Julio: I enjoyed that. A lot of that stems from, again, my love of the free market and the system. I started and I tell that story to the city councilors. I was able to live in Burbank. For people who don’t know LA, Burbank is its own microcosm around Los Angeles in the disaster that is La School District, LA police force, everything. Burbank has its own school systems, police force, utilities. All the studios are here. It is just a well-run small town in this behemoth of second largest city in the country.

When my dad brought us here from Columbia legally, he’s like, I got to live in Burbank. That’s where my kids are going to get a good education. We rent it. He’s like, I can’t afford to buy yet in there, so we rent it again in Burbank.

About a year-and-a-half ago, there’s a property management company here in Burbank that manages about 900 units, apartment, triplex. Me and a real estate buddy of mine—again, this goes into keeping those good relations—came to me and said, hey, do you want to buy this company with me? I was like, sure.

We bought this company. The seller carried paper for it, so we didn’t have to go in with a lot. We’re representing all these renters and these people that have owned their homes for all these years. Meanwhile, the homes in Burbank, I had bought one in 96 and now I own three. I bought in 1996 for $179,000. A little 1600 square foot house that in Florida or somewhere else is $300,000–$400,000 now, it’s about $1.1 million here in Burbank.

It’s paid off, I rent it out. I’m really good to my tenants. They’d been there seven years. I don’t even follow a lot of my own business rules, I’ve given them only a couple of rent increases. They’re good people.

I’m telling these people, I’m like, the minute you implement rent control, all of these people are going to say, I’m selling my home, someone else is going to buy it, and there’s going to be a lot less rental inventory. The people that want to come to Burbank and go to the better schools and advanced are going to get hurt.

When one side of the political equation tries to go the other way, I dissect them. I throw in my Spanish and my heritage and say, you can’t call me a racist or a right wing. I’m a businessman, and here’s how it works, buddy. If you want to control rents, add inventory, supply and demand, it’s that fucking simple, pardon my language.

Andrew: No, that makes a ton of sense. Let’s circle back here because we got passive investors looking at investing in mobile home parks. Maybe you can tell us how your mobile home park investing strategy has changed over the years if it has, and why?

Julio: Sure. We formed single-purpose entities, LLCs in each state. Each of our properties are single asset LLC, and then I have limited member investors, and we’re the managing member. Over the years, 24½ years now of Evergreen, we used to buy stabilized communities with 3%–5% vacancy, and dealers would bring in homes. That’s all changed now.

We’ve found now some communities that have more hair on them, but are in great markets. You obviously want to be in the right markets. Probably our last 10 deals we’ve done as joint ventures. I’ve brought in different people, whether they were brokers, or operators that didn’t have either the know how or the capital. They said, hey, I want to be in this business. I want to bring something to the table. I’m going to bring either the community to you, or I’m going to put in a ton of work.

This deal we’re buying in North Carolina, I’m dealing with a joint venture. The fellow lives 20 minutes from the property. He doesn’t have investors yet, he doesn’t have anything. I’m like, don’t worry about it, I got plenty of investors. We just got to make sure the property works.

He’s going to work on site, learn the property, then hire the manager, and then build from there. This joint venture model worked for us quite a bit. Our investors know that long-term, this thing’s going to cashflow great. We prepare them, hey, early on we’re below market rents, there’s vacancy, we’re going to do some cleanup. Your returns are going to be X, but hang on, let us get there, and it’s going to get there. These things are like a snowball effect once you do it right.

Andrew: You went from more stabilized to value add now, and that’s exactly what we do as well, because I think you’re going to be able to get the returns that makes sense. Also, you’re fixing up these assets. I assume you’re buying these things from mom and pops just like we are, that have just let the deferred maintenance compound, and they’ve taken every dollar.

It’s like using it as a retirement vehicle, and they haven’t reinvested. I think that’s a great model as well right now. Over the 30 years you’ve been in the business, what mistakes have you made that we can learn from?

Julio: One of them is not buying in the right market and in certain tertiary markets. We bought this property that was just beautiful outside of Indiana. You got to realize, your competitors aren’t always just other mobile home parks. If somebody can go and buy a stick-built home, own the land, and build their own equity for $120,000 in a podunk town, they’re competing against where you can take your rents and where you can sell homes. One of them was not buying in that.

Another one is now, we’ve been gearing more towards—again not politically but financially—red states. I love California. I mountain bike here every morning. I love it, but I wouldn’t buy another property here. It’s just overtaxed, mismanaged. We own two communities in New York, and I wouldn’t buy another property in New York.

When you put a 3% rent control on something, it sounds great when CPI was %2. Now when it’s 8%, 3% doesn’t cut it. I think you got to buy in the right areas where the populations are going, where the populations are moving.

Private utilities can be tough. But if you do it right, and you look at it, you study it, you know you can get it right, we have well water and septic on some communities. We have sewer plants. You just got to know what you’re getting into.

Sometimes our well water is better than city water at a community we have. They want us to hook up to the city, and we’re like, our water quality is better than yours. Why do we want to pay you for every bit of water that get leaks out of our system?

I’d say in our history, we had a couple of communities that have had issues. One was flood. Floodplains are unfortunately really tough now because it’s some of the best lenders want, BI flood insurance, which is business interruption.

Andrew: It’s super expensive

Julio: Yeah, it’s expensive as heck. And then again, the market that you’re in, I’d rather own a junky property in downtown Dallas than a great property in the middle of nowhere, a beautiful property.

Andrew: How do you judge that? What metrics make a good market for you? Is it just the population growing in a median home price above $120,000? What are you specifically looking at there? Our portfolio is mainly in secondary markets throughout the Midwest. We’ve been pretty successful with them.

We’ve hit, I think, one market like Southeast Iowa. We sold our one mobile home park that we had there because it was a market thing. Employers were leaving, and we didn’t want to be the last one in town holding the bag. Tell me about what you’re looking at when you look at a good market.

Julio: Sure. Just for the record, a lot of our properties are secondary markets, too. I love secondary markets. The few where we made mistakes were really tertiary ones, like your Iowa one that was just too far out.

I never like putting hard metrics. This is our minimum FICO score. This is our minimum home rent. This is the minimum population. I like to take it all in. We’re getting a property, I’ll look it, I’ll Google Earth it. I’ll look at, all right, where’s the growth going? What city is it? Is it outside of this MSA? And what’s happening there? Is growth coming there?

I’ll look to, how far are the jobs? How far are the Walmarts and the different shopping areas? You should look at the housing prices. But now, fortunately, housing prices everywhere, are minimum $200,000–$300,000. We’re still a very competitive alternative. That isn’t a big of a factor.

Another tip I can give is I look at the reviews that the tenants give on Google. We just looked at a property yesterday. You’ll look at the reviews and everyone’s on there. This owner is terrible, their water is bad, or they just jacked up the rent. You’re going to get the haters, but if you see 10–20 of these, you’re like, all right, they have this issue going on at that property. And at least you know about it.

You want to use the technology, the Internet to your benefit. We’ll do searches on whatever apartment rents and other parks or home rentals in that area so we know, okay, the sweet spot is going to be $1100 here for a three bedroom, two bath home if we bring it in. You want to do your quick research, but I don’t like hard black and white metrics. Most of our deals are tall storeys.

Andrew: I like not having a hard and fast rule. I think that’s how we are. We’re like, hey, this doesn’t meet the threshold. The median home price isn’t $100,000, and the monthly income doesn’t add up.

That’s interesting because one of our properties, one of the very first ones we bought, is in a tertiary area of Pennsylvania, but the best one. It’s zero turnover. The homes in the park sell for $50,000–$60,000 cash. It’s one of those markets that we got lucky, and then there are others like the Southeast Iowa that just didn’t ever develop into something.

Let me ask you this, Julio. This is the one question that I ask every person I have on the show. It’s the one that gets the best feedback from listeners. What are the most important things passive investors—we’re talking 30,000-foot view passive LPs—need to look out for when investing into mobile home parks?

Julio: First of all, you want to look at who you’re partnering with. Who are you putting your money with? Do your background on them, look to see what they’re doing. Do your investment criteria line up with theirs?

Are you going in just to flip and burn and be out in five years? Or is this something like, hey, I have investors telling me, don’t sell anything, I don’t want to pay uncle Sam, I just want to keep getting those quarterly distributions. And when you refi, let’s pull some money out and buy something else. Make sure that aligns.

You want to make sure that the operator you’re working with, if you’re near any of their properties, visit him. I see some people out there, and they’re just building it. Unfortunately, I drive through some of the properties and there are tarps. There are people working on cars. There’s simple stuff that I’m like, this doesn’t need to be like this. It’s simple stuff.

You want to see how they operate their communities. You want to talk to either their investors or their lenders. Get some good references on even industry wide. It’s a small world in this industry. If somebody’s out there slashing, burning, and screwing over brokers or screwing over this, they’re probably going to screw over their investors. People are consistent, as I was once told.

You want to look to who you’re partnering with and what they’re doing. Don’t get seduced by the returns, and oh, they got this waterfall, this preferred return, and this and that. All right, that’s great, but how long is this property going to be held? How are we going to operate it? What’s the long-term goal?

The returns will get there, and the returns will be there. The value will catch up. If you have a good operator who’s not a pig, and who’s going to look out for the best interest of everybody. We invest our own money right alongside with our investors. We’re LPs, we’re right alongside with them, and we’re the GP, we’re the managing member.

When I tell them, hey, I’m only getting paid when you’re getting paid, I’m only getting a return when you’re getting a return, we align our objectives, which I think is important for people to look out to. Don’t get desperate. Don’t just think, oh, my God, this is the latest hottest thing, I just got to get in with the first guy. I know. Look around.

I’m telling you this not because we need investors, because we don’t. Unfortunately, I don’t take many new investors because I already have enough telling me. Hey, when’s the next deal? I’m like, I’m not going to find a deal just to place your money, I’m going to find a deal what makes sense for all of us.

Unfortunately, if I send it out to my 200-plus bench of investors, I’ll be like oversubscribed. People are like, oh, you’re a jerk, I wanted it on that deal. That’s not an issue with us, fortunately, this long in the game, 25 years. But there are some good people out there.

I’ve invested with some good people, a couple of communities and groups out there that do the right thing, that either done podcasts. They were out there, I look at what they’re doing on LinkedIn, and they go in there and they invest money like yourself in the property. They value the resident and realize this is your seed. This is the seed of your growth and your investment. If you’re going to go shit on your seed, that is not going to grow.

Andrew: One of my very first investors worked at Goldman Sachs, and he had a long tenure there. He said one of their core values, one of the things they repeated at Goldman was be long-term greedy. That just resonated. If you’re short-term greedy, you’re always going to get in trouble.

Be long-term greedy. Do the right thing for the long term because you and I both know, hey, we can put some lipstick on the pig when we’re rehabbing a mobile home and do it for $3000 or $4000, or we can spend $6000 or $7000 and do it right and put this thing to bed. When we when we sell it, we can know that, hey, that tenant is going to be happy for a long time, and they’re not going to need to go anywhere.

I’m completely aligned with you there. I love that. Tell us a little bit about Evergreen. Tell us about your portfolio, where you guys zoned. If you don’t mind, just give us a little bit of recap of that.

Julio: Absolutely. y. We’re in 12 states. I got our maps behind me here. We liked the north. We started in the northeast.

Andrew: I don’t see any tins on Hawaii over there. What’s up with that?

Julio: Yeah, we love to get there. We’ve followed where the good deals are, where the markets are. It brought us to Florida, we have some in the Midwest. We have a lot of communities near universities. We love university towns. We love places that aren’t going anywhere.

We have a community two miles from Notre Dame. It’s always expanding, and they’re having student housing, and they’re doing this and they’re doing that. There are always jobs. People think, well, a professor’s not going to live in there. No, but the people who work in the cafeteria are the people that clean the buildings or the people that do this.

We follow the deals. We bought a deal in New Orleans. It was just in a great area. You just got to think about it and say, all right, this was three miles from the airport. The airport is always for hurricanes and everything else. It’s got to be accessible to bring in FEMA and help. The levees that were built there, this thing isn’t even in a flood zone because it’s so well-protected.

We like to follow the trends in the population. Like I said, we’re really hot on the red states. I’m trying to get into Texas, which I haven’t yet, but I’m close. We’re going into North Carolina. I like Tennessee. There are good areas everywhere, the mountain states.

We got into Wyoming and Colorado again through joint ventures. I have a joint venture partner in Denver, and he found some great stuff. Montana, we’re trying to get into. Like you said, there’s great stuff everywhere, in Iowa, in Minnesota. You just got to find those pockets.

It goes back to these people like, oh, I’m going to write off the whole area, I’m not buying in the Midwest, or I’m not buying in this state. The next thing, one of our best properties is crappy. We’re talking about New York, and one of our best properties is up by Saratoga Springs, which the area’s just awesome. We’d never have a vacancy and at home sell for $180,000.

Luckily, our rents are $500-plus, so the 3% rent cap is still a $15–$20 rent increase. Where we are in that community owning it 20 years, we’re fine. We’re long-term greedy, as you said. We’re real methodical.

Andrew: Tell me about the worst deal. An investor asked me this the other day, tell me about your worst deal.

Julio: You know what? There are a couple of deals that we had to sell in Indiana that weren’t quite in the areas we thought they were going to be. There wasn’t quite the development. Even our worst deal, our investors made money. No one has ever lost money with us, fortunately. Our investors still made money. I saw the purchaser of that deal, and he went more aggressive on the rents and did some stuff, and then he sold it and made more money.

I talked about a deal we have in Florida, and that’s why you got to take that long term view and not panic. We have a deal in Florida. We bought it in 2003. In 2004, it got hit by two hurricanes. It was a double whammy, a nightmare. We lost 100 homes, it just imploded.

I went down there pulling metal off homes, helping the people clean up. You got to get over yourself. Some of these people are like, I worked on Wall Street. I don’t give a shit. Get up there and help clean up the park. Go down there and show your residents, your managers, and your regionals that you put your pants on just like they do.

We’re up there cleaning the park. I thought I was going to lose it to the bank. The city bring in RVs on the mobile home sites. We bought that property for $10 million, almost lost it to the bank. Last year, someone offered us $50 million for it. This is 18 years later.

You just got to weather the things. Don’t panic. You’re not going to win or lose in the short-term. You got to take that long. Evergreen is, again, just very low key methodical. We’re to the point where, even my CFO says, we don’t have to buy. I’m like, I know.

If I see a great deal and I like it, and I still enjoy it, and I like going out there. When I travel to the properties, I go and catch a game in Boston. We have two properties in New Hampshire, and I’ll go catch up everything, hockey, football. I like seeing the city and knowing what’s going on around me, areas you would never see if you weren’t in this business like parts of Iowa.

Andrew: I love that, I think it is a recurring theme that I’m picking up on. I’m the same way. I’m a control freak, I’m very hands on. Like we talked about before we started recording, I’m the type of operator, I don’t come from Wall Street, but I’ll get under a home, and I know how to change a ball valve. I know how to get some new water lines ran and get it winterized.

I think you’re the same type. You got to be hands on sometimes. I love that correlation of like, hey, there’s a finance side of the business, but there’s also the side that’s like, hey, I know how to install a home myself if I need to. I know how to set these things and put them up on the axle. That’s really cool, man. I like your style.

Julio: People should know, none of this is rocket science. I haven’t used my calculus, derivatives, or physics from Cal Tech. All you need is basics here.

Andrew: You got to be willing to put the work in, and that’s the hard part. I know, there’s an operator that owns over $2 billion in assets under management of multifamily. A few years ago, he got into mobile home parks, bought eight or nine communities, and hired someone from Sun Communities to come in and manage the whole deal. It just drove him into the ground just because it’s operationally intensive.

That’s what people don’t realize. You can’t just hire a third party manager and say, here, take it over. No, you have to have your own management in-house. You got to be looking at the KPIs every single day, look at what’s failing, and get attention to it. Otherwise, it can get out of hand and get out of hand fast.

He ended up selling that portfolio. His worst performing deal was this mobile home park portfolio that he did, compared to all the multifamily that was his mainstream. It just goes to show you, things can go south fast if you don’t have your finger on the pulse.

Julio: Yeah, and nobody cares about the properties like yourself. That’s another thing that I preach. I don’t care how smart, good, capable you are. You only have 8–10 hours a day, if you’re working that much, to make shit happen. You got to multiply yourself, you got to share equity. You got to bring people in that care about it.

When you third party, everything, they’re like, oh, I’m getting my fee, I don’t care. I’ve seen that again at some of the comps I’ve driven through. They’re like, oh, that’s third-party managed. I’m like, oh, man, that looks like shit. I’d be like, later, dude, I’ll do this myself. You got to empower and share some of that growth so you have a rising tide.

Andrew: For the greater good. Totally, yup. Julio, what does the perfect mobile home park look like in your eyes and why?

Julio: Great question. A perfect community for me would be at least 100-plus sites, something that has some size, institutional quality, that is well-occupied with big lots. You want to worry about obsolescence, where you got different setbacks, and you can no longer get homes in there. And a community that has a lot of community feel to it, where you have events, where you have different objectives where people are helping each other.

One community in our community center, we added laptops and computers for the kids that don’t have that in their home. This is a Hispanic Park. They come in there and do their homework. People want to stay there, people want to be there. You have that community feel.

At a decent rent level, $20–$50 within the market. You’re consistently reinvesting in it and you’re like, oh, man, I’m going to hold this 30, 40, 50 years, my kids are going to have this, and the city is just growing up around you. You’re just like, oh, my God, this thing just caught into this area.

We have several like that. I think those are just gems for everybody. The residents love them. The city’s happy. We talked about the city. You need to impress them so they’re not coming down. You guys are a disgrace to our town, you’re looking like a trailer park. Your investors like them. They’re like, man, this thing just keeps giving off cash.

Andrew: Totally. What about park-owned homes? Are you a fan of park-owned homes or tenant-owned homes and then utilities in your perfect mobile home park?

Julio I like to write build city utilities. We’re not even submetering them. They’re just getting built. We have several like that, too. They’re just great. We used to only like tenant-owned homes. There are some areas where, again, you got to adjust. We have probably our most beautiful community that has just gorgeous double wides. We had to bring in some homes there, and nobody wanted to buy it.

A lot of seniors are like, I’m not going to get into a new mortgage, I want to rent. We had to rent some homes there. We like the pride of ownership when somebody has some skin in that game in that home, and they’re going to stay longer, whether we’re carrying paper, or it’s a rent-to-own lease or something, where they’re going to be there longer. We don’t want to be just an all apartment type community where everything’s rentals.

Again, if you do it right and scrutinize right, get better people in there if they’re going to rent their homes and have some guidelines. We allowed dogs, but not large dogs, vicious breeds, or certain things in our rental homes. It’s a sum of a lot of small, good decisions that people will say, oh, what’s my goal? I don’t even know, it keeps moving. But as long as I’m making pretty good decisions most of the time, it’s going to keep growing.

Andrew: Percentage wise, how many park-owned homes do you have in your portfolio?

Julio: We’re probably less than 10%.

Andrew: Same with us. We have some, but it’s not the preferred thing. We prefer the tenant-owned homes, utilities, direct bill, public utilities all the way. Just a few more questions just because we’re running out of time. Sorry.

Julio: Yeah. Sorry, I talk a lot.

Andrew: No. I just want to make sure we get through all of these. Julio, what does the future of mobile home park investing look like? And how do you see mobile home parks fitting in with the direction the economy is going, with obviously the higher interest rates, and possible recession?

Julio: I think we’re an emerging gem, but more people have to catch on to it. We’re the answer to affordable housing. We’re the answer to a lot of the homeless.

In New Hampshire, a homeless veteran group came to us and said, hey, we want to buy this mobile home, split it in half, and make two units for two of our homeless veterans. We love veterans, but we don’t want crazy going on and affecting all of our residents. These are now two of our best residents, and they take care of the place.

We got to quit allowing the places to look like crap. Make them nice and keep developing new stuff. I think we’re the answer. I think for the stuff we own, I think we have a huge runway in rents compared to where apartments are and where these things can go long-term from the investor side.

Again, you get there the long-term greedy. It’s a limited supply, and there are so many people getting in there that it’s hard, it’s competitive. I think we got to quit cannibalizing each other and overpaying for stuff, and then people end up going under till the last one standing, like you said. Oh, I got overbid on this call to offer, and then it’s like, oh, great, why do you pay for that? It’s below the cash flow, you’re getting a negative return.

You still got to be smart about it finding the deal. I think the biggest thing is being a responsible owner. When you take care of these things and set the bar, set the example, the sky’s the limit, because then you can develop new stuff, you can show the town like, look what we’ve done. We have a community that they said, no more mobile home spaces in our town.

We cleaned this thing up. We went to them and say, hey, first of all, HUD said you can’t impede these things. We need affordable housing. Your people need this. You’re going to get more tax revenue. Look what we’ve done. They came and looked at it and said, man, absolutely. Now we just got approved for 100 space expansion because they want these things.

People are watching you. You can’t be a pig and you can’t be stupid is what I’m saying to people. This isn’t the lottery. This is elbow grease, hard work, and a damn great investment when you take care of all your stakeholders, the lender, the tenant, the investor, and you the owner.

Andrew: I love it. Julio, how can listeners get a hold of you?

Julio: Our website is evergreencommunities.com. My email is julio@evergreencommunities.com. I’m available, I like to help. I got a lot of help coming up. I’ve given people advice and review deals for them. I don’t need anything from you, a fee, or anything. That’s not where we’re at.

If someone has a great deal and it makes sense, and we’re like, hey, can we put this together, we’ll look at it. Again, we have now six joint venture partners in different parts of the country that brought us a deal or brought us an area we wanted to get into. It’s a win-win. You’re not going to take advantage of me, and I’m not going to take advantage of you. If one plus one equals three, then we’re on board.

Andrew: I love that. That is fantastic. One last piece of advice that you would give to interested passive investors before we sign off.

Julio: Sure. Be patient. Look who you’re working at. Don’t look at this strictly financial. Look at it and say, okay, how am I getting into the right thing with the right people so you don’t get screwed? Pardon my language.

Using what you said, be long-term greedy. Realize this isn’t a liquid investment. This isn’t a Tesla stock. It’s not going to double in two years, but it’s going to keep giving back to you. It’s going to give you depreciation, it’s going to give you a lot of benefits. Do the right thing and you’ll be rewarded handsomely.

Andrew: I love it, Julio. Thank you so much for coming on the show.

Julio: Okay. One last thing we’re going to end is you and I are going to have to do an Ironman together just to hang out.

Andrew: That sounds amazing, I’m ready to go. Tell me when.

Julio: Okay. We’ll plan it.

Andrew: We’ll plan it, man. Julio, thanks again. Everybody listening, I hope you got some good golden nuggets out of this episode. That’s it for today. Thank you all so much for tuning in.

Julio: Thank you, Andrew, for informing so many people in this industry with these podcasts.

Andrew: Thanks, Julio.

Julio: Thank you.