Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-ryan-groene-of-groene-capital/id1520681893?i=1000525541836

SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. On this episode of the Passive Mobile Home Park Investing Podcast, Andrew talks with Ryan Groene, of Groene Capital. Ryan has had experience in every aspect of mobile home park investing and operations including finding, running, flipping, refinancing, and selling mobile home park communities. Ryan answers some of Andrew’s toughest and most interesting questions with his unique perspective and vast experience in the manufactured housing space. While he may be a part of the younger generation of owners and operators, Ryan is knowledgeable, eager to teach, and is excited to share what he has learned about the mobile home park industry.

Ryan started off his journey with a degree in finance after being a student athlete in college. He worked in the finance industry before diving into mobile home parks full time. His portfolio currently boasts nine mobile home parks with over 400 lots throughout the midwest and the southeast. He is also the Director of Operations for Buckeye Communities where he oversees the operations of over 500 lots throughout Ohio and Michigan.

***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.

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

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.

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:

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

02:00 – Ryan’s journey into real estate and the mobile home park industry

04:41 – Ryan’s first deal

07:13 – The toughest hurdle for Ryan when he first started

09:18 – Handling the management of his current portfolio

13:32 – How Ryan finds his deals

15:44 – The most important thing LP’s need to know when investing in the mobile home park asset class

18:54 – What is Ryan’s deal criteria

21:13 – Value-add Ryan has implemented in his current portfolio

26:08 – Ryan’s perfect mobile home park

27:33 – Grading and looking up school districts

29:19 – Common mistakes of new operators

31:50 – What hurdles does the manufactured housing industry face in the future

34:00 – $15 minimum wage

35:29 – Groene Capital

37:13 – Contacting Ryan

37:55 – Conclusion

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

Links & Mentions from This Episode:

Great Schools: https://www.greatschools.org/

Buckeye Communities Website: http://www.buckeyecommunities.com/

Ryan’s Facebook: https://www.facebook.com/ryan.groene.9

Ryan’s Instagram: https://www.instagram.com/groeneryan/

Email Ryan At: ryan.groene55@gmail.com

Ryan Groene, LinkedIn: https://www.linkedin.com/in/ryan-groene-22b40472/

Keel Team’s Official Website: https://www.keelteam.com/

Andrew Keel’s Official Website: https://www.andrewkeel.com/

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

Andrew Keel Facebook Page: https://www.facebook.com/PassiveMHPin…

Andrew Keel Instagram Page: https://www.instagram.com/passivemhpi…

Twitter: @MHPinvestors

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TRANSCRIPT

Andrew: Welcome to the Passive Mobile Home Park Investing Podcast. This is your host, Andrew keel, and today we have an amazing guest in Mr. Ryan Groene of Groene Capital. Before we dive in, I want 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 five-star review of the show.

All right, let’s dive in. Ryan was a student athlete baseball player in college and graduated in 2012 with a degree in finance. After graduation, he worked in the finance industry prior to getting into mobile home parks full-time. Currently, his portfolio has grown to over nine mobile home parks spreading across 400 lots throughout the Midwest and the Southeast. Ryan also serves as the Director of Operations for Buckeye Communities, where he oversees the operations of over 500 lots spread across mobile home parks in Ohio and Michigan. Ryan has been involved with almost every aspect of finding, running, turning around, and refinancing selling mobile home communities. So excited to dive into your story today, Ryan. Welcome to the show.

Ryan: I appreciate you having me on, Andrew. We’ve known each other for quite a few years now. Sometimes we were in the same space, so a good time to connect. I’m happy to try to provide some value to your listeners.

Andrew: Awesome, dude. I’m excited as well. Let’s jump right in. Can you start out by telling us a little about your story, and how you got into manufactured housing?

Ryan: When you gave my bio, it’s pretty much it. Honestly, in college, I read Rich Dad Poor Dad, probably like every real estate investor or business owner maybe has. You’ve heard of or read that’s typically a starting point. I went to college for finance. They really trained us to work in a corporation and work on Wall Street. That’s where I went to school. That was the goal. You get out, you go work on Wall Street, you work 90 hours and make lots of money but you kill yourself. You’re basically a slave to the W-2, that’s the point of this podcast, passive investor.

Our goal on why we got into parks, we wanted something else than a W-2, more than likely. Went back to college, had that in the back of my brain, got out, had to get a job, got a job, worked for an insurance company for a number of years. Then I looked at flipping mobile homes, kind of like a lot of dealers like you started.

When I was living in Cincinnati, there were some nicer communities that were always there. If you drove in them, you might have thought they were senior citizens or 55 and older parts, really nice. I looked at doing a live-in flip in one community in Cincinnati. Then I looked at doing a couple others like an actual live-in flip with a mobile home. I was living at home, so I was like, how do I get out of living there while also being cheap. I was making good money working in finance. You and I are probably a weirder person that we lived in parks or been in parks. That’s how I got started.

I never actually ended up doing a flip. The deals just didn’t work out. I ended up just kind of going down the rabbit hole of who owns these things, who owns parks, what are they, and I went to the […] Boot Camp. I actually went when they had some protesters in front of one of their parks. It was one of the more story news telling us back in like 2016 and off then. I don’t really remember the new story, but like everybody, pretty much went to the boot camp. That’s how I got started.

I never owned any other form of real estate. I’ve never owned a single family house. I’ve never owned a duplex, I never owned anything. My first purchase was Muslim partners. It was a 75 faith community at the end of 2018 in Fayetteville, North Carolina. That was my first real estate purchase ever. I don’t suggest that but if you have the stomach for it, or you have a little bit more risk tolerance, definitely move forward with it because it will change your life. That was my starting point and nine parks later, here we are.

Andrew: Wow, dude. Wow. Let’s go back to that first deal because I know that one had a little bit of hair on it, and you hadn’t purchased like a single family house, nothing. That was your very first real estate purchase.

Ryan: Yeah, correct.

Andrew: Wow. Kudos to you for that, man. That was a learning experience, right?

Ryan: Yeah. To back up even more, I guess putting all my chips in, I emptied my 401k.

Emptied that, paid the taxes, and bought it with a couple of partners. That deal, specifically, was an assignment. It was well […], was like 50 out of 70 occupied. The well was contaminated. It wasn’t a contamination where the EPA was like finding the well. It just basically was a smaller infraction to where you just had to fix it.

So long story short, we took over the community. We knew we could connect it to city water. We had already done our homework on how much it would cost, what’s the actual process of doing it, plumbers that would do it for us. We thought it was going to cost six figures to do and ended up costing half of that. It was like $40,000 or about probably $200 a lot, basically, in a 75 safe community.

Within the first year, we connected, and the roads were pretty bad. We repaved the roads, and then we brought in ten new homes and ten used homes over the last 2½ years. That was my first purchase ever, it was definitely something a little bit scary because you didn’t really know about parks.

I’ve spent three years prior just getting educated tying up parks, but never actually going through with them. I’ve been through the dance of due diligence. I’ve worked with other investors and other people that had bought parks before, so it’s not like I was doing it solo. I had mentors, I had other people in my corner that were kind of me walking me through some stuff. That’s the first thing: get educated. Also, find like-minded people that have already done it. Therefore, if you’ve got questions, it’s easier for you to actually move forward with the transaction.

Andrew: Very smart, especially on your first deal that you had so much work to do, to partner with some more experienced operators. That was smart. Ryan, what has been the toughest hurdle for you in the business?

Ryan: When I started, it was just not having any experience, you gain experience if you buy a couple of parks. Currently today, it’s probably finding potential deals that make sense for my own money and other people’s capital. Honestly, it’s also finding good workers at the parks, good employees that will last long-term because they’re your onsite managers or your staff. The turnover is pretty high in mostly family parks. You’re not going to have somebody that’s going to work for you for 20 years.

Like you’ve experienced, being in property management, especially when you’re on the front lines, is really tough. You listen to people complain all the time, you’re the brunt of all of these people’s frustration especially when you’re evicting them, you’re raising rent, or you’re doing other things that people just don’t like. People just complain typically about everything. Being in property management is tough. It’s typically not a long career for most people before they transition into something else. So finding

good personnel, and over my three to four years of doing this, it’s been capital as well.

Andrew: That’s a good couple of points there. We’re having that same issue where it’s tough to get people to work right now. Either they’re really busy or they just don’t want to come out and get to work.

Ryan: Yeah, and we’re recording this in 2021. Restaurants were having national shortages of workers and all that stuff. It’s tough to find good contractors, too, good HVAC people, good plumbers. When you do find them, you don’t want to tell those people because you want to keep them busy in your park, or they go somewhere else. COVID has been weird with a lot of that because a lot of the smaller guys went out of business.

Andrew: Yeah, it’s tough. Ryan, how do you handle the management of your current portfolio?

Ryan: I handle everything in-house. I have on-site staff, which means they either live there, on-site property managers and maintenance. Most of our portfolio is tenant-owned homes, so we don’t have a lot of maintenance staff or contractors on a day-to-day basis. Typically, the on-site manager may live on-site, or they may live within 10–15 minutes of the park. They may oversee 2–3 parks for us in a given region. Therefore, we can kind of hire somebody a little bit higher level that can handle a little bit more, and then it takes the offloading of me.

As far as actual operations, I still manage the managers. I have typically weekly phone calls with them, I run our delinquency reports, I still oversee our books and stuff like that. I don’t do the actual bookkeeping, we have a bookkeeper, but just given my background, it’s just easier for me to do the actual bookkeeping. To say that I don’t send leases, or I don’t take resident phone calls, I definitely do that.

Last week, I was in three different states in all of my parks within a week. It was a grueling trip. I went from North Carolina to West Virginia to Kentucky and back, hit all the parks. When you’re there, everybody thinks that you have to spend a lot of time there. You don’t if you’re not actually swinging a hammer, collecting rent, and doing all that stuff.

We use PayLease through Rent Manager, so most of our actual operational piece is automated to some degree. The revenue comes in, it goes in my bank account, it comes into the income statement, and we just have to reconcile it every month. We try to get as far as the investor relations stuff goes.

I do have a business partner. His name’s Miles. He handles a lot of acquisitions, most of the phone calls during due diligence, because due diligence is honestly just a lot of desktop and phone calls, and understanding where the city is, the market, so that does take time. He handles a lot of that, then he handles the management with the investors as far as communications. Obviously, we talk, but I handle the operational piece, and then he handles the investor portion of it.

It’s all hands on deck because we’re a small team. It’s just him and me, and we’re all helping out when we can. The goal this year is to really hire somebody. I know you just hired a COO. That’s the goal for me is maybe hire a regional person or somebody that’s below me to take the operational piece off of me.

One, I don’t personally always like operations. It’s a part of the business and that’s how I’m getting my start. But it does grow, it does wear you down after a number of times when you’re doing these turnaround parks. And it’s really time-consuming as well. People don’t realize that it’s fairly time-consuming finding homes, moving them in, evicting people, and when you do that across different assets and different states, it’s tough.

Andrew: It really is. It’s definitely not passive, as we’ve said on this show before. It’s very hands-on. I think some people may get into this business and say, hey, I’m going to buy a mobile home park myself, and it’s going to be completely passive, I’m just going to manage the manager, and that’ll be it. Well, there’s a lot more to it, as you know, Ryan. That’s why it’s good to have a team around you that can support in different aspects, so hiring is definitely important.

A couple of things you mentioned there. PayLease. We use PayLease as well; love that system. So people can pay either with cash at cash pay locations, or they can like to set up automatic ACH payments to pay rent automatically, or they can pay with credit card online, so that’s huge. Then also Rent Manager. The integration makes it super easy to manage that, which is great.

Ryan: Yeah, at the end of the show, I’ll tell you something that we started doing here with PayLease as well.

Andrew: I will make a note of that. Tell me, how did you find your deals, Ryan? What’s your typical formatting for acquisitions?

Ryan: I just sit here and my phone rings. That’s what everybody thinks. You send out mailers and your phone’s going to ring off the hook. When I first started six years ago, I was too naive because I had not owned any real estate. I literally had no experience. I was 25 years old—I’m 30 now—and when you used to send out letters, the phone used to ring. Now, it’s more competitive than ever in mobile home parks. Just like any sourcing of sales, it all comes down to your database, and you have to have good information with your database.

We have a database of all mobile home parks. Miles handles a lot of acquisitions on the cold calling front. We cold-call owners. We also ask other owners if they know anybody. Then just you and I connect. I trade deal flow with other investors, a lot of people. I’m not afraid to buy wholesale if somebody’s starting out and they have a deal. If somebody can call 20 owners and I pay them $25,000–$30,000, that is definitely worth it instead of me picking up the phone and calling. The best use of my time is probably managing the portfolio a little bit more, so we’re more profitable, and then paying somebody else to do the lead flow and stuff like that.

I’ve bought deals off of Facebook, where I’ve literally messaged someone that was posting a home and I knew they were the owner. Maybe I’m giving up a little bit of information, but I messaged them and say, hey, are you the owner? Not necessarily interested in the lot or the home, but we buy mobile home parks. Nine times out of 10, they said no, but I have bought one that way. I connect with wholesalers. I don’t know if you’ve had Jimmy on the show, but I bought some assignments from guys like him. And then brokers, too. I don’t really utilize that too much, but mainly it’s a lot of off-market leads through wholesales or direct-to-owner via cold calling.

Andrew: Very cool. Yeah, I’m going to have to get Jimmy Johnson on because I know he has a pretty cool story with wholesaling mobile home parks and getting assignments. Very, very cool. So, for passive investors—we’re talking limited partners here that just want to put their money to work—what are the most important things that they need to know, and they need to look out for when investing into the mobile home park asset class?

Ryan: They need to vet the sponsor, the general partners, or the operator, whoever that may be, because your general partner may not always be the operator. It might be a strategic partnership where if somebody has the deal, they might be a part of the general partnership, just that the general partners. Look at what they’re saying in the PPM, and what they’re actually showing in their pro forma, how does that compare to other operators and actual industry itself.

If somebody’s saying they’re going to pay a 15% preferred return, when the industry typically says 5%–8%, that might be a red flag if I was putting money with somebody. Just vet them, and sometimes it’s good to get on the phone with their team and understand what they’ve done in the past. Does this deal fit their criteria for what they’ve done in the past? Do they own anything else?

Then if you get a chance to meet them and drive some of their assets, potentially just to see how they actually take care of the stuff out in front. That’s what I would do. When you’re investing passively, I don’t necessarily have that experience per se. I would just vet the person and make sure you actually like the person. If you don’t like them, at the end of the day, you’re probably not going to be comfortable with your money giving it to them.

Andrew: That was really insightful there. I think the one thing you said is drive their communities and see how they look. I think that’s great. That’s not always possible, but sometimes it is, from Google Earth or something like that where you can just see how the properties look like. Even if you pay someone $50 or $100 via Craigslist and just say, hey, go drive this community and send me a drive through video. How cheap would that be to know if the operator’s taking care of the property or not. I think that’s a really good idea.

Ryan: If they’re not, ask them. Hey, I’ve driven this property. What’s going on there? Because there might be a story behind it. If they have a bunch of communities, sometimes things get missed. All of us are human. If you have managers, sometimes things get missed, and you also could be in the middle of a turnaround and if they’ve also never owned a mobile home park or seen a mobile home park they may not understand that it’s not Class A apartments.

What looks bad to them may not actually be bad to you and me. So explaining that and just telling them hey, it’s clean, affordable housing, and it’s not necessarily Class A apartments where everything is super pretty. Now, some of the parks might be that, but my stuff is family parks, three-star parks, and we really just try to provide clean, safe, affordable housing, and in good locations. That’s our pitch.

Andrew: Let’s dig into that. What is your deal criteria? You said, three-star parks all age? What else can you tell us about your typical mobile home park that you guys pursue and own?

Ryan: Right now our portfolio has been primarily, like I said, two- and three-star parks in great locations. I want to be in the best school districts, the highest median home prices. If I can get a mobile home park next to million-dollar houses, I want to buy that mobile home park.

Our traditional has typically been 40 units and above in metros that are 50,000 people and above, not necessarily one-horse towns. Now, I bought stuff where there’s not necessarily a metro, but it’s 30 minutes from that downtown area to the next downtown area, and it’s these metros, when you go to the best places in Sperling, they’re outdated. They’re not necessarily up to current standards on what’s going on. Now, I’ll buy deals outside of that. I bought smaller deals. That’s typically what we’re looking for. Forty units and above, we’ll buy mainly turnaround stuff, but I will also buy stabilized deals.

The days of 10 caps, 50 units, city water, city sewers in a million metro is kind of gone for the most part unless the parks got something wrong with it, like seriously wrong, but we’re open to different deals. I’ve done every structure of deals. I’ve done cash, I paid cash, I’ve done bank financing, done seller financing, and I’ve done a master list with option to purchase. I’m very creative when it comes to financing and closing deals.

I’m more about creating that opportunity and seeing it through. I have the flexibility because our investors are okay with that, and they understand that. Executing on it is the next piece of that. That’s what we’re looking for, 40 units and above. Don’t really have a deal size criteria. My preferences are city water, city sewer, direct build, and five of our nine parks are like that.

Andrew: Very cool. Let’s jump into value-add right now, because I know that’s one of your specialties, infill and so forth. What can you tell us about some of the projects you’ve done? What value-add components have you implemented in your current portfolio?

Ryan: The first one is obviously raising rents, if raising lot rents is the easiest. It may not even be like you’re raising $50. It could be $10–$15. Some […], above what they’re currently paying, now you’re increasing the value of your community. That’s the easiest.

Number two is typically submetering water and sewer. If we have that ability, we use Metron which integrates nicely with route manager.

Three is if there’s vacant park-owned homes or vacant abandoned homes, we rehab those, or we sell them off to potential Lonnie dealers or outside investors, so they can rehab them.

The fourth is we’re bringing in either new or used homes to the vacant path. That’s the most costly, but it also gives off the most value typically, because you’re adding anywhere from $30,000–$50,000 per space. If you have 10 homes at the $50,000 mark, that’s $500,000 of potential value if you value it as a per occupied space. That’s what we’re doing.

We’re also upgrading the aesthetic. We’re cutting trees, we’re offering assistance programs. If somebody has a broken skirting, we actually will pay for their skirting and install it and if they can’t afford it, we’ll bill it back, we don’t charge interest or anything like that. If they can only afford $25 a month, we will do that, because we want the community to look good. We’ll front the $500 that it costs to start a home or $1000 or whatever it is, because we know it’s going to upgrade the look of the community, which then in turn makes it worth more. Might only be half a basis point on the back end, but you want the park to look good. When it looks good, and people are showing pride of ownership, because you’re showing it as the community owner, it creates more value in the long run, creates people paying less drama, less drugs, less all that stuff.

We’re also doing the little things like installing fencing. If there’s needed streetlights, we do those. Signs. Little things like if the mailboxes are broken, fixing those. The little stuff that might not mean a lot to your eye, but painting homes and spraying off stuff to make them look cleaner. We’re doing all that, but actual money drivers are lot rent, submetering, and then bringing in homes and rehabbing homes.

Andrew: Very cool. I think that is very similar to what we do in our parks as well and is a good plan.

Ryan: One thing we also do that a lot of people don’t necessarily agree with. If we have dumpsters, we typically get rid of them. I don’t like them. Even though they might be cheaper, aesthetically, they don’t look as nice because you’re always cleaning it up. There’s always the potential that people come in and dump at night, illegally. So you’re always having to manage that versus individual trash cans. It looks a little better, might be a little bit more expensive. Down the line, you may have the ability to bill it back or it might be direct-to-resident from the provider.

Why should it be any different from a single family community if you have your own home, own parking pad. They should have their own trash can in my opinion. It looks better, and you also can manage the trash situation a little bit better because you know who the people in the community that have the most trash as well. They’re not taking out their trash, it will pile up because there’s no more dumpster. It’s not fair to everybody else because I’ve been in certain situations where the trash is somebody coming in, unloads 10 trash bags, and now it’s full. So now, nobody else can use it.

Andrew: I agree. I think one thing that just resonated with what you just mentioned, not just with the trash, but with your value add components is that you’re in that younger generation of operators, as am I. I think it’s just really awesome to see the value of the money that you’re spending to improve these communities that have so much deferred maintenance for years, they’ve been just let go by the mom and pops that have just owned them and been using them as a piggy bank.

I love to see that, like your skirting example. That is a great example of, hey, we’re improving the community because we want it to look better. It aligns your interest because the better the community looks, the better financing you’re going to be able to put on it. At the end of the day, you, the residents, and your investors all win by you taking that extra step to pay for that residence maintenance and putting on new skirting, and then billing it back like you mentioned. That’s awesome.

Ryan, here’s a question I asked everybody, and this is a fun one. What does the perfect mobile home park look like in your eyes?

Ryan: A perfect mobile home park from a unit count, or it could be anything?

Andrew: Just anything, use your imagination, the perfect mobile home park, what does it look like and why?

Ryan: Location is number one, typically for me, because all the other stuff you can either fix or get compensated in certain ways. Location is number one, can’t fix location. All the other stuff you can fix, meaning you can build back water sewer, you can fix infrastructure, you can fix homes, you can throw money at all the other problems, but you can’t fix location. So number one for me is I want the best location.

If I have a million-dollar McMansions around the park, I want that park, and I’m okay necessarily paying a little bit up for it because the location is great. If I’m in the south side of Chicago, this is maybe a bad example, but I don’t necessarily want to park there because the hood is still the hood and war zones are still war zones, great locations and great school districts. Even if it’s a two-star park, it will trump a five-star park in a bad location. Those don’t typically go hand in hand anyway. Five-star parks are typically in good areas. The ideal park for me is a really good location. Everything else I can fix.

Andrew: You’ve mentioned school districts a couple of times, so that I take is pretty important. How do you look up a school district, and how do you grade that?

Ryan: Number one, I just call. There are certain things online. Google is your best friend to get the school rating system. Just google the city, google what the school district is. You’ll get layers like grading scales, and sometimes the state will release or just online in general, they’ll rate the schools.

Andrew: One of the sites we used is called greatschools.org.

Ryan: Okay, I couldn’t think of the name of it. I was going to say, I know there’s a website. I also like to talk to local people. The actual city, like city people, is it a good school district, or if you call a realtor, they’ll tell you whether it’s a good area or not. They know realtors, other local investors, or local people, and they’ll tell you if it’s a good school district, typically.

The reason I keep coming back to that is because I buy family parks. At the end of the day, we have kids in our communities, I would buy, but I don’t currently have any 55 and older communities. The school districts are important because the people that live in our parks want their kids to go to good public schools. That’s why it’s important and why we look at that.

Now, if it’s a bad school district, I still own parks where school districts aren’t necessarily the best but the location may be really good because it’s on the main drag or the main street, or it’s next to the Walmart, or it’s next to a lot of big homes, and it’s so good location. There’s more to it than that.

Andrew: Location, location, location.

Ryan: Really yeah, typically.

Andrew: All right. Tell me this, what common mistakes do new operators make?

Ryan: They underestimate the time that it’s going to take to actually turn around a community. Also, when it’s stabilized, what it takes to run the community. Of course, there’s the money portion of that, but typically, you can back into that equation by calling around for quotes during due diligence, and seeing what it’s going to cost.

Underestimating the time to turn around is (I think) the biggest hurdle people get over because you and me, we’re full time. We can get to our communities at the drop of a hat if something happens. I can be there. Nine times out of 10, you don’t actually need to be there, but you can be there if needed.

Somebody that has an intense career and then a family, they think they’re going to buy this dilapidated trailer park and then turn it into a mobile home park in a matter of six months or a year because they’re going to throw money at it but they don’t actually have the time portion or somebody on their team doesn’t have the time portion, that’s the biggest underestimate (I think) a lot of people make getting into the industry because they think it’s like apartments where you can just turn it over to a third party manager.

Andrew: Tell me this, Ryan. What takes the longest?

Ryan: Just turning around the community or just the day-to-day?

Andrew: Yeah.

Ryan: Just managing all the components of turning it around, so finding homes, managing the contractors, doing evictions, following-up with people when they’re going to pay if they haven’t paid, and then also just managing the rules, too. Seeing that stuff gets done. That’s probably what takes the longest, but it’s mainly just finding the good manager, and then making sure they do their job. It’s not a 40-hour-a-week job. It’s still not, but things have to be handled sometimes right away.

If your manager is on trains doing leases or how to handle phone calls, somebody has to handle that, and it still has to get done. You have to be able to devote some time to turn it around, like finding mobile homes and doing sales is right now. Somebody doesn’t answer the phone when you call, that sale probably walks out the door if you’re selling up or leasing up the community. The same goes with I-want-to-pay-how-do-I-pay questions that still have to get answered. That’s the biggest time suck is just dealing with residents and dealing with your manager, typically.

Andrew: Ryan, what hurdles does the manufactured housing industry face as we move forward through the rest of 2021 and beyond that?

Ryan: Stigma. A lot of people still have bad things when they think of mobile home parks. They think of Trailer Park Boys, 8 Mile, mess, prostitutes, and all that fun stuff. The stigma, I think, is still the biggest hurdle, but I think people are getting over that as it becomes more mainstream from guys that have platforms, and Wall Street, too. I think there’s been articles in the Wall Street Journal in the last six months and in different money magazines that mobile home parks are a great return on your investment based on the supply and demand.

I also still think we face a lot of hurdles from our own like you and me. Just other guys like us or mom and pops that necessarily don’t want to maybe put money back into the communities because they’re always worried about profitability. they may cut corners in certain scenarios, or they may come in and raise the rate.The lot rent might be $200, and they raise it to $300 right away. Maybe that’s the way to do it in certain areas, or that’s how they do it.

If you actually get out from your desk, I think a lot of times, that’s another problem we face is there’s a lot of people who are scared to go to these assets. They own them but they’re scared to actually talk with the residents, and understand that these people are typically a flat tire way, their air conditioner going out, like one paycheck away from literally they’re living about broke, basically.

Once you understand that, you can add some human components to the actual you owning real estate. It’s all about the residents. That doesn’t mean you can’t raise rent and evict them if they don’t pay. It just means that understanding the human element of the actual industry itself, it’s affordable housing. So, you have to understand that a little bit at certain points when you take over a park.

Andrew: Definitely. How do you think a $15 an hour minimum wage would affect the mobile home park business?

Ryan: I think we’d have better collections because if you think about it, $15 an hour, that raises everything else is the ripple effect. I still think if that raises, we raise rents because now people can afford more. I think it’s just going to raise everything. We’re still going to have that delta between affordable housing. If you’re buying in areas where the median home price is $100,000 or $90,000 and above, and you have that difference in affordable housing, even if they get raised to $15 an hour, yeah it’s significant to them but everything else raises with it, typically. So, I think we’ll be fine.

Now if minimum wage went to $20 or $30 an hour—I think the medium income in America is like $50,000–55,000 a year—if it pushes more where people are making $40,000–$50,000—that’s a minimum—and rents don’t fall along with it, then we may have a problem because they can go afford the brick house down the street. But I think people still need some cheaper and safe place to live, so I don’t necessarily think we’d have a problem.

Andrew: Got you. Ryan, thank you so much for coming on the show. I really appreciate it. You’ve brought a lot of golden nuggets for our listeners. Maybe you can talk a little bit about you as an operator and what makes you different from other operators out there. I don’t know if you’re raising capital or if that’s something new you’re looking into, but maybe you can talk about growing capital.

Ryan: I am always looking for another deal in markets that we’re in. I’m happy to joint venture on stuff. Let’s say somebody, one of your listeners, has a deal and may have some capital but doesn’t necessarily have the experience like you and I do. I’m happy to take a look at it and JV with somebody, or I’m happy to pay an assignment fee, the way that’s getting started, and maybe even throw that in as equity.

As far as raising capital, right now, I haven’t done any syndication. I don’t have a fund or anything like that. I’m always looking to partner strategically with people with capital partners, as well as people who have deals. We’re always looking, and I’m always looking to meet new people and meet people who are interested in the space because passive investing is not always for everybody. It serves as a platform for a lot of places and a lot of people.

One day, I probably will have a deal here soon where we syndicate with somebody like you, might be a passive investor, or one of your listeners might be a passive investor in the future with me. That’s what we got going on. I’m always looking to scale. I don’t have an overarching goal to own 10,000 units. I’m more about opportunity, profitability, and creating a win-win for everybody that’s involved with a deal.

Andrew: Very cool. Ryan, how can listeners get a hold of you if they like to do so?

Ryan: I’m on every social media, on Instagram, Facebook. It’s just my name, Ryan Greone. I’m on LinkedIn. You can put my email in the show notes if you want. Feel free to shoot me an email or message me. I’m on all the platforms. Don’t be afraid to reach out. If you got a deal I also offer like, typically, I spent a lot of time talking with new investors just about deal flow, how to go about certain things. What that’s gotten me in the end is a lot of free time, it’s gotten me deals on the back end and other partners down the road.

Andrew: Very cool. Well, thank you so much, and I will put your email in the show notes. Thanks for coming on the show. It was a pleasure having you. That’s it for today, folks. Thank you all so much for tuning in.