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Interview with Shawn Dwyer of Golden Oak REI

Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-shawn-dwyer-of-golden-oak-rei/id1520681893?i=1000639851963

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 a special guest, Shawn Dwyer of Golden Oak REI. 

Shawn Dwyer has 19 years experience as a tech executive for a Fortune Top 30 Corporation and owns an 87 lot mobile home park in Maryland, which he bought in September 2022.

Although Shawn is fairly new to the Mobile Home Park industry, he offers a fresh and unique perspective. In this episode of the Passive Mobile Home Park Investing Podcast,  Shawn Dwyer and Andrew chat about the hurdles, lessons and experiences that Shawn has faced within his first mobile home park investment venture over the last year. Shawn also talks about how he missed out on his “Unicorn mobile home park property,” how he sourced and acquired his first mobile home park by partnering with an experienced operator, and what he thinks will happen to the Mobile Home Park asset class in the near future. 

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 40 manufactured housing communities across more than 10 states. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities. Check out KeelTeam.com to learn more. 

Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews:  https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy, Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at AndrewKeel.com.

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 500 total 5-star reviews, and it would mean the absolute world to me if you could help contribute to that. Thanks ahead of time for making my day with your 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:


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

00:46 – Shawn Dwyer’s story and how he got into Mobile Home Park investing

03:51 – Leadership qualities needed for working in mobile home parks

06:37 – The acquisition of his 1st mobile home park investment

08:34 – Lessons learned from his first mobile home park and his future plans with Mobile Home Park investing 

11:55 – Shawn’s mobile home park investing strategy

14:17 – Lessons learned in regards to mobile home park utilities

16:53 – Infill on vacant mobile home park lots and finding MHP contractors

19:53 – The affordability of housing and Mobile Homes as a solution?

23:03 – Funding equity & finding partners when investing in mobile home parks

25:27 – Tips for mobile home park syndication deals 

26:43 – Unicorn properties, Shawn’s perfect mobile home park looks like this 

29:34 – How large lot rent increases can hurt a mobile home park community

31:00 – The importance of staying educated in the mobile home park industry

32:30 – Reaching out to Shawn Dwyer (mobile home park investor)

32:47 – Conclusion

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

Links & Mentions from This Episode:

Golden Oak REI: https://goldenoakrei.com/ 

“The Mobile Home Park Manifesto” by Glenn Esterson, The MHP Expert: https://www.themhpexpert.com/buy-the-book-the-mhp-manifesto/ 

“Trailer Cash: How To Cash in On the Low-Income Housing Investment Boom” by Jamie Smith: https://www.amazon.com/Trailer-Cash-Low-Income-Housing-Investment/dp/193524535X 

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

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

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

Passive Mobile Home Park Investing Podcast Facebook page: https://www.facebook.com/PassiveMHPinvestingPodcast 

Passive mobile home park investing podcast 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 a very special guest with us in Mr. Shawn Dwyer of Golden Oak REI.

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 and rate this podcast with five stars? This helps us get more listeners, and it means the world to me. Thanks for making my day with that five-star review of the show. All right, let’s dive in.

Shawn Dwyer has 19 years experience as a tech executive for a Fortune top 30 Corporation. Shawn currently owns one mobile home park in Maryland that’s 87 lots, that he just bought back in September of 2022. 

We’re really excited to dive in today, Shawn, and learn about your first mobile home park and your path into mobile home park number one. Would you mind starting out and telling us about your story and how you got into mobile home park investing?

Shawn: For me, it started back in 2020 as soon as Covid hit. Over the course of my executive career with a Fortune top 30 company, I’ve seen the stock market crash 30% over a couple of big times. The first one really didn’t matter to me because I still had a long time before I was ready to retire, but the one where Covid hit pretty home.

Stock market crashes 30%. I’m ready to retire in a week right after that. What’s going to happen to my retirement funds? I said, okay, I need to start looking at something a little bit different. 

During Covid, at least I had a lot more free time, because I wasn’t necessarily traveling to the office, so I had more time and nights, weekends since we weren’t hanging out with friends and family, and a lot more time on my hands.

I dove and deep-dive into a lot of different books and a lot of different podcasts. I was really trying to figure out what that next phase of my investing career was going to be like. It’s been 401(k), like small little townhomes, condos. When I looked at how much it would take to scale, just a single family portfolio, it was going to be a while.

Like most folks getting started in this space, I first started listening to Kevin Bupp’s podcast from years ago back in 2017–2018, plowing through all of them pretty quick. Mobile home communities just seem to make a lot of sense to me. 

Self-storage facilities are great, RV communities are great, apartments are great. But when you look at the affordable housing crisis that we have in this country, where else can you live for $400–$500 per month, which typically include water, sewer, and trash? There really aren’t many options that are out there. 

This asset class just made a ton of sense, not only from the investing perspective, what you get for interest rates, but also just helping low income folks just find a nice, affordable place to live.

Andrew: That’s fantastic. Was that the first place you found mobile home parks? Was it on a podcast? Was it a book? What did you pick up that was like, okay, this is interesting?

Shawn: I think I did a Google search and just said, what other opportunities are out there for retirement? Real estate came up, single family homes, and then I just started hearing a little bit more about mobile home communities. 

I started diving into that asset class. I bought a couple of different books that were out there at the time. There really wasn’t much literature, so a lot of it just came from podcasts like yourself. I started to dive into it many, many years ago as well.

Andrew: That’s fantastic. You spent 19 years as a tech executive. How did your time in that role shape how you’re currently managing, operating, investing in mobile home parks?

Shawn: As a leader of large organizations that have 40 or so people reporting to me, I can’t do every job that is enacted on my team. I have to learn how to delegate. What are the systems? What are the processes? What are the automations that we could use? What are the KPIs that we need to take a look at?

When I hear people that are in the mobile home community space that come from various backgrounds, their challenge is when they get 5 or 10 parks, how do they start to scale? For me, I know that part. For me, it was just, how do I get into the industry? How do I buy my first one, two, or three? From there, I have an understanding of how to scale, how to leverage people, how to leverage automation and technology to take myself to that next level.

Andrew: Very cool. The background, it just doesn’t fully add up. I think it’s a tech exec turned trailer park investor. Did the stigma scare you at all? Did you have some negative feedback from anybody? Because even I had negative feedback. My dad, I’ll never forget. He was like, Andrew, you’re really going after it here. Are you sure this is the best fit investing in trailers? Did that scare you at all?

Shawn: Yeah, 100%. I had feedback from my wife, my friends, and my family. Obviously during Covid, they’re like, are you okay? Do you have Covid? Is it some reaction that you’re having? It’s like, no, here’s the reasons why. I just broke it down for them. They’re like, yeah, I don’t get it.

Now those same people are asking me, how can I start investing with you? I start telling them the returns that we have, what we’re doing for upkeep in the community, putting in brand new driveways, doing landscaping, bringing in brand new homes, helping people clean up their lots, doing community activity days where we declutter the stuff in the back of the house, which you don’t normally see if you’re not doing inspections on the lots. We’re making the community much nicer than it was when we first bought it.

Andrew: It’s so rewarding. I think like when you tell someone that, for whatever reason, it just doesn’t land well. We just did a video. We have a video crew come out and capture some of our infill and just some of the value-add projects that we had going on in one of our recent acquisitions.

I posted it on Facebook, and my neighbor saw it. We had been passing, just talked about what I do, and I got weird looks after I said I invest in mobile home parks. But just yesterday, she came up and she said, hey, I saw that video of what you guys are doing in Nebraska. Hey, can I get some information on investing?

When you see it in action, you see the homes being put on the lots, you see the utility hookups, and just cleaning up the community, new signage, new fencing, it’s so rewarding. It’s a win-win. That’s awesome. 

Shawn, tell us about your first park. How’d you find it? How’d you put the deal together? We’d love to know about that, because the first park is always the toughest one to buy.

Shawn: For me, it took almost two years from getting started to first starting with that mentorship program. I was working with Ryan and Ian over at Archimedes Group. Working with them as part of their mentorship program, just developing that database—how do you cold call, how do you talk to folks, how do you visit them at nights, weekends, drive-through parks, how do you build that relationship. For me, it took a little over two years. Believe it or not, this was the first community that I ever drove through that was a mobile home community. 

I connected with the owner one time. He said, hey, I’m interested in buying your community. I started talking with him for a little while. He’s like, have you visited? I said, no, I have material, but I’ve seen Google flyover for it and I said, it looks beautiful, nice layouts, they all look like they’re nice double-wides. He’s like, when you visit it, call me back. I said, all right.

Saturday morning, I woke up at 4:00 AM. It took about three hours to get down there. Just as the Sunrise was coming up, I threw all my camera, drove through the community just to prove that I took pictures and was actually there just in case he asked. I drove through it, got a bunch of videos for it. I went back home, called him later that afternoon, and said, hey, just drove through, it looks like an amazing park, what are you looking to get for it?

Unfortunately, he was looking for a pretty high price for what the lot rent was at that time. Still kept in contact with him over the course of those year-and-a-half, two years. A couple of years later, he’s like, yup, still ready to sell, here’s my price. He was able to do a couple of lot rent increases over the course of those two years, and now it finally made sense. I made him an offer, accepted it, and then closed just a few months later.

Andrew: That’s fantastic. Wow. Your first mobile home park, you’ve owned it for just over a year. What have been some of the toughest hurdles that you’ve faced with your first park?

Shawn: For myself, I did a partnership with a very experienced operator, Julio Jaramillo out of Evergreen. With his 30 years of experience, I believe that I’ve mitigated a bunch of roadblocks and hurdles that I would have had to overcome if it wasn’t for him.

Outside of that, honestly for me it was just a lot of learning for the first year. Just going from basic understanding of how communities operate to starting to develop the lease, handing those out, communications to customers, getting used to just the online portals, all the various reports, how to take checks, and process checks. It’s just something I’ve never done in my entire life, but he’s helped me a ton with mitigating some of those roadblocks and just understanding how to run essentially a giant community.

Andrew: And you’re managing it yourself?

Shawn: We have an onsite manager. She assists with a lot of the day-to-day activities, doing a lot of the bookkeeping, processing of checks, contractor invoicing, working on the brand collections and the issues that we’re having. She’s fully on-site. For times during the day, I’m working my full time W-2 job. We also have Julio’s team which she can reach out to if she has any questions during normal business hours.

Andrew: That’s awesome. You’re still working your W-2 job, this is on the side. Very smart, that is awesome. That is really cool. What’s next? You got your first park. Have you worked out all the kinks? Are you looking to expand?

Shawn: For us, we had five vacant lots, so infilling those now. As you know, that is a challenge to find some really great contractors. We have some great contractors, but honestly it’s lining them up to when they can come.

As you know, with mobile home parks, all utilities aren’t necessarily always marked where they actually are. We’ve had a couple of challenges with that. We’re fixing some streetlights now, and unfortunately cut some of those electrical lines when they weren’t marked.

Andrew: It’s better to cut those than to hit a gas line, because that happened when we were installing a fence. We had a big auger down and blew a gas line, you start smelling it everywhere. That was stressful. We had to call the fire department, get them out there.

Shawn: That almost happened with our water lines. It was close. We were about six to seven feet off from where the propane lines were marked from the company versus where they actually were. That one, we got pretty lucky with.

The water and sewer lines from the previous owner, the guy who built it, they’re six feet down. Normally, all the contractors in the area say their max is 18–24 inches. These ones are six feet. They don’t have backhoes that we’re deep enough that could actually hit the water lines and sewer lines where this guy actually had them. It’s been an experience.

Andrew: It’s actually good from a thermal temperature standpoint. We have parks in northern Minnesota and they’re 10 feet down. It’s really expensive when we want to get a mainline fixed. Or even a riser, you have to completely dig all the way down sometimes by hand if it’s in a weird spot. That’s interesting. 

With your first park and really with any of the parks that you’re looking to buy, what is your strategy? This one, I think you said, was 85–86 lots.

Shawn: Eighty-seven total sites. There are 86 mobile homes and then a single family home up front, so 87 total.

Andrew: And is this stabilized? You said there’s a little bit of infill. You said the seller just bumped those. Is there room to move those more? What’s the play?

Shawn: Yeah, there is. When we first took it over, we were at $75 under market lot rent at that time. Today, once January 1st hits, we’ll still be about $80 under market for what the other communities are in the area. We’re probably second nicest out of seven or eight different communities that are pretty close to it.

Andrew: That’s great. You said all majority double-wides.

Shawn: All double-wides. There are maybe four single-wides that are in there. We have double-wides that we’re moving in today. We have them listed and ready for sale. Once those get sold off, we’ll be 100% full.

Andrew: Very cool. Moving forward, are you looking at more stabilized deals like this that just need a couple of homes to be infilled? Are you looking at having value add deals? Obviously, you have your W-2 job. What’s the plan there?

Shawn: That’s where the strategy changed a little bit. When I first got started, it was just a shotgun approach like, I just need to find one, I just need to find one. It’s like a squirrel looking for something. Now that we owned it for the time, I don’t have that opportunity. I don’t have that time, that 40 hours, 80 hours a week that I can spend on infill sitting on top of contractors and making sure that everything is lining up.

For myself, it’s looking for more of those stabilized deals with a little bit of value add capability, whether it be rent increases, utility bill backs, moving in some additional homes, doing some upgrades. They’re the properties that I’m currently looking for. It minimizes the scope of who I have to cold call, market, network with. It’s really helped streamline my focus for the next couple of years.

Andrew: That’s fantastic. That’s a great approach. I assume that this park is on public utilities, city water, city sewer.

Shawn: It is on well water, public sewer.

Andrew: Well water, okay. What were your hurdles there learning that private utility? Obviously, you had coaching with Ryan and Ian who are great people to help work with, but did you have a learning curve there? Because I sure did.

Shawn: For me, I live out here in Pennsylvania. We have septic systems, and I’m on well water personally, so I’m very familiar with the systems and how they work and operate. The only little education piece that I needed is just all the testing that is required from at least states up here in the mid Atlantic, so Pennsylvania is very heavy on testing and so was Maryland.

On a daily basis, we have to make sure that certain levels like chlorine are within the water, everything’s good, everything’s clean, our pressure is solid. We also have monthly, quarterly, and yearly type testing that is mandated by the state to make sure that drinking water is safe for all the residents.

Andrew: That’s great. And you have a licensed well operator that has to go out there occasionally?

Shawn: Every day.

Andrew: Every day they have to go there? Okay. Very nice. We’re looking at a property with a well right now, but that would be our second one. I think they get a bad rap because there’s daily testing and all those requirements. I think our expense ratio on our one that we have now is not that much higher than our public utility parks. It’s just a little extra management to make sure that the operator actually gets out there.

Shawn: The only challenge with wells is you have to make sure they keep your electricity on. No electricity, no water.

Andrew: Yeah. In Ohio, where our other well is, they have a program that if you get a generator put in, which I think costs $20,000, they’ll fund $10,000 of the cost. They’ll cover half of it, which was huge, but it had to be for a community water system. And it was like a grant. We got that, which was great. If you lose power in a bad storm or something, that could put you in a tight spot. What’s the plan there if that happens? Do you have a backup plan?

Shawn: Luckily, we checked with the water operator ahead of time, as well as the power company. The community in the area very infrequently loses power. As of right now, there is not much risk that we’re seeing for losing power in that area.

Andrew: It’s good. Hope that doesn’t happen. If it does happen, do you have to get everybody to fill up their tubs and get them five gallon bottles of water?

Shawn: There are a couple of things you could do. You can bring in a portable generator. Hook it up. You’d have to have gasoline, diesel fuel, depending on what it runs off of just to make sure it’s running 24/7 until the electric company gets everything up and operational. That would be the backup plan.

Andrew: Cool. Shawn, what mistakes have you made with this first park that our listeners can learn from?

Shawn: For me, like I said, Julio helped to mitigate a lot of the risk upfront. For me, the learning that I had for it was just the intense amount of time it takes to do infill. The permitting process for lots that were already approved to be within the community, it took two months to get them back from the county. For sites that were already approved, just for them to get 5, 10, 15 signatures as part of the county, state, township, water, environmental departments, two months from start to finish, that was a little bit of a surprise and a wake-up call for me.

Andrew: Yeah, infill can be cumbersome, and every little municipality does it a little bit differently with their inspections required and everything. Some communities don’t like mobile home parks, so they make it extra hard and extra lengthy, so that’s good. That was the only thing, just the length of time for infill? There were no other mistakes on your first deal?

Shawn: None mistakes, no. The other challenge has been finding contractors, even calling people. We’re doing phased installs of new asphalt driveways for the whole community. I’d called 5 or 10 different companies, half of them never even called me back for quotes. That’s almost 90 driveways that we’re trying to do an install. They haven’t called me back.

Andrew: That’s interesting. Do you think it’s a market thing, or do you think that type of contractor is busy?

Shawn: It could be a little bit of both. It could be a stigma just working in mobile home communities and not wanting to do the work or not thinking that we’re going to give them a fair price for the work that they’re going to be doing. I have no idea, but it’s been a challenge. Also working with the county to do the expansion upfront. We have two or three acres that we’re working on up there. Just over overcoming some of the hurdles and challenges with that since we are on the public sewer system.

Apparently, the sewer system is at capacity. We’re trying to provide an additional 4–7 homes of affordable housing, and the township is telling us to tap down on sewer. Our other option is potentially septic. But according to the rules and regulations for the county, you have to have an acre of property per septic system for the home that you want to install, which for at least new mobile home communities, it’s essentially regulating them out of never being built. It’s unfortunate.

Andrew: That really is, wow, because I think you can fit at least 10 mobile homes on an acre and have decent spacing. It’s crazy you need that much for one home.

Shawn: Yeah. This community that we have here, for most homes from the street over to the front of their home, is 35 feet. They’re big front yards, just nice distance on the sides, big long driveways. It’s a nicely laid out community.

Andrew: Very cool. Shawn, what advice do you have for listeners out there that are looking for their first park? What things do you think you did right? What things do you think you could do better? Obviously, that first park, even for myself, took me 18 months from the time I was like, all right, I want to buy a park till the time it actually happened. What advice do you have for those listeners?

Shawn: It takes a ton of time. If you’re underwriting properties, whether you’re a GP or potentially an LP, for me it’s all about the affordability of the housing. Apartment buildings, you’re concerned about your rents, who’s getting what in the area, and what your supply looks like.

For mobile home communities, you have multifaceted of what you’re looking at. It’s not only apartment and apartment rent. It’s a single family home, it’s a townhome, it’s new construction, and it’s other mobile home communities. Its job infill and population growth, so there are more factors, at least I think, on the mobile home community side.

We look at properties that are in deep central Pennsylvania and the northwest part of the state. The pricing on the community looks great, it looks like a good opportunity. But when you look at what someone could buy, a single family home or potentially even a smaller townhome that’s brand new, when you start including the lot rent plus the cost of the home, whether it be new or used, it almost pushes the mobile home community up above some of those other housing options. You have to make sure you do your due diligence that it actually makes sense for what the business plan is from that specific operator.

Andrew: What would that number be? A lot of operators say the median home price is above $100,000. What is it for you?

Shawn: I would say even higher, I would look at $150,000–$175,000.

Andrew: I think all of our better markets that have a median home price above $150,000 or even above $200,000 are the best markets. You have more room for rents to grow just because of that spread. The affordability factor is real. Your service workers, where are they going to live?

Shawn: Especially with interest rates where they are today, when you start looking at what that lot rent is costing folks and then with brand new homes, single wide, double-wides coming in, plus all the cost to do setups, you’re talking maybe $150,000–$200,000 of what somebody could be spending for a townhome or single family home in that same market.

If you’re overpricing, or even some of GPs that are pretty aggressive on some of their rate hikes and lot right increases very, very quickly, in a football term, you’re almost out-kicking your coverage. You’re almost going way beyond what folks could do for infill for that particular community in that particular area.

If you think that you’re going to get this massive price value just because your lot rents are high, and you’re 75% full, the person that’s going to be purchasing that and doing a lot of the hard operations to get new homes in are not going to find people to come in there because you out-kicked the coverage. You out-kicked what that area can support for lot rent plus new home.

Andrew: I just read this huge article talking about how in most markets, it makes sense right now to rent over home ownership because it’s just so expensive, if you add in repairs and maintenance and what that’s going to add up to. I think a lot of operators are moving to renting out their new home inventory that they’re bringing in because it’s harder to get people to qualify to buy homes, but obviously, it’s very market-specific.

Shawn, how did you put this deal together? Did you use your own money? Did you raise money from limited partners? What did that look like?

Shawn: This particular one we had was a loan assumption. That was another area that I got to experience and learn a little bit more about. We have a fixed interest rate of 4.2% for the next 8 or 9 years. We did a capital raise for my friends and family that were interested in wanting to jump off the cliff with me. They’re very happy, very pleased with what they’re currently getting for quarterly distributions, what we’re doing to the community, and overall value-add versus what they’ve gotten in their 401(k) and stock market with other funds that they’ve had.

For myself and my business partner, like I said, he’s been in the industry 30-plus years. I said, here’s how much I think I can get to the table. He said, okay. He sent out not four or five blast email distributions, four or five emails to four or five people and raised like $800,000 within a couple of minutes. That’s the power of experience.

Andrew: I think that was smart. Another tip for investors looking to get their first deal is to partner with a bigger operator that has a management team and has done this multiple times before. That was really smart. Instead of trying to struggle through your first deal, there would have been a lot more mistakes if you didn’t bring in a bigger operator. That was smart.

Shawn: The great part is having interviews like this with yourself and just talking with more friends, more family, and the base investors that I have. They’re spreading the knowledge and information on what they’re doing to their friends and family. Now I have more people that’s reaching out to me. I’ll be able to bring more to the table for the next deals that we find.

Andrew: The first one is always the hardest. You have to convince people that you’re not going to light the park on fire or something. The next one, after they see you’ve done it, you have a track record now and it’s a little bit easier. That’s awesome.

Shawn: It’s not a Ponzi scheme. I’m not going to run over to the Bahamas with your $50,000 investment. It still gives me a little bit of angst just wiring money. It’s just me personally, I’m always double, triple checking the wiring instructions. I always tell people, if you’re investing with me, please reach out to me. If you see an email coming across about wiring instructions, just call me, text me, let me know. We’ll double check through all the numbers.

Andrew: That’s awesome. As a passive investor, what do you think are the most important things knowing what you know now that they should look out for before investing into a syndication deal like yours?

Shawn: Three things come to mind: Know the operator, know their experience, and know that they’ve had some cycles go through for not only economic cycles but also purchasing refi sales or properties. Ask them some of the tough questions on what we’re currently seeing in some of the apartment space and what’s being forecast out over the next 12–18 months, how are they mitigating some of those potential issues with rates and interest rate hikes, what are the capital calls doing, if any operators have ever had any of those. 

Make sure you know the operator is one. Know the area that the community is in. Do your due diligence to understand what that area looks like for not only growth, jobs, but what housing options are out there for folks.

Andrew: And they can do all of that 5–10 minutes. Best Places is a good website, citydata.com is another one. Yeah, that’s great advice.

Shawn: The last one, look at the debt that they have on the property and see if that matches the business plan. If they’re telling you that they’re going to do a major cash out refi in a couple of years, they’ll look and see what the terms are for that particular loan that they’re getting for that property.

Andrew: That’s a good tip there. What does the perfect mobile home park look like in your eyes, Shawn, knowing what you know now?

Shawn: This is unfortunate, because I found a unicorn property during the first two years, and I didn’t even know it. It was a 78-space community that was pretty close to me. I drove through it. I didn’t have a lot of experience at the time driving through communities. I was like, oh, this looks pretty nice.

It was an all double-wide community, 78 spaces. There was no skirting within the community. They were all on cinder blocks, so it looks beautiful. Public sewer, public water, direct billed, dedicated roads, and lot rent was, if I’m not mistaken, $350 at the time.

Andrew: Yeah, that sounds like a great white buffalo, man. That’s awesome. Did you end up selling? Did someone else buy it?

Shawn: Someone else bought it. I had it verbal under contract with the owner, and then someone swooped in at the last minute and offered about 30% more than we had a verbal offer with the owner at the time. He wanted about $50,000 per pad. We said, okay, this makes sense, this works.

We started finalizing and trying to get him to sign the LOI just to have that first step in the agreement so we can start the PSA process. Someone came in, swooped in, and offered him 30% more. It’s super close. That would have been my first park, but we learned from that experience. Don’t let those opportunities go to waste. If you do have something that comes and it’s a unicorn, make sure you got a net and bring it in.

Andrew: That’s a great tip there. Time kills deals. Sometimes it’s like, all right, what do we have to do here to get over the finish line? We just flew out to a property to meet with the owner in person before we had it under contract, just because those unicorn type of deals are few and far between right now.

Shawn: Absolutely.

Andrew: I’m curious about your thoughts and what you’re seeing. I know you’re actively looking at deals. It’s November 2023. Interest rates are pretty high right now. We’re quoting out deals right now and getting 8% interest rates on average. What does your pipeline look like? What are you looking for in deals that you’re underwriting?

Shawn: We’re looking specifically in the mid-Atlantic area. Like I mentioned before, small value-adds, lot rate increases, potentially utility bill backs, doing a little bit of infill. Ideally, it would be 90% occupancy or higher and really just in the strong mid Atlantic markets from the southeast corner of Pennsylvania, Maryland, Delaware. The Northern Virginia area is where I’m primarily looking right now. For me, sourcing deals off market with direct to owner as well as looking at broker opportunities.

Andrew: You and UMH are competing then, right?

Shawn: They do have some nice parks here locally to me. They are pretty good operators from what I can tell.

Andrew: They’re a big REIT operator. They probably have a lower cost of capital than you and I, right Shawn?

Shawn: Slightly.

Andrew: Shawn, what do you think is the biggest threat to mobile home park investing?

Shawn: A couple of things. I think doing lot rent increases above what is reasonable for the market could potentially hurt this industry in the long-term, not only for the residents that are currently living there, but also good operators like yourself that do lot rate increases $20, $25, $30 a year and just slowly up that income that you have coming in, but also provide great value for folks.

I see a lot of communities that I drive through, where certain groups buy them and jack up the lot rents, but don’t necessarily give back to the community to make it a better place to live. It’s just lot rent increase, lot rent increase, lot rent increase. You don’t see the value for your customers, ultimately the residents, of what you’re bringing back to them.

Andrew: Because it’ll bring regulation, bring rent control potentially, bring other rules. I think in Illinois, you can only raise rents once every two years, and there are limits on it. Yeah, I agree. You don’t want to be that guy that’s just jacking up rents, and that’s how you’re getting a deal to pencil out.

Unfortunately, there are some bad actors out there. I just saw a huge article in The Wall Street Journal on someone that did that. You don’t want to end up on the front page of the paper. That’s not a good look.

Shawn: No. It’s okay for the right reason, but definitely not that reason.

Andrew: Shawn, what’s one last bit of information or important advice you would give an interested passive mobile home park investor that’s familiar with apartment syndications, but are just interested in getting into a mobile home park deal? What would you tell them before we sign off?

Shawn: Honestly, educate yourself as much as you can. Listen to as many mobile home podcasts that are out there. Listen to some of the experience indicators. They have a wealth of knowledge. Read as many books as you can. There are a couple of really great books in the mobile home space that could add a ton of value so you understand the asset class a little bit more. That way, you can poke holes in any of their pro formas or at least what you’re hearing from the operators on what their business plan is.

Andrew: What are those books so we could share with the listeners?

Shawn: I have a couple that are in my closet, I have to go grab them.

Andrew: Glenn Esterson has one.

Shawn: His book is awesome. Yup, The MHP Expert was one, then there was another one that I had. I don’t remember the individual’s name. It was right before his book came out. That one was a really good one as well, but I think Glenn’s was a little bit better. It was a little bit more detailed and it had a ton of great information.

Andrew: The one that I read was by Jamie Smith, and it was called Trailer Cash. That was another really good one, but that’s an older one no. I’m sure a lot of things have changed, but that was another book. We can put the link to that in the show notes. 

Shawn, thank you so much for coming on the show, man. It was good chatting and learning about your story.

Shawn: I appreciate it. Thank you for having me.

Andrew: If our listeners would like to get a hold of you, Shawn, what’s the best way for them to do so?

Shawn: The best way is to go to my website, goldenoakrei.com. It has all my information, tons of great articles, podcasts that I’ve been on. Go visit goldenoakrei.com. I appreciate it.

Andrew: Awesome. Thank you so much, Shawn. That’s it for today, folks. Thank you so much for tuning in.

https://keelteam.com

Andrew is a passionate commercial real estate investor, husband, father and fitness fanatic. His specialty is in acquiring and operating manufactured housing communities. Visit AndrewKeel.com for more details on Andrew's story.