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 an amazing guest in Mr. Tim Woodbridge.
Tim Woodbridge purchased his first mobile home park in December of 2019 and since then he has grown a portfolio of 9 Mobile Home Parks totaling just under 300 lots. He specializes in value-add multifamily assets, most of which were distressed and in need of a total makeover.
Tim, a former registered nurse for over 8 years, graduated from Northern Arizona University in 2012 with a BS in nursing, he was able to, within just 2 years, quit nursing and jump into mobile home park investing full time!
A lot has changed in the last few years within the mobile home park investing space and Tim talks about the lessons he has learned during those formative years. He talks about how his mobile home park investing strategy has changed, as well as his view on the future of the mobile home park asset class. Tim focuses on helping educate those interested in investing in mobile home parks, and he reiterates the importance of keeping up to date with industry knowledge and trends. He also mentions that while you’re actively investing and operating within the mobile home park asset class, it’s important to keep an open mind on alternate ways of operating mobile home communities.
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.
Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews: https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy, Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at AndrewKeel.com
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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.
00:21 – Welcome to the Passive Mobile Home Park Investing Podcast
01:40 – Tim’s journey into the world of mobile home park investing
06:33 – Getting educated in the mobile home park industry
11:57 – Adjusting your expectations of people
14:28 – How Tim’s strategy in mobile home park investing has changed over the years
17:08 – Mistakes you make when you’re too hungry for your first deal
21:00 – Due diligence in mobile home communities (especially with plumbing)
24:00 – Figuring things out the best you can and knowing when to ask for help
25:30 – Being open and honest
34:18 – Being bullish on mobile home parks
37:00 – Government threats
39:41 – Getting in touch with Tim Woodbridge (mobile home park investor)
41:55 – The importance of networking
43:50 – Conclusion
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Links & Mentions from This Episode:
Tim’s Facebook: https://www.facebook.com/tim.woodbridge.54/Tim’s Instagram: https://www.instagram.com/tim.woodbridge/?hl=enKeel 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/PassiveMHPinvestingPodcastAndrew Keel Instagram page: https://www.instagram.com/passivemhpinvesting/Twitter: @MHPinvestors
Andrew: Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have an amazing guest in Mr. Tim Woodbridge.
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 absolute world to me. Thanks for making my day with that review of the show. All right, let’s dive in.
Tim Woodbridge purchased his first mobile home park in December of 2019. Since then, he has grown a portfolio of nine mobile home parks totaling just under 300 lots. He specializes in value-add multifamily assets, most of which were distressed and in need of total makeover.
Tim is a former registered nurse for over eight years, graduated from Northern Arizona University in 2012, and was able to just, within two years, quit nursing and join the MHP asset class full time. Tim, we are excited to welcome you to the show.
Tim: Andrew, thank you so much for having me on. Appreciate it.
Andrew: Would you mind starting out by telling our listeners a little about your story and how in the world you got into manufactured housing?
Tim: I was a nurse for a while. I went into nursing because nursing is safe. I grew up, I didn’t know anything about money. My dad worked and saved everything, and my mom spent everything. It’s two extremes of the ways not to really generate wealth, so I didn’t know anything,
I thought, get a safe job. Nursing is very safe. I like people. I like human biology. It’s fascinating. I graduated, worked as a nurse, didn’t know anything about real estate. I moved to Charleston, South Carolina about six years ago and still didn’t know anything about real estate, just nursing. That’s what I knew.
I came across Rich Dad, Poor Dad. Everyone talks about, oh, it’s so simple. I don’t know, it’s not 100% accurate. When I read it, I didn’t know the words asset or liability. These were totally new to me. It just blew my mind. From there, I read a ton, and listen to a lot of podcasts.
I listened to Frank Rolfe who was on the BiggerPockets Podcast talking to Brandon Turner. I was looking for my own path. I was like, oh, he laid out all these cool things about it. I said, yeah, I like that. It’s a little bit weird. It’s a little bit different, but the fundamentals are there. I really like it. I just researched a little bit more, talked to some people, and just dove in.
That first park was on mobilehomeparkstore.com because Frank said go check out mobilehomeparkstore.com, and I said, okay, sure. There was one, it was an hour and 15 minutes from where I live. I reached out. I was super, super nervous because I didn’t know anything.
The guy had listed it. It was per Frank Rolfe’s calculations. Per the lot rent model, it should have been substantially less. But anyway, I called the guy, got a voicemail. I love to text. Hey, I’m not sure if I have the right person, but my name is Tim. If you’re still selling, give me a call.
He calls me up. He is a retired pharmacist, so I’m just like, oh, that’s so cool. I’m a nurse. Naturally, I’m like, how can I build rapport with someone? That’s just how I am. I like finding common grounds. He was telling me, oh, I’m selling this. My daughter’s in Chicago with her husband, they’re both physicians. I want to spend time with them and with my new granddaughter, so I’m looking to sell.
I went up. I met them. I met him and his brother at the park. They showed me around, then we went to lunch, and then I said, well, you want this price, I can only offer this. Again, I’m going off lot-rent only. It was only 10 of 36 occupied, so it was substantially lower.
I just said, look, I’m sorry. I’m sorry this is way lower than you wanted, but here’s what I could offer. Right away, he said, no, no, I can’t do that. He said, I can’t go anything less than this. I said, okay, well, if I get you that, will you sell it to me for that? He said, yes. I said, will you finance it to me? He said, I’ll finance maybe a little bit of it.
I’ll finance 20%, is what he said. I said, okay. I didn’t even have any contracts or anything with me. I had no idea. I was flying by the seat of my pants. I had a contract for the price I wanted, but I didn’t have any extras like where I could write in a price. I was just like, okay. I left there.
He was all-in southern. I’m sticking by my word, and I totally respect that. I love that. Again, he could have said, oh, to hell with this guy. But no, he said he would do it. It was a lot. It was difficult. It was trying to find financing on a 10 of 36 occupied mobile home park in a small town in South Carolina. It was not easy, but we did.
We got it, and he financed that. Again, he stuck with his word. We closed it. I didn’t know where I was going to go, but I knew that I had to bring in homes. I’m like, okay, this is it. I have to bring in homes. I don’t know how exactly.
Andrew: Can I pause real quick, just because I have so many questions?
Andrew: I’m so impressed that you have this sophisticated real estate investing experience. How did you know to ask for seller financing? How did you get educated on mobile home park investing in the first place? I know you initially said podcast, but how did you know to ask for that seller second?
Tim: When I came here to Charleston and when I was getting into real estate, someone said, oh, go to meetups, go to a local meetup. I still am part of a local meetup group with guys who have been in the business for a while, not mobile home parks, but they’ve been in the real estate investing space for a while.
I would go there every Tuesday because I worked Friday, Saturday, and Sunday at nursing. I’d go every Tuesday morning, and I listen to them. They talk about all these crazy ways to do things. It’s like what I was around all the time, people talk owner finance. It was being around that that made me initially just like, oh, okay, will you finance the whole thing? It was almost second nature to ask for it.
Andrew: Wow, that is so awesome. I love that. That’s how I got started, too. I started going to CFRI. It’s a local REA group here in Orlando and learning about investing in notes, subject to’s, and lease options. They have a Saturday course every Saturday morning that I would go to, and the courses were $200.
It was a whole Saturday thing. That’s how I started flipping houses when I first got in. It’s just like, wow. What I learned from going to those Saturday courses and for-yourself Tuesdays was worth more than I got in four years of college in terms of financial education and financial freedom. It was crazy.
Tim: You know what they say. Get in the right rooms, get around the right people. That is so true. There are so many people doing things in different ways than the norm, and I guess just being around that is like osmosis. I just sucked it up.
Andrew: Is that how you learned to go directly to owners to try to find deals? Is that where you got that initiative from? Because that in and of itself took some initiative. If you didn’t have a lot of experience, how did you know to just go straight to the owner instead of going through a broker?
Tim: The other thing about the group is that some of them were realtors, but most of them were anti-broker. Anytime a broker gets involved, there’s unnecessary friction. That was just what they preferred. But to be honest, it was dumb luck, I’m sure, because the seller had listed it himself. He didn’t use a broker to list that park. It was just me being like, okay, I see the phone number on the website, how about I call that?
Andrew: That is awesome. How did you get educated on mobile home park investing in the first place? Did you go to a boot camp, or was it just like the podcasts, or read a book?
Tim: Just the podcast and then deep diving on the Internet. Not to disparage Frank, because I know most people that I know who are into the MHP space have gone to Frank’s boot camp, I just haven’t, and I never did. I should one these days and see.
Andrew: I’ve gotten a couple of times. You always learn something, and Frank is super entertaining. But that’s amazing. Congratulations. The park that was 10 of 36 occupied, how’s it doing now? And why was it distressed like that? Only 10 of 36 were occupied. Was it just poor management? What was going on there?
Tim: I was telling this story the other day. When the seller and his brother were showing me around, I asked this question which now seems rude, but it wasn’t rude. It was just me being curious. I was like, why is it only 10 of 36 occupied? He said, well, it’s all paid off, and I don’t have to put any work into it. I’m getting $2000, $3000, or whatever, a month from it. He’s like, I don’t need to. I said, oh, okay.
Andrew: Best reason ever.
Tim: Exactly. He’s like, well, I’m a retired pharmacist and I don’t need to. It’s just a necessity. He didn’t need to really build it up. Today, I have 25 of 36 homes on it. But what’s interesting about that park is there are all these individually deeded lots. I bought 36 deeded lots.
There are 25 homes in there, all the other parcels of land that I don’t really want to put a home on because as we all know, it’s not easy. But even more so, it’s not that it’s not easy. It’s that the economics don’t work as well in that small town, South Carolina, as I’d like them to to bring in new homes, so I have an owner finance all the land.
I think, right now there are 32 of 36 that are either leased with the option of purchase for the parcels of land, and then the 25 are rental/lot-rent only. It’s creative.
Andrew: It’s creative. Yeah, I like it. What do you think, Tim, is the toughest hurdle to overcome in mobile home park investing?
Tim: Lowering your expectations of people sometimes, maybe, depending on the park. Maybe a park looks a little rough and not like someplace that I would live, but people are paying really well. I got a park up in North Carolina where you go through. It’s not rough like, oh, man, I’m afraid to be here. It’s more like, oh, they spray painted their address on the side of their home. Okay, well, no, I wouldn’t live there, but is it going to make me money? It is.
It’s my best park. I’m not even going to lie about that. I love that park. I love the people on them. Not everyone is going to be the same. It doesn’t matter if you’re a billionaire or if you got nothing, everyone deserves to be treated like a person. Everyone deserves respect.
I think sometimes, adjusting your expectations. I could say, how dare you do that? We need to have different standards. That might work for some parks, but it doesn’t work for every park, so be a little bit fluid.
Andrew: Customizing each park based on the residents that are staying there. I like that. I don’t think any other operator has mentioned that, but that is so important. We have a similar park in southern Georgia in Tifton that is one of our best parks.
If we were very strict with our rules there, we would upset a lot of people and probably have a lot more turnover than we do now. Wherein other parks, it’s mandated. The tenants are on each other about rule violations and someone putting a washing machine in their front yard. You got to cater it. That’s very good feedback. That’s good feedback there.
By the way, Tim, do you own most of your stuff around where you live in Charleston like North Carolina, South Carolina?
Tim: North Carolina, South Carolina, Georgia is where I own currently. You got Tifton, I got two in Albany.
Andrew: Very close.
Andrew: Very close, awesome. Tim, how has your mobile home park investing strategy changed over your—how long has it been? Four years in the business? Has it changed at all?
Tim: Totally. For the longest time, I’ve been like, oh, how dare they ask for that price, That’s crazy. They’re never going to get it. We all know the last couple of years, they did get it. Oh, that’s BS. Instead of griping to myself about it, I’m more like, okay, how can I get that price? It’s probably got to be creative. But fortunately for me, I grew up in creative real estate. That’s interesting to me.
Creative deal structure, how can we make this a win-win? It’s like, okay, if I give you your price, are you going to give me my terms? Or how much money do you need down? Can you come in as an equity position and carry some of that down payment? I get a bank loan, you get that, and then you carry a little bit, and then I’m raising a little bit less from investors. It’s just a fun math problem.
Andrew: It is. There are so many ways to get creative with it, which I love. What’s the average size of the communities you’re buying? Do you get 40 lots or so?
Tim: I say 40-plus, but it depends. If it’s in a portfolio, then that changes it for me. I bought my Georgia portfolio at 78 lots and North Carolina portfolio, 88. But in that North Carolina portfolio, there’s one that’s 14. In the Georgia portfolio, there’s one that’s 14 as well.
Andrew: If you cluster and get enough around each other, it makes sense to have a bolt on a smaller one, right?
Tim: Yeah. The thing with smaller—and you know this better than I do, I’m sure—is that it’s just harder to run, harder to get stuff done when it’s small. Money makes the world go around, despite whatever, whoever says whatever. If I have money coming in, I can pay someone to do something effectively. Whereas if money’s not coming in, then it’s like, okay, how can we get this done with this limited amount of resources?
Andrew: And it’s a little bit tougher, exactly. That makes sense. Tim, what mistakes have you made in mobile home park investing that our listeners and myself can learn from?
Tim: Oh, my gosh, I feel like this needs another podcast. The first mistake I ever made is, on that first park, I left the meeting with the seller. I went home, and I met up with a friend I had at the time. He was someone who dressed super well and was well-versed. I was like, man, this guy’s got to have a lot of money. I have no idea what to do next, but he’s going to help me.
I took it to him, and he turned out to have no money. He was shady in the way that my ex-girlfriend was. I don’t know about partnering with him, but I was so hungry for that stupid first deal, so I partnered with him. The next thing I know, we’re closed, and he’s taking money from the operating account.
It was a cluster of bad times in early 2020 trying to get him out. It was a lot of he’s on the operating agreement now. He owns a third of this company. It was a lot of nastiness in early 2020. Listen to your gut. If someone seems crappy, or if they’re doing crappy things to some people, they’re probably going to do the crappy thanks to you, too.
Let’s see other mistakes in mobile home parks. Things don’t happen as quickly or as cheaply as I would think that they would. I know everyone says that, and I just had to experience it enough times to lower my expectations.
I can be really angry about this taking longer and being more expensive, but all that’s doing is me being angry. That doesn’t change things for the better. That doesn’t do anything for me, but just to my own expectations. I’d say those are the big ones. There’s always a story to tell. There’s always a way to do things.
Andrew: How about due diligence? I’m surprised. That’s how we got started, it was going to the boot camp, and they give you the 30-day due diligence handbook. How did you embark on due diligence on your acquisitions? Did you have some format that you were following or utility infrastructure inspections? How did you handle all that kind of stuff?
Tim: I didn’t really, I didn’t. And I felt it. Within early 2020, going through all the drama with the other partner, there was also a big sewer issue. Looking back, it wasn’t that big, but it was big to me because I didn’t know what the hell was going on.
I remember, I had just met Ryan Groney. I’m sure you know Groney because he lives here in Charleston, too. I was like, oh, my God, what do I do? He’s basically, calm down, just call a plumber. It’s going to be okay.
It would have been smart to snake the lines. I did not. It would have been smart to do a lot more thorough due diligence, I didn’t. In the grand scheme of things, I got out unscathed, relatively. I did research in terms of things that I should do, but I didn’t implement everything in terms of due diligence, so burning fast that first time.
Andrew: A lot of our due diligence has been not from the 30-day due diligence handbook. It’s been from doing deals, being in the field, and learning from our mistakes, because we’ve made some as well on utility infrastructure. I think everything deserves a lot of attention before you buy something. How does that process look now, on your future acquisitions for due diligence? Do you have a better process to catch sewer issues and things like that that you didn’t in your first mobile home park?
Tim: I’ve got a checklist now. It’s an amalgamation of stealing stuff from this person, this person, this person. I asked around a lot. What I am good at is asking for help. People have sent different things. I take what I like, and then I’ve made it into a checklist, and it has helped tremendously.
Yes, snake your lines. Check the utility infrastructure. I don’t have anything good for septic, to be honest. I have checked a few septics, but I don’t know. What do you do for septics?
Andrew: We’ve pumped them. We did one, and we pumped them, which was not the cheapest thing in the world. There were six tanks for 52 lots or something like that. We pumped them and just inspected the tank to make sure if it was concrete or what the infrastructure of it was. But without digging down in the lines and seeing, it’s really tough.
We had a company go out there. It was the company that cleaned them out every year and wrote up a little report on what they were seeing in the absorption and the leach field to make sure, but it wasn’t 100%. It wasn’t like they were like, oh, this is 100% going to be fine, and they’re giving a stamp of approval. It was really vague. Yeah, it’s worked to this point, and the tank didn’t have any obvious signs of leaking.
Ever since that one story that Frank Rolfe told, where someone he knows was getting charged $10,000 a day by the EPA because they had a septic tank that was leaking, I was like, wow, that’s scary. We prefer, and probably 90% of our parks are on public utilities, city water, city sewer, but I think that’s what people need to understand.
There’s additional risk with private. It’s not the end of the world. Deals still work with them. We own parks with septic and with, well, but there’s just a little bit of extra risk there, right?
Tim: Yeah. If you ever find someone who can give you a 100% stamp that is like, oh, you’re good, you’re not going to have to worry about it, you’re going to have to text me their info.
Andrew: Red flag.
Tim: I stay away from lagoons. I stay away from wastewater treatment plants. I’m not saying that people don’t do them successfully. I’m sure they do, it’s just not my thing. I am of the attitude of when there’s an issue, I will figure it out.
There are black swan things all the time. I have an idea of things, but I don’t need 100% certainty, because I recognize nothing in life is 100% certain, so I do the best I can, I gather the information I can, and if something comes up, then I figure it out.
Andrew: I love that. I’m wondering if there’s any aspect of that that you took from your nursing career and brought into MHP investing.
Tim: With nursing, depending on where you’re working, there are a lot of times where you have to make do with what you have. Nurses and occupational therapists are the best at figuring things out with the best I have. It’s probably a surprise to a lot of people who aren’t in the healthcare field, but that’s just the reality of it. It’s a business. A lot of things cost a lot of money. Not every hospital has the money to pay for things.
That’s above my head in terms of the healthcare business side. I never did that, I was all bedside. But it’s like, okay, well, I can’t afford this, so what can I do? A lot of times, it’s to go talk to that nurse over there. They have been doing this for 30 years. They can get an IV in the craziest of places, so maybe ask them for help.
Andrew: Asking for help.
Andrew: Like what you said, you’re great at that. That’s awesome.
Tim: Who’s better than me, who’s smarter than me? That’s what I’m looking for.
Andrew: That’s so important. Before we hit record, we were talking about triage. If no one’s dying here, how can we prioritize this appropriately to address the most important things first? That’s really cool, man. If you were going to invest passively as an LP in another operator’s deal, what would be the most important things that you would look out for, look at, or want to know, before investing into that deal?
Tim: I am big on being open and honest. I guess after that first deal, my bullshit detector is like, I want to see some solid projections, not anything too lavish because sure, I’ve done deals where I give great, great returns to people, but that’s not what I want to see as an LP. I want someone who’s aware of you managing the downside, let the upside take care of itself sort of thing.
I want someone who has a plan and wants something where they’re open and honest about this is how we’re doing things. I haven’t invested, but I’ve heard of different people doing different things. It’s just like, why did they do it that way? Because it seems like they’re hiding something.
I’m not saying they necessarily are hiding things, but it’s just like, why man? Just simplify things. Simplify it, tell me straight up how it’s going to be, how it’s going to look like. Everyone who’s investing knows that things happen.
Andrew: It’s not an annuity. This isn’t guaranteed cash flow. This is an investment, there’s risk and things. Things change. A previous guest, I think it was Ryan Smith with Elevation, said, your pro forma is just basically stating how wrong it is. What is the percentage wrong your pro forma is? Because nothing’s going to go exactly as planned. That’s good. Tim, what would the perfect mobile home park look like in your eyes? And why?
Tim: That is such a hard question because it depends. The perfect mobile home park is one where I have built out the team, and they make it so they’re running what they know they have to. Currently, my perfect mobile home park is up in North Carolina, and it’s perfect because of how great the onsite manager is.
When we were doing due diligence, I like to meet people. I like to get a feel from people. I was meeting all the tenants. I came across this one person, and she had lived there since the 90s. I couldn’t place my finger on it, but I liked her. I said, would you be interested in being the onsite manager? She said, well, I’ve never done anything like that. Oh, my God. It’s okay, I’ll teach you how to do it. If you’re willing, we can see. There’s nothing written in stone, but let’s see.
She is so good. There’s been stuff with the park. There’s been a lot of capex. There’s been a lot of things that we’ve had to do and fix, but she is on top of it. A hundred percent collection every month, no problem because she’s on top of it. She has filed eviction. She’s gone to court for me and one in court.
She calls the plumber, she calls the septic people. She is on top of it. That’s my dream park. It’s not that, oh, there are no problems. It’s, man, I am blessed because I found this person who is so on top of it. Now I’m reevaluating all my other parks and being like, I need this kind of manager.
In the Georgia parks, I have a really good onsite manager, too. She takes care of the four-park portfolio. She is very on top of it. She has a little bit of a law background. When I first met her, she’s like, well, I’m not a lawyer, but I’ve done this in school. I can help with this.
She’ll bring up something, and I’ll be like, what do you think? She’ll be like, here, per the law, the code is this. I’m like, that’s perfect, because I don’t want to do that. I’m not good at stuff like that, and it’s not my forte. She takes the initiative. That’s the perfect park. How about that? There’s no perfect park, there are just really, really good people.
Andrew: Perfect onsite managers. Onsite management is so important. I say this all the time. The very first park I bought, Quail Run, I inherited from the previous owners. Her name is Diana Rice. She was my onsite manager, and now she works with me in corporate. She’s been with me seven years now.
She was so good. Like what you’re saying, helping out with capex and everything that it was like, oh, this is easy, mobile home park investing, this is great. Obviously, I learned very quickly in the next couple of acquisitions that not every onsite manager is like Diana. It can get dicey with a bad onsite manager, but a good onsite manager is so valuable.
I took this from Mike Conlon actually, where we started paying. Frank teaches that $10 per occupied lot plus free lot rent to your onsite managers. But we threw that out, and Mike Conlon taught us with the Affordable Communities Group. He said, pay your onsite manager as well, because they’ll stay around longer, you have less turnover, and they’re worth their weight in gold, literally. That’s great feedback.
One thing I wanted to ask you, Tim, you do a lot of value-added parks. You’re doing financing, and you’re using a lot of creative structures to acquire the deals, but then you’re doing value-add. What would you say are the toughest value-add components? And what type of value-add are you executing upon in your business plans?
Tim: Of course, we’re getting homes in. That’s been my biggest and most profitable way of doing things of value-adding in mobile home parks. You also have to fix roads. If I’m going to jack up your rent $75 in a year because I just took this over, and they were charging criminally low, morally for me, I want to make things better.
The only way that makes sense for me is to do something. Fix up the roads. Make that place nicer to live in. Really, bringing homes in. I’m all about, how can I do this with the smallest capital outlay possible?
At the beginning of this year, I started with three parks. I got nine parks right now, another one under contract that’s likely to close. I’ve been expanding out my team. I do in-house management. Now I’ve got VAs to work with collections and stuff like that.
This is my year, I guess, of stopping being the bottleneck in my business. But in the ownership of the parks, one of my partners now, I’m like, look, I’ve brought in homes before, but you do that now. I’m always thinking like, who’s this person, and what are they probably best at? And then let’s make them be that.
He’s detail-oriented. He’s a realtor. He can go out and get his mobile home license. We can either 21st, try out, or whoever we can figure out how to do that with the lowest amount of capital outlay. Getting him in there, getting good people in there, and value adding, those are our two big things.
Andrew: That’s huge. A lot of operators don’t buy those types of deals. They want stabilized stuff. With interest rates, doing what they’re doing right now, it’s hard to get deals to pencil out. If you’re buying something at a seven-cap, and you’re getting a seven-and-a-half percent interest rate, that’s not going to get the best returns.
That takes us right into the next question. What do you think the future of mobile home park investing looks like, given the direction of the economy with higher rates? There was a big article that said something about the Fed is expected to keep rates higher for longer, possible recession. How do you think MHPs fit into all that?
Tim: I’m super bullish on mobile home parks. I do think if you are banking on interest rates going lower, you might get bit. If it happens, love it, that’s sweet. But I’m not banking on it. I’m underwriting it as if today’s rates have to work. To get to some people’s prices, I got to get creative.
I don’t negative cash flow. That’s not my thing. It has to be at least paying all the bills, paying all the investors, whatever pref I said, and then have a way to do a little bit better. It’s like, okay, you want that price. You want your seven cap, and my rate is eight or whatever. Well, then you got to carry back a portion of that as an equity investor […]. All of a sudden, my blended rate is six-and-a-half for six or whatever.
It’s a lot of creating spreads. Personally, I don’t think rates are going to go down. I can’t wait to listen to this in 2 years when interest rates are 3% again, and I’m like, look, I thought I was so right then.
If it works at 8%, if it works at 9%, if it works at 10% interest rate right now, then I’m good. I’m managing the downside, and the upside will take care of itself. If I’m underwriting it at 8%, I can do, but it only really cash flows when rates are at 5%. I like sleeping better than that. That stresses me out too much.
Andrew: I’m with you 100% on that. I think with your business model which is similar to ours, value-add approach, it’s like, on in-place income, we’re buying it at a six-cap. But at the end of year two, after we’ve infilled 24 homes, now it’s a nine-plus cap. That’s how we’re looking at some deals and making them pencil out right now, given the higher rates.
Tim, let me ask you this. What do you think the biggest threat to mobile home park investing is?
Tim: Part of me wants to say governments are trying to get rid of or being, oh, we don’t like this. They can say that all they want, but logistically, it doesn’t make sense. Sure, there are governments that want to get rid of them, but I don’t want to invest around there. Other than that, people who aren’t charging enough for lot rent, and then other people come in and say, oh, this isn’t a great area, I can get rid of this park, and build an apartment here.
I’m in Charleston, and it’s a hot market. I was talking to a guy. His mom and dad started a park. His dad has passed. His mom’s 85. She’s the matriarch of the family. I love this story.
She is still at the park. She goes by the office. She manages it. They’re her family. The whole park, she knows all of them. They’re looking to sell because mom’s getting older. Sure. They want this audacious price for it. They had someone come by and said, we’ll give you that price. Their plan was to buy it and turn it into an apartment. Mom and the family didn’t want that.
I love that. I totally respect that. If you’re in a hot market, if that’s your highest and best use for the land, I couldn’t blame anyone in that scenario, neither the buyers nor the sellers if they wanted to turn it into apartments. Maybe people are selling and turning them into apartments. Hire some best use.
Andrew: It’s more and more common. I wrote an article about this. It’s like, why are the number of mobile home parks in the US disappearing? It’s the only commercial asset class where there’s more redeveloped or torn down compared to new ones being developed because of that regulation and NIMBY, where it’s hard to get a new development approved because of the surrounding neighbors of the property. No one wants to live next to a trailer park. That stigma scares people away.
I agree. I think that is a risk, but I’m such a big fan of manufactured housing. I do think it is one of the solutions to the affordable housing crisis. We just need to get more people on board with that. A lot of these municipalities are pushing hard against that, so I agree with you, Tim.
Tim, this has been an awesome episode, dude. How can our listeners get a hold of you if they’d like to do so?
Tim: I’m on Facebook, Tim Woodbridge, Instagram, @tim.woodbridge. I’m not hard to get a hold of. I’m not like a giant where it’s like, oh, this is my corporation, and you have to talk to one person, and they’ll get a hold of me. No, just reach out. I love helping people.
I want to find newbies who are interested in the space. My problem right now, I am talking to a ton of people and creating interesting deals that work. Creative deal structure is my thing. My problem is that I’m the bottleneck. I don’t have enough time, there’s only one of me.
I want to take deals down with people who are hungry for mobile home parks, and I can show them how to do it, and we can both win. I also want to find investors who are interested in this space and who are like, oh, I want to throw a little bit of money in. We give great returns.
Before you hit the record, I was talking. I look at least 2X equity multiple in 5 years. I’m like, refi at 5 hold for 10-plus. That’s where I’m at right now. Really, the cash flow is great. I love mobile home parks. I say that, but we’re getting good returns for people.
Also, I was talking to someone recently. They want to be an LP. They’re like, but I also want to figure out how you do this, I want to know what that’s like. I’m like, dude, how about instead of you being an LP, be a JV, and then you can come behind the curtain? It’s not crazy. It seems crazy, because you don’t know it. But I would love to show everyone what I’m doing. There’s no magic sauce. It’s just putting the repetitions and being in and day out.
Andrew: It’s a lot of elbow grease, but it’s not rocket science. I say that all the time. I will say, there’s no promise of good returns. We can’t do that. This is not an annuity. Stuff goes wrong, and it can’t go wrong. That’s awesome that you’re willing to reach out, help out, and educate people. That’s really cool.
Tim, what’s one last piece of important advice you would give an interested passive investor before we sign off?
Tim: Just network with a lot of people, talk to a lot of people. My dad always told me, ask other people. The worst they can say is no. If you’re interested, just get around people doing it. There’s nothing crazy. Yeah, there is elbow grease a lot of times depending on what you’re doing and what you want to do, but ask around and have no fear.
If you all want to say, Tim, I’m looking at this deal, what are your thoughts, I’ll give you my thoughts. That’s fine. I’m sure a million other people in the mobile home park space would say the same.
I love going to SECO, because I met a whole ton of people that I’ve been talking to for years. Everyone is there to help. Everyone is there to like, we all know this game. We all know the business. We all are there to help each other. It’s a very cool niche. It’s a very cool space where everyone is 100% providing the help.
If you’re looking to throw some money at something, ask someone else. Do you know this operator? What have they done? What’s their past been like? Do you know them as a person?
Andrew: It’s a tight-knit community. It’s not like other asset classes, where there’s a big group of operators. It’s actually tight-knit. That’s what I thought was cool about SECO. It’s like, hey, there’s a core bunch of people that are doing deals, and they all know each other and networks. That’s really awesome. I agree, everyone’s really helpful. Tim, thank you so much for coming on the show. I really appreciate it.
Tim: Thanks for having me on. I really enjoyed it.
Andrew: Awesome. That’s it for today, folks. Thank you all so much for tuning in.