Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-victor-alves-of-vecno-capital/id1520681893?i=1000558736469

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 Victor Alves of Vecno Capital. Victor shares his thoughts on why paying attention to the small details in regards to mobile home park property management is super important. Andrew and Victor also discuss the most important things they think passive investors need to look out for when investing into mobile home parks. Victor shares why budgeting out repairs ahead of time are important in the real estate industry and specifically mobile home park investing.

Victor and his wife Nina Alves are real estate entrepreneurs. Together, they founded Vecno Capital which is a vertically integrated real estate investment company. They have experience in managing and acquiring investment properties such as multi-family apartments, manufactured housing communities and single family homes.

***Andrew Keel and Keel Team Real Estate Investments (Keel Team, LLC) do not endorse any interviewee. This interview is for informational purposes only and should not be depended upon for investment purposes. ***

Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 2,000 lots under management. His team currently manages over 30 manufactured housing communities across more than ten states. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities.

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

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

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

01:27 – Victor’s history and journey into the mobile home park industry

03:12 – His first mobile home park related education

04:20 – Victor’s portfolio

05:25 – The toughest hurdle

06:26 – Execution and filling in vacant lots

07:15 – Victor’s process of finding used mobile homes

08:41 – Vecno Capital operations/ property management

10:10 – Finding MHP deals

11:00 – Comparing single family rentals to mobile home parks

12:52 – The most important things passive investors need to look out for

14:20 – Utilities: public versus private

15:37 – Victor’s perfect mobile home park

16:54 – Mistakes to learn from

21:39 – The future of the mobile home park industry (in the next five to ten years) 23:00 – What makes Vecno Capital different

24:21 – Conclusion

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

Links & Mentions from This Episode:

Vecno Capital: https://vecnocapital.com/

Victor Alves, LinkedIn: https://www.linkedin.com/in/victoracalves/

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/PassiveMHPinvestingPodcast

Andrew Keel Instagram Page: https://www.instagram.com/passivemhpinvesting/

Twitter: @MHPinvestors

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TRANSCRIPT

Andrew: Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have an amazing guest Mr. Victor Alves of Vecno Capital.

Before we dive in, would you mind please heading over to iTunes to rate this podcast with five stars? This means the absolute world to me. I really appreciate you taking the time to do that. All right, let’s dive in.

Victor and his wife, Nina, are real estate entrepreneurs and are the founders of Vecno Capital, which is a vertically-integrated real estate investment business. They have experience in managing all aspects from acquiring, renovating, and repositioning multi-family, single-family, and mobile home communities all in the great state of Texas. They have completed over a hundred real estate investing projects since 2015 and have over 575 units that they have an ownership interest in Texas. Victor, welcome to the show.

Victor: Thank you, Andrew. A pleasure to be on the show. I’m a longtime listener so I’m glad to be here.

Andrew: Let’s dive in, dude. Would you mind sharing your story with our listeners and how you ended up in manufactured housing?

Victor: I’m originally from Brazil, born and raised there. My wife was actually from Serbia. We met in college and moved to San Antonio. I worked in sales and she was a college professor. Fast forward, we heard a seminar about flipping houses in 2015. I was in transition with my visa situation with my employer at the time and I was like, you know what? Let’s just dive in on the real estate thing.

We started wholesaling, then flipped a bunch of houses, and then at the end of 2018, I had a falling out with my business partner at the time. We just decided do we continue flipping houses or do we go to something else? At the same time, I already knew about multi-family. I was kind of getting interested there, but I got introduced to mobile home parks. That’s when I was like man, this looks very cool and kind of more my style as far as managing and going pursuing it.

That’s where we started learning more and more and more, and 2020 was like our learning and figuring out all the nuances of underwriting parks because it’s very different from underwriting any kind of other assets that I’ve seen in real estate. Then 2021 was our go time, but I still do multi-family as well because I like the asset class, but my focus and heart are at the mobile home parks.

Andrew: Very cool. What was the first thing that you saw that was mobile home park-related? Was it bigger pockets? Was it Frank and Dave? I’m just curious.

Victor: Actually, one of my private lenders on the single-family actually said that there was a Frank and Dave Bootcamp coming to Austin and he said, hey, I want to invest in parks, but I don’t want to do the work. Do you want to go and see if you’re interested?

Andrew: That’s how it started? You did go?

Victor: I did.

Andrew: That’s great, man. Out of all the operators we’ve had on the show, I literally think 99% of them have been to the Frank and Dave Bootcamp. I tell passive investors that should be on your qualifying list. Did they attend the Frank and Dave Bootcamp? That’s awesome. When did you buy your first park? Was that last year 2021?

Victor: It was June or July of last year. We bought three back to back. We bought one in June, July, August, and September, so 109 lots from there.

Andrew: A hundred and nine lots last year. Tell me about the portfolio. All based in Texas. What are the sizes of the parks? What do you like about them? And so forth.

Victor: Sure thing. One is right in the middle of San Antonio, which is my biggest value add one because we bought a bunch of 1978 rentals, mobile homes that are part of the portfolio that was a 45 lot. Then we have 38 lots which are 38 sites, 1 single-family, 4 RV lots, and then 33 be mobile home lots that’s in […] which is kind of south of San Antonio just right outside. Then we have one in Uvalde, which is about an hour out from San Antonio, which I call a 26 lot. That’s my easiest park. It’s all townhome. Everybody there’s pretty responsible and so makes my life a lot easier there.

Andrew: Isn’t that crazy? That’s the one that’s farthest away. That tenant-owned home model, that’s ours as well, that really works. Victor, what is the toughest hurdle for you right now in the mobile home park business?

Victor: I think like most people have heard, infill. I think the toughest part is finding a good priced mobile home to buy at an infill or depending on the size of projects that you’re buying, that is getting approved for 21st Mortgage or the legacy programs that they have because they have certain parameters that you have to meet size-wise and vacancy wise to be able to do those things.

I think we’re pretty lucky in most of our markets. We have a good demand of people that want to move in and the ones that we have were full, so it’s a good thing. The main aspect of it, I think, is infill for us right now.

Andrew: I agree. It’s one of the more time-taking parts of the business. Tell me how many homes have you infilled? I know you just bought those parks last year, but have you been able to execute and go fill some lots?

Victor: Yeah, we filled one which is the only one that was vacant in our San Antonio one. Then we just bought five of them, four for our Valley Park, which is for the lots that we developed because we added extra lots there. The […] there just didn’t have electricity, water, and sewer and so we did that. We got four for that. Then we have one also for our […] or […] park which is the only vacant unit that was there to make that. It’s tougher. We’ve been waiting to find the right-priced ones to be able to bring it into the community.

Andrew: New homes, used homes. What are used homes and how’s that process been for you? How do you find those?

Victor: Right now, mainly through other wholesalers on Facebook that wholesale mobile homes. That’s kind of where we’re all of them that we bought the game from. Actually, this last one that we bought five together was this lady who had a connection with one of the parks, a bigger park that was bought out last year from an operator. They’re turning over and putting in all brand new homes. She had 13 of those homes for sale. I just couldn’t buy more. I didn’t need to buy more and I couldn’t buy more. If I could and I would, I would probably buy it just to have it available.

Andrew: That sounds like a heck of a deal. We came across a bunch of used homes in a similar case where they were pulling out the homes to convert the mobile home park into an RV park. It was a nice location on a lake and they were decent 1990 age homes that they were pulling out. That was one way we were able to get a lot of used homes. I agree it’s very tough out there to find those right now.

Victor: People want some used ones that are only $25,000 for a 1994 home that they kind of have to put some money into. I’m like yeah, sure.

Andrew: Share a little bit about your operations. Is it just you that handles the property management and the CapEx projects, the value add? How does that look right now given your size and everything?

Victor: We also do property management in San Antonio for other people.

Andrew: Oh, for other people? Like single-family houses?

Victor: Single-family, small multi-family. We also brought in a client last year that has a park in Florida, which is also close by here that we manage. It’s a 10-lot mobile park that he needed help with. That’s kind of what we do. Right now we have a team of five, including me and my wife. My wife and her assistant deal with all the leasing, collections, violations, and that part of things.

Then I have a manager, our maintenance and CapEx manager, she and her assistant manage all the maintenance calls for whatever we manage and then also the projects that we have going on in the community. Then I do mainly accounting, acquisitions, and the technology part of it to try to make everybody’s life easier. I think I’m making it easier, sometimes they don’t like it.

Andrew: Victor, how do you find most of the deals? Is it three parks or four that you guys own now?

Victor: We have three parks that we own. Then we have the RV park that we’re under the contract that I mentioned earlier. Right now we find our deals with just cold calling owners and networking too. We ended up getting a deal from somebody that referred us to a person, and then the same thing with the RV park. They wanted us to do the management for them and I was like, I don’t know if I want to do management for an RV park, but I can buy it from you if you want to sell it. That’s kind of how it came about.

Andrew: Very nice. I know you’re relatively new to the operations of mobile home parks, but not to property management. If you’re going to compare the two, the single-family rental property management to the mobile home park property management, what would you say are the big differences in mobile home parks compared to single family rentals?

Victor: First thing, I think depending on what you’re buying. If you’re buying a bunch of park-owned home communities, I think you’re going to see, depending on the age as well, a lot of deferred maintenance typically if it’s a value-added. Just be ready to get calls because when you’re the new owner, they want everything fixed. Especially if you’re also planning on raising rents, that’s another component of it.

I think the clientele and learning how to deal with it is a little bit different. I think they end up being more responsible, in a sense, but also more sensitive because they appreciate that they have a nice place to live, affordable, but at the same time their tire bursts on their car and they’re going to call you and say they’re going to pay half the rent on the third and then the other half when they get paid the next paycheck. You have to learn how to be flexible, but at the same time don’t let it slide too much so it doesn’t become a habit.

I think that’s the biggest differentiator between the two. Outside of once you have all tenant-owned homes, your maintenance calls are almost nonexistent. You don’t get toilets or anything like that. I think it’s really nice when you get to that point.

Andrew: Definitely. What are the most important things that passive investors need to look out for when investing in mobile home parks?

Victor: I think on the investor side, just the operator in the sense of obviously if they have experience in parks. Also if they have experience in real estate in general, too, because there are some things that can be translated over. They don’t have exact experience. I think get to know the operator a bit.

I had one of my investors on one of the parks run a background check on me, which I was like, man, this is pretty interesting. You’re doing your homework, which is awesome. If anybody says no, they don’t need your money or they have something to hide. I feel like you can get creative on how you screen people.

The other part, too, is just understanding. Like you said, go to a Frank and Dave Bootcamp, understand the asset, understand the location. What’s the driver? I think the biggest one is what’s driving the economy in those cities because that can really make it or break it at the end of the day. I think once you do your homework, just trust the operator.

Andrew: Definitely. That’s been a recurring theme throughout all of this so I agree with you. Let’s talk about utilities—public, private. What’s your preference and why?

Victor: Public is always preferred and if you have direct bills, even better. I honestly don’t mind septics. I have no issues with that. Wells scare me a little bit and that’s just because of the maintenance component of it and I really haven’t dealt with wells a lot. Two of our communities are septic and city water. Then one is city water, city sewer. I’ve dealt with septics on single-family flips and things that we’ve done in the past. It doesn’t scare me as much. I’d say that’s my preference. No lagoons.

Andrew: Yeah, that’s a boot camp graduate right there. The other thing that people don’t realize about the wells is you’re a public water provider, so there’s a lot of testing you have to go through and there’s a lot of liability. You’re providing potable water to people and if you poison a whole community because somebody put in too much chlorine or something, that’s a major liability. That always is one of those things that keeps me up at night. What does the perfect mobile home park look like in your eyes, Victor, and why?

Victor: I think to buy is the ones that have below-market rent, it’s not too vacant. I don’t mind park-owned homes. If there are a lot of park-owned homes, I prefer that versus infill right now. That needs some love, below-market rents, and we can come in and do a nice upgrade on the aesthetics and convert those park-owned home tenants to actual homeowners.

The stabilized ones, all tenant homes, build back utilities, preferably public utilities, and we just manage and have fun with the community. I think one of the things that we like to do that we implemented on all of them last year which our tenants liked was little events like Halloween, Christmas decorations, all that kind of stuff and just make it fun for them to live there, too. That’s the part that I think people don’t focus on too much, but it’s just fun with the community.

Andrew: Victor, What mistakes have you made that maybe our listeners can learn from?

Victor: I think one of the ones that I added to my list was we always have a plumber check the septic lines, but we didn’t have a professional septic company come and check the system in general. We run cameras on the line to see which ones are clogged and see if there are any big breaks or issues. I think one of the ones that we had in one of our parks, we just had one of the lines broken.

Andrew: The sewer line underground, the drain line?

Victor: Yeah, the drain line. One of the lines broke, so now we’re trying to figure out what’s the steps to fixing it, how much we need to fix it, and all that stuff. The only reason that happened is that when that specific one was installed, it wasn’t installed deep enough. If you had a professional septic company checking on it, they would have caught it for sure, and that was the main mistake.

Andrew: Did it freeze up? Was it cold? That was the problem or not?

Victor: I don’t know. One of the tenants called us saying hey, there’s some water passing over. We got a temporary repair just so we don’t have sewer leaking in the community, but now we have to actually properly fix it. I don’t know what caused it. I just think that it was too high from where it was. Even the septic companies that we’ve been getting bids on said it should have been dug deeper, but it’s part of the original infrastructure. Maybe at the time, it was correct. That’s one of the things.

Then the other part is just making sure that when you’re budgeting your underwriting, you have a solid number of what it costs for what you want to do, especially when you have a lot of park-owned homes, just budget those repairs because you’re going to have them and they’re going to come all at once and fast.

Andrew: Yes, that’s one of my biggest worries when I look to invest with other operators and I see in their pro forma that they’re planning to use the cash flow to do their capital improvements. It just makes me really worried that maybe those will never happen because you’re only one sewer line away from a $5000–$10,000 mistake or repair. Now your timeline for infill and everything else just gets pushed back. That’s one thing I recommend is to just raise the money upfront.

I think a lot of operators coming in are trying to be frugal. They’re like, you know what? I’m going to have a skinny budget and get this done. It’s going to provide really great returns. Then again, you’re not going to hit those returns if you don’t have the money to execute because you tried to do it inexpensively or cheaply and you don’t have the cash.

That’s a very good point that I don’t think we’ve talked about on this show is to make sure your operator is raising enough money and the numbers are realistic. They’re not saying it’s going to cost $500 to trim trees throughout a 70 lot mobile home park. It’s going to be thousands of dollars.

Victor: We just went through that on one of ours and we spent $10,000 to trim and it was a bunch of trees, those things really add up. To your point, if you budget what you really need in advance, it allows you, for example, when you have things like what just happened with us with a sewer line. You can be like okay, let’s pause this additional CapEx, which we want to do, but use this money to fix the immediate problem. Then we can kind of rekindle it later and you have that flexibility of cash to fix things quickly versus I have to wait three months to accumulate the cash to be able to fix it.

Andrew: Yeah, or raise a miscellaneous budget.

Victor: Exactly.

Andrew: Put it right in there. Just have an extra slush fund, because things will go wrong. Let me ask you this, Victor. Where do you think the mobile home park industry is headed given the woes in the economy now with inflation and some other stuff? What do you see happening with mobile home parks over the next 5–10 years?

Victor: In my humble opinion—being fairly new to the industry— I see it being strong. It’s very affordable housing. The demand that you get for the product is still good. I don’t think that’s going to go away. Interest rates (I think) is going to stay pretty much where it is, maybe bump a little bit, but nothing crazy like I’ve heard some people think it’s going to go, because if not, then that’s really when you’re going to have issues in my opinion. I think that’s going to be still a very solid investment, a solid asset class, and there’s going to be a huge demand for it.

Andrew: Yeah, the interest rate thing is interesting to see what happens there because I personally think that a lot of operators have pro forma for this quick five-year refinance, pay back the investor money, and hold long-term, but if interest rates when you refinance are 6%, they’re no longer 3%, you’re going to be cutting it pretty tight on your debt service ratios and everything. It’ll be interesting to see where those go. Tell us about Vecno Capital. What makes you guys different and then also how to get a hold of you?

Victor: I think what makes us unique is the fact that we manage different asset classes. We’re able to bring things from different worlds and try to mash them into the mobile home park side of things. Also, we do the same thing on the other components.

Really what it is we like to think we’re an open book. We don’t try to hide. We try to be upfront with everybody how work and operate, and just try to do the right thing. That’s one of our core values is to do the right thing. That kind of resumes what we’re about. To get a hold of us, you can find me on Facebook as Victor Alves, or you can reach out to me via email at victor@vecnocapital.com, or check our website vecnocapital.com.

Andrew: Awesome, Victor. Well, thank you so much for coming on the show. I really appreciate it.

Victor: Awesome. Thanks, Andrew.

Andrew: That’s it for today, folks. Thanks so much for tuning in.