Study Hall: Mobile Home Investing

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So I don't think people fully understand, like I said, especially like we come from New York and but you actually told me that there's a lot of mobile homes in New York. But like the New York City area metropolitan area, and you know a lot of listeners that may be from like cities. They don't fully understand how big of an industry mobile parks homes are. So I did some research. So it's twenty two million Americans live in mobile homes, and so like, how lucrative is it?

Man, Listen, it's the highest cash on cash return of any real estate investing. Like I didn't believe it at first until I'm gonna give example, our average returns are two hundred and fifty ROI on per deal that we do, how long does it does our normal turnaround in sixty days. Now we're to the point that we flip a house. We flip in less than fifteen days.

Wow.

Okay, so all right, so since you said that you can, you can you break down a deal and like kind of explain, like how does that work?

Cool? So I'm gonna break down with a deal. So we had a deal. We purchased a home for three thousand dollars right in Indiana, and the home that it didn't need any work from an older lady. In most of the situations, right, most people don't really know the value of their homes. And three grand said cool. So what we did was we say, you know what, we're going to open up for sellar finance. We're going to

So all right, a lot fee? What's the lot fee?

So it's like an hoa fees they're paying for the trash. They're paying for.

Just to stay on the actual so that the park owns the land. Tell you own that. If you can't just park your mobile home anywhere, no, now have to be inside of a license, like a park that has a permit. And it's it's like a okay.

Right, And so normally the ones that you drive, like the RVs, those are different, right, you go, you can go take drive those and go into a park and pay like a fee. But normally the ones that you see are kind of just like on actual like land, like those right there. Yeah, you can move those, but it's not costly normally about two grand or so to move them, depending on how many miles. But in this case, so we so we say, hey, you know, we'll take

So the rent that you were guys were collecting was four hundred a month for twenty twenty eight. Yeah, and how much did you buy it for three thousand? How how do you buy something for three thousand in the charge? How much were they they were paying eight hundred dollars a month in rent? Yes? Because how is that? How is that possible?

So with that, so instead of them renting an apartment, right because they get it. If they rent apartment for eight hundred dollars, they got no equity in it. So we're providing it's just equity in that house.

Right.

The thing is, we buy it for so low, Right, we don't necessarily have to say, Okay, we're gonna only sell it for five thousand. Right, we still operate because if you think about the number, is still a house, it's still a home for them. So a twenty at the end of the day, a twenty five thousand dollars house where you still gonna get other moving ready, twenty five thousand dollars.

House, So no, that's crazy. But I was just like, but if why would somebody not just buy it on their own? If they like, why would you rent for eight hundred if it only cost three hundred three thousand to buy?

So the thing is for us being investors, it's almost like we buying off off market property.

Right.

The most people don't really know that, hey, I can go get there, and if they do, they definitely take advantage.

Right.

For example, we have a house Chinese just sold this week. We literally we got the house of four fifteen hundred. We sold him him for six thousand. He's going to move the home. Right, We're still doing a favor. But then at the same time we offer seller finance, we is offered I usually I usually do anywhere from like eighteen dollars. I look at eighteen dollars to twenty five dollars per square foot.

So you could actually with your finance and you could have no money and get a home. Yes, yeah, interesting, so I can, right, So like I go in, I have no money.

I'm like, yo, I want to get this home. That's where you come in.

Yeah, yeah, And that's what I'm offering. Because see the thing is most banks don't lend to mobile homes. They like Warren Buffett, he has two lending companies because you understand that Warren Buffet is in this game on Clayton Homes.

Warren Buffett Lenk's mobile Homes.

Yeah, yea, he owns Clayton Homes. That was acquisition he brought in nineteen ninety seven. Clayton Homes is the largest like manufactured home company in the country.

So banks don't give the loans because are they looking at it as like an ornamobile loan?

Like how are they looking at it?

They looking at as a depreciating asset. Words for us, we look at it as value.

So it's an appreciating asset because it has wills and anything that wills appreciates correct, So is that true?

Not nine?

At the end of the day, for us, we look at it we solve an affordable housing crisis, right, Like that's the biggest thing. Like cities, we know what the cost of living is going up, all right, Wages are still staying the same so people are getting pushed out like we see it every day, like where it's gentrification people can't afford. So for us, it's like, hey, listen, I get it. You've been living in this apartment for the last five to six years. Why don't you get

So where these mobile parks located in proximity to major cities?

Right, So we live in the New York tried state.

How many miles typically would a mobile park be located?

Right?

Good question. So for you guys, I know you guys got one in Staten Island.

I've been.

We've been in New York our whole lives, Like I think, I don't think I've ever been stand now.

And then we got a few students out in New York and they normally work with parks in Jersey, so they go over to Jersey.

Yeah, and about honestly, I will say about sixty miles if you're willing to go upstate New York I'm not sure that the exact knowledge, but I know you guys have a lot central and upstate new Is there like.

A mandated distance like that the federal government will say like this is a further dents you can go before you create a park.

So here's the thing in modern days, So mobile home parks. The reason why you don't see a lot of them popping up right now because here's the reality. Taxes right in America that calls on the average is like twelve thousand. It's in a kid to school. I'm gonna give you guys exam. I'm aout to blow your mind real quick. Our taxes on our mobile homes per year one hundred and sixty dollars. Our taxes on our mobile homes in Indiana thirty seven dollars for the year. So you got

Over here, Sony more on lunch money than I always. All right, here's a question. You live in a mobile home, right, how do you what do plumbing? How does that work?

So?

I like so everything is above ground. Everything is above ground. So the cool thing is like you know, if you need something fixed, they can go under the actual mobile home to repair.

So but like your actual like you go in the bathroom and goes underneath the like where did that go?

Is it like a septic tank down there?

So normally most parts so here's the thing. Most parts either have they're hooked up to city sewer, so it will they will have the hook up so it can go you know, along with the city, or they have septic tanks.

Okay, So like if it comes from your truck, your your mobile home into like a underground thing. Yeah, so all right, So if the taxes is so low, right, so what's the what's the gig? Because it has to right, like what's going on? So all right, the taxes a loan, you can buy a home for low you can sell it for high. So why a why would any why why did? What's why? What's in it for the city or for the town to actually house these places? And how come more people aren't doing it?

Good question? So I would say, person, well, the first question I'm gonna answer. You said, like, like, why why do city? So most mobile home parks our grandfather in. A lot of them really popped up in the forties, fifties, sixties, seventies begin because after the war, the government invested into

You told me, Yeah, it's like it used to be luxury.

Yeah, and it was kind of like suburbia. Most mobile homes are in rules like suburbia, right, when you go to a lot of mobile home parks, they look like little I guess you can say suburban neighborhoods. And once when hug got involved, unfortunately I think about the next generation and people start moving back to the city, it just kind of took the value down. So it was it was a need for affordable housing. But with cities,

So when did when did mobile homes get the bad name of like trailer parks and trailer home Like when did that shift? Because you said that at first it was luxury and then it kind of got tarnished and people have bad ideas when they think about that. So like, at what point did that even like you said, like trailer park trash stuff like that, How did that happen?

So to my knowledge, it was an article. I'm not sure the exact year, but I think I know it was like in the late sixties and somebody had wrote a newspaper article about trailer trash, and that just kind of stuck. The name just kind of stuck. And then, of course movies play. I think about horror movies, right, eight mile right.

I tell you, when y'all said mobile home, the first thing I thought was ozarks Yo.

Okay, must be similar to that.

And so the ones they show on television or they depict, I look at it. Honestly, it's almost like in the hood, right, they depict like you know what they for example, Chicago, they're going to depict on certain shows that is just the gutter, you know what I mean. But at the same time, it's very nice mobile home. It's a luxury people don't know. In San Francisco they have a mobile

I saw will Smith that had a mobile home. It was cost like two million. It was like a two story mobile home. It travels like to movie sets with them.

Okay, yeah, that's dope, all right, So now we got the backstory sitting down the second segment we're going to go into some details and go over terms and key definitions. All right, So now we're going to go with some key terms, definitions, things that nature. But before I start, we talked about pricing. But on average, since we're in Illinois, how much can does a mobile home cost? On average?

So the average price in Illinois use mobile homes right at seventy five hundred. So if you're looking for something new, like if you get in a brand new home, they can start it rite about like thirty five forty thousand, all right.

And one of the things in the negative connotations that go with mobile homes is that they're not safe. So one of the questions I ad was like how safe are mobile homes?

Man?

I love that question. So so mobile homes are actually since they're built in factories, they're wind tested, they're built to last outstand tornadoes and earthquakes and things like that.

Right.

The thing is unforcing that you've seen maybe seeing in or so they may show they may show a mobile home park with like three three tops. You know what I'm saying, gone, But it's not like you know, back, I think, what's the movie and whatever it is? But anyway, with the houses flying all the way around and things like that. No, it's not like that they actually built safe.

So what's the lifespan? Right?

So sometimes, like you know, a tritional brownstone might be built in nineteen oh nine.

What's the lifespan of a mobile home?

Good question. So the older ones, anything that's built after nineteen ninety up to thirty years. The new ones are built to last within forty five to fifty five years.

Okay, okay, So as far as you was explaining that title, right, and it's different from like when you buy a home, like a regular home and you have a deed, So can you explain that the process as far as like the title, it's like it's just it's easy to do it, right. Yeah.

Yeah, So as far as a mobile home, like, the mobile home is considered a motor vehicle, so it's kind of like a car. So when you are selling the asset, you're just going down to the DMV or whatever your motor vehicle department is in your state and you're just transferring that title.

That's it.

Yeah, how long does it take about two weeks to come back?

So the closing, what's the typical closing from buying a home and having it up and running late.

Yeah, so buy Honestly, it's like a day. I mean, so you buying a home. You of course we're dealing with the park, so we're gonna deal with the park manager. Our buyer has to sign some paperwork with the park. That's about thirty minutes to an hour. That's signing a lease for that lot rent that we talked about earlier. After that, we normally take our buyers, we go to the DMV together, we do that paperwork, transfer the title that's about again a fifteen minute process, and then they'll

What yah.

One of the things we were doing some research, it was like, there's a difference between modular homes and manufactured homes.

What's the biggest difference.

So, modular homes more times you see concrete base where so they have like there are they are more applotted on cement right, whereas a manufacturing home is they're they're literally sitting on cinder blocks. So that's why you see it's called skirting. So you'll see like like uh, some vinyl that's like right around the bottom of that, So that's what covers that. But the house is actually sitting on cinder blocks.

So all right, what about insurance, like insurance for a mobile home? Is it different from insurance to a regular home? Is it car insurance? Is it's actually transportation vehicle? Like how does that work?

Yeah? You literally can call, you literally can.

So when it comes to mobile home insurance is very similar to what you would get for homeowners insurance or renters insurance. So you literally can call like IO Stay Farmed like your normal insurance companies, and you let them know like you would like to get insurance on your mobile home.

And the typical cost.

For that is about like fourteen fifteen dollars a month, so kind of similar to what you would pay for renters insurance.

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So what's the process, Because you said, like the park owns the land, right, but you own the actual mobile home. What's the actual process to getting your mobile home into a park.

So that process you'll be really looking for a mobile home park owner who's looking for houses, and right now it's like a gold rush, right, like literally now, out of the forty four thousand mobile home parks, four well sorry, four thousand are institutionally owned, meaning like just corporation to own it. But it's really like the wild always because they see the opportunity. Cap rates are crazy on these things. So for them, what's happening is you have literally called

Trust me, bro. So like, what's some of the incentives that a park a lot owner would say, live in this lot as opposed to living that lot.

So the one thing, the cooler thing in the newer mobile home parks, what they're trying to really do is make it a community base because that's one thing about mobile home parks get a bad rap. It's a really good community because everybody knows each other, right, So like for example, it may be you know that minitis in the park where you got parts. They got swimming pools and basketball.

Courts in the mobile home park, and yeah, yeah.

It's like a whole exactly exactly, yeah, and so it's really just the amenities, like what can this park provide?

Right?

Like like one park, I love it because they give beautification awards for whoever has the best line.

Right.

Some parks are pretty much like a concrete jungle, are on concrete. But a lot of parks are I mean, have like huge backyards, gated fences and garages and like you'll be surprised at seeing some of the way this stuff is developed.

So all right, so you have a mobile home, you put it in a lot, but that a lot has a backyard and all that, so you have to pay for that backyard. Is that part of just the lot fee? Like how does that work?

Yep, that's part of your lot fee. I look I equivalent to almost like taxes, right because I know here in Chicago, depending on single family home, you may be paying anywhere from three grand and six grand on your taxes. Right, I look at it, that's the same as taxes if you kind of if you add that number, if you're paying three seventy five, you know a month, when you look at the yearly, it's pretty much still in line with taxes. And some people pay in their cities.

So in real estate, you know, when people have multiple and it's multiple assets, they have property managers. In the mobile home game, you'll have park managers. Is it similar to what's the differences in those two roles?

So the park manager's role is really to oversee the park for example, you know, make sure they's filling houses, you know somebody's not paying their lock rent, making sure they send them their notices. A lot of parks have staff, so they have other handymen on the park. But the cool thing about it is they're not really most parks don't. They do rentals, but they're not let's just say, like fixing everything in the house.

Should you say that? Okay?

So all right, So there's two types of communities, right, there's age restricted in family communities. Yes, can you explain that?

Yeah?

So all age community would be like you know, eighteen to really all ages. The restricted ones is the more they're normally fifty five and older. So it's more so retirement communities. And you normally see those like down south Florida West Coast, like Arizona, California, Las Vegas, like you'll see the more restricted communities in those areas Okay.

So how many people, like how many homes are in a typical community.

So it varies. It could be anywhere from thirty upwards to five hundred homes. It really just depends on that particular part.

And you said that they don't depart, manager doesn't come around to collect rent, right, So what's the process when somebody doesn't pay?

Is it the eviction process?

Are the deadlines the same as state regulator or is it faster for mobile homes?

Honestly, from what we see, parks don't play no games. Like I'm gonna say this, Like most parks that we deal with, they give you ten days if you get a ten day notice, and then after that, I mean, you can definitely pay. But if you're past that thirty days, they got paperwork already and they're starting that eviction process.

Wow.

So all right, what's the maintenance on mobile homes? Is it car maintenance?

Is it?

House maintenance? Is the combination of bob? You have to change the oil? Like, what's the deal with that?

My time in bow Bro?

So, I mean literally like regular house maintenance.

Right.

The cool thing about a mobile home all the materials are much cheaper than a traditional house, right, breaking mortar because you're dealing with most houses come with you know, vinyl floors. They're coming with they say wall board instead of dry wall. So most of your materials are cheaper. So like mainess, like I tell people, if you're doing a full rehab and a mobile, let's say a full gut twelve grand.

So speaking of that, so yeah, you said fix fix out, So I took some notes. Vinyl, it's real rock, it's foam installated cinder block. So like, all right, you're you're fixing up and your your rebuilding a mobile home? Right, how does that work? Like you get a contractor to do that, and like how like what's the how do you do that? Like is it just like a regular.

Home or so you can here's the thing. You can get a contractor. But it's a lot of people, a lot of mobile homes that use special contractors. Right, they just do mobile homes because a lot of the main well, the maintenance a lot of times cheaper, and the materials are cheaper. If I take somebody who has been doing all single family houses rehab, he comes to my mobile home, he trust me, my price is gonna be a little bit highercause what he used to right. But at the

Can you talk about that?

Yeah, So it's really like again, since it's a it's a motor vehicle, asset is not as strenuous as a house like appraisal process exactly exactly. And that's why for us, it's like, yo, we add in his value because you're not gonna let nobody come in and tell us like, nah, wait, this is only worth four grant Like no.

So as far as like getting started, how much money do you need to get started in the mobile home real estate industry?

I mean really, we always tell our students like little to no money. It really just depends on your market and really just how you're prospecting. You can literally like for me and Buyron. We don't really touch anything over five thousand. That's the strategy that we have created and stuck with. But even in like the higher markets, like we always say, like you can wholesale mobile homes, like you can still literally go in and still we call it like being that helper in the situation and helping

So how does the whole sealing Because I know anybody's not familiar with whole selling real estate. It's like you're pretty much like the middle man. You never actually own the home, right, but you can make a profit. It's like if Troy wants to buy a home and you want to swim aself home, you want to buy a home, and then I can come in and be like the middle person and then make like ten thousand and fifteen thousand, and I don't wait any work there's no risk, it's

Yes, the exact same process. You know, you can put them on the contract. And the reality of it right now in this market is really no competition that it's wide. Like we're in Illinois. We only like that. We personally we know of ten other investors, but we've only met two and out of those and the newer ones are our students.

Wow.

So as you're talking, I'm thinking to myself, right, yeah, it's cool to get the mobile home, right, but you said that the person that owns the land is the one who makes the profit. How do I go about getting the land? Do I have to buy a lot and then get licensed to have mobile homes on it?

Like?

What's that process?

So that's dope. So for example, let's say we get a lot of people like Yo, I got like thirty acres down in Mississippi, Like, can I put homes on it? It's like, yes, yes you can. You know, like honestly, if it's your land. Yeah, I mean the biggest thing is like, for example, let's say you just got raw land, right, so yeah, now you're gonna have to get septic, and you're gonna have to get the whale system installed. On the high end, that can run you up to like

Right.

You can either lease that land out forever or you can just either package that up and now sell the land in the house.

Okay, So for by do you buy it in an LLC or you just buy it like as a regular person, Like, how do you do that?

So when we started with buying our person. But now we purchase all our homes in LLC.

Well just from protection standpoint.

Yes, and then from there we go ahead roll them in a trusty. Can you talk about that the trust Yeah, it's really just keeping your name off. We don't want people know how many assets we have. I mean, we just learned from a mentor that hey, this is just an extra layer of.

Protection for us small businessman.

You I saw on your Instagram page you said one proper. You can get one proper I guess like in the area, well somewhere I don't know where in America, but you can get one property for forty five thousand dollars and that could generate an income of eight hundred dollars a month. Let's say, well, you can get nine mobile homes for forty five thousand and that generates an income of twenty seven hundred dollars a month. That's pretty impressive. Yeah, profit margins.

Yeah, yeah, so I actually made that post right first, lady at mobile homes, But I definitely did that just to kind of show the margins as far as you know. When we say like mobile homes is the highest cash on cash return on any form of real estate. So in that specific example, I kind of used the numbers that I got from one of my relative friends who end up purchasing a property for forty five thousand. In that situation, she was a landlord. They were renting it

Right.

Remember we talked a little bit about earlier about that seller finance putting our attendant buyers on payments. Now, if you're putting them on payments for a minimum of three hundred dollars a month. Mind you, we're no landlords in this situation, so we have no landlord responsibility.

We're playing the bank.

So in that three hundred dollars a month or nine homes, you're looking at twenty seven hundred dollars a month again in cash flow, so you already tripling your cash flow profit. So now let's look at five years. How much you're looking at make in five years over it's like over one hundred and sixty thousand.

I can't remember.

I think it's one hundred and sixty two thousand. So you've tripled your initial investment investing in mobile homes. So then it's like when people always ask us, like why do y'all stick to mobile homes?

That's why?

Right shemer That was impressible.

Yeah, in the next segment, we're going to talk about education, and we're going to talk about scaling and a few other things in the last one. All right, So in the last segment, we're going to talk about education scaling. But before I start, I want I had a quick question. So all right, there's three different like there's different ways like real suspicional real estate, you like buying whole and make money off of cash flow, or you can you know,

Man, definitely. For example, Man, I got to give a shout out to one of our students, Herald, but he's down in Georgia and he purchased a mobile home for fifteen hundred, put a thousand into it. And what he did was he's an opportunity with truckers. He understand a lot of guys say extended stays. So he running out per room five hundred dollars per room of his mobile home. Right, So think about it. He got his money back in like three months. Now he's making all profit. He just

So the lot feed plus whatever your charge for rent, that's what gives you the total rent price.

Right, Okay, So what's your what's what's your vision to scale, like what's your what's your plans on scaling for your for your personal business brand?

And so we definitely want mobile home parks. So the larger goal with that is to get an acquisition where we find somebody who has a portfolio ten twenty mobile home parks just looking kind of just to retire, right, and just pretty much purchase that portfolio and just build from there and really open up the floodgates for more people to invest in mobile homes.

Is that just something like just being in an industry, you'll know, is there like a database where you can see, like these people own this amount of mobile parks?

Right, So we've been doing our homework. We got the top one hundred companies that do it. Literally to be in the top one hundred, if you own over fifteen mobile home parks, you are in the top one hundred of the companies.

How much does it cost for mobile home park?

So now the prices went up. I would say on an average for fifty paths plus, you're looking at it about like one point two depending on the region, one point two mill two million, really depends on the region.

Right.

I've seen parks for that has one hundred pass that was going for one point two mil.

The area that's designated for this exactly how much revenue can that bring it on a year?

Wow?

So man, that's a great question. So for example, I look at it. If you have let's say you have two hundred pass right, and then you're getting a you're getting four hundred bucks per path. Normally most for a park to be occupied, fully occupied, you're looking at a good park. Ninety five percent, right, ninety five percent of those houses are field. So if you look at your castle, I might pull out the calculated real quick.

I heard you do, but.

I'll run in my head.

But yeah, I mean I'm trying to think. But the cast law.

I know.

I had some some parks that pretty much, but they're like netting per month in the you know, in six figure range and just net after everything.

So I mean literally a lot of like after a year, you can probably get you a million back. Oh yeah, and then one hundred thousand and let's say on the low end, one hundred thousand a month you'd be making from that. Yes, but like maintenance, you gotta have like maintenance up keeping all that maintenance.

Guys, you may if you have a park manager that comes with your costs. Of course taxes, right, But a lot of times if you the thing what I've learned about in the mobile home park, if you give your uh, if you give the tenants more responsibility, so they're responsible for water, they're responsible, that's how you cut costs.

Also, like the utilities up to them.

Yes, right, okay, yes, dope.

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