Charles:
Welcome to the episode of the Global Investors Podcast. I’m your host, Charles Carillo. Today we have Jack Martin. He is a co-founder and chief investment officer of 52 10. So it’s an Arizona based investment firm specializing in the acquisition and reposition of mobile home parks. The firm is vertically integrated and manages 1800 lots across five states, and currently with $60 million of private investor capital. Jack’s experience includes general contracting, development, capital management, and the acquisition and disposition of over $450 million worth of residential and commercial real estate. After serving in the US Army, Jack became a general contractor specializing in land and custom home development, and then spent 14 years with an Arizona base real estate firm where he acquired and sold over 2000 single family homes, over 900 apartment units and mobile home Park lots. So Jack, thank you so much for coming on the show today.
Jack:
Well, thank you for the invitation. Excited to share with your audience a little more about this unique niche of mobile home parks.
Charles:
Yeah, that’s that’s definitely what we want to get into. Before I, I went over a little bit about yourself, both personally and professionally, but if you can expand a little bit on kind of what got you to 52 10 and and doing everything you’re doing there.
Jack:
Yeah, so I’ve been in real estate most of my life. You know, going all the way back to my initial attraction was in the military and listening to late night TV and Carlton Sheets. I don’t know if you’re, if you’re, if you know who Carlton Sheets is, that means you, you’re probably around 50 years old.
Charles:
No, my my my dad bought those programs back in like the nineties or so. He’s literally originally when he was from, was only about 45 minutes north of me here in Florida in Stewart. But okay, there you go. I
Jack:
Know those shoes. That’s, that the idea or the seed was planted while I was an 18-year-old in the US Army. But yeah, so then I did a all manner of real estate until I tripped over mobile home parks. And, you know, I had originally thought the same thing that most people think, which is, you know, the stereotype of mobile home parks is that they’re trailer trash and it’s kind of the you know, ugly stepchild of real estate and you know, doesn’t appear to be attractive. But when you own one and you find out how stable they are and, and what steady kind of permanent cash flow they can produce. And then now, now with the, the recent tax changes, what tax benefits that you can get, like, there’s just nothing that compares. So, you know, having been in all other or many other asset classes and then tripped over this, I decided to build a company that is specifically focused on the acquisition and reposition of mobile and parks. Other
Charles:
Than Carleton Sheets, was there anything else that really preempted you to get into real estate investing? Did some of, you know, a mentor you had maybe in a different line of work?
Jack:
I think it was just a pathway that I was, I was put on. So I was a general contractor and you make more money if you buy the land and build the home than you do if you’re just the builder that builds the home. So it just seemed like it was kind of a natural path. As a a person who has the talents and skills to re renovate single family homes, you make more money if you buy the home and renovate it than you do if you’re just a contractor who does the renovations. So it just seemed like a natural path to me. One thing led to another and pretty soon I was doing a couple hundred homes a year and you know, 500 apartment units a year and, you know, that’s, that’s just scale has always been an interest to me. Yeah,
Charles:
It makes perfect sense. So when you, what was this kind of got you into mobile home park investing, and one thing I found interesting about mobile home parks is that many decades back somebody wanted to sell my dad a junkyard, auto salvage yard, and my dad didn’t wanna buy it, and the guy’s pitch was really, they’re not making any more of ’em. And it’s the same thing I see with mobile home parks. But how did you stumble into it from maybe some of the other asset classes you were working in? Residential?
Jack:
Yeah, so I didn’t purposefully pursue mobile home parks. What had happened was I was looking to purchase a vacant apartment building, and the city said that you couldn’t bring that back online as an apartment building because it had lost its conditional use permit. And in order to use it as an apartment, again, you needed more parking. Right next door, there was a small mobile home park that its land would satisfy the parking requirement. So I purchased the mobile home park, went back to the city. Long story short, we never wanted that mobile home or that apartment to come back online today. That’s a government office, by the way. So I, I own this mobile home park, so I thought, well, this is no different than apartments. It’s just a, a, you know, many people living on one piece of land.
Jack:
And then I discovered how wrong I was. You know, they’re distant cousins. Yes, the similarity is there’s many people living on the same land, but the difference between a mobile home park and an apartment building for your audience, mobile home park is really a giant parking lot. As the owner of the park, I own the parking lot, I own all the parking spaces, I own the roads and any kind of common amenities if there’s a clubhouse or an office or something like that. But I do not own the homes. Those are owned by the tenants. I’m renting parking spaces. I’m not renting real estate. So I don’t take care of the maintenance on the homes. I just set the rules with respect to what it needs to look like, and the tenants have to abide by those rules. But they pay me a monthly allot rent for every month that their home sits on my parking space.
Jack:
So the neat thing about mobile homes, parks is that the mobile homes rarely ever move. So if you think about the tenant mindset in an apartment complex or a single family rental, or a condo or any kind of residential real estate, their mindset is this is temporary. I’m gonna live here until something better comes along. Whereas in the mobile home park, the mindset is, I’m a homeowner, I own this home, I I don’t intend to move. So the outcome is it’s very, very stable cash flow. You don’t have turnover like you do. Well, you don’t, there’s not, the, this pace of turnover is extremely low in comparison to other asset classes. So we’ll still have tenants who sell their homes because they’re moving to the other side of the country, but we don’t have to reposition the unit. We don’t have to put it for sale.
Jack:
We’re not the one who has to handle that transaction. We just approve a new, the new owner of the home to be at a resident in our park who pays the lot rent. So the last month, the prior owner of the home pay the lot rent. This month, the new owner pays the, the lot rent. So when you discover the difference then you start to appreciate why it’s kind of the secret asset class that most people wouldn’t otherwise not pursue. But to your point, they’re not making any more of them. Now, again, they are making a few of them, but they’re going away faster than they’re being built. So there’s about 10 new mobile home parks of size built in the United States every year. If you compare that two apartments, there’s probably 10 new apartment buildings coming online 10 miles from where you’re sitting in the next 12 months. Right. and they’re being knocked over for redevelopment at a alarming pace. So there’s, there’s a scarcity component to the mobile home park business, and that’s very attractive.
Charles:
So can you kind of break down a little bit more on your investment strategy and your kind of, your criteria? So some of the markets that you guys are focusing on, what types of actual parks you are targeting?
Jack:
Yeah, so we’re pretty picky. We’re not the group that buys a a deal just to buy, just to deploy capital. You know, we’re we’re, I like to be in a position where if I’m buying this real estate, I love it and I want to own it indefinitely. So it’s kind of like looking at a, a marriage, you know, I’m gonna be married to this property for at least 10 years, so I better not just like it, but I better love it. We’re, as it relates to the markets, we’re, we’re not necessarily focused on a specific market, but there’s about 22 states that we like. Those states have markets where median home values are 300,000 or greater. They have favorable landlord tenant regulations, so likely the coastal states everything up in the northeast states like Colorado, Illinois, Minnesota you know, where there’s, they’re pretty blue states and there’s rent control or there’s whispers of rent control.
Jack:
We don’t want to be in the, in a position where we can’t execute our strategy because of some regulatory changes. So we like to stay in states where we’re pretty confident that the, the runway for the next 10 years is gonna be favorable to the landlord tenant relationship. And then the quality and size of the asset would be the third thing that we look at. So we’re really not interested in acquiring a park unless it’s, you know, over $10 million. And that usually equates to a hundred lots or more. And then we’d like to be of quality where you can get agency debt. So that’s usually gonna be, you know, in the apartment world, you’d call that like a, you know, B minus asset. We want to be in that type of quality or above.
Charles:
No, that makes perfect sense. So that was one of my other questions too, is how you finance it, but with agency debt, obviously they have to be a little bit higher quality properties, like I guess your a and b class, mobile home assets to be able to be able to get that that type of financing from the government.
Jack:
Yeah, so if you look at, at you know, kind of the, the 10,000 foot view of mobile home parks, you have trailer trash, those are real, the ones that you see on an episode of cops or, you know, in the, in the, you know, TV world. Those are, those are not parks we look at. Then you have brand new manufacture housing communities. Those are five star gated communities where everything is brand new. They’re fully amenitized with sport courts and pools and spas and dog parks and playgrounds and clubhouses and all that fun stuff. And then in the middle you have three star parks, which is, you know, nice paved streets and curbs and gutters and maybe sidewalks, maybe there’s a office, but not a lot of amenities, but it’s still really clean call it manufactured housing communities. So mobile home parks is a little bit of a stigma.
Jack:
They’re all considered mobile home parks, but there’s a spectrum of quality and density and, and the age that it was built, and all of those things contribute to the quality. But as it relates to agency debt, you know, typically there’s a floor with respect to the minimum quality requirements in order to qualify for agency debt. And that’s gonna be wide paved streets. It’s gonna be you know, 10 homes per acre or less. It’s gonna be paved parking areas. You know, there’s gonna be some pretty simple requirements that would cause that to be a nice mobile home community.
Charles:
When you’re acquiring these assets, are they coming from mom and pop owners or since you’re larger, $10 million plus assets, are they really coming from other investment groups?
Jack:
It depends. I mean, it, historically they’re more mom and pop or let’s say, you know, a a a intelligent real estate investor who owns a single park and he owns a bunch of other commercial real estate. There’s a, there’s a, there’s a place for acquiring from other investment groups if, you know, they bought it and it was a heavy lift and they did 70% of the work, and now it’s time for them to exit. And there’s still some meat on the bone. There’s a, there’s a, a place for that, but typically it’s gonna be one of those two. Yeah.
Charles:
And I imagine this is coming from a mix of both off market and then also through brokers as well that are listing this nationwide.
Jack:
Correct. Yeah, so they’re, they’re all off market. We’ve, we’ve made the attempt to be competitive on the on market listings and we’ve never been successful on that front. Doesn’t mean we never will, but we never have been. So, you know, our focus is off market deals where it’s direct to the owner or maybe it’s a pocket listing of a broker. Yeah.
Charles:
So one thing you mentioned about not owning the homes, and when I’ve spoken to mobile home and park investors, that’s kind of like the, the kind of the gray area where you’re buying parks and if you start buying them with homes and you’re owning the homes, you become almost like a de class C minus landlord. Right. how are you, I imagine some of the parks you are buying, they have some park owned homes. How do you handle that during the acquisition and during your like value add renovation stages?
Jack:
Yeah, so we’re not really concerned about a small percentage of park owned inventory. When we buy a a a a mobile home park, you know, as long as it’s not 70% or 60% of the inventory, typically when you see really high park owned inventory, that means it’s difficult to sell homes in that market. So when you have that kind of dynamic, you can’t ever get to a spot where you’re fully stabilized and qualify for agency debt. So that’s another condition for agency debt is they don’t wanna see park owned inventory because they know that tenants could move out in a weekend. It’s just a pickup truck and two buddies and they’re out of there. Right? So the stability of mobile home parks comes from tenant ownership of the homes. So they’d like to see 80% tenant ownership and, and, and those kind of deals, what you’ll see is that the owner either was okay with some rental income ’cause he thought it was greater than the stability he could gain from, from tenant andone units.
Jack:
So that conversion is usually pretty easy. You know, you go in there and either sell the homes to those existing renters or when the leases run out, you re recondition the home and then put them on the market and sell them. So a lot of those factors, I mean, if you don’t have a median home value of 300,000 in the market or greater, usually you will see high park owned inventory because the only way to fill up spaces is to rent the homes. So it’s not a primary strategy, but if the, if we love the real estate, we can reposition park on inventory to tenant and own pretty easily.
Charles:
Interesting. So we’ve, you know, you have 1800 lots right now and you know, when there’s a asset class that becomes very popular and we’ve seen it through all real estate classes, you know, industrial coming through now, mobile home parks is another one of them that are really gaining the attention of large players, Blackstone, Carlisle, and that have very long time, time horizons when they’re buying these properties. How are you, or how does a mobile home park investor on a smaller scale really mean really compete with that when the person you’re competing with, it’s maybe just betting just on the land alone and not on the park?
Jack:
Yeah, so it’s certainly, you know, especially when you look at the scarcity component, each time a new fish comes into the pond, you know, the pond’s not growing in size. So each time a new fish comes into the pond, it gets more crowded. I, I believe that that there is a percentage of the privately owned inventory. So in other words, it’s not owned by the institutional owners or the professional owners yet where the, the current owner does not want an institutional owner to be the next owner. And that’s for typically for a couple of reasons. One is they don’t like institutional owners. Two is they have a relationship with the existing tenant base and they’re afraid that if an institutional owner takes over their tenants become you know, the institutional owners could be a vulture to their tenants. So they’re looking for somebody who’s more hands-on, more boutique owner who will treat their tenants and their park you know, in the same vein that they did and not just as a number. So, you know, most of the acquisitions that we make would’ve been a candidate for the institutional owners as well, but because the owner was seeking a different kind of buyer we were a way better fit for them. But that it is a lot of hard work. I will, I will sh admit that we have to turn over a lot of rocks to find a deal that’s a good fit for us. So we’ll look at, you know, 150 deals a year and you know, we’re happy if we buy three or four.
Charles:
Yeah, a lot of due diligence on those properties. When you’re looking at those properties do you, how soon is it that you’re going out and actually walking those properties during that due diligence process? Or is it quick inspection on your end and underwriting proforma and then you’re going out during your, before an l lo I Or is it something where you’re putting out a whole bunch of different Lois to seeing kind of what sticks and then going back out?
Jack:
It’s a combination of both. And a lot of it depends on the owner. So, you know, if we’re talking to an owner where he says, Hey, you know, so far I like what I hear about you guys. I’d like you to see the real estate, touch the real estate before you make an offer, then we’ll go that route. But if it’s an owner who says, I’m not gonna share anything with you until I see an offer, well then we have to go that route. So a little bit of that is directed by the audience and you know, most of these owners are, they have their own kind of set ways, so yeah, we’re you, you have to be able to dance regardless of what the flavor of the dance is. And we’re pretty adept at both.
Charles:
Yeah. And for people that talk about greedy investors, I found this on my first property. I bought, just like you were saying the person I was buying it from was like, somebody had been in the property for like 20 or 25 years and he was like, I was told by the person I bought the property from to take care of this guy in like three. And he’s like, alright, I’m gonna move him to another property ’cause I know you guys are like doing it for renovation, so I’ll take care of it. And I was amazing because he made, it was literally, we’re going two ownerships down, we were taking care of this tenant. And I, I just thought that was something that really stuck with me throughout my real estate career. And when people are like, oh, they come in, they, you know, you see on TV or whatever or news, they’re just jacking up rent and there’s no personality. I mean, I can see how someone would avoid selling to an institutional buyer even if it was a few percent more versus selling to someone where they’re gonna be a little bit more human to human contact with that.
Jack:
Yeah, there’s, I mean, it is, it is interesting ’cause I think immediately of one of our tenants in one of our Arizona parks, they’re, they’ve been there for 45 years now, so we’re the third owner since since they first leased their spot living in the same house and their whole life has changed. They’ve grown up and raised a family and their kids have moved out and now they’re seniors. And so it’s it’s really neat to have that kind of dynamic exists there. But there’s a lot of that kind of and it’s probably because mobile home parks are the affordable housing solution and the current owner knows what’s happening out there and it’s, you can’t own a large institutional quality asset and not get calls from brokers. We’re promising you, you know, pie in the sky. You just, it’s impossible to hide.
Jack:
So they know what, what the market looks like out there, but their concern is that there’s a human element in this business. And if you if that doesn’t matter to you, then you’re not an appropriate buyer for their park. So it has to matter to you. So I think the correct way, I mean, most of the properties that we acquire are gonna have rental rates that are lower than the market. The previous owner wasn’t raising rents at the same rate as everyone else. The appropriate way to approach that is to first go in there and make the improvements that the previous owner did not wanna spend the money to, to, to complete. So redo the roads so they have brand new roads and redo the clubhouse or the pool or whatever other common amenities. So they were, they’re essentially brand new. Improve the lighting, upgrade the landscaping, you know, put in security if the pro the property you know, if it’s appropriate gate, the entrance add lighting.
Jack:
It’s like all these kind of simple things. Yes they cost money but prove to your resident base that hey, we’re not just a new owner who are gonna come in here and raise the rent. We’re a new owner that’s gonna come in here and make your quality of life better. Yes, we’re also gonna raise the rent. You’re $200 behind market, but we’re not gonna go $200 in year one. We’re gonna take little bites out of that and we’ll catch up to the market, you know, in years three or four and give you at least some runway to, to budget for it. So I think that’s the, the right way to approach it. But when it comes down to paying the highest price for an asset, the only option that you have is to raise the rent all the way to market year one. So it’s unfortunate, but that’s just the way the business is. We like to avoid that. That’s not our mo We want to have a really good relationship with our residents because we plan to own these parks for a long time. Yeah,
Charles:
Yeah. With every asset class within real estate, there’s pros and cons to kind of for your rent and with, if it’s triple net lease, you might, you know, you’re getting that longer term. You don’t have to deal with the maintenance if you’re doing apartments. Yes. there’s more, there’s less consistency people might renew once, but the thing is they move out and that’s where you can get that unit usually closer or at market rent with yours. You have more stability, more less volatility. However, yes, it’s more difficult to achieve market rents in the short term, which is fine. I mean, if you’re still eating away at it, I mean, if that’s the right mindset to have well, while improving the tenant experience, I think it’s a win-win. Yeah,
Jack:
I agree. Yeah, it’s a, it’s kind of the tortoise in the hare, you know, with some asset classes you could jump from, you know, start to finish really quickly. And with mobile home parks, it’s a little bit more of a patient game. And if it’s played well, it’s extremely stable and it’s worth it. But yeah, you, I know we used to do apartments and we would empty half the apartment unit where the rents were 600 and this is way back when I say 600, you know, how long ago this was. And then we would renovate those units and reten it at 1200 and then empty the other half and renovate those units and reten it at 1200 and that was an 18 month process or a 12 month process. So mobile home parks don’t work that way ’cause the tenants own the homes. So when you purchase the real estate, you also assume all the tenants. So it’s you know, the tenant base is really important to understand what kind of tenant base you have when you’re purchasing a Malone Park.
Charles:
So going back down to your, during your due diligence and inspection, obviously if you’re buying parks, there’s gonna be a lot of, for the most part, I would imagine there’s deferred maintenance if you’re buying a park from someone that’s owned it for 20 or 30 years. Kind of what are some of the red flags you see and do during your due diligence of like the infrastructure of the park, you know what I mean, that you usually when you’re walking, what you usually find that requires a second look or something else to kind of, to figure out how you’re gonna change your renovation budgets.
Jack:
Yeah, some of it you can see in some of it you can’t see at least initially. So when it comes to infrastructure, everything that’s above ground you can see. So if the pedestals are old and, and falling apart, you can, you could essentially guess that you’re gonna have to replace those, particularly if your plan is to put in new homes. A lot of times the older homes had a lesser amperage requirement and the newer homes are gonna have a greater amperage requirement. So you, you have to understand what the current wiring looks like and what the current pedestals capacity is. So you know, if you have to budget for a greater amperage you know, we typically don’t buy parks of that nature, but that’s something that we’ve learned in the past. You do underground sewer inspections, like you get the sewer sewer’s camera, some red flags are Orangeburg.
Jack:
So there’s a type of material that was used that was kind of like a cardboard slash clay and you know, it worked, but it deteriorates over time. And those, especially if you have trees or plants that get down in there and the roots get down in there, you can’t solve for that. So that has to get replaced to us. A park that has Orangeburg is just a no, I mean, it would have to be a really good deal that would allow for a substantial reposition of the underground drainage lines or the sewage lines. So you know, if the price of the property wasn’t sufficient to accommodate for that, we would just just pass on it. The typically in a mobile home park, the water that comes into the park is a single meter and then it’s sub, or it’s not sub-meters, it’s split, it comes in on main lines and then it splits off on, on smaller supply lines that go each one of the units.
Jack:
And a lot of times those are not sub-metered. So we’ll budget for sub-metering those if the risers are built out of the old material. So a lot of times they’re built out of galvanized material or steel pipe that would corrode with time. You have to budget to, to change out those risers. So, and same thing would be with the underground water. If it’s coming in and all of it underground is not PVC, well then likely you’re gonna have to budget for that as well. So, you know, a mobile home park has a tremendous amount of underground infrastructure and you have to make sure that you understand what you have or that could just become a expense drain that goes on for years. So, you know, we have purchased parks where that there’s been a, an ongoing annual budget for replacing a section of the infrastructure in a very organized manner and they’re 80% done with it. And we just keep that line item ’em in the budget and we’ll purchase that park and continue with the same vendors and contractors that do it every year. So there’s a way to go through it in a structured manner where you end up with brand new infrastructure but certainly probably one of the most important things to look at.
Charles:
Yeah, it’s also with that infrastructure you’re talking about, you’re not really getting rent increases I would imagine on anything underground. You’re really getting it on what you mentioned before, which is really common areas, the roads landscaping, stuff like this, which lighting, obviously lighting’s a big one. It makes a huge difference. I think that’s where you’re able to kind of sell the rent increases or lot increases a little better to your tenants than we, you know, we, something that you don’t even see we fixed or we put this new water line in and now we can submeter you. You know what I mean? So yeah,
Jack:
Yeah. Unfortunately that is the truth. You know, it’s kinda like buying a, buying a house and the framer was amazing and he used extra studs, 12 inches on center instead of 16 to make the house stronger. You’re, you’re the buyer of the house, you can’t even see it ’cause it’s covered up by drywall and paint, right? So, and he thinks he’s gonna get more for it because it’s a stronger built house and you can’t see it so you’re not willing to pay for it. So that, that’s absolutely the case. Visually those things that can be improved and will actually make the life of a resident better, those things can justify rent increases. So we like to buy parks that don’t need a bunch of invisible things solved for, but yet there’s an opportunity to solve some of the visible things. And that gives us, that gives us a good, good opportunity to create a great relationship with the resident as we’re raising rent. Makes
Charles:
Perfect sense. So I remember on one of our apartments properties, we had a gardendale apartment. People had, were leaving stuff in front of their units and it just kind of was looking a little dumpy. And when we had that cleaned up, it gave a whole new look to the property with the renovation we were doing with a mobile home park. I mean, what happens when your tenants kinda let their homes go into disrepair? Whether they’re messy around where their, their lot is, or it just isn’t appealing to just anybody? I mean, how, how do you deal with that? Is it really like, do they have a con contractual like obligation, like they’re in an HOA or how does that kind of
Jack:
Unfold? Yeah, so as the owner of the mobile home park, we get to set the rules. So it’s not an HOA, but it will, and it’ll, it’s a cousin to an HOA, so it’ll look like an HOA in the way that there are strict requirements of how each lot needs to be kept, you know, down to the landscaping, even the color of the homes, like you could get that detailed. But certainly things like the skirting requirements so that there’s no opportunity for, you know, cats or something to go underneath your unit. You know, the, the c the outward appearance of your home needs to be in a certain minimum standards or qual qualifications, storage of bicycles and you know, whatever used or items that you would otherwise stack up, number of vehicles that can be parked on the lot whether or not you can do repairs to your vehicles at your home and how long how many numbers of days that you have to get those repairs done.
Jack:
So there’s a lot of levity that you have as the owner of the park to set forth rules where you can avoid all of that. But that brings us back to the due diligence that if you’re driving through a mobile home park and you’re doing your initial inspections and you see that rampant everywhere, what you know is you have a heavy lift project to recondition the, the behavior of your resident pool. So you have to ask yourself if you want to go through that work. You know, if they’re used to the prior owners saying, oh yeah, free for all, do whatever you want, and now you’re gonna come in and set new rules and you have to, you have to move them from where they were to where you’re going. That might be difficult or impossible to achieve. So usually in a, in a 10 minute drive through a property, I can tell if the property is one that we, or if the tenant base is one that we want to own or not. It does not take me long. So, but that’s, that’s another piece of due diligence for us. So
Charles:
Oja kind of as we’re wrapping up here, what would you say are common mistakes you see mobile home park investors make?
Jack:
That’s a loaded question ’cause there’s a lot there. Your favorites. Well, if I could look at my own experience and let’s let’s look at Jack’s mistakes today. I would say that the initial parks that we bought were too small. It’s not scalable to buy smaller parks like that. So I think that if somebody’s tried to build scale in a mobile home park portfolio, you know, buying 20, 30, 40 space parks is gonna be too small for you. Now, that’s probably not gonna be the case. If you wanna buy a single mobile home park five minutes from your home, that could be the best investment you ever owned because you can own and manage it yourself and you don’t need any onsite management or maintenance. So you could just manage it yourself. So it really depends on your strategy. I think the due diligence, the neglecting, the you know, we have almost 200 items that we look into when we do due diligence, due diligence on a property that’s onsite and offsite due diligence.
Jack:
It gets into the, the detail with respect to the county and the city and the fire and the, you know, code enforcement and all of those kind of things. So yeah, not doing property diligence I think would, would make a difference. Not making assumptions on what the broker tells you or the owner tells you with respect to where market rents are. So not doing property diligence, you should be driving every competing park in the marketplace that the subject acquisition is in, and making sure that you’re crystal clear on where the market actually is. Otherwise your performance is gonna be, you know, outta line for your underwriting. So those are some of the common things. And oh, here’s another one. Buying a park that looks like a great deal, but it’s in the wrong market. Location, location, location. It’s true in every asset class, very true in mobile home parks, you buy a park in the wrong market, you can’t solve for the, the you, you can’t execute the, the ad value strategy. You won’t be able to sell homes, you won’t be able to do the things that you would like to do to improve the value of the property.
Charles:
Interesting. Yeah, the, I always, the dealing with the city and speaking to the city is definitely something, especially with older apartment buildings where there’s, there’s a lot of grandfathered things that are in there, you know what I mean? And you might not be aware of ’em. So checking with the city and seeing if there’s issues, especially with fire that always comes up, you know what I mean? There’s definitely a lot more due diligence that has to go when you’re dealing with I think a lot of parks that maybe have parts of it that have been grandfathered in. You know what I mean? That you might not be knowing what you’re really inheriting. Yeah,
Jack:
There’s private utilities. I mean, there’s so many nuances with mobile home parks. We looked at a park, loved the neighborhood, incredible city median home values in the mid fours, so like easy to sell homes there. And they had all kinds of park owned inventory because it was an it was an old park on septic, no, it wasn’t even septic, it was drilled like septic wells and a private water system that was constantly having problems and septic systems that were backing up and old vintage coaches and tired old roads. And I mean, everything was old and poor and kind of band-aided together. So the type of resident that they attracted were the, the ones that were looking for the best bargain in the marketplace and they were showing, I mean, there was like a blue school bus in there that somebody was living in and like all that kind of stuff.
Jack:
You can’t change that, that park is what it is. So, you know, even though the pricing might look attractive, you know, if your expectation is I could move this to be the kind of park this market would demand, you can’t change that tenant pool and you can’t change that infrastructure and you can’t change the private utility structure. Like, there’s none of that stuff that you could change without knocking it over and starting, starting again new. So, you know, understanding all of those components certainly will help you avoid buying something that you wish you wouldn’t have. Well,
Charles:
Jack, thank you so much for a lot of great information. How can our listeners learn more about your business, 52, 10, and you yourself?
Jack:
Super easy. Go to our website 52 ten.com and that’s the number 52 and then TEN spelled out.com. And go to the contact page and connect with us.
Charles:
Okay. Well Jack, thank you so much for coming on today and looking forward to connecting with you here in the near future.
Jack:
Hey, thanks for the invite.
