Creating Scalable Cash Flow with Mobile Home Parks and Land Development

0:00When I first started, I had the misconception of man, mobile home parks, trailer parks are scary, right? And in fact, the very first one that I bought, I I went in with the maintenance guy, the owner sent his maintenance guy with me, and we went around, met all the tenants. And he said, "Man, why you scared? Why are you shaking?" I was like, "Hey, I've never done this before." I actually had to only own two rentals at the time. I was like, "I've never done this before, right?" And I'm going up to these mobile home parks. This guy hadn't collected rent in a couple years.

0:31And I was like, just frightened, right? — collected rent in a few years? Yeah. Yeah. He had moved on to laundromats and anyhow, he he was making money there. So anyhow, so I going to these places that, you know, I'd never been before. I I grew up in a middle-class, upper-class family, and never had gone inside of a mobile home park. I was scared. Well, what I found out though, you know, from a misconception standpoint is all the people that live in these are just like me and you.

1:07You know, they want a good roof over their head. They want somebody to take care of them and help fix water heaters when they break and fix roof leaks and so on. No different than me and you. It's just, you know, they're at a different economic level. They're trying to get to the same place that we're trying to get to, right? Now, of course, are there a few bad apples here and there? Yeah, but most of the people are really good people that's trying to make a living and wants wants a landlord that's going to help take care of them. And if you do that, then, you know, you're going to have a really happy resident.

1:38So, I'd say the the misconception is, oh man, mobile home parks are scary, there's really bad people in them. In in my experience, not really the case. Yeah. But yeah, so so that that's probably the biggest misconception. Yeah. Yeah, I I I know a lot of really successful mobile home investors and most of them have really good things to say. Obviously, you're you're going to have bad apples here and there, but that's in any any space. So, Right. Yeah, it makes sense.

2:09So, how I I'm curious how this transition then into land home development? Like, where did you just have extra land that you were like, "Okay, let's put some more pads on." Or what did that look like and why are you kind of I guess focused on on expanding that? Yeah, so I'd always looked at mobile home parks as the long-term investment. When I started buying mobile home parks I was I think 39. And I always looked at it as like, "All right, well, it's 15-year note and it's going to be paid off in 15 years." But between now and the end of 15 years, probably not going to make a ton of money, right?

2:47I'm going to make some money, but not a ton. So, that being said, we were flipping houses and flipping properties and wholesaling a little bit. Well, part of mobile home in South Carolina, if you sell more than two mobile home park or mobile home, sorry, you're supposed to have a dealer's license. Mhm. So, I got my dealer's license. I saw, "Hey, well, I could buy these mobile homes for a pretty affordable price direct from the factory." and so, at that point I saw what I could buy mobile home for like anywhere between 60 and 80 thousand dollars.

3:20And said, "Well, if I can get a a mobile home for that, a nice new double wide, 1,500 square feet, then why don't I look for some land and I'll do land home packages?" And so, started doing that and never looked back. Started buying more land, putting new more new mobile homes, selling them as a package, typically to first-time homeowners. Mhm. And VA buyers, USDA buyers. Oh, VA loans will cover mobile homes as well? — Yeah. I didn't realize that. That's You could get about any loan on mobile home.

3:51Wow. We set them up so they're HUD certified. We do title them. And so they'll call us out for financing. Okay. So, you're not putting new mobile homes on your parks necessarily. You're just buying parcels of raw land and then putting, you know, improving it enough to put the utilities and that sort of thing and then putting them a new mobile home there. That's right. That's right. And I mean, I will I will put new homes in the mobile home parks, too, when it makes sense. Oh. — but in this particular strategy, it's putting homes on scattered lots, or maybe we do a small subdivision, and selling the home and the land together to the end buyer.

4:32I see. Okay. Yeah. And what's the spread that makes all that the work that goes into that worth it for you? Man, I'll tell you, we make at minimum we're going to look at trying to make 30k. We've made as much as 75k, on a property. And, really depends on the location. You know, some markets we can sell for 225, other markets we can sell for 300. And 300 still first-time home owner, which is wild, but that's that's the market we're in.

5:03Yeah. So, yeah, it's pretty good spread and the the work involved, you say, man, what's it to make it all worth it? I mean, honestly, I'm once I've learned this process and gone through this process, I'm only working probably 10 to 20 hours per project. — Wow. And so the the return on your time is is really good. Yeah. That's incredible. One of the things that So, we do, a lot of short-term rentals and I I work with people who do short-term rentals and a lot of people like to set, you know, they they kind of have a dream of setting up sort of a a glamping site or, you know, multiple tiny houses on one, you know, large lot.

5:43And what I've realized is that the cost of the infrastructure sometimes exceeds the structures themselves. You know, to get a road in there, get water, get a you know, septic, get electricity, all that stuff. How do you keep those costs low when you're looking at a parcel of land so that it doesn't, you know, eat up all your margin? Yeah, that's a good question. So, typically we're looking for all road frontage lots. And so we're not the the largest development I've done is nine lots.

6:15And it was nine lots all facing a road. I think it was like 2,000 ft of of road frontage. It was pretty big. Yeah. And so, we didn't have to do any interior roads. And then so from there, we really just have to do a septic tank, which is pretty affordable, and a water tap with the water company. Got it. Now, there are times when we look at larger parcels and try to decide whether we want to do interior roads, and to your point, a lot of times the infrastructure will make it a deal that's not worth pursuing.

6:46Or, the cost for subdivision it is, you know, storm water preparation and other things the county will make you do make it not worth it. Yeah, got it. And do you have to put these on a concrete pad, or do you have to pour asphalt driveway, or is it just you can just put them right on the lot itself on the dirt? So, we'll we'll bring the house in and we'll create a a pad for the house out of compacted soil. And then, we can do concrete footers for the piers. Or we can use ABS plastic engineered pads for the for the piers, also.

7:22And so, we'll put it on piers just like a a house would be put on. And then the house itself that is comes from the factory will then be set and blocked and tied down to those piers. Okay, cool. And then just a gravel driveway? Typically, we do a gravel driveway. You know, again, if you talk about like what my expectation would be would be of course I'd like to have a concrete driveway or an asphalt driveway. But a lot of times these buyers are are okay with a gravel driveway. And they're just happy to have the first home.

7:55They never thought maybe I had a closing yesterday. It was a lady. She never thought she'd been renting for a few years. Went through divorce. She thought, "Man, I'm never going to be able to afford a house again." and she was able to move into a house that has a gravel driveway. She's ecstatic about moving there and she's moving in this weekend. Yeah. Well, that that's one thing that keeps costs down, you know, all those things add up. You start adding all these extra things on there like that. So, that makes sense. And then in terms of working with with cities or counties on this, do you do you run into restrictions where there's like, "No, it has to be stick-built." or is it to I mean, if if you're allowed to build a house, you're allowed to drop a mobile home there?

8:41Yeah. So, we'll run into restrictions every so often. In South Carolina it hasn't been that difficult as long as we're outside of the city limits. Okay. — typically if we're in the county outside of city limits, then we're okay to put a manufactured house. Sometimes there are deed restrictions. So, maybe you know, 20 years ago the whoever sold the property initially put a deed restriction against mobile homes. Because the 20 years ago that stigma against mobile homes was a lot different than what people believe about mobile homes today.

9:14And so we will face some deed restrictions every once in a while. But, in terms of county government, at least in South Carolina, it it's fairly easy to find land to put on. Other states like Georgia, North Carolina are a little tougher in some counties, especially as you get closer to the big cities. But, there's there's plenty of opportunity out there. Yeah, interesting. Is there a difference between mobile homes and manufactured homes? Mobile and manufactured really can be used interchangeable.

9:48Within the manufactured housing category, let's say, you'll have, HUD certified, home, which is really historically what would be called a mobile home. And then separately you'll have a modular home, which is built, to the differences it's built off frame, it comes off the frame, on site via a crane, and then, it's built to, home building standards, slightly different standards, so it can qualify for conventional, financing.

10:19Oh, got it. Okay. Well, now I I should say qualify for conventional finance. It It qualifies to be appraised against a site-built house, a modular would. Oh, I see. Okay. Same standard, got it. Makes sense. And you you talked about the financing for these, like, you kind of mentioned when you were buying the mobile home parks, you did owner finance initially for that first one. I kind of look at financing and like, especially with what you're doing is sort of like there's the front end financing to purchase the lot or the mobile home park, and then there's the back end with the end user, you know, would would use, which we talked about that VA or or, HUD loans or, you know, there USDA loans are all acceptable.

11:04So, for you though, on the on the front end, is it mostly are you are you getting a lot of owner finance or how do you scale this up? What capital sources are you tapping into? That's a great question, and I need more lenders, so if you're listening and you're a lender, please reach out. But, in all seriousness, we use private lenders, so individuals like me and you who have maybe made money in real estate or made money as a doctor or in business or whatever it may be and wants to diversify their investments, that would be a good good case.

11:36and we'll lend money per project or borrow money per project with a private individual. We also use hard money. So we've partnered up and developed relationships with hard money companies that will lend on the development. And then the last would be banks. And so there are some banks as we've developed relationships that will fund these also. Okay. — And of course you can self-fund. We work with or or know, you know, we've got a lot of people in our network that will just self-fund it and develop theirself.

12:10Yeah. Okay. But that in terms of owner finance, is that pretty common when you're when you're buying this stuff? For mobile home parks it is, it's very common. I've had a lot of I'd say 50% of the parks that I've purchased were owner financed. Oh, okay. — for land home deals, not really. We We We always fund the purchase of the land up front. Okay. Got it. Interesting. And and I noticed your the name of your your company is Howl and Sons.

12:42Are your kids working in your company now or So I've got two boys. They're one's a freshman and one's a junior in high school. Oh, okay. — they started doing cold calling for me a couple summers ago and did a great job. And my junior, he's he loves marketing and love sales, and he's really asked They're They're so busy with school and running and athletics and such that they don't have much time during the school year, but in the summer they do a little bit of work.

13:15And they actually own a mobile home in one of our parks I sold to them on owner finance. And so they get to collect rent and they get some experience that way, too. I love that. I love that. I I think a lot of people who listen to this podcast have kids and they're they're doing this for their kids, but also want to incorporate their kids into the business, you know, because it's one thing to just hand the keys to a kid you know, as you're like passing away, you know, and it's like now you got all this potential wealth and all these properties and they have no idea what to do with it.

13:49And then I think it's very different to start to incorporate them into the business kind of like you were talking about. So what I guess what advice would you have for somebody who has kids about your kids age to to try to get them this maybe start to become interested or or start working within the business. Yeah, I mean, you know, they're around me a lot and I work from home, so they hear me talking about business quite a bit. And so I think it starts there, right? You make it part of the normal everyday conversation. And then beyond that, you know, what I did was look for opportunities initially when they got to an age where they could probably help looking for areas where they could help, right?

14:33And I thought cold calling was a really great skill and so I had them help with that. I had them help with preparing letters to mail out. Mhm. And that's a simple task. They started that probably when they were I think the youngest probably was in elementary, you know, folding letters and putting envelopes together and putting stamps on and you know, incentivize them by paying them a little money to do that. Yeah. And then, you know, as as they continue to get older, I looking for ways that you know, more advanced work maybe they can help with.

15:09My son, my older son, well, both of them actually now have recently got into creating YouTube videos. And they actually they'll post a a YouTube short and they'll get a few thousand views in a few days, which is wild to me. And — real estate? No, they just dumb stuff like, you know, kid stuff, you know, sports, especially sports. Yeah. But, no, it's really good content though and funny, right? Really funny. But, anyways, that being said, I'm like, "Hey, Bobby, why don't you maybe one day follow me around and you can make some YouTube shorts for me, right?" — Yeah.

15:43And he's excited to to give that a shot. That's great. I think that's that's such a great balance. I I talked to a lot of people who said growing up their parents had real estate and basically they were their kind of slave labor where it was like every weekend they'd bring them to properties and they'd be scraping, you know, paint off the wall and repainting and cleaning and stuff and you know, they saw all the the headaches, but never saw any of the benefits. And then, you know, I think there's the opposite side of things, which maybe my kids kind of see now where it's like, you know, I they're not doing a whole lot of work for it, but they get to live you know, a pretty flexible lifestyle that we've created and and so I think as they get older, you know, my intent is to have them, you know, start to do some more of the the day-to-day tactical stuff to

16:31See, you know, where that that mailbox money, quote unquote, comes from. It doesn't just show up. So I love that you're kind of right, you know, you're you're incorporating them a little bit, but yet it's not like they're you know, your slave labor that is just doing all the the ugly stuff cuz those people, you know, that they hate real estate. And I talked to them, they're like, "Oh man, my parents had properties." And and their parents were trying to get them into real estate and it had the exact opposite effect cuz they never saw any of the benefit of of it, so. Yeah.

17:02I love that. And, you know, whether it's right or wrong, I mean, I'm trying to teach them the things that I like doing and the way that I think business should should should be run, really. And again, I don't know I don't know or wrong, but it's like I don't go out and change door locks, right? Or I don't go out and mow the grass, right? Cuz I'm trying to work on the business. Right. And so, you know, maybe I should get him out there on a lawn mower. I'm not sure, but I think there's more valuable things that I could be doing for the business versus going out and doing maintenance.