KSS 36 | Mobile Home Parks

 

An increasing number of Americans are choosing to live in mobile homes because of practicality. Kevin Bupp, the host of Real Estate Investing For Cash Flow, shares how you can capitalize on this growth. As he walks us through his journey towards investing in multifamily real estate and mobile home parks, Kevin discusses the responsibilities that come with it and the necessary aspects that need to be dealt with such as paperwork and infrastructure. He also gets into the lending options for a mobile home park and talks about the funds he creates to get more investors involved in his mobile home parks across the US.
Love the show? Subscribe, rate, review, and share!
Join the Kevin Shortle Show community today:

Listen to the podcast here:

Why Mobile Home Parks Are Great Investments with Kevin Bupp

I do have a special guest and surprisingly to me, I can’t believe that we haven’t met before. We maybe have casually because we’re both here in Florida and both been active in real estate in Florida for a long time. When I looked at LinkedIn, we had about 96 common people. It’s interesting how this business works. I love the fact that LinkedIn and podcasts can bring people together with the way it does. I’m happy to have him on. His name is Kevin Bupp. He’s over in Tampa area in Florida and he’s in an area that I’ve always been intrigued with. I’ve done business in volume on that on the paper side but it’s something that people have some misconceptions about and that is dealing with mobile manufactured homes. He has funds that do that and also, he has cash flow. The note business is all about cash flow. He has a cash flow type of podcast where it’s called Real Estate Investing For Cashflow with Kevin Bupp. Please check his podcast out as well. Kevin, welcome.

Kevin, thanks for having me.

I’m going through your bio and bartending, I bartended and got into real estate young. You’ve been a lifetime entrepreneur starting as early as twelve years old, the paper routes and moving on from there. I love that in getting into real estate at a young age because I went through a similar thing. What attracted you to real estate in general and then investing at a young age?

I wish I had a better grand story of how I fell into real estate but ultimately, I always wanted to make money at a young age. I grew up in a very blue-collar family and we never went without by any means. My parents always provided for us. We always had clothes on our back and always had food on the table but we surely weren’t rich. There were little luxuries as a kid that you want, bikes, dirt bikes, and four wheelers, cars, and baseball cards. We did get some of that but not as much. I learned that at an early age by doing chores around the house and then mowing grass, shoveling snow and getting the paper route, I need to make my own money if I wanted things.

I didn’t want to rely on someone else to get them for me. I wanted to get them myself and I wanted them on my own time. That’s what drew me to being an entrepreneur. I didn’t know I knew that word back then. No one knew that terminology way back then but that’s why I was doing it. It led into what turned me into my adulthood and to real estate. Real estate was an interesting path for me. I was tending bar going to school. I was always doing side hustles but didn’t know what the future held for me. I was nineteen years old.

I can’t tell you that I had this grand vision of business that I wanted to start at that point in my life. I wanted something. I had this burning desire to do something big. I didn’t know what it was. I met a guy by the name of David through a girl I was dating at the time. David was a local real estate investor on a bunch of single-family properties and multifamily. He lived a very cool lifestyle. He seemed to have a lot of flexibility in his life. He traveled a lot and I was attracted to that and I want to know what he was doing. David invited me to a three-day boot camp down in Philadelphia of how to fix and flip and create a rental portfolio of single-family homes. I took him up on the offer and to me, it was the light bulb.

I went to the three-day boot camp and saw another hundred people that were living that same type of lifestyle and it didn’t seem like rocket science to me. It seemed like something I could wrap my arms around, something that excited me and something that could build the lifestyle that I desired. I had David there and he seemed like a nice guy. I didn’t know if he was willing to help me out or not but he took me to this boot camp. I went to him and said, “David, I want to do what you’re doing. I still don’t fully understand it yet. I’m a little overwhelmed but how can I help you and your business? What can I do to bring value to you so that in turn, I can learn what it is you’re doing?”

Were you in your twenties or something like that?

I was nineteen when I met David and when I went to this boot camp. I was twenty before I bought my first property on my own. David took me underneath his wing. If I wasn’t tending bar in the evening and if I wasn’t going to class in the morning time, I was at David’s house or I was out in the field with him and all of his properties meeting with brokers, inspectors, new renters and signing leases. I was doing admin work left and right. I was doing whatever he needed to be done so that I could see what it was that he was doing on a day to day basis and how he ran his business. I did that for fourteen months. I followed him around until I felt comfortable enough and until the opportunity presented itself for me to do my own deal. I’d saved up some money tending bar, bought my first junker, rehabbed it with some of his guidance and went on to do the next one and so on and so forth. I was having a lot of fun and started to make money at it.

KSS 36 | Mobile Home Parks

Mobile Home Parks: Often, a real estate investor has a lot of flexibility in life with regards to having more extra time.

 

It does illustrate the importance of having a coach and a mentor. I know people have heard this before but it’s so true because I was going through something similar after I graduated college. It’s such a parallel where I graduated college and I became a commercial real estate appraiser. Back then, no internet. I spent all my time in the courthouse going through the books and the microfiche and doing appraisal work on commercial properties and some residential. I said, “I’m selling real estate. They’re driving all the big cars. I’m going to become a real estate salesperson and make all the big bucks.”

Right here at Orlando, I had to bartend at night. They were like, “You can’t bartend. We don’t want you selling real estate and then you’re serving them drinks at night.” I said, “I get it, but I had to live.” I bartended way across town. I did that at night and worked. I didn’t have anybody to guide me. In fact, it was a little bit the opposite in the real estate office. They didn’t want the competition. There’s that element of, “We’re not going to help you too much.” It was tougher for me to get started but I always wanted to get into the investing side. One day, I’m working a Saturday, sitting at the desk, waiting for walk-ins and the next thing you know, somebody comes in and they had one of those old ANQ loans, assumable non-qualifying. I said, “I’ll buy this because all I had to do was take over the payments on the signature.”

It took me a little longer to get going in the investment side but once I hooked up with somebody else who was doing a lot of properties, it’s amazing how quick you go through that. You start to learn to mirror and match and get into that. As you progressed to real estate, you got into the mortgage business, you got into a whole bunch of different areas, as I did but your focus has been on manufactured homes and mobile homes. I know there are pockets of the country that they’re like, “These are cash cows,” and then you have other people like, “Those things lose value so quick.” I try to shake people and say, “No, you’re missing out on this.” How did you get into that and tell us what you’ve been doing in that industry?

I’ve been buying parks for about seven years. Leading up to 2008, I had acquired quite a substantial portfolio of single-family properties and also multifamily. Between the two different types, I had over 700 units. 2008 did not treat me very well here in Southwest Florida and I lost most of what I had built up over those prior years. I had to rebuild myself from scratch and it didn’t happen right away. I took a couple of years hiatus. I shouldn’t have, looking back, I wish I had to start buying when there was all that blood in the street but it was my blood, too. It’s hard to step outside of that bubble and get comfortable again.

I started a few other businesses non-real estate related to keep my mind busy and to try to rebuild myself financially, at least afford a roof over my head even. I had this burning desire for real estate. It wasn’t going away and I knew to look back at what I had built prior, my original business was built around single-family. That’s what I did well and I had a system put in place. We bought a lot of homes and it was easy. I became complacent because the process was in place. The multifamily stuff came by default. I had partners in it. I wasn’t very active and had acquired about four times the amount of multifamily property than I had single-family and worked way less doing that. I looked back and said, “What was broken? What don’t I want to do again?”

When I get back into the space, after the crash, I didn’t want to own single-family and I didn’t want to go property by property to build this portfolio backup because it would’ve taken forever to do that. There’s the same amount of effort and the same amount of assisting the process in going into building a multifamily portfolio that goes into a single-family portfolio. It’s just a much bigger scale. I knew that getting back into it, I wanted to rebuild this empire with multifamily properties or so I thought. I spent about a year getting myself ingrained in the space and talking to everybody that either had jumped into the market after the crash or hadn’t made it through, had weathered the downturn and made it back out on the other side okay. I wanted to know what the new landscape looks like. When I say I took a hiatus, I literally stepped away. Pretty much completely from real estate and I kept my finger on the pulse a little bit but things were drastically different in 2011 than what they were in 2007, from a lending perspective, from an opportunity perspective, so on and so forth.

During that period of time, I met an individual through a mutual friend. His name was Randy. He owned mobile home parks. I had never considered a niche. I wanted to be the multifamily guy and I had lunch with Randy because I love meeting new people. After a two-hour lunch with Randy, I left that lunch very intrigued and very excited about focusing on mobile home parks or at least taking it as far as learning everything I needed to know in buying a community and either proving or disproving all the huge benefits and positives that Randy had shared with me during that two-hour lunch. That’s what I did.

It took me about fourteen months to buy the first property, looked at a lot, made a lot of offers, got scared away from a few and bought my very first mobile home park back in 2012 up in Atlanta, Georgia. I still own that one and I proved the concept there. I enjoyed it. I bought another one and bought another one. We’re now in thirteen different states. We’ve got about 2,000 lots under the ownership and we’re the mobile home park guys. I wouldn’t say that we’re the only mobile home park guys but it’s a niche that fits us very well. I like being in the parking lot business. That’s what I consider ourselves. We’re in the parking lot business. We rent parking lot spaces to folks that own mobile homes. It’s a beautiful thing and it’s become quite lucrative.

You don’t go in and buy individual mobile homes. You go in and buy the land and all of the necessary services around that land to maintain it and such. People come onto your properties with their own mobile homes.

You can't just hook mobile homes up to your pickup truck and tow them down the road. There’s a much more of an elaborate process in that. Click To Tweet

That’s correct. In a perfect world, Kevin, I want to be the parking lot owner. I want to be the place where they have to park their mobile home and these things aren’t very mobile, even though they’re called mobile homes. Once it leaves the factory and makes it into a community, it very rarely ever leaves. Some statistic says that 98% of the homes never moved to a second location. They stay. It costs a lot of money to move them. You can’t just hook them up to your pickup truck and tow them down the road. There’s a much more of an elaborate process in that.

However, I want to get some clarity here. We do own some mobile homes, not by choice. Some community owners that we’ve purchased from the past have had maybe a little bit more of a mind on the rental side of the business. They happen to own some of the mobile homes. Maybe they inherited them because someone passed away. Maybe they purchased it from a resident that was in eviction and they want that person gone and they didn’t want that home leaving the park. Many different reasons why a community might own some of the mobile homes in them. We own about 250 give or take mobile homes. Some parks we have zero, some parks we have a handful and other parks we have twenty or 30 or more. Our goal though is to always get back into the parking lot or the land lease part of it to where we’re renting the dirt. We always try to sell these mobile homes back to prospective home buyers rather than doing a straight rental arrangement.

I’m unfamiliar that that was a type of investment in practice. My very limited experience in this was buying portfolios of notes on homes and all the people we dealt with owned the park and the mobile homes and they sold the mobile homes with seller financing. We would cash them out of those papers. You’re essentially a land buyer and then the people put the homes on there, they pay you rent for that space on a regular basis. In that field, what other responsibilities do you have?

The beautiful thing about it is if we don’t own any of the homes, assuming that we own a number of communities where we own zero homes, all the residents own their own individual home, we own the land and the infrastructure. Our responsibility in most of those communities is the upkeep of the roads, upkeep of the common areas and upkeep of the water and sewer lines that are being fed to these individual homes and that’s it. In some of those parks, we might have a clubhouse. If it snows, we might have to plow the snow and things of that nature but that’s practically a deal. If their AC goes out, if their plumbing breaks, if the roof starts leaking, that’s their responsibility. They don’t call us. They call their own vendors.

That’s one of the things we like about the note business. We’re like, “We don’t know the house. We just own the notes.” They don’t call us when that stuff happens. Do you need an on-site manager there to maintain the things that you need to maintain or are they simply on-call when something happens?

We do have managers. Each one of our community has a manager that either lives as a resident manager that happens to live in the community or they come in for a set amount of hours and live outside of the community. Every community’s a little different as far as the management demands. The communities where we own zero homes and where we have a stable resident base, there’s not much to do. It comes down to collecting the rents and ensuring that folks are maintaining their yards. We want to enforce the rules. We make sure that people are keeping up on their units. We’re walking the park every day to make sure there are no water leaks because we own the water lines. We make sure that there’s no money seeping into the ground, which is when water leaks. We make sure that folks are keeping up with their units or not have abandoned vehicles or their skirting might be damaged or their home needs paint and things like that. There’s very minimal oversight in that type of community.

On the other side of that spectrum, we’ve got communities that may own 30 of the mobile homes to where they’re either rentals or they’re being sold on like a lease to option type arrangement, which is a glorified rental. In those situations, there’s a lot more responsibility from the manager because we’re still maintaining the units, we’re still getting maintenance calls and we’re still having a little bit more of a turnover process involved with folks that truly don’t own their home outright. In that situation, a manager is much more of a demanding position than it might be in that first example I gave you where we don’t own any of the homes. It depends, but we always have a manager there on site and their job responsibilities depend on the park itself.

I’m sure some of my audience would like to take you out of that responsibility by buying that home. We always like to get them and sell them with seller financing again to remove ourselves from having to manage that property is a popular technique amongst note investors. I’m intrigued. Purchasing these parks, it’s got to be a special tea type of financing. Do you approach it more of a business with an income approach and say, “Here’s what we have and here’s what the income’s going to be?” How do you approach lenders on this? Do you utilize capital in another way?

It’s valued the same way any other type of income producing property would be. Lending had come a long way ever since I’ve been in the business from when I first got into. Fannie Mae and Freddie Mac have phenomenal non-recourse loan programs on mobile home communities. They’re CMBS lenders who are securitized mortgage instruments. There are tons of recourse that are out there for communities. Everything’s a case by case scenario. There are local banks that do lending on mobile home parks. There’s a lot of different lending options out there. I would say that it’s still a little easier probably to get lending on a traditional apartment complex than it might be on a mobile home park. However, there are plenty of lending options available to mobile home park investors. We use debt and equity structure. We raise capital from investors for the equity component and then leverage it with somewhere between 65% and 75% loan-to-value debt in a first lien position.

KSS 36 | Mobile Home Parks

Mobile Home Parks; There’s the same amount of effort and assisting the process in going into building a multifamily portfolio that goes into a single-family portfolio.

 

Have new programs come along since Berkshire Hathaway got involved in this? They’re the biggest manufacturer and homeowner in seller finance or do they finance? I know demographically that company was a big believer in Warren Buffett. After the crash that we were talking about earlier, a lot of people couldn’t buy another home. They were looking for manufactured homes. They’re built better 100%. They provide good housing for people younger as well as older and he saw a value by there. Have they been a game changer in the business?

They have been a game changer. They’ve helped us progress forward as an industry as a whole. As far as the financing side of it, when you’re speaking to the financing and the communities themselves, they are involved in a very small scale. Berkshire Hathaway owns Vanderbilt Mortgage and also 21st Mortgage. Both of those are predominantly on the consumer-facing side and doing the lending practices on individual mobile homes. They’re starting to do some recourse community financing for park owners like ourselves. They’re surely not aggressive in that space by any means. However, they’ve been a game changer on the consumer side because lending for a borrower that wanted to own a mobile home and get financing on it has been very challenging. There was a crash back in the late nineties like we had the subprime bubble. Mobile home lenders had their own internal bubble about eight years prior.

Is it the green tree funding or something?

Yes and when that happened, it all went away. It dried up completely. Berkshire Hathaway with Vanderbilt and 21st have helped push this industry forward. One thing that they did during that crash, what happened was there was a lot of repossessions homes getting pulled out of their park. Whenever you have a home leave, that lot revenue’s not coming anymore. Your park is getting devalued by $20,000 to $30,000. Every time a home might leave out of that park and a lot of park owners didn’t have the capital to bring homes back in.

It’s very capital-intensive to go buy homes and bring them back in and to create a sales program to fill your community back up. What Warren Buffett did through 21st Mortgage is he created a lender arm that essentially will work with park owners like ourselves. Let’s say we have a hundred space mobile home community and there are only 70 of those lots are occupied with homes, the other 30 are vacant. He’ll essentially work with the park owner to bring brand-new home inventory in and give them a period of time to get that home sold. 21st will do the financing for the end buyer. It’s a win-win that the park owner gets up some brand-new inventory in their park. It’s a win for 21st because they get the lending side of it and it’s a win for Clayton Homes because they made the home that’s sitting in that park. It’s a very direct way for Clayton Homes. Essentially get their inventory in front of the eyes of those that are going to be buyers, which are folks that are probably friends of friends that already live in a mobile home community. It’s been a game changer for the industry and it’s only moving in a positive manner from here on out. There are lots of positive changes on the horizon as well.

As a note investor, we look to go to where the deals are. We’re different than the more traditional real estate investor that wants to buy in their own backyard. It sounds like you do the same thing in searching for these investment opportunities in the form of the parks. You have to go outside your geographical area to go where the better buys are.

In a perfect world, I would love to own everything here in Florida because I love the Florida market. There are many different great markets and submarkets here in Florida. I love living here and I love investing here. However, there’s a certain quality of a community that we like to own and there’s a certain return that we like to hit as well. It’s very hard here in Florida to get a high-grade community. There are lots of large institutional buyers purchasing communities here in Florida. It’s very challenging to get even remotely close to a double-digit return. That means that we have to go outside of our marketplace to find those opportunities.

I believe you were also running a fund. You’ve done multiple funds to finance these deals as well, which is a natural progression. Tell us a little bit about what you’ve done with the funds and where you are with that.

We wrapped up our second fund. We’re going to be opening up a third mobile home park fund. As far as the reasons behind it, we’re good at finding off-market opportunities. That’s one of our value propositions being investors into our current investors, our equity investors, is that we’ve spent many years honing and building a database from scratch of all the mobile home parks throughout the US down to the owner or the members of the LLCs, their home phone numbers, their cell phone numbers or home mailing addresses or what have you. You can’t buy the list. It doesn’t exist like in many other asset classes. You can’t go to purchase it. We took our expertise from the single-family space.

The best way to get investors involved in multiple different mobile home parks and markets across the country is by creating funds. Click To Tweet

Back then, I was doing 100,000 mailers a month. I had a massive direct mail business. I knew that business well. We’ve made a ton of cold calls. We took all the practices that worked well and were successful back in the residential days and brought it over to the mobile home park spaces. We’ve been good at driving off-market opportunities and we had way too many coming in a couple of years back and it didn’t make sense. Number one, we couldn’t take them all down ourselves and number two, raising money for each individual deal when we had five or six in the pipeline didn’t make logistical sense. That’s when the fund was created or born.

We created our first fund due to a large amount of opportunities we had at that point in time. We raised capital for those. We took them down inside that fund and started a second fund after the success of the first fund. We’ve found that that’s the best way for us to give diversity to our investors and get them involved in multiple different mobile home parks and different markets across the country all at one time versus one individual asset. It’s much more of an efficient process for us as well on the acquisition side rather than doing deal by deal. That’s where we’re at. We’ve raised about $20 million thus far and look to raise probably another about $20 million to $25 million in our third fund. We’re going to continue buying and again, we’re in thirteen states and forever expanding.

It’s a very intriguing niche and often overlooked, which in my opinion is a shame but you put a whole new twist on it. That parking lot concept, I’m intrigued by that. I’ve been talking with Kevin Bupp. His website is KevinBupp.com and also he does run and manage Sunrise Capital Investors. They do have a website as well, SunriseCapitalInvestors.com. They’re not raising a fund is my understanding. You’re working with your other funds and then perhaps a little bit down the road, people are maybe interested in the fund as well.

If anyone has an interest, you can go to our website. We have a secure portal on there where you can go in and sign up. You’ll be there for any new updates that come out on the additional funds and you can also even get access to our current fund documents. If you want to see our pitch stacks, see what it is we’re doing and understand our track record a little bit. There are lots of information you can still gather there and again, get signed up into our portal. That way you get all the relevant updates in any of the new funds that we’ll roll out.

What do you do on your podcast, The Real Estate Investing For Cashflow?

I’ve got two podcasts. I’ve been doing The Real Estate Investing For Cashflow, that one is a commercial real estate investing podcast. I interview experts in every different niche that you could think of that revolves around commercial real estate. Anything from the more common niches like retail, self-storage, mobile home parks, multifamily, office to more niche areas like car washes and marinas. I’m interviewing a guy. He’s the largest bowling alley owner in the US. There are very niche investments and I interview folks like that with the goal of expanding the horizons of our audience and I’m letting them know that there are 1,001 or even more ways to make money in real estate. Commercial real estate is the bigger way. If you’re a residential investor and you’re looking to do bigger things, there are lots of different types of opportunities that you can sink your teeth into in the commercial space. That’s what we cover on that show.

I’ve got a mobile home park investing podcast. It’s called The Mobile Home Park Investing Podcast. The name is pretty straight forward and that’s what we talk about. We discuss mobile home park investing. We go very granular into our business model. I also interview other mobile home park operators and other vendors that are in our space that bring value to the industry. We’ve done about 120 or so episodes on The Mobile Home Park show and we’re going on the 230 or 240 on the other show for quite a number of years.

On the cash flow, it sounds like you need an old note guy on there.

I’d love to have you on. We’ve covered notes as well.

KSS 36 | Mobile Home Parks

Mobile Home Parks: In Florida, it’s very challenging to get even remotely close to a double-digit return.

 

Hopefully, we’re not still considered a niche but in a way, we are.

They’re all different niches and it depends on your personality and what your end goals are for your investing business. For example, we’ve interviewed a few guys that owned parking lots throughout the US and our business is parking lots but we’re parking mobile homes. Lots of these folks I’ve interviewed have own parking lots where you parked cars, surface lots or parking garages. That is probably one of the most passive investments I could think of. That’s its own niche in and of itself. The bowling alley is another one, again, car washes and things of that nature. There are many different ways to make money in real estate.

My whole thing on my research and everything I’ve seen in the note space is I’ve never been just a note guy. I started in a more traditional real estate but going forward, there’s a play for both of those working together. I can see a play in what you’re doing there on that. It’s the finance side and I love it. I like what you’re doing. It’s very intriguing and I’m sure you’ll have some people that will visit your website. Once again, it’s KevinBupp.com and you can also look at the SunriseCapitalInvestors.com. We’re always looking at different opportunities and different ways to look at real estate as Kevin was saying. You’ll never know you find out a little niche and starts to take off and keep increasing your knowledge. It’s the best way to grow in this business.

I never thought I’d be in mobile home parks but here I am years later.

I appreciate you coming on the show. Thanks again, Kevin.

Thank you, Kevin. Thanks for tuning in. I’ll have another one for you next time. Don’t forget, check out the website. If you are looking for some online training, I put that on the website. Check that out under Products on the website. Thanks.

Important Links: 

About Kevin Bupp

KSS 36 | Mobile Home ParksKevin Bupp is a Florida-based Real Estate Investor, top iTunes podcast host and serial entrepreneur with over $40 million of real estate transactions. His extensive investment experience spans the gamut of apartment buildings, single-family homes, office buildings, raw land, condos, and his favorite and by far the most profitable, Mobile Home Parks.

Kevin holds the keys to successful real estate investment. With over 16 years of experience, Kevin now educates investors to locate, acquire, and create “higher than average” returns from this widely misunderstood niche of Mobile Home Park Investing. He shares his expertise through the Mobile Home Academy and also as the host of The Investing for Cashflow Podcast which has become one of the hottest podcasts on iTunes, often in the top 100!

In addition to his Real Estate endeavors, Kevin is passionate about giving back and is the founder of several charitable organizations, including founded RunningforBrews.com, a social running club with more than 10,000 active members, and “72 Hours to Key West,” an annual 280-mile bike ride benefitting impoverished families during the holidays.