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Welcome to The Legacy Investor Podcast, where we talk money, investing, business, and what it means to leave a legacy for generations to come. Hosted by Cameron Philgreen, this show dives deep into the intersection of entrepreneurship, investing, and legacy-building, all while keeping God at the center. Whether you're a seasoned investor or just starting out, you'll discover how to align your financial journey with your faith, grow wealth with integrity, and create a lasting impact for generations to come. Join in, as we explore practical strategies, real-world stories, and timeless biblical principles to help you honor God in every step of your journey.
If you've never looked at mobile home parks as an asset class worth investing in, today's conversation is going to change your mind. I'm here with Jack Martin, and he is the expert on mobile home parks. He has his company 5210. This is all they do. They invest in mobile home parks all over the country. And he's going to go into detail about some of the finances behind the deals and the capital stack and how they finance them and some of the cash flow that they spin off and the way they work. Honestly, a lot of people just don't know like what even is a mobile home park? How does the money flow? Who owns what? And he goes into detail on all that. And I feel inspired after this episode just to be more patient with real estate. I'm like, this is a patience game. This is not a quick money question. quick flip, you know, chasing the next check kind of game. Like I was kind of reminded today after this episode that I got into real estate for the recurring passive income and Jack has just made it such a priority for him and his investors and really amazing what he's been able to achieve in this business. And man, his story is wild too. Just going from, you know, 2,000 flips, 2,000 single family flips to owning mobile home parks. So let's hop into it. I'm going to stop talking. This is Jack Martin with 5210. Let's hop into it. Bye-bye. All right, Jack Martin, welcome to the Legacy Investor Podcast. How are we doing today, sir? How's Scottsdale, Arizona? This time of the year, it's bragging season in Scottsdale. Love it. So 75 degrees, it's golfing weather, if that's your thing. I was just saying off air, I love Scottsdale. I love the Phoenix area. Just the warm weather, the smooth roads, lots of cool cars. I really appreciate those things. It's a great time in Scottsdale. Okay, Jack, catch us up to speed on your story. How did you get started real estate investing and why mobile home parks? And let's just talk about all these things. I originally did not start out with the goal of investing in mobile home parks. So my real estate journey starts with general contracting. So I was buying land, building single family homes, building spec homes and selling those. Then with a friend of mine, we started buying small kind of inner city boarded up vacant properties, fixing them up with the intention to build some rental portfolio. Um, and one thing led to another and that scale to almost 250 houses a year. So we did about 2000 single family homes over a decade. Yeah. Oh my goodness. So, uh, then I tripped over apartments. So well, I kind of fell into the apartment world, which is kind of natural when you're doing a lot of single family, you get kind of burnout. So apartments make a lot of sense. The apartments for several years. And then I found this little niche mobile home parks kind of on accident. So we we had a vacant apartment complex in a small mountain town called Flagstaff in Arizona. where NAU is, and they actually have a ski hill up there. Fun fact, you can ski in Arizona. Anyway, it had been vacant long enough to where it had lost its conditional use permit. So the city did not want that to be an apartment anymore. They were looking for it to be a different use. In order to bring back the conditional use permit, you needed more parking. So that was the real issue with that particular apartment. Um, right next door, there was a little mobile home park. So I bought it knowing that it would have satisfied the parking need for the apartment next door. A long story short city would never let me do what I wanted to do, but I owned this mobile home park, small one, half acre. I thought this is no different than a multifamily. So let's just get to work. Well, it turns out way different. Way different. Learned so many lessons on there. But the chief lesson that I learned was this is the most stable cash flow of any real estate I've ever owned. Oh, wow. So that's when I said, wait a second, the stereotype, which is typical trailer trash or trailer parks, most people kind of wrinkle up their nose at it because it's not the prettiest real estate in the world. It's not your downtown glass commercial building, right? Um, but the cashflow and the stability of these parks is unbelievable. So that's when I, when I, you know, got my first taste of it, then I just started, started to go buy more of those, um, built a small portfolio of the wrong ones. Um, learn all kinds of lessons there too. What do you mean by that? Um, smaller ones, um, you know, parks with the, you know, the wrong age infrastructure. the wrong age of homes, the wrong tenant pool, like all of the kind of things that, I mean, mobile home parks is no different than let's call it apartments. If you just look at it from a kind of the wide spectrum of available quality of real estate that you can buy. So apartments, you can have brand new class A, you know, $3,500 a month units. And you can also have, a really old half falling apart, band-aided together, product that was built in the 30s or 40s and it's you know you're you're lucky to get any rent from it right yeah and the tenant pool is going to be different you know across that entire spectrum so will the maintenance so will the management so will the i mean everything will behave differently with with respect to the quality location and age of the real estate So mobile home parks are similar. There's different things that show up across all of those kind of, let's call it landmines. The landmines look different, but their same amount of landmines are still there. Cool. Then I started 5210. This is about a decade ago. So after about four years of those lessons, left that firm that I was with, partnered with Nate, my current business partner, Nate Patee, And we began buying larger mobile home parks of better quality. And today we have about 1,800 lots across five states, about $60 million in private capital behind all of that. Wow. Top 100 owner in the United States, and we're still growing. So that's a lot to share, but that's my journey. Amazing, man. Congratulations, first of all, and going from so I'm struggling with the going from you said 2000 single family home flips, you said like 250 houses a year to mobile home parks. What was that transition like? And I'm guessing it's just because of the stability. Yeah, like talk to me about that. That's like a huge change, I guess. Yeah, well, I think it demonstrates that there's so many different ways to play the real estate game. Yeah. So the single family flip game was fun. We had a little bit of a corner on the market back before the internet was what it is today. So it used to be, if you wanted to find out who owned a vacant property, you had to go down to the courthouse in person. Yeah. Now, shoot, you can do that. from anywhere in the world in your pajamas, right? So the competition changed, the landscape changed dramatically with respect to competition, especially in the state of Arizona when it's 115 degrees during the day. If you were one of the few that was willing to get out there in that heat and do the hard work, You know, there was, there was far less competition back then. So, you know, could you still do 2000 houses in a decade? Sure. Still could. It would look different than it did back then. Um, but I just got burnt out of it. So to me it was like, you know, I'd like to pivot away from flipping properties and making a, uh, you know, a fast profit to owning properties and building cashflow. You look at it through more of a retirement lens. So I thought there was going to be apartments until I tripped over mobile home parks. And when I discovered the stability of mobile home parks, there was really no looking back for me. love it so let's talk about mobile home parks versus storage versus multifamily let's do a little three-way competition here why are mobile home why mobile home parks first of all and how does this compare do you feel like because i've heard storage facilities are like they kill and they're like the most stable possible vehicle out there so what would you say to that and then you know obviously multifamily there's a lot more multifamily than there is mobile home parks. But let's talk about stability and why you feel like this is the best. Yeah, well, let's unpack those kind of one by one. First of all, mobile home parks have some intrinsic qualities or features that no other real estate has. The first one is the first of all, just to kind of share with your audience. So everybody understands a mobile home park is essentially a giant parking lot. instead of parking cars in each parking space, you park a home. That's essentially what it is. So we own a parking lot with homes in each one of the lots and the homes or each one of the lots has its own utility connections and all those kinds of things, right? Our, as the owner of the parking lot, we are responsible for all the common amenities. So if there's a clubhouse and a pool, that's us. We're responsible for the roads. In most cases, the roads are private, we own them. So we're responsible for those. There's a rare case where the city owns them. We're responsible for any common lighting or landscaping. And if there's a trash, uh, pick up like, like central location. We'd be responsible for that as well, but everything else is, is the tenant. So we don't have hot water heaters and leaky roofs and toilets because we don't own the homes, the residents own the homes, right? So this is the only real estate where the tenant has a vested interest in the success of the property. They own their home. They, this is their community. They view it as their mobile home park. They don't, want to move. So huge difference kind of in the mentality of a renter and the mentality of a mobile home park resident. So even though they're renting the land, they own their own homes. So these are homeowners. What attracts mobile home residents is the affordability. Yeah. So in most markets, you know, median home value is probably somewhere three, four hundred thousand bucks. Whereas you can buy a brand new, pretty well appointed mobile home for a hundred grand, brand new. So three bedroom, two bath, good quality insulation. It's built just like a single family home. It's just built in a factory and it's brought in on wheels. And that's usually the last time it ever moves. So because it's really expensive to move these, you know, 10,000 bucks or more to move a mobile home. Um, when somebody buys one, they don't, if something changes in their life, they don't take it with them when they leave. Yeah. They put it for sale and they sell it just like you would a re a traditional home. Yeah. So, and then they move wherever they're going to move to and they, they purchase another one in a different park across the country or wherever they move to. So here's where, um, mobile home, um, how the performance of a mobile home park really stands out. Let's compare it to apartments because it's a bunch of, let's call it hundreds of people living on the same property. Very similar in that respect to an apartment, right? Yeah. But here's what's different. In an apartment complex, if somebody wants to move out, they're just a renter. It's a pickup truck and a couple of friends and a weekend and they're gone, right? And your only recourse as the property owner is their damage deposit. You know, they likely do more damage than what you required of them. Now you have vacancy. You have to do the maintenance and repairs. You have to market it again and you have to go through that whole cycle. When I owned apartments, it was pretty common that in a 12 month period, on average, you only collect 10 months worth of rent. because of that vacancy factor. Or maybe if you're really good, you could collect 11 months worth of rent, but you spent a month worth of rent to get it back in a position where you could rent it out again, right? So when you start to look at stability of cashflow, you know, then let's go look at kind of worst case scenario. In 2008, I had a lot of friends in the apartment building industry and they had purchased the right properties, you know, B class properties or B minus properties in good locations. They put, you know, what was considered conservative debt, call it 70% coverage. And then the market crashed. And so 2008, 9, 10, 11, during that period of time, there was a little bit of a race to the bottom when it comes to competing for tenants. So what ends up happening is some tenants go home, they go back to stay with mom and dad or they start to pool their resources and stay in a single home. Some tenants leave to go to the more affordable housing, which is a mobile home park. then some tenants just get bought out or attracted lured by the guy across the street who doesn't have any debt on his apartment so he just lowers the rent and he steals your tenant right so the outcome of that was um you had to lower your tent your rents to keep you know at some you know a decent occupancy rate but then when your loan became due you couldn't meet the dcr requirement So you couldn't refinance or you couldn't extend with the same lender. Yeah. And those of you who don't know, DSCR is debt service coverage ratio. It's like a type of financing that looks at the rents coming in and how the asset performs. And so if you're not meeting their requirements, which is usually 1.2 or whatever above the debt service, they're not going to give you the loan. And if you have to refinance or if your note's coming due, that's not a good thing. Yeah, so there was a lot of really good operators who lost their real estate, and it wasn't because of poor choices they made or poor management or over leverage. It was just market conditions that were at play. So if you take that same dynamic and you apply that to mobile home parks. Now, first of all, I did pretty good research before we started. We looked at larger mobile home parks. Larger to us is like over 50 spaces back then. Now it's over 100. But we looked back at 2008, 9, 10, 11, and we said, where were there foreclosures in the mobile home park asset class? We couldn't find a single one. across the entire Southwest and every market that we had interest, there was zero foreclosures. So there's a reason for that. Tenants don't move out. And if they do, I mean, they can't move to a more affordable asset class. This is the most affordable asset class. If they do move, they sell their home. So unlike all other rental product. If somebody moves out, you have vacancy and you have expensive cost of turnover in the mobile home park business. Somebody sells their home. The next resident who buys it makes the lot rent payments. So there's no gap in our income. And then, you know, traditionally rent goes up at 5% per year and it never goes backwards. Just keeps going up at 5% per year. There may have been a case when the economy is really difficult like that. where owners choose not to raise the rent in those more difficult economic times. But the beauty of it is you're still collecting your rent. So here's another thing that few people know. The penalty for nonpayment of rent is the forfeiture of your home. So if you get evicted out of a mobile home park, you forfeit your home to the park. So if you paid $100,000 for a home, Even if you only had it half paid off, I mean, who's going to avoid paying, you know, what's average lot rent is like 600 bucks across the United States. Who's going to avoid paying $600 to lose a hundred thousand dollar asset. They're going to do whatever they can to come up with 600 bucks. So these are not foreclosures that you do. You, they actually forfeit the home. It's like in the contract that if you miss a payment, you lose the house. yeah so it's like this is just the law but it's kind of like abandoning a vehicle so it becomes mobile home because they're mobile they're titled as a like a motor vehicle so the the possession um behaves very similar to if you abandon your car on my yeah After a certain number of days, I could go get a bonded title and that becomes my vehicle. So that's how it works. But the law says that the only way that you can remove your home from the mobile home park is if you come current on all back, uh, all rent that's due plus whatever penalties and, uh, have accrued. So, um, and I think this kind of shines a light on, um, the during COVID. if you're paying it if you were in real estate or you're paying attention to real estate during 2020 2021 there was a moratorium on eviction for non-payment of rent so the law was and this is nationwide you cannot evict somebody from your property because they didn't pay the rent but at the end of the moratorium when that um when the the stay on evictions was lifted Now you can do everything up to prepare yourself to take somebody to court to evict them, but you just couldn't go through with the eviction. As soon as the moratorium is lifted, you evict your tenants and they leave, but they got 10 to 12 months of free rent and you couldn't do anything about it. So across the apartment business You know, I had quite a few friends, again, they were in this predicament where they couldn't evict their tenants. And there was 30, 40% of them that were playing this, I call it strategic default game. You can't evict me, so I'm just not going to pay, right? So the tenants in our mobile home parks were curious because they heard you don't have to pay your rent. They came into our office and said, hey, I heard I don't have to pay the rent. It's like, yeah, that is true. You don't have to. But at the end, if you don't catch up, well then you get evicted and we get your home. And they all know this. So anybody in the mobile home world knows that the penalty is forfeiture of your home. It doesn't happen. I mean, we've been in this business for over a decade. Like I said, we have almost 2000 lots. It's only happened twice in over a decade. And in both cases, it involved a death. So, you know, a senior park, mom or pop passed away. Kids inherited the mobile home. They live on the other side of the country. They don't even want it. It accrues all this back rent and then at some point it becomes ours, right? Yeah. So, or like they call us and say, we don't want it. Here's the title. You can have it. So now if it was a brand new one, that would probably been a different story. These were both older vintage properties, but still it rarely ever happens. But it just goes to shine a light on the stability of the rent during the 2008 through 2012, the great financial crisis, mobile home parks did not go to foreclosure. And then during the pandemic, we collected all of our rent. So you can't say that about any other asset class. That's amazing. It's only because the tenants own the homes. No other real estate that behaves like that. Do you guys buy all over the country or just in Arizona? We started in Arizona, but today we're in Arizona, Texas, Nevada, Florida, and Nebraska. And there's about 22 states that we like. And with mobile home park, there's usually, I'm so, I don't know if I've ever like honestly been to one, which is kind of embarrassing, but like there's like a clubhouse and like a receptionist kind of in a management office or something there, right? So you just have good managers and good- Yeah, so there's- mobile home parks are rated on a star rating, one to five stars. The one star mobile home park is the trailer park. That's the one that you see on TV. And it's where the stereotype comes from. It's dirt roads. The homes are really old, probably built in the 60s. They're falling apart. They have tires on the roof, cars on blocks. It's a trailer park, right? Yeah. And you probably can get whatever you want at night in one of those parks, but you probably wouldn't want to go there at night. And then on the other end of the spectrum is the five star, that's like a class A apartment. So it's a brand new gated manufacturer housing community. And they look much like a subdivision where the builder decided to use manufactured homes instead of building his own. but they're beautiful you know they're low density they have pools and spas and sport courts and clubhouses and all that fun stuff right yeah and then in the middle in the three-star um world and that's where we see the real opportunity some of those parks are just um safe affordable housing and some of them do have you know they're they're older um kind of built in the eighties, um, was class a in the eighties, but it's kind of, you know, it's like a class a apartment eventually comes class B and a class B eventually becomes class C. So it's just with age. So, but I do believe that the greatest opportunity is in the, in the middle there. Yeah. Super cool. So this is like your niche. I mean, I don't know if you're even in other asset classes now, but this is your thing. So obviously the deals and the opportunities are going to come to Jack Martin. But for the listeners and like for people like me, I mean, where do you even go to to look at these opportunities? Where do people go to to find them? Well, if you're gonna buy a mobile home park, you can go, there's parks that get listed for sale publicly, but just like any other real estate, those are not gonna be the best deals. So if you wanna pay retail, go look on LoopNet and look for a mobile home park and you'll find them for sale. The best way to acquire mobile home parks and get them at a basis that makes sense is either buy them directly from the owner off market, or through a broker relationship where he knows the owner would sell, but it's not gonna be publicly available for sale. So off-market transactions are always gonna make the most sense. And in this asset class, I would say probably 80% of the transactions do occur off market. And that's a little bit unique. It's not that way in other asset classes, but it's pretty common that you'll see 10 parks trade, only two of them were listed publicly for sale. super cool okay and then best way you've hinted at this about the two and three star mobile home parks how do you value add is this add lighting make the streets better uh you know out of pool like what is uh 5210 what is your main go-to method of value add for mobile home parks yeah so first of all some value add opportunity you can see and some of it you can't see so and this would be the case also with other asset classes um but there's some nuance specifically with mobile home parks so first of all we always look for expenses that are higher than they should be and we look for income that's lower than it should be so obviously that's the fastest way to change the value of a property is to increase the noi which you do by increasing income, lowering expenses. So those two things we look for, and there's some low hanging fruit on the defense side of things, again, similar to other multifamily, like solving for the trash solution, billing back for utilities, you know, in apartments, they call that rubs, but in in the mobile home park, they're just, you know, a lot of times what ends up happening. So common one is that there's a single water meter that comes into the property and you're just billing a flat fee to, um, residents for the use of your water and right but one guy washes his car five times a week and um the gal down on you know lot number 49 like has a garden and she waters it every day and um you know half the tenants have leaky toilets and they don't care um you know all of those things lead up to i'm not collecting near as much as i'm spending on water so you sub meter You put sub meters at every property and then they pay for their own usage. So as soon as they find out, wow, I'm using a hundred dollars worth of water last month, then they start to care that their toilet is running. and fix it because they're paying for it, right? So there's some simple low hanging fruit that it's pretty common that you see. And then there's cases where you have an absentee owner and they'll have extremely expensive onsite staff when it's unnecessary. So we'll solve for some of those kind of things. That's super. On the income side. What about, yeah, income side. I was going to say, can you just raise rents? I mean, you can't, people can't just up and leave if they don't like the rent increase. How does that work? Yeah. So there's sensitivity there. So you certainly don't want headline risk. So even if you buy a property where the market rents are twice what yours are, the wrong thing to do is to raise the rent to market on January 1st. So like what we like to do is go in there. Usually when, when the previous owner has not raised rent and let's call it 10 or 15 years. So you're way behind the market. He also doesn't have sufficient cash flow to put money back into the property. So that's when you'll see those physical things appear. The clubhouse is still looks like it was built. I mean, when it built in the eighties, it still looks like you're in the eighties. The pool shut down because the equipment doesn't work. half the lighting in the park doesn't work, the roads are in poor condition and so on and so forth, right? So we'd like to go in there and make the greatest immediate impact and spend a million bucks or 2 million bucks or whatever's required to make the park really stand out as the nicest community of its type. or of its quality in the area, right? So now you have the nicest park. That's the goal, right? Well, now you go to your residents and say, hey, here's a rent survey. Here's what all the other parks in this area are charging. You're way behind. We're not going to raise it to market next year, but we're going to take small bites out of the apple until we catch up. In the meantime, we're going to prove it to you that we care. You could justify the lower rent because the last owner didn't take care of the park. Whereas now we're gonna make it really nice. Your standard of living is gonna go up. Your kind of pride of ownership in the park is going to increase. And then we're slowly gonna move these rental rates to market. That's the right way to do it. A little bit more patient. It creates a good, it fosters a healthy relationship between the landlord and the residents who live there. So, yes, you could, in theory, raise it to market, but then you'd have a bunch of residents that they're unhappy with you. So there's a right way to approach that. And that's the more measured way is the way we like to do it. Yeah, that totally makes sense. And you you're honoring these residents and not Yeah, headline risk is one way to put it. Another way is like, you know, you want to do what's right for people and honor them and respect them. And yeah, it seems like a pretty good idea. You mentioned faith comes up often in this podcast. kind of look at it as these residents um are yours to be a good steward of yeah and stewardship is something that the lord takes seriously yes so if he blesses you with um that stewardship you're going to be judged for your stewardship so yeah you know you want to take a um you want to take the pathway that feels like it's the fairest and it makes you know it would be uh looked upon favorably by the lord Yeah, that's such a great... Most people think of money when they think of stewardship, which is probably 99% of people. It's just money. But what about your kids, your belongings, your tenants, the people in your life? That's just not something you often think of when you think of stewardship. That's super cool. Awesome. I would love to hear if you're up for it, example deal, including numbers, if you're up for it, sort of like how do you underwrite these and then financing? Are you just like, you know, buying these free and clear? Does the bank... I mean, it's land and you're renting spots on the lands. I'm assuming the bank is involved. Are you raising money? Are you syndicating? What's your typical financing method? And then sort of deal underwriting for us, like the mobile home park 101 with Jack Martin. Before we jump into that, I want to make sure that I cover the comparison to storage. Oh yeah, good memory. Storage was the other asset class that we looked at. We said, okay, if we're going to, the kind of general thesis that we were looking at when we started 5210, And this is kind of, you know, 2016. So post GFC, where the economy is healthy, the real estate market is healthy, everything is good. But how can we position ourselves so that when that cycle repeats itself, and I assure you and your listeners, this is cyclical, a GFC type of event is in our future. It will happen again. So how can we position ourselves and our investor capital so that we can avoid taking the hit not only not lose principal but also continue to earn income so we always maybe it's not the best time to sell your real estate but as long as you have a nice healthy cash flow coupon that you're getting in the mail every day or every month then um know you're in a good spot you can weather the storm right so so we looked at um the top two examples of that were mobile home parks and storage facilities the challenge that you have with storage is it can be built right across the street from your storage so and again this is why we chose mobile home parks mobile home parks actually a harder asset class it's more work but it's a shrinking asset class. So more mobile home parks are going away every year than there are new ones being built. And it's by quite a while. So, you know, just in Phoenix alone last year, there was over 10 mobile home parks that were knocked over for redevelopment into higher and better use. So the land eventually has a better or higher use than a mobile home park. Right. Um, there's only about 10 new mobile home parks of size that are built in the entire United States every year. And most of those are built in Texas. So it's just really difficult to build a mobile home park. And there's a lot of reasons, nimbyism is one, not in my backyard, so the neighbors don't want them, but usually it's a zoning issue. So yeah, you got to get a zoning approval and the neighbors are going to say no, but usually the city will not even allow for it. So here's the greatest challenge that cities have. And I'll use a quick example here of like a 30 acre property. You could fit about 300 mobile home sites on 30 acres, roughly 10 units per acre. If you build three or four story apartments there instead, Um, you could probably fit 20 times that many units on the same 30 acres. Right. So then if you start to look at, at, um, the income average income or lot rent income is 600 bucks in the United States. Average two bedroom brand new class a apartments is probably what 2000. So call it three X, the income per unit, and just start doing the math and then look at it through the city's lens of tax revenue. Yeah. When there is, you know, there's so much more tax revenue that comes out of an apartment complex than what comes out of a mobile home park. The city still has to provide schools, services like fire and police and all those kinds of things. They'll likely lose money. They'll spend more money providing those services to those 300 residents than they will earn in the form of tax on their rent. Yeah. So because of that, they will say no, even though they'd like to provide affordable housing, the truth is they can't do it without losing money. So they won't give zoning to a mobile home park. Yeah, totally makes sense. So then the only place that you can build them is out in the country. And then the challenge you have out there is utilities. Yeah. It's extremely expensive to solve the utility solution out there. Um, and then who wants to move 50 miles outside of town? Um, to move in just, just to get an affordable place to live. So you put all those factors together, mobile home parks are not being built at scale and it's extremely difficult to build them. Whereas storage, you can have a storage facility and you buy it right and It was mismanaged, so you can see there's some value add potential for you there. And then across the street, the vacant land gets developed into a new storage building. And now you have competition that wasn't there when you bought it. So you just can't prevent what gets built. I mean, even if it's not across the street, one block away, it's still going to make a huge impact on your ability to fill your storage facility. Yeah. And you bring up a great point with the, the, the city incentives to increase taxes. They want these big apartment buildings. Like, have you ever thought about that's probably gonna be your exit on many of these mobile home parks is like, you might end up selling to some big hedge fund. That's going to build a big skyscraper. Is that like on, on the forefront of your mind? It's not our, our exit strategy, but you see it happen every day. So like some mobile home parks that I wanted to buy. And I've had my eye on them for years. And this is locally here in Phoenix. It finally comes available for sale and I'm just like, sweet. And then I go talk to the owner and they're like, oh no, I want twice as much as it's worth as a mobile home park. I was like, well, I can't pay that. It's like, I know, but a developer will. And then you, and then everybody gets, I mean, there is what's called a replacement fund. So like the state of, most states have these, but Arizona has this, fund that if you get evicted out of your home, uh, out of the park because it's closing, then they'll provide you the funds necessary to move your home to another park in the city. Yeah. So, um, even though good stewardship. Yeah. Yep. Um, but let's go on to, to, uh, talking about a deal. So I'm gonna talk about a deal that we closed this year. The last deal that we closed, this was in Omaha, Nebraska, 138 lots. Usually there's some vacancy. This one, there was no vacancy. So it's pretty rare. Previous owner ran it pretty doggone well. It was pretty well cared for physically. The upside is the management or the operations. So there's a handful of things that we can do to solve for on the expense side, but most of the upside was in the income side. There's, and this is a great example, this property, because there's ancillary income. That's a little bit unusual. So normally it's just a lot rent. And then you might get some reimbursement of utilities, but that's about it. There's a possibility in most mobile home parks, but you can do this in apartments as well to provide like TV or you know, entertainment solutions. And then you can get a little bit of a spread or a little bit of a Delta buy it in bulk and you sell it individually. So there's those opportunities exist on any multifamily. So that's not unique there. But this particular one is right next to a freeway. So there's a billboard. that you know sees 65 000 cars a day or whatever that is and um and so there's a contract on the billboard but it's a 20 year old contract never been renegotiated or um you know investigated so there's there's room to improve billboard income there um particularly because an old billboard thing kind of looks like it was built 20 years ago out of wood and um You know, today's billboards are much more efficient. They're built out of aluminum and, um, they're fully lighted and led and all that kind of stuff. Right. So there's an opportunity there. The, the billboard thing is kind of unique for your listeners who are not familiar with billboards. You can't just put up a billboard wherever you want. You have to have the zoning for the billboard, um, and for that location. So they limit the number of billboard locations in a city. And if you have one, it's gold. So there's most likely, especially if it's an old contract, there's most likely the case where there's room to improve the income on that. Since this property was completely full, the previous owner, there is a clubhouse or an office building. The previous owner was using that for his own personal use. So they didn't need a manager because they're not doing any home sales and all the payments are made digitally online nowadays. So there really wasn't a need to come to the office. They're still a manager, but they live in their own unit, site number 24 or whatever. And if somebody needs to talk to the manager, they either call them or they go knock on their door. So what we'll do in those kinds of cases is we'll create like a half a dozen executive office suites and we'll lease those out either to the residents in the park. So they kind of get first ride refusal or to local business owners that are living in the neighborhood around the park. So that's a really cool way to get some extra income. It's almost like, And typically the income you get for those suites is going to be greater than the income that you get from a single lot. So, you know, you rent out a half a dozen office suites and you could effectively gain the same income you would if you had 10 more lots in the property, right? Yeah. Then in addition, across the front of this property, there's all this kind of unused open space. So we'll probably end up getting six to 10 additional lots there. So we're always looking for areas that we can improve the income. Yeah. but back to kind of your questions about the capital stack. So will we put agency debt on this property? So agency for your audience is Freddie or Fannie debt. So it's government backed debt. It's the best debt typically for most commercial real estate, if the real estate qualifies for it and if the operator qualifies to get it. So there's a little bit of, Well, there's actually quite a bit of experience required. But we did our first agency loan when we were two years in. How do they determine if the operator is approved? Is it based on your personal income or something else? So you have to provide a personal financial statement. So typically, there needs to be liquidity. provisions that are based on the amount of the debt service. And then typically you have to have a certain net worth in order to qualify. But a lot of times it's also experience. So they don't want to give agency debt to somebody who this is their first rodeo. You've never owned asset class before. Typically they're going to look at how many parks do you own? How long have you been in the business? Those kind of things. Yeah. Then the property also has to qualify. So this is where we really don't buy anything that's in the one and two star space because they typically won't qualify for agency debt. Some of the simple qualifications that it has to have paved road surfaces and it has to have paved parking spaces. So usually, you know, a two star park doesn't have paved roads or maybe they have a paved road. They don't have any paved parking spaces. So, uh, that those are just kind of simple generic things, but agency debt. Um, and if, uh, the, the spread over the 10 year treasury at that time was like 140 bips. So, uh, in the interest of the 10 year, when we bought that was right around four, I think it's like 4.1 right now, but it's four. So the interest rate was 5.4, let's call it. Um, and that's 10 year fixed rate debt. Um, And the first five years was interest only. So we get, you know, the first five years to reposition the property and then kind of maximize cash flow before we have to start making principal pay down, which is, you know, we'll have it fully. And yeah, the neatest thing about agency debt is that you can put a supplemental loan on as long as you do that before improvements. Well, you can do it at any time. Um, but it has, there has to be more value in the property. So let's say that you buy this case. The property was, it was about a $12 million purchase. in five years, once we've repositioned, done the capital improvements that we want to do, reposition the property and stabilize the income, the property's probably worth somewhere around 17 million. So that extra $5 million in value that was created since we bought it is going to apply towards the agency having more interest in lending more money. Yeah. So supplemental says you can keep your first position loan and we're going to give you kind of, kind of think of it as a second position loan, um, with the same maturity date as your first position, but we're just going to give you more money. Typically the spread is going to be a little greater on the second position loan than it was on the first. So, you know, if, if the current spread on first position debt is let's call it a hundred basis points over the 10 year. well, this would be a five-year because there's five years left on the loan. They might be 200 bps or 250 bps over the five, right? Seven or 8% or something. Yeah, but the beauty of it is that you can get some capital back and you can use that to return the capital. So if you look at this through the lens of the LP, LP says, okay, so I'm going to invest in this mobile home park. Oh, one thing we didn't talk about was the tax benefit. So we'll shine a light on that one right here. Okay, love it. So we're gonna invest in this mobile home park. Our leverage is about 65%. So we're pretty comfortable that we're not over leveraged here. We're gonna reposition the property. I'm gonna get a coupon that starts out, you know, three or 4%. By the time we get to that supplemental, we're already earning like 7% on the coupon. And then we're gonna get some of our capital back. So, and then we're gonna keep it a little bit longer, like call it to the end of the 10 years and then we'll refinance it again and we'll get all of our capital back. And this is a little bit more of a tax strategy. So, you know, we're not mobile home park flippers. We believe that the really good quality mobile home parks are irreplaceable. If you get a good one and you've owned it for five years, you've worked all the kinks out of it, you should never sell it. If you can find a pathway to not sell it, you should aim at that pathway. The biggest challenge that you have is that there's not alignment of interest between the general partner and the limited partners. So the general partner, before he really gets paid, you have to sell. because now he gets his promote, right? Whereas the limited partners prefer not to sell because there's gonna be a recapture of the bonus depreciation that we took up front and there's gonna be capital gains and they wanna avoid both of those things. So the limited partners focus would be let's take maximum bonus depreciation in year one, which for your audience in the mobile home park space, that's at least dollar for dollar. So if you invest a million bucks, you're gonna get a million dollars in passive losses. There are potential for far greater than that. So like that particular mobile home park achieved about $1.50 for every dollar. In passive losses. What? Yeah. That's incredible. We can walk through the whys on that, but it's because of the debt. But at least there's going to be at least dollar for dollar. Yeah. And then if you go to sell that property- Powerful, man. You're going to have to pay the recapture on that passive loss that you took up front. So to avoid that, the goal is to return capital and then just rinse and repeat. So we're not a seller. So it takes a patient- general partner. So in this case, we're the general partner because, um, you know, other, we otherwise would have sold it and took our profits. Yeah. We're not concerned about recapture of bonus depreciation because that all goes to the LPs. So we're not penalized by that. Um, so but the way that we've created it is we've just created a tiered waterfall that says as we return capital to you and we reach certain hurdles we can earn our way towards equal partner so it won't take us 15 years but at some point our lps have made you know 15 return hurdle and a 20 return hurdle and so on that allows us to kind of earn our way to equal partners wow And that's where we want to be. I want to share cash flow with my investors forever. Yeah, that's super cool. Super powerful. And it sounds like there's a lot of nuance and a lot of tax rules that we can learn from you. I'm curious. I've been at one to ask this kind of the whole time, you know, you're, you're, I think your assistant or someone reached out about you coming on the show. Why did you want to come on here? Why do you, why are you doing the podcast thing? Why are you spreading the word about mobile home parks? it's interesting um we've never had to pay for um spreading the news like we've built our 60 million aum with just word of mouth so you know i kind of feel like mobile home parks are the secret little asset class that nobody ever talks about and the only people that talk about them are the owners So we go to these industry events and we all talk shop with each other and how much we love our asset class, but then the world doesn't know. So one of the initiatives in 2025 was let's go share this story with the world. cool that's really cool well thanks for coming on man can i ask you how has you mentioned faith you know how has faith influenced your approach to this business and investing and in general just like what's your mindset around following jesus and investing and making money curious yeah interesting we talked about stewardship earlier um but there's one um and we'll we'll We'll touch on that again here with this answer, but there's one core value in our company. It's called it will happen to have these simple core values that we established when we started our company. One of them is it will happen. And it really kind of, um, describes belief or faith. So we started this business with no money or very low. We had some money, but we didn't have an, obviously we were raising capital for our first deal. So we didn't have enough money to do this on our own. um and when we had no real prior experience in this asset class with the exception of the wrong ones we had bought a lot of the wrong ones right even today like we don't know where our next deal is coming from or when it will come so so much of this business um is uh being okay an environment of uncertainty And just trusting that exactly what we need will come our way. So there's a lot of faith built in. I think you could look at that through the lens of new acquisitions, through the right capital partners, even through the lens of assembling the right team. It's not easy to find. I mean, this is a small, narrow niche of commercial real estate. So it's not easy to find talent. So somebody has to, somebody with a lot of experience in mobile home parks and on the management side has to be unhappy where they're at before we get an opportunity to hire them. Right. So it's really, it's, you know, there's, there's, there's a million solutions in the apartment world that are, you know, vendors and contractors and property management firms and, and, and, you know, staff that you can hire. And there's just a very small pool to draw from in mobile home park business. So there's got to be a lot of faith across the entire enterprise. But also the stewardship. So it's really interesting that you mentioned kids. I have seven children. Oh, wow. Awesome. And I don't see those as my own children. I see those as God's children. But he did ask me to be a steward of them until they're old enough to go on their own. And then God's going to take control or he's going to guide their lives, right? So I see that same thing in the stewardship of this business, my business partner, our residents that live at our properties, our vendors and contractors, our internal staff, our onsite staff. We have a responsibility to be a good steward of all of that. So yeah, tremendous amount of faith involved. It's amazing, man. I feel inspired. I feel inspired to be more patient in business and in real estate and in investing and inspired by you, Jack, to be a better steward of not just money, but of people and of tenants and even strangers, you know, and my kids. And it's just such a cool perspective and such a cool mindset. Hey, man, where can people find you if they want to reach out to you, if they want to be a part of what you're doing, if they want to be a partner with you? Just tell us all your social handles and email and all that if The simplest way, go to our website, 5210.com. That's the number 52, T-E-N.com and just go to the contact page. Love it. Beautiful. Hope you guys enjoyed this one. Mobile home parks. Definitely. I think a lot of people are going to listen to this and start looking into it. Super cool asset class. And thank you, Jack, for being open and honest and transparent about everything and teaching us so much. Learned a ton. And we'll see you guys next time. Thanks for coming on. guys thank you so much for tuning into this episode of the legacy investor hey if you want to help us grow and support us please leave a review on apple podcast and spotify that really helps a lot please subscribe to my youtube channel cameron phil green it's still new and growing but i am going to start posting on there more regularly follow me on instagram at cameron underscore phil green if you know someone who should be on this podcast Go fill out the form on my website. It's CameronPhilGreen.com slash podcast. Fill out the form there. I'd love to have more guests on this podcast. It's been a blast. And music is by Eric Lopez Villaverde. Reach out to him for all your music needs. On Instagram, he's Eric Lopez Villaverde. Hope you guys have a great day and thank you for tuning in. Bye-bye.