Welcome to the Mobile Home Park Mastery Podcast where you will learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks! Your host is Frank Rolfe, the 5th largest mobile home park owner in the United State with his partner Dave Reynolds. Together, they also own and operate Mobile Home University, the leading educational website for both new and experienced mobile home park investors!
Back in the 1980s, if you drove through the Wendy's, they offered you a book for sale. You had to pay for it. It wasn't free. And one day while I was going through the Wendy's line, getting my burger and fries in a Frosty, when I got up to the window and they said, You want to buy a copy of our book? I bought a copy. It was paperback. It wasn't that expensive. I had no idea the information that would be involved in the book, but I love reading biographies, autobiographies, business books. And so I thought, What the heck? It's interesting. I'm going to learn more about Wendy's.
And then when I read the book, I learned that Dave Thomas had some really powerful business experience and lessons learned. And one of the biggest lessons learned in the book to me was something called riding the wave. This is Frank Rolfe for the Mobile Home Park Mastery Podcast. We're going to talk about riding the wave and what that means and how to embrace that theory to improve your mobile home park business.
So here's the story of Dave Thomas as portrayed in the book. He worked at a barbecue restaurant. He was a manager. His career was going absolutely nowhere, but he wanted more out of life. He didn't want to be stuck in a rut. He was in, I believe, his 30s. And so meanwhile, the guy that owned the barbecue restaurant one day got a visit by Colonel Sanders. And Colonel Sanders was going around trying to convince people to open fried chicken restaurants. And he took the bait. He liked Colonel Sanders' pitch, and he opened a fried chicken restaurant. And this is at a time when fried chicken restaurants just didn't exist. Most people, when they fried chicken, they did it at home. But now we were going to have a restaurant devoted to this soul food product. And what happens? Well, it doesn't do well at all. The sales are abysmal, and next thing you know, the guy shuts it down. It's a total failure.
Dave Thomas, meanwhile, saw this as his once-in-a-lifetime opportunity. So he said to the barbecue restaurant owner, Hey, what would you think about me reopening the fried chicken restaurant? And if I can make a go of it, then I get the right to buy it. And the guy says, Dave, I'll tell you what I'll do. You want to start the fried chicken restaurant? If you can just get me back the money I spent on it and buying the building, buying the equipment, you just get me repaid 100 cents on the dollar, I'll give it to you. Well, that's all Dave Thomas needed to hear. Out with the barbecue restaurant manager, in with the fried chicken store, soon to be owner.
And he started from ground up and he redesigned everything. He invented the red and white bucket. He invented the sign with the red and white bucket in an angle to make it more visually interesting. He even invented the idea of the fried chicken that came with the mashed potatoes, gravy, and the coleslaw, and the roll. All of that was Dave Thomas's work. It wasn't Colonel Sanders. When he got done, it was so successful that he not only paid off that one and owned it, he started building more of them. And yes, Dave Thomas was really, if you read the book and if the book is accurate, effectively the founder of the Kentucky Fried Chicken franchise. He's the one who learned how to make it work. He ultimately sold out, and he started up Wendy's.
But what was interesting in the book, I thought, and I thought the fried chicken part was more interesting than the burger part, to be honest with you, because I always like underdog stories of hear [0:03:50.8] ____ the guy, the scrounging around, starving barbecue restaurant manager who takes a huge gamble and wins is much more interesting than the wealthy investor guy who invests in opening a burger joint. To me, that's not as big an underdog story. But the big lesson learned in the book, to me, as a reader, was what was called in the book, riding the wave.
Now, what in the world does that mean? Well, in the book, Dave Thomas gives an example of what riding the wave means. It's getting to be lunchtime at the Wendy's, and suddenly, in the middle of it all, the manager realizes they have no pickles for the hamburgers. It's an utter crisis. He has to run to the store, abandon the restaurant when he should be there observing what people are doing. He'd probably have some customers that won't have any pickles, and they're going to complain, but he buys the pickles, and he returns to the restaurant, and he thinks he's done his job. But sadly, what he's done is he is a victim of not being able to ride the wave.
Riding the wave means that you are at tune with everything that goes on in the business, and you're always thinking ahead, so those kinds of things don't occur. A manager who's good at riding the wave basically is someone who would have thought, okay, lunchtime is approaching. What ingredients do we need on the burgers during lunchtime? Ah, I see we're low on pickles. I will go over and buy pickles right now, three hours before lunch starts, so that we have plenty of pickles. That would be a manager who was riding the wave. But sadly, the manager who doesn't ride the wave costs you a fortune. Bad customer reviews. It costs you anarchy at your business. Sometimes abandoning the business to fix the problem, it could have been easily alleviated.
So what does it mean for mobile home park? Why do we even care about the concept of riding the wave? Well, let's look at that for a moment. Now, in a mobile home park, what happens is you have, just like the drive-thru at Wendy's, you have certain moments where all the action takes place, followed by other moments where there's not that much action at all. At Wendy's, all the action takes place at lunch time and dinner time and otherwise people may just filter in here and there, but not a whole lot going on. And parks are very similar.
So for example, the collections at the park typically start on the first and then the grace period ends on the fifth. And most of your rent should come in during that period. So what if the manager says to you, Hey, I want to go on vacation, you know, I want to go next week. But next weekend is the first of the month. That's a manager who's not riding the wave. They're not thinking through what their job is, what they have to do, what their commitments are. That's someone who's going to mess you up because they're not riding the wave.
And then you have the prime selling season of homes. Typically, our home sales begin in large volume with tax refunds, and then they end pretty much at the advent of holiday season, but mostly when school is about to restart. And let's assume your manager forgets that, and they don't have the homes ready where the marketing started at the time we had the tax refund. So once again, you may have missed a whole bunch of customers who could have bought, but you weren't riding the wave.
Then, of course, you have winter weather events, frozen pipes, not having salt on the sidewalk by the office. Oops, someone just fell down and broke their leg. Once again, they weren't riding the wave. And then you have the fact in most parks you raise the rents annually. You have to. The rents are ridiculously low. And so what happens? Well, there's a methodology to when you do it. But what if the manager forgets or delays it? Delays it so bad that you raise the rents during the holiday season, which most park owners absolutely hate. Once again, you weren't riding the wave.
So even in our business, even though we don't sell hamburgers, there definitely is a factor, a problem, when a manager can't ride the wave. And it can cost you a lot of money. Going just back to the homes for a minute. When it's cold out like it is right now, and there's not a lot of home sales going on, this is when you remodel the homes. You get them ready for the prime selling season, which starts here in about 60 days. The manager who doesn't ride the wave wouldn't do that. They wouldn't touch the homes until the selling season begins. By the time you get done, several months of renovation, you've perhaps missed the prime selling season. These are the frustrations that always happen with managers who can't follow it.
And the same is also true with owners. Owners also have to ride the wave. You have to make sure that you're sitting on top of such things as your annual permit. When is your annual permit? If you have one in your state or county or city, when's it due by? You can't let it lapse. If you let it lapse, who knows what would happen? It'd be an absolute crisis. You have your loan on the park. When does that loan come due? You got to manage that. You got to start a year ahead, maybe two years, ahead on your loan, giving you plenty of time to do the refinancing. And if you fail at that, plenty of time to go out there and sell the property. You're responsible for that, too. So if you really look at it, all of us have to ride the wave collectively.
Park manager has to ride the wave, and you as the owner have to ride the wave. Now, on the manager side, there's an old adage in our industry "It's easier to change people than to change people." It's one of the first things that mom and pop ever told me. The other thing they told me was before you file an eviction, you should walk a mile in your customer's shoes. To which they then added, that way, when you get the eviction, you're a mile away and you have their shoes. That was kind of a humorous comment made to me by mom and pop once.
But the other one, which took me longer to fully understand what they were saying, was, it's easier to change people than to change people. But I think in reflecting what it means is if you have a manager who can't ride the wave, if they can't think ahead enough to protect your business and to ride the general flow of events, you probably need a different manager because I don't know if you can teach people to ride the wave. I think it may be more instinctive that you understand how to think ahead, to spot the weak spots, the problems, and solve them in advance.
But as the owner, you can't fire yourself. You've got to learn to ride the wave. So how best can you do that? You need to have some special spot, either on paper or on your computer somewhere, of a list of critical drop-dead dates, things that you absolutely must accomplish annually, and you should look at that literally every day. I don't care if that loan renewal doesn't come due for three years. You should be looking at that every single day, 365 times a year, so that you know like the back of your hand with 100% accuracy when those critical dates are.
And then you need to work backwards from that. How much advance time do you need? On your permit, for example, why not apply for it a little earlier? Ask them, How early can I apply for it? Doesn't harm you. Makes life less stressful. But put in those critical dates and put in when you should start that action and then just memorize it like crazy because everyone has to ride the wave to be successful. The mobile home park. And there's no exception, and that includes you. This is Frank Rolfe, the Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.