February 27, 2025 • 32 mins
Dive into an enlightening episode filled with insights from Frank Rizzo, a seasoned veteran in mobile home park investing. Discover how he went from a traditional real estate agent to a successful operator in the often-overlooked sector of mobile homes. We explore the unique challenges and misconceptions surrounding mobile home investments, shedding light on why this niche presents incredible opportunities for cash flow and stability in today's housing market.
Frank's journey reveals the substantial role mobile homes play in providing affordable housing options for the many families who struggle with skyrocketing real estate prices. He articulates the importance of a strong community feel and how effective management impacts tenant satisfaction and retention.
In this episode, we also discuss financial strategies for investing in mobile homes, including creative financing options such as seller financing. Frank provides actionable advice that will guide new investors in crafting their business plans and identifying lucrative opportunities.
With a focus on the cultural aspects of community living and effective management, we aim to empower listeners with the knowledge they need to navigate the mobile home investment landscape confidently. Don't miss out on this episode that combines expert interviews with practical insights to elevate your understanding of mobile home investments.
If you're intrigued by the prospect of mobile home investing, check out our YouTube channel, Trailer Park Turnaround, for a behind-the-scenes look at what it takes to turn around a mobile home park. Join us, subscribe, and start your journey into this fascinating sector today!
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Episode Transcript
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Speaker 1 (00:02):
Hello world.
I just want to get everybody tointroduce you to the
Professions Real EstateInvesting Podcast.
I'm with Frank Rizzo.
How you doing, Frank.
Speaker 2 (00:10):
I'm doing very well today, Tony.
Thank you very much for havingme on.
Speaker 1 (00:14):
Yes, we got Frank Rizzo.
He's a seasoned mobile homepark investor with over 20 years
of experience in the realestate industry, and he's the
co-host of the MHP Exchangepodcast.
So, Frank, I just want to knowhow did you get into the sector
of the mobile homes and realestate investing?
Speaker 2 (00:34):
You know the funny story about it, tony.
I don't think many people wakeup in the morning and say they
want to become a mobile homepark operator, right, unless you
were born into it.
But having had a real estatecareer which, where I started as
an agent and eventually startedit, moved into being a real
estate broker, I was assistingone of my clients I mean real
(00:59):
salt of the earth people firstgeneration entrepreneur who had
come to New York.
First generation entrepreneurwho had come to New York,
started a bunch of smallbusinesses and, like most
business owners who do not havea 401k or do not have a
retirement plan, did really thebest thing possible, which was
(01:22):
to buy and own a bunch ofmultifamily buildings to create
rental income for himself.
And when he started to phaseout of the active management and
he was having some operationalchallenges as things have gotten
where he was just at adifferent stage of life, me and
my office got involved to manageand kind of situate the
properties correctly.
(01:43):
And in the process of doingthat they relocated down South
because most people, as the oldexpression goes, nobody retires
up North right.
So they moved down South and asthe family was happy with our
services.
They had asked me to work withthem to find a suitable
(02:03):
replacement for the income thatthey were going to be losing by
selling their investmentproperties in the New York City
area.
So as I'm in the process oflooking for high yield, cash
flowing, predictable real estateinvestments for them, I came
across the mobile home parkindustry and when I sat down
(02:27):
with the family and made myrecommendation that I think that
you should exchange into amobile home park, not having any
background or experience in it,but for the reason of you know
it is a very sticky andresilient asset class.
And what do I mean by that?
I mean, typically, whenresidents own their home inside
(02:49):
the community.
They own the home.
Your responsibility is tomaintain the grounds, keeping it
clean, keeping it beautiful,keeping it safe, keeping the
lights on, making sure theinfrastructure is working.
That is something that I feltthat they could do remotely.
That is something that I feltthat they could do from a
distance, and typically, when aresident owns their home,
(03:11):
they'll stay in the park, onaverage, 17 and a half years, as
long as the place, tony, isclean and safe.
So I recommended them to getinto the mobile home park space.
And the father who said I willonly do it, frank, if you stayed
in the deal and you ran thedeal for us.
So, almost by a baptism by fire.
(03:33):
I had to put my money where mymouth was.
I had to operate and managethis community in Southeast
Georgia while I was in New Yorkand it proved to be a very
worthwhile investment and agreat learning opportunity and
it really sparked my interestinto the space and it's been
probably, without a doubt, tony,the best investment decision I
(03:56):
made in the over 20 years I'vebeen in the real estate space
was to get into manufacturedhousing.
Speaker 1 (04:01):
Wow, that's beautiful and I already caught already
something to it, because upnorth, especially New York and
California, it's the worst whenit comes to taxes.
But if you go down to like thesouthern states, you get more of
an investment when it comes tothose southern states.
Speaker 2 (04:21):
You know.
That's a great point, tony.
I mean you're in California,we're in New York, I think we
have, you know, every city,every state.
There's legislative hurdles.
It just seems that we happen tobe in some areas where there's
a little bit more challenges.
What I found is when you canoperate in a location where you
(04:44):
have some business clarity.
It doesn't mean that you alwaysget the answer that you want,
but you can get the answer thatyou need and that can help you
make better business decisions.
Knowing that you know what Ineed to do to execute us a real
(05:07):
clarity of purpose and clarityof being able to operate, and
that's something that we reallylooked towards in one of the
reasons why we really like thearea and the markets that we're
in, yes, so and then you talkabout transferring from the
multifamily into the mobile homepart.
(05:33):
What is the?
What's some of the or thebiggest misconception about
investing in mobile homes?
Well, I think the first big,big misconception in it is that
these homes are mobile, right,so you have it just in the name
mobile home or mobile home park.
The assumption is that thesehomes could be readily moved and
, quite frankly, these homes arevery expensive to move or
(05:55):
costly to move, can rangeanywhere from $12,000 to $17,000
, depending on getting alicensed mover If the lot that
it's moving to is prepped, hasthe connections to the sewer and
electric readily available ifyou need to bring in an HVAC
(06:17):
unit, so it could be very costly.
So people who own these homes donot tend to move these homes
unless, of course, they'removing it to a piece of land
that they may have purchased.
And so, for the most part, whenthey own someone owns their
home they will keep it in acommunity and they will keep it.
(06:38):
You know they they like thatcommunity living, they just want
to own their home, like thatcommunity living, they just want
to own their home and it'sessentially multifamily housing
that is horizontal rather thanvertical.
Speaker 1 (06:52):
That's a great way of putting it.
As soon as you said that, I waslike, yes, you're right on
point when it comes to thatright there, because I know a
lot of people that I'm aroundwith in real estate.
They don't do much with thesector of the mobile homes, but
where should investors look tofind mobile home deals at?
Speaker 2 (07:12):
You know it's.
It's interesting.
You say that I mean, I grew upin New York City, so we don't in
New York City it's.
It's not a hotbed of mobilehome parks, it's not a hotbed of
mobile home parks.
And so when you leave outsideof the city areas, you start to
(07:34):
realize that 12% of the USpopulation lives in manufactured
housing, right, Wow.
So it is a large portion of theUS public that is living in
some sort of manufactured home.
Now, they're not in parks, butthese mobile home parks are
throughout the country, outsideof, say, major metros.
They're all in secondary,tertiary markets.
(07:56):
In a lot of the major metros, alot of times the mobile home
parks, typically the cities arelooking to do a higher and
better use.
They're looking to build, youknow, multifamily housing or
luxury housing.
So they are dwindling in supplyas crazy as that sounds which,
(08:16):
in a country that's in anaffordability crisis, makes this
a very interesting investmentat this point in time.
Speaker 1 (08:24):
I'm glad you brought that up.
Yes, because the housingshortage here in the United
States is between the $7 millionto $9 million mark.
What would it play for with themobile homes, Say, if they got
an abundance of mobile homes?
How would that help out theeconomy and the sector of
affordable housing?
The sector of affordablehousing.
Speaker 2 (08:52):
Tony, that is an excellent question because in
the affordable housingconversation a lot of time
what's missed is the fact thatthis is the most affordable
housing solution available forpeople who are looking to become
homeowners and create thatpathway to homeownership.
The facts are that a stick-builthouse is going to be two to two
(09:13):
and a half times as costly as amanufactured home, for a number
of reasons.
I mean and I've been to anumber of different factories
from some of the largermanufacturers in this country it
is an efficient assembly lineof production where they're
moving these homes outregardless of weather or
(09:34):
exterior condition and they canbuild the demand.
So, affordable housing youcannot have an affordable
housing solution without lookingat or considering manufactured
housing as a way to step peopleinto a home ownership situation.
And, as you know, you know,home ownership is the number one
(09:58):
pathway to generational wealth.
It gets people out of the cycleof renting and puts in that
pride of ownership and changesthe mindset for people to start
thinking about longer terminvestments for them.
So manufactured housing isabsolutely a part of the
solution.
Speaker 1 (10:21):
I'm not saying it's 100% of it, but it definitely
should be a bigger part of thesolution that's being talked
about right now.
Yes, it was definitely a startof the conversation because,
from the way you're explainingit, it would help out our
economy so much better.
With the housing solution, evenwith I mean, we just had the
huge fires down in SouthernCalifornia there's a lot of
displacement going on.
They don't know what they'regoing to do with all that land
(10:41):
because that dirt is.
So I tell people it's dirt.
That dirt is expensive becauseof the location, like they don't
know what to do with it.
So even the idea of what youbrought up about the mobile home
, like there's areas where Ihave I had a friend I just did a
podcast with and there was afire in Paradise.
Paradise was the way they built.
(11:01):
It was backwards, it was oneway in, one way out.
It got to be a fire and he wasable to buy a mobile home park.
They cleared the land out andhe's doing amazing with that
investment.
Speaker 2 (11:17):
And he ran it back, put it back as a mobile home
park.
Speaker 1 (11:20):
Yes, he did, yeah, yeah, it was.
So it was very smart,intelligent on his side to do
that.
So, when it comes to that also,how do you, how would you
determine if a mobile home ormobile home park would be a good
investment?
What, what, what, what is itthat you would say?
Your professional side of it?
Speaker 2 (11:39):
So so from us, from the vantage point of where we
look at I mean, we're truevalue-add investors right.
So we look at any potentialacquisition from the lens of
where can we go in there andcreate real value, right?
Where can we createefficiencies in the management
(12:00):
right?
Where can we enhance theresident experience?
And many times this is still avery fragmented industry where
predominantly Tony, it is stillowned by multi-generational mom
and pop retail owners and a lotof times they're not, they don't
look at themselves as somebodywho operates in a mobile home
(12:22):
park, it's somebody that's, youknow, they might've inherited,
you know and they're not gearedtowards really raising the
standards of that community.
Maybe a lot of deferredmaintenance, maybe roads that
need to be done, orinfrastructure improvements that
need to be done, or lots whichare vacant, lots they need to be
infilled, meaning brought inwith new homes brought in there.
(12:44):
Vacant lots that need to beinfilled, meaning with new homes
brought in there.
So for us we tend to look atthose types of communities as
our target because we believethat our program adds the most
value.
There we can help beautify thesurrounding areas, we can
enhance the homes that are thereon site.
We could bring in theinfrastructure improvements and
(13:06):
then start to bring in new homesto get the community at large
that affordable housing optionwhere for us, tony, we can sell
a new home on site for somewherebetween like $60,000 and
$80,000, which is significantlybelow national average and we
(13:28):
can enhance the residentexperience down on the ground.
And that's for us where we lookto add value.
And then we look at where wecan create some management
efficiencies, where we can savemoney through better management,
maybe utility reimbursements,making sure that there's not any
(13:49):
waste happening down on theground.
So we take a two-prongedapproach of where we can add the
most value and that's what welook at when we look to acquire
any new community.
Speaker 1 (14:03):
Well, that's a great blueprint right there how to go
about it.
Now, on the other flip side ofthat, what would be some common
red flags investors should avoidbefore purchasing a mobile home
In?
Speaker 2 (14:18):
the last, say, three or four years.
You know, in the last, say,three or four years, mobile home
park investing has becomesomething of a buzz in the
industry.
I think people have started tolook for more yield for
(14:41):
investments with higherpotential for cash flow, and a
lot of people have come in withthe thesis of when people own
their homes they're kind oftethered to the land and I don't
have to do much to make money.
And I think that's some of thestory.
But I think that they'remissing a big part of it,
because what makes a communityor a mobile home park a
community is really that feelthat the residents have with the
(15:04):
ownership or the ownershipgroup.
And it's not just, you know,you know, fix it and forget it.
It's.
There is some, you know there isamount of touches that that
goes into maintaining andoperating the park.
So you have to have a goodbusiness plan on how you're
going to run and operate thatpark, especially if you're going
(15:24):
to do it from a distance, right.
You have to make sure you have agood team on the ground that's
going to be able to facilitatethat, and I think the community
manager is so important.
And then you have to make surethat you're able to instill a
culture on the ground of what'sacceptable and what's not,
because in these communities orthese types of communities, it
(15:47):
is very easy for a community toget away from you if you're not
actively managing it.
If you allow people to notconform to a certain standard,
everybody will.
That pride of ownership whichmakes this such a compelling
asset class will disappear ifyou just allow people to, you
know, bring in junk cars andleave them on their lawn.
(16:08):
Or to, you know, bring in a youknow laundry machines and leave
it on their front lawn, like,and that will have a negative
impact on your community.
So it's it's super importantthat you look to instill a
culture of accountability foryourself and for the for your
residents, and that makes a bigdifference in how you're going
to your operations will be.
Speaker 1 (16:30):
That's exactly true.
Especially have, like you said,having a great team and
especially if you're a distanceaway, you have somebody on site
that's taking care of theresponsibilities, the culture,
keeping everything clean.
And you got to think the moreyou take care, I tell people the
more you take care of something, and especially no matter what
it is, and especially when itcomes to real estate, the
(16:52):
tenants are going to want tostay there.
They're not going to want toleave.
They're like I've been takingcare of, like what I say, what I
say what's broken, how fast theresponse is, and everything
that all plays a key part ofkeeping great tenants.
Speaker 2 (17:11):
You hit the nail on the head, Tony, and especially
because and here's thedifference from multifamily,
right If somebody wants to movetheir home and there's a $15,000
cost to move their home rightFrom one site and connect it
somewhere else, and if you're,they're only going to do it for
a specific reason, If price isthe same, then they wouldn't
(17:32):
move right.
They'll only move if you're notable to maintain that culture,
if you're not able to createthat community feel, or they
feel, that the standards havebeen reduced to the point where
it's dangerous, unsafe oraffecting their values.
So if you can do that and youcan maintain that as being a
(17:52):
focal point, you will haveresidents that are very happy to
be there.
And then we found people whothey will be.
Those residents will becomeyour best referral source.
They will bring in theirfriends, their neighbors, their
cousins, their coworkers,because they're going to want to
have a community of otherpeople who they want to have, a
community of other people whothey want to share that
community with.
Speaker 1 (18:13):
Yes, and word of mouth goes a long ways negative
or positive, it goes a long waysand, like you said, their
friends, their families, likeyou.
You're what you're building.
You're building a strongcommunity where everybody is
friendly, respectful respectfulto each other, respectful to the
property that's there.
So it all goes together in one.
Speaker 2 (18:35):
Absolutely.
I mean, that's a key componentto all of this.
Speaker 1 (18:38):
Yes.
Now, when it comes to likefinancial options, how can you
go about financially likepurchasing?
What do you use financially topurchase mobile homes?
Speaker 2 (18:53):
So for the parks and I think for any investor.
Right now, tony, the bigchallenge has been in the
underwriting and in thefinancing, because because rates
are significantly higher,that's why we've seen a
reduction, I guess a slowdown,in the commercial real estate
(19:14):
transactions.
But we're one where, when therates are higher, we happen to
believe that this is anopportune time.
We think that anything thatwe're able to acquire now in the
next few months, we're probablyvery well positioned because
we're at the higher end of therate curve and should start to
peel back and sellers at thispoint, if they're looking to
(19:38):
sell, they'll be willing to be alittle bit more creative with
you.
So we're a big proponent,especially going into a value
add situation is try to createor craft creative ways to get us
to the you know, the us and theseller to the same point.
A lot of time.
That involves some sellerfinancing or a seller financing
(20:00):
component.
For instance, we just closed ona 271 unit community where we
were able to craft that with aseller financing note and we
were able to get the seller todefer some of those payments
until the balloon period endsfour years from now.
(20:20):
So that gives us some time toexecute the business plan.
We knew that we were at a greatvalue.
We can reinvest the capitalinto the community to get us to
where we need to be and itpositions us where we felt,
where it works for us and itworked for the seller as well.
So I think, you know, we've gotto look at each market's a
little different, but we thinkin the current environment, with
(20:42):
rates the way they are, youknow, being able to use
different tools of either sellerfinancing or lease options
become very advantageous to usin terms of where we look to do
and acquiring properties rightnow.
Speaker 1 (20:59):
Yeah, and I was thinking that's when I asked
that question to you and I wasthinking I said you know what
I'm going to use?
Seller financing.
And, like you said earlier inthe podcast, a lot of them are
moms and pops, so that actuallyhelps with the seller financing.
A whole lot says, hey, youdon't have to deal with the bank
, we can structure this outtogether and work together as
(21:19):
one well.
Speaker 2 (21:20):
Well, you know, tony.
You know, anytime you're buyingreal estate, you're buying
three things right, you'rebuying the income, the expense
and the financing.
Right now, the financing isvery expensive.
Right for You're buying theincome, the expense and the
financing.
Right now, the financing isvery expensive.
Right for anybody.
And so the only way you canmake that up is on the price.
So, if you can work with this,if the seller wants to sell and
(21:42):
they know that you're a sponsoror you know an operator who has
a track record of performanceand we've been involved in about
27 communities right now andwe've been involved in about 27
communities right now We've beenable to go full life cycle on
10 of them we're able todemonstrate.
Here's our business plan.
It's been tried, it's been true.
We've had over a decade ofsuccess in this space and we can
(22:06):
show you that you're going tobe invested in this community
anyway, with professionalmanagement and ownership that's
going to be able to take it tothe next step.
You know, the funny thing iswe've actually had some prior
owners who've worked with usafterwards, which we've been
very proud of and very happy tohave that happen.
(22:27):
And you know that gives us anadded advantage where we have
someone who really knows theproperty, who's who's boots on
the ground.
So, and one of the things thatoften gets overlooked, tony, you
know we've seen this happenright.
When you sell a property,everybody in town knows you sold
the property right.
(22:47):
Your cousins, your friends, youknow.
And they know if you sold theproperty right your cousins,
your friends and they know ifyou've come into this big
windfall.
It's the reason why a third oflottery winners will declare
bankruptcy inside of three years.
Right, it's not because theydon't know what to do with the
money, it's because they don'tknow how to say no, right,
everybody comes out.
Can you help me?
Can you do this?
But if you take back a note,right, if you take back a seller
(23:11):
financing note, they might knowyou sold the property, but,
tony, I took back a note.
They don't have to know whenyou get that note paid off.
Right.
And so for the seller, you knowit gives them a little distance
and not have the situationwhere, hey, I've got this big
pool of money, what am I goingto do with it?
(23:31):
Oh well, this one needs a carand that one needs a little help
, and I want to help this.
It gives them some time to kindof absorb what's going to
happen and kind of make theirdecisions in the time they need
to make those decisions.
Speaker 1 (23:44):
Great, that's very true right there.
I like that, my one.
I have always one tax question,because I love taxes and real
estate.
You know people like they tryto shun away from it and
everything like this is thereason why the government gives
us so many advantages when itcomes to taxes and real estate
investing.
How does depreciation and taxstrategy work with the mobile
(24:06):
homes?
Speaker 2 (24:12):
and tax strategy work with the mobile homes?
Well, that's another greatquestion, because for mobile
home park investing it's veryfavorable.
We always like to do a costsegregation analysis and report
prior to acquiring the property,which allows us to basically
bifurcate the land from thepersonal property, from the land
(24:32):
improvements and from thebuildings, and we were allowed,
or we're allowed, to take someaccelerated depreciation on the
land improvements in thepersonal property.
Now, in the case of a mobilehome park, what you're buying is
land and mainly landimprovements right, that's the
value of that.
And then you can get thataccelerated depreciation which
(24:55):
allows real estate investors toshield a lot of income that's
coming in.
Rightly, now that getsrecaptured on a sale.
But if you hold onto thatproperty for an extended period
of time, well, that gives you along period of time to defer
that right, and that's a hugeadvantage in not only investing
(25:17):
in real estate but investing inmobile home parks specifically.
Speaker 1 (25:21):
Great, that's great.
Speaker 2 (25:23):
I didn't even I didn't know that this podcast
made me want to get a mobilehome now and venture with
somebody else now I would tellyou, Tony, it would be
definitely be an advantage and agreat way to shield your income
as a real estate professional.
That would be a fantastic wayto do that.
Speaker 1 (25:40):
Oh yes, oh yes.
Speaker 2 (25:48):
So what's one piece of advice you would give someone
looking to start investing inmobile homes today.
So whenever I speak to somebodylooking to invest, I always tell
them that the first thing thatyou should do before you do
anything is to write out yourbusiness plan.
Because I'm sure you know,right, as a real estate agent,
(26:08):
how many times have you gotten acall from somebody who says,
tony, can you help me find thedeal?
Yeah, right, and if I had adollar for every time somebody
said that to me, I wouldn't haveto buy any real estate, right?
And then when you ask them like, well, define what a deal looks
like.
And then they don't knowexactly what the deal looks like
(26:32):
.
I'll know it when I see it.
Well, you're not definingsuccess.
So the first thing you shoulddo is define success and then
your expectation and what thatlooks like.
What does it look like to ownthat community or park or
investment?
What kind of return are youlooking to get out of that?
What are you willing to committo generate that return?
(26:55):
How much work are you willingto do or able to do, like
everybody says?
I want to.
You know, and again, from doingbeing in real estate for so long
and I'm a transactional agentand broker to where I am now in
that journey.
You know everybody wants tofind that home that's worth
(27:16):
$300,000, that the seller wants$180,000 and needs work, but all
it needs is painting right andquite frankly, that doesn't
necessarily exist.
So be realistic of the work I'mwilling to do, the capital I'm
willing to put in there, thetimeline I'm willing to expect
and the time I'm willing tocommit to make this work.
(27:37):
And then when you backtrackthat you've really got a pretty
well-defined buy box of whatyou're looking for and that
makes you so much better of aninvestor because you'll know
what not to look at and you'llknow what to look for.
So I always say the first stepis having a good, clear plan and
(27:58):
defining what success means foryou and the dollars that you're
willing to commit to it.
Speaker 1 (28:04):
That is great info.
Great information right there.
Frank, I appreciate everythingthat you said, like the sector
of mobile home and the mobilehome parks I had no knowledge
about.
Now, if anybody's everybody'slistening to this podcast, you
might need to re-listen andre-watch it over again, because
Frank just put out some gems outthere that I didn't even know
(28:27):
about.
That's the reason why thispodcast so people can learn.
That's the reason why so goahead, frank.
Speaker 2 (28:36):
No, I mean listen, tony.
That's great and you know welove sharing knowledge on that
and I appreciate the opportunityto share with you and talk with
you about the mobile home parkspace.
Speaker 1 (28:49):
Yes, this is Frank Rizzo.
Like I said, he's been in thisreal estate game for over 20
plus years.
He has his own podcast, the MHPExchange Podcast.
Y'all need to go out there andlisten to that also, and I just
want to say it's been an honorand a pleasure, frank, to have
you on the podcast.
I enjoyed spending this timewith you today.
Speaker 2 (29:08):
Tony, I really appreciate you having me on.
It's been a pleasure talkingwith you.
I'd love to come out toCalifornia and see the markets
that you're in and see what'sgoing on.
Oh yes, oh yes, yes, yes indeed,and I would say, if anybody out
there is interested in seeingwhat it takes to turn around one
of these mobile home parks,they can check out our YouTube
(29:29):
channel, trailer Park Turnaround, where it's a video series
where we'll show you whathappens, from finding a deal to
turning it from acquisition day,what it takes to turn those
parks around and then what itlooks like at the finish line.
So you can check out TrailerPark Turnaround on YouTube.
Speaker 1 (29:49):
That's great.
Yeah, just give me theinformation, I will put it there
so everybody can watch it andsubscribe to his channel and
everything, and so on that noteworld.
Thank you for listening andwatching and, frank, I
appreciate you so much andeverything that you do.
Speaker 2 (30:05):
Thank you Everybody, have a blessed day.
Speaker 1 (30:07):
Thank you All right.
Hello world.
I just want to get everybody tointroduce you to the
Professions Real EstateInvesting Podcast.
I'm with Frank Rizzo.
How you doing, Frank.
Speaker 2 (00:10):
I'm doing very well today, Tony.
Thank you very much for havingme on.
Speaker 1 (00:14):
Yes, we got Frank Rizzo.
He's a seasoned mobile homepark investor with over 20 years
of experience in the realestate industry, and he's the
co-host of the MHP Exchangepodcast.
So, Frank, I just want to knowhow did you get into the sector
of the mobile homes and realestate investing?
Speaker 2 (00:34):
You know the funny story about it, tony.
I don't think many people wakeup in the morning and say they
want to become a mobile homepark operator, right, unless you
were born into it.
But having had a real estatecareer which, where I started as
an agent and eventually startedit, moved into being a real
estate broker, I was assistingone of my clients I mean real
(00:59):
salt of the earth people firstgeneration entrepreneur who had
come to New York.
First generation entrepreneurwho had come to New York,
started a bunch of smallbusinesses and, like most
business owners who do not havea 401k or do not have a
retirement plan, did really thebest thing possible, which was
(01:22):
to buy and own a bunch ofmultifamily buildings to create
rental income for himself.
And when he started to phaseout of the active management and
he was having some operationalchallenges as things have gotten
where he was just at adifferent stage of life, me and
my office got involved to manageand kind of situate the
properties correctly.
(01:43):
And in the process of doingthat they relocated down South
because most people, as the oldexpression goes, nobody retires
up North right.
So they moved down South and asthe family was happy with our
services.
They had asked me to work withthem to find a suitable
(02:03):
replacement for the income thatthey were going to be losing by
selling their investmentproperties in the New York City
area.
So as I'm in the process oflooking for high yield, cash
flowing, predictable real estateinvestments for them, I came
across the mobile home parkindustry and when I sat down
(02:27):
with the family and made myrecommendation that I think that
you should exchange into amobile home park, not having any
background or experience in it,but for the reason of you know
it is a very sticky andresilient asset class.
And what do I mean by that?
I mean, typically, whenresidents own their home inside
(02:49):
the community.
They own the home.
Your responsibility is tomaintain the grounds, keeping it
clean, keeping it beautiful,keeping it safe, keeping the
lights on, making sure theinfrastructure is working.
That is something that I feltthat they could do remotely.
That is something that I feltthat they could do from a
distance, and typically, when aresident owns their home,
(03:11):
they'll stay in the park, onaverage, 17 and a half years, as
long as the place, tony, isclean and safe.
So I recommended them to getinto the mobile home park space.
And the father who said I willonly do it, frank, if you stayed
in the deal and you ran thedeal for us.
So, almost by a baptism by fire.
(03:33):
I had to put my money where mymouth was.
I had to operate and managethis community in Southeast
Georgia while I was in New Yorkand it proved to be a very
worthwhile investment and agreat learning opportunity and
it really sparked my interestinto the space and it's been
probably, without a doubt, tony,the best investment decision I
(03:56):
made in the over 20 years I'vebeen in the real estate space
was to get into manufacturedhousing.
Speaker 1 (04:01):
Wow, that's beautiful and I already caught already
something to it, because upnorth, especially New York and
California, it's the worst whenit comes to taxes.
But if you go down to like thesouthern states, you get more of
an investment when it comes tothose southern states.
Speaker 2 (04:21):
You know.
That's a great point, tony.
I mean you're in California,we're in New York, I think we
have, you know, every city,every state.
There's legislative hurdles.
It just seems that we happen tobe in some areas where there's
a little bit more challenges.
What I found is when you canoperate in a location where you
(04:44):
have some business clarity.
It doesn't mean that you alwaysget the answer that you want,
but you can get the answer thatyou need and that can help you
make better business decisions.
Knowing that you know what Ineed to do to execute us a real
(05:07):
clarity of purpose and clarityof being able to operate, and
that's something that we reallylooked towards in one of the
reasons why we really like thearea and the markets that we're
in, yes, so and then you talkabout transferring from the
multifamily into the mobile homepart.
(05:33):
What is the?
What's some of the or thebiggest misconception about
investing in mobile homes?
Well, I think the first big,big misconception in it is that
these homes are mobile, right,so you have it just in the name
mobile home or mobile home park.
The assumption is that thesehomes could be readily moved and
, quite frankly, these homes arevery expensive to move or
(05:55):
costly to move, can rangeanywhere from $12,000 to $17,000
, depending on getting alicensed mover If the lot that
it's moving to is prepped, hasthe connections to the sewer and
electric readily available ifyou need to bring in an HVAC
(06:17):
unit, so it could be very costly.
So people who own these homes donot tend to move these homes
unless, of course, they'removing it to a piece of land
that they may have purchased.
And so, for the most part, whenthey own someone owns their
home they will keep it in acommunity and they will keep it.
(06:38):
You know they they like thatcommunity living, they just want
to own their home, like thatcommunity living, they just want
to own their home and it'sessentially multifamily housing
that is horizontal rather thanvertical.
Speaker 1 (06:52):
That's a great way of putting it.
As soon as you said that, I waslike, yes, you're right on
point when it comes to thatright there, because I know a
lot of people that I'm aroundwith in real estate.
They don't do much with thesector of the mobile homes, but
where should investors look tofind mobile home deals at?
Speaker 2 (07:12):
You know it's.
It's interesting.
You say that I mean, I grew upin New York City, so we don't in
New York City it's.
It's not a hotbed of mobilehome parks, it's not a hotbed of
mobile home parks.
And so when you leave outsideof the city areas, you start to
(07:34):
realize that 12% of the USpopulation lives in manufactured
housing, right, Wow.
So it is a large portion of theUS public that is living in
some sort of manufactured home.
Now, they're not in parks, butthese mobile home parks are
throughout the country, outsideof, say, major metros.
They're all in secondary,tertiary markets.
(07:56):
In a lot of the major metros, alot of times the mobile home
parks, typically the cities arelooking to do a higher and
better use.
They're looking to build, youknow, multifamily housing or
luxury housing.
So they are dwindling in supplyas crazy as that sounds which,
(08:16):
in a country that's in anaffordability crisis, makes this
a very interesting investmentat this point in time.
Speaker 1 (08:24):
I'm glad you brought that up.
Yes, because the housingshortage here in the United
States is between the $7 millionto $9 million mark.
What would it play for with themobile homes, Say, if they got
an abundance of mobile homes?
How would that help out theeconomy and the sector of
affordable housing?
The sector of affordablehousing.
Speaker 2 (08:52):
Tony, that is an excellent question because in
the affordable housingconversation a lot of time
what's missed is the fact thatthis is the most affordable
housing solution available forpeople who are looking to become
homeowners and create thatpathway to homeownership.
The facts are that a stick-builthouse is going to be two to two
(09:13):
and a half times as costly as amanufactured home, for a number
of reasons.
I mean and I've been to anumber of different factories
from some of the largermanufacturers in this country it
is an efficient assembly lineof production where they're
moving these homes outregardless of weather or
(09:34):
exterior condition and they canbuild the demand.
So, affordable housing youcannot have an affordable
housing solution without lookingat or considering manufactured
housing as a way to step peopleinto a home ownership situation.
And, as you know, you know,home ownership is the number one
(09:58):
pathway to generational wealth.
It gets people out of the cycleof renting and puts in that
pride of ownership and changesthe mindset for people to start
thinking about longer terminvestments for them.
So manufactured housing isabsolutely a part of the
solution.
Speaker 1 (10:21):
I'm not saying it's 100% of it, but it definitely
should be a bigger part of thesolution that's being talked
about right now.
Yes, it was definitely a startof the conversation because,
from the way you're explainingit, it would help out our
economy so much better.
With the housing solution, evenwith I mean, we just had the
huge fires down in SouthernCalifornia there's a lot of
displacement going on.
They don't know what they'regoing to do with all that land
(10:41):
because that dirt is.
So I tell people it's dirt.
That dirt is expensive becauseof the location, like they don't
know what to do with it.
So even the idea of what youbrought up about the mobile home
, like there's areas where Ihave I had a friend I just did a
podcast with and there was afire in Paradise.
Paradise was the way they built.
(11:01):
It was backwards, it was oneway in, one way out.
It got to be a fire and he wasable to buy a mobile home park.
They cleared the land out andhe's doing amazing with that
investment.
Speaker 2 (11:17):
And he ran it back, put it back as a mobile home
park.
Speaker 1 (11:20):
Yes, he did, yeah, yeah, it was.
So it was very smart,intelligent on his side to do
that.
So, when it comes to that also,how do you, how would you
determine if a mobile home ormobile home park would be a good
investment?
What, what, what, what is itthat you would say?
Your professional side of it?
Speaker 2 (11:39):
So so from us, from the vantage point of where we
look at I mean, we're truevalue-add investors right.
So we look at any potentialacquisition from the lens of
where can we go in there andcreate real value, right?
Where can we createefficiencies in the management
(12:00):
right?
Where can we enhance theresident experience?
And many times this is still avery fragmented industry where
predominantly Tony, it is stillowned by multi-generational mom
and pop retail owners and a lotof times they're not, they don't
look at themselves as somebodywho operates in a mobile home
(12:22):
park, it's somebody that's, youknow, they might've inherited,
you know and they're not gearedtowards really raising the
standards of that community.
Maybe a lot of deferredmaintenance, maybe roads that
need to be done, orinfrastructure improvements that
need to be done, or lots whichare vacant, lots they need to be
infilled, meaning brought inwith new homes brought in there.
(12:44):
Vacant lots that need to beinfilled, meaning with new homes
brought in there.
So for us we tend to look atthose types of communities as
our target because we believethat our program adds the most
value.
There we can help beautify thesurrounding areas, we can
enhance the homes that are thereon site.
We could bring in theinfrastructure improvements and
(13:06):
then start to bring in new homesto get the community at large
that affordable housing optionwhere for us, tony, we can sell
a new home on site for somewherebetween like $60,000 and
$80,000, which is significantlybelow national average and we
(13:28):
can enhance the residentexperience down on the ground.
And that's for us where we lookto add value.
And then we look at where wecan create some management
efficiencies, where we can savemoney through better management,
maybe utility reimbursements,making sure that there's not any
(13:49):
waste happening down on theground.
So we take a two-prongedapproach of where we can add the
most value and that's what welook at when we look to acquire
any new community.
Speaker 1 (14:03):
Well, that's a great blueprint right there how to go
about it.
Now, on the other flip side ofthat, what would be some common
red flags investors should avoidbefore purchasing a mobile home
In?
Speaker 2 (14:18):
the last, say, three or four years.
You know, in the last, say,three or four years, mobile home
park investing has becomesomething of a buzz in the
industry.
I think people have started tolook for more yield for
(14:41):
investments with higherpotential for cash flow, and a
lot of people have come in withthe thesis of when people own
their homes they're kind oftethered to the land and I don't
have to do much to make money.
And I think that's some of thestory.
But I think that they'remissing a big part of it,
because what makes a communityor a mobile home park a
community is really that feelthat the residents have with the
(15:04):
ownership or the ownershipgroup.
And it's not just, you know,you know, fix it and forget it.
It's.
There is some, you know there isamount of touches that that
goes into maintaining andoperating the park.
So you have to have a goodbusiness plan on how you're
going to run and operate thatpark, especially if you're going
(15:24):
to do it from a distance, right.
You have to make sure you have agood team on the ground that's
going to be able to facilitatethat, and I think the community
manager is so important.
And then you have to make surethat you're able to instill a
culture on the ground of what'sacceptable and what's not,
because in these communities orthese types of communities, it
(15:47):
is very easy for a community toget away from you if you're not
actively managing it.
If you allow people to notconform to a certain standard,
everybody will.
That pride of ownership whichmakes this such a compelling
asset class will disappear ifyou just allow people to, you
know, bring in junk cars andleave them on their lawn.
(16:08):
Or to, you know, bring in a youknow laundry machines and leave
it on their front lawn, like,and that will have a negative
impact on your community.
So it's it's super importantthat you look to instill a
culture of accountability foryourself and for the for your
residents, and that makes a bigdifference in how you're going
to your operations will be.
Speaker 1 (16:30):
That's exactly true.
Especially have, like you said,having a great team and
especially if you're a distanceaway, you have somebody on site
that's taking care of theresponsibilities, the culture,
keeping everything clean.
And you got to think the moreyou take care, I tell people the
more you take care of something, and especially no matter what
it is, and especially when itcomes to real estate, the
(16:52):
tenants are going to want tostay there.
They're not going to want toleave.
They're like I've been takingcare of, like what I say, what I
say what's broken, how fast theresponse is, and everything
that all plays a key part ofkeeping great tenants.
Speaker 2 (17:11):
You hit the nail on the head, Tony, and especially
because and here's thedifference from multifamily,
right If somebody wants to movetheir home and there's a $15,000
cost to move their home rightFrom one site and connect it
somewhere else, and if you're,they're only going to do it for
a specific reason, If price isthe same, then they wouldn't
(17:32):
move right.
They'll only move if you're notable to maintain that culture,
if you're not able to createthat community feel, or they
feel, that the standards havebeen reduced to the point where
it's dangerous, unsafe oraffecting their values.
So if you can do that and youcan maintain that as being a
(17:52):
focal point, you will haveresidents that are very happy to
be there.
And then we found people whothey will be.
Those residents will becomeyour best referral source.
They will bring in theirfriends, their neighbors, their
cousins, their coworkers,because they're going to want to
have a community of otherpeople who they want to have, a
community of other people whothey want to share that
community with.
Speaker 1 (18:13):
Yes, and word of mouth goes a long ways negative
or positive, it goes a long waysand, like you said, their
friends, their families, likeyou.
You're what you're building.
You're building a strongcommunity where everybody is
friendly, respectful respectfulto each other, respectful to the
property that's there.
So it all goes together in one.
Speaker 2 (18:35):
Absolutely.
I mean, that's a key componentto all of this.
Speaker 1 (18:38):
Yes.
Now, when it comes to likefinancial options, how can you
go about financially likepurchasing?
What do you use financially topurchase mobile homes?
Speaker 2 (18:53):
So for the parks and I think for any investor.
Right now, tony, the bigchallenge has been in the
underwriting and in thefinancing, because because rates
are significantly higher,that's why we've seen a
reduction, I guess a slowdown,in the commercial real estate
(19:14):
transactions.
But we're one where, when therates are higher, we happen to
believe that this is anopportune time.
We think that anything thatwe're able to acquire now in the
next few months, we're probablyvery well positioned because
we're at the higher end of therate curve and should start to
peel back and sellers at thispoint, if they're looking to
(19:38):
sell, they'll be willing to be alittle bit more creative with
you.
So we're a big proponent,especially going into a value
add situation is try to createor craft creative ways to get us
to the you know, the us and theseller to the same point.
A lot of time.
That involves some sellerfinancing or a seller financing
(20:00):
component.
For instance, we just closed ona 271 unit community where we
were able to craft that with aseller financing note and we
were able to get the seller todefer some of those payments
until the balloon period endsfour years from now.
(20:20):
So that gives us some time toexecute the business plan.
We knew that we were at a greatvalue.
We can reinvest the capitalinto the community to get us to
where we need to be and itpositions us where we felt,
where it works for us and itworked for the seller as well.
So I think, you know, we've gotto look at each market's a
little different, but we thinkin the current environment, with
(20:42):
rates the way they are, youknow, being able to use
different tools of either sellerfinancing or lease options
become very advantageous to usin terms of where we look to do
and acquiring properties rightnow.
Speaker 1 (20:59):
Yeah, and I was thinking that's when I asked
that question to you and I wasthinking I said you know what
I'm going to use?
Seller financing.
And, like you said earlier inthe podcast, a lot of them are
moms and pops, so that actuallyhelps with the seller financing.
A whole lot says, hey, youdon't have to deal with the bank
, we can structure this outtogether and work together as
(21:19):
one well.
Speaker 2 (21:20):
Well, you know, tony.
You know, anytime you're buyingreal estate, you're buying
three things right, you'rebuying the income, the expense
and the financing.
Right now, the financing isvery expensive.
Right for You're buying theincome, the expense and the
financing.
Right now, the financing isvery expensive.
Right for anybody.
And so the only way you canmake that up is on the price.
So, if you can work with this,if the seller wants to sell and
(21:42):
they know that you're a sponsoror you know an operator who has
a track record of performanceand we've been involved in about
27 communities right now andwe've been involved in about 27
communities right now We've beenable to go full life cycle on
10 of them we're able todemonstrate.
Here's our business plan.
It's been tried, it's been true.
We've had over a decade ofsuccess in this space and we can
(22:06):
show you that you're going tobe invested in this community
anyway, with professionalmanagement and ownership that's
going to be able to take it tothe next step.
You know, the funny thing iswe've actually had some prior
owners who've worked with usafterwards, which we've been
very proud of and very happy tohave that happen.
(22:27):
And you know that gives us anadded advantage where we have
someone who really knows theproperty, who's who's boots on
the ground.
So, and one of the things thatoften gets overlooked, tony, you
know we've seen this happenright.
When you sell a property,everybody in town knows you sold
the property right.
(22:47):
Your cousins, your friends, youknow.
And they know if you sold theproperty right your cousins,
your friends and they know ifyou've come into this big
windfall.
It's the reason why a third oflottery winners will declare
bankruptcy inside of three years.
Right, it's not because theydon't know what to do with the
money, it's because they don'tknow how to say no, right,
everybody comes out.
Can you help me?
Can you do this?
But if you take back a note,right, if you take back a seller
(23:11):
financing note, they might knowyou sold the property, but,
tony, I took back a note.
They don't have to know whenyou get that note paid off.
Right.
And so for the seller, you knowit gives them a little distance
and not have the situationwhere, hey, I've got this big
pool of money, what am I goingto do with it?
(23:31):
Oh well, this one needs a carand that one needs a little help
, and I want to help this.
It gives them some time to kindof absorb what's going to
happen and kind of make theirdecisions in the time they need
to make those decisions.
Speaker 1 (23:44):
Great, that's very true right there.
I like that, my one.
I have always one tax question,because I love taxes and real
estate.
You know people like they tryto shun away from it and
everything like this is thereason why the government gives
us so many advantages when itcomes to taxes and real estate
investing.
How does depreciation and taxstrategy work with the mobile
(24:06):
homes?
Speaker 2 (24:12):
and tax strategy work with the mobile homes?
Well, that's another greatquestion, because for mobile
home park investing it's veryfavorable.
We always like to do a costsegregation analysis and report
prior to acquiring the property,which allows us to basically
bifurcate the land from thepersonal property, from the land
(24:32):
improvements and from thebuildings, and we were allowed,
or we're allowed, to take someaccelerated depreciation on the
land improvements in thepersonal property.
Now, in the case of a mobilehome park, what you're buying is
land and mainly landimprovements right, that's the
value of that.
And then you can get thataccelerated depreciation which
(24:55):
allows real estate investors toshield a lot of income that's
coming in.
Rightly, now that getsrecaptured on a sale.
But if you hold onto thatproperty for an extended period
of time, well, that gives you along period of time to defer
that right, and that's a hugeadvantage in not only investing
(25:17):
in real estate but investing inmobile home parks specifically.
Speaker 1 (25:21):
Great, that's great.
Speaker 2 (25:23):
I didn't even I didn't know that this podcast
made me want to get a mobilehome now and venture with
somebody else now I would tellyou, Tony, it would be
definitely be an advantage and agreat way to shield your income
as a real estate professional.
That would be a fantastic wayto do that.
Speaker 1 (25:40):
Oh yes, oh yes.
Speaker 2 (25:48):
So what's one piece of advice you would give someone
looking to start investing inmobile homes today.
So whenever I speak to somebodylooking to invest, I always tell
them that the first thing thatyou should do before you do
anything is to write out yourbusiness plan.
Because I'm sure you know,right, as a real estate agent,
(26:08):
how many times have you gotten acall from somebody who says,
tony, can you help me find thedeal?
Yeah, right, and if I had adollar for every time somebody
said that to me, I wouldn't haveto buy any real estate, right?
And then when you ask them like, well, define what a deal looks
like.
And then they don't knowexactly what the deal looks like
(26:32):
.
I'll know it when I see it.
Well, you're not definingsuccess.
So the first thing you shoulddo is define success and then
your expectation and what thatlooks like.
What does it look like to ownthat community or park or
investment?
What kind of return are youlooking to get out of that?
What are you willing to committo generate that return?
(26:55):
How much work are you willingto do or able to do, like
everybody says?
I want to.
You know, and again, from doingbeing in real estate for so long
and I'm a transactional agentand broker to where I am now in
that journey.
You know everybody wants tofind that home that's worth
(27:16):
$300,000, that the seller wants$180,000 and needs work, but all
it needs is painting right andquite frankly, that doesn't
necessarily exist.
So be realistic of the work I'mwilling to do, the capital I'm
willing to put in there, thetimeline I'm willing to expect
and the time I'm willing tocommit to make this work.
(27:37):
And then when you backtrackthat you've really got a pretty
well-defined buy box of whatyou're looking for and that
makes you so much better of aninvestor because you'll know
what not to look at and you'llknow what to look for.
So I always say the first stepis having a good, clear plan and
(27:58):
defining what success means foryou and the dollars that you're
willing to commit to it.
Speaker 1 (28:04):
That is great info.
Great information right there.
Frank, I appreciate everythingthat you said, like the sector
of mobile home and the mobilehome parks I had no knowledge
about.
Now, if anybody's everybody'slistening to this podcast, you
might need to re-listen andre-watch it over again, because
Frank just put out some gems outthere that I didn't even know
(28:27):
about.
That's the reason why thispodcast so people can learn.
That's the reason why so goahead, frank.
Speaker 2 (28:36):
No, I mean listen, tony.
That's great and you know welove sharing knowledge on that
and I appreciate the opportunityto share with you and talk with
you about the mobile home parkspace.
Speaker 1 (28:49):
Yes, this is Frank Rizzo.
Like I said, he's been in thisreal estate game for over 20
plus years.
He has his own podcast, the MHPExchange Podcast.
Y'all need to go out there andlisten to that also, and I just
want to say it's been an honorand a pleasure, frank, to have
you on the podcast.
I enjoyed spending this timewith you today.
Speaker 2 (29:08):
Tony, I really appreciate you having me on.
It's been a pleasure talkingwith you.
I'd love to come out toCalifornia and see the markets
that you're in and see what'sgoing on.
Oh yes, oh yes, yes, yes indeed,and I would say, if anybody out
there is interested in seeingwhat it takes to turn around one
of these mobile home parks,they can check out our YouTube
(29:29):
channel, trailer Park Turnaround, where it's a video series
where we'll show you whathappens, from finding a deal to
turning it from acquisition day,what it takes to turn those
parks around and then what itlooks like at the finish line.
So you can check out TrailerPark Turnaround on YouTube.
Speaker 1 (29:49):
That's great.
Yeah, just give me theinformation, I will put it there
so everybody can watch it andsubscribe to his channel and
everything, and so on that noteworld.
Thank you for listening andwatching and, frank, I
appreciate you so much andeverything that you do.
Speaker 2 (30:05):
Thank you Everybody, have a blessed day.
Speaker 1 (30:07):
Thank you All right.
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