On this episode of the Apartments Operators Podcast we are joined by Stewart Beal to discuss how he plans to shift his strategies for the new real estate market of 2023, How he built a portfolio of over 3,000 multifamily units and how he created the infrastructure and the team to support this large operation!
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Welcome back everybody to the Apartments Operators podcast. My name is Joseph Golan. I’m your host, and today we have Derek. Derek is a mobile home park operator, and we’ve been venturing into mobile homes in the last few episodes.
Welcome Derek to the show. Yeah. Thanks Joseph. I appreciate you having me on. I’m excited. I love doing these things. I love giving value to people and hopefully I can help them either start their mobile home park investing career or real estate investing career. And yeah, I hope I can provide some value.
Fantastic. And for the audience, just so they’ll know you tell us a little bit about your portfolio, what you guys are doing, and how big is your portfolio, just so they’ll get to know. Yeah, so we have just about 2000 lots of mobile home parks, about 38 mobile home parks in the southeast. 21 of those are in the state of Florida where I reside.
And we bought our first, we acquired our first mobile home park in September, at the end of September of 2020. And so we grew extremely rapidly here in the last two. And it’s been crazy and we can talk a little bit about the pitfalls of that. So it’s great to grow fast, but it does not come with, without some growing pains and headaches.
And we specialize in value add mobile home parks. We come in and lift up the value of the property, paving the roads, et cetera. Cap, injecting our capital into the properties and, and bringing them up. Then, these properties aren’t, scraped for multi-family, which is more affordable housing that’s gone in the us.
So we really look to provide clean, safe, affordable housing for our resident. . Awesome. Wow. So that’s gonna be a very interesting conversation today cuz I got so many questions. So let’s get started with the very basics of mobile home parks. You can either own the lot or you can own the lots and some of the houses.
Or all the houses, right? What is your model? Are you guys just lots or are you guys doing the whole thing with the houses and everyth? Yeah, so that’s a great question. And so what we do is our goal is generally to get to all tenant owned homes. Meaning the tenants own the units. We just own the land.
Okay. But we actually will buy parks that where we own all the units. And there’s a lot of vacancy. There’s not many people living in these parks. So then we can actually sell those houses and create affordable housing there. But also we can actually then bring, everybody up to market lot rent then, which allows us to create a lot of value and.
I think in the last two years we brought on something like three or 400 houses of affordable housing that were abandoned or vacant that wouldn’t have been brought up had we not came in and injected our dollars into these properties. So that’s the general how we do it. So it’s a little backwards than what people do, but we like to buy them and we own them and then turn them in to where the tenants own the.
That’s fantastic. So out of your 2000 lots, give or take, how many of them are park owned and how many of them are already either tenant owned or in the process of. Being purchased from the park. Yeah, so I think around the portfolio, I was just looking the other day, we have around like a buck 75, a buck 85 homes that we don’t own, that we’re in the process of selling in one way, shape, or form now.
So I would say, 90% of the portfolio is 10 and owned. And I think here within the next six months to a year, we should have all those tenon. Oh yeah. No, that’s fantastic. That’s a great rate. And how many of them are financed by you guys? So we roughly yeah, so interestingly enough, like we don’t really underwrite the home sales value into our underwriting because we want to come in, we want to provide families with clean, safe, affordable housing.
So we’ll take a house that we could sell on the market for 15, 20, 25. and we’ll sell it for $5,000 to somebody. We’ll take a home that we could sell for 50,000 and we’ll sell it for 20,000. We really want to give people the opportunity to get affordable housing cuz there’s not a lot of it. But that’s one of our goals.
So we really don’t, underwrite the cost of the home in the, in our underwriting for the proper. . Interesting. That’s that’s an interesting approach. So let’s talk about the big questions that we always ask everybody. Third party or self-management. I self-management in mobile home parks, I know of some people that do it and I’m sure they do it well.
We’ve never used it. We actually purchased a property from Friday management and they did a relatively good job. But if you’re in this business, Like anybody who’s an operator, it’s these parks require attention. And I’m a bit of a control freak, so I like being able to control what’s going on in the properties.
So if you’re buying value add properties, Where you have to go in, you have to sell homes, you know that you have to do a lot of CapEx. You’re not gonna want third party management because you’re gonna wanna make sure that your hands are in there making that work. Because we made, a mistake where we didn’t really have third party management, but we had a manager that it’s turned into third party at some of our properties and it ended up being a disa.
It was a big learning experience. I’ll be honest, it ended up being a disaster for sure. But big deals, we fixed everything now and I think it’s better especially where you can have more control and then eventually you can pop out. Because some of our more seasoned properties that are a couple we’ve had for a couple of years now, you, nobody really needs to be there and there’s not much work required after they’re snowball.
Okay, so we’re gonna circle back to your operations in a minute, but we want details on the disaster, right? We pride ourself of being the podcast that doesn’t sugarcoat and doesn’t tell everybody it’s, oh look, it’s all rainbows and lollipops, right? So deet. Yeah, and I would just say if you do have a third party manager, you need to, you need to keep an eye on them.
It’s not gonna be completely hands off. It needs your attention to make sure the right things are being done. And, it’s super, super important because, you go in there and you realize, oh my gosh, we’ve hired all these people that we don’t even know that are on, the payroll that we’re paying and they’re doing, x, y, and Z stuff around the park.
And, you find out that people are, you wonder why people aren’t paying rent. And then you go talk to these people and they say, oh, we were paying so-and-so cash for rent for the last six. Yeah. Yeah. Stuff like that. And, with code enforcement and government, the municipalities not being attentive to their requests, not being attentive to violations.
And things and making sure that they’re handled in a timely manner can create a disaster, especially for a mobile home park because these municipalities and some of them that we’re in, we’re not in the middle of nowhere. We’re in, big, big MSAs in Florida. . And so these municipalities, they don’t make as much.
Look, we pay a lot of property taxes, but it’s not as much as a 300 unit apartment building would pay in that spot. And so they’re not favorable to us and in any way. And so if you get on their bad side, you can have so many things go wrong because these parks are old. They were built in the fifties and sixties.
The units are old. A code enforcement person at any time. Could come in there and write a thousand violations. Yeah. It’s just, cause it’s not up to building code of right now. So you get a guy that’s power hungry and he likes to have a little power. His chest is propped up a little bit.
He can come in there and ruin you and all that stems from poor management and not handling those things, correctly. Like we had permits that were supposed to be renewed that weren’t renewed. We had, fines that had built up. We had, I think at one park we had 120 code enforcement violations that we didn’t know about.
Yeah. Yeah, it’s, I it’s absolutely, and it doesn’t matter what asset class it is. Honestly, if you get in a pissing contest with the code enforcement, it’s not gonna end well for you. It doesn’t matter what you do. Doesn’t matter what you do. It’s and they know that they have all pretty much all power over you.
There’s really nothing you can do about it. Yep. We actually talked with an operator that had gotten into a pissing contest with the fire marshal and they just flat out shut them down. Like they forced full evacuation of the entire apartment. And it is you can’t, you just can’t do that.
Yeah, and I agree. And like we’ve dealt with stuff with the fire marshal too. Like other than the code enforcement stuff that happened, there was, because the code enforcement things weren’t answered and handled properly. They had then had the fire marshal out there and then they had, I felt like the entire city of Tampa out.
And, it’s you just have to pay attention to that stuff because the city could, I think, in theory, shut you down. We’ve got grandfathering and stuff and we could get attorneys and they could battle, but like from what we’ve been through with the city now, it’s man, I probably, if they really wanted to and they really wanted to fight us really hard, for whatever reason, you could probably get shut down.
And then this guy’s case where you’re telling me they , they did, they. Okay, cool. Let’s talk about how is it life as an operator for, in such a big portfolio of mobile home parks. So let’s start with a little bit of how the portfolio looks like. Do you guys, do you have 2000 units across how many parks?
So it’s 38 parks. Yes. Okay. So is it an average of about it’s smallers or do you have some large ones, some small ones. How does the mix look? Yeah, so we have a three, 300 unit property and that’s our largest, but the average around the portfolio is 50 lots. And so they’re generally small to medium size.
And we found that, most of the large operators and the REITs and the private equity companies, they aren’t going after these deals. And there’s still a lot of meat on the bone. It’s still a lot of value to be had. So we have found actually a lot of value in the smaller properties. . So it’s an average.
Actually, someone asked me this the other day and I did the math. It’s exactly about 50 lots on average per park. Yeah. And we’ve heard that from another or a few other guests on the multifamily side as well, is that it’s easier to operate and there’s more meat on the bone with the smallers 20, 30, 40, 50 units, apartment buildings than it is on the two 300.
So I always compare that to, if you need to take something and turn it around, it’s gonna be a lot easier to turn around a speedboat than it is to turn a tanker, right? Yeah. For you need a bigger radius. It takes longer time, you need more tools, more engines, right? So it’s just a lot easier to turn these things around, a lot faster to get to your capital.
Yeah, and too these parks they’re, and I’m sure multi-family is more aggregated and not as fragmented as mobile home park is, to my knowledge. But I think there’s still mom and pop operators that operate these, 10, 20, 30, 40, 50 unit apartment buildings.
But that’s who we’re generally. From mom and pop, they’ve owned the park for 40 years, 30 years, 50 years. They have no debt on the property. It’s just it makes them so much money that they don’t ever, they’re just like, okay, the money comes in, we’re not gonna do anything to the property.
And it’s like they’re getting literally 25% of the value out of it. And it’s just, some minor changes they could do, but they don’t wanna do the work either. Yeah. So it takes work what for. . Yeah, exactly. What course They don’t have investors that have to pay returns to you. Exactly.
Exactly. . So how does day-to-day look like, right? You go to the office, what does it look like, right? What do you do? How do you keep an eye on all those properties? How do you get reports? How, who does collections and so on and. Yeah, so we actually so my day-to-day is different every day.
I’ve never been really much of an office guy. I’m out and about, especially at the properties that are still in the turnaround phase. I like to be a little bit more hands-on just because of the experience we’ve had in the past in making sure that things are getting done properly. So some days I’m in the office.
I spent some time in the morning on emails communicating with our property managers. We have property managers that manage roughly one to 200 lots each. They’re our regional property managers and sometimes we’ll have an extra person on the ground, but like on the stabilized ones, we found that one property manager can run, almost 200 lots and even more in some cases depending on how stabilized, because our operat.
We have a corporate office that basically the managers, they take some calls, but not really, but all of any. Calls that you get for, random things. That’s another topic. It’s some of the calls that we’ve gotten from people, but that’s answered by someone in our corporate office who takes notes down, talks to them, and they’ll send it to the property manager if necessary.
But a lot of times that person can actually handle whatever, whatever the issue. And so it actually takes a lot of weight off of the property managers. And then we also have someone in the corporate office that does collections. And this guy, he does a fantastic job. When we had that issues with the other property manager our collections weren’t that great.
We brought him in and now we’re, I think I just checked for this month, we’re, 95% collected around the portfolio. So we’re you. Doing phenomenally there now. And so we also have another lady in the corporate office who handles permitting and, different things administrative things like that.
But generally we have everyone pay online. There’s no money orders, no checks, no nothing. Everyone pays online, which, it sounds like, okay, that’s a no-brainer. It’s 2022. In the mobile home park business, it. It’s a little bit more difficult of a task than you would initially think when some of these mom and pop owners.
like when I was doing deal the deals with these guys, I would go into their office at the first of the month and Joseph, I kid you not, they’ve got a stack of cash, , like stack of cash, one property. It was actually a set of three properties we bought, we were asking for proof of the income coming.
Okay. I get pictures on my phone of stacks of cash on the sixth of the month or something like, okay, here’s the proof. I’m like, really? Yeah. So it’s it’s very interesting. Yeah. We call those shoebox owners, right? Because you ask for a p and l, they give you a shoebox full of receipts. Yeah. Yeah.
I’ve never heard that term, but I’m going to I’m gonna start using that because that’s exactly what they are. I’ve got a a guy I’ve been working now, he’s a mom and pop guy. He developed this park. The dude’s 90 something years old and I was like, I’m just gonna bring you a duffle bag full of cash one day, and we’ll finally get this deal done.
And he’s oh, I already got enough of that
Yeah. How do you deal with maintenance? Do you have any maintenance? Because, you have about a hundred, you said 170, 180 houses that are still parked owned. So you gotta take care of those. . Yeah. And the interesting thing yes, there, there is some maintenance and I think, generally the Parkland homes yes, they have some maintenance and some of them are more of a headache than others, but it’s actually not as, as much as you would think.
So for example, some of these parks that we bought, like I had mentioned before they’re, they were developed in the fifties. The infrastructure is. Shoddy at best. In some places they have these old water lines, old sewer lines, they get clogged. Some of these properties were 50, 60, 70% vacant when we bought them.
And no one’s lived in those houses in forever. So when you put people in them, it puts strain on the infrastructure that wasn’t there before. And hadn’t been there in a while. So you’ve, Sewer clogs, you’ve got, water leaks. And so we have probably one or two maintenance people.
I think something to that effect every, four or 500 lots to assist with those water line breaks and things like that. But if it gets major, we’ve got some handyman services. We’ve we’ve got plumbing companies that come out. What we’ve learned is that, pay more to do the job right, don’t pay less.
And save a thousand bucks now cuz you’re gonna come back and Joe Smith, the plumber didn’t do a good job and you gotta do the work. And we’ve actually, we’ve talked about really eliminating maintenance and just using handyman companies and just using plumbing and companies and things so you don’t have to manage those people because it’s just one extra thing that the property managers have to deal.
Yeah. And hiring these days is very challenging, right? Oh yeah. But we went actually the other way around, so we decided that we were in a certain market that. getting qualified plumbers and qualified vendors was challenging. Like you say, Joe Smith comes in and he does a crappy job and then comes back and he still does a crappy job, and then you have to hire another company to fix his crappy job.
Yeah. And you end up paying and they all overcharge you. Yeah. So we ended up just buying a lot of equipment and training our own guys to handle anything. So the only time we would call a plumber is when you had to have a certified master plumber license to get a permit or to install a commercial grade water heater because you don’t have a warranty if you don’t have a master plumber license on the installation.
But everything else, like slab leaks and all that, we would take care of in-house with our own guys having commercial grade plumbing. And that I love that idea and we’ve experimented with that a little bit. But as you had mentioned before, it’s like it’s been it hasn’t been easy finding people that you can trust.
You hire the guy and he is doing that fine, and then one day he doesn’t show up and then he is got your snake and he’s got, every other tool that you bought it. You can’t win. I see you laughing cuz it sounds like you’ve been Sorry. Yeah I’m laughing. But we’ve all, we, I hear that from every operator.
I hear that from every vendor and every business owner in the last three years. It is it’s really hard to find higher and retain. Good talent. It’s just, yeah. Very hard. So how do you guys deal with that? How do you, because you still have people, you, whether it’s property management or ma or the collection guy or whoever picks up the phones or maintenance, how do you deal with hiring and retaining people?
Yeah, so we, this was one of the things we learned the hard way on and we tried to do this, cheaper and what the, consensus is in the mobile home park business. Hey, hire someone, pay ’em 500 bucks a month in free lot rent. It doesn’t work on a turnaround property or A property doesn’t need any attention, you can do that.
We were trying to hire cheap employees. It didn’t work. So we learned how we got quality property managers, dependable property managers, people that we can trust is to pay them more. So we pay a property manager more than probably, most mobile home park operators do. I would say, and that’s how we’ve gotten great talent in and we’ve had to pay for it.
So we’ve had to take a cut on our end, but it’s hiring talent and it’s probably saving us money in the long run because we can trust them. and they’re not doing, shady stuff cuz they’re only making 500 bucks a month and they’re trying to figure out how to make more money . That’s what we’ve learned, and especially in this environment and the way things are now, you have to pay someone well or what’s their incentive to c to come to work, so it’s Chick Filet is paying 18, $19 an.
Yeah. You gotta complete, and if you’re gonna pay 18 or 19 bucks an hour and you’re gonna have tenants yelling at you and you’re ha you’re going to have irrational arguments with tenants it’s can be a lot to deal with a lot of stress. You gotta be able to handle a little bit of pressure.
And if someone’s dude, that can just, swipe someone’s card to Chick-fil-A for the same amount, I’ll do that. Yep. Yeah. How do you guys or what’s on your menu for taking a property and doing a value add? So the obvious things are increasing rent or charging utilities which in your case, I’m not sure if you guys have that or not.
But what else? What are the creative ways you guys find that you can increase your income? And then we’ll follow up with the same question about decreasing. Yeah, so it’s really, the things you said increasing rents billing back for water and sewer billing, back trash. We put in individual meters on the homes, and that’s really what we’ve done from an income perspective because these properties that we’ve bought, for example, you know these properties that we bought in Tampa, I think I mentioned the three package earlier. So these properties were I think the prior owner, I think he was pulling in $25,000 a month and it was 120 lots. And that’s if everybody was paying. And I think we have those properties pulling in somewhere to 90, 95,000 now.
And that’s not even from that. Crazy. It’s just getting people into the vacant units, billing back for water and sewer. Which they should, because people in this park, they’d have a pool outside, they fill it up with water and the owners fitting the bill, they got a sprinkler outside or something crazy.
And so we’ve really kept it simple as far as adding value, filling in vacant lots, which we’ve done some of, but it’s really selling these vacant units and getting good families in them that are going to. And that’s really how we’ve increased the value of these things. Okay, that’s great.
How about reducing expenses? . Yeah. And so some of the same stuff, billing back for water and sewer, really looking at economies of scale, having that one regional property manager handle multiple parks. Buying and aggregating parks in areas so you can get those economies of scale.
Because if I have a, a 60 lot park that’s, out in the middle of nowhere, I’ve gotta hire a separate property manager. But if we’ve got 10 properties in an area, , that are 50 lots each. We can hire one property manager with maybe an assistant or something and get that economy of scale.
So that in turn reduces expenses. Also, if we’ve have companies and treatment plan operators, we’ve looked at, aggregating those guys to more properties to reduce some expenses as well. But the typical billback stuff , that’s helped. And the wa and we actually have our office monitors the water leaks on a daily basis.
We get a report every day, Hey, this unit has, they’ve used, however many thousand gallons. It seems irregular. And so then we can send that to our maintenance crew that’s over those properties and they can go check that because the people, they don’t want, they’re like, they don’t want to have to.
A $400 water bill, but if they have a lease in their house, they’re gonna have to pay a $400 water bill. Typically we work with them and and so unfortunately in the affordable housing business, these people may not even have the money to do it. And so eventually, like we have to end up fitting the bill because we understand that, things are tough.
We’re in the affordable housing business. We’re here to help people. And , if we don’t notify them of that leak, we’re typically gonna have to pay for it anyways. Yeah. And so we’ve even actually in many instances when we didn’t have to, we could just say, Hey, this leak is on you. This problem in your house is on you.
You own the house, which in some cases the request is irrational and you have to do that. But in the case of something like water, we’ll be more than happy to send our maintenance guy in there to fix it. and to help our tenants out because we know at the end of the day we’re probably gonna get fit with the bill, but, and it also helps them, helps us.
Yeah so we were creating a habit of checking the meters every week and just keeping track of the meter to see which one goes haywire. . And just tracking the meters every week was a lot more efficient than waiting for the bill because the bill comes in about a month and a half too late.
Yeah. Yeah. So if you’re waiting for the bill you are already losing bleeding money, right? For a month and a half at least a month and a half. So that’s really where we got into the habit of just sending our maintenance guys to read the meters, once a. Yeah. Do you guys have digital meters or they like analog where they have to go read ’em?
Mix and match. So the digital meters only came in last year and a half or so? Yeah. But we still have have one property that has one main meter, which is digital, but each and every unit has its own separate submeter and those are analog. Okay. So those actually somebody has to go and read them.
Yeah. Yeah. So you mentioned earlier some lessons about growing too fast. What can you. . Yeah. And I think, look, I, I’m like a go big kind of guy, so it even pains me to say some of this, , I’ll be honest with you, if you’re gonna go fast, you need to make sure that you have the infrastructure, the pro infrastructure, I mean by employees, the staff, the trustworthy staff to help you, the systems and processes in place.
Because we bought, 20 turnaround properties in 2020. Okay. And so like we would’ve been really busy if we would’ve bought like a quarter of those, we would’ve still been like crazy in getting these things turned around. And so I would just say that’s a lesson learned. Like you can, and this pains me to say it like you can have too many projects going on.
You’re like, there’s no question. You can have too many projects going on, especially if you don’t have the quality staff that’s trained, that’s honest, that’s trustworthy to help you handle that. It can be tough. And so that’s one big lesson learned. And another one is one thing I mentioned earlier.
Don’t go cheap on stuff. If you’re gonna hire, Joe, Joe Smith, the plumber here, you just need to hire the right. Hire the right guy at first because you’re gonna end up spending money in the long run. It may work for a little bit, but, pay the extra couple thousand dollars and make sure it is done right.
Make sure they’re pulling permits, make sure they’re a licensed contractor. And I know when you’re in it, it’s oh my God, I don’t wanna spend $5,000 on that. This guy, Fred over here in the park said he can do it for 1500. It sounds so great. It’s like you’re winning. But actually in the long run, if he screws it up and then you end up having to pay the guy $5,000 anyways, so you actually end up paying, $6,500.
So you just I would say that do things right the first time, hire the right people, and then, pay attention to your operations. And I know there’s people out there that if you’re operating. Eventually, I’ll have someone in my place to where they can handle a lot of this, day-to-day stuff, and we’re getting to that point.
But like you, you have to pay attention to it, to a certain degree, and it becomes passive. At some point, and I think if you’re, you’re in the business and you want to get like the big returns from real estate, the big multiples, you have to be, in the general partnership. And you can be an lp, your capital, your multiple of capital isn’t gonna be as high as someone that’s in the general partnership.
But you can do. But don’t get into the operations business and thinking it’s just a walk in the park, like you’re dealing with people here and they’re gonna do stupid stuff. They’re, you’re gonna evict someone that hasn’t paid for 12 months, they’re gonna call code enforcement and then they’re gonna cause you a lot of problems.
They never called before, but until they get evicted. I’m sure you’ve had , I’m sure you’ve had that before. But yeah, and I would just, be conscious of who you’re hiring too. Make sure you do solid background checks. Make sure you ask great questions, make sure you call references and make sure you’re hiring someone that you know is honest and trustworthy.
And quite honestly, it’s tough to get that if you’re trying to pay 12 bucks an hour or 15 bucks an hour. Now it’s just , it’s just harder, since 2020 it’s made that although the minimum wage didn’t go to $15 an hour, it essentially did , it tacitly did, everybody knows you at least gotta pay someone 15 bucks an hour now, at least.
And I would say it’s even more than that now to get quality. And unless, I could be off and maybe I just got unlucky with people, but no, you’re not you’re in, you’re 15. Sounds low. Honestly for a quality person. It’s just that I feel that it’s less of an inflation thing and more of a.
generational thing. It feels like people just gave up. Yeah. And they don’t have any dreams or passion or drive. So I talk to a lot of residents and they’ll go, yeah I, I don’t have a job. So it’s just like, how do you pay rent? How do you pay your bills? I do a little DoorDash and a little Uber and an occasional shift here and there, and I have enough to pay my bills.
Oh, I. And it’s like for people like you and me and our listeners that are trying to invest and grow and buy it, it sounds so weird, but yeah, I see that so often that it’s a real problem. . Yeah. Yeah. And I agree completely and I think it’s, it’s a mentality thing.
It’s a mindset thing. I can go on and on about this. With, movies and TV and, people have just been taught really the wrong things about money, the wrong things about investing. And I think it’s just. , know, people have been led this way, unfortunately.
And if you don’t really have that drive and you don’t want to do something better for yourself you won’t. And I think if people have grown up and tough settings and I, my family wasn’t wealthy by, by any means, but unfortunately that’s all people.
They know like just getting by is normal. And then the media portrays guys like you and me as evil guys that want to go out and do something. They want to create, they wanna help people. They wanna. Because a lot of people just don’t have goals. They don’t, I don’t think they think big enough.
They think about, getting themselves through. They don’t think about, I have charities that I’m passionate about. I have my family, I have my close family. That’s a motivator for me. I wanna donate to charities. I wanna, help people. I want to make a difference in, in the world and in people’s.
And I just, don’t think people can see pass sometimes okay, I need to pay my bills that this month and that’s it. Yeah. Yeah. I agree. So do you guys do any events or cuz you know, at the apartment industry we have to worry about retention, right? In your world, if they own the house retention is built in cuz it’s gonna cost them a lot of money to take that house and move it somewhere.
But is there any retention related activities that you guys are doing other than just good customer service? Yeah. And so we’ve actually, since we’ve gotten, out of the weeds a little bit with some of the turnarounds on these things, so one of our properties, we had a Thanksgiving picnic where we had like the inflatable slide out there.
We had face painting there, we had food, we had prizes. There was like a DJ out there. And so we’ve done that. We have done a c. Same thing actually two weekends ago at one of our properties. So we’re actually getting into doing more things like that. We had a flower planting day where we bought, 500 bucks worth of, nice flowers and plants from Lowe’s or Home Depot.
We dropped them off at the property and, allows, Plant in front of their house makes it, it’s good for us. It looks great. It’s good for the residents, it’s good for morale and, it doesn’t cost a lot of money, but it goes, a, a long way. Yep. Makes them part of ownership.
That’s what we wanna see. Absolutely. Okay we’re recording this episode at the end of 2022 and everybody is hovering around and worried and thinking and talking about. How’s 2023 gonna look like? Inflation is still running wild. I might stop growth in the last couple of months, but it’s still pretty high.
Interest rates are very high these days, right? If you’re looking at a small bank loan, you’re in the 7% range, a seven and half percent range. If you look at Fannie Freddy, you are almost at six. What is your outlook? What do you guys see? What are your plans for 2023? Are you still buying?
Are you holding? Are you waiting to see what’s going on? Are you selling? What’s your outlook? Yeah many different ways. We’re yes, we’re looking at buying, I’ve made a couple offers on deals, but, the strike zone at the beginning of, 20 this year was huge.
And now it’s smaller, so it doesn’t mean you can’t do a deal. The deal just has to make sense. And, taken into account a lot of our properties are financed by, local banks where you’re getting in that, I just got talked to one of our bankers the other day and they’re, seven and a quarter Yeah.
Is basically where they’re at now. And they’ll do, they’ll, they’ll loan money. They’re in the business of loaning money, they’re just gonna take less risk and the deal has to be more solid than, the bank would literally take anything. Like at the beginning of this year, not anything, but yeah.
They weren’t, looking through deals with a fine tooth comb. So I think there’ll be deals out there. The interesting thing, Joseph, is I’ve seen in 21 in the beginning of this year, if you tried to negotiate seller financing with park owner. No way. No. . But now, like every deal that I’ve been working on now, it’s seller financing options.
Yeah. And so I think it’s gonna get it’s gonna get more difficult to execute some of those deals because of what, whatever reason. Higher rates and things and, capital, it’s interesting one of my partners was talking about, and I’ve heard people talk about, capital’s. , people are restraining from investing and taking risks, but I honestly see the opposite because the people I’ve talked to, they’re like, inflation.
I don’t want my money sitting in the bank. Yep. If you can pay me an 8% pre, and over that, you’re gonna gimme 70 30 or 60 40, whatever the deal is like, , that’s good for people because their money’s dying in the bank now. . And so I, I see it. I think there’s gonna be some opportunities, and I don’t think we’ll see it for the next two or three years, but there will be some life-changing deals.
There will be some people that get in trouble. If you bought, let’s say you bought an asset, 3, 4, 5 years ago and your loans come and do now and it’s gonna hurt. It’s gonna hurt. It’s gonna hurt. Yep. And maybe because of rent growth, you were able to get out of it, but. Maybe not.
And so it’s gonna be interesting. I think there’s gonna be some opportunities we’re looking to buy. But we’re also being more, disciplined with what we buy. If we find a, a treatment plant or a septic system that needs, it’s all the, and it needs work, in January we’ve just been like, buy it, if it breaks, we’ll, we’ll figure it out.
That would probably kill a deal now versus back in, in January. Yeah, that makes total sense. So one question I’d like to ask everybody on the show is if you could go back five, 10 years ago and talk to a younger self, right? What advice would you give yourself? . I would give myself the advice of getting into this business then because I was in the insurance business and granted, look, I learned a lot of things about leadership, a lot of things about sales that helped me in this business actually, and the acquisitions business too.
But I would say get in the business. Get in this business. If you’re looking to get in this business, get in it now and start building equity now, and you’re not gonna own the whole deal. You’re never gonna own the whole deal because the bank is gonna own, yeah, you’re not paying cash. So the bank’s gonna own a portion deal.
You’re never gonna own the whole deal. Okay? So don’t worry about not having any money and just get into the game. And there’s many different ways that you can do that. But get into the game and start building equity in different deals. Do the hard work, get in grind, and do the operations.
Go hand out the notices, go knock on the doors for equity, and then you build that up over time and then you can step out of that. But I was in the business for nine years. Nine 10 years that I didn’t have any, I wasn’t building any equity in, I was making good. But I was building no equity in it. So when I got out of it, I couldn’t sell it like it was the insurance business.
So like I still get renewals and stuff from that, which is fine, but in that particular business, I couldn’t sell it. So even if it’s not real estate, get into something where you’re building your own equity. And I know people say that entrepreneurship is risky, but no, I think the opposite is more risky.
If you’re gonna go work at a job and make 40 grand a year, that is the riskiest thing that you can do. Because it’s, you’re susceptible to things happening. And I guess you could say you are as an entrepreneur, but then you just rely on yourself and your skills and your confidence and your certainty. And me personally, I would rely on that more than, someone else like that you’re working for or whatnot.
So that’s what I would say. I, I hope that I think that made sense. Yeah. No, it makes total sense. It really does. It’s I saw a tweet thread, a tutor thread the other day that some influencer, right? And that’s a lot of the problem today is people just look at people that have a following and they don’t vet.
They just, you just got X amount of followers. So whatever he says must be true. And a lot of the time it’s not. So I saw Twitter third the other day. It goes, go to work. Be good at your job. Put maximize your Roth ira, which is $6,000 a year. Go home, you’ll be fine. And he’s really?
6K a year? First of all, let’s start with 55% of Americans have less than $10,000 in their retirement account. So if you maximize your Roth ira, you are better off than 55% of Americans. But in today’s world, with the way rates that prices keep going up, I don’t think six K year is gonna be doing anything much.
By the time you get ready to. Yeah, no, you’re getting killed. And that goes to what you just said, that information being, disseminated on the public is part of the problem. And what you said, people think, go to school, get a job, invest in the 401k, or go to college too.
That’s the other thing. And then you’re gonna be fine. And it’s not the case anymore. And I think a lot of people have to do some confronting on that and look at that. , I’m going to school. Is that the right thing to do? No. Am I investing, I’m gonna put all my money into this 401k that I can’t touch until I’m, what is it?
Whatever it is, 60. I can’t touch it, but Wall Street can invest it and make money off of it while it’s in there. Yeah don’t get me on my soapbox around the 401k. That’s just a scam. Total. The 401k is you betting against. It’s just absolutely doing betting against yourself. If you’re 21, just got outta college, right?
You’re earning, I don’t know, 60, 70, $80,000, a hundred thousand dollars a year that you have a low tax bracket, right? So you’re putting your tax deferred money now at a low tax bracket. So when you get to retirement and you’ll be at a higher tax bracket, you’re gonna pay the. That makes no sense.
It makes no sense. Yeah, it makes no sense. And I’ve talked to even family members of mine that have, they grew up with that mentality and I don’t blame them for it. And so they all, they thought I was crazy. And initially, and, rightfully so going against the grain, but I’ve gotten, people to invest and I’m like,
I’m gonna give you some money outta my 401k. How much should we give all of it? He’s not doing anything in there. Like I’m putting all of my look at this. Look how much money that I’ve put into these deals. So it’s not like I’m just telling you something I’m not doing, but do all of it.
Yeah. These deals are, they’re good deals. We’re not buying stupid stuff. But, like we always tell our investors the only reason we take investors is because we run out of money to invest ourselves. Exactly. So we’re, my partner and I, were always the biggest investor in every deal with.
Absolutely. Absolutely. Yeah. And that’s, that’s great too because like you are showing that, and even people who don’t know a lot about real estate, it’s look, this is how much I’m putting into this deal hey we trust you. We’ll we, we’ll go in with you. And . love getting investors because it helps them, especially people that don’t know how to do real estate deals, because it’s a difference.
It’s a heavy transaction. There’s a lot of moving parts and things. , but you actually get to help them to where they can actually still create wealth. You could be an LP investor and keep rolling your money in deals and become quite wealthy and do really well for yourself. And plus you have an.
You can go touch, you can go kiss, you can just go look at it, right? Your 401k, it’s like this ethereal thing that this nebulous thing that’s like, where is it? What is it in? There’s 50,000 things I’m invested in. I’m diversified, and that’s a whole nother topic. Unless you’ve got like a billion dollars liquid.
You don’t need to diversify. Like you got a billion. The guy that has that money, Warren Buffet says diversification is only required when you dunno what you’re doing. There you go. There you go. And that’s totally true. That is totally true. 100%. Yeah. So I’m gonna be conscious of your time. If our investors or our listeners wants to get in touch with you, see more of what you’re doing, maybe invest with you guys what’s the best way to reach out to you, and obviously we’ll put all the links in the show notes.
Yeah, so just reach out to me via email. It’s Derek Vickers, 8 85 gmail.com. You can catch me on Instagram, Derek Vickers 8 85 and TikTok, Derek Vickers, 8 85. Facebook, I’m always posting videos about out in the parks and. Crazy things that are happening in the parks and just really tips on entrepreneurship.
And I just I have fun with it and I ba recently got back on the social media about three months ago after a two year dark period while we were buying all this stuff. And then I got this realization. I’m like, oh my gosh. Like all these lessons I’ve learned all these times, I fell on my face, I can.
Other people that are getting into real estate or whatever can help them, avoid some of those pitfalls. I’m back on there now. Follow me, I’d love to hear from you via email too. I’d love to help you. If you have any questions, you have a deal you want me to look at, you wanna partner on a deal, just, reach out for sure.
Awesome. Thank you so much Derek, for coming on the show. It’s been very interesting. I appreciate you coming. Yeah, Joseph. I. Appreciate that and we will talk again soon. It’s been fun. Sounds great. And for you, the listeners, thank you so much for listening to our podcast. If you like and subscribe, that will be very helpful.
You can give us a review, one stars, five stars, whatever you feel, we are worth just go to iTunes or wherever you consume your podcast and we’ll see you soon in the next episode.