Abraham Anderson went to our Boot Camp in 2019 with nothing more than the vision of investing in mobile home parks. Less than two years later, he is the 100th largest owner of mobile home parks in the U.S. with 11 parks totaling 632 lots. So how did he do it? That’s the subject of this MHU Lecture Series Event titled “From Zero to 100”. We’re going to discuss with Abraham the granular details of each of the 11 parks he’s purchased including how he found them, how he financed them, how he improved them and what his lessons learned are. We’re also going to review his future plans and macro thoughts on the state of the mobile home park industry.
If you have ever thought about buying mobile home parks then you will enjoy hearing the real-life experiences of someone who started with zero and now is the 100th largest owner in the U.S.
If you want to learn skills that Abraham used to succeed with his parks, attend our Virtual Mobile Home Park Investor's Boot Camp. You’ll learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks. The course is taught by Frank Rolfe who, with his partner Dave Reynolds, is one of the largest owners of mobile home parks in the U.S. To learn more Click Here or call (855) 879-2738.
From Zero To 100 With Abraham Anderson - Transcript
Frank Rolfe: Welcome to our MHU Lecture Series Event. This is Frank Rolfe. We're very excited for today's event, which is titled Zero To 100. It's the real-life story of Abraham Anderson who came to our bootcamp back in 2019. He's now purchased 11 properties and just became the 100th largest owner of mobile home parks in the United States, which means, in fact, in the world, since we have all the mobile home parks virtually. Abraham, are you here with us?
Abraham Anderson:
I am, Frank. I'm glad to be here.
Frank Rolfe:
Great. Well, we're excited to have you because nobody in the world knows more about buying and operating parks than those who have done it, and you've done it no less than 11 times now. I thought we would start off with just a quick overview of the Abraham story, so like what made you interested in this, what were your initial stereotypes on it, that kind of stuff. Where were you when you first had the idea to maybe buy a mobile home park?
Abraham Anderson:
Sure. I started out in the apartment space, and my first deal ever was about six years ago. I did a new construction of four town homes. Moved away from where I was at in Tennessee to a different part. I sold those, then I bought 21 apartments. They were okay. I made money. I still own those apartments. But the biggest headache for me was two things, the turnover and the repair and maintenance. I mean, it didn't matter how hard I try, I got it full, and then I had someone leave, and I'd sell another one out. And then the repair and maintenance was just killing me.
Abraham Anderson:
So, over the years, I listen to all the podcasts, including yours, and I would hear about different forms of investing. And I always would hear about parks every once in a while, and my first reaction's, "I don't want to buy a trailer park. That's so trashy. Those things, you want to stay away from those." And so, that was my gut reaction for quite a while. Then around the beginning of 2018, it just hit me like a ton of bricks. I talked to another operator and was listening to him talk about the numbers. And I was like, "Wow, this is really... I'm in investing to make money. Why am I not doing this?"
Abraham Anderson:
I went down the rabbit hole, listened to a bunch of different podcasts, found out about you, attended your bootcamp. Actually, before I even ever bought a park or even did the bootcamp, I found another guy that was doing parks. I managed one of his parks for him for about six months, just to learn what he was doing. I was blown away at how much easier it was to manage a park than to manage apartments. You would think just intuitively it'd be the opposite. So that's how I got into it, was just from learning and then from attending the bootcamp.
Frank Rolfe:
Was there a moment in the early days when you were doing it that you thought, "What have I done?" Did you ever have one of those days where you're like, "Man, it was just a bad idea." Any of those moments or was pretty much fairly easy as you went?
Abraham Anderson:
My only thing was why wasn't I doing this six years ago?
Frank Rolfe:
That was my moment. It was more of a issue.
Abraham Anderson:
Yes. Yeah.
Frank Rolfe:
Than a issue. Okay. All right.
Abraham Anderson:
Yes. Absolutely.
Frank Rolfe:
Okay. Let's jump into the deals. Deal number one, how did you find it? How did you finance it? Just some overall details on that.
Abraham Anderson:
Sure, sure. Because I really started looking for parks towards the middle to the end of 2018, it wasn't until almost a year later in May of 2019 I closed my first park. The first one, it was two parks, same seller. I went to a lot of real-estate networking events and met a guy there who had bought some parks from this guy that was liquidating all his real estate. Not some parks. He bought some apartments, and he didn't want the parks. So he ended up referring me to the guy. I paid that guy a wholesale fee.
Abraham Anderson:
It was two smaller parks, total of it was about 45 lots. The how I financed it was I got a bank loan. That was one of the only ones I've just gotten a normal bank loan. Most of the other ones, I've gotten some form of seller financing on. But I got a bank loan, 20% down. The lessons learned on those two parks was a young person can also be a mom and pop. The guy that purchased it from, he's a business guy. He bought a bunch of real estate. He got some parks in with the portfolio, ended up selling it all. Just very mismanaged, lots of vacancy.
Abraham Anderson:
Took me no time at all to get the park fulled up. Sold off the park-owned homes. That was a big lesson there, is younger people, they can also be not very professional managers and you need to be talking with everyone, including going to networking events, to try to find deals.
Frank Rolfe:
Abraham, how long had the guy owned that park?
Abraham Anderson:
He owned it I think it was about five years. He bought just a ton of real estate. And these two parks, he got by buying a portfolio from another guy. And so, I'm not sure how many times that happened because I think he bought from the same thing. They were just passed around like the ugly stepchild. Then no one seemed to want them. And so, I got a fairly good deal on them and was able to refinance those in less than a year, just from a combination of selling off the vacant homes, converting all the park-owned to tenant-owned homes, raising the rent, cutting expenses.
Abraham Anderson:
It was crazy how, and this was in a pretty good area, but how mismanaged this park was, just from simple things. Stuff you teach, I was able to really get this thing turned around.
Frank Rolfe:
In retrospect, what was the guy that you bought it from's... What was his biggest mistake? What had he done wrong to ruin the potential value on it?
Abraham Anderson:
His biggest mistake, it was two-fold. He was in a partnership with three other people. They were out of state. So he was doing all the work and this was not his main business. He was a business guy. And so, this was just taking up a ton of his time. His other mistake was he actually had a property manager, but they didn't understand parks at all. Their fee structure was crazy. They were charging 30% and then doing all the repairs, and their doing all the repairs was doing none of the repairs. Just lack of oversight and I think he was in a bad partnership. So a combination of the two is what I think was some pain points for him, which led to him selling.
Frank Rolfe:
Got it. Okay. Well, tell us now about park number two. Where did that come from and how did you finance that one?
Abraham Anderson:
Park number two was weird, because situation I had, I knew about this park from building out a list and going and door-knocking the owners. This park, it was in a company and it was very secretive. I could never find the owner. I even went to the park once as a last resort to try to talk to the manager. He wouldn't give me any information. Well, sure enough, probably four months after that, the park gets listed.
Abraham Anderson:
I called the broker. I didn't believe him when he told me this, but he later showed them to me. They got 11 offers on the first day it was listed. And the reason he went with me was this guy was well-known broker in town. He was friends with a different park owner who I had went and talked to multiple times. This lady told the guy, "Abraham is aggressively looking for parks. So if you've got any parks, talk to Abraham."
Abraham Anderson:
So I reached out to him. The seller went with me. I was not even the highest offer and they went with me. On this deal, I got them to carry a second note, and then the bank financed 80%, seller financed 10%, and then I came up with 10% down. Then the same seller had another park nearby. So I bought both of those parks. Lessons learned on that was talked... For every avenue, brokers, sometimes they can't get good deals and unless the know who you are and they know that you own other parks, you're never going to hear from them.
Abraham Anderson:
Talk to other park owners and see if they know any other parks for sale, because it's really not a big world with parks. It's a small community, especially my mom and pops. They all seem to know each other. So get your name out there and just explore every option.
Frank Rolfe:
Now, on that one, Abraham, don't you also think... I know how you are because I've talked to you many times and done deal reviews and stuff. You're very enthusiastic, so that probably helped, because when you're enthusiastic, it sends a signal to the seller that you're going to make it happen. Right?
Abraham Anderson:
Yes.
Frank Rolfe:
If they had that many offers, clearly, if I was the broker or the seller, I'd be looking for the person who, when you hit that speed bump on due diligence or financing, can get around it, right?
Abraham Anderson:
Yes.
Frank Rolfe:
I think another lesson learned on that may just be your personality was just very enthusiastic. That too, to many brokers and sellers, that's a huge plus. I only say that for anybody who's thinking, "Oh, well, you know, I read some negotiating book and it says, 'Seem like you don't care, you get a better price.'" In that case, if you appeared any less than enthusiastic, you would never have got it, don't you think?
Abraham Anderson:
Oh, absolutely. That's one thing. It's so counterintuitive to what you hear. As you said, negotiating books, they say, "Oh, just play it cool. Act like you're not interested." Completely not true. They can sense enthusiasm. And a lot of times, you remind them of them when they were younger, and they want the park to go to someone that really wants in and wants to take care of it, because a lot of times, this is their biggest asset. And a lot of times, they built it themselves and that's their life, and that's 30 years of their life that they built and maintained, and they want to see it to go to a person, not to some company out of some coastal state. So show enthusiasm, and really getting in front of sellers, that was a big lesson from that. Also, that led to them carrying it-
Frank Rolfe:
Let me ask you [crosstalk 00:10:17]... Go ahead. Go ahead. I'm sorry.
Abraham Anderson:
As I said, that led to them carrying a note. If they didn't like me, they weren't comfortable with me, didn't think I was able to make it happen and comfortable, then they wouldn't have financed it. So that led to them financing it, part of it.
Frank Rolfe:
Right. Abraham, before we get too many more parks in, let's also define park number one and what you did to increase the net income and cash. What was this big item? Was it filling lots, raising rents, cutting costs, combination? Number one, what do you think it was?
Abraham Anderson:
It's now what I would consider my favorite turnarounds, which was a combination of raising rents, because that's the easiest. Costs you a postage stamp to raise the rent. It was completely full. Ballparks were full. I believe altogether, there was probably seven vacant mobile homes that were in various stages of being ready to sell. It didn't take much at all, a couple thousand dollars a home, getting them ready to go. It was getting those filled, raising the rents, selling off the rental homes to the residents.
Abraham Anderson:
What that let us do is, let's say they were renting the home for 500. Well, we sell them the home, and then we give their lot rent to 350, which is the market lot rent, versus the other people need to cover there at 160. We take them to maybe 210. And so, I mean, the combination of doing those items, I mean, within a period of a few months, got it a lot better numbers-wise than it was before we took over.
Frank Rolfe:
Got you. Park number two, is that park number two and three, or are we now at park four? Number one, was it one park or two parks?
Abraham Anderson:
Park one and two had two parks. And then the next set was also two parks, same seller.
Frank Rolfe:
Okay. So now we're through four parks.
Abraham Anderson:
Yes.
Frank Rolfe:
And the biggest bulk of what's going on here is you're buying them, raising rents, filling homes. Any big cost-cutting stories in those or...
Abraham Anderson:
Yeah. Well, like I said, the first couple parks, the guy that managed the company was charging 30%, and his whole pitch was, "Hey, well, it's 30%, but we're going to do all the repairs." Then everything was to do none of the repairs. But this guy is making no money. Rents are low. Everyone's unhappy except the management company, I guess. With all of these, I'm largely self-managing. I have similar to a [inaudible 00:12:43] system like we used to have where we have someone in the park that is your eyes and ears. They get free lot rent and maybe $10 a month for lots. But they help out.
Abraham Anderson:
And so, implementing that and then overseeing them, and just making sure collections come in and things get addressed when there are repairs we need to do. That was a big thing as well, just implementing some professional management and actually addressing tenant issues as they come up, and cleaning up the park. I mean, the first couple parks, we found almost a hundred tires, just all throughout the park, hidden in different areas, behind trees and stuff, and then it's ditched.
Abraham Anderson:
And so, getting rid of all those, cleaning up the debris, getting out dumpsters, just making it look like a community. It's really amazing once you sell off park-owned homes. I mean, instantly they take pride of ownership. We sold one to this family, and as soon as we signed the papers and they got the title, they were out there digging up the yard and planting flowers, and pulling out weeds. It was just really such a cool moment to see in action, the pride of ownership.
Frank Rolfe:
Yep. I agree. All right. Let's move to park number five. I think we're in park five now.
Abraham Anderson:
Yeah.
Frank Rolfe:
Where did that come from? How did you finance that one? What were your lessons learned? And then any other details you have on it.
Abraham Anderson:
Yeah. This one was cold calling, and it was a no-money-down deal, 100% seller finance. Very strange setup. It was, like I said, no money down. All the payments are straight to principal for about 13 years and then the park is paid off. The reason why is this park was in pretty bad shape. It had utility issues, a lot of park-owned homes, just pretty rough, an older park. It was hard to turn down something that's no money down.
Abraham Anderson:
The lessons learned on this one, so it was an older guy. He was getting a lot of phone calls, but no one wanted to come and see him. I mean, I was the first person, out of the, I don't know how many dozens, if not hundreds of phone calls he's gotten over the years, that went out and saw him, visited him in his house. He lived a couple hours away from where I was at. It took a period of about six months of me going to see him at least twice a month before he finally sold it to me. I mean, that's what, 12 visits, two hours from my house. But, I mean, I just kept going there, building that relationship, showing them I had what it takes to get the park turned around, and that's how that deal came about.
Frank Rolfe:
Okay. On that deal, what were your key lessons learned on that one?
Abraham Anderson:
On that one, I would say really it's all about the relationship for some of these mom and pops. I was thinking about this just recently. All the sellers I've purchased from, most of them are fairly well off. It's not really that they need the money. They usually just want to simplify their life. They're getting older, they want to travel, and this is a headache for them. They just want to make sure they're getting a fair price. Not necessarily the top of the market.
Abraham Anderson:
Like I said before, I've gotten some parks where I wasn't even the highest offer on it, because they just liked me and they liked what I was wanting to do with the park. Just a matter of building that relationship and accommodating the seller, and then doing what he wanted.
Frank Rolfe:
Got you. All right. Well, let's move on to the new park number six. How did you find that one? How'd you finance it? Give us some details on that and lessons learned sure.
Abraham Anderson:
Sure. This one was from door-knocking. I initially tried to call the owner, never gotten them on the phone. I had a pretty good indication that I had their correct number, but they would just never answer. So I thought, "Well, I'll just take out the trip." Same thing, couple hours away. Drove out to their house, knocked on the door. They came to the door. Really friendly. It's like it's those people that have a "no soliciting" sign, and those usually the most easy people to talk to. I guess, the person knew if they got on the phone, they would just end up selling to whoever they talked to.
Abraham Anderson:
But got in front of them. It was interesting about this was another person had talked to them from out of state and made them a pretty good offer, but they didn't like that they were out of state. And also, this was very strange because in this situation, the seller wanted to finance the whole thing and the other person wanted to pay all cash. They raised money and I guess they had a 1031 or something and they wanted to give them all cash. The seller didn't need the money. And so, they wanted to finance it.
Abraham Anderson:
With that one, we ended up getting it under contract at the same price the other person offered, 30-year, fully amortized, 4% with a 10% down. So really an awesome deal. It was just a matter of same thing, following up, building relationship with them, and building rapport with them, that I'm a fairly local guy, was the same state, and I'm not going to buy the park and go flip it to someone else. I'm going to really take care of this and make it better than it was when I took it over.
Frank Rolfe:
Yeah, that's right. On that one, what were your main plans to improve the net income on that park?
Abraham Anderson:
That one, it had quite a bit of vacancy. Had a few vacant homes. But that was really largely turnkey in the sense of there wasn't a lot of homes to unload. It was some deferred maintenance, but it's more from the roads, installed some signage, fencing, things like that. And then, also, really the biggest thing that comes to mind, there was several very shady characters in the park. And I think that's why they ended up selling, was they had so much issues with probably just five out of 70 or so occupied out of almost a hundred.
Abraham Anderson:
Those were just causing them so much grief. That was one of the reasons they wanted to sell. So took it over. It took a few months, but I got them out. And, I mean, the park went from police going in there every other night to them never even coming there. The police department actually spoke to them recently and they said, "We're really impressed about how far it has gotten over here. We used to be in here all the time and now we're never here." So that made me feel good to really clean up a park and get rid of some shady characters.
Abraham Anderson:
That's something that's hard to know going in. I mean, they seem like they're all paying, basically. Oh yeah, they're mostly fine. But you don't know you've got potentially five drug dealers in the park and so it can really take over.
Frank Rolfe:
Abraham, what would you tell people, if you have a drug dealer or drug dealers? What has been your strategy to resolve that situation?
Abraham Anderson:
If you have a good manager that lives in the park, that helps a lot, because they're your eyes and ears. I don't want to stay there all night and watch the cars coming in and out. They were there. They see suspicious activity, call the police. The police come up there. Eventually, they just get so sick of it that they'll just run off. And if they don't, you're at least building up the case against them where you can go to court and get them out, whether it's from evicting them for some violation, or if you can just not renew them and get them out.
Abraham Anderson:
Don't be afraid of it. And if you're scared, just get an attorney to represent you and have them go with your manager to remove the riff-raffs. I mean, every problem that you will run into, someone else has went through it before, and there's a solution to. You just need to find out what works and copy success. You don't have to reinvent the wheel.
Frank Rolfe:
Yeah. What Abraham just said, I had someone who called me earlier with a question on that exact item. There was someone in the park, they were getting reports of was they thought dealing drugs, [inaudible 00:20:31] stopping by on a regular procession, virtually all night. And I told them the mobile home park itself has no business getting into crime enforcement. That's for the police. That if they informed everybody who was concerned to just call 911, it would be solved.
Frank Rolfe:
But the problem was the residents weren't calling 911, they were calling the manager. And that's not what you need. If many residents call, the police will take action because, not only their whole job is crime fighting, but on top of that, the squeaky wheel gets the grease. That's why mobile home parks, to me, traditionally, are not crime havens, is you've got at any given moment 50 witnesses looking out of windows in every possible direction. I mean, it's the dumbest place ever if you're a criminal. I don't think anyone who's a good criminal would ever be in a mobile home park. It's terrible studying for that. There's so many eyes looking at the windows at all times. Let's move on to park number seven then. I think we're on seven, correct?
Abraham Anderson:
Yeah, seven and eight. This one was two parks also from the same seller. Okay. On these two, these took over a year. First met the guy in person, and then over a year of following up about once a month, seeing if he wanted to sell. First time I met him, I had to call him for a couple of months just to get him to meet me in person. I went to his house. I could never get him at his house. Left a card, no call. I finally got him on the phone and talked to him for a couple months. Finally got him to meet me at a restaurant.
Abraham Anderson:
He was not a serious fellow at the time. He threw out this ridiculously high number, and he knew it was crazy. I knew it was crazy. I knew he didn't want to sell. But, hey, I kept that relationship alive, "Hey, would it be okay to call you in a month?" "Sure." Call him up, "How are you doing? Are you ready to sell yet?" "No, I don't think so." Call him up next month. This went on for over a year. And so, one day I call him up and he said, "I think I'm ready to sell." And so, met him and bought two parks from him.
Abraham Anderson:
They were both 100% seller finance, meaning he was in first position. He financed, the whole thing was 15% down. I'd say the key lesson there was just following up. I could have stopped after the 11th month of calling him and I wouldn't have gotten anything, that I just kept on, and in a friendly way. And you ask, "Is it okay to call you? What time's good to call you? That way, when you call him up, you're not bugging him. Hey, he asked you to call at that time.
Abraham Anderson:
With these two parks, the biggest thing is lots of park-owned homes, and the way that I underwrote the deal is I assigned no value or very little value to the homes themselves. Everything was on the [inaudible 00:23:16]. And so, this is a play where we are selling off the mobile homes, and then also in rent credit, or selling for cash vacant homes to fill the park. It's really crazy to me because one of the parks, it was over a hundred lots, there was only about 49 or so occupied when I took it over, and this has only been about four or five months ago. We've already gotten about 59 occupied.
Abraham Anderson:
We had three homes move in, sold off several other ones. I mean, there was a ton of demand, but I mean, he was just an older guy, got burnt out on it, and then just didn't have the energy to hustle [inaudible 00:23:53] and get lots filled. There's a lot of upside with this. Of course, filling lots is not my favorite strategy, but really nice park city utilities. And so, I was willing to put in the work to get them up to where they need to be.
Frank Rolfe:
These homes you're bringing in, are these new homes, used homes? Are you financing through 21st or another group, or how are you doing that?
Abraham Anderson:
This was actually three people that brought in homes to live in them, so that was awesome.
Frank Rolfe:
This is the [inaudible 00:24:19], so you didn't have to do anything.
Abraham Anderson:
Correct. Correct.
Frank Rolfe:
That was very [crosstalk 00:24:23]-
Abraham Anderson:
One of them was Lonnie dealer. That's not my favorite thing, but they're some form selling it to the person they're renting it to. The other ones were people living in the home. As far as with the CASH program, I just got my license, dealer's license, and it took several months longer due to COVID. And so, I'm finally just waiting for that from the state so I can start selling off some of these other homes, because I've got right now, probably 130 really nice '90s or 2000s mobile homes I'm ready to unload. I'm just waiting for me to get the license to start selling these off.
Frank Rolfe:
Got you. Okay. Tell us about park number nine.
Abraham Anderson:
Park number nine, this is nine and 10. This is very interesting, these two, because my family had known the owners for probably over 20 years. When I was a child, my parents owned a home in one of these parks, and we used to visit... It was like our vacation home. We'd come up a weekend a month and stay in this town. I loved that. That was so great. Growing up, I never had any stigma to parks. I guess, as I got into the adult years, I started being indoctrinated with how terrible parks are.
Abraham Anderson:
But I remember, just as a kid, these parks were great, and some of my best memories are living in that park over on the weekend. I had approached this guy when I first started looking at parks and he didn't want to sell at the time. And then, out of the blue, my mother wakes up one night and said she had a dream about the parks. She's pretty religious. And she goes and talks to the owner the next day, and he said he woke up that night as well at the same time as she did. And so she really-
Frank Rolfe:
Okay. That's scary, Abraham, but go ahead.
Abraham Anderson:
Yeah. It was pretty freaky. But I mean, that's what it took for him to sell to... It was completely legit. My mom told me, she'd called me, say, "I had a dream. I woke up at 5:00 AM. I had a dream about the parks and I need to go speak with him." I said, "Well, great. See if he wants to sell." And so, we ended up getting... I mean, these are A-class parks, completely full. It was the strangest thing because also these were mostly rental. But going to the parks, you would never know it. I mean, it was immaculate.
Abraham Anderson:
They built the parks themselves. I mean, just immaculate. There were several people interested, but just because of the relationship that he had with my family over the years, and then him knowing me, because I had approached him a couple years earlier than that, trying to buy them. He knew that we had the expertise to take them over and actually buy them. So we ended up buying those. They carried a second. So they carried a 10% and then the bank financed I believe it was 75% and we had to come up with the rest.
Abraham Anderson:
And so, that's how those... The biggest thing with these are, like I said, mostly rental homes. We're, once again, in the process of selling those off. Also, the rentals, they had the lot rent only, as they had the tenant-owned homes, very under market. I mean, half of what they should be. Of course, we can't just raise them up all of a sudden double. They were going up $50 this year, $50 next year to get them up to the market.
Frank Rolfe:
What were your big lessons learned on parks number nine and 10 there?
Abraham Anderson:
I guess, have a dream about the seller and go talk to them. No. I mean, stranger things have happened, I guess, but biggest lessons are I almost missed out on these because I had no idea this guy was thinking about selling. When I had talked to him previously, I made him an offer. He laughed it off and said... So threw out some crazy high number, probably over almost double than what we actually ended up buying it for, similar to the previous parks. I wrote him off. I didn't think, "Okay, they're not serious seller."
Abraham Anderson:
But you never know. People have life changes that make them want to sell, and unless you're talking to them and communicating with them regularly, you're following up, you'll never know. And so, the lessons learned here was, just because they didn't want to sell a year ago, or two years ago, or even a month ago, doesn't mean they don't want to sell today. And I've had cases where I call someone up and I lax off. I call them a couple months later and then they say, "Oh, I just sold it." You don't want to get that call. You don't want to hear that. So the biggest lesson really is just follow up.
Frank Rolfe:
Got you. Okay. Now we're moving on to the final park, park number 11. Where did that come from? How did you finance that? What were the lessons learned, and some macro details on that?
Abraham Anderson:
Sure. This one, biggest one so far, it was around 125 spaces. I had been trying to get in touch with this guy almost ever since I started looking at parks, so over two years. It was a owner in California. Wrote them letters, left messages. I almost got on a plane just to fly out there to try to get in touch with the guy. All of a sudden, on a Sunday, it gets listed on LoopNet. I mean, of all places. I called the broker probably 10 times until he picked up on a Sunday and worked with them.
Abraham Anderson:
This started in January, and that did not close until July. So it took seven months, and COVID was a big factor in that. But this seller was just... Even after we got under contract, he just disappeared. He would disappear for weeks or months, and it was just such a crazy thing. The biggest lessons learned on it were you want to be easy to sell to. I mean, I think part of the reason I got this park was, if there was also other people interested in it, but this guy was just so eccentric. If he was a normal seller, I think it would have sold probably years ago. But he was so hard to get in touch with and so hard to deal with that just putting up with it and being persistent, I think is how I ended up with the park.
Frank Rolfe:
Got you. All right. Well, let me now shift things around for a moment here. Tell me if you think these observations will be true from those 11 stories. Number one, one of the big items that helped you a lot was bonding.
Abraham Anderson:
Yes.
Frank Rolfe:
Right. Because I hear the same thing in every story, which was you bonded with the seller. You weren't necessarily the highest offer. You still got the deal. And I completely agree. There's no force ever more powerful than bonding. My very first park came from bonding and bought it in one phone call, although I already had known the guy and had done errands and favors for him when I owned my billboard company. But again, bonding is a super critical item. On that, we all agree with that premise. What is your best opening line or what's your best way to bond with somebody? My favorite best way to bond with somebody is I say, "So how did you come to own the park?" Because that story [crosstalk 00:31:20]-
Abraham Anderson:
Yeah. That's exactly what I say.
Frank Rolfe:
... their entire life from birth until current. Their answer can take up to two hours based on the seller. What is your favorite opening line?
Abraham Anderson:
Oh yeah. I got it from you, Frank. I say the exact same thing. "How'd you come to own the park?
Frank Rolfe:
Yep. There you go. Okay.
Abraham Anderson:
Really, and the other thing, yeah, the other thing is in the actually listening to them. They can tell, I mean, if you're just dozing off or just not paying attention. I genuinely do like talking with people. It's fun to me. It's fun to talk to these... They all have different stories. They have cool events that's happened. I mean, you really run into some funny things when you're working at this business. And so, I'm genuinely interested to hear what they have to say.
Abraham Anderson:
I mean, it's funny because you may sit with them and talk for two hours. And of those two hours, you might talk about the park for five minutes. But that is probably one of your best meetings you'll have, because that's how you bond. You listen to them and you ask questions. Then that's how they get comfortable with you to sell you the property. And then, also, I just ask them about... Just listen to them and show interest in what they're doing.
Frank Rolfe:
Okay. And then, the next thing I hear, in the Abraham story, is unbridled enthusiasm and persistence. And so, let's focus on that for a moment because enthusiasm, I find, is contagious. When you're talking with moms and pops who are really old and they're worn out, and they're losing their zest for life, nothing is more attractive to an older person who's not having a whole lot of fun, to find a younger person who's having a lot of fun, right?
Abraham Anderson:
Mm-hmm (affirmative).
Frank Rolfe:
Would you not agree that another big part of you and your success has been, you're not only very enthusiastic, but you're also extremely persistent? Because I keep hearing in the stories like, "I drove two hours down to the place like 12 times," and most people wouldn't do that. They just give up after one time and say, "Oh, well, I don't know. I don't want to go do that again." But I always try and tell myself... There was once a saying I saw somewhere that said, "Successful people do what unsuccessful people don't."
Frank Rolfe:
What that means to me is you've got to do the things that most people won't do because of laziness. That's where you can really score. So I think that's another big part of your story. Third item is that you're just scrounging looking for parks everywhere. I didn't hear in that story, "Yeah, I met this broker at Marcus & Millichap," or I didn't hear in that story, "Oh yeah, I was surfing the internet and I..." I mean, you're getting in these parks from all kinds of weird resources, from friends of family members, to networking at mobile home things. You're casting a gigantic net, would you agree?
Abraham Anderson:
Absolutely. Yeah. Yeah. To every other-
Frank Rolfe:
It's a big part of what you're doing.
Abraham Anderson:
Mm-hmm (affirmative).
Frank Rolfe:
What would you say, of all the things that you have done, what has been your most effective outreach program to find deals of all the things? Like if you look at the commonality between them, like if people could just do one thing, what would be the one thing you would have them do?
Abraham Anderson:
The one thing I would say is get in front of park owners that are around your market that you want to be in. And a lot of times, it's where you live, because, I mean, I'm sure someone's not going to want to live in a bad area. Wherever you live, it's probably going to be a decent area to own a park. So just start, go on Google maps, and look at parks in your area. Look up on the property assessor who owns the park and just show up at their house.
Abraham Anderson:
I mean, you'd be surprised. I mean, maybe it works different in New York State, or California, or something, but I'm in the South. I mean, I would assume it's similar in the Midwest. I've been out there several times. You show up at their house, nine times out of 10, if not more, they're happy to talk with you. Even if they don't want to sell right then, no one's going to their house. No one's door knocking. Just that alone shows enthusiasm. And then, give them your contact information. Ask if it's okay to follow up.
Abraham Anderson:
And then, another key item is I always ask, "Do you know of any other parks that may be for sale?" I've got some deals now that are pending from that. You just ask them that simple question. If they don't want to sell, "Well, do you know any park owners that may want to sell?" Same thing, you never know where you're going to find a park. So you've got to cast a big net.
Frank Rolfe:
All right. Well, now the final item in your story that I think you would agree with is your whole story is based on just using fundamental old-fashioned methods. When you're buying the park, you're raising the rent. You're filling a lot, normal stuff. Because, see, I get calls all the time from people who they think, to be in the business, they have to come up with a new thing. I'll get calls from people, that they want to buy an old park, take all the homes out, and refill it with tiny homes, and make it like a tiny home utopian community. I mean, what are your thoughts on just sticking with the old-fashioned stuff, because clearly, I'm a huge old-fashioned stuff guy. So like you're doing the old-fashioned stuff, is that not the best way? Have you seen anybody else who's getting places otherwise?
Abraham Anderson:
I've heard of people that claim they make money other ways. I've never seen it myself. I mean, of course, it's not very sexy. I mean, no one brags, "Oh, hey, I own a trailer park." But where you make the money in this business is renting the land. Once you get that fundamental idea that you're just in the land rental business, you don't want to rent the structures, because otherwise you might as well do apartment. You just want to rent the land. That's not very glamorous, but that's where you make your money, because then tenants usually stay a long time, a lot lower repair and maintenance, and it's just so simple.
Abraham Anderson:
At one point, when I had 200 lots, and I have the 20 apartments, it was easier for me to manage those 200 lots than it was for my 20 apartments. When I tell that to people in apartment business, usually they don't even believe it. But that's the reality. And so, just stick with what works. As I said earlier, you don't have to reinvent the wheel. I mean, Sam Zell didn't get to be the number one owner by ripping out homes and putting in tiny homes, all that. Just copy what the successful people are doing. It's right there in front of you. Just find out what works and do it.
Frank Rolfe:
Yep. I agree. All right, now let's shift gears for a minute because some people are listening to the Lecture Series Events, not from a buying park perspective, but from a management perspective. I'm going to throw six items out to you here, and you tell me what your big lessons learned were there. Number one, managers. What's been your big lessons learned, now in 11 properties, regarding managers? Or like what are some of your Abraham's fundamental rules regarding managers?
Abraham Anderson:
Sure. Be quick to fire if you've got manage that's not working out. Just get rid of them. Yeah. I mean, I would rather self-manage than have a bad manager because they not only are not helpful, but they will harm you. They will just mess everything up. And that's been a lesson, is if you wait too long, they can cause a lot of damage. So be quick to fire if they're not working out.
Abraham Anderson:
Number two is start in the park. Look for the nicest home in the park, talk to them, see if they have any interest. And if not, go to the second nicest home. Usually, also, while you're still on your diligence, talk to the owner. Typically, they have someone in the park that helps them out in some shape or fashion. You can start with them. The number three is... And this is my style. I know it's maybe different from others, but I do not let the managers collect any of the rent. We use Rent Manager and everyone either has to pay online or they can pay at Walmart, or Kroger, or several other locations.
Abraham Anderson:
We made up these business cards and we write their account number on the back, and we give them all to tenants that has our information on the back. It has instructions on how to pay the rent. They can take that card to Walmart or Kroger, give Walmart their cash if they want to, they get a receipt that it's paid and it goes from your bank account. So getting the managers out of the rent, because that's a big step as well, because then if you do have to replace the manager, you don't have any issue with embezzling or losing money or anything like that.
Frank Rolfe:
Okay. All good points. Let's move on now to occupancy, home sales, home ready, and what have been some of your lessons learned regarding getting homes on vacant lots and humans in those homes? What are some of your thoughts on that?
Abraham Anderson:
Similar to, how do you find parks? I mean, it's shotgun approach. We advertise on a Craigslist, Facebook Marketplace. Some markets, it might be different. It might be a newspaper. But we advertise homes for sale or rent, lots, move your home in for free, every avenue you can think of as far as to get homes in. Also, we look at used homes. I try to find deals on those and have them move in.
Abraham Anderson:
The other thing we do, and we just recently started having success doing it, is talk to your local dealerships and see if you can get them to bring a home in your park and try to fill out the park. How I finally got them to agree to it was I agreed to purchase the home if it didn't sell after, say, six months, or you can even do longer. So they brought the home and the home sold and they're doing another one. So you've got to explore every avenue as far as to get homes on lots. The other one is the CASH program, which I'm getting onboarded with now to bring it homes that way as well.
Frank Rolfe:
What about collections? What have been your lessons learned on collections.
Abraham Anderson:
I got this from another operator. Now the big thing is post those... If it's on the sixth of every month, it's late. You have to be very consistent with that. Post the notices every single month. And don't just post them, but go to the resident, knock on the door, hand them the notice and ask them, "Hey, your rent hasn't been paid. When do you plan on paying? What's going on?" Have the manager approach it that way, because you'd be surprised. You don't just want to post a note. You've got to communicate with them.
Abraham Anderson:
The other thing we do is, if they're not there or ignoring us, we have our notices printed on pink paper. One side has the legal notice. The other side has big black letters that say, "Your September rent is past due." What it does, it does two things. It's obviously the legal notice that they owe the rent. And the other thing is it's like social shaming, where we've had it to where residents will call us like early on the sixth and say, "I paid the rent. Please don't put that pink slip on my door," because they don't want to be embarrassed by their neighbors that they haven't paid the rent. And so, that's actually been-
Frank Rolfe:
What do you see with COVID right now?
Abraham Anderson:
Go ahead, I'm sorry. I was just going to say, that's been helpful as well.
Frank Rolfe:
How is COVID-19 impacting your collections so far?
Abraham Anderson:
I knew it was going to have some effect, but I didn't think it was going to be as bad as some of these doomsday prophecies that you would hear people, in mainly the apartment space, freaking out about. Maybe it is affecting them that bad, it seems like. But if I was at 97% last year, I'm probably at 96% this year. Whether that's from probably a lot to do with the unemployment, and the stimulus, and everything else, but I really haven't had that much of an issue.
Abraham Anderson:
The other thing is it really separates out your good residents from your bad ones. During the first shutdown, we had a few that were using this as an opportunity to not pay rent. Well, we got rid of them when it opened back up. And really though, if you look at it, those were the source of most of our problems. They were just trouble tenants, to begin with. So getting rid of them, it was painful in the short run, not getting that rent and having to evict them. But now that they're gone, we have a park that has a better class of tenants and we got better people already replace them. So that's been my experience with COVID.
Frank Rolfe:
Yeah. A lot of people have wondered why we have escaped the issues that multi-family has. I mean, a lot of multi-family owners are only collecting 70%, whereas most mobile home park owners are still up in the nineties. I think the issue is because the resident own their home and they don't want to lose their home. Would you agree with that? I mean, that's our deal. 80% of all of our residents own their home outright. And so, we figured what their thinking is, "Man, I don't want to pay the rent, but I don't want to lose my house." Whereas apartment people are just like, "Yeah, I never liked this place anyway. I'll just turn my stuff in the pickup truck and drive off."
Abraham Anderson:
Oh yeah. No one's attached to their apartment. But when you've got a mobile home park that's all tenant-owned, they know all their neighbors. They've been there for years. Because they all know, then they stay long. They like their homes. I talked to a park owner today. His park, he built it himself. He's had the park four years. He had first generation of people and they had kids. Their kids grew up, they had kids, and now their grandkids are living in that same home. So that's how long some of these residents will stay, are multi-generational. Good luck finding that with apartments. I mean-
Frank Rolfe:
Yeah. [crosstalk 00:44:39]-
Abraham Anderson:
They'll trash the place and just run off, but if they own the home, they really want to keep that home. And a lot of times, that's one of their most expensive asset, maybe other than their car. So they'll really fight to keep that. No one cares about their apartment. They'll just run off and go find another place.
Frank Rolfe:
Yep. Totally agree. What about water sewer systems? What are lessons learned as far as water leaks, sewer blockages, water sewer building? Any water sewer thoughts?
Abraham Anderson:
Yeah. I would say it's a matter of understanding what you're getting into. Most thankfully, most of my properties are city utilities and direct build. We've got some better on septic. And with that, it's really important to understand how the utility system works and getting comfortable with it, and scoping the lines and all of that. We've had to get American Leak Detection out once to find the water leak. I know you had a similar story where there was a huge water leak and the mom and pop just thought, "Oh, we can't solve this. It's too hard to find.
Abraham Anderson:
And then, you get in there and you solve it within a month or two. I had the same exact experience. And so, it's just a matter of, during diligence, know what you're getting into, understand how it works, and that really gets you comfortable. If it's going to cost you some money to get it up to where it needs to be, or to do some repairs, find that out on the front end before you buy it. That can be a legitimate reason to go back to them, if it's something they did disclose. They maybe didn't even know about it. Find out before you buy it, and then you can use that to possibly get a concession to make the repairs after you buy it.
Frank Rolfe:
Right. And then, finally, what is your management process financially? I heard you're on Rent Manager. We are also on Rent Manager. Do you have any formalized meetings with yourself? Are there any certain reports that you run that you feel are important, reports that you're looking at frequently, which are from Rent Manager, but could also be simply from someone doing QuickBooks and Excel? What are the key things that you look at financially to feel happy? I mean, do you have a monthly meeting with yourself comparing the budget to the actuals? Do you every week look at your collections? What are some of the things that you do?
Abraham Anderson:
Mainly I'll run the collections report, see what's going on. Talk with the managers, find out, "Hey, what's up with lot number 15? Looks like they still haven't paid, and we're getting close to where we're going to have to evict them. What's going on? Have you talked to them?" Just staying on top of that. The other thing would be if we've got vacant homes that are ready to go. Thankfully, all of my parks, I've focused on getting parks from strong markets where there's demand.
Abraham Anderson:
If we've got a home there that's been sitting there empty, it's ready to go for a couple of months, what's going on? Are they not posting the ads? Are they not showing up when they made appointments to see you? Are they not answering the phone? So it's really monitoring collections and then the occupancy. And then, also, at least until you get maybe a district manager, talk to the managers. I mean, I know sometimes it can be annoying because they want to make small talk for hours on end, it seems like. But they're there to do a job and they need the tools in order to do it.
Abraham Anderson:
So you may have to talk to them to find out what's going on and give them the backing up to get things solved. Just closely look at your collections and see what's going on. And if there's something seems off, you need to figure out if it's a manager or what's going on in order to correct the problem.
Frank Rolfe:
All right. This is something that many people ask you about all the time, and let me get your thoughts. You have a regular normal day career also, correct?
Abraham Anderson:
Yes. Yep.
Frank Rolfe:
Right. So you're only in these 11 parks as a hobby, right, sort of?
Abraham Anderson:
Yep. My only hobby.
Frank Rolfe:
How much time per week do you spend with your mobile home park hobby, which just happens to be the hundredth largest mobile home park operation in the US. How much time do you spend on that hobby a week?
Abraham Anderson:
In my other career, I'm self-employed as an insurance agent. And so, that gave me some flexibility. When I first started out, I would say I was spending maybe 10 hours a week on parks, and 30 to 40 on my other career. And I work a lot. I really like it. I like working. And so, I didn't mind putting in extra hours on the weekends or things like that. That's not even necessary. I didn't have to do that, but I guess I'm crazy like that. Majority of my time was spent doing the parks where it was maybe 40 hours a week, and I was spending another 20 hours a week doing my other job.
Abraham Anderson:
So I just recently hired a district manager and I already feel the relief of that. If I want to focus on finding more parks or focus back on insurance, I can do that. And so, I'd say, once it gets to a point where you could go full time, you can either do that, or you can just hire someone else to help you. One park is nothing to manage. I mean, really it wasn't until I started getting I think above 350, when I closed on that set of parks, where it was starting to take a lot of my time and had to really start thinking about getting a manager. And then, now 600, I finally got a district manager. But even a hundred lots is not that much to manage. You can do that with a full-time 40-hour-week job without any issue.
Frank Rolfe:
That would be, on your first park, to be, what, maybe four hours a week?
Abraham Anderson:
Oh yeah. Yeah. I'd say about four hours a week. Maybe the first couple months, it was a little bit more than that, just to get things set up and showing them how to pay the rent online or at the store and that. But once it was pretty well stabilized, yeah, four hours a week, I would say.
Frank Rolfe:
Got you. All right. And then, let's talk for a minute about where you go from here, because you've only been buying parks now since 2019, so not for super long time. But already just in that span, and I want to get people who don't know a lot about the industry, because some people are listening who are maybe very new to it, most of your mobile home lot values in America are anywhere from 30,000 to $50,000. There's some that are 100,000 per occupied lots. This portfolio you have at full is about a $30 million grouping. I mean, I'm just estimating, I don't know your lot rents.
Frank Rolfe:
It's a very sizable item. I mean, when you're in the top 100, among other things, you get calls from people periodically who are trying to do consolidations. And so, what's the plan? Are you going to keep growing like you're growing, or want to get to a certain number of properties and quit? What's your long-term plan at this moment? I know that plans change always, but what are you thinking of today?
Abraham Anderson:
Yeah, my goal was this year I wanted to get in the top 100. It's kind of arbitrary, but it's kind of cool at the same time. I mean, you've got to shoot for something. So that was my first goal. And thankfully, I hit it a lot sooner than I anticipated, so that was cool. My next goal, I want to get to 2,000 lots by the end of next year. So that might be a thousand lots by end of first quarter, next year, and then 2,000 by the end of that year. Yeah, I'm going to go into this full time is what...
Abraham Anderson:
I'm already almost in it full time. I scaled back a lot and once I got to a certain size on my other career. And so, I just want to keep on with doing parks. This is the most fun I've ever had as far as doing work. Just, I love it. I love talking to sellers. Some stuff is not as fun, mostly dealing with tenants, but I really like the park business. It's like a brotherhood, whereas other industries like insurance, it seems like it's a lot of cut throat. You're competing against everyone. With parks, I mean, people share information and vendors lists and things like that. I love this and I want to keep doing this maybe for the rest of my life.
Frank Rolfe:
Yeah. That's a great story, Abraham. As people may or may not know, my one hobby I have is I really like restoring old cars, and I've always tried to model MHU around this old Corvair I had, which I was... Corvairs are horrible junky cars. I mean, they just are, and people buy them because they're cheap. I bought mine I think for $4,000,. But they're fascinated with them because it's an air-cooled engine, it doesn't have a grill on the front. So looks a little bit like an electric car almost today.
Frank Rolfe:
Corvair owners are so weird. There's like a brotherhood of Corvair owners. So when I bought this Corvair, I didn't know a lot about Corvairs. I called this place called, I think, Clark's Corvair Parts. I called him up and said, "Hey, I've got this part that's broken, so the mechanic says I need one of these." The guy said, "Okay." And then, I got this box and I opened the box, and in the box there were like five parts. So I called the guy up and said, "I think you made a mistake. I had bought this part."
Frank Rolfe:
The guy goes, "No, no, you'll need the rest of the parts." I said, "But I didn't buy the rest." He goes, "Yeah, I know, but you're going to need them. When the guy goes to put that in, he's going to see those things are probably broken. So I just sent them with it." And I said, "Okay, well, then I need to pay you." "No, no, you don't pay me." Every time I'd order from that guy, he would send you not only the parts, he would send you other items just because he just was fascinated with Corvairs. He was like Mr. Corvair.
Frank Rolfe:
I think that's what's fun about our industry, is you can go to any event... You can't right now because of COVID, so there are no industry events. There was no Vegas, won't be any Chicago, no home shows. But it's a pretty affable group, wouldn't you admit? I mean, you've talked to a lot of sellers. Have you ever had a seller slam a door on you, say, "F you"? I haven't. I mean, I've talked to a thousand owners. I've never had any of them less than cordial. So I think when you're saying it's like a brotherhood, I agree.
Frank Rolfe:
It's odd how the industry developed because it's like everybody respects each other, that they have an interest in this really odd thing of a mobile home park. And so, therefore, just because you're interested in it, you're like a member of the club. Is that what you have found?
Abraham Anderson:
Oh yeah. Absolutely. And some of that, "Why would you want a trailer park, son?" They really are just almost fascinated that you're even interested in it. So it's always fun talking with them. And as you said, seeing how they got into the business and all that. It's definitely a brotherhood. I really would not be where I'm at today, Frank, without your platform and what you do. I mean, your podcast, your website, and all that. You really have built a community and that's been very helpful along the way, talking with other people and the information you put out. I mean, I would have had to make a lot of painful mistakes along the way, that you helped me avoid, with the community you put together. So I thank you for that.
Frank Rolfe:
Absolutely. I appreciate that. But, again, a lot of what I've learned, I learned from other moms and pops and people and their experiences. And that's why, to me, is so much like a brotherhood because it's like everyone's trying to help each other. Just felt like the guy at Clark's Corvair was. He didn't have to. There was no money in it. He was just trying to help me because he was nice. And to me, mobile home park industry helps reaffirm that people actually can do things without trying to get money from each other or some other materialistic thing.
Frank Rolfe:
It's like when the seller sold you the park because he likes you. He's not doing it because you were the highest offer, he's doing it for the uneconomic concept of he just likes you. I know of very few things in America today like that, the people just help people. Obviously, volunteer organizations, yep, they do. But outside of the nonprofit world or people who volunteer in nonprofits, in a business perspective, I really don't know any other industry that people share so much. Because like you're in the insurance industry, I used to be the billboard industry. Billboard people hate each other.
Frank Rolfe:
Every time you talked to a billboard person, they would be thinking, "What misinformation can I give this person to really screw them over?" That's how it would work. If you called the billboard guy asking his opinion on something, he would try and use it against you. If you called someone and said, "Hey, is it legal to saw limb off the tree on state?" Right away, they call up the state and say, "Hey, I just had a call from a guy. I think he's going to try to cut your limb off."
Frank Rolfe:
So yeah, it is kind of a mystical item. But again, Abraham, we really appreciate you being here and sharing your bit of the brotherhood, your words of wisdom. I mean, you've done an amazing job. I don't really honestly know anybody else who in this fast a span, has amassed so many lots, to be honest with you. We have a lot of people who go to bootcamp, buy a park, buy a couple, but to buy that many in two years' time is extremely remarkable. So you've done an incredible job, particularly the fact that you bought them at good prices and done all the right things, and stuck with all the right basics. So that's indeed admirable. If it's okay, Abraham, if people ever have any questions, if they email it into us, can we forward those to you?
Abraham Anderson:
Absolutely. Yeah, no problem at all. Feel free.
Frank Rolfe:
Okay. Again, if you have any questions on this lecture series, for Abraham, if you'll just send those in to Brandon, he will forward them to Abraham, who can maybe dispense even more words of wisdom, if anyone has a specific question for him. I think that that then wraps it up for tonight, our MHU Lecture Series Event on Zero to 100, the story of Abraham Anderson. Abraham, we really appreciate you taking the time to be here. We also appreciate everyone who listened in.
Frank Rolfe:
I know there's a lot of things you can do with your time. Not too many mobile home park things you can do with your time at night, but again, we really appreciate everyone for being here. So, again, this is Frank Rolfe with mhu.com, signing off in this lecture series and we'll talk to everyone again soon.