Patrick lives in Alaska yet owns and manages mobile home parks that are roughly 3,000 miles from his home. How is that possible? In this event, we discuss how he manages properties from such a long distance as well as his lessons learned in buying and financing the parks he owns. It’s a huge amount of information, and it is of interest to anyone looking to buy a mobile home park or better operate the ones that they currently own.
The host will be Frank Rolfe, who is very familiar with managing properties from afar. He’s also the guy that the New York Times calls “the human encyclopedia of all things mobile home park”. Frank keeps the conversation fast-paced and throws in his own color commentary.
So if you are interested in the real-life business of buying, financing, and operating mobile home parks, then this Lecture Series Event should be of great interest to you!
3,000 Miles & Counting with Patrick from Alaska - Transcript
Frank Rolfe: Welcome everybody to our lecture series event. We've titled this 3000 miles and counting. It's a story of Patrick from Alaska, who's built a really nice portfolio of mobile home parks that he owns and operates from a really long distance. In fact, 3000 is an easier number than 3500 miles, which is actually what it currently is from his house to his closest park. But we thought this would be a fascinating discussion because so many people are always curious as to how much the geography between you and your parks matters. Can you buy parks? I mean, my first park, I bought, it was only 15 minutes from my house, and in Dave's early parks, he would often actually move into the park and live there. So, it's really hard to get over that barrier of distance, but Patrick's done an amazing, admirable job of conquering the barrier. And with us is Patrick, so Patrick, are you there?
00:51
Patrick: I am here.
00:53
Frank Rolfe: Well, Patrick, we love to have you, we can tell from the decor of the background, you definitely are in Alaska.
00:57
Patrick: Yeah.
00:58
Frank Rolfe: It's definitely... That's something you'd see in Florida. So let's just jump into it. So tell us the story, how in the world did you ever even think of buying a mobile home park? How did that decision ever happen?
01:08
Patrick: Well, it started in Iowa where I grew up. My dad got me into the real estate. He had real estate that I was forced to help him, whether I really wanted to or not. And just kinda got the bug started and then graduated high school, and he had me build a duplex right out of high school, thought that was a good idea. So I always kinda had that real estate bug, hired a coach and kind of got a little more involved in bigger real estate. In 2012, I bought an apartment, 28-unit, and tried to buy more of those but with prices going up I just couldn't find the deals that I was looking for. Ended up moving over to storage, bought a storage facility that was a really good deal. That helped me quit my job. Actually shortly after I went to the bootcamp, I kind of... I just kept stumbling along, trying to find my niche until I finally heard about mobile home parks, and I went to your bootcamp and was confident enough after that, along with the other cash flow I had coming in that I decided to just quit my job and go for it. And little over three years after that, I finally bought my first park, so, yeah.
02:21
Frank Rolfe: And what were your... Had you ever had any experience in parks before? Had you ever lived in one? Had you ever had a family member in one? What was your thought? When you say the word, what did you think when you hear the term mobile home park, was it terror, was it opportunity? What were your thoughts?
02:37
Patrick: Well, my first house from moving out on my own, was actually a '60s double-wide. So I knew what they were obviously. I was told I could live in it. It was a family member that had it, told I could live in it if I could pay just the utilities, and the utilities was about the same as the rent payment elsewhere. So it was just not insulated well, and yeah, other than that, I really haven't had much experience with mobile home parks, really never thought about them.
03:08
Frank Rolfe: All right. And so you had this idea to get into mobile home parks, and let's talk about the very first deal you did. So how did you find that first mobile home park? The first one was in Iowa, correct?
03:22
Patrick: It was, yep. Yeah, I'm comfortable with Iowa. I've lived there, so I know... When a town pops up, I'm familiar with it, familiar with the area. And I did a mailer. I guess before that though, we went to the bootcamp and I built... Off of your list, I built a database there. Went through and cleaned it up and made it current. We spent about a year and a half between my spouse and I, and a virtual assistant, making a 26-state database list. And we just started mailing out to that. And yeah, it was just shy of a 100 space park that a bigger operator had. And he called me... I don't know why he called me, but he called me. And yeah, we got it bought, it was a great deal.
04:14
Frank Rolfe: Any diligent surprises that came up on that first deal?
04:18
Patrick: Not really, other than the infrastructure, the electrical infrastructure, the cost to upgrade that as we bring in homes has kind of been a little bit more than I had planned. A big deal that thankfully I caught, it had about a $100,000 worth of Ash trees, and as you know, in the Midwest, those Emerald ash borers are killing the Ash trees. And so I did calculate that in, but that would've been about a $100,000 oops, had I not caught that. But yeah... I guess one thing I maybe would've accounted for a little bit more is the older homes. As you raised rent and enforce rules, these older homes, these people don't maintain their homes and they let them go. And once you start cracking down on them, they just kind of run off and then you have to deal with tearing it down. If you can get it in your name, you gotta get it in your name then tear it down, then update the electrical and bring in a new home. And that's a tremendous amount of work.
05:22
Frank Rolfe: Right. And how did you finance that first part?
05:25
Patrick: It was a local bank. Local bank that I had worked with in the past. So, they were familiar with me. They were not as excited about mobile home parks as I was, but they liked me so it worked out.
05:41
Frank Rolfe: And what was your turnaround plan? Was it filling lots? Was it raising rents? Was it cutting cost? Was it all the above? What was that deal like?
05:49
Patrick: Yeah, it had a few inventory homes. They just... They really hadn't done a lot with the park. And then they tried to bring in some new homes and they just didn't sell. It took a lot of hands-on advertising and cleaning up and just to get people to wanna move into the park. It was in a state where I don't think people really wanted to move there. So I had to clean it up. And we've brought in 24 homes in that park so far, and we've torn down probably a dozen. So, it's been a lot of work.
06:27
Frank Rolfe: And we've also bought parks from larger owners on a one-off basis. Typically there's one overriding reason they wanna sell that they... It's either got a flooding problem they can't fix, an occupancy problem they can't fix, a manager problem. What was the overriding reason you think they sold in this place?
06:45
Patrick: I think it was occupancy and management. They didn't treat the manager very well. I actually still have that... Their manager today. They weren't getting along well with that manager, and I... She's worked out great for me. So, I think it was management and occupancy and just the hands-on touch of doing the right advertising, putting the right homes in there, cleaning it up and getting people to wanna live in that park. Think they just couldn't figure that out.
07:13
Frank Rolfe: Gotcha. Okay, and so let's go into park number two. So, you've got park number one under your belt, park number two pops up. How did park number two come to your attention?
07:23
Patrick: It was another big operator responded to one of my letters. It was their one-off, it was the only one they had in Iowa, and they hadn't had a manager for years. They brought in... They just, I think they brought in like 17 new homes and they just... They would rent them, and tried to sell them, and they... With nobody on site with rentals, you can about imagine how that went. I showed up the due diligence and some of the rentals, I had the windows open, the furnace was on, water was spraying everywhere. I mean, just a wild animal. And overall I had a good bones. It was around a 60 space park, and yeah, just implemented some rules, put a manager in place and... Yeah, I bought that park for... It was so run down and not managed well. I only bought that park for 200,000.
08:24
Frank Rolfe: Oh my gosh. Wow. And any due diligence surprises on that deal?
08:30
Patrick: Just it... There was one, when I go to best places and pull up the median home price on that particular area, there's a lot of, I would like call rich farmers that had maybe $1,000,000 homes that kind of skewed the median home price. It was really a lot lower median home price than what I've... Actual median home price than what I suspected, so kind of caught me off guard, but the good news is that that area has kind of exploded recently. So, now it's got a lot stronger.
09:06
Frank Rolfe: Okay. And how did you finance park number two?
09:11
Patrick: Same bank. That same bank as the first one?
09:13
Frank Rolfe: Okay. And what was the overarching reason on that part? It sounds like it was once again, occupancy and management, same, same story?
09:23
Patrick: Yep. And it was. Geographically, it was outside of their area. It was a big group that had sold and they just... They wanted rid of that one park in Iowa, and they weren't really paying attention to it. And yeah, it was a great deal. It was some work come with some inventory homes and rentals, like I said, but it was a great deal.
09:45
Frank Rolfe: I noticed you said that you said that you used letters. On your direct mail, do you prefer letters or postcards?
09:52
Patrick: I've tried postcards. Haven't got a lot of response from them, but I... It's hard to tell exactly what they... Which ones they responded to, but the lion share of what I've done is letters, but that was back in 2018, '19. Now I feel I'm getting... I'm not really getting any response from those as much.
10:14
Frank Rolfe: Okay.
10:15
Patrick: The phone calls is what I've been been doing here lately.
10:19
Frank Rolfe: Gotcha. Okay. So, let's talk about park number three then. So, park number three, also in Iowa?
10:24
Patrick: Park number three is actually in Wyoming. So, I lived in Wyoming for 15 years, so I was familiar with Wyoming as well, and this one was a mom and pop. They called and reached out and... The nice thing about Wyoming is there's certain pockets of Wyoming that have really higher lot rents than Iowa, and this one was quite a bit below market value on the rents and hadn't been billed back at all. So, there was some good gain here. The bad one with... The bad thing that happened with this one is the bank kind of pulled a snafu on me the last minute. They thought I was growing too fast and made me put 50% down, just before closing. So, thankfully I had the cash, but, yeah, I wasn't too impressed with that one.
11:18
Frank Rolfe: Right. And then what was the turnaround plan on that? What were the key things you were gonna do?
11:23
Patrick: It was basically raise rent bill back, and that one was a full when I bought it, but during due diligence, one pulled out. It's around a 30-space park. And then, we've lost a couple since then. So, what went... It kind of went from a pretty passive park to more of a tearing some old homes down, bringing in some new ones. So now, it's kind of turned into a little bit more of a project, since I've owned it. The good thing about that one is that I had to put 50% down, so of course I immediately refinanced, and actually ended up pulling out half a million dollar money in my pocket from that park. Wasn't planning on doing it, but the bank kind of forced my hand there and was able... I bought it well enough that was able to pull out a half a million, right within a few months of buying it.
12:15
Frank Rolfe: Now, was that lender... Was that a conduit lender or was that same bank from earlier.
12:19
Patrick: Just that same local bank that was... It was, yeah, they were out of their zone and they felt I was growing too fast, and yeah, so I switched banks and carried on.
12:31
Frank Rolfe: Okay. And then what about park number four? What stage is park number four?
12:35
Patrick: Park number four is in Wyoming again. This was a real slam dunk. It's one of my nicest parks. It was full, it's a little over 50 spaces and I've had to do virtually nothing. I did some... I think I sealed the road and just cleaned up a couple things, changed the sign, but drastically undervalued on rents and billback water sewer, but it's a senior park and just in great shape. So, I'd hardly spend any time on this one. I spent all my time on the first parks we talked about where you're... Where I'm tearing homes down and bringing homes in and trying to sell them.
13:20
Frank Rolfe: And who did your financing on park number four?
13:23
Patrick: That was a local bank in that same town.
13:25
Frank Rolfe: Gotcha. Okay.
13:26
Patrick: They were comfortable with it. And yeah, they took that one.
13:33
Frank Rolfe: Okay. And then park number five, you're back to Iowa again, is that correct?
13:36
Patrick: Park number five. Sorry, it's been a few years here. [laughter] Yeah. Park number five was back in Iowa, all park owned homes around 40 spaces. It was actually a guy that I knew, that had this park, and I always was asking him if he wanted to sell one day. He just said, yeah. I was like, okay, well, let's do it. And he took pretty good care of his park own homes. Otherwise it would've been a bigger project than it was, but that was 40 park own homes that came with that deal. So it was a broad... And they were all rentals.
14:12
Frank Rolfe: And how did you finance that deal?
14:15
Patrick: That is a different local bank in Iowa. Yep.
14:20
Frank Rolfe: Got it. And are those still rentals or did you, or have you sold those off or...
14:26
Patrick: I gave them about four months and then I gave them several options, whether they could do, get their own financing, pay cash. And then I, if they didn't wanna do that, I did offer... Well basically they automatically went on rent credit program, and if they wanted to move out and go do something else, they didn't want to do that, I gave them plenty of time and work with them on the way out. Went to the park and, you know, had a meet and greet. That park's got a park office. Lot of those tenants were very concerned and, you know, for good reason. We're changing quite a few things. But went and met with all the tenants, and we lost about 10-12, about 10. We lost a couple other ones due to some other reasons, but we've since filled those up. We've got, I think three or four... I think three vacant for sale now. I think a couple of those are in process though of being rent credited. So yeah, happened that we just bought that last year, last summer, and yeah, it's turned around quite nicely. We are putting a whole brand new road in that park, just to kind of show that we're not just raising the rent and not bringing value back to the park.
15:50
Frank Rolfe: And just for those who have considered doing a road, give an idea... Give an idea of how, what the cost is to put in a new road in a park of, you said, 40 lots.
15:58
Patrick: Yeah. It's around 40 lots. You know, the asphalt is... Has gone up so much, and that's what it currently is, is asphalt. And I've got a guy that does all my concrete work that does it for pretty reasonable. It's about a quarter million to do concrete. I could have saved probably 70, 80,000 by doing asphalt somewhere in that neighborhood. But I thought it was worth it just to do concrete. So we're gonna go, we're gonna rip the whole road out and start over with six inch concrete for about a quarter million.
16:33
Frank Rolfe: Got it. And why did you feel the need to rip that road out? What was unique about that road?
16:37
Patrick: It had been patched so many times. It was unlevel and we had... There's a lot of drainage issues, so the water would be draining under the... On a lot of the homes and washing out. And there just not a lot of guy could do with it. It just wasn't flat and graded all the same. And so I just decided to start over fresh. And we ended up raising the rents ultimately about a couple hundred dollars from what they were paying. They were only paying like 550 for house rent and lot rent, which, you know, in Iowa in a good market, you know, that's way below where it should be. And so, if we're gonna raise rent that much, I felt, you know, we needed to show some good faith, and it needed done. It just really needed done. And then we'll be done with it. So.
17:30
Frank Rolfe: Okay. And then we're... And the final park is park number six, which is again in Iowa, correct?
17:35
Patrick: Yeah. Part number six is actually under contract. We're gonna close on it, hopefully next week. Around 50 spaces, all direct build, curb and gutter, city-owned streets, just a real nice park, in a little smaller town, but a solid town, and mom and pop, again. And I actually did a cold call on this one. So this was actually... This was actually a neighboring community to one of the parks I already own.
18:06
Frank Rolfe: Got it. Okay. And so let's talk about some macro things off of that portfolio. First off, you are in two states that we think are fantastic, Iowa and Wyoming. I assume you feel the same or you wouldn't be buying over and over in Iowa and Wyoming.
18:26
Patrick: Correct.
18:27
Frank Rolfe: Any thoughts on why Iowa and Wyoming do so well, because everyone in the industry has learned long ago that they do well. Why do you think they do well?
18:34
Patrick: Well, I learned a long time ago in Wyoming on a housing development that I did, what a boom and bust market looks like. And so, yeah, I got burned pretty good with that. And so that's what kind of pushed me back to good old, boring Iowa where prices... And like California, the prices go through the roof and then we have a crash and they come down. That doesn't really happen in Iowa. It's just slow and steady wins the race. And I just, after being burned by a bubble like that, I just... I wanted to seek out something more stable. And then of course with mobile home parks, it's hard for them to move. So I like that stability as well. Wyoming is a little different. There's parts of it that are boom-and-bust, and there's parts of it that are more stable. And I've... Where I own, it's more of a stable economy, not so much dependent upon energy. So, but yeah, it's just a... I don't know, they're just solid, and they don't jump up in price and fall in price when we have market cycles, which makes me sleep better.
19:44
Frank Rolfe: And it sounds like with some of the parts you have, some of the population centers may not be gigantic. What is the range of your metro or county populations on those...
19:53
Patrick: Well, the... I'm in around some bigger metros, but I'm not inside of the, what I call the heart of the city. I am in smaller 5000-10,000 towns. But yeah, a couple of them are in the bigger metros that you're familiar with in Des Moines area, in that general area. But yeah, I'm not afraid of a smaller town just because I'm... I guess I'm familiar with it and not scared of it. It works.
20:27
Frank Rolfe: Got it. And then do you have any private utilities or is everything you have 100%?
20:32
Patrick: A 100% city-owned utilities, no septic, no nothing.
20:39
Frank Rolfe: Okay. And I assume you like that.
[overlapping conversation]
20:44
Patrick: I do, yeah. I've looked at some others. Obviously it just adds a lot of an element to the purchase, and I just never have found anything that made sense that had them. Actually, in my due diligence list, or not my due diligence list, but my database list, I've kind of sorted it out. So, generally speaking, I just... I market to only city-owned utilities.
21:12
Frank Rolfe: Okay. And I... Well, I don't know, do you have any Master Meter gas or electric?
21:17
Patrick: I do not. Nope. I do not. I listen to your stories on that. So I've... I watch that pretty closely. [laughter] Make sure that I don't buy that.
21:27
Frank Rolfe: So you're living the infrastructure dream.
21:28
Patrick: Yes.
21:29
Frank Rolfe: It sounds like. Okay. Which is probably part of why you can manage these from thousands of miles away, 'cause you don't have any of that Master Meter, right?
21:36
Patrick: Correct. Yeah, it makes it easier to manage, for sure. It's just a lot less. I do have... I think the worst thing I have is one lift station, I just did buy a park with a lift station. But other than that, yeah, that's the only thing I have to worry about.
21:50
Frank Rolfe: Any density issues in any of the parks, or is your density fine?
21:55
Patrick: The densities? No, are really... Actually really good. 50 by a 100 lot, individual lots, 50 by 90. So they're plenty spacious. There's a park in Wyoming that, well, both parks in Wyoming are a little tighter. But there's still room, and there's a lot of older homes in one of the nicer community, but they keep them up so well it almost is like you're driving back in time when you drive through there. They're very well kept. And they sell for... These used homes that are like in the '60s and '70s, they'll sell for 30-$50,000, and they're just these old vintage homes that they've... People have fixed up and there's just that much demand.
22:49
Frank Rolfe: And from a macro perspective, strictly macro, from the economic side, when you've been buying these things, what roughly is the cap rate you target? And then what is roughly the cap rate you hope to achieve when you're done?
23:04
Patrick: It's kinda all over the board on the going in cap rate, but that's because I'm changing so much within the first few months. I try to get it to a 11-13 cap within a year or two, probably two years. And if I can't do that, it's just like, well, do I really wanna buy it? So I mean, I'm really... I'm really cranking it up on the value. We've created over... Well over a million, up to 3 million, two or 3 million on all of these parks each from the time I bought them to now, really. I guess I look for value add, if I can't put a lot of work into it and create value, I just, it's just not worth it.
23:57
Frank Rolfe: What's been your single largest rent increase in a given year?
24:01
Patrick: Well, the conversion from park owned home to lot rent and tenant-owned would probably be my biggest one, where they were rented out... The whole house and lot was like 550-ish, and now they're 750-ish. So that definitely was the biggest one, but it was just so undervalued and people threw a fit, but they went to the market and looked for somewhere else to go, and they admitted there is no other place they can go and pay that lower rent. So, they realized it was still a fair, very fair rent. And that's why I went on site for that particular one, just to work through that. But yeah, $200 was the biggest, but I try not to go over 50 just for lot rent. I mean, $50 is the max I try to do.
24:56
Frank Rolfe: Sure. And then, as far as filling lots, obviously you've... Based on the markets and the prices you're throwing out, I guess you can bring new homes in, still in those markets, even if these are all new inflated numbers, are you focusing on used homes or how are you filling the lots?
25:13
Patrick: In the beginning we did only used homes, struggled with contractors, but yeah, got them fixed up and then sold used homes. We did start into buying new homes here three years ago back when the prices were much better, and it worked, and it has been working. I have a five new homes now that were priced substantially higher. I think the asking price for these homes are in the 90s. And we're experiencing quite a slowdown right now in anybody calling to look at them. And so I am a little nervous of how long we're gonna be sitting on these. I feel that I no longer can sell new homes from what I'm feeling right now. Unless something drastically changes, I think we've come... I think we've hit a wall. And I think a lot of people are in a kind of a wait and see attitude with inflation and fuel prices. So yeah, we're sitting on a whole couple million dollars worth of inventory in rentals and inventory altogether, about 20. I think we got 24 homes, about 27 homes. And it's a little scary slow at the moment.
26:34
Frank Rolfe: Right. Yeah. And the scary part of course is the markets you're in are the parts of America where you can sell the new homes. Right. So if your markets are scary on new homes, you can imagine how terrifying it would be in a place like Mississippi or Alabama or many other locales where the home price just are not supportable.
26:57
Patrick: Yeah. You know, we used to look at the... That 100,000 median home price like you used to talk about, I think I'm... I would probably not buy a park in anything less than 150, and I would love to see it at 200. Now, with the prices of everything, I think that benchmark has leaped up on what I should buy. And now that we've got some scale in Iowa and in Wyoming in this area, I've pretty much quit marketing to any of those other states, just because I'm busy enough. [laughter]
27:33
Frank Rolfe: Right. And let's... Talk to me about the management side, because you're so far away. I mean, we see in the background there, I mean, animals that you're not gonna find in Iowa, obviously, so you're managing by your own choice from a really far distance. Tell people how you ended up in Alaska of all places. So, I mean you're from originally... Are you from Iowa?
27:56
Patrick: I'm from central Iowa. Yep. From central Iowa.
28:00
Frank Rolfe: Okay. So how the heck you end up in Alaska?
28:01
Patrick: Well, I moved out to Wyoming for 15 years, like I had said before, and still had some property in Iowa. So I was managing with some help, with different family members and then managers that helped manage it while I was in Wyoming. And I figure for if I could manage it from 800 miles away I surely ought to be able to manage it from over 3000. So the goal was to build up enough passive income to be able to quit my job. And I did that. And then I thought, well, I'm in the desert in Wyoming. Not that I didn't like Wyoming, but Alaska was kind of always a dream. So I finally picked up and with a lot of help from my spouse, we downsized and put everything in a semi-trailer and moved to Alaska just to kind of fulfill a dream.
28:53
Frank Rolfe: And do you enjoy Alaska at this point?
28:55
Patrick: Absolutely love it. Yeah. We like to... Obviously like to get out and hunt and fish, and there's... This is just a paradise, for that. The winters are a little long, and we do jet outta here and go to Florida or Hawaii or somewhere warm for an extended period during the summer, which is crucial because it's not that it's terribly cold. We live kind of by the coast in Alaska, so it's moderate, but it can get below zero. But yeah, it's the darkness kind of wears on you a little bit and they are long. It starts earlier. Winter starts earlier and spring comes later, so it's good to get out.
29:35
Frank Rolfe: Okay. So you're obviously thousands of miles from your parks. So I imagine having systems is critical for you to have your peace of mind operations. So what are some of the key systems that have led you to be 3500 miles away from your nearest park? What are some of the systems you use?
29:53
Patrick: Well, I think like everybody else, you start off with Excel when you got one or two properties, and then you quickly realize that keeping track of rent to owns and contracts and everything, you've gotta get a software system. So we upgraded to rent manager and that helped out, that help bring everything together. And then just having to... Really having a good manager on site is just, is crucial. I mean, you just have to have a good manager. All my managers do do very well. And really, they're the reason why I don't have to be there, just having a great manager. And then we've got 40 residential units and about 60,000 square foot of storage before we bought our first park and now we're buying our sixth park, so it's got to be a substantial amount of work, just keeping track of everything. So we did just hire a regional manager that had experience with managing mobile home parks. And she has been a breath of fresh air. She's taken a lot off of our plate.
31:07
Frank Rolfe: So what is your corporate hierarchy then? Obviously, you're at the top of the pyramid. You have... Do you have a manager in each property? Do you have any properties that share a manager or is it just one manager per property?
31:21
Patrick: We have... Well, the glue that holds the whole thing together is my spouse, Kris. She's the one that keeps... She reconciles everything, does all bookkeeping, keeps me in line, just... I mean, she's the glue that holds it all together. And then it goes to regional manager and then every park has its own manager. The one nicer park in Wyoming is a third party manager that we inherited. It's a... And that's been working out. I think it's partly because such an easy park to manage that one, that one works. But yeah, every Park's got its own manager.
31:54
Frank Rolfe: Do you have one regional manager for the whole portfolio or do you have one for Iowa and then one for Wyoming.
32:00
Patrick: It's just one for Iowa. And then we are still managing the managers in Wyoming.
32:05
Frank Rolfe: Got it. So then the chain of command is if you're in Iowa and you're a park manager, you talk to your regional manager and the regional manager talks to you and your wife, is that correct?
32:14
Patrick: That... Yeah, generally speaking, we've just switched into that. Some of these parks, I've got away with not letting them have our number. We've put the manager in place and kept us kind of out of the loop. Some of these parks we just had to go to Iowa and just get boots on the ground, hand out our number and say, you know, figure it out. And so then some of the tenants actually do have our number, but we're strongly trying to get away from that. But yeah, going forward, it's gonna be, you know, basically managers talk to the regional manager, regional manager talks to us, but we're... We're not... We're open to... Our door's open, our phones on. We're here to solve any issues and not really get too tied up about hierarchy.
33:05
Frank Rolfe: So other than the regional manager though, your only back office is basically you and your wife, is that correct?
33:10
Patrick: That's it. Just us. And it's all 100% owned by us. We don't have any partners. Don't have a lot of interest in partnership. It's all owned by us and all of the inventory homes are all financed out of our own pocket as well. We don't take on any banks for that either, so we just kinda like to do it on our own.
33:34
Frank Rolfe: Got it. And so tell us about your typical day. So you wake up. What kind of things happen in your day, where other than the regional manager, you go to the entire back office, to this portfolio, how does that work? How much time do you spend a day on the parks or what kinda things happen in your given day?
33:53
Patrick: Well, it's a little hard to break it up between the parks and the rest of the portfolio. But the parks that we're tearing down old homes, bringing in used homes, rehabbing them, updating the infrastructure of the lot and marketing those homes, showing 'em to people, well, the manager's showing it, but just the oversight of that whole bringing homes in and trying to fill these parks up is what we spend majority of our time with. I'm still the one that's out hunting the homes, the used homes. So that does take up quite a bit of my time. I just haven't felt comfortable until maybe now with the regional manager of turning that over to anybody else. So that does take up quite a bit. But my day will be, I'll probably get up around 6:00 in the morning. Before I go to bed though, I turn my phone on complete silent, because of course being three hours behind central standard time, my phone will start going off at 4:00 in the morning and wake me up whether I want to or not. So that's the first thing I do. Yeah, drink coffee and play with the dog a little bit and kinda check emails. And then I like to kinda start my day at about 8:00 AM Alaska time, which is about 11:00 AM central time. And a lot of the managers know to kinda just wait.
35:19
Patrick: If they can wait till 11:00 or send me a text or something, and I try to respond, but we work until... Before we had the regional manager, it was all day, every day. We were just... There was no hardly any downtime. I do take off quite a bit of time, go on hunting trips like you can see behind me. But just day-to-day, I was pretty busy. It's led up quite a bit now with the new regional manager. So I would say, we still... I put in at least a six hour a day, if not eight.
35:56
Frank Rolfe: Got it. And if you were to hire anyone additional at this point, would you even need to hire anyone additional or do you think you can run it like this till the end?
36:03
Patrick: Right now, I think we're good. Until we... If we buy another park, depending on what that is, if it's a turnaround with infill, we may need to look at hiring another regional manager at some point. But I don't know. I don't really want to grow to a point where I've got a half a dozen or more employees. The goal was to have my time and be free, and I think I've hit that. So if it's not a good deal, I probably won't buy it. And I just don't... Well, I don't have a lot of dreams about being the largest park owner in my area. I'm not too tied up about the numbers. We don't really have... You see some of these guys that have a lot more lots, but I wish they would say what their profit per lot is because if that's a bigger deal than just how many lots you have.
37:04
Frank Rolfe: Right. Well, you're probably aware. I looked at it just a couple of days ago, I think ELS and Sons Distributions are down to two point something.
37:14
Patrick: Wow.
37:14
Frank Rolfe: Being big doesn't necessarily translate into being that profitable.
37:20
Patrick: No.
37:21
Frank Rolfe: Let me ask you this then. Obviously, when you're 3000 miles away, you can't make a bad manager hire, right? It'd be a disaster.
37:29
Patrick: Right.
37:29
Frank Rolfe: 'Cause your manager's the whole movie. Have you had any tricks over time of people who... Traits you find in managers that suggest they will succeed, or have you had any issues with like certain questions you ask people that you found are great interview questions? Or what are some of your tricks on the managers that you've found so far?
37:52
Patrick: Well, every time I go to hire a manager, I kinda stress out. I'm like, it's just kind of a... I only... Fly by the seat of your pants is the way I've done it. I hired one manager for one of the parks in Iowa before I bought it. When I was on site and she had the nicest yard in the community and she kinda went berserk before I even bought it. She just... She couldn't handle basic task and stress of being responsible. So we had to... We actually had to hire a third party manager for a while to get that park under control before we found somebody. And it's actually one of our new tenants that came in to be manager. But typically, I've taken your advice, we've looked for the nice car, nice yard, they present well. And it's worked, I guess. It's just kind of... We haven't had a lot of turnover on managers, a couple, but fly by the seat of my pants is kinda how it goes. Go with my gut is just what I've done.
39:02
Frank Rolfe: And you said in that one park, you have a management company, is that just a local management company or M. Shapiro or what is it?
39:09
Patrick: No, it was just a local kind of a... He was an accountant/investor/property manager in this smaller town and he took it on and helped us out a bunch and with a good portion of the turnaround. And they decided it was really probably not for them ultimately, and then we found somebody else, but just didn't have any other options. It was...
39:38
Frank Rolfe: And based on your distance, obviously, your software platform is important, I assume you did as much diligence on it as we did and we also came to the conclusion, Rent Manager was by far the best. We looked at Yardi and every other option and we thought it was the best, and then years later, we thought, "Well, let's check it out again," and we did it all over again, and once again, we found Rent Manager to be the best. Have you been happy with Rent Manager? Is that all going well?
40:04
Patrick: Yes, it's going well. Yeah, I basically just piggy-back off of everybody else. I'm in the forums and the groups on Facebook and listen to everything that you put out, and I've just been taking everybody's advice that Rent Manager is working for everybody else. I did not try any of the other platforms. I just used you guys as an example and went with it and it's working well for us.
40:31
Frank Rolfe: Okay. And now let's talk about some lessons learned. First lesson learned on finding the properties to buy, it sounds like your forte has been in direct mail and cold calling, more so than brokers and other items. Is that correct?
40:50
Patrick: Yeah, I have a strict criteria of there's gotta be some meat on the bone, and everything that the brokers have that I've seen, I've tied a few parks up over the years that brokers have had, and it just never has worked out. I mean they just... The widely shopped parks are just not for me. Brokers reach out all the time and honestly, I just don't have a lot of faith in broker listings. I know pocket listings can be a great deal, but I feel like you gotta buy a park or two to kinda get in the door, and I just haven't... It just hasn't worked out. And I've been able to, thankfully, find enough parks to buy on my own. Honestly there for a while, we were growing so fast I kinda had to quit cold calling and quit mailing, and they still kept coming in the door. So I've been able to find parks that way, and just that's the way it's worked.
41:55
Frank Rolfe: And then what about on the negotiation side, any tricks you've learned on negotiation? Are you a win-win negotiator? What is your negotiation posture?
42:03
Patrick: Yeah, yeah, no, I mean I try to be... I think my biggest advantage is I'm down-to-earth, and I'm not slick and polished, I'm very direct, I don't... I try not to... I think the mom and pop can really... Are a lot more comfortable with somebody that's lived near where they've lived, can speak without being polished and not trying to pull one over on them. I just pride myself on being very direct and honest, and I think that people get real comfortable quickly when they don't... Trying to be hoodwinked into something. And... Yeah, I'm honest with what I can give for a park, and then it just worked out really well. I haven't had a lot of issues there.
42:53
Frank Rolfe: And then let's talk some more about due diligence. Any lessons learned or surprises that you've had on due diligence? Have you had... Have you ever had a phase one come back dirty, survey problem?
43:05
Patrick: I have.
43:05
Frank Rolfe: It's just been pretty much clean?
43:06
Patrick: I've got one park that the survey came back where the farm field fence was the border and the corner pens were quite a ways off, so their fence was encroaching on my property by several feet. So that was one issue that came up. I just do a boundary survey. I don't do the ALTA Survey. I just try to keep it simple. No surprises on phase one. I've never had anything come back, so smooth sailing there. Just trying to think any issues that have popped up. It's really been pretty uneventful. I mean there has been a few little things here and there that I've probably forgotten about, but it's not all gone smooth, but nothing big and wild and crazy.
43:57
Frank Rolfe: Okay. And then it sounds like on the financing side, it's mostly been a story of just regular old small town banks, perhaps.
44:05
Patrick: It has. I looked at agency debt a little bit and was just right on the cusp of where they wanted to see occupancy-wise, and maybe the town was just a little bit smaller than they liked, and so then they wanted a little bit more down. And I just never really... And then the interest rates started going up, so I just kind of dropped it. I got in mind that I would like to maybe do some agency debt in the future and get these parks filled up, stabilized and cleaned up, and then maybe do that. But yeah, everything's kinda on hold now with interest rates doing what they're doing, the local banks and...
[overlapping conversation]
44:42
Frank Rolfe: Then on the turnaround outside, it sounds like the lesson learned or the big issue is the future of buying new homes and/or new homes at a price in which people can afford to buy them, which is kind of a general industry-wide revelation that you can't just import and sell $80,000 single-wides without having all kinds of problems. Has that been your big lesson learned?
45:11
Patrick: Yeah, things have definitely changed. It's just not near as easy to fill parks now as it was just a couple of years ago. So yeah, I'm definitely on full alert when it comes to being able to fill these parks. The game has changed a little, in my opinion, in the areas where I'm at.
45:33
Frank Rolfe: Right, but it sounds like your big drive and your profitability, it sounds like it has been and will be increasing rents, correct?
45:39
Patrick: Yeah, always increasing rents. I agree that we're still a pretty cheap game. However, I know 21st Mortgage, I just spoke with them and they've kind of bumped their interest rates up, I think in the 10%, 11%, is what they told me, range. And between that and the price of homes, that is definitely eating into everybody's budget, along with gas and food and just general inflation. So I think I would say that I've probably tamed down my lot rent expectations until wages can kinda catch up.
46:17
Frank Rolfe: Have you tried filling lots through other methods? Have you... Do you aggressively try to get RVs? Do you get any organic move-ins or anything else?
46:25
Patrick: I really dislike RVs. I just haven't had great luck with that. And I don't really have... I've only got a couple RV spots, but I just haven't had great luck with that. The organic move-ins I've had... I've had a couple organic move-ins. I've offered to pay to move homes in, and I just haven't really got a lot of bites on that. It just seems that I gotta bring the home in, set it up and make it turnkey and that's what seems to work for me in my markets.
47:02
Frank Rolfe: Well, what kind of range as far as pace of filling homes in your parks per month? Has your experience been maybe an average of a home a month, two homes a month, or is it higher, or... And what's like... What's been your fastest pace ever? What's been your all-time record park pace of bringing in homes?
47:23
Patrick: Probably in the bigger park, that first park is kind of our biggest infill project. That was probably the... About a home a month is about all I've really... That's about as fast as I've worked in that bringing homes in. We're not... We don't have big crews. I still don't have a big rehab crew. I'm still using a guy here and a guy there, and it's just painfully slow. I can never seem to find a good contractor that will work in all parks and do a great job. So we just... It's slow go in bringing homes in and getting them rehabbed.
48:07
Frank Rolfe: And then what about any city problems so far? Have you had a city's... A grandfathering or anything, or have you been able to avoid that?
48:16
Patrick: I have been able to avoid that. I've looked at a couple parks that had potential issues with that and backed away from them just because of that. But no, really the cities don't give me too much trouble. They've gone from not enforcing some rules to all of a sudden out of the blue enforcing them. But really other than that, there's a couple... There's one city that isn't really easy to deal with on water. I'm always trying to get some information on what my water meter's reading and stuff, and they're not... They're just not easy to deal with. But, yeah, they don't love me, but they don't hate me, I guess I would say.
49:02
Frank Rolfe: Right. Okay. And then what is your future plan? Obviously, you're living your dream life, you're living in Alaska, you're working for yourself, you don't really have any problems or worries and you're escaping most of all the ills of America, whether it be urban violence or who knows what. So is it gonna be a story of just, you're gonna add on a few more parks as you find really great deals to buy? What's the future looking like?
49:31
Patrick: Yeah, that's about it. I mean, I'm happy up here. I just wanna be able to have my freedom and not have a boss, which is kind of my most sought-out aspect of having my own business. I just... I like to be able to just kind of do whatever I want. We've got busier than we wanna be here until we hired this regional manager. So we're kind of sorting through that, trying to get back down to where we've got a little bit more time. But yeah, my dad used to say, "I don't need the experience or the exercise. If I'm not gonna make any money at it why mess with it?" And that's kind of the motto that I have. If I find a good deal, I'll buy it and and make it work. And if I have to hire another person to help manage it, I guess I will. Otherwise, I'm just not... Yeah, I'm just pretty content.
50:26
Frank Rolfe: Right. And then what do you think of the future of the industry itself? Do you think mobile home parks will, for example, 50 years from now, look like they do today? Do you think the mobile home product itself is as good as it can ever be? Where do you see this crazy industry half a century to a century into the future? Where are things gonna end up?
50:48
Patrick: I see that... My opinion and what I'd like to see happen is change the look and the feel of the single wides to a more modern, different decor, different than just your standard 16 by 80. It looks all the same. It looks the same as it does in 1990. I think we gotta get to something that looks better. And of course they're trying to make them more energy efficient. I think they're... I think they're plenty energy efficient at the moment, but I just... I would love to see a different look and feel. And I think that we'll get there. I think some of these manufacturers are starting to do some things that make them look better. But when you drive down in these parks, you can't really tell a new one from a 1990, and I just think that's a shame. People really gravitate towards some of the simplest changes in these homes. They just... They wanna feel like they're in a new home. And I don't think it's that tough to do, but I just don't see a lot of people doing it.
52:01
Frank Rolfe: What... Just I'm curious, what would your vision be? Are you thinking more of like a streamlined home? What would the exterior be like?
52:08
Patrick: Maybe some...
52:09
Frank Rolfe: [52:09] ____, what do you think?
52:12
Patrick: A story and a half, or some transition windows with a pop-up and maybe like a bunk type pod. I'm just... I don't know. I'm not the most creative person, but I just would really would like to see just something more modern, kind of a combination of tiny home, but yet it's not tiny, it's still 1200-square-foot, but it looks like a tiny home, if that makes any sense.
52:36
Frank Rolfe: Yeah. Why do you think we're stuck in this rut? Because, in other words, anyone who goes to the mobile home shows, anyone I ask the same question, everyone always says, "Oh yeah, well, the homes are... They're not as nearly as good as they could be." I've been hearing that for 25 years now. Why is the industry, do you think, so set on this certain single-wide look? I can't really figure it out because I guarantee you that if you got 10 of the top industrial designers in America right here, up right now, they would all give the modern single-wide a flunking grade.
53:10
Patrick: Yes, yes.
53:10
Frank Rolfe: Right? They're not attractive. They're not ingenious. They're... [chuckle] Why can't we break through the rut here? It's getting kinda ridiculous.
53:20
Patrick: I don't know, and I don't know if it has to do with pricing. 'Cause a few of these little items are as options, and I think maybe it increases the price to where it's not feasible. But I don't know if they're scared of breaking out of their mold or what. But, gosh, I would... Yeah, it just would be nice to see something different like, "Hey, when I drive down, that's a new home. That's not a freshly resited 1997. I mean, I don't know. They need to do something.
53:52
Frank Rolfe: Anything new on the parks you have visions of? Have you tried any new amenities? Anything that you're like, "Yeah, well, the park of the future will have this additional amenity or characteristic"? Or do you think the parks themselves, are they at the highest level or could they still be taken up a notch?
54:11
Patrick: And I think you guys are doing this in a couple of your parks, offering free Wi-Fi. I think that's something I might look into in the future. If you can save them a $40 internet bill and we can get it for 20, I mean, that's more budget room there. I'm putting in a playground in the biggest park right now, a place for the kids to play in there. I just literally brought it in. I brought it in, haven't really got it real set up yet, and it's just a mob scene of kids there, so I know that's going over well. I've got picnic tables on order for that spot. So that's one thing, is putting that in. I don't know. Maybe like a... I think you guys have talked about a splash park, something like that, just something where the kids can play.
55:01
Frank Rolfe: Splash pad, yeah.
55:03
Patrick: But I haven't really... I'm still in kind of turnaround mode on most of these, so I haven't really got to the, what else can I add for amenities stage just quite yet.
55:16
Frank Rolfe: What are your thoughts on how the industry can end its perpetually poor and negative stigma? Any ideas of workable solutions to the industry having no good marketing for half a century?
55:29
Patrick: I think as bigger operators take over these parks that are just ran down and let go, I think it will get better. But with these people that own these parks and don't do anything to them and let the homes just get run down, they're the ones that are causing, I think, the majority of the stigma. Because there's a night and day difference between a park that's just got all '70s home that are in horrible repair versus a park that's got at least a few newer homes brought in and rules are enforced and everything's clean. I mean, it's a night and day difference. And I think these landlords that just let them go and don't put money into them is really what's causing it.
56:18
Frank Rolfe: And that kind of speaks to this whole narrative in the media where landlords are evil for raising rents when in fact you can't bring old parks to life without raising rents. For example, in your portfolio, you would not have bought any of these parks or invested any capital. You would not have put in 250,000 into the roads or anything unless you could raise rents to get a good return, right?
56:41
Patrick: That's right.
56:41
Frank Rolfe: Only a fool would do that.
56:43
Patrick: Right.
56:44
Frank Rolfe: So that narrative is completely hollow because in the absence of people raising rents, no one will buy these old parks and put any capital into them.
56:53
Patrick: That's right. Yeah, it doesn't do anybody any good to leave the lot rent low and not put any money into it. 'Cause, I mean, it's just... It's tailspinning into disaster. I mean, you've talked about it extensively, parks getting tore down. But not only... Even if it doesn't get tore down, it just finally gets to a stage where nobody wants to live there and that doesn't do anybody any good. And I think the value is still there. I think people, they may not say they wanna pay more to live in a clean place, but I just can't help but think that that's not the case. I mean, I would much rather pay a little bit more to have a nice, clean, safe place to live that doesn't look like a disaster.
57:40
Frank Rolfe: Right, [laughter] totally, totally agree. Well Patrick, you and your wife are an inspiration to many people because you're living your dream life which you've created yourself. You're kinda like Frank Sinatra's song, doing it your way.
57:53
Patrick: Right.
57:54
Frank Rolfe: Right? So you have created this amazing lifestyle out in Alaska with this portfolio of parks. But we equally appreciate you taking the time to be here to help explain to others who are contemplating the park industry or maybe have already jumped in there and own a park that there still is opportunity aplenty. You have to work at it, right? It's not a get-rich-quick-overnight scheme. It requires strategy and work and intelligence and basic business know-how, but it's an attainable goal. And I think it's important for people to realize in a world of real estate where a lot of it is completely shot such as home wholesaling and many of these single family shows that still are around HGTV. I love watching these shows today because they would all be bankrupt. In fact, a lot of those shows like Flipping Las Vegas, if you Google them up, they all went out of production years ago.
58:52
Frank Rolfe: So I'm sure if you saw the show today, the guy would buy the house, he'd have 250 in it, it would sell for 170, if he could find a buyer, right? But it's good for people to see that there is opportunity in America despite all of America's problems, at least as far as the mobile home park industry goes. So we really appreciate you being here and for you and your wife doing what you've done and for helping educate people to that. So we really appreciate you being here. And we also appreciate everyone else for being here tonight to hear the story of Patrick and how he does it from Alaska. And so we really appreciate you being here, Patrick and thanks for...
59:31
Patrick: Well, I wanna thank you too, Frank. The information you've put out, the learning, the things you've taught me has made me millions and made it all possible. So I really wanna thank you and your organization as well.
59:48
Frank Rolfe: Thanks very much, Patrick, for that, it makes our day. And, again, thanks everyone for being here tonight, and we will see everyone again soon.
59:55
Patrick: Thanks.