The new year has arrived, bringing with it fresh opportunities and challenges. In our latest Lecture Series Event, Frank Rolfe explored the Top 5 trends—good, bad, and wildcard—that we see shaping 2025. This insightful discussion included a deep dive into how these factors could impact mobile home park buyers and owners.
If you missed the live event, no worries! You can now access the full recording.
Why Watch?
Frank Rolfe, co-founder of the largest mobile home park portfolio in the U.S., shared his expert predictions for what he calls a "rebuilding year" for both America and the mobile home park industry. Known as the "human encyclopedia of all things mobile home park" (New York Times), Frank has nearly 30 years of experience in the field.
Whether you’re an experienced owner or just starting your journey, this session is packed with valuable insights you won’t want to miss.
Five Good Things Five Bad Things and Five Wildcards for 2025 - Transcript
Frank Rolfe: Welcome everybody to tonight's lecture series event. As you're probably aware, we're in a new year now. Last time we were talking, it was 2024 and now we're in 2025. And like any smart investor, smart park, buyer, owner, operator, it's time to start really looking at what we have going on right now in the Mobile Home Park space for the year of 2025 and help organize our thoughts. I broke it into three categories, The Top Five Good Things, The Top Five Bad Things, and The Top Five Wildcards.
00:32
Frank Rolfe: Now, before we begin, let me remind people, I'm giving you my perspective based on being a Mobile Home Park specific focus. So there are some realities to life that are ugly that all Americans face. I'm not talking to any special interest other than Mobile Home Parks. So while I wish we could all bring forth peace, happiness, unicorns, lollipops to America, we can't. There are some areas that are in real trouble, others are doing better. But I'm just gonna tell it like it is, hopefully not offend too many people. But what I tell you is just my knowledge based on the facts. But again, strictly from a Mobile Home Park focus.
01:21
Frank Rolfe: So let's start off with The Top Five Good Things going on right now in America regarding the Mobile Home Park business. And this first slide appears to be cruel because there's no fix to the US affordable housing crisis. It does not exist. And since Mobile Home Parks are built on affordable housing, this is a good thing for us. Bad thing for Americans, but a good thing for us. Now, other industry sectors in the past have thought that they also had something set in stone. People in the office building sector, for example, thought they had just the greatest investment idea ever.
02:02
Frank Rolfe: Building structures that people can come into their office every day because gosh darn it, you had to go to the office. But now we know that you really didn't have to. Technology has changed that space. But what we're talking about on this slide is simply the fact that there is no technological way to solve affordable housing, nor is there anything in a non technology sphere that can fix where we're at. And let's just put that into science.
02:27
Frank Rolfe: I was at a bunch of speeches here a while back, many, many years ago. And at this conference, which was a Mobile Home Park/Housing conference, they had a speaker and this guy was a single family home expert professor at the University of Texas. And he went up there and said, hey, everybody, here's the deal. They can't build cheap houses anymore, but it's not for the reason you think because this was pre-COVID when you could build things kind of cheap. And people said, this is an interesting speech.
03:04
Frank Rolfe: What's he talking about? And he then brought forth a whole bunch of charts and graphs on a PowerPoint to prove that the average single family lot in America, and this was back then, was $80,000. Now, of course, yes, that includes places like California and New York and washed in and averaged with Mississippi. But nevertheless, that's a pretty high amount of money for a little tiny parcel of land. I'm not talking an acre here.
03:36
Frank Rolfe: I'm talking probably a quarter acre to an eighth of an acre. And the point of his speech was that when you start off with $80,000, the idea of building a $150,000 home, which is what most people would target as affordability, just is impossible. You can't build a house for $80,000. So there's Article One of why you can't solve affordable housing in America. But number two is simply the cost of building a home. And for the example to this look no farther than my small town of St. Genevieve, Missouri, where the town decided to reallocate some land it owned out on a street out by a waterpark.
04:10
Frank Rolfe: It was originally intended by the city to be a place to build businesses. But over time, people realized no one really wanted to build a business in a small town in Missouri. So housing seemed to be more logical, but our town had an unusual wrinkle to it. They saw the housing if it would be truly effective for the needs of the residents. They were hoping to come in at a price point of about a $150,000. And the concept would be that therefore seniors who are downsizing or new family startups could afford to buy a house in town and therefore they wouldn't have to leave town. As they got more successful, if they were the younger group, they could buy a more expensive house. But the goal was, let's try and build it for $150,000.
05:00
Frank Rolfe: So the town went around to builders and said, here's the deal. We will go ahead and effectively give you the land. We will even build the streets. We'll even put in the water, sewer. How cheap a home can you build? No one could break $200,000. Not even close. It was more like between the two and 250 price point. And that was with free land, free utilities, free everything. So that's the true reality of building a single family home today. So if you take those two numbers and add them together, what do you get? 250,80,330. Average home in America right now is running over $400,000. So if you really kind of think about it, it really adds up. And that's kind of where things are at. Is there a way to reduce this?
05:46
Frank Rolfe: No, I can't come up with anything. I know we saw a big run up in prices after COVID with supposedly supply chain interruption, which is still very dubious, as was COVID in general. But nevertheless, I don't see a retreat in pricing to such a level that you can bring that price down by half, maybe 10% over time. But at the same time, other costs keep going up. Who knows what the permits will cost you and all the other soft costs. So the bottom line is you can't build cheap housing, it doesn't exist. And why that's a good thing for park owners is because we will always remain in our dominant position as the only cheap housing on the planet.
06:18
Frank Rolfe: We're the only affordable detached housing in existence. And that's never going away. So unlike all the other real estate sectors of office and retail and lodging and storage and you name it, who face constant pressure from the internet and technological advantages, no one has figured out a way to build a house in the cloud. If they could, they'd be working on it. I'm sure maybe Elon Musk has been pondering it, but it just doesn't exist. Now that's not to say there aren't some housing alternatives out there that you come upon occasionally. When I was in college, I thought the smartest adult I knew was a guy who was related to one of my dorm roommates. And here was his plan.
07:06
Frank Rolfe: He wanted to find a nice affordable place to live as he got older. So he found a nice wooden yacht out of Wooden Yacht Magazine, which you can go to the local Barnes & Noble and look up. And he found this boat, a nice yacht from like the 1940s. Looks like something you'd see stereotypically out of a movie. And he bought this yacht for about $50,000. And then he moored it just off of Catalina Island, nicest part of all of the whole Los Angeles coastline, but it had no engine in it. So it was a yacht without an engine, so it couldn't actually go anywhere. And then he bought a little dinghy and it had an engine.
07:40
Frank Rolfe: He would take the dinghy to shore. He would buy groceries and then go back out to his yacht. So he had found how to have a very high end, high quality Southern California ocean style yachting lifestyle for $50,000. And then he would maintain the yacht himself. And I thought, there's a genius. And there's probably people out there who have their own other unique one-off ideas to create affordable housing. But in general, there's just nothing there. Now, housing versus income in America is also unique because we spend, we think, a lot of our percent of income on housing. But that stat, if you dig deep on that, that's not even really true.
08:32
Frank Rolfe: On the lower sectors of the American population, they're not spending 33% on housing. And I urge you to look this up yourself. They're spending close to 75%. So Americans are just tapped out in general. The country is broke. The average American consumer apparently doesn't realize it yet. The only thing propelling the economy is people continuing to spend on credit cards until they just hit their backs and it shuts down. But there's just not a lot of room to maneuver between incomes and housing in America. And there's no AI coming to the rescue. This is not something that can be impacted technologically.
09:07
Frank Rolfe: A lot of other industries are finding that AI and the internet have revolutionized things in both good and bad ways they never anticipated. Look at the motion picture industry. They now can... Through AI, they can replicate stars that died 50 years ago. They can bring back James Dean, Marilyn Monroe, it doesn't matter. They can build amazing special effects and it kind of makes the value of movie stars goes down, makes the value of people who did things, stuntmen, etcetera. They're all damaged from that. But I can't come up with any scenario unless you can of how AI is going to change things.
09:39
Frank Rolfe: Now I'll be the first to admit there are new styles of housing, 3D printed homes are cool as heck. But we rent land. So it's not really a question of can you make the structures on the land different? Probably can in the years ahead. But as far as can you get around the fact that people need inexpensive places to live? No. Can you come up with a business model that delivers that product cheaper than a Mobile Home Park? No.
10:08
Frank Rolfe: And as far as what happens with the homes that sit on our lots like cars in a parking lot, that doesn't really much matter. Let's move to the next top five good thing. And that's that our lot rents are ridiculously cheap. They could literally double or triple. And we would still be ridiculously cheap. And let's just start off with the story of what I'm talking about here, because I'm not urging everyone to go out and double or triple your rents. What I'm suggesting is that all park owners look a little closer at the value you're providing. And what that's really worth to people.
10:40
Frank Rolfe: Let's assume that you and I are in a car, we're driving down the highway, we come to an exit, and there's not another exit for hours, and it's dark. So we're gonna pull over, and we're gonna spend the night at this exit. And at that exit, you have three choices. The Tiki Motor Court, the Holiday Inn Express, and the Four Seasons Hotel. The Tiki Motor Court $20 a night. Holiday Inn Express is 100. And the Four Seasons is 300. Which one would you stay at? I'd stay at the Holiday Inn Express.
11:16
Frank Rolfe: In fact, I'm a big Holiday Inn Express fan. I stay there most of the time when I'm out on the road. But I don't know anyone who's ever said the Tiki Motor Court. Why wouldn't you stay there? It's the cheapest, right? It's $20. It's a fifth of the price of the Holiday Inn Express. And you'd say, well, I'm not gonna stay there because it's probably dangerous. I might get bed bugs there. Cleanliness might be appalling. And you'd be right. That's correct. But the moral is that the American consumer doesn't do things just off price point. They do them off value. And there's a huge disconnect between the price point and the value in our industry.
11:54
Frank Rolfe: Now, right now, there's a statistic that's never been more out of whack. And that's the ratio between the cost of owning versus renting. Always in American history, the ratio has been closer to about 1.2:1. It costs a little bit more to own than to rent. And that's why we value, as Americans, our pride of ownership. But the problem right now is the ratio is almost 3:1. It costs about three times more to own than it does to rent. And you can run the numbers yourself.
12:30
Frank Rolfe: I ran the numbers myself. So it's completely correct. If you take into account the cost as far as what you could make on your down payment in interest in a CD, and if you take the mortgage and you take the utilities, the tax, the insurance, you're gonna find it will cost you about three times more to own than rent. And in American history, whenever that ratio has gotten wrong, it has to self-correct because at a certain point, people aren't gonna own anymore. At a certain point, they can't rent the stuff out because if people buy a house, let's say you buy a single-family home to rent it, obviously the cost of running that house is gonna have a huge, perhaps the largest, impact on the price you can charge in rent. And at the same time, if you're renting a house, you can sell it at such a premium well, you're gonna sell it. So what does it mean?
13:23
Frank Rolfe: Well, there's a guy named Grant Cardone. I don't know a whole lot about him, although he is much of a self-promoter from the multifamily sector. But he's written many articles recently that say that rents in America will have to triple on the apartment side before the ratio comes back to equilibrium. Now, I find that hard to believe. I don't know how apartment rents can go from an average of $2000 a month to $6000 a month. I find that shocking, alarming, seemingly impossible for my brain to comprehend. But if you really read what he says, and if you really look it up yourself on the internet, you find most of what he says is true. But I'm a Mobile Home Park person.
14:05
Frank Rolfe: I don't really care about the premium limitations of rent. But I would throw out to you, if the future of apartment rents is to go up to 4000 or 6000 a month, then clearly Mobile Home Park rents are ridiculous. The average Mobile Home Park rent, to the best of our knowledge, is about $300 a month. Why do we say that? Well, it makes common sense. If you go out and look at deals for sale, you'll see all the time the lot rents are $200, $300 a month. And you have to remember that there's 44,000 Parks in America, and you have to take the ones with the big rents and average them with the small.
14:41
Frank Rolfe: So for every park in LA where the lot rents $1200 a month, there's a park in Mississippi where it's $100 to counterbalance it. Now, if you're at a $300 rent in a market in which houses cost $400,000 and can never come down, and apartment rents average $2000 and are only gonna be going up, it seems kind of weird that we're at $300 a month, doesn't it? Why in the world are we at only 15% of what our competition is charging? Now, there was a guy named Charles Becker who wrote a paper on Mobile Home Park lot rents and why they were so insanely low.
15:12
Frank Rolfe: He did this years ago. He would never do it again, I'm sure, today in today's woke environment. He'd be cancel cultured within minutes. But he called me up when he did that paper and asked me if I had an opinion of why they were so low. And I said, well, mom and pops just never increased them. They just never had the desire. And he said, well, that matches up with what I found. He said that in all the years of inflation, the Carter era, when it was over 10%, other areas, 5%, 6%, they never raised them. So here's a crazy statistic for you.
15:48
Frank Rolfe: If you look at the rents back in the 1950s and 60s when these Parks were built, a standard rent was $50 a month. If you inflation adjust that to today, that would be $500 a month. So Parks right now are on average about half of what they were when they were built. It doesn't make a lot of sense. Some would say, oh, well, it's because they depreciated down over the years. Now we're talking land here, not talking the homes, just talking the land. Even the 1965 Mustang sold for $2500 in 1965.
16:23
Frank Rolfe: Today it sells for about $25,000. That's exactly right on with where inflation is. $2500 back in 1965 today is $25,000 in modern dollars. But what happened to Mobile Home Park lot rents? We didn't keep up with the 1965 Mustang. We didn't keep up with anything. We went nowhere. I once had a park in Grapevine, Texas. It was owned by a guy. He was a contractor, and then he got more successful, and then he became mayor of the city. But his rent was $100 a month. So after I had it tied up under diligence, I said to him, I'm just curious, why are you at $100 a month?
17:02
Frank Rolfe: Every other Mobile Home Park in this town is in the 300s, and you're at $100. And he said, yeah, I know. Well, here's the deal. See, when I got up to being the mayor of the town, I was worried if I raised the rent, the tenants would come and heckle me. So I just elected. It's a choice I made to never raise the rent again. This guy had not raised the rent literally in like three or four decades. He just left it at $100 a month, even though everyone else was at 300, 350, 375. It was so ludicrous that when I bought the park, there was nothing to do but to move it up significantly.
17:39
Frank Rolfe: I mean, if I went up just $50 annually, which is what we recommend, it would take me five years to catch up to market. And five years from now, market would have been even higher. So I just went to everyone and said, look, here's the deal. You probably all have friends and relatives at other Mobile Home Parks. You know everyone's paying in the 300s to live here in Grapevine. And it's a great town. We're probably the nicest park in the town, which it was. It was right in the heart of a bunch of very expensive single family homes. So here's the deal. I'm gonna keep letting you have the best deal of all time, but I got to raise it to 275.
18:13
Frank Rolfe: So if you don't wanna do it, hey, here's the name and number of every other Mobile Home Park in Grapevine, free to go there. I sent this thing out and I didn't have one single person contact me because everyone had known for all those decades that they had been getting away with murder, paying $100 when everyone else was at 300 and 350. And that's how it is. So mom and pops have basically quantitatively eased our rents, just like the government kept interest rates low under Obama by buying up all the debt themselves.
18:46
Frank Rolfe: Park owners made a conscious decision not to raise rents. Was it ignorance? Did they not realize that we had massive inflation during the Carter era and other eras? I don't know. I don't know why they did it. Maybe they were just trying to be altruistic, but it's not gonna work anymore. New owners are not gonna be able to buy Mobile Home Parks at current values and pay for wildly increased insurance, property tax, and utilities all on these crazy rents that we all have.
19:17
Frank Rolfe: So over time, people are gonna have to realize that Mobile Home Park lot rents are gonna have to go up significantly not to take advantage of people, not to reach a level in which it's no longer a good value, but simply because we provide an incredible value for nothing. If you go to Costco, which I do probably once a week, you'll notice they have an item in there. They have a hot dog, chips, and a drink for $1.50. And there have been articles written on this because Costco loses money on every hot dog. How do they make it up?
19:50
Frank Rolfe: Well, because you buy other stuff when you're at Costco. Maybe you go there to get the hot dog, and then you eat the hot dog, and then you go around the store with your shopping cart, and you go up there, and you spend $180 there at the front desk. But we don't have any other product in Mobile Home Parks. All we have is the Costco hot dog. So you can't have a lost leader and make back something when you have no other products. Now, there's huge power in being the dollar store of housing, because our phone and everyone's phone rings off the hook by people who cannot believe how crazy inexpensive we are. But we can't remain crazy inexpensive.
20:23
Frank Rolfe: We can still be insanely inexpensive, but we just can't be crazy inexpensive because when you're crazy inexpensive in the modern world, what happens is you're ultimately just gonna redevelop. If you read all the articles that come out every week that I review and send out to everyone, if you're not getting those, contact Brandon because you should be getting my weekly news reviews, there's a recurring theme, which are Parks that are shutting down for redevelopment. There's a ton of them.
20:55
Frank Rolfe: Every week, there's probably at least one or two new announcements of Parks being torn down. And they're normally being torn down to build apartments. And the reason that's happening is apartment rents are 2000 a month, Mobile Home Parks are 300 a month, and you can stack apartments two or three high. So clearly, that's what you're gonna do. You're gonna go in there and just redevelop if you can't get a good price for your rent. There's no simple solution to it. But modern owners, even when the tenants are buying the Parks, they cannot maintain these low rents.
21:25
Frank Rolfe: I've written many articles on that, which are again, reviews of articles which appear in the media. It's also important in our industry to ignore people's perception that everything in the world is based on percent. Dollar store went from $1 an item to $1.25 last couple of years. That's a 25% increase. The McChicken sandwich at McDonald's went from $1 to $3 in just the last few years. That's a 300% increase. Is that abhorrent that McDonald's would raise the McChicken 300%? No, because it's only $2. And at $3, it's still a much better value than a hamburger over at Wendy's. So what's it all mean?
22:13
Frank Rolfe: Percents mean nothing. When you start off at a low number, then of course, you end up with a giant percent increase from there. It's all about the actual nominal real dollar value. When a Mobile Home Park lot rent goes from 300 to 330, that's a 10% increase. Oh my gosh. When an apartment goes up, 10%, you go from 2000 to 2200. You cannot compare $30 to 200. Yet that never gets discussed or written about. But the bottom line to it all is, rents in our industry are crazy low. They have nowhere to go but up.
22:54
Frank Rolfe: How much up? It depends on your market. It all depends on your value that you provide. But I can tell you one direction, Mobile Home Park lot rents are never going and that's down, because the only way they can go anywhere is up or they end up being demolished. Next to The Top Five Good Things, the collapse of office and retail makes Mobile Home Parks finally mainstream. When I hit my first deal that I could not get seller financing on, I went to my banker that I knew well from the olden days and I proposed him making a loan on a Mobile Home Park.
23:30
Frank Rolfe: His reaction was very cold. He basically told me that Mobile Home Parks to him were junk and that if I was gonna buy something in real estate, I needed to buy like an office building or something classy. And that was the general attitude back in the '90s. If you were in the businesses, getting loans were really hard because people saw Mobile Home Parks as a joke and not a funny one and lenders had no interest in the collateral whatsoever. But what's happened now? Well, we're seeing it happen every day now. The internet has basically changed the way people work. They all wanna work remotely.
24:09
Frank Rolfe: They don't wanna come to the office anymore. The stats in most major US downtowns are appalling. In St. Louis, the vacancy rates around 50%. In Washington, DC, you probably saw with Elon Musk and Doge starting to go through the books finally, that what was the occupancy of DC office buildings that the government rents? It was, I forgot what it was, 15%, something like that. I may be over much at 15. It might have been five. But the bottom line is the internet, the ability to work remotely has ruined the office market. Now, people are starting to say, wait, you got to come back to the office. But they're saying, come back to the office three days a week, two days a week, four days a week. Office will never be ever like it was. And retail is no different. And maybe it's even worse in retail.
24:54
Frank Rolfe: You can't call the customer to come back to the store or you're threatening to fire them. So the world of retail, most people today shop for most of their stuff online. I know that I do. I go on Amazon. I'm not gonna go to Walmart even today. Why would I spend the gas and time? Let's go on Amazon and buy it on there. Most people are doing that. So brick and mortar stores don't matter anymore. As a result, retail has terrible vacancy. How do I know? I'm an adult. I go to like a mall. How much occupancy do malls have today?
25:30
Frank Rolfe: I don't know. Some of them, 50% of real occupancy. Some of them maybe 75 or 80 if they're highly successful. That is never gonna work. And now that you're seeing those loans come due in office and retail, look at the values. A Manhattan office building recently that they had a $330,000,000 mortgage on sold for I think around 8,000,000 or 9,000,000. The largest office building in all of St. Louis at 1,000,000 square feet. That thing sold for I think less than 4,000,000. Can we all see the problem here? So, as all of these things that were considered much more grand than Mobile Home Parks have fallen out of favor, not making any money, it just makes Mobile Home Parks look much better to people because at the end of the day, if you're an investor, it's all about money.
26:16
Frank Rolfe: It's all about the return you make on your money. It's all about capital preservation. There's the old saying, before you can have return of capital, you must have return or before you have return on capital, you must have return of capital. That's not happening in the office sector. That's not happening in the retail sector. It's not happening in the lodging sector. And as all of those old mainstays everyone was so excited about, so proud of, as those all get destroyed, you kind of have what I call the Goldfinger effect. If you've seen the old James Bond movie Goldfinger, the plot in Goldfinger was that this guy named Goldfinger was trying to corner the gold market.
26:55
Frank Rolfe: He was gonna irradiate all the gold in Fort Knox, not steal it, didn't have to steal it. He was basically gonna fire off some kind of nuclear device to irradiate it with the theory that if all the gold in Fort Knox was rendered useless for hundreds of years, the value of his gold would go up substantially. That's kind of what's happened with Mobile Home Parks. As we've watched all of our peers fall from grace, literally collapse, humiliate themselves.
27:22
Frank Rolfe: It just makes Mobile Home Parks seem like a much more mainstream feature. I only see that getting better over time. I think we're only gonna be keeping getting more and more respect. You see with private equity groups entering our space, so many of them, Sam's L, Carlisle Group, every big name is now in our industry because we are finally gotten our deserved recognition. Also, and we'll be talking about it on some other slides coming up, you have what will really be the nail in the coffin, which is what they're calling the commercial mortgage apocalypse, which is the fact that you have somewhere around a couple trillion dollars of debt on office and retail coming due in the next two years, and no one knows what's gonna happen with it.
28:04
Frank Rolfe: A lot of it is coming due. They're just doing what's called extend and pretend, can down the road, extend the note, keep making payments, pray to heaven that somehow the internet gets destroyed, I guess, and people go back to shopping and brick and mortar stores, not gonna happen. But when that all occurs, and you're starting to see it now, every time there's a story about a multi hundred million dollar office building selling for nothing, it's gonna hammer home the fact that maybe the whole point of income properties always was the income side, and it wasn't just the appearance. Number four on the good things, the weakening of the stigma.
28:43
Frank Rolfe: Now it's really unusual that if you talk to people about Mobile Home Parks, if you're a boomer like I am, you have a negative attitude. I had a horribly negative attitude when I bought my first park and everyone I know hates Mobile Home Parks because we grew up on nothing but television and movies that said only the low lives live in Mobile Home Parks. But here's what's weird. I've got a daughter who's a millennial. If you talk to millennials, they don't have that stigma. Their generation missed all those TV and movies. So over time, things are changing. One thing that's changing in a big way is just the level of play of most Mobile Home Park owners. Everyone's trying so hard to improve the quality of the product.
29:25
Frank Rolfe: Again, we're going back to the whole value formula. If you wanna raise your rents, you have to offer a good value so you will retain your customers. But have you ever noticed that all the Parks go in these days, many of them, even the ones that used to be nasty are looking better? It's because people are trying to clean up their act. They're trying to take things to the next level. And as that happens, as you see fewer Mobile Home Parks that are just awful, dirt roads, people parking in the yards, no skirting, as that all dies off, every American's general view of the industry improves because they only know what they see.
30:00
Frank Rolfe: You're also seeing the advent of modern greenfield development. And I don't mean people trying to go out and build Mobile Home Parks on a piece of land somewhere. It's a tough model. To get a permit, you have to go out in the middle of nowhere. There's no water, no sewer. And once you build it, there's no customers. I'm talking big professional builders that are doing mixed use developments that include a portion of Mobile Home Park. So these are professional developers, not Mobile Home Park owner operators.
30:28
Frank Rolfe: And what they're gonna do is they're gonna have section for single family, section for apartments, maybe some condos, and maybe some Mobile Home Park. It makes total sense. It's like a car dealership, which has cars of all different styles and price points. So it makes total common sense that they would do that. But that, again, will elevate the industry because a lot of cities will become confused. They're supposed to hate Mobile Home Parks, but yet now they kind of like them. Kind of a schizophrenic experience for city inspectors and others.
31:02
Frank Rolfe: And also these developers are gonna produce really nice product, which again, people will be exposed to and it will reduce down the stigma. And don't forget the baby boomers like myself, we're all getting old. Baby boomers were born between 1946 and 1964. So if you fit into that spectrum you're a boomer. But one thing you share in common, if you're a boomer and I'm no different, is you're getting old. Meanwhile, millennials have become the largest age segment of the American population. As boomers have died off, the millennials have stepped up and they've now got the number one position.
31:38
Frank Rolfe: And the millennials don't have a negative stigma on Mobile Home Parks. Quite to the contrary, millennials are attracted to the concept of living small. Why is that? I don't know. Maybe because boomers were so addicted to the concept of building bathrooms the size of football fields, that there's a reaction from the millennials. Or maybe it's the fact that millennials just realized that given the numbers today, they can never aspire to have a gigantic house. Or maybe they just watched a lot of HGTV with all of the tiny home shows. But all of these combined is definitely weakening the stigma.
32:13
Frank Rolfe: The stigma has been a big battle for this industry for at least a half a century now. Number five is something from a timing issue of why there is a good thing in 2025. And that's if you're buying Mobile Home Parks, when rates go into decline, that's like the best moment to buy a park. We all saw that during the 2007-2008 Great Recession. Anyone who bought a Mobile Home Park in 2006, '7 in that era and really worked it and the rates started coming down, what happened? When the rates went down, the values went up. The cap rates follow interest rates. When the rates went down, you could go in and ReFi your Mobile Home Park. You look like a hero. You can do a cash out ReFi. The sky was no limit.
33:02
Frank Rolfe: So, we all learned from 2007-2008 that you wanna buy Mobile Home Parks when rates are declining. You wanna not be psyched to buy Mobile Home Parks when the rates are ascending. Now, we've just come out of a period where rates ascended faster than they have in 40 years. So that was a tough time. Now, we seem to be at the peak. Now, what's gonna happen here at some point, not to be the bearer of bad news, but as an economics major at Stanford University, for whatever that's worth, which isn't much, I know that interest rates and the economy go in cycles.
33:38
Frank Rolfe: How do I know this fact? Because if you go back to the origins of human civilization, to the earliest times they ever tracked anything, you will notice that the world has always been filled with periods of boom and bust. And they just naturally follow each other in an endless perpetual cycle. And it's always been the case. Look at 2007, 2008 Great Recession. Let's go back. What's the next one? 2000.com bust. Okay, there we go. What about before that? Well, you had the savings loan crash, 1988, '89 era, right? You'll see that there's a very predictable bust every eight years or so. However, it all ended after the Great Recession.
34:25
Frank Rolfe: We've not had a bust now in about 16 years. How abnormal is that? It's never happened before in history. It can't go on. There's no way you could have a society that had perpetual cycles for three, four, 500 years, and then suddenly announced, oh, no, we're not doing that anymore. That would be as irregular as a tide going out, but never comes back in again. So, I don't think that's the case. Nor do I think that our current leaders would be the geniuses to figure out how not to have recessions. So, I don't think that happened. So, I think you're gonna see a recession, probably 2012, perhaps maybe 2006. And with the recession will come substantial interest rate movement down.
35:08
Frank Rolfe: I once gave a lecture series like this, if you all recall, a few years ago, and I just mapped out interest rates since 1950. And if you recall from that lecture, what happens when you hit a recession? The average interest rate drops by about three points. 2007, 2008, it fell even more than that. That was an anomaly. So, I'm not gonna say, oh, yeah, we're gonna be just like 2007, 2008 rates go to zero. Now that's probably unlikely. But would rates fall three points in a recession? Oh, absolutely. In fact, based on history, that would be the norm. So, what it means is if you can buy a Mobile Home Park before the recession hits, which I think will be hitting within the next 12 to 24 months, then you'll look like a genius no matter what, if you just bought an average Mobile Home Park and did average job of running it, as those interest rates go down, and the cap rates go down, then the values go up.
36:03
Frank Rolfe: Now, let's transition to five bad things that could happen or might happen in 2025. The first one is the free rent movement. So, if you are a member of the baby boom generation, 1946 to 1964, then you probably remember the free love movement. The free love movement were the hippies. And their mission was to try and convince all of America that marriage was antiquated. In fact, marriage was a terrible thing, they would say, making commitments and things. No, no, that all tied back to some kind of heritage we had of controlling each other. And so they advocated for the end of marriage, and that we would all just end up in this kind of non binding, non committal, no... Zero monogamy situation.
36:54
Frank Rolfe: And of course, it died out. It was big in the 60s. And it was still kind of freewheeling into the 70s. And by the 80s, it died out. People realized, you know what, I don't really think that works out from a lifestyle choice, not really enjoying it. Factions were terrible. And so in the 80s, it all it all died off made way for return to the original values. You had like the preppy handbook was the number one seller. And but now we have a replacement. So all those hippies have all gotten into the history boxes. And now we have basically new hippies and their new movement since free love didn't work out as the free rent movement.
37:29
Frank Rolfe: And this movement is one in which they they wanna make this case that landlords are evil, no matter what they do. It doesn't matter what you do, you are evil as a landlord. And therefore, landlords need to be destroyed. So, we need to have whatever the government and society can do to destroy landlords, freezing rents, you name it, because landlording is bad. And free rent is great. And it's a souvenir of Biden, to be honest with you, Biden did an enormous amount of pandering and vote buying. It was a very destructive four year period. And that empowered many of the same goofballs. They did the free love movement.
38:13
Frank Rolfe: Decades earlier, they now reinvented themselves as the free rent movement. And it's it makes no sense. You can't build a case for it. I for fun, because I write lots of articles. And I'm an old high school debater. I love debating people. I love getting their opinion on stuff and trying to say, hey, sometimes I'll say, you know what, that's actually not a bad idea. I've got lots of ideas from people where I took the contrary position. I didn't use Uber or Lyft originally, because I thought taxis were the only way to go. People said, No, you're a moron. Here's why Uber Lyft is superior. And after hearing their their their debate arguments, I thought, Oh, you know what, I'm gonna get the app, I'm gonna use Uber Lyft, because, okay, that looks like better than a taxi.
38:58
Frank Rolfe: But when I talk to people on the whole free rent movement, the their argument is just stupid. There's nothing there. It's not like, Oh, yes, they have some great revelation, they don't understand how things work. Landlords are not gonna provide housing for free. If it's for free, then let's just tear it down and build something that's not housing related. And when you talk to them, which I do all the time, and debate them, I go on woke podcasts and things. Basically, it's agonizing, because there's just no arguments to support what they want.
39:38
Frank Rolfe: They do not understand the reality of it. But nevertheless, they often get their way by being enormously obnoxious. You see that a lot in society today. So if I wanna change the decisions of some politician or judge, I know, let's just all get together as a group, get a blow horn, stand in their yard and scream all night long chant, we hate you do something different. And they will, because at the end of the day, they all get worn out and become chickens. I one time back when I had my billboard company, I was trying to get a variance on a billboard. And I went to City Hall. And I was at the back of the presentation for that night. And the presentation went long, and they rolled me to the next meeting. So I went to the next meeting, and they had all new cases.
40:29
Frank Rolfe: But I noticed there was something odd, there was this one person that was at both meetings on two completely different topics. This person just came in, they were screaming. The first one was someone wanted to put in a convenience store. And this person was there screaming, it's gonna ruin our town and ruin it all. And it just was crazy. And everyone in the audience was rolling their eyes. Oh, my gosh, will they just shut up. This is ridiculous. And now here they were back again on something entirely different.
40:56
Frank Rolfe: I can't remember what the second one wasn't nothing to do with it was someone like wanting to put in a break shop. And they were there again. And this person basically their theory on life was they would get their way by disruption, by screaming, by threatening people. And what happens with the free rent movement people is that they've been very effective at this. They've been very effective at manipulating a lot of politicians who know better, but they just wanna get them out of their office. So that's one of the problems with the free rent movement. I admit that people have been very, very good about screaming and irritating people endlessly.
41:33
Frank Rolfe: But what's sad and disappointing to me is how many people are weak enough that they then let that change smart policy decisions because they just don't wanna deal with them. And that's wrong. And at the worst end of the spectrum is when you go into such items as rent control. Anytime you have screaming people with weak people or idiots who have political power, it's a bad ending. And until the free rent movement dies off, just like the free love movement, look at how the manipulation of the free love of movement. I mean, the media loved it. Everyone loved it. It became a part of our society.
42:11
Frank Rolfe: Hippies everywhere. Giant mess. It takes a while for that to die down, because they are very good at what they do, which is basically driving sane people insane. And when those two meet, when the free rent movement intersects bad leadership, you end up with number two on our top five bad things to watch out for in 2025. And that's rent control. Now, most of your rent control initiatives in America have either happened or not happened at this point. Rent control is really old. It starts in World War I, not World War II, like most people think, but World War I. My grandfather was in World War I. He was born in 1900. So, when someone's a World War I vet, that means you serve typically like 1918.
43:01
Frank Rolfe: So from 1918 to now, there was rent control. How many states adopted it? Hardly any. Why? They knew it was stupid. They knew it was a terrible idea. But a few did it and it didn't turn out good. And all of the stats, all of the economic papers, all the economists unanimously said, this is the worst idea anyone's ever had. Why? Because when you have rent control, landlords will put no capital back into the existing properties, nor will they build any more. So you end up with a greater shortage of housing and all of the housing you have is much worse quality. Yet, despite the realities that everyone knows about rent control, during this whole Biden era of empowering people, empowering the free rent movement, you had some people, some legislators, bureaucrats, so weak, they just shut them up.
44:00
Frank Rolfe: They would go with rent control. But most of those really weak groups have now exhausted themselves. So who joined the bandwagon during the Biden era? New York did. Oregon did. But I think it's kind of run its course at this point. But nevertheless, you got to watch out for that. You need to watch out in your state, join MHAs and things and make sure that doesn't happen. Because if you buy a park with the expectation of bringing the rents to market and you hit rent control, then you're in a pickle, because you can't enact your business plan. And once again, this is another Biden souvenir we're stuck with. Now, as the free rent movement dies out, so will even the discussion of rent control.
44:44
Frank Rolfe: You probably have seen what's going on in Los Angeles right now. I doubt there'll be very much economic political fervor for more issues resulting into environmental issues about getting water to Los Angeles. Because as you know, many of the fire hydrants were dry because they had taken down dams because it was blocking the flow of certain tiny little fish to go upstream. And life is all about priorities. So, I think that you'll see rent control literally become a lower priority going forward. So, I don't think we'll see a lot of it. The only state I would be mostly worried about in 2025 is the state of Washington. It's a state that came so close to passing rent control. It's crazy. And would they do it? Their neighbors are crazy.
45:31
Frank Rolfe: California is there. Oregon is there. So, that to me, that would be the state that I would be most worried about. Bad thing number three, Senior Parks. Senior Parks used to be something very desirable for most park buyers. ELS, Sam Zell, the late Sam Zell's company. That was their main focus were Senior Parks. And Senior Parks are very successful. I know that back when I got in the business, Senior Parks, if you had Senior Parks, you were considered cooler than the people who didn't have Senior Parks. Because Senior Parks tended to be more desirable. They looked nicer. But the problem is the residents have all grown in age. So the same Senior Parks in the mid 90s, those seniors are now 30 years older. And the problem has been that society has changed enormously.
46:22
Frank Rolfe: Boomers are not even the biggest segment of our population. Millennials are today. When you have a park with senior designation, you can't let in young people. There's a lot of articles that I've reviewed them in those weekly news reviews about people trying to get their designation changed. Some people are lucky. The sign out in the front is alive. It's not a senior property. Never got the senior designation from HUD. They can just pull that thing off the sign and suddenly it's an all age community. But most of them can't do that. So you have to be very watchful on Senior Parks to make sure that you're not getting into a problem with them.
46:56
Frank Rolfe: Now, there's a lot of great Senior Parks out there that are well run and have no problem attracting new customers. But remember that when you run ads on a senior park, your phone does not ring anywhere near the quantity that you have on the all age communities. And additionally, even on those Parks that have had mom and pop quantitative easing to the end of time, raising rents even mildly towards market rents becomes extremely difficult. Top bad thing number four, weather. You probably noticed that we have more extreme weather now than any time that I can remember.
47:33
Frank Rolfe: So, just this year, 2024, we had some major hurricanes with major flooding events. We saw them all right there on TV. And then you've seen what happened this week with all the fires out in Los Angeles. So that's a problem. If you're looking at a park that has floodplain, and by floodplain, let's just define that for a moment. It's okay to have floodplain. A lot of Mobile Home Parks have floodplain zoning. But you got to look at it analytically. If you have floodplain, the key items are how many lots are in the floodplain? Is the water still pooling water? Or is it floodway? And then finally, what is the base floodplain elevation also known as the BFE? That simply means how high does the still pooling water rise like a bathtub up before it recedes? Because you've got to have the home above that line to have no damage to it.
48:24
Frank Rolfe: Now, FEMA, and I don't know where this came from. I don't know what the goal is here. They came up with a new position that now they're not gonna help you if you flood unless you bring your mobile home above the BFE. And that is cost prohibitive for many people. There was a park that is now being shut down in Florida that they probably could have helped people out and reopened. But they were demanding that every trailer before they would give them any money to fix it, or even just the right to be there, they had to bring the trailer above the BFE.
48:54
Frank Rolfe: One home they wanted the people to jack at 12 feet in the air. The cost of that is horrendous. And they certainly must know that. I don't know if this is FEMA conspiring with cities to just get the Parks removed, or what bureaucrat came up with this genius stroke. It would be like if you call the police and the police go to your house and they say, oh, I'm sorry, I can't stop that person from strangling you to death until you replace your deadbolt because gosh darn it, it might happen again. Don't wanna waste my effort or anything. It's that puzzling. Also, as weather gets worse, there may reach a time, and you've already seen that in California, where you just can't even obtain insurance.
49:37
Frank Rolfe: In your flyover states, don't have this issue. We don't have extreme weather. Occasional tornado, no big deal. Everyone has wind insurance. But on the West Coast with the fires and the East Coast with the hurricanes, that's gonna present new problems for park owners is not only can I afford the insurance, but can I even get it? Because if you can't get it, I don't even know how you buy the Mobile Home Park. Number five of the bad things in 2025 is the price of new homes. Now, Mobile Homes doubled during COVID. Was it legit? I don't think so. Here's how you can figure it out. Look at the net income of mobile home manufacturers pre-COVID and then during COVID. And if it was true that they had to double the prices because all the little pieces of their puzzle doubled on plywood and things, then their net income should remain constant.
50:30
Frank Rolfe: But I don't think that's what happened. I'm not an analyst. I didn't analyze the stocks, but just from what I've read just a little bit, it doesn't look like it quite happened that way. And we all know that was a big truth to COVID in many industries is everyone used this wonderful excuse of supply chain interruption. You heard that on everything. And that's why everything had to double. It was supply chain interruption. Now, of course, as that was true, when the supply chain was back in business, they would drop by half. They didn't do that. As a result, since price of homes have gone up significantly, it's harder for many Parks to make sense of bringing in new homes because if a new home is $80,000 installed and the old ones were $40,000 installed, that's a doubling of the customer's payments.
51:14
Frank Rolfe: And that makes it hard. Now, there still are some markets where you can do this. We sell a huge number of homes a year, over a 1000 homes a year. So we've gotten really good at spotting the markets and marketing and getting them out the door. But many park owners don't have that luxury. They're not as large as we are. So they haven't had the ability to hire that kind of personnel or learn how to do that. And it used to be, pre-COVID, that almost any park in America could bring in a new home and sell it and having a problem. Now, things are a little more selective. So you may have a park that you can't bring in new homes.
51:46
Frank Rolfe: You can only bring in used homes. And if that's true, that's fine. You can do it. But it is gonna slow down your budget on speed of filling. So you have to make sure that your budgets reflect that. Now, let's move on to The Top Five Wildcards in 2025, starting with the timing of the recession and the interest rate to climb. I know, I guarantee you, we are gonna have a recession because I do not believe that we will end having the constant cycle of daylight and moonlight. I just don't think it's gonna happen. So we're gonna have a recession. People have been pushing it off forever. I would even suggest this past year that the statistics on which we derived the economy's performance have been hugely manipulated.
52:31
Frank Rolfe: How do I know this? Because it made no common sense. A lot of the stats you see, they don't make any sense. We have hundreds of years of numbers to run through. And then we have this insane anomaly right now. Look at the labor stats for a minute. They lied about 850,000 jobs. That is insane. Almost a million jobs we were told were created were not created. And if you look at a lot of what is being created, it's being created by the government. So, there was huge manipulation. They were trying to stave off any name of recession before the election. But how long can they keep pushing that? I don't know. So, I'm pretty sure that the reality is about to set in and that you are gonna see a recession sometime soon.
53:16
Frank Rolfe: I just don't know when. We know right now that the only statistics that are not awful all revolve around consumer spending. American consumers apparently are on the wildest odyssey of spending anyone's ever seen. Is it because they're richer than any other generation? No. Is it because they've got some special plan? No. I think they just basically are the most careless perhaps generation ever. And that's why most of what you're seeing is being done on consumer debt. It's not being done on actual incomes. And at some point, that is gonna come home to roost. Another wildcard we have is conduit lending. And it really ties back to this commercial real estate apocalypse.
53:58
Frank Rolfe: I don't know who the lender was on the building in Manhattan that just sold at nearly $300 million, more than $300 million loss. But I guarantee you that hurt that bank a whole lot. And you have 100 deals like that and you're pretty much wiped out. And we don't really know who holds that debt. So, people claim it's like national banks. Others claim it's conduit lenders. I don't know who it is that's holding it. But that's gonna be a real wildcard is to see who actually at the end of the day was carrying all of this failed office and retail and hotel debt. And then what the impact will be from that. We all know from the great recession, there was a period where conduit lending, for example, left the building for years.
54:45
Frank Rolfe: They just stopped doing it. Wouldn't answer their phone. If you got them they say, well, we're not making more loans right now. And that's what you get when you have a very unstable economy because banks like stability. They like normalcy. And when things get weird, they tend to pull in their horns. And I think you will see something give with all of this bad debt in the office, retail and hotel sector. Something has to come of that. Another wildcard is what happens with federal regulations. Trump won the election. We all know that. What is one of his big pledges is to remove regulation.
55:20
Frank Rolfe: He has a perfect tool because the Supreme Court reversed the Chevron doctrine. A lot of people didn't pay much attention to that. But to me, that was one of the biggest things that happened in the year 2024. What does it mean? It means that now, instead of a bunch of bureaucrats setting the laws, that no longer works. Only the actual Congress can set the laws.
55:44
Frank Rolfe: It use to be the Congress would just let these agencies run amok. Look at Obama and the Consumer Finance Protection Bureau, the CFPB. There's questions of which... Of whether the CFPB can even legally exist. That's already been fought in court. I think it's an appeals process. But all of their ideas, like the SAFE Act, et cetera. Under the Chevron Doctrine Reversal, none of those, to my understanding are actually now binding. So, I assume you'll see all of these things ultimately re-litigated. I was talking to one MHA recently, and they thought it would probably take 10 years for most of these basic policies to go right through the court system again. And it could have a wildcard, good or bad item for the Mobile Home Park industry. We suffer from some regulations that would probably fall under Chevron Doctrine Reversal. One is the HUD installation standards, particularly the lot preparation, where you need pads, piers, or runners.
56:41
Frank Rolfe: So, if they were to reverse that rule, that would save park owners tens of thousands of dollars on even just the most basic park. That'd be huge. And then the SAFE Act itself and the CFPB, will they even survive Chevron Doctrine Re-litigation? I don't know. And then all of the HUD requirements on Mobile Homes, particularly the ones about the fact that Mobile Homes have to remain on the boat trailer upon arrival, many people don't realize that's something that the government stuck on there to basically put, in my opinion, Mobile Homes at a disadvantage to single family homes, because they were trying to support their friends in the single family space.
57:19
Frank Rolfe: So, they make Mobile Homes sit up in the air. Well, they don't have to sit up in the air. All of these things will probably be fought in court. And that's an eternal wildcard is how all of that shakes out. Another top five wildcard industry consolidation. Now, there were two big deals recently. There were some big deals back in 2015,'16 era. You had three $2 billion transactions in one year. You had the sale of RHP to Brookfield Asset Management. You had the sale of Yes to the sovereign nation of Singapore Fund, GIC. And you had the sale of Carefree Communities to Sun. And each of those was a couple of billion dollars. And people said, oh, industry consolidation is here. And then a lot of it died off.
58:07
Frank Rolfe: A lot of it died off because Elizabeth Warren sent nasty letters around to every private equity group saying, don't you dare buy Mobile Home Parks. I'll come after you with a vengeance. Of course, that's back when she had some political clout. She still has some, but unlikely presidential material at this point. But then now recently, you've had two more big deals. You had the sale of a whole bunch of Brookfield to another operator. And then you had the purchase by Crow, I think formerly traveled Crow out of Dallas, of about a billion or so Mobile Home Parks. So big deals are kind of coming back. So you had two big deals with a B on the end happening in one year. It's kind of reminiscent of how it was back then.
58:47
Frank Rolfe: And you also have a whole lot of private equity groups in the industry. If you've been to any industry events today, you know that you see lots of people with really nice suits and shoes. And no, those are not normal park owners. Those are private equity groups. Carlyle, Apollo, they're all in the business now. And then you have the potential for mergers. You don't have to buy each other out. Some of these guys could just merge together and cut their overhead and just expand their base, things like that. There's been rumors going around for years that Yes, would ultimately go public. Do I think they will? I think eventually they will. I don't know when they will. Makes sense. A lot of the stuff that GIC buys, they buy things, they fix them up, and they take them public.
59:25
Frank Rolfe: Why haven't they yet? Probably they don't think the stock market is the right time to do it. They're very patient investors. So I'm sure they would pick the right time if that is something they wanna do. And this will all have a huge impact on all kinds of things, park valuations, financing, public relations. And again, it's a wildcard. When did it happen? 2025? I don't know. It might, could. And then finally taxation. So Trump won, and now he's gonna try and pass a renewal of all of his tax initiatives from the last time. And they're obviously very, very attractive to all Mobile Home Park owners. So he would extend capital gains tax, or at least not take it away, extend his beneficial upper tax brackets, maybe accelerated depreciation for those who wanna do that, the state tax exclusions, all kinds of things.
1:00:17
Frank Rolfe: Will it happen? I don't know. We're probably gonna find out maybe this year, but it is definitely a wildcard. Now under the Biden administration, we faced the dreaded end of capital gains. We talked about it all the time, but it just never happened. Didn't really have the support to get the votes to do it. Will Trump have the support this time on maintaining these tax things? Well, he does. The Republicans now hold the House and the Senate. So, I think they can. Now I don't know if there'll be a filibuster on it in the Senate. That's always a wild card. And then sometimes Republicans screw up and little factions sink their own stuff. You remember Paul Ryan, the dreaded Paul Ryan, back when Trump had control of the House and Senate.
1:01:00
Frank Rolfe: He just didn't have control of Paul Ryan. He screwed things up everywhere he went. But again, it's a big wildcard. We just don't know where taxation is gonna go. So when you put it all together, what does it really mean? Well, 2005 is very much a rebuilding year for America. From a park owner's perspective, the last four years under Biden were just horrific. I don't care what political flavor you are. When you look at everything that happened during that period, we had COVID, fastest runoff of interest rates in 40 years, fastest runoff of inflation in 40 years. That's a pretty bad period. Those three strikes are out. That's pretty bad. And it's also a rebuilding year for the mobile home industry because we are also related to many of those same things, the change in interest rates, change of inflation on cost.
1:01:47
Frank Rolfe: So, I look at this year kind of like a sports team that's beaten down after a long string of losses. Now, America has to try and rebuild the team. So we are very much in a rebuilding era, in my opinion. Also, I think that it will become to be known that the Mobile Home Park business is in fact, the best real estate model that's out there. We have the least amount of risk. We have the greatest aptitude for success. And I think as office and retail fall apart, hotel falls apart, a lot of storage is falling apart, that we will once and for all have our moment to be at the top of the pack. Now, will that then change again? Well, it could. I mean, there's been lots of things that were very popular and suddenly weren't anymore.
1:02:34
Frank Rolfe: But I don't know how we would actually fall apart as an industry because our basic product is the safest as far as demand and having what Warren Buffett calls a giant moat away from other people being able to figure out a different way to deliver affordable housing. Also, there's gonna be lots of big changes in society as we go from a boomer era to the millennial era. So, I always remember when the boomers were the biggest part of the population. And I always thought, well, this is great for me because I'm the biggest part of the population. So since America is all about democracy and democracy, majority rules, I thought, well, everything will always go my way now because I'm the big megatrend. I'm a baby boomer. I think everyone from 1946 to 1964, birthday, always thought that. But now we're not anymore.
1:03:25
Frank Rolfe: Now, the millennials are bigger than we are. They have more political clout than we have. If they all get together and vote as a single voting bloc, they will beat everyone else out. And that's gonna have big changes, some for the good in our industry. I think most of that's beneficial, but then some for the bad. People had businesses that related to things that boomers like to do will probably go down the drain. Also, you have to watch out for some geographies, weather event, political issues, rent control. As time goes on, you will see America kind of splice up in the little sections that are not as attractive that others. I think we're already seeing this come to light right now as a nation, just with this week with all the big fires going on.
1:04:11
Frank Rolfe: We're also gonna have to suffer through the free rent movement until it dies off, because it's not gonna be until it dies off because it's just like free love. I still see occasional hippies. Back when I was at Stanford, started Stanford in 1979, hippies were still around. I remember gonna San Francisco with the dorm and I'd see these old guys with scraggly beards and their old beat up Hell's Angels jackets. And they were all totally high, sitting around smoking marijuana. And people would say, oh yeah, there's some of those hippie guys from the 60s. Can you believe they're still around? And they still were. So it took a long time to get rid of them. And it's the same with the free rent movement.
1:04:49
Frank Rolfe: The cause is stupid. You can't make any rational sense. I would love to debate someone on it. If we could just get a debate going. I've tried, I've been on some podcasts. The problem is, free rent movement people, when you argue with them and you just throw out facts, they just delete it. That's how it works. So you can talk to a woke journalist, podcaster, and you think, well, I've made some great points. They just cut that part out. It really irks me when people don't have basically the guts to debate. So if you really feel that strongly about something, I would think you would have no problem in having a little adult conversation on it. But I'm afraid that isn't gonna occur. And it's just gonna have to keep going on and on and on until ultimately all the hippies drop off and they come up with a new item.
1:05:38
Frank Rolfe: I think it's also worthy of note. And this is something that it drives me crazy that nobody points it out but myself. But if you go to the government's own websites on cost and household budgeting, you will find that housing is not America's number one cost like the media portrays. It's the fifth. We're not number one. We're not two. We're not three. We're not four. We're five. What is ahead of us? Go to the website and you'll see, health insurance, child care, transportation, and taxes. All four of those outpace housing. And within housing, you might have seen some recent articles, which I've written about, but no one ever listens to me.
1:06:22
Frank Rolfe: And that's the fact for many Americans today, a huge percent, their insurance costs, their property tax, and their utilities are greater than their mortgage. That's how much those have inflated over time. So, when people criticize our Mobile Home Park industry for our little ridiculously lowly lot rents, that isn't fair. Because what about the four ahead of us that have got it far higher and faster than we have? And then what about the other items within the housing specter that have gotten up more than we have? Those never get mentioned. I wonder why that is. Well, because maybe they have a lot of tie-in to different media outlets, and they're in taboo areas they're not allowed to talk about. So the bottom line to it all is be optimistic, but just be careful.
1:07:09
Frank Rolfe: I think 2025 is a start of something really good, but we all have to go through this rebuilding period until we get there. All right, now we're gonna go on to Q&A, and I've already had a whole lot of questions posted over here in Q&A, so we'll just go ahead and jump into it here. So first question I have, and let's see here, let's see if I can pop it up here. Yeah, there we go. So what happens when overpriced Parks, like there's one in Lewisville at 1200 lot rents, reach lot rents similar to apartment rents like in Dallas-Fort Worth? Has that happened before? Well, I have never seen lot rents hit apartment rents, but I have talked to someone old enough to be there when mobile home pricing hit single-family home pricing. In fact, there's a guy named Bob Vashholz that we sell the right on the stand, and we ended up buying the rights to his book, and we're gonna be bringing it out shortly. And you'll see that back in the 1960s, the mobile home product became just about as costly as single-family.
1:08:08
Frank Rolfe: And then people said, oh, that's crazy, never gonna work, and in many ways it didn't. And the production of Mobile Homes then kind of fell significantly because people said, well, I'm not gonna buy as much... Pay as much for a trailer as for a brick house. But that's how the market economics work. So if a $1200 lot rent in Lewisville is crazy, you'll start seeing lots of vacancy, and the rates will have to come down. That's how things work. That's how the whole part of capitalism is that everything is competitive, and prices go to a level in which the value is not there for the consumers, and they basically abandon it. But if a park in Lewisville, a $1200 lot rent is full, then that would beg the question if people don't perceive that as a value to them to have a detached house for less than apartments. Now, when lot rents reach parity with apartments, and there are some markets where they are, if you go out to California, in many of the Parks out there, the rents can be as high as $5000 a month.
1:09:09
Frank Rolfe: There's a park in the Los Angeles area that's $5000 a month. To me, that's kind of crazy that you pay $5000 a month lot rent. I can't fathom that on the big scale of things that that seems like a good value to people. And if it's not, ultimately, they'd have to drop the prices down. And we've seen that happen in products throughout American history, right? Things hit the zenith, and then they have to retreat the price because no one buys it anymore. You saw that in Mobile Homes themselves. Post COVID, when they were hard charging with those really high price on the homes, now they're coming down.
1:09:44
Frank Rolfe: Why? Because they couldn't sell enough of them at that higher price or have to reduce the price to start selling them again. So, I don't really know the answer to that question. People have always asked me, so like, what's the terminal velocity of lots? Not like, what's the lowest? How high can they go? I don't know the answer to that. It's kind of like when they asked Chuck Yeager to break the sound barrier and see what would happen. So, he took the X-15 up into the atmosphere. He kept pushing the throttle. The thing started shaking violently. And he just thought, oh, what the heck? You only live once. And he pushed the throttle forward.
1:10:12
Frank Rolfe: And the next thing you know, the thing was spinning end over end with so much centrifugal force that his head swolled up and filled the whole helmet. Then his whole body swolled up until the helmet was hitting the roof. And he knew he was about to explode. And he tried to steer it because he could only see through his swollen up eyes two things, dark and light. He thought the light was the sky, the dark was the ground. So he actually was able to stabilize the plane and crash it in the ground and live. And they learned a lot about what happens then when you break the speed of sound. The problem is we haven't had a Mobile Home Park in America yet to reach terminal velocity in lot rent. And that won't tell the tale. And I don't know when that occurs.
1:10:49
Frank Rolfe: If you look at the Parks in Denver, for example, that used to be, I don't know, $400 a month. And now they're at a 1000. Those Parks are still completely full with waiting lists. So there's waiting lists of people who are going there by there all the time. If you have any vacancy, call me. So clearly that has not reached terminal velocity. The one in LA at 5000 lot, where it's completely full. So I don't know the answer to that. But we will see that at some point in the future. We will probably see ultimately the park that hits the terminal velocity where the value isn't there. Okay. We have another question here. If I partner with someone on a Mobile Home Park and they made the 20% down payment, the bank financing, but I did everything management and all the rest of it to put up the money, how should I structure the ownership split with the person?
1:11:35
Frank Rolfe: Or if I have no money to put down, but my goal is to buy my first park by the end of the year, what kind of person would you look to partner with? How would you structure the deal? I'm willing to be aggressive and do whatever it takes to find the deals, do the due diligence, etcetera. Well, it's been a very longstanding tradition in America in all forms of real estate to have partnership between the equity partner and the operating partner. Equity partner puts up the money, the operating partner puts up the work. So that's not a unique concept. The way that normally works is you give preference to the equity partner in that before there's a split of profits, there's a preferred return to the equity investor's equity. Then you have a profit split.
1:12:17
Frank Rolfe: So, let's go over what I mean by that. Let's say someone put up $200,000 to buy a million dollar park. And the normal structure would be you'd have a preferred return on the 200,000. Let's just say it's 10%. So, before you have a profit split, they'd have to get all their money back plus 10% for each year that the money was allocated to this investment. After that, you would have your profit split. The profit split is all over the map. I've seen everything in 30 years. I've seen from 80-20 to 20-80, but I'd say the normal norm is probably 50-50. So the equity partner would get their equity back plus a preferred return. They didn't have a profit split of 50-50.
1:12:57
Frank Rolfe: That's an answer to your question. That is probably the most normal arrangement. Where would you find such a person? If you even post on our forum at mhu.com looking for a capital partner, you'll probably get a lot of response, but they're gonna want you to normally put up a deal, show them a deal you're looking to buy to really get them interested. But that's how that normally works. Next question. What about septic fields and flood zones? That could be a real dilemma. You're seeing that happen right now in Montpelier. I believe it's Vermont. I am not well studied in New England. We own no Parks there, never have.
1:13:31
Frank Rolfe: So, I've traveled there, pretty place to go, but I don't really think about Parks there. But I do know right now in Montpelier, which is the place that had all the flooding here in the last few years that wasn't even on the FEMA flood maps, which really irritated everyone and helped to this embarrassing announcement that FEMA has not been keeping up the maps nor have they mapped about a third of America. But be that as it may, the problem they're having in Montpelier right now, beyond mitigating mold and stuff, are septic fields that will not kick back into operation because septic fields require the earth to suck up the fluids out of the perforated pipes coming out of the septic tank.
1:14:13
Frank Rolfe: And when you flood it, then it becomes completely saturated with water and they won't suck it up anymore. So, it can be a real problem. Now, again, you could come to grips with it in your due diligence. You can do a perc test of your septic field. They drill a small hole in the ground and see how long it takes to fill up with fluid. And based on the findings of the perc test, you would know whether you're too saturated or not. But still, that won't tell you what would happen if you then had an enormous amount of rain. What happens? Just recently in St. Louis, we had eight inches of rain in one day. It's a world record in my little town of St. Genevieve.
1:14:51
Frank Rolfe: It caused mass flooding in areas that had not flooded in the longest time. And what does it mean? It means areas where you had septic, it could be a problem. Now, not always. If you had a mass amount of rain and then it all drained off and evaporated the earth is a pretty big thing and you can't just saturate a septic field on one day's rainstorm. But if you had a big flooding event, the water stood on your septic field for a long period of time leaching into the ground, it's very possible it would cause a disruption. So, if you're looking to buying a park with a septic field in a flood zone, I would wanna know a whole lot about its past experience flooding, because we're finding that past experience has become a better driver to knowledge than FEMA is.
1:15:32
Frank Rolfe: So, if you're buying a Mobile Home Park and it is on the bank of a water feature, a river, a lake, a stream, it's a very good bet, there has been flooding. If you talk to the neighbors and say, hey, neighbors have we ever flooded? And the guy with a bowling alley next door says, oh yeah, the water was two feet up the side of my building. You can see the water line on the side of my brick building. That's much better information than FEMA's flood maps are. If you go to the city and say, hey, city, has this ever flooded? Oh yeah, that flooded totally back 10 years ago. That's better information than FEMA gives you.
1:16:09
Frank Rolfe: Because you have to remember those FEMA maps are hugely flawed. They've pretty much now come to admit it after the North Carolina catastrophe floods. But checking historical is probably a good idea. But yes, it is definitely worthy of diligence, but it does not mean you can't buy a park in a flood zone with a septic field. It's just really know what you're doing there. We have another question here. Some of your guests on your webinars have had the opinion that rehabbing old used Mobile Homes is more trouble than it's worth and would rather buy new. If you bought new Mobile Homes to fill vacant lots, would you buy single-wide, double-wide, the cheapest thing you can afford, and what's the best strategy?
1:16:50
Frank Rolfe: Well, here's the deal. It is a lot easier to repopulate vacant lots with new homes because you don't have to rehab them. And so it's very truthful when people say, well, I'd much rather fill my park with new homes. And there are many Parks out there that you can do that. You can bring in new homes and they sell just as well as used homes because you have richer customers. But there's other Parks which you can't sell new homes because your customers aren't rich enough and they can only do used homes. But I wouldn't fault anyone for saying they prefer not to bring in old because no one wants to bring in old and rehab them if they can get away with not. But in some Parks, it's a necessity that you do that.
1:17:27
Frank Rolfe: Now, when you're buying homes, whether new or used, always stick with single-wides. Avoid double-wides like the plague. The problem with double-wides are they basically cost double, but they don't bring in double lot rent because most park owners allow you to park a double-wide on the lot and only pay for one single-wide lot rent. If you go to sell a double-wide, you'll have great misfortune making it work. If you charge a set of a 400 lot rent and 800 lot rent, then when they get done with the double price of the home, no one will ever qualify for the mortgage. So stick with single-wides. Stick with homes that 16-wides are the best, but 14, 16, 18, those are your width choices. We would prefer 16. Some people buy 14.
1:18:14
Frank Rolfe: Almost no one buys 18. It's overkill, too expensive. Try to stay away from 12-foot-wides. Those are called FEMA homes. Those are a little too narrow. Cheapest thing you can find in the mobile homes, if you're talking new homes, it's True Homes, T-R-U. It's a product of Clayton Homes. It's the most bare bones. I remember when they came to the home shows back in Louisville when they first came out, they had a big banner on the side, and they were tracking all the attention because they had a three-bedroom, two-bath that started at $19,995, as I recall.
1:18:45
Frank Rolfe: And everyone flocked to the True Home booth to say, how in the world can that home be that cheap? That home is cheaper than a car. So that's still probably your cheapest new thing. When it comes to the used things, the cheapest things you'll find will be postings probably on Facebook and Craigslist of old 1970s and 80s Mobile Homes and Parks. And some of those can have a wickedly high cost of renovation. You're probably better off sticking with stuff that's 1990s vintage. It looks better from the outside. It has a better floor plan. You can find those on repo lists from your major financiers. You can find it through home wholesalers that occasionally comes with Craigslist and Facebook.
1:19:24
Frank Rolfe: But that's the best stuff. I will also tell you, even if you think your park can just do new all day long, don't make big commitments. Let the market decide what works. So, the worst thing you can do is run out and buy 10 brand new homes and slam them in your lots because you so arrogantly thought you knew what you were doing. And then what will happen is you'll show them and the customers can't afford them. And then you'll look like a fool because you have 10 of them. If you bring in a new one and a used one, see what sells. And if you sell the used one, bring another used one in. Sell another used one, bring another used one in.
1:19:58
Frank Rolfe: Now, you're selling the new one. Okay, bring another new one in. Let the market dictate how your occupancy ends up. You get the same lot rate whether the home is new or used. It's all the question of how fast you can get out the door with the ultimate lot rent is and how fast you can get the lot rent coming in the door. And in some markets used are the way to go and some it's new and many it's in a mixture. And there's other ways to fill lots besides even bringing homes in. You can in some markets fill them with RVs to some degree. You might get organic moves in to fill your lots. But the key is moderation. There's an old saying, first you need to crawl before you can walk and walk before you can run.
1:20:35
Frank Rolfe: That is the best saying for filling vacant lots. Try things out, see what works. Let the market... Let the customers dictate what you end up doing. You have the next question here. Hold on. Could you explain the best process for filling lots with new homes and funding buyers? Sorry to ask you to repeat this, but how does the cash program work? Well, in the early days, there was no programs at all to help park owners fill lots. It was kind of sad. And then Warren Buffett bought out Clayton back in 2003, as I recall. And that was a step in the right direction. And the next thing he did is he brought out a thing called the cash program. It was a floor plan lender.
1:21:17
Frank Rolfe: And the way cash worked was concept was they would help you populate your bank at lots, and they would carry the paper on the home. Now, the early versions of which we were a guinea pig didn't work well, because what they would do is they would send you the homes that were rejects, ones that people never picked up. They would send to your park. And often it was a horrible mismatch. So they would send a very, very expensive single-wide with stained glass windows and things into a park that you could barely sell a used home in. And you had no choice of what homes they would send you. Over the years, the program changed. And in its current form, it's the best it's been.
1:21:51
Frank Rolfe: So, what they could do is you can actually populate your bank at lots with homes, and then they'll write mortgages on them. But it's not just the cash program now. There's a company called PEP, Performance Equity Partners that do it also. There's Triad. There's Zippy. All of these people all follow kind of the same general mantra. It mainly falls down to which is the easiest to work with. That's where a lot of it heads. But the bottom line to it all is it's been a huge boon to park owners because now you can fill lots with very little capital out of pocket. Now, you can do it with both new and used homes. So, you can bring in new homes and you can bring in used.
1:22:34
Frank Rolfe: The difference is on the new homes, some of the floor funders will front you the money in advance so you don't have to put any money out of pocket. On the used homes, you have to pay for it all upfront, and then they reimburse you in the end when it gets sold. Now, as far as the sales process, the sales process revolves around a few key items. You've got to run ads. You've got to answer the phone. You've got to show the home, and then you've got to basically close the sale. And the only way to handle that process is to do it analytically. Statistically, the ratio we have found is you need three calls for a showing and three showings for an application. So, every nine calls, you should get in one application.
1:23:16
Frank Rolfe: All healthy Parks pretty much follow this guideline. If you're not hitting those stats, it's because either the manager's not running the ads, not answering the phone, not gonna the showings, or doesn't know how to sell the stuff.
1:23:27
Frank Rolfe: Let's go to the next question here, hold on. You might've mentioned it, but do you know the average price of a Mobile Home Park average home is 400,000, you said? I'm curious what the average park is. Well, the $400,000 home example is not related to the park. It would be a home in a park. The average mobile home in America has nothing to do with what the government claims. The government will tell you the average mobile home is right now is $126,000, which is ludicrous and is the mark of someone who has no idea what they're talking about, because everyone in the park ownership space knows that many of our homes sell internally among residents for everywhere from a 1000 to 10,000. And yet a lot of your used homes sell even from the park owner for 25 to 35,000. So what's an issue is a $400,000 home versus either no mortgage at all, and you just have lot rent or a home that's probably an average of 30,000 in America plus lot rent.
1:24:27
Frank Rolfe: And any way you cut it we're insanely cheap. If you look at the lot rent plus mortgage on a $30,000 home, you're probably looking at a sum of somewhere under a $1000 a month on a $400,000 home. I mean, you're not even... You'd be lucky to be hit a $1000 a month just in property tax if you were in Texas, for example. But that's what the $400,000 number as far as what average price for Mobile Home Park. They're all over the map. All over the map. The least we've ever paid for Mobile Home Park, I believe was $62,000. And then on the high side, we've paid well over $10 million on many properties. But if you average 'em together, of the 44,000 Mobile Home Parks in America, I would say the average probably between all of 'em is maybe a million dollars, which means half of it is under that number.
1:25:21
Frank Rolfe: And a lot of that will depend on the size of the park, of course its condition. And then locationally where it is at geographically. We have another question here. How is financing affected in a park? If it is a zone A, without a BFE, does that equate to no financing available? What are the buyers of these Parks if it seems difficult to resell? All right, well, floodplain is definitely a scarlet letter that no park buyer or owner wants to see. None of us want floodplain, so don't let anyone ever tell you, oh yeah, floodplains, it's the greatest thing ever. Oh my gosh, I love floodplain. Nobody likes it. But the lenders realize that there are some Parks out there that have floodplain that's not even in the lots. We've had Parks like that where the only thing that's floodplain is the portion down where the basketball court is.
1:26:12
Frank Rolfe: And mom and pop built it that way because they didn't wanna have any lots in the flood plain. So today's lenders, they want you to look at it very, very statistically, how many lots? What's a BFE, whether you're in the floodway or not. If the answer is, oh, yeah, well, every lot in the park is in the floodplain and they're all in the floodway, then you'll never get financing because no one will touch it. If the answer is it's a hundred space park and 10 lots are in the floodplain and the BFE is eight inches, well, they're gonna think, well, worst case scenario is only 10% of the park population, and at eight inches, it's not even gonna get to the bottom of the mobile home. So, it'll just pass under the skirting and drain out. It won't hurt anybody. So, that's the issue on floodplain is people today, when you talk floodplain, they, they wanna talk the science.
1:27:00
Frank Rolfe: They don't wanna hear just the scarlet letter of the big F on there. But if you are in a park that has a way too many lots and you're in the floodway, yeah, you probably can't finance it, it's probably impossible. Now, I remember a Mobile Home Park like that in Grand Prairie, Texas, years and years ago, back in the '90s, what happened was it flooded out, they put it back together and it flooded out a second time. And the city said, "Okay, well you can't put more homes in there. This is getting ridiculous." Well, they changed into a very successful RV Park, and the concept would be if the flood waters started to rise, they would tell everyone, okay, turn on your RV and get outta here. So they were still able to reposition it. I don't think that that's out there for every Mobile Home Park as an option.
1:27:47
Frank Rolfe: But the simple fact you're in floodplain today, is not going to equate to necessarily to doom. But it is not a good thing. And then when you go to resell, you'll have the same issues, the same questions, the same problems. And it's always important to remember that, our industry, like all real estate, is completely dull on lending because we all use the tool of lending. Even the REITs use 50% loan to value leverage, but most park owners are using even greater than that. They use 70 to 80%. So, you have to think like a lender. And since lenders don't like floodplain, if you buy a park with floodplain, you need to pay less of a premium for it. You need to have a discount in there. Because when you go to resell it, you're gonna have these same issues pop up again.
1:28:33
Frank Rolfe: So, floodplain is not death, it's not the end of the movie. You can buy a parking a floodplain, but you have to know what the heck you're doing. Also, do not trust the FEMA maps as though they are the gospel. They're not, these were not brought down on high. These are things that were done by the Corps of Engineers many years ago, and they can be wildly inaccurate. There have been cities that are not even on the map of floodplain where the entire city has flooded out like Montpelier. I believe it is Vermont. Just to give you an example of how flawed the world of flooding can be where I live, in our South of St. Louis is Interstate 55. Town is only a few miles off of I55 and I55 is supposed to be completely out of the floodplain.
1:29:22
Frank Rolfe: There's no way it can even come close to flooding. It's impossible, never gonna happen. So, one day there was a big rain and the water just started rising up until it went right over I55. People were driving down 55 thinking of not a care in the world, there can't be any flood. They ran right into the solid sheet of water. It's probably three feet high over the highway, and it just annihilated everything. I think the first thing that hit it was an 18 wheeler. It just blew right off the highway. Next was a car, then another car. Then cars would crash into those cars. What happened, what happened was someone had put in a subway franchise in a parking lot, and during the rainstorm, the water rose and the stream next to the parking lot, which had never been in a flood before. They had a dumpster that rose up, floated down the river and plugged the drainage hole under the highway, created a dam, water couldn't go through the hole, just so went all over the highway.
1:30:19
Frank Rolfe: Now, if you'd had a Mobile Home Park and then it occurred, you'd have a terrible situation, even though you probably weren't even shown to be in the floodplain. So, that's why we say it's typically his historical reference that really is key on a lot of this. I think we all have now seen the realities of what's going on with the Corps of Engineers and the FEMA flood maps and some areas are woefully behind. The whole part of America has never been mapped. They've admitted that they're supposed to update them every 10 years. They've failed in most areas. So I think, where you'll get in real trouble with floodplain is when you trust the bureaucrats. That's what's really probably gonna give you your biggest problem. All right. I also had some questions that someone had a problem getting on and Brandon texted it to this, hold on just a moment here.
1:31:05
Frank Rolfe: Let me get my text up. I can't pop this out up on the screen, but, just a moment. Okay, here was the question. They wanna know what we think about the Southeast in regards to North Carolina, South Carolina and Georgia. Then they wanna know about, Florida, Arizona, and Texas. So let's just bring... Let's just go down then. I wish I could pop up the question here for you, but I can't. It's here on the form of a text. So I think that the Southeast is a real gem right now because the Southeast is in an economic renaissance like it hasn't seen in the longest time. And it all ties back to Alabama. I think that's the epicenter of the turnaround because the Chamber of Congress in Alabama was trying to find a way to create jobs. And they came up with this vision.
1:32:05
Frank Rolfe: They went to, car manufacturers and said, "You know, you can build a car cheaper in Alabama than you can in Mexico, because at that time, mayor wanted moved their plant to Mexico." And people said, no, you can. And they said, oh, yes you can. And they showed 'em all their stats. And one group Mercedes said, you know what? I think they're right. I think we could build these Mercedes in Alabama. If you cut out the transportation cost from Mexico, the labor's about the same price. We wanted to build a new factory. Anyway, you know what, let's just put it back in Alabama. They did it. It worked. More people came over and did it. And suddenly the Southeast took people, took notes, and wait a minute, the Southeast area that that's pretty good for business. And from there, what happened? The areas came back to life.
1:32:47
Frank Rolfe: Housing prices went up again, and yet a lot of people had written it off. So, back when I got into business, for example, no one ever looked at the Southeast and said, oh, Southeast, it's poorer and it's no good. So that's where I think there is quite a bit of opportunity there. I think if you go down and probably around the Southeast, you'll see there's probably a lot of good deals there that have all been just passed over, not even looked at in modern times by other park owners. So, I think those areas are all very promising. Florida scares me as far as the insurance, to be honest with you. I've heard of Parks that where people cannot even get their insurance renewed. And we just had two more hurricanes there. So, that one, that one, I'd be a little afraid of the insurance side.
1:33:25
Frank Rolfe: Maybe if you were far, far inland and you didn't have the same weather events, it might be better. But that one's a little scary. Also, the laws here are kind of weird, even though Florida's a Red State for some reason, when it comes to landlord law, they come off blue always passing new crazy legislation that's totally unnecessary. So, I would really wanna get a handle on the laws there also. Then you've got Arizona. Arizona. I don't know a lot about it. I've never heard of anyone with a problem with Arizona or said, "Oh my gosh, you know what a terrible market Arizona." I will tell you, a lot of the Parks in Arizona look very different than a lot of the Parks we're accustomed to because many of the Parks in Arizona are more of an RV bent to them.
1:34:08
Frank Rolfe: So, they're typically a lot older, higher density, and they just look a little more antiquated because many of them have had homes in there for longer than many other Midwestern Parks that we own and operate. But I think Arizona's fine. And then the last one was Texas. Well, Texas is great. I mean, we started in Texas. We still own Parks in Texas. Texas is great. Why is Texas so great? It's so great because it's got always such a dynamic economy. It's always growing. I mean, Texas never is in retreat. It's always economically go, go, go home prices follow suit. They're always go, go, go. And there's a lot of Parks in Texas. Texas has the largest number of Parks in the United States. Now, there's one weird trivia quiz on this because Texas is number one and number two and three are pretty much a tossup between California and Florida.
1:35:01
Frank Rolfe: But number four is Kentucky. That's always the crazy, cocktail party trivia question that no one will know or care about at a cocktail party is what state is number four. It's Kentucky. People ask me why Kentucky? I believe it's because Kentucky had a large number of military bases in the World War II era, but they shut most of them down. I've forgotten what the number was, but I think Kentucky had somewhere around 40 bases, which today it's dwindled down to maybe only like 15, something like that. And so since Parks often were built around army bases, I think that's why they have so many. But that's the only state that's an anomaly. Like that doesn't make a lot of sense. Go the next question here. Hold on.
1:35:46
Frank Rolfe: Have you seen on private utilities water well, where the seller has to pay for water rights and it is limited to a certain volume of water, anything used above that allotted amount seller is charged additional amount? Do you have anything Parks like that? I've seen Parks like that. I had one under contract like that. It was in Las Cruces, New Mexico. And that's why I didn't buy the park, to be honest with you. The water regulations were so complicated. The first one was that you had to test the water daily. Every day. The manager had to take a sample, take it to a junior college, have it tested. That freaked me out because if my manager quit, if my manager went nuts. What would happen to me? How would I get the sample there for that day? And then what would the ramifications be if it didn't?
1:36:33
Frank Rolfe: And then as I got more into the water, just due due diligence, I found that in some of these Mobile Home Parks in Las Cruces, at that time, the water rights were worth more than the Parks. People were shutting Parks down, selling their water rights to apartments or to single family homes because it's my understanding it's served by this aquifer and they don't have enough water in it. So, basically it's being rationed in the form of water rights that if you exceed your water rights, then yeah, you get in big trouble. So that's frightened me. So I've never owned a park that had water issues like you're describing, but yes, they do exist. I've been there. It was called Las Cruces, New Mexico, probably in the late '90s, early 2000s. Now since then, they may have come up with a new plan for water.
1:37:18
Frank Rolfe: They may have changed it, I don't know. But I do know that back at that time, yes, it was exactly what you are talking about. And to be honest with you, it really freaked me out. Now, I'm sure there's people watching this who are familiar with Las Cruces and say, "Nah, nah, it's not that big a deal." And it may not be, but you know, as an out of towner who doesn't know anything, things that are just weird like that, just, they just freak you out. And that one really freaked me out because every other park I'd ever had had basically all the water you want with no exceptions. And if you tested the water like well water, it was typically only monthly. I'd never seen daily testing. And I don't know if that's still the law there or not, but yes, you are correct.
1:38:04
Frank Rolfe: I have seen it, but I didn't buy any of it. Question here, there is a small park, 25 minutes outside of Longview with a 225 lot rent that can go up. It's 100% occupied with tenant owned homes. 25 lots, 900 grand. Is that a fair purchase price? It's water well and septic close to a big city. Okay, well let's just go over the good and bad things here. When you say 25 minutes outside of Longview, we've owned Parks in Longview and my third park I own was in Longview Metro. Are you talking in the metro or are you outta the metro? Because for example, my park was 25 minutes West of Longview, pretty close to the interstate. And so it was in the big city and there were million dollar McMansions down the street. Are you talking really rural and remote?
1:39:00
Frank Rolfe: Huge difference between those two. A lot of these Texas revolves around school district, I found. So, are you in a good school district? Are you just some kind of bad rural co-op kind of school district? Because that could be an issue. The 225 lot rents send really, really low by Texas standards as are laughably low. They may be laughably low because mom and pop never raised the rent for 20 years. Or it may be that you're real rural areas. So, that goes back to the whole rural thing. All occupied homes by tenant. That's great. You don't want any park owned homes. But then that's offset by this water well and septic issue because most of the time in life you wanna have, if you're gonna have a private utility, one but not two. So city water and septic, that would be one option that would make this better than what you gotta going on.
1:39:51
Frank Rolfe: Or well water and city sewer, there's another option that makes it better. Well, you have, well water and septic. You got two private utilities to worry about. And I will tell you with, well water and septic, you gotta make sure your septic field is nowhere near your water well, you can't have that septic that's infiltrating back into you in the water system. That could be a problem. Now, let's look at the price for a minute though. Here, let's just do that real quick. So you're saying that you've got, oh, hold on here just a moment.
1:40:22
Frank Rolfe: So, you've got 25 lots fully occupied at 225 rent. So we're taking that times 12, and then we're taking that because of this private water and sewer thing, we're gonna do that times 0.6, 40,500 of net income and they're asking $900,000. So at $900,000 that's a four and a half cap. That is never gonna work. If you've got 45,000 of net income, then at a 10 cap, that'd be 450, right? And if you take it to a five cap, then it's about your 900. And then in between those a seven and eight, it's gonna be the midpoint. It's be like 700 or something like that. So yeah, the guy's priced way too high except for one issue. And this deal, every deal has its own lever that makes it good or bad. It's all about being able to raise the rent. So, if we were able to raise the rent from 225 to 450 over time, then everything is half yet again.
1:41:25
Frank Rolfe: So, if I'm at 45 net income and I get up to 450, I'm at 90, now is 900 is a 10 cap. It not no longer at five. So, that's when you have to really put your diligence on. So, on this deal, if you were to have an interest in doing it, I've never seen it. I don't know how it looks, I don't have a location or anything. The key items in diligence would be number one, how much can you raise the rent and still provide a good value? Where would you be in line with your peers? And then also, number one, what cap exit needs, that would be a big issue. And then a real focus on the water well and septic systems. Are those a good repair? Are they going well?
1:42:06
Frank Rolfe: Are they going by the wayside? What's going on with those? The answer to all of those combined is gonna tell you whether or not that deal is something for you or not. And then again, none of these sellers typically have their prices set in stone either. If the guy's asking 900, he'll take less than 900. Most people have an imputed often 20% difference, reduction between what they're asking and what they're hoping for. So more than likely, the price really isn't 900. That's the asking price. The guy's probably seeking 800, something like that. I mean, I don't know. I don't know the deal, but I see that frequently. So, don't be thinking the asking is set in stone. It's probably not. But the key items are occasionally where you are, how much can the rents go up? And then what condition is the water and the septic, right? Let me go to the next question here and then we go to the next text. Some people had problems posting, so Brandon has texted me. So just a moment here. Let me get my texting back up. Just a moment, just a moment here.
1:43:25
Frank Rolfe: All right, hold on here. We have a question here. How do you get a seller who is on the fence to wanna go ahead and sell? You can't force 'em, that's for sure. So, the best way to get someone who lackadaisical of whether they should or should not sell is to bond with them. Because when you bond with them and they like you, it makes them more motivated to sell. To bond with people, just talk to them on the phone or in person. So that's an important item. But a lot of whether moms and pops wanted to sell comes back to the timing on their side of the equation. I one time mapped out, back in the olden days, all the Parks I bought, what was the trigger? Why did people sell to me? And I found the most common reason they sold were health issues.
1:44:16
Frank Rolfe: So, what happened is someone went down to the doctor and the doctor said, I've got bad news for you. You've got colon cancer and you probably have four years to live. Mom and pop think, I don't wanna do Mobile Home Parks until I'm dead. I wanna just sell this thing and move down to Florida and go fishing for my last four years. Those were the kind of triggers that came up. If you try and push people, it has the opposite effect. If you try and push moms and pops, they typically lose interest and it makes them not wanna sell to you. So, that's never worked. But if you just hang in there and bond with them, when they do ultimately wanna sell, you'd be probably their first choice. But that's really bonding is such a powerful part of everything.
1:45:02
Frank Rolfe: You had a chance there for a while during the Biden administration to dangle the threat of the end of capital gains tax, but now that trump's in that probably his guy by the wayside. But at any rate, it's normally the ball is isn't completely mom and pop's court. And the only thing you can really do is bond with them to the next of these texted questions. Hold on a second question here. Where do you get your rules and your lease and rules from? You wanna get this from your state mobile home associations. So, it's always a good idea if you're buying a Mobile Home Park in the state to, to join the association and go to the association and say, look, what is the approved lease and rules in this state? And use that as your initial chassis and then read through that and adapt that to in minor ways to what you're trying to do.
1:45:55
Frank Rolfe: Obviously on the lease, the amount and that kind of stuff, on the rules side, remember, you have to keep the insurance company happy. And the city has no restrictions on such things as dogs, trampolines or pools, but your insurance company typically does. They're gonna want no dangerous breeds of dogs, no large dogs, no trampolines, no pools. You can't enforce that unless that's actually in the rules. So, make make sure that you have got what your insurance company mandates in there also. And then finally, you also have to become an expert on how these leases are to be delivered and how they are to be picked up. In some states, you can unilaterally just mail them typically, certified mail, and if they don't move out, they're bound. That's a very sensible way. But in many of the blue states, they actually have to physically sign it.
1:46:44
Frank Rolfe: Now, the good news is you hold all the cards. If they won't sign it for whatever reason, if they hide from your manager, then you can non-renew their lease, which typically brings it to a head because now they have to sign the lease or move out. But it's very, very important. You know this in some states, if you don't deliver it correctly, it's as though you never set it. And some states may say, ah, well you have to deliver the new rules by hand in person. And so if that's the law, then you better do it because otherwise you're not getting anywhere. And you also, again, have to know whether or not it's good enough just to mail it, or do you have to go round them up. Some states you have to have the side ones, others you have to send them return receipt.
1:47:23
Frank Rolfe: And if they don't pick it up and they don't move out, then they're bound. But you just have to understand how it all works. And I know we're one big giant country on paper called the United States of America, but the key items are the word states. And most of the states, most every state has its own unique wrinkle on how everything works. And even beyond that, some of the judges in some states have kind of gone rogue anymore, and they have their own ideas of how things work. So, even if you do what the state says, it won't matter if the judge doesn't do it like the state does it. So, you also have to be ever, ever, ever watching over that issue. I think we have one more question here on the text that Brandon sent over here. Hold on just a minute.
1:48:14
Frank Rolfe: Okay, this is a lengthy question, but to sum it up, the question is, how important is it that you know exactly who lives in the unit from a legal perspective? It's gonna depend on your state and what your state's rules are on how much you are supposed to be the babysitter over people living in housing. But in most states, it's not a requirement. It would be impossible for you to even do. And there could even be legal ramifications. People would claim that you're discriminating against, for example, families by tracking homes with more people as opposed to ones with fewer people. Remember that all you're gonna get you a parking lot, so you get the same parking fee regardless of how many people are in the home. It's kinda like a ride through Christmas light thing where part of the ride through Christmas light process is that you get a 20 bucks a car, unlimited people in the car.
1:49:10
Frank Rolfe: You could have five people in one car, 20 bucks, one person next car, 20 bucks, you're like that Christmas light right through thing. So, if you have nine occupants, you get the same pay, the same as if you get one. So there's no mathematical reason you would track who is in the homes, doesn't matter. But the bigger issue is how the heck would you do it? I mean, even in your single family neighborhood, do you really know who lives in any of those houses? Does the city No, the city doesn't care as long as you follow the city's rules and regulations. As long as the property tax get paid, they don't... They don't know or care how many people are in there. And even if you were to micromanagement, how, who's gonna actually track how long people are there, like in most places, you're allowed to go live at someone's house, like for 14 days, even under most leases, are you gonna go with a piece of chalk, like a meter made and on a parking lot and put a chalk down their leg and see if they, the guy with the chalk on the leg is still there 14 days later.
1:50:12
Frank Rolfe: Now that's ludicrous. So it really just doesn't do you much good. Typically when Parks get obsessed with who's living in what home, it's again, not coming from a healthy source, it's the manager perhaps being a little too nosy of what's going on. The key item is if someone's paying the rent and following the rules, then you really should not get involved in it unless you're in some state, I don't even know what state it would be. That mandates that you do track who's in the home. Even evictions in most states can be done with an eviction that's the name of the last known person. And oral occupants, because the legal system itself has this built in escape valve for situations where we don't know who actually is in there. You could have rented the lot to a couple, and then without your knowledge, one of them left. They had a big fight, one of them left, then the remaining person, starts dating someone else. They move in, they move in and they bring three kids. You know, that's humanity. That's what happens. I mean, we have like a 50% divorce rate in America. I mean, household formations are constantly evolving. You've got family members moving in, getting back on their feet, moving out.
1:51:25
Frank Rolfe: You can imagine from these LA fires. How many occupants are moving into other houses in LA for a very extended period of time, or maybe a decade, maybe a lifetime. But that normally doesn't cause any disruption to the business model at all, so the key item is probably just not obsess over it. We've bought Parks in the past from moms and pops that have obsessed too much on everything. There was one park one time that the guy went out there in a little golf cart, and all he did was track people parking. And if you had your tire more than a certain number of inches off the concrete parking pad, he would find you, why? Who knows? Even if you ask the guy, why do you care so much about the car wheels on the pad car, he's, Oh, well, if they're on the edge, it's gonna crack the pad.
1:52:15
Frank Rolfe: Really? Is that really even true? I think the problem was the person was just kind of bored, kind of nosy and just like to probably get involved in things that he had no business getting involved in. So in summary if your state/county/city does not have a regulation where you have to actually know who's living in the home, then just don't worry about that, that's really none of your business. You could only actually have negative implications, maybe from a fair housing perspective. But I can't imagine any positive, positive business things coming from that and like any good business, if it's not something that benefits you or is important, then I would not get involved in it, just let it go. All right, it's kind of the last chance for questions here.
1:53:06
Frank Rolfe: I've done my texted questions. I'm watching to see if I have any more texted questions from Ben, but I do not. We have the questions so far while we wait to see if there's any final questions, I'll remind people that our industry is still very much in its infancy. We are only what 50, 60 years in many other industries in America are 200 years like office and retail and stuff, we're still morphing to change. And that's why we think having these periodic discussions and dialogues through the lecture series events are important because we need some kind of communal science to how all of this works. Also, if you own a park and you're tuning in, I know that it's very important to people who have a fellowship of park owners because it can be a very lonely business that you don't meet a lot of people in your private life who own Parks care about Mobile Home Parks.
1:53:51
Frank Rolfe: So, it's important to know that there are people out there who do the same thing that you do and do think about them and do care about them and do try and apply and derive the science that everyone benefits from. We also know that you have lots of options with your time. I'm glad you were able to be with us for these two hours to get everything decided. Actually, you know what, let me check one more thing here Brandon warned me about. Hold on let me see, make sure over here that there were no questions that came in under the other chat, just a moment. I don't want to cheat anyone and not have it.
1:54:35
Frank Rolfe: Hold on here. This may be where there were some questions lurking, just a moment, let me scan down these. Hold on just a minute, let me just double check. I hate it when we don't hit all the questions. Here are some questions that we did miss, so let's nail these. Question, what do you think about mobile home? Well, oh, I can't pop it up a on the screen because it came under the chat instead of the question section. What about Mobile Home Parks in states adjacent to Texas, which are Oklahoma, Arkansas, Louisiana? Yes, we have owned Parks in all of those states. Probably the one most similar to Texas is Oklahoma, second position is probably Arkansas, third position of Louisiana. If you're in Oklahoma, the key areas are Tulsa and Oklahoma City, obviously those are the big cities there.
1:55:41
Frank Rolfe: Arkansas, the number one rated market is probably Fayetteville, where the University of Arkansas is, after Fayetteville is probably Little Rock. And then in Louisiana, number one location today is probably Baton Rouge where most of the focus of Louisiana moved after Katrina. Then it would be probably residential areas of New Orleans, probably out on its fringe. After Baton Rouge and New Orleans, you probably drop over to Shreveport. We have a question here of how many Parks have dirt roads and how much does that affect your buying decision? How much do you deduct from a purchase price for a dirt road park as opposed to one that's asphalt? Well, we have virtually no dirt road Parks and the Parks we have that are dirt are not actually dirt, it's called collegiate, it's road base, this is what is under asphalt and under concrete.
1:56:33
Frank Rolfe: It's what holds up the road because you have to have something strong to hold up, because asphalt has no inherent strength, it just is a nice hard covering over the caliche, which the caliche is rough, it's crushed limestone, it could be dusty and the asphalt takes all those negatives away. But if you don't have that in there whole Brandon's now, got it, so I can pop up the questions, thank you Brandon. So, there was a question. The issue is a dirt road, which is literally a road created by cars driving over grass, killing the grass till it becomes dirt, that's a problem. I don't know of any lender that will make loans on that. If you have a caliche road, lenders will make loans on that. Because in some parts of America, like Colorado caliche is sometimes the only way you can build the road because with all the snowplowing, the asphalt is scraped to death.
1:57:26
Frank Rolfe: But if you're gonna buy a park with a dirt road and you wanna fix it up and sell it or ReFi it, you will have to pave it at some point. You're gonna figure it, what would it cost to pave it? And you need to factor that number into your value calculation if it, will cost you 150 grand to pave it and you thought it was worth a million, it is not worth a million. It's worth 850 because it's worth a million after you pave the roads on it. Another question over here. Do you think there will be expansion of government backed loans and Fannie Mae and Freddie Mac? We've heard so much over these last four years about all these things the government would do with with affordable housing, none of them actually happened.
1:58:09
Frank Rolfe: Fannie Freddie is a wonderful group. Fannie Freddie has been one of the biggest supporters of the Mobile Home Park industry, they finance more than half of every loan in America in Mobile Home Parks sector by dollar value, wonderful people. There's discussion they may go private that Trump may privatize Fannie Freddie, and that may happen. But there's also been discussion of there we're going to be additional, programs to allow customers to buy Mobile Homes from dealers again. I've seen that discussion over and over historically, I've been in this business for 30 years, it's come up several times in the past, it never amounted to much. But if they do wanna do that, I certainly welcome it. I'm a little worried about some of these partying shot initiatives that Biden has announced because you know that Trump will go in and kill them all day one.
1:58:55
Frank Rolfe: So, are they gonna do something or not? I don't know. I know for the last four years I haven't seen much progress on that spear at all. But if they want to, I would certainly welcome that, they are a great group. Question, have cap rates come down recently? What are they in average areas, cap rates are all over the map. You're probably looking at cap rates in the four to five area on very desirable Parks all the way up to probably 12% of less desirable that's a huge range for cap rates, right? It's too much. So, it's exhausting to even try and figure out applying a cap rate to a certain park, but yet you have to do that, that's your role as a buyer. If I was on a game show and I said, okay, what's the average cap rate in America have to be? Well, it would typically have to be a cap rate that you can get a loan on, right? So then the question is, at what cap rate would the appraiser appraise something? And when you take into account all of the 44,000 Parks from the urban to the rural, to the big metro to the middle of nowhere, to geographic hot areas like Austin, and then lesser areas like Tuscaloosa, Alabama, I'm gonna say probably the average is gonna be eight maybe. But again it's such a spread and I cheated on that. I took the midpoint between the four to five and the 12. So, the bottom line to that is that you really can't go by an average cap rate.
2:00:23
Frank Rolfe: Most people obviously wanna buy where the cap rate is greater than the interest rate on the loan. But you're seeing a lot of people say look these interest rates are not going to stick, or we're gonna have a cycle, we're gonna have a recession, rates are gonna come down, some people are buying Parks with the assumption the rates will come down two or three points and they'll ReFi them later. So, that is a really hard question based on the reality of what's going on. Next question here. We were doing due diligence on a park with four septics serving 32 homes. After calling the city zoning department, they said current septics are not to code and if they fail, you can't replace them, you can do a light fix but not replace them, there's not enough room lateral, etcetera. We ask if the park could be tied into the city sewer and they were not willing to allow this and they said, the park is dying, it's old and we will shut it down when the septic issue comes up. What would you suggest? Well, here's the deal in the world of septic, they are correct that in most states, the concept is one home per tank, it's like the old Texas saying "one riot, one ranger" There's a sculpture in the southwest airline terminal from the '60s back during the free love movement.
2:01:35
Frank Rolfe: And it's a Texas ranger and it just has a giant bronze plaque that says "one riot, one ranger." Which I guess meant that one Texas ranger could take out an entire free love riot, I don't know. But the problem is that in Mobile Home Park land, you never have one home per tank. So, one home per tank is considered residential septic law, but when you put more than two homes on a tank, you become a high capacity law or a commercial law, and they have nothing to do with your standard residential septic. So, they're correct in that and it probably is not up to code, and it probably would never be up to code, and that's the danger with those kinds of systems. And it's good you know, that now rather than buy it and then find it out, because that would be sad.
2:02:19
Frank Rolfe: That would be a tragedy. So number one, if it's not up to code and it's grandfathered only in as much as small minor repairs, but not full replacement, you have to really think about what you're doing with that park. Because if you have to replace a tank, which is not uncommon or a leach field and they're gonna block you, that kills your park off. So, in this case, you've got eight homes per tank. If you lost one tank, you would lose eight homes, you would lose 25% of your occupancy, 25% of your net income, meaning you probably can't pay the mortgage, it's a gigantic mess. So, on that note to me, I would say that you're doomed. If you were to go to city sewer, then you'd have to re-pipe the whole park because septic does not come to a common collection point.
2:03:09
Frank Rolfe: In this case, it comes to four different collections points, you then have to unite those into a main pipe, which would then have to flow probably via a lift station to the city's Maine. And they're saying here that they won't even let you get to the city Maine, and on top of that, even if you could, you don't know what they would charge you for a tap fee for the right to attach to the city Maine. So sadly, more than likely yes this part just probably needs to die. Mom and pop can keep it and run it until the septic blows, and when it blows, it becomes raw land. And then maybe they could redevelop it. But that one sounds a little too scary to do as a buyer. Question, a park listed in Birmingham, Alabama 185 lots, but it's half occupied at a 340 rent.
2:03:52
Frank Rolfe: But the rent could be in the 450s, has a lot of upside potential by filling, is it realistic to fill in 80 lots? What kind of investor is this kind of part four? Is this something that the cash program could help in? Many different questions here, let's just, break it down into bite-sized pieces. 50% occupied Parks are not uncommon, we see them throughout America. It's not always because the market was terrible, often the problem is that mom and pop never tried to bring in homes to fill lots. And over the time, if they'd brought in a home here or there, they might be full, but they didn't do it. So now the first thing you have to figure out is, is it empty because no one wants to live there or is it empty because no one tried? Then the way to look at these deals is very simple.
2:04:32
Frank Rolfe: You're buying a 93 space park and you're getting a second one for free, so you're buying a 93 spaced, fully occupied Mobile Home Park, and then you're getting a 92 space park for free, buy one get one. But of course the one you're getting has 0% occupancy. So we can tell what the value is, if you take 92 times your lot rent, which you're saying you think would be 450 times 12, well, that tells you the potential profit from that, that's pretty darn profitable, that's like 300 to $400,000 of net income. So, that makes it pretty good if you can make that that 93 space park fly. So when you run the numbers on the 93 space park, the question is what can you pay for the 93 space park to get the buy one get one free sale that a bank will actually finance?
2:05:26
Frank Rolfe: They're not gonna give you any credit for the empty park at all. So, that's not gonna be any good at all. But then the question is, is it realistic to think you could do it? Yeah, we do that all the time. We've filled literally thousands and thousands and thousands of lots, so can it be done? Yes. I can tell you from experience it can be done, cash program is helpful on that, but only if it can be new homes, there's others that have similar programs out there as well. So you've got cash, you've got pep, you've got Zippy, you've got Triad, those are kinda the big ones. But yes, a floor plan lender could definitely aid you on this. Now, they will not be able to aid you unless the demand is there, and so that's the key item.
2:06:07
Frank Rolfe: When you have a park that's that empty, the question really is will it work? Like is the demand there? You have to run test ads, you have to see how many people actually wanna live there, check the other Parks around, are they full? Are they half empty? I've seen half empty Parks that are half empty because the market is deteriorated and there's no longer any demand. And then we've bought Parks that were half empty where mom and pop would say during diligence or the manager yeah, we have 10 people a day coming by, try to buy homes here, but we don't wanna jack with them, we don't wanna bring them in, we don't want have to sell them. So the question, is it empty, because it elected to be empty? Or is it empty because no one wants to live there? And if they've got a brand new home in there with a nice sign banner out front, decent ads, then the problem is probably no one wants to live there. But that's something you'd have to figure out in due diligence. We have some more questions now.
2:07:00
Frank Rolfe: Question. As a park owner who pays from a central meter, water and sewer, I increase lot rent, $10 per occupant. Also, we require a background check on any occupant in order to keep our community safe. So, my situation, it is important to know all occupants and that's fine. Again as I said, as a disclaimer on that if it has a material impact, which in this case it sounds like it does, then there's no problem with that. But there's many Mobile Home Parks, even those owned by the largest of REITs that no one really has a handle, nor will they have a handle on who is living in the park. I'm not saying that's the best thing, it's probably good to know who everyone is, it's good to have an application on everyone and make sure there's no problems. But throughout America, most Mobile Home Parks work on the system that if you're paying your rent and following the rules, you're dandy and otherwise you're not.
2:07:52
Frank Rolfe: But in your specific case here with what you have going on, then that probably is the best for you, I have no problem with that whatsoever. Next question here is the Macallan, Edinburgh, etcetera valley a good place to invest? Well, we own stuff down there. We have two very large properties on the border of Texas and Mexico, so it's hard to get any more south than the border of Mexico. What you have going on down there right now is you have two things. Number one, you always have demand for affordable housing that hasn't really gone anywhere. But you also have a lot of seniors who are moving down there because of the weather. Seniors have always tended to favor warm weather in the winter, and then some are realizing, you know what, I don't even like going back to where I currently live even in the summer, so I'm gonna give up on it.
2:08:40
Frank Rolfe: So, a lot of these Parks where you have this seasonal nature to it are becoming more permanent. Because a lot of people are saying, you know what, why not just sell my house in Ohio and just live in the park full time? I can take the money from the house sale, I can put it in the bank, so why not? Now, to help them do that, what a lot of people are doing is they're pumping in a lot of park models and Mobile Homes into these Parks that formally might have been RVs because it's much more user friendly. RVs are much smaller than Mobile Homes much harder to navigate if you're disabled, so that's one thing we're seeing a lot of those Parks is a morphine from more RV oriented things to more mobile home oriented things, which is a natural thing.
2:09:28
Frank Rolfe: Everything in the world is constantly morphing, constantly changing based on all of the population and its desires at hand, so there's nothing wrong with that. But again the additional wildcard in all this is Texas is gonna get a big boost from Trump. I mean, there's no question to that. With the whole slogan of Drill, baby, drill, who benefits from Drill, baby, drill more than Texas? Probably nobody. So you'll see a lot more oil and gas production down in Texas and that will definitely impact that area, they're gonna go back to building the border wall that's gonna positively impact the area. So yeah, if you had a right deal down there, we own down there, many other people own down there, don't see any real problem with it.
2:10:14
Frank Rolfe: You just have to do good due diligence obviously, but you know that that's about it. Let me make sure I've got all my questions, hold on, here we go. We have two more that slipped through the cracks. What about... No, no, we already did that one, that one came in on a text question, so whoever did the text question did ultimately get it through. Hold on a second here. Okay, this is someone who is answering my answer regarding Longview it says outside of Kilgore close to Longview, it's rural. Well, you're not rural if you are in Kilgore are Longview. The metro areas of each of those is not rural, so if you mean you're not in the metro of Kilgore then you would be rural. But technically if you're in the Kilgore Metro, which you can tell by going to Bestplaces.net, then you would not be defined as rural.
2:11:17
Frank Rolfe: I haven't looked at the Kilgore Metro in recent times, I've been there many times, you know, grew up in the Kilgore Ranger Rats, it was a famous dance team that was part of Texas lore back in the '60s. But you're not rural there. So, if you're talking, you're in Kilgore Metro, that's not what I would call rural. If you are beyond Kilgore, then you might be rural. Now that doesn't mean that the deal still won't work, you can run test ads and you can see what the demand is to be outside of this area. But don't be considering, Kilgore as a rural area, it's not. I mean, it's got a college, it has a downtown, it has all that kind of stuff. A true rural area, by definition has normally none of those things. It's just, it might have a convenience store, gas station, maybe a pizzeria. But when you're truly rural, one thing you don't have is you do not have a lot of commercial area at all and Kilgore does, so you may be fine on that. Let me search for any other questions over here on this section here. Looks like I've nailed those.
2:12:11
Frank Rolfe: Go back to this section here, aha. We have another question that just popped up here. Are tap fees for water and sewer, usually per unit, in other words, for a 72 unit park per unit would be around $500,000 to convert from private utilities to cities. Seems high if utilities run in front, but just not familiar if it's normal. The tap fees are completely locally based, I have seen everything in 30 years, I have seen no tap fee and I have seen $1000 a unit tap fee. So, in this example, 72 units would be $72,000.
2:13:00
Frank Rolfe: And I've seen 5000 tap fee that would take you to your 400, $500,000 mark. But I've also seen in Colorado 25,000 tap fee, which would launch your 72 units into millions of dollars. So, the bottom line is you just have to ask what is the tap fee? You can't really guess. The tap fees are often done cruelly, they do not tell you there's a tap fee until you go to connect. And then after you already put all the lines in and got all the permits, then they spring a tap fee on you, it's like entrapment, it's like a speed trap for novice people who don't know what a tap fee is. And you can imagine what a mess it would be in Colorado if you happen to build a 10 pad expansion and you got it all done. And then they said, "oh, well I need your tap fee check of a quarter million dollars."
2:13:46
Frank Rolfe: And you'd say, what are you talking about? They'd say, "oh, well if you don't wanna pay it, we won't just won't connect you. So, I always... This is a situation, you always wanna ask permission rather than forgiveness, you don't wanna do anything until you know, the tap fee component, it pretty much cuts along the lines of the big city and the small city. So, where you're gonna get zero tap fee or a small dollar tap fee is typically a small town an exurban market, a super commuter market where you're gonna get those big dollar deals, those are gonna be the big city, they're gonna charge those big dollar prices. Now they get them because let's see you build a single family house in Denver or something, well then 25,000 on top of a $400,000 house is not the end of the world.
2:14:26
Frank Rolfe: But you can't slap 25,000 on top of a $25,000 mobile home. That's crushing that's truly unfair. All right, let me scan again for questions. Just don't wanna skip anyone's questions. If you came to the event, we don't wanna make you come and not go away with the answer to the question, okay that one is clean. So, on that note, I think therefore we just wanna thank you for being here again. I'm excited about 2025, I think good things are gonna happen. I think we're gonna get things rebuilt and I think in the end we're gonna like what we end up with once we rebuild it all, so I see this year as an exciting opportunity. And so, I've had other years of dread Covid, the interest rate spike, the inflation spike, none of that was good.
2:15:17
Frank Rolfe: But here in '25, feeling pretty good about things. But at the same time you have to be very mindful, you gotta watch over what's going on, stay outta trouble, and this is... I say I think this year could be a good year with the start of really good news. Typically, the rebuilding year, there are surprises to it, it's not normally the happy ending most people want, but again, it's the start of something good. So, on that note, we wanna thank you for being here. Also, if you wanna attend our next bootcamp, it's coming up January 17th through 19th, so there's that option. We also have the masterclass coming up, I think on the 26th. But again, we're devoted to try and bring you the science of how Mobile Home Park investing works, someone's gotta do it, there's not a lot of scientific commentary out there to be had. And again, we hold these lecture series of events to try and provide that. So, on behalf of myself, Dave Reynolds and Brandon Reynolds, we thank you for being here we will hopefully talk to everyone soon.