How to Make High Returns Investing in Mobile Home Parks

Investing in mobile home parks

Mobile home parks, are a great, real estate investment, because of their low maintenance, high returns and overall affordability.  There’s a strong argument for, mobile home investing. Listen to this interview with Jefferson Lilly,  mobile home park,  investment expert and educator and learn why and how you should be investing in one of the, real estate, industry’s hidden gems.

Jefferson Lilly is the founder of Park Avenue Partners, a private equity real estate fund that acquires and operates, mobile home parks, nationwide.  His investment funds are currently returning 8% – 15% cash annually to Limited Partners.  Both personally and through his partnerships, Jefferson has acquired 25, mobile home parks, in 13 states since 2007 totaling over $56mm in value.

He also started the industry’s first, mobile home park podcast,  and the largest group on LinkedIn dedicated to, investing in mobile home parks. Jefferson has been featured in The New York Times, Bloomberg Magazine, and on the Real Money television show.  He holds a B.A. from the University of Pennsylvania and an MBA from the Wharton School of Business.

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Warren Buffett advises that we should stay within our circle of competence, so I figured that I had always lived in a house or apartment so that was within my circle of competence.   I started looking for traditional apartment buildings; but kind of stumbled into, mobile home parks,. I began researching it, in then realized why, mobile home parks,  was really the best niche in, real estate.

How to Get Started investing in, Mobile Home Parks,

I started out by buying my first, mobile home park,  it was a little under $500,000. I put down a little less than $100,000 and I borrowed almost $400,000 from a bank.   I still had some other reserves and I still had my day job.  Just to be clear, at no point you can say like hey, mobile home park,  next stop actions is silicon valley.   I was looking for passive income, I had two streams of income the, mobile home park, and my regular W2 income for about a year.  It’s now just coming up on 12  years later and I haven’t  looked back.

The first, mobile home park, I purchased, I  just bought the land, I didn’t actually buy any of the homes at that time.  My tenants owned all the, mobile homes. There were about 45, mobile homes, in the park. I purchased the land and the, mobile home, owners paid me rent to park their homes in the park.  Think of it as a parking lot.  You own the lot, not the cars parked on the lot.  The cars pay you to park there.  Same concept in a, mobile home park.

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Investing in, mobile home parks, instead of mobile homes

Then about 5 years ago, I formed my first partnership to start acquiring, mobile home parks, Nationwide.    Now sometimes I buy, mobile home parks, with the homes as well as the lot.

We call those a horizontal apartment building of sort,  our colloquial term for that.  Most of the, mobile home parks,  the owner of the park does not own the, mobile homes, and the owner is paying rent to the park owner.

Whenever we buy a, mobile home park, with the homes, we tell the tenants, hey you can now own your own house for the same monthly payment as renting. Depending on the value of the house they can own after about thirty six months or less then 60 months. When they become homeowners they have to actually maintain the houses.  It’s just like real home ownership, they’ve  got to put on  big-boy pants, there  now a homeowner.  So when that proverbial toilet leaks, they don’t call me.  They have to go to Lowe’s or Home Depot and spend $12 for the part instead of the $200.00 it would cost me to send in a plumber to fix.

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The optimal way to own these, mobile home parks  is to not own the home but just home the park.  You don’t want to be responsible for fixing leaky toilets and such.

If you don’t have the money to buy, mobile home parks, for $500,000 as most of you will not, then buying individual homes and fixing them up or something and selling them or even renting them would be a good start. I know one gentleman who started with just a couple thousand dollars and now owns over 50 mobile homes.

How to talk to the owner of the, mobile home park, to get a deal

If you don’t have a lot of money to start, investing in mobile home parks, what you can do is you can go to a, mobile home park, owner and say.  Hey do you have any individual, mobile homes, in your park that are just sitting there vacant?  Maybe they need some renovation so you you can hopefully find a win-win scenario.

That Park owner may even give you the house for free or maybe just for a couple thousand dollars.  You then put some sweat equity into it.  You paint,  put in new flooring etc.  Your agreement with the park owner is that maybe you’ve got a couple months to get the house fixed up.  Hopefully you can do it in one month and then indeed you’ll begin paying the lot rent.  Because that house is just sitting there un-renovated and  obviously the, mobile home park, owner is getting no cash flow off it because it’s sitting there vacant.

So you get a month or two abated lot rent, you fix up the house and then rent it or sell it. You might then get an extra two to three four hundred dollars a month for the house depending on the market.  You put that additional money in your pocket, and that is how you get started.

The average income of a, mobile home,  owner  is around  $35,000 annually.  That’s about three thousand a month. So their housing budget is around a thousand dollars a month.  Most folks that make thirty five thousand a year aren’t going to be able to save up twenty thousand for a down payment on a single family home, so that is the target market for the mobile home buyer.  Our, mobile home,  a 3 bedroom, 2 bath rents for about $800.00 per month. We offer a rent to own package and in 3 to 5 years, they can own their own home.  Beats a 30 year mortgage any day.

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If you visit my website https://parkstreetpartners.com , on the homepage you’ll see our phone number and information on our, mobile home parks, nationwide.  There is also information on investing in our private equity fund. You can also email us at Park Avenue partners. com.  You will  find other information on the web site as well. Articles and webinars on investing in, mobile home parks, on the upper right corner of that web page they’ll see a button that simply says “Invest” they will find  and again they can find  summary information on the fund and also the PPM, the private placement memorandum which is a very long and dry legal agreement.

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Additional Resources

https://blog.myhelps.us/build-wealth-turnkey-real-estate-investment/

https://www.forbes.com/sites/brandonturner/2017/07/11/7-powerful-benefits-to-mobile-home-park-investing/#2f9eb1476e92

My interest was peaked after interviewing several mobile home park investors on The BiggerPockets Podcast, and later finding The Mobile Home Park Investing Podcast, hosted by Kevin Bupp and Charles Dehart of Mobile Home Park Academy.  I realized that mobile home park investors were crushing it right now.

 

How to Build Multiple Passive Income Streams

Passive Income Retirement

Looking for, passive income streams, for retirement? Jack Gibson, President of High Return Real Estate, shares how to use real estate to build passive income.

Today’s episode in the 3rd in our series on building wealth with Real Estate investments.  My intention is to sow seeds into your subconscious that 2019 is the year to build your net worth. The power of intention is an invisible force of energy in the Universe. It is activated when we become inspired and will propel us towards our goals.

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  • Guest Biography

Jack Gibson began his entrepreneurial journey at 19, and founded his first company at the ripe old age of 21. Operating a successful nutrition consulting and distribution company.  He had built a multi-million dollar venture before he was old enough to rent a car. Soon thereafter, he bought his first home as an investment. One home quickly became five, and then the bug hit. He became obsessed with learning everything about Real Estate Investing and soon had over 50 investment properties generating Massive amounts of passive income. Today, Jack spends his time mentoring other entrepreneurs, building his real estate investment portfolio, and helping other investors to build a brighter future through the power of turnkey real estate income.

 

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Show Notes

My very first business that I started at age 19 was  a multi-level marketing nutrition distribution business.  The whole goal of that business was to build up a sales team and create ongoing, passive streams of income, so  I got that concept right away. I built that business up over the years and we currently have annual revenues over ten million dollars.  The last couple years it’s been a little bit more part-time or quite a bit more part-time as I pursued building my real estate company.  But I mean I still love it, I still love the people and I love the, passive streams of income,.  Two years into my network marketing company,  I read the book Rich Dad Poor Dad, that was the book that really transformed my mind to start thinking about utilizing real estate as a way to deploy the cash that I was making in my primary business and add additional, passive streams of income,.  I was still investing in stocks until about 4 years ago.  I was in stocks for most of the last 14 years, so about four years ago two events happened that were critical and really pushed me over into investing into real estate as another, passive streams of income,

There were two negative events,  but you know most negative events if we look back we can find the good in them.  One of them was I had some insider information, not anything illegal by any stretch,  I mean I knew that our company had a good earnings quarter.  I mean it wasn’t that hard to figure out based on what I heard from all my colleagues, so that’s kind of my insider information.

I bought into the stock about a week before the earnings report was to be released expecting things to be great.  Well the earnings report was phenomenal and typically, not always but typically stocks go up when the earnings report is great.  Well this  billionaire Hedge Fund investor was very well known as  an activist in terms of shorting stocks.  He gets on our company earnings call,  he asked  three or four pointed questions and then it appeared that he was shorting the stock;  the stock drops 30% overnight.

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Stocks as a, passive streams of income,

I realized then that I didn’t have control over stocks. Not even a sure thing is guaranteed. I want to be in the driver’s seat and put myself in a great position where I have as much control over the outcome as possible.  I took that as my sign that this is my time to learn a new asset class and another, passive streams of income, it was the final push.  I told myself, I’m going to draw the line in the sand.  So I studied real estate and listened to podcasts for a hundred straight days.

Jack you know that someone listening is going to pay devil’s advocate and say the same thing happens in real estate.  What’s your come back on that?

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So here’s what we have to consider when looking at real estate as another, passive streams of income,  we look at the past.  I mean could go back 100 even you know 200 years or whatever, the variance between real estate and the stock market is almost four times different.  If you look at historical data,  the swing in the stock market is around a variance of 16 or so from year to year.  Real estate has a variance of four.  That means from year to year on average that the swing in the market is going to be four percent, so you’re not quite so volatile in real estate.

The other part in this, passive streams of income, scenario  is it that you’re  investing in the real estate as  Robert T. Kiyosaki says, for the cash flow that it produces.  Not necessarily for it to go up in value.  You really don’t care if it appreciates or depreciates. As an investor and you’re renting it out and you will always be able to rent it out for more than the mortgage payment.

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At the same time  property values  will go up eventually, even if it dips for a little in the short term.  I was listening to the Automatic Millionaire Homeowner and the author was interviewing homeowners who lived in their homes for about 2 years and then sold and moved to bigger homes, and became millionaires because homes always go up in value.

We’ve discussed  real estate, we’ve talked about the stock market and we’ve also talked about multi-level marketing.  I understand why that’s been your foundation for, passive streams of income, because you’ve been you’ve been taught well.  You stayed in the business  for 20 years so you must be really doing well, because everybody that joins the business under you feeds you, passive streams of income,.

Multi-Level Marketing a Tool for generating, passive streams of Income,

Yea, it is phenomenal. If I could describe the business to people without saying what it was they’d be like wow that sounds too good to be true. I have a multi-million dollar business that I work right here from my home office.  That I help people with their health and nutrition. I have no employees, I have no accounts receivable.  I have no inventory, I have no monthly overhead whatsoever.  I have a free cash flowing business that produces ten to twelve million dollars in sales revenue per year.  That’s not obviously my income; but a percentage of that.

Skilled , passive streams of income: Writing a book, Music, software

That’s why, passive streams of income,  is so important.  On my website, www.myhelps.com  I talk about a some other forms of, passive streams of income,  like writing a book, or writing music.  Mariah Carey wrote the song “All I want for Christmas”  in 15 minutes. She’s generated sixty million dollars in royalties off of that 15 minute work.  So her, passive streams of income, is phenomenal.

Explain what we mean by, passive streams of income,  which ones would you recommend it to a seasoned investor or someone just starting out?

Passive income is created from work you have done in the past, that is paying you today.

You have one or two scenarios.  You either have money at work or capital at work and you’re drawing royalties. There’s multiple ways to go about creating, passive streams of income,  it boils down to either unskilled or skilled forms of passive income. It’s like what you talked about in terms of creating music and selling music, or writing a book, or creating a piece of software that you then are able to license out and sell.  Those are very technical skills, very skilled types of, passive streams of income,.

Creating, passive streams of income, from a business  I won’t say is unskilled in terms of work. It does it takes skills to put the right management team in place.  There’s a way you can have any type of business that you set up  to become a, passive income stream, if you’re not involved directly in day-to-day operations, then it’s a, passive income stream, business.

To listen to the full interview, download on iTunes and please subscribe and leave a review.

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Check out Jack on the web https://highreturnrealestate.com/.  All of our properties are listed on the website. Nicole is the Head of Investor Relations and she will be happy to answer any questions.

On the nutrition side,  we have a brand new system, it’s a nine week online body transformation Course that we’re planning on scaling so that over 10,000 people can participate. Check out Jack’s Body Transformation podcast 

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Additional Resources:

Top 20 Areas In Miami For Increasing Property Values

25 Best Passive Income Ideas to Make Money in 2019

https://wellkeptwallet.com/passive-income-ideas/

https://wallethacks.com/passive-income-ideas/

How to Create a Freedom Lifestyle with Investment Property