Table of Contents - Getting Started in Mobile Home Parks with Gabe Petersen
Dave Debeau [00:00:09] Hi everybody, Dave Debeau. Welcome to another episode of the Property Profits Real Estate podcast today, zooming in all the way from a place I recognize. Look at that. Look at that skyline behind him there, Gabe Petersen, all the way from Seattle, Washington. How are you doing today, Gabe?
Gabe Petersen [00:00:25] I'm doing great, Dave. Thanks for having me on the show.
Dave Debeau [00:00:28] My pleasure. So Gabe is a an experienced real estate entrepreneur. He's done a bunch of different things. A operates a fantastic podcast that I had the pleasure of being interviewed on. Not that long ago. And these days, Gabe is really focused on something that a lot of people are interested in, and that is mobile home and RV park. So that's what we're going to be focusing our conversation on here today. And Dave, before we ask about all your your background and your experience and all that kind of good stuff, why don't you just tell us what are some of the big benefits of investing in this particular asset class?
Gabe Petersen [00:01:06] Yeah, yeah, for sure. Now, I I'm really stoked about this asset class. As you said, I've had experience in single family, multifamily wholesales, all that jazz, but mobile home RV parks, they're very unique. And I really, really like the asset class itself. The two reasons. Well, for one society, our culture right now, we need affordable housing there, especially in Washington state. There's just not enough affordable housing. So the need is there. There's a huge there is not enough supply for the demand that is out there for affordable housing at the level that we're providing it. But on the other side, from the investor's perspective, in terms of ROIC and time value headache, it is a great investment when you're talking about investing. I've had a ton of experience with, you know, stick built structures like multifamily, single family, stuff like that, where you have windows, you have toilets, you have you have a roof. All these things that kid over time just slowly start to deteriorate and cause headache with mobile home parks, RV parks. That is not there. What you're really renting out, what you're leasing to people is the structure or the infrastructure and the community. And so that is really what you're offering to your tenants is an ability to have access to a safe environment and then also to water, sewer and electricity. And that when you're talking about in terms of how much effort that you have to do to maintain that and to manage it, it's much less than a stick built structure. So that's why I really, really like mobile home parks and RV parks, particularly mobile homes, a little bit even less headache than RV parks. RV parks tend to have a little bit more turnover, but you can rent them as long term stay. RV parks, it's just a little bit more difficult.
Dave Debeau [00:02:51] All right. Very, very cool. So, yeah, sort of. If I'm understanding correctly, one of the big benefits of, let's say, a mobile home park versus an apartment building is what you're really providing is the dirt. And they're put their own place on top of it. Really, that's that's what it is really. They've got the infrastructure, the community around there. But you don't have to worry about their leaky roof. You don't have to worry about if their furnace breaks down. You don't have to worry about covering their utilities. That's their responsibility. They're paying you for the privilege of having their home on your property. Would that be as kind of a good summary there?
Gabe Petersen [00:03:36] Yeah, and I mean, on that note, there's two benefits to that. So I've when I've rented out, like single family, apartment building, stuff like that, people don't have they don't have as much respect or appreciation for something that they don't own. And so if if they're renting out a single unit from you and they don't own the house, they're not going to treat that house. I do believe people are good at heart. But it just the truth is they're not going to treat that house with as much respect as if the house were theirs. Now, when they're in a mobile home park and they own their unit, they own their mobile manufactured house, they have a little bit more respect for that. That is their house. So they treat it accordingly. They actually keep it up. They they like living there. They have a little bit more ownership. And so they there's just more there's more loyalty to the park, to the the structure than than if it were an actual single family or multifamily property.
Dave Debeau [00:04:30] Yeah, that makes sense. Now, I think a lot of people, when they think of mobile home parks, think of our good old Canadian TV show up here, Trailer Park Boys. That's that's the image that comes to a lot of people's mind when it comes to mobile home parks and fun show, but not a not a great image as the mobile home owner manager, that sort of thing. So talk to us a little bit about that, about perhaps that the stigma or some of the the negatives that are associated with this investment class.
Gabe Petersen [00:05:05] Yeah. And. That is definitely true. There's definitely a stigma around mobile home RV parks, and I think that is mostly due to inept or just unscrupulous owners. I mean, it is the responsibility of the owner to create a good community as the owner. You are the one accepting people into the community, into the park. And if you don't have any scruples, if you are not doing your due diligence when it comes to accepting people into the park, then you're going to have, you know, a bad community. You're going to have a place that's not safe, a place that's not not a good place to live. And so I feel like that's mostly where that comes from. It also is I mean, this the the fact of the matter is it is for people without lower income families. And that is that's just the fact it is for lower income, but it is serving a purpose. It's there to help people who who can't afford to live in places like Seattle where the rent is, you know, 15, 18 hundred dollars a month. It serves a purpose. Where it goes south is where the owner does not doesn't have any scruples when it comes to actually creating the community itself and isn't maintaining the grounds, isn't, you know, interviewing the people that he's allowing in the community. That's where I think the negative stereotype comes from.
Dave Debeau [00:06:17] So moving from single family homes and smaller type deals, it it might seem on the surface to be very intimidating. Getting into an entire mobile home park, so why don't why don't you kind of walk us through how did you get into your first deal and without getting into too much detail, what are the numbers kind of look like, how much it costs and how much you need down and all that kind of stuff?
Gabe Petersen [00:06:44] Yeah. So the first deal was twenty six paid mobile home park in George Washington. I had met a few partners who had taken a course in mobile home parks. They were interested. They told me about it. It sounded like something that that excited me. I'd done single family multifamily for a while. And so it just sounded like an exciting direction to go. So we hopped on that. The first deal, that twenty six pad mobile park and George, we bought it for four hundred fifty thousand. It was a value added park, so it was in bad shape, needed to be turned around, bought it for four hundred fifty thousand. And if so
Dave Debeau [00:07:18] how long ago was that. Because you can't even get a house in Canada. Four hundred fifty thousand dollars a.
Gabe Petersen [00:07:24] All right. Well so this is a value add deal. So it's we're doing
Dave Debeau [00:07:28] by value-add deal. Let's cut to the chase. You mean it was like a trailer Park Boys type trailer park that pretty much surprisingly.
Gabe Petersen [00:07:37] No, the community the tenant base is it's mostly migrant workers. It's in a farm area. And so mostly they're farm hands. It's one hundred percent Hispanic. And the community themselves, it's just a really quality community, all families. There was one tenant who was, you know, you would classify as kind of a trailer Park Boys tenant. She was bringing around Riff-Raff. She it was obvious she was struggling with a drug addiction. And eventually, you know, she left, which was a boon to us. And we filled it. We're we're in the process of actually filling that right now. I forgot where I was going.
Dave Debeau [00:08:13] OK, so so as for how long ago was this was this 20 years ago?
Gabe Petersen [00:08:18] Was this. No. No. So mobile home parks is is a new asset class for for me too. So we bought this this year or last year. We found it in June I believe, or maybe May. And then we we closed some paper on September 15th of twenty twenty.
Dave Debeau [00:08:36] Congratulations.
Gabe Petersen [00:08:37] Yeah. So that was our first deal.
Dave Debeau [00:08:39] And so as a value add one, what is, what does that mean. I mean you had the one tenant from hell in there, but everybody else is pretty good. So where is the value build in this particular part.
Gabe Petersen [00:08:51] So the value. So OK, we bought it for four hundred fifty thousand. The operating expense ratio for this park was eighty percent, which means for people who aren't familiar. Eighty percent of the gross income was already taken out by the operating expenses. By what the cost to run the park we dug into the numbers we dug into all is doing our due diligence period. We kind of dug into everything and we found that most of it it was like it was almost fifty percent of the operating expense ratio came from utilities. He had underground water leaks. And this was so to give you a little context, the seller who was selling us this property is like he's a potato king, like he he grows all the potatoes from Washington state. And so he had this idea of kind of creating a themed town. If you ever been to Washington State, been to Leavenworth, it's kind of a German themed town. So he wanted to do the same thing with George Washington and create kind of a civil American or Civil War era town theme town. So he bought a bunch of land in. George had this intention, but he's running this potato empire and so it didn't have the time. So it kind of just let everything go. And George, this mobile home park was part of that. And so he tried to sell the entire town, but it didn't work. Nobody wanted to buy it. So he started piecemealing it off. We kind of got got to him at the time that he was looking to sell this this particular parcel. So we we got the park and sorry, I forgot where I was going with that with that story. It was related to
Dave Debeau [00:10:22] how are you going to increase the value of the property.
Gabe Petersen [00:10:26] Oh, yeah. Yeah. That was related to the the water leaks. So, yeah, he had you know, this wasn't a priority for him. He kind of just let it go. And so the main issue was the utility, the water leaks. The utility bill was absurd. And so we figured we can get in there. This is a real value that we can add. We can cut that utility more than in half. And so that is the main value add. And then also the grounds were have been very unkept. And so we got in there putting speed bumps, redoing the roads where the trees had been kind of overgrown everybody's lot. So we did tree trimming. There's a single family unit that is in just dilapidated. So we're in the process of flipping that. And yeah, that's most of the value that we've been adding to it. But when in terms when you're talking about ROIC, the biggest ROIC was just fixing the the leaks that were in the water lines.
Dave Debeau [00:11:19] Interesting. Very, very cool. OK, so that was the first one. Did you guys have you guys got another one on the go as well.
Gabe Petersen [00:11:27] Yes. A. We're on to our third one, we're in the process of closing it, the second one is a forty three pad RV mobile home park hybrid in Moses Lake, and it could be seventy three pads, but we need to do a little bit of work to add that in. That's the value out there is bringing in the utilities to the extra pads that have one or the other utility but needs an additional utility brought in from
Dave Debeau [00:11:52] Arby's into mobile pads. Is that what I'm understanding for now?
Gabe Petersen [00:11:57] So the biggest restriction for this unit is it's on well and septic. So Georgeson sewer and and city water, this is on well and septic. And so the well really isn't the issue because it's on a really good ground water. But the septic, there's no more room to mobile home units because they have so many rooms in them. There are fewer mobile home units that you can have per septic tank than RV. And so our our idea is to put in our additional ARV's bases, long term RV spaces versus mobile home interest.
Dave Debeau [00:12:32] All right. Go ahead. The third one,
Gabe Petersen [00:12:34] that's another one in George, actually, and that one is not closed yet. So we're still we're in the process of closing it. This one is a huge value add zero occupancy. Again, just an owner who kind of just let things go and
Dave Debeau [00:12:48] he's making so much money for potatoes. He doesn't. This is small potatoes for.
Gabe Petersen [00:12:52] Exactly. So there's no more occupancy in the park. It's almost 100 hundred percent filled with vacant RVs, which is interesting. So the big value out there is actually going in and in filling. So repairing any RVs that need repair, bringing in tenants, filling the park and start renting it out.
Dave Debeau [00:13:11] Very, very cool. So again, we only have a few minutes left, but I've got two questions I'd like you to cover. And the first one is. If somebody is hearing this and saying, well, that sounds pretty, pretty good to me, what would you suggest to people for getting some some education around investing in mobile home parks, RV parks? What do you have any any resources or suggestions where people can get educated about that?
Gabe Petersen [00:13:36] Yeah, for sure. I mean, so there's a ton of paid and free resources out there. If you guys want to do free, just Google on YouTube. I'm telling you, all the information you need is on YouTube. You just got to Google it. You can check out my channel. You can check out my podcast. I'm sure Dave has some good content, too. It's all out there. You can just Google it if you want paid. You can go to the website, Real Estate Investing Club Dotcom. I saw an e-book that goes into the main four steps of closing on a real estate investment. It's not specific to mobile home parks, but it's general in nature. But it does cover what you need to do in order to actually get closed on your first property. And then from there we offer a few other things. But that ebook will come with a ton of additional resources that somebody could take advantage of if they're if they're interested in getting started.
Dave Debeau [00:14:21] Very cool. All right. The other question I have for you is specific to mobile home parks and RV parks. What are the best ways to find these deals?
Gabe Petersen [00:14:33] That's our secret sauce. Actually, it's very hard to find deals.
Dave Debeau [00:14:36] So if I understand correctly and and correct me if I'm wrong, supply and demand is definitely in your favor once you own one, because it's from what I understand, I could be wrong. It's very, very difficult to get approval to create new mobile home parks in most areas of the country because most municipalities don't make very much revenue for property taxes with mobile home parks versus know more dense multifamily type dwellings. Is that correct? So so there are there are few and far between.
Gabe Petersen [00:15:15] Yeah, no, that that is absolutely correct. There are mobile home parks are there's about 50, 50, 5000 in the United States and that number is not growing like you would see apartment buildings because you're right, municipalities do not get as much tax the tax dollars as they would from an apartment building or anything like that. So there is not a lot of incentive to build more the demand for mobile home parks because their price point is so low, the demand is growing on the consumer side. And so if you do own a mobile home park, it is it's a very good investment to own. So that means it's also very difficult to find a good deal because so many people are looking for this type of asset class. They're looking to find to buy something like that. So in terms of how you do it, you could join our our wholesalers list. We market nationally anything that doesn't quite fit our criteria we assign to somebody else. They can check that out, go to the website, Real Estate Investment Club, scroll all the way down to the bottom. It'll say invest with us. That's one of the ways to get on our list. Outside of that, if you want to do it yourself, there's basically five things we do to generate leads. First one is digital marketing, Google ads, Facebook ads. We run that to a website, sell my mobile home parks dotcom. Second one is direct mail, send mailers to people. Third one is our VMS or wingless voice mail. And then the fourth one is text blasting. We actually don't do that very much because we think it's a little bit too intrusive. And then cold calling is the last one. All that is predicated on having good data. So you've got a download, go to the Department of Homeland Security, download their list of all the mobile home parks in the United States, and then you've got to go find a good skip tracer, skip trace, all of those, the owners of all the parks on that list and just start cold calling.
Dave Debeau [00:16:57] Sounds like fun. And hopefully you find somebody like the potato has they've got a couple of agreements to get rid of. Exactly. All right. Well, thanks very much. I appreciate your insights. And again, if people want to find out more about you and what you're up to and listen to some of your podcasts, where should they go?
Gabe Petersen [00:17:16] Podcast is the Real Estate Investing Club. The website is the Real Estate Investing Club, dot com. Check them both out. And yeah, I'd love to see you guys.
Dave Debeau [00:17:25] Awesome. Sounds good. Thanks so much, Gabe. It's good job with you.
Gabe Petersen [00:17:29] All right. Thanks, Dave. Thanks for having me on.
Dave Debeau [00:17:31] My pleasure. All right. Take care. We'll talk to you in the next episode. Well, hey there. Thanks for tuning in to the Property Profits podcast. If you like this episode, that's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. It is the money partner formula. You get a PDF version at investor attraction book, dot com again, investor attraction book, dot com ticker.