Table of Contents - Making Moolah with Mobiles Home Parks with Kevin Bupp
Dave Debeau [00:00:09] Hey, everyone, this is David Debeau with another episode of the Property Profits Real Estate podcast today. It is my pleasure to be interviewing Kevin, but all the way from beautiful Florida. And I'm up here in Canada freezing my buns off ABC right now. So I'm a little bit jealous. And Kevin, if you haven't heard of them, is a pretty accomplished real estate entrepreneur, has done all sorts of things over the last 20 years. And nowadays his main focus is on mobile home park investing. He's got mobile home parks in 13 different states and definitely knows his stuff when it comes to this kind of investment. So welcome to the interview. Kevin, how are you doing today?
Kevin Bupp [00:00:48] I'm doing great, Dave. Thanks for having me very much. Looking forward to it.
Dave Debeau [00:00:51] My pleasure. So looking at your bio, it looks like you've got a few different things. Tell me let's go back in time, 20 years or whatever it was. What was it that first sparked your interest in real estate investing? And how did you get started at the very beginning?
Kevin Bupp [00:01:07] Yeah, I wish I could take credit for me being the one that had the idea of getting into real estate investing. But it wasn't, to my credit, was more so to a gentleman by the name of David, who became a mentor of mine. And I met David through a girl was dating. David was he's about 20 years older than I am. And that's what he did locally. Where I grew up in Pennsylvania is a real estate investor, had a lot of single family rentals, smaller multifamily properties, and lived a pretty cool lifestyle and something that was very new to me. And I had an interest in what he was doing. I was going to college at the time, a local community college, and didn't really know what I wanted to do when I grew up and knew I wanted to make money and do something with my life. I just didn't know what that was. And I think David might have you might have seen that me I kind of a kid with no direction and ultimately just we became friends, you know. Long story short, he took me under his wing after attending a boot camp with him, went to a real estate training boot camp. And he took me under his wing. And I basically I worked for him for about a year and a half, didn't get paid, was over there at any any time that I wasn't in class or tending bar in the evenings. I was with David either at his home office or out in the field, basically doing whatever he needed me to help him do to grow his business so that I could learn exactly what it was he was doing and how he was doing it. So I fell in love with real estate very shortly after he introduced me to it. And I didn't know much then. I didn't know too much at all. However, I did know that it was something that was very exciting and something that I knew given enough time and energy, had built around my arms around to do something pretty cool with it. So that was the beginning. That was a very humble beginnings.
Dave Debeau [00:02:37] Well, you know what? You kick started things probably the best possible way anybody could, and that is being mentored directly by somebody who is actively doing it and working for free. That's you know, we can learn through the school of hard knocks. We can go out and invest in training and coaching and mentoring, or we can work for free. And I think at your age and at that time and probably at any stage, that's probably the the best way to do it by far. So what was your first investment property? What was the first thing that you bought yourself?
Kevin Bupp [00:03:12] Yeah, it was a very run down, single family row home in Harrisburg, Pennsylvania. Paid fifteen thousand dollars for it. It was in a very bad neighborhood. Probably wouldn't have wouldn't buy that home again, given what I know today. But that was a very first one. The intent was. So I'll back up a little bit. David's David's M.O. was to buy properties for long term cash flow. And so he was at a different stage of his life, though. And so everything he bought, he bought with the intent of holding and actually living off that cash flow. I had limited funds at that age. I had money that saved up from tending bar and that was about it. And so I originally bought that property with the intent of actually renovating it and actually having as a rental. However, it only cash flow a few hundred dollars a month. I was out of money after that first property. I needed to actually build up kind of a war chest of of capital that I could use. And so although the intent was really just follow his game plan, that game plan fell apart pretty quickly. And I had to actually flip that property and I flip the next couple of properties or wholesale either renovate and flip or wholesale until I actually had enough capital to where I could buy a property and comfortably keep that and continue building the business on the side here, flipping and building more of a war chest. So that's what I did. And that first one was just scary. Lots of mistakes was made. He was there to give me guidance along the way. His relationships really came to play there. Most of the lending came from a hard money lender that he introduced me to. And so lots of the resources that made that deal actually happened were a direct result of that relationship that I built with David.
Dave Debeau [00:04:39] Oh, that's cool. So nowadays or fast forward to the last twenty years. Well, let's talk about how and when did you get inspired or or curious and involved in investing in mobile home parks?
Kevin Bupp [00:04:52] Yeah, that's a that's a great question. That's a great question. So like a lot of folks, I got started the single family stuff and built up quite a large portfolio in my twenties, acquired over one hundred single family rental properties, also had about five hundred apartment doors and had owned some other commercial real estate as well that. All leading up to twenty eight, twenty eight absolutely crushed me. I was down here in Clearwater, the Tampa Bay area at that point in time, so Florida was kind of ground zero for the real estate crash. And so it was a very challenging time. And so it was more in defensive mode at that point. Two thousand eight to 2011 was really just dealing with disaster recovery more than anything else. And so what ultimately happened, Dave, is I look back and reflect it on my business after those couple of years of that hardship and reflecting on what worked really well and what didn't work well. And what I identified is that the apartments that I owned just seemed to I seem to have built that portfolio without working nearly as hard as I did building the single family home portfolio. And I just had never put a large emphasis on that side of the business. It's just kind of worked itself out and it was much more scalable than the single family side. And so I knew going back into the rebuilding phase, you know, 2011 era that I won that by multifamily, I had never considered mobile home parks. It was going to be apartment complexes. And, you know, through a close friend of mine, he introduced me to a gentleman he had known for a couple of years by name, Randy, Randy and mobile home parks here locally. He was retired from a bank for banking and basically bought a couple of communities. And that's what he was doing. And I wasn't going to meet with him just because I had an interest in what he did. I just wanted to meet someone new. You know, I always enjoy meeting the folks that are successful. And so I had lunch with Randy really, again, with no interest of digging or picking into his brain about mobile home parks. That's ultimately what occurred. And to our lunch with him piqued my interest in many different ways about mobile home parks. And I left that meeting basically committing to myself that I was going to buy a mobile home park sometime over the next year and either prove or disprove all these great things that Randy had to say about this business. So that was back in 2011, bought our first park in 2012 and have been doing so ever since.
Dave Debeau [00:06:54] So has that become like your main bread and butter thing? That's that's what you focus on these days?
Kevin Bupp [00:06:59] It is. You know, I have a lot of investments and I'm pretty diversified as far as like my you know, my my investments are concerned. So I've got investments in self-storage that are passive. I've got investments with a lot of different multifamily operators that are passive of medical office, what have you. But mobile home parks is our business. That's what we do in a day in, day out basis. We raise capital from accredited investors and we own and operate communities, as you mentioned, beginning the show through 13 states right now. So that is our core focus.
Dave Debeau [00:07:26] Excellent. All right. So for folks who are familiar with mobile home park investing, what would you say? Are they the top three or four big benefits to that style of real estate investing versus single family homes, apartment buildings, et cetera, et cetera? Everything's everything's got its pros and cons. You've got a lot of different things. What is it that you like most about mobile home parks?
Kevin Bupp [00:07:50] Yeah, there's a number of things in some of the big things that Randi piqued my interest on were the one was barrier to entry. You know, mobile home parks are the only asset class that have a diminishing supply, meaning that there's more parks that are actually being redeveloped or shut down that are actually being brought in line each and every year. And there's two reasons behind that. Number one, they've got a negative stigma attached to them. You know, a mobile home park is a place where the drug, sex and rock and roll exists. And that's just not the case. That's what municipalities think. And so the chance of actually getting one approved, a new one approved is slim to none. In addition to that, they're not great from a tax basis standpoint for a municipality. They're much, much better tax situation of apartments built in that same place or retail shopping center, what have you. And so there's not much of an incentive for Masmoudi to approve a new mobile home park to be built. And also the neighbors are we don't want that in our backyard. They have that type syndrome as well. And so there's a major barrier to entry here and there's a benefit behind that, because if we buy a mobile home park on a great market, we don't have to worry about a competitor buying a vacant lot down the road of being another community. So I really like that aspect of it. Another big one is the the turnover. You know, most of these residents own their own home and the average length of tenancy in a community is twelve years. And so when they own their home, it's just like they own a single family home in the neighborhood. You know, very rarely do they move. You know, people aren't coming and going every 12 months. It might happen. But like, that's not the normal. Whereas in the apartment you might have a change over every 12, 18 months and so much lower turnover. And then when that turnover does happen, the beautiful thing about it is just like in a single family neighborhood, if you put your home up for sale, you basically list a home for sale, your continue to pay your taxes and your mortgage payment and all that new buyer comes in. They pay off that home, you move on. That person comes in and assumes now the tax liability and what have you for that particular piece of property. So the same thing occurs in our space. So we very rarely ever have like a period of a few months where we're not getting revenue from that lot. So that's a beautiful thing. Some of the other big aspects are the actual management side of it. You know, we're not dealing with the plumbing repairs, HVAC repairs, roofing repairs, what have you, because the residents own their own homes. And so whenever the middle of night something happens, they don't call us. The only thing that we're really in charge of in a community is basically the common areas and also also the infrastructure of the water sewer lines. A lot of times the roads and again, the general common areas are upkeep, which is much easier than dealing with. Service calls at all hours of the day and night for things that we own, again, plumbing pipes, roof repairs, fixes, what have you. So those are just like three really big items. There's many, many more. One of the other big ones I'll mention here is the returns. When you really compare mobile home parks, if you try to, it's really hard to give like an apple to Apple comparison. But if you take, like, the same city and state, the same size mobile home park to the same size apartment complex, same class C, grade B, greater what have you, typically you'll find that there's a higher yield, a return on the mobile home park than that of the traditional apartment complex. And so just one of the many things that really attract us in space. And there are many more to go along with that. But those are some of the big ones that really attracted us and again, made me commit myself to either prove or disprove, you know, how great this was. And I was going to go out by my own park when I met with Randi, and that's what I went out and did. And again, here we are seven or so years later, still by and parks.
Dave Debeau [00:11:00] Well, yeah, I'm going to I'm going to guess that you proved most of what Randi had to say. Correct. And probably then some. If you've got 13 different states, how many how many actual mobile home parks
Kevin Bupp [00:11:12] does your company or. We've got twenty one at this point in time. Wow.
Dave Debeau [00:11:16] That's great. All right. So, Kevin, I know you offer training about this and you've mentored people about this in the past. What are what are some of the big challenges, difficulties or or mistakes that you see newbie mobile home park investors making as they get into this business?
Kevin Bupp [00:11:37] Yeah, that's a great question. You know, and I think a lot of mistakes that are made are the same mistakes that are made and a lot of the other niches. If you're not trained appropriately before diving in and putting the money on the line. And so one of the big ones in our space is just location specific. You know, there's just like there's mobile home parks in heavily populated areas. There's also mobile home parks that exist in very rural locations. You know, I don't like one horse towns, towns that don't have much of not many economic drivers that might have a declining population, what have you. Maybe some factories exist there that have shut down over the years. What have you in those parks from the outside looking in, they might be trading at much higher cap rates. And, you know, a lot of people are lured to the high cap. They think that you'll pay a higher return, better investment. I want to make more money off this thing. But what they don't really take the consideration is I need people to move into my park. I need good people to actually be there. I need to have jobs so they can pay the rent on a monthly basis. I see a lot of folks being attracted to parks that are not in the greatest locations. Another big one is in our niche. There's some unique nuances that exist. One of them is the ideal situation is to actually not own any of the mobile homes in the community. That's in a perfect world. However, we're not in the perfect world and we have a number of communities where we don't own any homes and we have other cities where we own some. And most of the time it's because of the prior owner. That's how their structure was. They just happened to accumulate some homes and they had those rentals what have you. And there's a you know, there's really two different businesses there. When you're underwriting a community, you really want to focus on the lot revenue, the revenue from the lot itself, not necessary from the home itself because the home is a depreciating assets, a personal piece of property. So I see a lot of new investors make a mistake by if a home, the mobile home park has a lot of homes that it owns. And the gross revenue is typically overstated because they're taken into account also the rental revenue and they're not underwriting accordingly. And their numbers, their offer number comes in much higher than what it typically should be. And so I see a lot of new investors overpaying because of that rental component on some of these parks. And so those are just two of the really big ones. And then, you know, lastly is just really private utilities are pretty, pretty popular in our in our niche. If they're in a market that a lot of these parks were built in the parts of town that we're on the outskirts. Right. Cheaper piece of land. And over time, a lot of these towns, like the path of progress, has actually grown into the park. But it's still these communities that are on private utilities. So for sewer systems, that would be septic systems, wastewater treatment plants, lagoons for water, be well systems and not really get a handle on that before buying something. Not really having engineers come in and actually inspect all these components. You get into a lot of trouble. So I see a lot of newbies also really lose a lot of money, not understanding what they're stepping into. And a lot of times it could be a complete disaster if you've got failing sewer systems, what have you, so that some of the big ones that come to mind.
Dave Debeau [00:14:22] So just in the last minute and a half that we got here. So and this is a loaded question, but how do the twenty one parts that you guys own and the experience you have with your students and taking into account different markets, et cetera, what's kind of like a ballpark figure for a price tag on one of these parks? And I understand that so many.
Kevin Bupp [00:14:45] Yeah, that is a loaded question. So there's a certain size. Yeah, I can tell you what it is for us, because again, anything more than one mobile home is a mobile home park. So you might find a piece of land with two homes and it's classified as a mobile home park. Right. And so, you know, our average size is is one hundred lots or larger. So but the one hundred about the average, about the minimum that we'll look for. And so based on that, our typical deals. The somewhere between two and five million dollars, again, there's many smaller parks out there, the very first park that we purchased was up in Atlanta was a small little thirty four space community. It was a bank owned property. We picked it up for two hundred thousand dollars and we purchased some other less expensive parks over the years. But nowadays us about two to five million dollars is a normal price point.
Dave Debeau [00:15:29] All right. Very good. And is it kind of the the normal twenty twenty five percent down the road gets financed by the bank and the situation is that.
Kevin Bupp [00:15:38] Yeah, yeah. And it really depends on the size of the community. So basically there's anything under a million dollars you're going to be basically relying on like a local cameleer credit union type of a lender to get the deal done. And I'd say that normal situations would be a 30 percent down payment, 20 year amortization on the smaller loans that once you get up into the one million plus indefinitely, the two million plus range, there's lots of other institutional type lenders available. Fannie Mae and Freddie Mac are very much in our niche. However, their typical loan amount, they like to see two million or higher. They do make some exceptions here and there. There's also many different CMBS or conduit lenders that are in our space that get all these, you know, between Fannie Mae, Freddie Mac and these kind of lenders. They have 30 year amortizations, twenty to twenty five percent down and much more attractive interest rates than that of a smaller local bank or credit union.
Dave Debeau [00:16:28] Might have said, Kevin, this has been great. Time flies when you're having fun, my friend. Thank you very much. If people want to find out more about Kevin, about them and how they might be able to get some some assistance when it comes to a mobile home park investing, what should they do?
Kevin Bupp [00:16:43] Yeah, find me on my website. Kevin Bupp, Dotcom. There's links there to the different podcast that I host on a weekly basis. I have a commercial real estate investing podcast called Real Estate Investing for Cash Flow. I also have a mobile home park specific podcast called the Mobile Home Park Investing Podcast. And then also, as you mentioned, we do training as well. But all that can be found on the Kevin Dotcom website.
Dave Debeau [00:17:03] There you have it. Kevin, thank you very much. And everyone, thank you for tuning in. And stay tuned for our next episode. Take care. Bye bye. Well, thanks very much for checking out the property profits podcast and you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.