Table of Contents - Mobile Home Park Investing with Frank Rolfe
Dave Debeau [00:00:08] Hey, everyone, this is Dave Debeau. Well, welcome to this week's episode of the Property Profits Real Estate podcast. Today, it is my pleasure to be interviewing somebody very, very interesting and talking about something we haven't spoken about yet on this podcast. And that's all about investing in mobile home parks. So it's my pleasure to have Mr. Frank Rolfe on the call with us today. Frank, how are you doing today? Doing great. Thanks for having me. My pleasure. So where are you calling in from today? Today I'm in Chicago. Is that home for you?
Frank Rolfe [00:00:43] Not at all, no. I'm on the road at all of our different mobile home parks.
Dave Debeau [00:00:48] So Frank has been investing in mobile home parks, I believe, for over 30 years. Is that correct?
Frank Rolfe [00:00:53] Right now. But the mobile home park portion for about twenty five that I didn't get that 14 years of billboards before that.
Dave Debeau [00:01:01] Interesting. Very, very interesting. And what I find very interesting is the fact that you and your partner are the fifth largest mobile home park owners in North America and you have two hundred and fifty mobile home parks in your portfolio right now. Is that correct? Roughly correct. That's right. That's mind boggling. So, Frank, before we jump into that, let's kind of rewind a little bit here. And why don't you tell us, how did you go from billboards to mobile home parks? How did you get into the whole mobile home park investing thing or
Frank Rolfe [00:01:38] whatever it was? I sold I sold the billboard company and I needed to find something new to do. So I called around some of the landowners I had built billboards on. I built two of them on a guy Nimrods Mobile Home Park down in Dallas. So on one phone call, he sold me the park. Why that and why not just experience it myself? Four hundred thousand dollars ten thousand three hundred ninety thousand for 30 years. Wow. That was the deal. So that's how I got into it.
Dave Debeau [00:02:07] All right. So it sounds like you kind of stumbled into the whole mobile home park field and rock and roll with it big time. So I don't know if you've got much other, you know, many other reference points when it comes to real estate investing. But you've been around the block quite a few times now. Why do you think why are mobile homes, your mobile home parks, your choice for your real estate investment strategy?
Frank Rolfe [00:02:33] First thing is they've got a steady supply and demand issue because they haven't allowed them to be built since about the 70s. So everyone hates cities, hate the average American, hates them. So they're not going to ever allow deals to be built. People are afraid of them, take their own property values, necessary evil in many, many bureaucrat's minds. So they allow what's there to continue. They don't want anymore. I like the fact life shut down. That's a place to be. I love the fact that affordable housing is a big thing right now in the US. So if we were all getting super prosperous, we would need mobile home parks. But I'm a believer that we're going down the drain. So the demand for affordable housing grows every day. So that's a new data for us. Third item is we're buying from Moms and pops, so we're buying from the original builders who are still alive. And often because of that, we buy not only cheap because they're not working properly, but also with seller financing.
Dave Debeau [00:03:25] Those are the three most concise best reasons I've heard for a strategy and a long time so good on you. I know that. So I was aware of the whole fact that most municipalities aren't thrilled about mobile home parks, had no idea that they weren't making any more of them,
Frank Rolfe [00:03:42] that they don't want you to know that day, because if they say that, that's a violation of the duty to serve in the U.S.. Right. So we're all supposed to pretend that we that we want to have all forms of policy. But if you're a city, you want only expensive housing because expensive housing pays a lot of taxes, expensive house, and encourages other expensive development. So when you have to take a typical mobile home park in America, it's a money losing proposition city because the tuition on each kid is seven or eight thousand a year. But the taxes on a five hundred dollar home is five dollars and a five thousand four hundred fifty dollars. Even if you throw in our property tax on our land for a lot, they're only getting about five hundred dollars a year on. Could be twenty thousand dollars for school tuition. So since you're losing money, they're obviously very hostile about it.
Dave Debeau [00:04:31] Makes sense. Yeah, that makes sense. So you've definitely dialed a lot of things in when it comes to your particular strategy, what would you consider to be your unfair advantage when it comes to investing in real estate, specifically mobile home parks?
Frank Rolfe [00:04:49] Well, as far as our personal unfair advantage, yeah. Yeah. I mean, our unfair advantage probably is we've been doing this for so long that so many people, every part that we buy, we can put it in a box based on past past we've had and could just almost guess from before we buy it exactly how it will turn out. So that's probably our entry badges. We just it's like doing anything enough to buy the same thing over and over. You develop a sixth sense as to what works and does not work. So we can literally size of a deal quickly. And it always turns out it ends up just exactly like we thought.
Dave Debeau [00:05:20] Now, that's beautiful. It's beautiful. OK, now. And how about personality wise? What do you think? I mean, you come from the world of advertising sales. That was your previous incarnation. What do you think is kind of your personal skill set or unfair advantage that you bring to the table?
Frank Rolfe [00:05:38] Probably the skill set about myself and my partners where workaholic we work insane number of hours. You probably work an average of 16 hours a day Monday through Friday, and then we're probably pretty good about ten hours a day, Saturday and Sunday. So we outwork everyone. We're very focused on due diligence because we were very negative people. So we always worry about everything. So we're extremely focused, which has allowed us to sidestep any big disasters every time my personal, I guess, additional super powers have been filled all the time. So I'm out in the parks typically Monday to Friday, and I'm actually out there where a lot of investors do forecast. We can't be out of details, other obligations. But I'm physically on parks.
Dave Debeau [00:06:17] What would you just had of personal curiosity, what are some of the biggest challenges that you've come across or or let's say, you know, everything, it's old hat for you now, but like somebody that's getting into mobile home parks. What are some of the challenges they typically come across that they might not be expecting?
Frank Rolfe [00:06:37] You know, the challenge is, first off, a lot of people who are not familiar with the industry don't know what an actual mobile home park is supposed to look like, because we all get this idea of the media of Eight Mile with Eminem and Trailer Park Boys apartment or the trailer parks or just these haphazard places filled with misfits of every description festival, mobile home, park business look more like subdivisions. And I know most people are driven by these. And maybe they thought, oh, that's not really important. That's exactly what local park is. That's that's where the money is. That's where the financing is. You want to be an owner of subdivisions, those little crazy trailer parks. Sure they exist. You know, there's a few and almost every every market you want to stay a million miles away. For most people, they just don't go with the property taxes.
Dave Debeau [00:07:23] All right. Now, that makes sense. OK, so you you've also written books about investing in mobile home parks. I know you've got a program all about that. What do you think is the biggest problem you're helping your students solve by them getting into mobile home parks?
Frank Rolfe [00:07:44] Probably twofold. One, giving them enough knowledge to feel they can actually comfortably do it because getting anything, particularly mobile home parks, is just scary enough that most people can find a million reasons not to do it. Yeah, so the reasons to do it. The other is we try and give them the knowledge to be able to do good due diligence because there's there's a million stories out. There are people about mobile home parks without any any good due diligence. And it all blew up. So we try and empower them to buy them, but we'll try to teach them to avoid. So kind of.
Dave Debeau [00:08:17] So, Frank, let me ask you this question, so if somebody is listening to this or watching this interview and they're going to mobile home parks, never, ever thought about buying a mobile home park before. Why would I want to? What's like your 30 second second sales pitch on my mobile home parks are such a great investment,
Frank Rolfe [00:08:38] big guy to his money. We have the highest returns of any form of real estate that I've ever seen. The other one is, is the financing situation of great finance seller financing. We also do it. We get agency that we get the same financing as big office buildings. So those are the two key reasons most people get into it. Many people, you know, want to maybe buy apartments. They can't find anything attractively priced that can give you a three million dollar loan. I have a buyer for my paper. I had a 10, 12 caps, things like that. So that's really what makes people do it,
Dave Debeau [00:09:12] makes it so. Frank, I know you've got a couple of hundred of these babies in your portfolio right now. You must have a pretty good idea of what, like an average mobile home park deal looks like. Can you kind of walk us through that? So what are we looking at for a number of units, a number of ads? How does it help financially?
Frank Rolfe [00:09:34] There's about forty four thousand parts in the US. There's about four thousand that are institutionalists, about forty thousand that are still left with mom and pop. If you average all those together, the average Pakse is going to be probably between 40 and 50 lots. It's probably gonna be about 80 percent occupied. Most of them have city water in the city sewer, contrary to what people think about that. Well, that's not true. And it's all about the lot rent. And often you'll find my mom never kept a lot right up to market. So while the parks we buy the lot, rents are two hundred dollars and the market in that same market may be four hundred dollars. So a lot of our value creation is in raising the rents to market, pushing back water sewer under the customer, which is where it needs to be to begin with foster conservation and then filling vacant lots. That's basically it also cutting costs sometimes, sometimes multiple people hired a manager somewhere along the way that they befriended as far as 80 lots of managers making hundred twenty grand a year. Wow. And replacing the manager with something more appropriate is also
Dave Debeau [00:10:35] very, very interesting. So let's say one of those mom and pop parks, you got 40 to 50 lots. What's the price point typically for buying one of these properties
Frank Rolfe [00:10:47] in a park apartment and making 40 to 50 lives typically would be selling somewhere between half a million and a million dollars, somewhere between and 20 thousand a bed. It's going to have a cap rate typically put on the park and anywhere from seven to 10 percent, although sometimes higher. But that's based on current lotteries. So that's where it gets difficult for people to grasp because the most real estate tax would maximize our industry, that they have quantitative easing. So what happens is you look at the lottery not only with you're buying it, but what it would be, say, 90 days future when you raise it. That's what they should have. So the seven cap would you raise or maybe a 10 cap or so, you just get rid of all those factors together and then see if you could get what we call a three point spread. So most people are after this three points from the interest rate cap rate, which gives you 20 percent cash on cash return, which is people's benchmark minimum for most investors. So that's kind of how it works.
Dave Debeau [00:11:42] Very cool. Very, very interesting. All right, Frank, have you got any word on geez, this sounds really interesting. And they like to find out a little bit more. Have you got any free resources from people or somewhere you can point people to go take a look at stuff?
Frank Rolfe [00:11:56] Absolutely. For about 20 years that my partner and I have, we started off writing little tiny books to entertain ourselves and to see if anyone out there even cared about mobile home parks. And those are just grown and grown and grown. And I write typically one to two hours a day. And all of that stuff you'll find on the website Mobile Home University dot com, or you could just put True.com and you will find a giant pile of free material in gigantic forum of free books. We have free articles. We get free everything with free videos. Yeah. So that's that's where you would go. That is that's the compendium of everything I've ever written or taped to.
Dave Debeau [00:12:30] Excellent. I just have a lot of our our listeners are up here in Canada. Do you have students doing this kind of stuff up here? Because typically Canadians think, well, that works great down there, but it won't work in Canada.
Frank Rolfe [00:12:43] What we have a lot of Canadians with a lot of Canadians going to our boot camps, all of our items. I think the reason Canadians like the industry is you have a ballpark in Canada, roughly 5000 in Canada, so they can actually see the product. But your product is nothing like our product. Yours is more rustic. Kind of. Gilbert is kind of what we would call RV park ish in the United States. But you don't really have the true subdivision style that we have. Canadians like the higher cap rates. They like a really good business model. We like all the megatrends that fits into the only complication for Canadians. Of course, now in our business, we produce seller financing. That's another way people get around that. But that would be the big issue to figure out is just the banking portion of the FDA bank.
Dave Debeau [00:13:28] Another option might be for Canadians to go down and buy and down in the states might make more sense.
Frank Rolfe [00:13:33] Well, we'll right that I've seen it I've seen in the United States. But most Canadians don't want to buy the Canadian mobile home parks. They prefer the American option. So but yet they know of the industry and the industry. This if your country and our country and that's it. They don't have mobile home parks in Europe. They have what are called caravan parks, which are sometimes filled with gypsies, literally in Italy. I had an Italian TV station have a look at our parks at one point and he and he had never seen parks that actual conventional people lived in. They are ugly RV park and only candidate America share the cost of the war.
Dave Debeau [00:14:13] Interesting. Very, very cool. All right, Frank, from all your years of experience, people are listening this what's the most valuable tip that you would give people that are interested in getting into mobile?
Frank Rolfe [00:14:25] But, you know, I think back to the old saying, think like a man of action and act like a man of thought. Right. I mean, gather all the information and look at it reasonably. And if you like what you see, take an action on it. Look at some properties, make offers if you like. There's no point in learning about it unless you do something that also is equally dangerous without having any knowledge of it. And there's a million cases I have seen of that. People call me all the time, blah, blah parts and they'll say like sewers not working. My water is not working, not realizing that private sewer and it's their own responsibility. They didn't even know about that. I think I call me once for that was full of activity plan, which is about a half a million dollar liability if he thought he was our city sewer. So it's dangerous. But if you're going to do it, think about it. But if you're going to think about it, do something.
Dave Debeau [00:15:10] Good advice. Frank, very nice to meet you. Thank you very much for being on the episode.
Frank Rolfe [00:15:15] Thank you very much. Glad to be here.
Dave Debeau [00:15:17] Take care. All right, everybody. See you next time. 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. 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.