Dave Debeau [00:00:08] Hey there, everyone, this is David Debeau with another episode of the Property Profits Real Estate podcast today, zooming in for my favorite city in Texas, Austin, Texas, Jon Fedro, who is a mobile home investment specialist. John, how are you doing today?
John Fedro [00:00:26] I'm doing very good. You made me sound important. And Specialist,
Dave Debeau [00:00:30] you are more important, my friend. Oh, what the heck are you talking about when it comes to mobiles? And you know what is kind of interesting? Mobiles do have a special place in my heart, because when I first started in in real estate investing, I did several mobile home deals, not with the whole parts just within the single family mobile homes. Some I did pretty good, some not so great. So I'm looking forward to learning how to do it right from it.
John Fedro [00:00:57] That's incredible. That's not something I was expecting and not too common either. I'm curious why just stuff.
Dave Debeau [00:01:05] Why do you start? I got sidetracked for a few years with other things and then got into single family homes and more recently into multifamily properties. So it's kind of congratulations. Your deals. Yeah, yeah. Yeah. But you know what? There's a lot I mean, people kind of I'm sure you see this all the time because you teach and train people about mobiles. There's kind of a little bit of a snobby factor with certain investors about investing in mobile homes. So why don't you tell us big picture and I'm talking about mobile home parks. I'm talking about individual units. Why do you think or what is are the big benefits about this as an investment class?
John Fedro [00:01:47] It's so good that there's that air of arrogance and maybe a lot of people turn their noses up to these mobile homes and they give us a lot of their leads. I would have to say other investors that aren't as interested in this us specifically about the benefits.
Dave Debeau [00:02:02] Yeah, yeah, yeah. So for for example, if someone's a new investor, they're thinking about getting into real estate or somebody is an experienced real estate investor, why should they, in your opinion, be looking at mobile homes as an investment class?
John Fedro [00:02:17] Oh, that's a good question. Should they in the first place? There's so many, as we both know, so many different niches and sub niches and specialties you can get into. Many of them are valid. But I think I suppose it depends on local supply and demand and what your risk tolerance is or how much time you have during the day, your location, what you're comfortable doing. Do you want to start with just a little trailers or are you just more confident whether you really know things or you don't that know you want to go right to the parks first? With the individual mobile homes, there are pros and cons. We're making our money one deal after the next after the next, helping one person at a time, one deal and then the next one of the next one building our cash flow. Typically a lot of homes we sell on payments, some we sell for cash. It allows people to get in with less money. You still have to know just exactly what you're doing, but you can have less money. You do need time and you don't need that much credit. We're not borrowing money from banks. Typically, I'd say that's about that's that's a big one. Get in with less capital
Dave Debeau [00:03:17] when it comes to job. When it comes to individual mobile homes, are you typically kind of flipping them or you're selling them on time, selling them on on payments? What, or holding them for cash flow? What's your preferred strategy with an individual mobile home?
John Fedro [00:03:35] It's evolved over the years. In the beginning of my career, I needed to sell some more for cash because I just didn't have all the cash and I needed to sell some notes to get more cash, to then buy more homes on with cash. I love selling homes on payments. Now, it's usually what I do. If you're selling a home for cash, a mobile home for cash, you may only sell it for. I'm just picking a number twenty thousand dollars cash. If you sell it on payments now you're selling it for thirty thousand dollars over over time with an interest rate potentially. But can you do that. What kind of down payments are you looking at. You still want to set your buyer up for success regardless and work with good people. And but I guess I suppose the answer, like most in real estate is it depends.
Dave Debeau [00:04:18] Yeah. So when you first got started, because you've been doing this for quite a while, I think you're saying since 20 to
John Fedro [00:04:24] 18 it time flies. I don't know.
Dave Debeau [00:04:26] We only look like you're about twenty two years old for crying out loud.
John Fedro [00:04:29] I recently shave normally. Well you don't it's. Well thank you. I'll take it. Yeah. Don't ignore these grades here.
Dave Debeau [00:04:37] You know, I get it. If that area got out anyhow. Back to focus. So twenty two. What were you doing when you first got in and where you flipping them. So you get one and then or you don't fix it up and flipping it or what. Were you doing it those way back to the day.
John Fedro [00:04:55] Flipping homes. As important as I realized it was needed in my business, I couldn't sell everything on payments. I wanted to sell everything on payments, flipping homes and fast money. It just wasn't as exciting. As long term money, I can just put my feet up a little bit, I thought I thought that's what I wanted back then.
Dave Debeau [00:05:14] Do you have the vision of the long term money
John Fedro [00:05:17] over the long term? I just wanted to I thought I wanted just to sit down and put my feet up. But as time goes by, you realize that's not the case. There's things to do. You're busy and you want to be busy. But cash flow was always important to me. But my first couple deals, it was in Florida at the time or back in 2002 where with real estate, you could make money by cleaning the window and then reselling it. So luckily, I did sell a couple properties for cash, mobile homes on land, not in the parks, but attached to one mobile home on a piece of land. And I sold to one or two of those. Well, I sold two of those within my first year for cash, which really helped give me more capital to then invest in more properties. I didn't sell them for a lot of money, but it was like more money than I had ever seen walking away from a title company with twenty thousand dollars in my hand, which is not a lot of money, but with 20 grand, you can buy three to five mobile homes.
Dave Debeau [00:06:16] OK, very cool. So for people who aren't familiar with mobile homes, one of the things that other one of the criticisms other real estate investors have about buying and selling mobile homes is that you don't really own the property you own in a mobile home park because basically what you own is the structure on top of somebody else's dirt. So you're you've got to pay the mobile home park pad fees, pad rentals, typically this property taxes as well. And you own the 10 on top of the dirt, but you don't own the dirt. So that's the big criticism a lot of people have. They say it's difficult to get financing. You can't get bank financing on mobile homes because you don't own the dirt or at least in Canada. So what do you say or what how do you get around that? Or how do you not see that as a as a big issue with the way that you do things?
John Fedro [00:07:15] Some people use these as a stepping stone, they start with the mobile homes and parks, they buy a mobile home on its own piece of land and then another one. And we're always typically buying from sellers that are somewhat motivated, whether they own a home on in a park, they own the home on the little piece of land they need to sell. There might be a hardship, but we're we're going from mobile homes and parks then to homes on land. And some people then they start buying the entire mobile home parks. So some folks, they use it strategically to get to that point or to start in real estate. But you got to pick up both sides of the stick. These deals are pretty quick. When we're talking about a mobile home in a park, I can purchase it and sell it in the same week. There's and you can do that with real estate as well, but it's just less common and not as realistic. So with mobile homes and parks, there are pros and cons. But you're right, these are going to pay off after five, six, 10 years. You don't own the land. There is a park manager there. Typically, that may be your friend. They may not be escalations. Right. But you got to pick up both ends of the stick. There's goods and bads and.
Dave Debeau [00:08:19] Well, I think it's is I mean, especially especially in hotter markets, you know, where a single family home might be hundreds of thousands of dollars. That's not very affordable for a lot of first time homebuyers. It's also not very affordable for a lot of relatively new real estate investors, whereas you can perhaps go into a mobile home park and buy a mobile home for 10, 15, 20 thousand dollars help. I bought them for as little as two thousand dollars way back in the day. Five thousand dollars, these kind of things. Yeah, typically it's from a definitely a motivated seller. And typically my experience has been they aren't pristine properties and they need a little bit of elbow grease there to get a patched up and so to speak. But here's the thing. There's quite a bit of a market there for people who need it, who can really only buy these kind of properties. They can qualify for financing to buy a regular house. They still need a place to live. They don't want to just rent an apartment. So there's quite a bit of demand for that. What I'd like you to do, John, if you don't mind, explain to people who aren't familiar with the concept of selling the paper or selling, you know, offering owner financing on these kind of properties. So if you could just kind of briefly walk us through, what would a typical deal look like if you were buying a mobile home? Give us an idea of what you might be paying for, what you might be doing to repair it, and then how you're selling it and how you're making money on that over time. Oh, sure. Yeah.
John Fedro [00:09:56] Well, the answer is it depends on all those point, because there's all those points. There's so many variables. But we could purchase a home for payments. I know you were maybe mainly talking more about selling on payments, but we can certainly purchase on payments as well. Some sellers, they don't need all the money to get from point A to point B, we can give them a higher price and make them payments for their mobile home. But we are going to take the title. We're going to take ownership right away, whether we're buying it for payments or for cash. And again, we're just talking about the rectangle in the park. We have to get approved by the park. We have to check with with the local municipality that the taxes are current. There's no hidden Lean's. We take possession of the mobile home. Sometimes there's title problems which will help with we're kind of a one stop shop. So we take the title. We do fix up the home, we clean it up. We don't always fix it up to the nines. But I think you brought up a good point where there's a lot of people that will want to be in these homes. And as investors, we can really screw people, we can take advantage of people, or we can sell good homes to good people and set people up for success. And there's a lot of folks that might be listening and say, oh, mobile homes, investors, equal slumlords, or you're just going to steal from people. You're taking advantage of people. And it really comes down to the investor. We're trying to sell good homes for admittedly retail prices with payments. Over time, we try to sell more than try. We want to get the good people in there, but we are taking payments and taking payments. Depending on who you ask. That could be anything from a promissory note to a traditional note mortgage to having a loan originator help you using a lease with an option or some type of rent credit program. So the paperwork changes, but the the ideal buyer is someone that's there humble. They're sincere. They're appreciative of this needle in a haystack opportunity that you're giving them to own a decent home on payments, a little bit of money down a reasonable amount, but a low amount down monthly payments for the next five to ten years if it's in a park. My litmus test to make sure I'm I want to do this deal when I sell it. I want to make my money, assuming I'm buying the home for cash when I sell the home in a park. I want to make my money back. All the money, the acquisition costs to repair is holding costs marketing. I want to make that back in 12 months or less. OK, Aurelie, one hundred percent in 12 months. And then I want to sell for at least five years worth of payments at three hundred minimum cash flow or net every month. So minimum what we're selling these homes for 60 months. Three hundred a month is 18 grand without any interest, plus a small down payment. Most of the homes we're selling for are going in the low, low 20s. So anyway, that was
Dave Debeau [00:12:50] my theory that if you don't mind, John, so there was no in that scenario, how much would you be give or take paying for that property? Oh, good.
John Fedro [00:13:00] Good question. We work backwards a little bit because we have to know what we can resell the home for and how quickly we want to make our money back around the country. Here in the States, the prices certainly do vary. Sometimes we're making our money back and if we're selling on payments, it might take us 18 months to get our money back and we have to make a decision. Do we still want to do the deal, even though it takes us longer to get our money back? But to answer your question, how much are we paying for many mobile homes that we buy, the acquisition, the holding cost repairs and labor and marketing under ten thousand dollars?
Dave Debeau [00:13:35] OK, good. All right. So then so let's say it's 10 grand just for even numbers. Ten thousand bucks. You're bringing in the buyer. You want to get wave the magic wand. Perfect scenario. You get all your money out in 12 months. So is that like five thousand dollars down and X amount of months? You say you want to net three hundred dollars a month cash flow after everything else is paid out. So how does that how does that work?
John Fedro [00:14:05] That was the grand slam of what we go for. Like in a perfect scenario, the grand slam, I suppose, which is not uncommon, but it's just getting all your money back with the down payment or with the movement fee or with the option money. So with the money that they're putting down, you're getting all your money back and then setting up an income stream moving forward.
Dave Debeau [00:14:27] So the ideal situation would be you're all in for 10 grand and the fee that they're paying you to get started with the deal is ten grand. And then everything else after that is pure profit and you're selling it on time with a kind of thing, is that correct?
John Fedro [00:14:43] Correct. Yeah, they're paying in every month. I like when the buyer pays me the rent for the park and then I can pay the rent.
Dave Debeau [00:14:52] I know it's getting paid. Yeah. For sure. Yeah, it's very, very cool. I have another question out here for you, John. So yeah, that's the ideal situation. But basically any way that you can figure it out where you're getting your money back within 12 to 18 months, probably a pretty good deal. And then it's a five year term. And think about it from the buyer's point of view, where else can they buy a home and have it paid off in five years? That's unheard of with pretty much any other kind of property. I mean, it's really is only only possible with Mobile's. I'm just going to pause this, because I got a question for you as we're doing this interview right now, we're kind of all in the middle of this covid thing and. I don't know about you, but I think there's going to be massive opportunities in mobile homes on the other side of this, because unfortunately I think there's going to be a ton of people out of work, downsized, losing their traditional houses, going bankrupt, needing places to live. And I think mobile homes are going to be a very, very viable option for many of these people. What are your thoughts? Obviously, you're biased here into the whole mobile home thing, but that's what I mean. That's what I'm thinking off the top of my head. Right?
John Fedro [00:16:11] I agree. Things have changed going back to 2008, 2009 and 10, when we had had the crash with the housing, things were fine in the mobile home sector. I did notice some things changing. There were some construction tenant buyers that had to leave because they couldn't pay their bills, but there were still buyers. In fact, people were jaded from owning single family homes. They wanted to own a mobile home in a park. You mean I can own something for thirty dollars a square foot? I was just paying one hundred and not bankrupted or foreclosed on it. So might my buyers were changing, but there were still sellers getting into trouble. There are still buyers that want to buy on payments, that's for sure. Now fast forward 10 years to where we are now. There's more investors looking at mobile homes in parks. Prices in real estate have gone up, which pushes mobile home prices up. So I do think there will be a wave the differences. And we're I'm I'm I'm already seeing it. And eviction court isn't even open, so I'm already seeing it where people they're losing their jobs or they thought they had their homes sold and the buyer flaked out because they're holding on to their money or they have to take care of a sick relative in a different state. The thing I think is different is, yes, there's going to be that wave of sellers. But now I believe that there's buyers. So as invest as a mobile home investor saying what can I do to prepare and be ready, you're still going to have to act quick. We're still going to get the normal. It's not like we're going to get amazing deals. I mean, we're getting good deals now, but I don't think we're going to get better deals. I just do think that there is going to be more opportunities. We have to act quicker. They'll still be buyers, especially on payments. But I'm curious to see as well, in three months, six months,
Dave Debeau [00:17:52] 12 months, I think there'll be great opportunities there. And the other thing, correct me if I'm wrong, John, but they really aren't making more mobile home park. So it's kind of a you know, most municipalities aren't thrilled about it. Most people don't want them next door. All that kind of stuff. The ones that exist, a lot of them are going to kind of get turned into condo developments in this kind of thing. So really, it's not expanding like other areas of real estate. So it could actually be creating more demand.
John Fedro [00:18:23] I don't see how it's not creating more demand, but I think that's got to change. I mean, it could be the flip of a switch because there's so many, I believe, people now with money just waiting to build parks. If they just got that switch to say, here's your permits. So, I mean, it could change overnight.
Dave Debeau [00:18:39] But the new situation, who knows on time flies when we're having fun. We haven't even had a chance to talk about investing in mobile home parks, like buying a whole park they'll have to do for another conversation. But if people want to find out more about you and what you're up to with mobile home investing and the different training and options that you have, what should they do?
John Fedro [00:18:59] Oh, check out a lot of free information at a mobile home investing dot net, and you can find me and a lot of other great free, free content.
Dave Debeau [00:19:09] There are a lot of good stuff. Thank you very much. I appreciate it. It's been a lot of fun.
John Fedro [00:19:13] Thank you so much. Thank you, everyone.
Dave Debeau [00:19:15] All right, everybody, take care and we'll talk to you on the next episode. Bye bye. 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 the review. He 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.