Ep. 26 | First Time MHP Buyers Mini-Series: Interview with Michael Stilfield – From Manager to Owner
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On this episode of The Mobile Home Park Lawyer, Ferd talks with Michael Stilfield, a former MHP manager and now MHP owner. Michael discusses some tips and tricks he’s picked up over the years, as well as some of the differences between managing a park and owning one. Enjoy!
“Thorough screening is just so extremely important. And I have always had above-average luck with my tenants because I do a thorough screening. And one of the most important things I can do is talk to their former landlords and be sure you’re talking to their former landlord.”
0:00 – Intro and background on Michael
4:03 – Michael explains in a nutshell what a Lonnie deal is and what he does within them
6:30 – Michael explains how he essentially acts as a bank
8:33 – Michael discusses how he became an MHP manager, what his day-to-day was like as a manager, and what differences there are between his old job and owning his own park
15:00 – Ferd talks about setting up an LLC and getting an EIN
16:50 – Michael shares what he does differently from a lot of the big operators in the industry as well as some general wisdom about the industry
19:59 – Michael finds that within an MHP community there are likely going to be handy people who you can utilize, and Ferd offers a story of some of his handymen
24:26 – Michael says he sees a lot of landlords not evicting quick enough, as Ferd offers some tales of his past
31:59 – Michael shares a good piece of advice about screening prospective tenants and talking to former landlords
Ferd Niemann: Welcome back mobile home park nation. Here again today Ferd Niemann Mobile Home Park Lawyer with another interview. This one today I think is a special one. Our guest he’s a former mobile home park property manager, he manages a large park here in the Kansas City metro, which is where I met him. I was trying to buy that park. It didn’t work out because it was already under contract but got to know him a little bit and helped him on the legal side. And he now has moved out on his own and is just doing his own park and he’s a mobile home park owner. So great, a great success story of the transition from employee to owner. Please welcome our guests, Michael Stilfield. Michael Thanks for coming on.
Michael Stilfield: Hey, great to be here.
Ferd Niemann: All right, well Michael, tell us a little bit about your background and then how you got started in MHP space. And tell us a little bit of your story.
Michael Stilfield: Well, it actually goes way back before being a park manager back in like, 2003. I read a book, Deals on Wheels by Lonnie Scruggs. I was just overall interested in real estate investment or notes or something. I wasn’t really sure what I wanted to do. I was just a punk kid with a few thousand dollars saved up. And so, I read that book and just going along with it. Yeah, I can do that. I got that much money saved. Yeah, I can talk to this person. And so, got down with the book and now the whole way I’m thinking I can do that. So, I did it. Did whatever it said and got started and did that. And I was an employee just at another unrelated job at the time was eventually able to quit that. And then the first few years, several years exclusively did Lonnie deals. And then after the real estate crash, I got, you know, had had a few cash sales. So, I had a chunk of cash every once in a while and buy a house. So, started doing some rentals, single-family homes, and did a couple of flips and rehabs, wholesales, little bit of everything. And then went into my own park that I work at quite a bit one day. I talked to the manager just to keep in touch, look for more Lonnie deals and she wasn’t there. So, talked to assistant mangers. Where’s so-and-so at, oh, well she’s not working here anymore. I didn’t think anything of it. And just went on home and got to think in the next day, I’m like oh, wait a minute. That might be an opportunity. I don’t know how to do that, but I could learn and figure it out where I’m going and learn a whole lot along the way. That’d be a good step. So, I knew how to get ahold of the owners of that park. And it was a local family type operation, real big operation. They had done a lot in the area. Anyway, I talked to them and went in and interviewed and got the job and I was there seven and a half years and was always looking for a park to buy and just had searches set up and get emailed whenever something became available and this one popped up somewhat local. So, I drove down to see it and worked the numbers, made sense to me and moved forward.
Ferd Niemann: That’s great. And I want to revisit one of the things you mentioned, the Lonnie deals, because I’ve read that book, you know, Deals on Wheels by Lonnie Scruggs. I think the term goes around a lot. It’s that theory, that method, I think, has taken a little bit at some arrows because of some Dodd-Frank Act concerns and SAFE Act concern, but there is definitely a business model that can make money. Can you give us the kind of high-level real, what a Lonnie deal is, and how that works for the mobile homeowner, and how it works for the product of the mobile home park owner?
Michael Stilfield: So in a nutshell, I mean, you’re buying a home mobile home for cash and the reason you can buy it so cheap is because you have some cash and the person selling it, you know, they want a high, high price. They can’t get it because most folks, at least in this area that are buying a mobile home, don’t have $10,000 in cash or whatever. And they can’t go get a loan for it because banks just don’t loan on older used mobile homes. So that just plummets the value way down. So, I can pick one up. Overall decent condition definitely needed to work around, say $3000, but $3,000 to $4,000 in it. And then I’d sell that for low twenties on payments. So, buy cheaper cash, fix it up, resell it on payments.
Ferd Niemann: What kind of payments? What kind of down payment would you use and then what kind of amortization for the payment plan?
Michael Stilfield: It would depend upon the sale price. I’m going to sell them anywhere from $9,900 for something that I got really cheap, or it was really dated, but still solid. So, my average payment was $306 and some change. So, I was always shooting for a payment of at least $300 up to whatever I could get. I would occasionally go lower especially for one of those $9,900 homes. Five to seven years-ish. I always tried to keep it under seven years. I don’t know why, but just at the time, that’s what I was doing. And down payments so $1000 to $1500 and occasionally more, occasionally a cash sale. I mean, there’s always a fluke in there somewhere. This standard $1,000 to 1500 down, $300 to $350 month.
Ferd Niemann: And is that 350, did you then pay the lot rent or did the resident pay a lot of rent to the landlord on top of that?
Michael Stilfield: The resident paid the lot rent to the park directly.
Ferd Niemann: Okay. So, the $300 or so it was all your money. Some of it was profits, some of it is fraternity or capital. But it’s kind of the business model is you buy it cash; you fix it up and then it becomes livable and it becomes a decent home. And then you finance somebody else. And then you’re kind of part of the transaction so long as they pay you, they don’t pay you, you got to step back in kind of quasi foreclose and then do it again or eat the lot rent payments to the landowner. That’s basically it, right?
Michael Stilfield: Well, the parks that I worked in, we had always agreed beforehand that I’m just acting as a bank. So, I’m not guaranteeing their lot rent payments. They don’t pay, park needs to tell me, and we’ll work together to get them caught up or get them out or whatever, because they owe a bunch of money. I’m not paying that because it wasn’t my debt.
Ferd Niemann: Got it. That’s good. That’s a good for you guy. I’ve had some money dealers in my parts and I’ve got park owned homes and I’ve got other homes that sold, their numbers are waste, but yeah, I’ve had a lot of dealers in my parking and I always said, you got to pay the lot rent. And then as a landlord, I wanted to make sure that I also vetted the tenant from a criminal background standpoint. But that’s good that you’re able to do that.
Michael Stilfield: There was complete cooperation with the park managers and owners, cause it was a mutually beneficial thing. I mean, I took homes that were nearing the end of their life, just based upon the condition they were in and the trends they were following. And I give them a 20-year lifespan, keep that space full form and the home would look better too. And they had Fullscreen rights for the tenants, had to pass their screening before I would even consider them. And then I also screen very heavily a number of times when I would turn down some on, as a buyer that the park had approved as a tenant, just because I didn’t think they were going to be a good risk for me.
Ferd Niemann: Yeah. That makes sense. So, your guys’ interests are often aligned, the Lonnie deal in the park, but the difference can be on the screening. Because they don’t want you to put in a criminal who’s rich. You don’t want to put in, you know, somebody who’s not a criminal, but can’t make the payments. Because then you’re going to be upside down financially that ideally, it works for everybody. That’s great. Now tell me, so you did the Lonnie deals. Did you do that in numerous parts? Tell us about how you became, you said, you mentioned that you got the job as the manager. How big was the part that you were managing and what was your day-to-day life there relative to your day-to-day now? Where you own your own park?
Michael Stilfield: The parks 382 spaces that included about, they were 80 empty at any one time. So, 300 households occupied lots, day-to-day was basically customer relations is what everything boils down to. I mean, you got to maintain the property. I had an assistant manager and one or two maintenance guys at any one time, there were two positions, but we just seem to always be churning through one guy. Couldn’t keep that second one steady. So, we had enough work to keep two maintenance guys busy, especially at the beginning because honestly it had been mismanaged for a while. One of the first things I went in and did that made a vast improvement and it just, I told everybody to cut down all the brush growing up around their house. You know, I don’t know what happened, what was going on before, but we just cleaned things up, and then we’re always on a steady slope of slow improvements. And so that was the maintenance guys. And then the assistant manager and I, we were always a development system because there were no systems. They were still using photocopies and filling the blanks with pens. They photocopy a photocopy of a photocopy to do the lease. So, we developed all the systems and the programs and the policies that we put in place in conjunction with the owner, of course, everything had to have his approval. And I was always asking for input and advice. I was learning as I was going. And then towards the end, you know, it’s pretty much on autopilot. It’s just, this happens. This is how we respond. This happens, we do this. So, I don’t know, it got easier at the end, but also kind of boring at the end. So, I was ready for something else.
Ferd Niemann: Okay. So now as an owner, what kind of additional steps? I mean, now as the owner, you’re probably overseeing more leasing, rehab, sale, insurance. I mean it’s everything, banking, everything.
Michael Stilfield: Yeah. Well COVID has thrown a glitch in my banking that’s for sure. It took me when you were helping me on this. It was three to six months. I don’t remember now, how long does it get an EIN number? So, I’ve even opened a bank account. That was a challenge in itself because the IRS had just shut down. So nowadays it’s doing a lot of the things that I just described, putting policies in place and get your paperwork together and putting it in electronic form and that kind of thing. I’m also doing a lot more maintenance working with my hands out of the office, which I enjoy. I’d rather do that than sit in the office. Cause this place was definitely run down, no doubt about it. So, we rehabbed several homes, already gotten them rented, raised the rents. So, a new challenge that I don’t have the solution for yet is this is an hour and a half away. So, for showing homes, I mean, that’s fairly easy. I just put a lockbox on it, and you know, they call me, I give them the code, go in and look there’s leases on the table if you want them. But then how do I get that lease back? You know, it’s a paper lease. I don’t want to drive down there an hour and a half just to pick up the lease. I don’t want to ask them to mail it because that can take a few days. So, things like that, I’m trying to figure out what kind of do electronically. Cause nobody has a printer nowadays. Everybody just has a cell phone, so I can’t just email it. So, there’s challenges like that. And I like to be able to have him sign everything electronically. We do the lease and somehow get the keys. I don’t know. For rent collections, I did get new things figured out that I hadn’t done before. So of course, they can still mail me, check or money order. I set up a local bank account that they can make a deposit directly into. They just have to fill out a deposit slip with their name and lot number. And that gets scanned. I can see that online, so I know where to apply it. And I set up Google Pay. So, for the more tech-savvy ones, there were surprisingly many, I was surprised. They got that set up on their phone and linked it to their debit card and click a few buttons and it’s directly in my bank account and they’re like, that’s great. That’s been my new challenge.
Ferd Niemann: Sure. Yeah. We’ve had those challenges in our products, especially in smaller rural areas. And you’ve got one park in particular where managers are Hispanic and there’s a language gap on some of that and the technology gap on some things. But what we’ve done is we’ve just bought the park leader in place. The person that puts out the notices, checks the water meters, does some showings and we’ll have them collect the leases and they’ll, and we buy them a printer, scanner for 300 bucks and they just scan it to us electronically there. I’m also doing some transition over to like DocuSign, that only works with the higher-tech people, not high tech, that’s a challenge a little bit, but having that park greeter onsite seemed to help us because that person can also collect the rent checks that was mailing once a month or mail them when they come in and then you know you’ve got them in possession as opposed to hey, it’s in the mail. So, you know, the manager says, it’s in my hands, it’s then in the mail. And then as you scale, you can get things like rent manager for bookkeeping, which is kind of like QuickBooks on steroids.
Michael Stilfield: Yeah, we used that when I was managing the large property. That’s great. It’s a little bit expensive for what I am at right now.
Ferd Niemann: Yeah. That’s the challenge when you have one or two parks, it’s like, it’s not inexpensive, but they have some functionality where you can have your tenants go to Walmart. They pay at Walmart. And basically, instead of buying money order, they charge a fee, but it’s less than a money order to just go there and say, I’m in lot 10, I owe $300. And then boom. And then automatically, the beauty of that is not only does it automatically go to my bank account, it automatically enters information in the rent neighborhood, which saves bookkeeping time. So that’s, it passes the cost on the resident, but it’s cost they’ve already paying for money orders. So, there’s been minimal or no pushback aside from there’s some brain damage associated with becoming higher tech. So, I try this piece of the business anyway, I’ve got an assistant that does that kind of stuff. But anyway, those are some tips that we’ve been, I can maybe share that we’ve been working on, but I also want to touch on, you mentioned the EIN. Because that was a unique challenge. So, for everybody else’s home it’s generally advisable to not own real estate in your personal name. So, Michael knew that. So, we set up an LLC, which this is in Missouri. So, we check the secretary of state’s website. If the name of his LLC is Main Street Real Estate LLC, we do a search. Is that available? Yes. Main Street Real Estate LLC. Also, it was in Missouri. If it wasn’t, we got to find a different name. Then you register in state and get articles organization. You get a certificate organization and then you have to create your operating agreement. The next step you got to get an EIN or federal employee identification number that you need for dropping a bank account and you need for tax reporting purposes.
So the challenge that we ran into on this one is the common name, like Main Street Real Estate LLC or whatever the one I made up was despite being available in Missouri apparently was not available in some other state. So, from the federal government, that name is out there more than once, which then normally you’re getting an EIN, it takes two minutes to get one. And they give you the number at the end of the 10 questions in your case, they said, this is too gray because this name is out there, but we had to do this at the last minute on the closing. So, we ended up, they were going to mail it to you, but then COVID happens and they just took six months off. So sorry that that become a little of a nightmare. But I thought that was a good teaching point for others. That, because that’s one of the things I like to do with this is what advice can you share and what have you learned with school of hard knocks. So together we learned the school of hard knocks on EIN, which is seemingly a very easy process, but in this instance, it became a little messier. But with that in mind, what other advice can you share that you’ve learned and even at the transition in your new ownership role as an MHP owner?
Michael Stilfield: Oh, I don’t know. I mean, there hasn’t been too much that it hadn’t been able to figure out. You know, I guess one thing I’d probably do differently than a lot of big operators, I don’t have a lot of working capital. I spent all my money buying the property. I paid cash for it, with the intention of refinancing which again, COVID has slowed that down. So, I’ve got all my money tied up in it and I’m just bootstrapping it up. So, I did not plan for several tenants moving out shortly after I closed over the instilling next couple of months. So that reduced my cash flow and I’m down there working on halls, but I get them rented. There’s a lot of demand for a nice home, a solid home, or they don’t have to be fancy. Just everything is not nice where I’m at. So, you get a good reputation on it, my phone blows up whenever I put one out there. So, I guess I would just recommend making sure you have some cash reserves because that’s made it a little bit harder and slower than it otherwise would have. You can find a local handyman that can do this kind of stuff too. That can definitely speed up the rehab. And I realized that most folks are probably not going to go up there and do everything themselves like I’m doing. That’s just how I am, I guess.
Ferd Niemann: I think you have the skills to do some of the maintenance work and the rehab work and maybe that you have some of that interest and desire. But I think a lot of people start out that way too, just because it’s expensive. I know that I started out in rental properties. Like I was mowing grass and I was painting. I was fixing fences. I was changing locks and I wasn’t doing plumbing. I wasn’t doing, you know, sheetrock on the ceiling, but I could do basic repairs. I was doing the showings. I was doing the keeping the books, you know, all that stuff. At some point, you know, there’s not time to do that, where you figure out what you’re better at, you figure out what your highest and best skill is at. Right now like I like to drive the loader and put in driveways, but I do it now, it wasn’t all just for fun because it’s like, it gets me out of my desk, put some boots and jeans on it. But I can hire some of the 12 hours, I don’t do that. So it’s probably not the highest and best use of my time, but I recognize it and I haven’t done it in six months, but there was a time there where I was like, I’m just going to go do this for an hour a week, visit the property. Hey guys, I’m going to go listen to music, drive the loader for an hour, put in five driveways. And it was just fine. But I knew what I was doing. I knew it was a waste of money for me to be doing that. But it was relaxation therapy, right. So, to each their own, but that’s good. You just got to figure out what your skills are, what your desires are. And sometimes you get you know, you can’t hire an expert plumber, you got to do it yourself. And then for plumbers, $200 an hour, but it’s a $15 task to, it might make sense to do it because you’re cost savings. So, I think that’s good to just continually evaluate, you know, the workload and the whole dynamics of the situation. So, it sounds like you’re continually doing that.
Michael Stilfield: Well, one thing that would help anybody I have found that in any community, just your town community over at a larger mobile home park, that community, there’s going to be some very handy people that just want to keep busy or whatever. After you find the, try a few of them. I mean, you can find a good reliable guy eventually, and they are just invaluable. And so, for, well, where I’m at now in mid-Missouri, the going rate seems to be $10 an hour, which to me seems extremely cheap. Cause I’m used to being up here in the city where it’s at least $15 to $20 an hour. But I’ve hired guys, well, when I was doing the Lonnie deals, I eventually sold to a guy. And a couple months later he says hey, come look at what I did to the place. I fixed it all up. Well, normally when I hear that, that means they butchered it all up, but I went and humored him and went to see what he did. And it looked really good. I could tell he did quality work and knew what he was doing. So, I started hiring him. Eventually, he became a full-time handyman and we worked together for probably five years with me paying $20 an hour, 40 hours a week. So, I’m just in a new area right now. So, I don’t have that network, but you can build that. So, you eventually you find your reliable HVAC guy that, you know, I got two people, two different. I call these guys, they’re reasonably priced. They show up and do what they say they’re going to do. And this is just my guys for this type of work. And then you find a plumber that this guy’s reasonable. He knows what he’s doing, but you still just always need a general handyman that can go replace a window or fix a leaky toilet or something like that. That’s a tip is just develop that network.
Ferd Niemann: No, that’s good advice. And that’s not, that’s often not easy. Cause I know we had a park we had to renovate like 20 parking zones. These were rough. And these were, you know, we got them for a $1000 or $2000 a piece. I mean they were never super rough. So, they needed a lot of work. And we probably went through 15 guys in one year and it was so frustrating. But then if you get somebody good, okay, you want to offer the ability to do full-time work in this case, we could show look, we got a whole bunch of inventory. You’ve got full-time work for a good year. So, then you can get somebody better. Cause the problem we had previously, you know, six, seven years ago, we had a guy we’d use them 40 hours one week, 40 hours of the second week, and then we’d only have 20 hours of work. Well then, he goes to have look for another work, understandably and then we need him on Friday. There was a major sewer problem and he’d say I’m on a roof for the next 10 days. I can’t break free. So, we’re like okay, we need to buy enough property. We end up buying some mobile homes and park and buying some duplexes, ended up having a farm, we are like, we’re going to keep you busy full-time, don’t go look for other work. But we had to, we then made sure we had enough to keep him busy so that we wouldn’t lose him on the day we needed him. And then if we ever got low again and we limit him for 40 hours because he wanted to work like 50, 60, but then if he worked 50, 60, we might run out of work. So, we limited him for 40 and said, you can do extra at nights and weekends for other people. And that’s what he did. But then if we ever got low, we saw it coming and we would go find other, he was kind of niche guy at mobile homes. We found another mobile home park guy, and said hey, I’ve got this guy, I’m going to let you borrow him for a week or two. But if I need to pull them off for a couple hours to fix a major problem, I get to pull him off. But you can’t poach him.
Michael Stilfield: That a bit dangerous.
Ferd Niemann: Yeah, it was. But we did it and now I’ve got three or four guys like that. That was like, keep you fed. And sometimes we got to relocate them. I don’t have work in the city. Can you go out of town for four or five days and paint 10 houses. But they are like, yeah, sure. Then they we pay them for drive time. We pay them for overtime, that kind of stuff. So, they’re willing to just kind of fun for them to go to the city. But that way I never run out of full-time work for fear of this problem that I’ve described here. Cause I’ve gone through so many guys and it’s like, if you get somebody that shows up, sober, hard-working, has their own tools, has a truck, jeez, grab them, don’t let them get away. So anyway, yeah, that’s definitely a good tip. You have any other kind of lessons from, as I said, the school of hard knocks and the things that, your mistake or somebody else that you learned from that you can share with the rest of us, so we don’t make the same mistake.
Michael Stilfield: You know, what I see a lot of people doing, a lot of landlords in any industry is not filing for eviction soon enough. You know, it’s all well and good. To be the nice guy and try to work with folks. But I’ve learned, especially when I was trying to develop policies for the larger park that I manage. You got to stop people from keep digging a hole. So, we just set a policy, you know, rent’s due on this date. So, on this date, we’re going to send this notice. And on this date, it’s still not paid, we’re going to file it. And we’re still willing to work with them all the way through. We would love for you to pay your rent and stay here, caught up and for everything to be good that we all want that. But at the same time, you’re digging a hole. If I let you go to the end of the month, well, now you’re two months behind. That’s a bigger hole. So, we just file it and say, well, we’ll work with you. But if it gets to the judgment time and the judge enters a judgment, that’s kind of it. Now we would sometimes if they had all the money to pay it off and they had been a good tenant, not causing problems. I mean, you can still let them say, but you can also at that time say, well, your lease is terminated. We’re not going to sign a new lease and get things updated. And we’re going to charge you more to the deposit because it’s shown to be a risk. So, we need to compensate for that. So, I guess my point was just to have a policy and follow it. And once you get that filed, people that yesterday told you they were flat broke, had no money. Were out of work. You know, there’s no way they could pay rent. Suddenly they’re in here today with their money order for the rents in full, you know it’s a miracle. You know, just have a policy and follow it. And I think a lot of folks let it go way too long and then everybody loses and that’s not good.
Ferd Niemann: That’s, that’s a good point. And I’ve learned that the hard way too, and have this kind of script, no pay, no stay, but a couple of things we’ve also done that I’ve learned, partly because of my legal background is you mentioned all the way up until the judgment. They may pay you. Look at the specific state or municipality, but in general, it’s important not to accept partial payment because you could lose your rights to evict. Like they owe you $1,500 with legal fees and late fees and rent. And they come in the day before judgment and giving your $400 and you say, Oh cool, it’s progress. And some people think I’ll take the $400 and that they still owe me $1,100. And I’m going to still show up to court tomorrow and ask for $1,100. Well, they show up to court and they say, no, no, no, I paid, I made a payment. We’re on a payment plan. The judge may say, Oh, well you accepted a $400. And now you have to refile. You basically waived that eviction.
Michael Stilfield: Not into that.
Ferd Niemann: Most of the time the tenant is behind doesn’t show up when you get a default judgment, but I’ve had a time they showed up and then the judge was like, what’s going on here? Well, they brought up a payment plan with this person, well, I had a judge and then another time I hadn’t had a full judgment, it was over. They didn’t pay, the judgment. Then when the sheriff shows up to execute the judgment and remove them from the property, she then said, Hey, I got a month lot rent. She was a tenant-owned home. So, she only, she owed like two or three-months lot rent. She paid one month. Like, okay, we’ll get you, you can start paying an extra $25 a month on top of that to catch up, well, then she didn’t pay. Well, then I tried to reinforce the judgment and the judge is like you waived that judgment, because you let her stay in and started paying.
Michael Stilfield: I used to have an overall lease, I believe at that point.
Ferd Niemann: Yeah. I hadn’t read the specifics on this city or state. And I was just like, oh my God, I’m not going to really do a lot of evictions, I didn’t do myself, I had a local attorney. It’s just been, I don’t know, Taylorville, Illinois I think this was, you know, six, seven hours away. So, I didn’t do the eviction myself, but then I agreed to take the payment, so then it backfired on me. So that was kind of a school of hard knocks lesson there for me related to yours. But something that my brother came up with this, my brother does some kind of Lonnie deals as well. And what he came up with was when you were filling out the sign of the lease, he has them fill out a piece paper that says hey, please list three emergency contacts in case we have a problem. And I don’t think we tell the tenant that it’s in case they don’t pay. In case of a fire, it’s nice to have contact in case of an injury…
Michael Stilfield: And now something comes up.
Ferd Niemann: They do come up. But then also in my opinion, it’s an emergency and you don’t pay me. So then when they don’t pay lot rent, we call their grandma say hi, is this Michael’s grandma? Yeah, What’s the matter? We’ve got an emergency. Yeah. Michael didn’t pay his rent and he listed you as an emergency contact. He’s going to be homeless. And he listed you, so I assumed that you’re going to help pay it. I’m not paying his rent. Well, maybe they will pay his rent. Now, that your kind of embarrassed Michael too. And he’s like, crap, I should pay. We’ve had one person. We bought this parking and ran to Illinois. And they owed like, I don’t even know five years rent. So, it’s a huge number. So, we thought they were toast. So, we just want to get them out of the new lease, start paying rent, or we want to get him out of there and take over the home. My manager one found this guy, I think his name was Carlos. He found Carlos’ mom in town. I know this last name. He found her, she works at a laundry mat or something. He follows her home, knocks on her door and says, do you know, your son is not honoring his moral and legal obligations to pay rent. And she was livid. She said, he arrived, we will pay you tomorrow. And we got a check for like five months back rent. It was unbelievable. So, it was like, so now I hope that the emergency contact does that. In that case, I think I got lucky, but that’s just another little tip. I think your advice is great. Do the evictions, because if a person falls behind by one month, maybe they can catch up two, three, four at some point they’re never going to catch up and you’re doing them a disservice. Because if you instead said hey, let’s get one month and then just we’ll get on a payment plan. You pay one month plus 50 bucks and you kind of pay off that one month that’s behind, we’ll let you float as long as month two was good with some extra, but if you have them get too far by eventually it’s going to be this big number. And one day you’re going to be hurting for cash. You’re going to be just this. And you’re going to say, I’m done with them and you’re going to, you’re just going to say, evict and now you’ve let them dig too big a hole. Versus as you mentioned, they were broke today. But tomorrow they got all the money. Like people can have some fight in them and go borrow, steal, you know, work overtime, find a month’s worth, but you let them get behind two, three, six months. It’s only a matter of time till you take that house back. Especially on the rentals, you know, tenant-owned homes have a much stickier tenant base, but the rentals they fall three, four or five months behind. They’re going to jump in the middle of night.
Michael Stilfield: Yeah. And nobody, I mean, we don’t want to evict anybody we don’t have to.
Ferd Niemann: Right. Agreed. All right, Michael. Well, I appreciate your time. Where can our viewers get ahold of you or do you prefer to be visible? If we went looking for Michael Stilfield, how do we get ahold of you?
Michael Stilfield: Oh, email me and email@example.com. Mary, Mary, Henry, Larry, Larry, Charlie. Hey, are we completely out of time?
Ferd Niemann: No, go ahead. There’s no limit.
Michael Stilfield: You sent me a list of questions before a meeting here and one of them, I don’t know what the question was, but my answer had to do with screening. It was the best piece of advice I had gotten. This is not my teller, but this is extremely important. So back before I had bought anything there used be a website called CRE online. And it had one of those old-timey bulletin boards, message boards, whatever, where people from all over the country that were doing these Lonnie deals would post and help each other out. And I mean, it is a great community. So those guy on there said, you really only have one job as a landlord or, you know, selling these Lonnie deals and financing them. Don’t let a deadbeat move into your house. That’s your only job. And he says, well, you do that is by thorough screening. And if you do get a deadbeat in your house, then one of two things happened. You didn’t do your job, or you took a good person and turned them into a deadbeat. So most likely you didn’t do your job. So, he just stressed the importance of screening and be nervous about this at the time. Having never done it before I took that very seriously. And I have always been focusing on how to screen, trying to learn how to screen effectively, what are your resources? What, you know, what do you need to look for? And so, I would just address that to everybody else, too, thorough screening is just so extremely important. And I have always had above average luck if you want to call it that with my tenants because I do a thorough screening. And one of the most important things I think I can do is talk to their former landlords and be sure you’re talking to their former landlord. I had somebody apply for one of these, the mobile homes that I have now just a couple of months ago. And she put down her sister or her cousin or somebody I don’t remember. And the way I found this out, it was because when I called it went to voicemail, it says, this is so-and-so, which was not the name that was supposed to be. So, then I started digging and started out lucky on that if she had answered, I might not have known, but so anyway, I was able to get in contact with the actual landlord. I’m very good at turning up phone numbers for people that supposedly don’t even exist. Got ahold of her and talked to her at number one, this applicant got disqualified because she lied. So, she’s toast already, no matter what anybody said good about her. But yeah, just talk to former landlords, Concentrix for that is, you know, especially if they own rental properties and they’re self-managing or anything like that, do Google Earth and go drive by the house. A lot of times there’s just sign in the yard with the phone number on it in photo and Google Earth, or if they rent it from an apartment complex or, you know, any commercial type thing, freshly managed, there will be a sign in the front with the phone number right there on Google, and you can find lots of things just on the internet, but talk to former landlords and screen, screen, screen. So that’s my tip.
Ferd Niemann: That’s great. And we, you figured it out on your own. I, I had somebody else tell me, so I got kind of lucky as well. And we use a company called landlord-tenant services and they’re real big on that. And one thing they told us that they do, which is, I know it works is they’ll call more than one landlord. Cause if you call the current landlord like, Hey Michael, how’s this tenant. If the tenant is horrible, the landlord may say, Oh, she’s great. I hope she doesn’t leave. Hoping they get rid of them. But if you call the landlord from two landlords ago and they have skin in the game, that landlord is going to say, oh my gosh, this person is a nightmare. Don’t ever do it, because they don’t have skin in the game. So that was one tip they used. And then another thing it’s like in your example of the lady that went to voicemail, and you said, you wouldn’t have figured it out had she answered. Here’s what the LTS does. They’ll say, let’s say that the stated rent is a thousand a month and you call the person, it’s the sister, the sister is not going to really know all the details of that lease. You could say something like, okay, I see here that you’re the landlord. Yes. I’m the landlord. Oh, she’s a great tenant. Best thing ever. Oh, the rent is $1200 a month, right? Oh yeah. Always on time. The real landlord will know, it’s not $1200 a month. It’s a $1,000. But if you deceive the fake landlord, they may not catch that or a pet or something else. So, I thought that was a good tip that LTS does. It occasionally catches those sorts of things. And I’ve had friends and be like, hey man, will you pretend to be my landlord? I’m like, no, I can’ be your landlord. But they’re like, I can’t. I’m in trouble. I got a new place and I need a reference. It’s like I had a friend do that on a job. He had made up one friend made up an entire fake resume. And he said, he was like an IT exec. And he was like, kind of sharp with computers. And I am, you’re not going to get this job. He’s like, just pretend to be my supervisor. I’m like, I’m not going to get in on this. But these people take these lies to these elaborate levels.
Michael Stilfield: Right. Yeah. I would slightly disagree with your trick of stating a different rent. Because I have found that a lot of tenants don’t remember what their rent was. They knew about what it was and a lot of mom and pop landlords, you know, they don’t keep records or if you do catch them and they’re out driving somewhere, they’ll go ahead and answer all your questions. They don’t need a release. But they’re doing all from memory and they kind of know, but not really know. Another good thing to do along those lines is to ask them, well, what address were they rent from you again? Oh. Even if they don’t remember exactly. Well, it was the place over on Baker street, so at least you get some verification that way, that in my opinion, it would be more accurate than trying to get an exact rent match. That’s just my 2 cents.
Ferd Niemann: That makes, that makes that makes sense. For sure. That’s a good idea.
Michael Stilfield: So, all right. That’s my tips.
Ferd Niemann: Alright Michael. Appreciate it.
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