On this episode of the Mobile Home Park Lawyer Podcast, Ferd is joined by Ryan Hill and Brett Bowman. Ryan and Brett share the obscure way they got into MHP while also maintaining their day jobs, as well as some of the benefits of working as a partnership and how they get around managing parks out of state.
“We’re trying to create a legacy wealth for our families, for our kids. And like most people just create a great community and value for our residents. Somewhere they’re proud to live and call home. “
0:00 – Intro and background to Ryan Hill and Brett Bowman
5:36 – Ryan talks about his first few deals and how he manages parks so far from home
9:00 – Ryan goes into more detail on his management company which is willing to travel
13:56 – Outsourcing has helped with deal flow and build relationships with people quicker
15:39 – Brett discusses finding contractors and how you need to go through a couple people to find the one, and also reveals how he finds people and some of the tasks
19:57 – Brett talks about broker deals vs his own organic search
22:12 – Brett says brokers trust you more if you have a park than if you don’t
23:41 –Ryan enjoys giving people time and adding value to them and them giving value to him
25:26 – Brett tells a story about sellers trying to strong arm and claim back rent 15 minutes before funding
29:04 – Brett shares some stories from that deal which taught them some things
32:38 – Ryan adds to the story told by Brett on the deal
35:00 – Ferd offers a story where he bought a park with a clean phase 1 and when he went to sell it the buyer did his own phase 1 and it failed
37:09 – Brett has his entities set up so he’s the only signer which helps a lot
38:46 – Ryan states there’s no way he could scale as fast as they have without having partnerships and relationships
43:45 – it’s important to get on site for the due diligence at some point with out of state properties
46:41 – Brett gives his experience with his first few MHP’s as a final thought
47:40 – Anyone can do it if they have the right reasons and the passion
49:45 – Knowledge isn’t power, knowledge is potential
FIND | Brett Bowman and Ryan Hill
Email: email@example.com or Ryan@suncrestcap.com
Ferd Niemann: Welcome back mobile home park nation. Ferd Niemann here again with another episode. Today, I’ve got two special guests for you really had a good opportunity to get to know these guys in the last couple of months, they just closed on a big mobile home portfolio, complicated deal. They both got day jobs. They’ve got regular life. They decided to get into MHP investing and they arekicking butt. So excited to have him tell a little bit more about their story. Please help me welcome my guests, Ryan Hill, and Brett Bowman. Hey guys. Thanks for coming on.
Ryan Hill: Thanks for having us Ferd.
Ferd Niemann: You got it, man, Ryan. Brett, well, I know you a little bit obviously, but for our audience, they may or may not know you as well. So tell us a little more about your background and then we’ll get into how you guys got into MHP. Cause it’s definitely not the normal path to that you guys have taken, but you’ve jumped in both feet and it’s going well for you.
Ryan Hill: Yeah, absolutely, Ferd. So I’m Ryan Hill. I’m by day, I’m an elementary school principal in the Boise Idaho area. And so my background, I taught high school science for 13 years and then became an administrator. I was also a real estate agent for 13 years. So single family, real estate, where I worked with another partner for gosh that was about 13 years as well. So moved to Idaho a couple of years ago. And self-educated in the mobile home park space probably a year, year, and a half before we purchased our first, my wife and I in July 2018. So about two years ago. A year ago, I didn’t know Brett. He didn’t know me and we, you know, kind of a God thing, serendipitous thing connected us and we’ve just kind of been expanding exponentially since this last fall, really. So we own six now and have four or five under contract. And so mostly in the Midwest no, we own eight, sorry, there’s two up in Sun Valley, Idaho that we’re general partners on as well.
Brett Bowman: Hey, so Brett Bowman. So my background is mostly in technology. So I’ve been in tech sector for over a dozen years mostly in corporate finance and complicated project management type role. So really what I do with MHP is kind of perfect from my background, doing a lot of, I mean, you know, Ferd there’s a lot of financial analysis that goes on a lot of underwriting, tons of time in underwriting, right? And then there’s a ton of complicated hairy projects we get involved in too. And that’s kind of stuff that excites me. So mostly what drew me to MHP, I started investing in single family homes several years ago and kind of, I think the typical real estate path of just trying to do kind of the burst strategy where I buy one, rehab it, refi, repeat kind of thing. And just started realizing that wasn’t scaling as fast as I thought it could with, you know, you got to have an individual loan for each time, got to have different property managers or it mean sometimes you can scale a little bit there, but it goes slow. And then I started realizing that there’s better things to do in corporate. I’m sorry in commercial. I got involved in some multi-family commercial, industrial commercial, and then like Ryan kind of alluded to, we kind of stumbled into meeting each other and getting toknow each other. And he already was doing MHP kind of convinced me that was the path and I’ve been loving it. So that’s kind of where we’ve been.
Ferd Niemann: That’s great. No, I mean, I had a similar experience with the BRRRR Method and I did it successfully for a few years, but it was just, scalability was like, okay, can I really own a hundred houses or 200 houses or a thousand houses and people do it. I know one guy in particular in Kansas, he does it well, but it’s very few in park community that could do it well and have the reserves and have the management. And then multifamily was very competitive cap rate wise and in Kansas City, probably less so on the west coast, you guys, but it’s still competitive. So MHP seemed to check all the boxes, real estate, diversification, economy of scale, limited competition. And then as Brett alluded to very intensive as far as underwritings financial analysis, operational stuff. So it’s a challenge every day. So that’s kind of makes it exciting, makes it fun. I don’t remember the last time I was bored from my work, which I was bored more. I joke with my team, like one of these days I’m going to golf on Fridays, but I haven’t golfed all year. And I don’t even know where my gloves are to be honest. So I think they’re in my basement, but anyway MHP has been fun. So tell us a little bit more about, you know, specifically your first couple of deals and how you, and some of the challenges you guys had to face and how you, how you got through them. I know that the regional portfolio at Iowa, you guys had some Orangeburg sewer issues, which those are definitely no picnic. And then, you know, you guys have been buying them for the most part halfway across the country. You guys are both west coast, you’re buying in the Midwest. So how does that work from a DD, clearly you’re going to budget more money for flights than I will, or drive time. But aside from just different DD how does that work for you guys?
Ryan Hill: Yeah, we have a strong management team that’s based out of Kansas City area. So that’s part of the reason why we were looking, you know, four to five hours in a radius outside of there. So they started by managing my first park that I purchased two years ago. One, that’s a married couple, one’s an inspector and on commercial and residential. And he has his own handyman company as well. And then his wife does a great job of just the typical property management pieces. So they will, you know, they’re kind of our the folks that will go out and do the initial due diligence. So, like for example, our Missouri parks, we have three under contract right now. And we had a short DD for two of them, and they were able to get out there within a couple of days. So that’s a big reason why we’ve been able to scale quickly in the area. And then they’re helping oversee the managers at the other parks as well. So Brett and I, and some of our other partners we take turns flying out. I just got back a couple of weeks ago from, we were in Iowa, Kansas, and Missouri, think about 10 parks total and just plowing through them. So just all day long, which is it’s fun for me, it’s fun for both of us. It doesn’t seem like work to us. Just uncovering the rocks, talking to the contractors, electricians, plumbers we have everything from lagoon to a wastewater treatment plant, city utilities, of course. And so, you know, you’ve done a lot of podcasts for it on all of those different fun adventures and those private utilities. And so, you know, we had Orangeburg and one of the parks we closed on and there wasn’t a lot of Orangeburg and actually it’s still surprisingly in really good condition. So we don’t have any plans day one or year one even to start replacing that until it need’s there. But it seems to be holding up, but yeah, it’s an adventure for sure. But we have good people in the area that do a lot of that legwork for us.
Ferd Niemann: That sounds good. I mean, it makes sense. And on the Orangeburg in particular, if it ain’t broke, don’t fix it. We’ve got a park in mid Missouri that it’s got some Orangeburg, but the key is you identify it, camera in the lines, and then you have a professional bid and say, look, you have this level of problem, or you don’t same with the one we’re closing on about two weeks, we budgeted it 15,000, to replumb the whole park cost a quarter million, but we’ve got 15,000. We know exactly where it’s at, where it’s failing. We know what’s been replaced and we’ve got a camera in line for like 600 bucks. There’s a group out of independence was already that does it, camera guy sometimes cost two or three times that much, but this guy is willing to travel within the region. And he’s pretty reasonable. So definitely with you there on, you know, don’t fix them if It’s not broke. But tell me real quick also on this management team you’ve found, that’s obviously helped you scale. Did you already know them or did they come with the park or do you find them on the internet? Because that’s always the challenge is finding good people you can trust and scale with, and if you’d tell me their name and phone number, I would like to know them.
Ryan Hill: After the show we’ve purposely not giving their contacts out.
Ferd Niemann: John Smith and Joan Smith.
Ryan Hill: So that first park that my wife and I bought you know, and this park, for some of those that don’t have a lot of money getting into the space, you know, for less than a cost of a single family home, you can pick up a smaller mobile home park. And then the scalability from that is whatever X that home rent might be. But so essentially what we did, I struggled finding an inspector that would go we’re about 40 minutes south of Kansas City, it is kind of a, I guess, a desert for contractors or inspectors. Nobody really wanted to go. So I finally found like Doug, I’ll give you his first name. So he went and inspected the mobile homes there. I called him after we closed or before we closed and just said, hey, I’m struggling to find a property manager. Like nobody will do property management down there either. So he said, well, I’ll talk to my, let me talk to my wife because he didn’t really know anyone offhand that would, and his wife has a background in some corporate work and project management work. So they’ve just been a great team together. And then they’ve been willing to grow with us and scale with us. So they see the potential and where we’re going with it. You know, we’re trying to create a legacy wealth for our families, for our kids. And like, most people just create a great community and value for our residents. Somewhere they’re proud to live and call home. So that’s the short story of how we found them. And they’ve just been great in scaling up with us.
Brett Bowman: And I think what’s really been beneficial for us with having that team and kind of the initial team anyway, we’ve had other contractor teams that we’ve pulled together in Kansas City. For example, we have another team of five contractors all work together. They’re actually going to live in our Iowa parks and rehab them for a few months at a time. Which, I mean, if you can find people like that, I definitely won’t be sharing those names anytime soon. But going back to that initial husband, wife team, the other thing that’s been great about them is they’ve just completely like jumped in and learned our systems. So we use [10:52 inaudible] for our property management. And she’s in there at least as much as I’m in there. So she’s helping me like pulling the rents. She’s pulling reports, she’s training our new managers. We’re actually to be on site in a couple of weeks during a day training for all of them. Getting them up to speed on, I mean, not just [11:07 inaudible], everything else [11:09 inaudible]. But that helps us a ton where we don’t have to be the ones that are necessarily hands on all the time. Cause we’ve got a team that we trust and they can be up there within a couple of hours if needed. And then obviously making sure we’ve got good onsite managers as well.
Ryan Hill: So I think, and to give you an example for like Doug today, he’s right now, he’s traveling to Missouri to it’s got a couple of cashier’s checks to close on a mobile home that we’re purchasing there and we, you know, we got off Facebook marketplace. And so, you know, they’re, they’re able to drop what they’re doing and take care of those things for us that we obviously can’t do being out here, we’re in Idaho. So it takes us a full day just to get to Kansas City off of a couple of flights.
Ferd Niemann: No, I think you hit the nail on the head a little bit that having a team that’s flexible is key. I mean, for most of us, we have to start and maybe we always keep this, by the way, with the day job or you can always keep the day job and you miss out on stuff like that. Dad and I started, we both had day jobs. It was like, hey, can you go? No, can I go? No, go tomorrow, It’s too late. So we didn’t have a team. You know, we weren’t big enough to have a team or we didn’t have enough project for the team. At least we thought, so the bigger your team gets, the bigger your portfolio gets. It does feel like in some respects it is a lot harder, but in some respects it’s easier because it’s like, I’ve told you guys where the show, my internet at my office quit working an hour ago. I got to get home. So I lived 12 minutes away. I drove home. I got an office at home also. But I got somebody else working [12:41 inaudible] right now. So I can go back there have another call in an hour and a half. And hopefully I’ll be back at my regular desk. And I don’t have to ask the wife and kids to go play outside for another hour. But just having a team makes life easier that’s for sure.
Ryan Hill: Yeah. I think Brett has done a nice job in helping us scale with sourcing. We utilize virtual assistance, like a lot of operators do in a lot of aspects, but a lot of his time was being taken up with underwriting deals where if we can outsource that type of thing you know, it just frees us up to make connections with people and you know, like the deal flow has been pretty cool. You know, starting out, if you don’t know anybody, it’s just, it’s a grind to even try to get somebody to stay on the phone with you for more than 10 seconds.But we’ve been able to develop relationships quickly and find other people in the space that are just willing to hustle and bust their butts to get into the space and help find us deals and things like that. So that’s been part of the success with our scalability as well, going from two parks last fall to now, now up to like eight in less than a year.
Ferd Niemann: That’s great. Well, let’s touch on that a little more Brett and for Brett I know you’re the IT guy. So obviously using VA’s is probably going to come easier to you than most, but can you shed any secrets on that as far as where do you find them? Are you going through like an Upwork or Fiverr or you find them on, are they American VA’s that speak English and you pay $10 or $15 an hour, or is it some foreign VA that’s doing, you know, data research and they don’t speak any English and you pay him 50 cents a day or whatever you pay them. I’ve tried VA’s myself. And another member of my team does, he’s got somebody in Florida and she works out really well. But for some of the VA’s I’ve tried, it’s been like pulling teeth, you know, at times. I’ve been going the opposite route as hiring more kind of executive assistant or secretarial roles in that I can see and touch and kick if I have to right. Versus they are in Philippines and, you know, I don’t speak Filipino. So what can you share on that? What task Are they working on, I’m interested in as well.
Brett Bowman: Yeah, to your point, I’ve had a lot of experience in my career with contractors and offshore teams and what I will say from my experience, working with a sign press capital and finding our own contractors. You do see a lot of churn, unfortunately, where you’ve got to go through four or five people before you get to the right person that’s good for you. In fact, just a couple of weeks ago, we had to take a [15:32 inaudible] because I know they will help us out with the website and logos and everything, because it wasn’t working out great. So we’re on to finding another one right now. So I think just being willing to churn and find the right person, we do interviews too. So we usually use Upwork. We’ve tried Fiverr and a couple others, but Upwork’s kind of the one that I like to use for a number of reasons. But we do several interviews before we identify who we’re going to start with. And then even then it may not be the perfect fit. So that’s one of the nice things about having a contractor is, it’s really easy to terminate a contract. So some of the tasks we do, they range from very basic. We’ve got a contractor for example, that we just set up with a VPN phone cause she was having a hard time from the Philippines calling and getting into call mobile home parks. She’s helping us out now with rent comps. We’ve got people that are doing looking Facebook every day, about every 12 hours, scouring Facebook marketplace for homes. Ryan touched on the group that we’re using for underwriting. And just before you panic there, cause I listened to your episode a few weeks ago on underwriting. They’re doing the first wave of underwriting. So it generally saves me about 5 to 10 hours of by time because they’ll go through all the T12, they’ll go through the OM, all the details. And they usually can give me a summary of everything. And then within about 30 to 60 minutes of my own time, I kind of get to the point of whether or not it’s worth it for me to spend more time on it. And I mean, actually just sorry, diverging for a second before I even will send them a deal. We have a ton of criteria we go through before we’ll even waste that time. Cause we’re paying those guys $25 an hour, which as you know, Ferd onshore resource, let alone offshore $25 an hour is pretty decent compensation. So we want to be careful with that time, but it’s worth it to me because it’s protecting my time too. So anyway, on that divergence, we’re really strict about location. Like Ryan touched on, we’ve got to be within three to five hours of Kansas City. Cause that’s where our team is. We both have day jobs. We can’t be going to Florida for stuff. We’ve got to have a team we can rely on that can help us with stuff. So I mean, having that strict geography, we can say no to a lot of stuff really fast. And then just kind of looking at a few other aspects of the deal. We can tell whether or not it’s going to work. And then if it’s kind of in that gray area, that’s where I’ll have this offshore team underwrite it for me and then I’ll take the deeper dive if things are looking good on it. So anyway, bottom line with contractors got to be willing to be patient and churn a bit unfortunately, you also got to be willing to put in some time to train cause they need a lot of guidance I think upfront, especially.
Ferd Niemann: Sure. No, training in generals is just, you know, part of life owning a company, but it’s a time suck. It’s challenging, but it’s necessary at times as well. Now I know you mentioned geographic boundaries, that makes sense. It’s kind of finding your footprint, finding your niche. And I know Ryan, you mentioned earlier, you know, when you got started, it was harder to get somebody to take you seriously, to get a phone call from a broker. Now you guys have closed combination of deals. What’s the attack plan going forward? I mean, how much of your time are you spending looking at, like, I looked at a broker deal this morning and I feel like I wasted 20 minutes of my life. Cause it was so crazy on price. And I told my colleague, I said, and I’ve got a park in this exact same market.And I said, if this one sells for this price, I’m selling my other park with this broker because there’s no way it should be anywhere near this. And I don’t think it will, but it sometimes it feels like the broker market, the brokers have access to lots of deals. I know a lot of brokers, some of them I really like, some of them I don’t care for, but sometimes I feel like I’m wasting my time chasing those deals, but then again, that’s where those deals are and then you guys just closed some deals that were on market. So what’s the attack plan going forward as far as broker deals versus from your own organic search?
Brett Bowman: Well, I completely agree with you. There are certainly brokers that I get a package from and I hardly spend any time on it. Cause I know it’s going to be way overpriced and you know, like, so I’ve definitely come to learn whose deals to pay attention to and which ones not to pay attention to. So as you mentioned, the one in Iowa, we got on market, it was listed without a price tag on it. So that made it a little bit more challenging to kind of figure out where to settle. But after three months of negotiations, we got into a price on it. And actually you were part of that negotiation. So you’re familiar with that. Going forward we’re going to continue looking at brokers and networking with especially with local brokers that kind of are in a market that aren’t necessarily national. We’re continuing to try to expand our network there. We also have a couple of folks cold calling for us. So far we haven’t actually closed on anything there, but we’ve had several sellers talk to us and we’ve got a handful of, Ryan’s actually got kind of a cool story there. We’ve got a handful that are like kind of warm leads that we’re talking to and hopefully we’ll close with. The three we’ve got under contract in Missouri, just to give you an idea of kind of the mix of how we’re finding deals. Two are from a wholesaler. And that’s the one Ryan touched on that we had a short due diligence timeline on, unfortunately because [20:41 inaudible] under the wholesaler’s contract. Although we did get an extension and we were able to negotiate. But the other one we actually, I got from our network. So someone, the person that brought it to us as a junior owner on that deal, and he basically said, hey, I don’t know if the primary owners interested in selling, but I’m interested in selling. Maybe we can make something work and he kind of helped back channel that for us. So that was kind of convenient, not necessarily cold calling, but still the network to get that deal.
Ferd Niemann: Those are the best ones. Where they fall in your lap. Because something you did yesterday, you were like, I had one recently, it was like a client couldn’t get a loan because he wasn’t local. And he’s like, hey, I got this deal. I can’t get a loan. If you want to waive my legal fees and pay a small fee, I’ll let you have it. And I was like, works for me. I didn’t find that deal. So yeah, it’s like you have to build a brand, build reputation, network, treat people right. And occasionally get an easy one.
Brett Bowman: For sure. And I think there’s a lot to be said, like once you close a park, I’ve heard brokers say that multiple times that if you have a park, they trust you more than if you don’t. Cause there’s a lot of tire kickers, but even just being able to prove that you can close like that, you can get it across the finish line is kind of huge. And people will talk to you a little bit more.
Ferd Niemann: That’s absolutely the case, not just once, but how big is your portfolio stuff. I try to keep a relatively low profile on the acquisition side. But same time I talked to a broker one day goes, well, I got you down for this many. I go, what about this one? Oh, you own those. It’s just a different LLC. I was like, yeah, that’s me. And then I’ve got, it’s funny, I’ve got a client that he doesn’t know what I own, but he sends me junk mail like once a month. And here’s the best part. He paid me, it was only like 10 minutes, but he paid me to draft the letter to send to Mom and pop and I now get that letter in the mail from him on a regular basis. And I’m like, he doesn’t even know this is my park. And I’m like, and I’m not selling it to him, but I’ve never told him. But I chuckle every time I get it, I’m like, I’m literally getting,and my dad doesn’t know that I did the legal work for this guy. So he sends them to my dad who’s the contact name, apparently on a park we have in Illinois. And dad’s like if you ever want to sell this guy says he pays top dollar. And I’m like, yeah, I know that’s what the letter says.
Brett Bowman: I wrote the letter.
Ferd Niemann: I told my dad I wrote that letter.
Ryan Hill: Yeah, I think, and to the point of the, those that are, they’re just trying to break in in some way. Because that’s where I started. But now Brett and I, we get to talk to people that are either referred to us or they find us on our website or LinkedIn or whatever. And we’re good with giving people time and just getting to know them and just figuring out how to add value to them and how they could possibly add value to us. So that’s how we’ve gotten a couple of people to essentially partner with us, making cold calls. Or if they hear a video, they’re going to send it to us, to take a quick look at. So as long as you can find, even if you don’t have money to get started, but you can help people like us who are growing quickly in some aspect, you know, cause we pay like a finder’s fee like a lot of people will, or we’ll give some ownership percentage like a lot of people will as well for [24:11 inaudible] deals and they can kind of learn along with us as you know, we have a lot to learn still. Every deal is you know has its own unique things happen. And so, you know, I think Brett said getting deals to the closing, the finish line and we use you for the Iowa deals and you help tremendously like, I can’t say enough of like the contracts that we were able to utilize from you we’ll save 10X plus of what we spent on that. Just based on I’ll let Brett kind of tell the story of what the sellers tried to do right at the end and how your contract helped us a lot on that part.
Brett Bowman: Well, so we were buying from a group that owned several mobile home parks and has for 20 years or so. They’ve just, I think they’re kind of at the stage where they’re starting to divest of their portfolios, we’ll continue looking at them, but they were kind of trying to strong arm us really down to the wires like 15, I’m not even kidding, 15 minutes before we’re supposed to fund. And like the funding cutoffs 2.30 or 2:15 PM. They’re trying to say that they should get all the backgrounds. So any rent we collect after closing they get, and that makes by the way, no sense to me. Why would I do all the work to go collect this just to pay it to you? Like, if anything, I would just come in and be the hero to all these people and say, hey, I’m waiving your rent because I’m not getting it anyway. What’s the point. But fortunately Ferds contract head in there and frankly I’d forgotten it was in there so thankfully it was in these emails, had in there that we had already agreed that we get all the back rent. So that alone was worth several thousand to us per park and it was four parks. So definitely a nice lesson learned there to make sure you got a Bulletproof contract.
Ferd Niemann: Thanks for the shout out. Yeah. I mean, that’s, you know, I I’ve had that happen before where the sellers, they know, I mean, you guys were, I say, you’re already pregnant on the deal. Like you were going to close. You’re 15 minutes away, we’re talking about $8,000 or $9,000 on a multi-million dollar transaction. So they know you’re going to close. So they’ll just be like, oh, we’re getting the back rent. And I’m like, if it’s the seventh of the month as we sit here and record this, okay and you collect July rent. I think it’s reasonable to give them the seven days of July rent if you later collect it. But June rent, may rent, April rent, a year ago rent, I take the position hey seller, you had a chance to collect that you didn’t. And what I can’t have you do is have some sort of lien against my new tenants. So you’re shaking them down post-Closing perhaps taking them to court, perhaps garnishing their wages, taking their tax refund, taking their paychecks. And now my tenant base is less stable because you’re harassing them. So I had this happen once. So I put in the contract, I get all rights to back rent, including prior, you know, prior months, etc., you got till the day close and you collected or don’t. So in this case, the guy he had forgotten and his attorney forgot that that was in there and it’s good to put it in. I used to put it in just the bill of sale and the assignment of leases for at closing. But as it happened in this case, the guy at closing red lines that provision says, I’m not going to agree to that.
Brett Bowman: Oh yeah, we’d already signed the assignment of leases at that point days before. And then they tried changing it last minute.
Ferd Niemann: Right. So that’s why we said, hey, go look at the underlying contract. It says, buyer gets right to all the back rent and that you will sign a form of bill of sale on [27:30 inaudible] at closing. And these guys were, at that point, they became honorable. And they’re like, okay, our bad. We didn’t see it in there. And they signed, but they were just you’re right. They are being bullies, theyare being strong handed. And this was a term that had been negotiated months earlier and the beauty of negotiating months earlier it was not contentious at that time. And it wasn’t even relevant. And in the meantime, they get along due diligence period because of the complexity of this portfolio, that 2, 3, 4 months have passed. They haven’t got rent. All of a sudden there’s now government aid programs that are about to send big checks, so the rent was real. It wasn’t just pending eviction. It was like, oh, there’s thousands of dollars coming. So yeah, I’m glad that worked out for you guys. I’m glad that you got this thing over the hump. I mean, that’s one lesson learned, right. Just remember what’s in your contract. Remember what’s important to you, but what are some other lessons learned in that portfolio? I know that was, you guys had changed banks. Title company was complicated at times you had lots of DD. I think that would be an eye opening. I’m sure you guys learned a bunch on that. And maybe some things that you do differently the next time around, but what stories from that can you share with our audience.
Brett Bowman: There were a handful of things that happened within, so we closed on the 25th and just the last couple of weeks of the other, a handful of things that kind of landed that really put us a risk of closing. So one of them you touched on there was we switched banks. So we had a bank several months ago, give us a commitment. 4.5% interest rate, 70% loan to value, it is a pretty decent deal considering that the occupancy of the portfolio is hovering around 65%. But we had a local credit union come to us about six weeks ago saying that they would give us 70% loan to cost. So they’d be funding 70% of our capex budget, which is huge for us. Because we’ve got a lot of capex going on up there and they were going to miss sub 4% rate. So better rate, some interest only, refinance terms were better, everything looked better about this deal. The problem was we didn’t, there were still like some contingencies on that loan where they weren’t from like going to sign. So I shouldn’t have done this. Really in retrospect, this was a kind of a learning that I should have just made this switch as soon as we were confident that, there were just small contingencies that I wasn’t a hundred percent sure this new loan was going to on us. So literally six business days before closing, I still hadn’t chosen which bank we were going to close with. And so titles confused.
Ryan Hill: I was confused. I didn’t know what was going on. I looked and was like are they switching lenders?
Brett Bowman: And I’m like, I’m trying to play the game where I’m telling entitled, hey, I’m dating two girls. You can’t tell them that I’m dating each other, you know, kind of thing. And that was kind of a nightmare, frankly. So we made the call to switch over to this credit union in Iowa, they closed first. They were fantastic. And I mean really down at the wire, we also had to switch it from one loan for all four different loans. So it’s quadruple the paperwork. You know I say, another one for anybody out of state, another big learning I had, I had a mobile notary print all the documents and bring them to me for signing. And we’re talking about hundreds of hundreds of pages that I had to sign. Cause it’s four different loans, four different contracts, everything right. And I’m halfway through signing, I’m realizing that certain documents that I had on one park, weren’t showing up for the second park. So I started to reconciling the documents. It turns out I’m missing documents and I’m down to like an hour and a half to sign all this stuff and get it overnighted to meet the deadline. So my learning was, if you’re out of state signing, go to a title company, they do a courtesy closings where you can pay them they print it off. You’re right there. They’re a little bit more, I’m probably a lot more professional, a lot more organized, a lot more experience than maybe a mobile notary. So if you can’t be in person for it, I that’s what I’m planning to do for the future.
Ferd Niemann: Here’s another tip. I don’t know about Idaho, but in Missouri, you’re not allowed to notarize yourself, but you can notarize your spouse. So my wife is a notary. My secretary is a notary, my property manager is a notary. Cause you got to use your notary all the time when these 21st mortgage docs, when you sell homes too. So I got notaries all over the place and I don’t have to,mobile notaries are expensive. It’s like 250 bucks a pop versus a one-time fee of $50 for, so my wife’s my notary. And she’s like, are you buying more parks? I may not notarize this.
Brett Bowman: And what is she charge you Ferd?
Ferd Niemann: She doesn’t charge me.
Ryan Hill: Yeah. Another piece on the two girls that Brett was dating/the lenders.
Ferd Niemann: That’s going to be the excerpt we’re going to put on LinkedIn when we promote this, Brett says I am dating two girls, but I couldn’t tell them.
Ryan Hill: So the first one, they didn’t require phase ones. But the second bank did and one of the park. So this is dealing with the environmental companies. One of the parks has a bunch of vacant land. And so next to where the vacant land was there used to be, what was it?
Brett Bowman: There was a salvage yard 30 plus years ago.
Ryan Hill: Yeah. 30 something years ago. And so that triggered phase two. Well originally they wanted to do phase two at all four parks. And it’s like, no, the issue is only at one. So we got them to just do the phase one at the one park. But that went all the way up to getting those results was like the last hurdle.
Brett Bowman: And it was scheduled for June 24th to get the phase two. And we were supposed to call this June 25th.
Ryan Hill: So luckily, I mean, we had to get on the environmental company and see if there was anything coming at us as far as, is there any mediation or mitigation to anything they found. They didn’t find anything. But it definitely held things up. It cost us a little bit more money at the end and a little bit of seller concession for, or our concession to the sellers. But yeah, lesson learned on that piece.
Ferd Niemann: Yeah. The phase one, phase two, I had to go through that several times. This is no picnic either, but yeah, the lesson I suggest on that is we always get bids right out of the gate on those. And then if we know we need to get them, and then I’ve learned to go with guys that don’t find problems, frankly. I mean, there’s some companies that, there’s one of in Kansas City I don’t use anymore. That when I used to retail, we used them. They’re more expensive to do a big development ground, but they did have a low ball bid for the phase one and they’d get the work and then they’d always come back. You know, we think you should probably do a phase two. It’s kind of a gray area we think should do phase two. Well, you got to do it then it’s like, you can’t get a go against medical advice on that one.So I got to get the phase two. Well, now I’m in for another 10 grand versus somebody else charges $500 extra for the phase one. And n they shoot you straight. You don’t need to see it. Here’s a prod. There are no recognized environmental conditions. You don’t have to go through the phase two or go through the borings and core samples and ground penetrating radar, etc. But I did have it happen where I did it. I bought a park in Illinois, got a phase one, came back clean, didn’t think anything about it, bought the park two years later, I go to sell it. My buyer is going to get, he asked me for my phase one, I give it to him, it’s clean. I said, why would you buy a different go hire a third-party company? Just hire this company. It’s going to cost like 250 bucks to update it instead of 2000. Well, he didn’t trust me or something. So he went and got a different company. His company says it fails the phase one. So I was just like, you got to be kidding me. So I called my guy. So here’s the best part actually, I don’t even get to call my guy. The buyer sees my guy’s company name and personal name in the report, calls him and says, my new guy says that you’re wrong. You made a mistake and you’re too aggressive. And you should have called for a phase two for Ferd, and he’s recording this. And the guy says, yeah, I could see how the, I was probably being a little aggressive. I could see why you should get a phase two. Yeah, I’d probably go for it. So I get a copy of emailed the transcription of this, like this guy’s name’s Lance. I called Lance. And I was like, what the hell Lance? You just, I now have to pay for a phase two and so Lance and I agree, he’s going to do a part of it for free. Well, the new guy, the buyer’s like, well, your guy Lance is incompetent. We already proved that I’m not going to hire him. So I got to pay a different phase two guy to fix my phase one that I paid $2,000 for two years prior. So even when you do it right, it still didn’t work out right for me. And it ended up the phase two cleared, sold the park. It just costs me a few thousand bucks. But man, I was pissed. I was like, what could I have done better than hire a phase one environmental engineer and then rely on the report. And it still didn’t work. But anyway, lesson learned there is don’t hire Lance.
Brett Bowman: Yeah. That’s what I might ask for a last name on after the call. I think one thing that did go really well with closing though that I’m a huge fan of partnering and I can tell you like all along, why it’s been beneficial for me to be partnering with Ryan. But during closing, we had our, we have our entity set up that I can be the only signer who we learned with our first park. It was a nightmare, like no kidding Ferd. We are there with all of our, like our wives are there signing, we’re signing. And it’s just, it was a circus. Cause I’ve got a million children running around me at signing. Anyway, so we have our entities set up that I can be the only signer when we’re closing, which is fantastic. Cause then last week or during that same week, Ryan was out in Missouri the whole week doing really thorough due diligence on our Missouri parks. And there was no way he could have stopped to sign anything. So that was just nice to be able to tag team. And I mean, I spent hours that week on signing. He spent even longer on due diligence and both of us were like, I don’t know how people do this on their own. You know, this is just, you can’t be in two places at once unless you’ve got someone you trust.
Ferd Niemann: That’s a great point. That’s how we do it now too, because the same thing and we bought a mobile home the other day in Eastern Illinois and the title company sends the documents. Are you coming? They are four hours away, my dad said, are you going to be here for closing? And I was just like, people still go to title companies. No, I’ve not been to closing company in five years. I’m not going to the closing. It was a $9,000 mobile home. I’m not going for a multi-million dollar transaction. So that the lesson learned there is you can close remote and one person can sign. You just need an authorizing resolution from the rest of the members allowing it. And it’s man, it makes it easy compared to the old way. But yeah, you guys have figured it out.
Ryan Hill: Yeah. There’s no way we could scale as fast as we have without one, our partnership relationship and having strengths, the other dozen necessarily. So that’s huge and finding a partner that balances your areas of, I guess, is the best way to put it. And then like, like I said, I was on the phone with, for measuring lots next to a dumpster in a park in Missouri and trying to figure this stuff out before closing and Brett scrambling signing documents. So yeah, you have to have a good team in place for sure. And I think a big part of that scalability too, is putting the systems in place for not only your manager, regional manager, manager team, but you know, we’re utilizing what a lot of people, you know, purchasing platform, which, you know, Frank and Dave preach and we’ve started using them. And that that’s been a huge help so far. We’re still early in that process, but just organizing we, gosh, we have what? 15 to 20 homes where we’re going to be rehabbing here in the first 16 to 20 weeks and just keeping all of those expenses separated by park. That type of thing helps a time and they have a team that does a lot of the due diligence pieces for you for getting multiple bids like on resurfacing roads or tree work or whatever it is. So finding those types of companies that you can get partnerships with that will save you time is big. And just getting those people’s systems down. So you’re not scrambling and making the kind of the minutia calls to banks or vendors. You’ve got people doing that for you, or you’ve got systems in place that are doing that for you.
Ferd Niemann: No, I hear that a lot from people is great systems and it’s kind of like this cliche word is like everybody has to have their own system and the system like, and your example, for example, Brett’s doing the signing, Brett’s doing the underwriting, Ryan’s doing more due diligence. You know what I mean? Or you just trade off roles. That’s part of it is roles separation of duties of people. And then also find a way to systematize this is that, you know, I joke, you know, get something so easy from a hierarchical level that you could get a monkey to do it with enough bananas. And if you can train all the way down and then there’s some stuff that it’s very simple, like picking up the other end of the box, very simple. But knowing whether this box is people have to be thrown away or put in storage higher level, knowing that the box is fragile higher level, knowing if it’s our box or if we have to go through the Housing Act on the box, all these different things. And it’s just, I’ve learned, especially with a lot of the contractors is just, there’s a lot of people who are good at taking direction, following direction. And there are fewer people who are good at creative thinking and problem solving and both sets of people are valuable and you got to get people in the right lane. And one of my contractors, he’s extremely talented, lot more talented than I am on everything labor. But if he’s in the middle of putting in 200 amp or middle of welding a hitch on, I don’t have to do that stuff. That’s really important. But where he sometimes gets distracted is without a system that tells him and the system says, do everything on this list in order, unless I direct you otherwise, or Austin directs you otherwise. And give him a list every single day, he can do it. But otherwise he’ll be putting in electric in some resident will come and say, hey, my air conditioner’s not working can you come look at it and he’ll go look at it. Oh, your thermostats broke. Well, let me run to Home Depot, get a thermostat, let me come run it, put it in. Oh, wait, now that I’m here, all your toilets are going to be fixed that. And pretty soon it’s dark. And we’re like, where’s this guy. He goes, oh, I was helping a resident like that wasn’t what you were supposed to be working on. That’s not even a park owned home. That was nice of you to help. But like I got a permit inspection at four o’clock tomorrow and I need this electric hooked up and it’s an eight hour job. And he’s like, oh, but I was doing good work.Like you were doing good work, but didn’t understand the hierarchy of duties. So the system for us, we had to learn was just give it to him every single day and just do it in order. And man, if you point and click in the right direction, he’s a valuable member of the team. If you let him make his own decisions too much, you’re going to fire him. I almost fired him 30 times, but he keeps doing something great. I let him back around. But from a micro level system to macro level and organizational I’m with you, it’s the only way to, you know, get to bed by midnight and get all the work done is to have other people doing other stuff, especially you guys. I used to do it. Now you know, I don’t have a real job. But I used to have a day job and I had to do this stuff at night, evening. It’s just like, you got to have a system, you got to organize or you’re going to fail, or you’re going to get fired from your real job, because they’re going to figure out you’re goofing off all the time.
Ryan Hill: Yeah. We don’t want that for sure. And I think that being an out-of-state owner for most of these parks that we own it is important to get onsite for the due diligence at some point. We have a good team. They could go and measure lots. They could look at pedestals, they could, you know, work with people to get sewer lines scoped all that. But there’s a ton of value in you with that ownership mindset being onsite because you’re going to see things a little differently. You’re going to catch things that others may not. So I also recommend wearing a safety vest and bringing in a clipboard because then nobody really questions why you’re walking around the park. They just assume that you’re some kind of contractor and you could actually find out all kinds of interesting information when people do ask you like, hey, oh, we’re just checking the utilities and making sure everything’s going well, how long have you lived here? And so you get some cool Intel that way. Quick story, one it’s you know, if we are talking class, the class type, it’s a class probably warfare part. Class C minus minus. We like the value add for sure like a lot of people. So we’re doing due diligence a couple of weeks ago there, and this guy behind an RV, he’s digging up where the sewer line connects in. I just kind of go back there and talk to them a little bit and ask him, hey, what are you working on? He’s like, well, these old clay pipes, they’re busted up. So that’s good info to know like the cylinders not working, it’s actually a septic system. And so he sort of indicated he was going to fix it himself, which I thought was odd. But then probably an hour later when we’re doing a drive-through video of the park and part of our document, you know, we’re documenting everything, I see him in his front yard, he’s drilling holes into a plastic, like a storage container, like just drilling massive holes in. And like that dude is making his own homemade septic system. He just dug that hole and he’s going to stick that thing in the ground and put it. I was like, okay, so I know if we close on this one, that’s something we’re going to have to fix. So there’s value in being onsite and seeing those types of things.
Ferd Niemann: There’s a lot of homemade gadgets like that. But man, what would make you think I’m going to go create my own septic system. Different idea than I would ever had, but anyway. Well, this is good stuff guys, before we jump any other kind of final ideas or comments, and then before I forget, remind us how to reach you guys as well.
Ryan Hill: Go ahead Brett.
Brett Bowman: Yeah. I mean, I just kind of echoing, I think the partnership model is fantastic. If you can find the right partner. I didn’t really get into this at the very beginning, but just quickly you asked about our first couple of parks. So when I was first teetering on the mobile home park idea, I didn’t really know what I didn’t know. And so being able to find somebody like Brian that already had experience and was willing to do a JV with me, that was kind of critical for me because I could learn that way. Like I said before, I’d already partnered with others on like multi-family and industrial, but learning something new, it’s just kind of nice. It’s almost like getting on the job training rather than having to learn for a year or two and then try to do something on your own. That was pretty fantastic. So totally believe in that. So my email is just Brett@suncrestcap.com. That’s also our website www.Suncrestcap.com. So CAP short for capital. Www.Suncrestcap.com. We’re both active on LinkedIn and Facebook. Find us, reach out. Ryan, what’s your word of wisdom there at the end?
Ryan Hill: You know, I think for us it’s fun. We enjoy it. It can be stressful for sure. But you know, we both have day jobs. Anyone can do it if they’ve got the passion for it and, and kind of are doing it for the right reasons. So yeah, we just love learning from each other, learning from our mistakes, learning from people that have done it for a lot longer than us, like you Ferd and, you know, there’s a bunch of podcasters out there that do a lot of great content. So I started out as just a podcast junkie and read everything I could and that’s just, that’s how I started and then just started taking action. So I think a lot of people, like we talked to people from, they’ve quote unquote, graduated from Frank and Dave’s academy and they haven’t done anything like they’ve taken no action. So taking that first step of taking some action and then just keep grinding at it until, you know, you get that first deal and then does, it opens up and snowballs from there in good ways if you keep at it.
Ferd Niemann: That’s a great point. It reminds me just, you were saying about going to bootcamp there’s guys that I know they’ve gone to bootcamp numerous times and if have not made an offer in a park, and I was just thinking, you said that in your quote, and I went to a Tony Robbins event, I’ve been to a couple of Tony Robbins events and there’s one called unleash the power within. And there was a guy in my little, small group. He’s like, yeah, this is my 19th time here. And the guy probably weighed 500 pounds. And you know, it was one of his struggles was weight, his weight and his energy and his health and the systems, the knowledge that Tony Robbins provides was world-class. And it was there, but he wasn’t taking the action and he’d do it for a day, a couple of days he’d come back the next year, he’d come back the next year. He has been doing it for a decade. And he lost 500 pounds. He lost the same 50 pounds, 10 times, put it back on again. So reminds me of the quote, you know, knowledge is power is wrong. Knowledge is potential power, execution beats knowledge every day of the week. And that’s the same thing you’re talking about here is you had lots of knowledge from being a podcast junkie and that’s not worthless, butit’s not worth much until you take that action and you use it, obviously you figure out how to do that and figure how to do it from joint venture. And it’s fun to watch.
Brett Bowman: Cool. Yeah. I love that quote. Ryan’s email is the same as mine, by the way. It’s just Ryan@suncrestcap.com.
Ferd Niemann: All right. Thanks. Look at that partnership. You’re watching his back to make sure he gets added onto the spam list.
Brett Bowman: Yeah exactly. Email him first. Just reach out. We’re happy to help. We’ve actually like Ryan touched on before we’ve taken on some junior partners that help us out and you know, it’s a win-win scenario. They help us out. We kind of mentor a bit, so we’re happy to help in any way, learn.
Ferd Niemann: All right. Sounds good guys. Thanks again.
Brett Bowman: Thanks Ferd, Appreciate it.