Cali Real Estate Housing Crisis and Mobile Home Park Investing with Jefferson Lilly

He is a founding managing partner of Park Avenue partners and they’re focused on mobile home park investments. He’s also an educator and has a passion for producing commercial real estate mobile home park content to help you create and preserve more wealth. He has also acquired 25 mobile home parks in 13. States since 2007, totaling over $56 million of value, and I believe have raised over $34 million for these deals. He started the industry’s first podcast of mobile home parks and has the largest group on LinkedIn dedicated to investing in mobile home parks.

Episode Highlights Here:

Jefferson:

We also buy when we can get them at good prices, we buy used mobile homes and bring those in. We don’t rent them, then we rent to own them or we help folks get proper mortgages.

Brett:

Let’s dive into you know, the top three secrets right now for mobile home park investing. But in particular, think of at a higher level a little bit, maybe you know, folks that maybe have own multifamily or senior housing right or retail, ooh, get out of retail you can write. And now mobile home parks why Jefferson, and in tell us a little bit about the returns.

Jefferson:

it is still a mostly overlooked niche that certainly gets gaining in popularity, but still, nothing quite like you know what, what we’ve seen in the other basic food groups, traditional multifamily hotel office, what have you. So prices tend to be better. There are a couple of other things, though, beyond that. First is that at least the way we do it, we tend to buy parks that are not horizontal apartment buildings. What I mean by that is we tend to buy mobile home parks where the tenants own those mobile homes, not us. the implication there is that we don’t have to maintain all those proverbial leaky roofs and leaky toilets. The tenants do that it’s their home. So that’s been been a big win to just have our repair and maintenance budget drop, it’s typically five or 6% of rents. My understanding, I’ve never owned an apartment complex, but my understanding is traditional multifamily is probably three acts that somewhere around 15, or 18%, of apartment rents go to repair and maintenance because again, it’s so expensive to maintain those improvements to the land. Another thing is in this business, again, we have folks frankly, that graduate up out of the apartments, they might not be able to live in a site-built house, brand, as nice as you and I are blessed to do. But this is their home, this is what they can afford. And it’s better to be a homeowner of a mobile home, not as good as a site-built home investment, but still far better for these folks to become a homeowner of a mobile home than to remain an apartment renter and just throw away their rent money. Once you own a home, again, not as good of an investment as a site-built house, but still dramatically better for these folks than remaining in an apartment. So our mission is, of course, we are first and foremost a for-profit fund. But we also have a social mission. And that social mission is to help folks become homeowners. So we bring in mobile homes new from the factory to infill any vacant pads. We also buy when we can get them at good prices. We buy used mobile homes and bring those in, we don’t rent them, then we rent to own them or we help folks get proper mortgages. But either way, we’re all about building communities of owners helping folks that typically make around 35,000 a year, we help them with a clear path to become a homeowner and get out of that game of paying rent. So that’s something else again that I find particularly compelling about the manufactured housing space versus apartments which try to trap people into paying rent forever.

Brett:

I think right on that simple nuance that it’s homeownership, but at a drastically reduced price and we’ll talk about some examples here in a minute. But by the way, I’m originally from the Bay Area Mission st is a free San Francisco right? I live in Sacramento now and so so a lot of families there in California have been faced with just, you know, a housing crisis for now, and the cost to build and the cost to own is just it’s just very very challenging for so many people right and you’re right when you’re dependent upon an apartment complex or you’re dependent upon different rules and you’re and you don’t own something yourself, it tends to be just not as desirable right? Is not as great for the what the family and community