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SHOW NOTES FOR EPISODE 045 WITH KEVIN BUPP – ROLLIN’ IN CASH FLOW WITH MOBILE HOME PARKS
As you know, the focus of this show is on how real estate investing can generate significant cash flow for your future retirement and today. And although we focus a lot on multifamily and apartment investing, there are a number of different ways to invest in real estate – fix ‘n flipping, buy and hold, commercial real estate, deeds. liens, and self-storage, to name a few. In this episode, our guest Kevin Bupp will introduce you to another very profitable and often overlooked real estate investing methodology – mobile home park investing.
What You Will Learn
- Why a good mentor can make a giant impact on your success
- How Kevin recovered from an almost total loss of his real estate business in 2007-2008
- Two main reasons mobile home park investing is superior to apartment investing
- How Kevin regularly gets 16-20% cash-on-cash returns on most mobile home park deals
- How you can hire an expert for your team in exchange for an equity position on deals
- How he recently got into a deal for $20,ooo that will yield $65,000 a year and more than triple in value
About Our Guest
Kevin Bupp
Kevin Bupp is a Florida-based Real Estate Investor, top iTunes podcast host and serial entrepreneur with over $40 million of real estate transactions. His extensive investment experience spans the gamut of apartment buildings, single-family homes, office buildings, raw land, condos, and his favorite and by far mobile home parks. With over 16 years of experience, Kevin now educates investors to locate, acquire, and create “higher than average” returns from this widely misunderstood niche of mobile home park investing. He shares his expertise through the Mobile Home Academy and also as the host of Real Estate Investing for Cashflow Podcast which has become one of the hottest podcasts on iTunes, often in the top 100! In addition to his real estate endeavors, Kevin is passionate about giving back and is the founder of several charitable organizations, including RunningforBrews.com, a social running club with more than 10,000 active members, and “72 Hours to Key West,” an annual 280 mile bike ride benefitting impoverished families during the holidays.
More about Kevin
- Terrible high school student
- Blue collar middle class family
- Hung out with the wrong people
- Went to Community College
- Bar tending job
- Met a man who started mentoring him in real estate investing
- Within a year and a half, started fix n flipping and buying small SFRs, multifamily properties
- Moved to southwest Florida buying lots of SFRs and small multifamily properties
- Formed own mortgage company
- Lost 99% of what he had acquired during the crash
- 2010-2011 started getting back into multifamily
- A mentor helped him move into mobile home parks (manufactured housing communities)
Why he prefers mobile home park investing over apartment investing
- Two main reasons:
- Not being built anymore – diminishing supply
- Not a lot of competition
- Knew he wanted to be in multifamily
- As more and more buying apartment buildings, he had a hard time finding apartment buildings that would give him the returns he can get with mobile homes
- Liked the returns he could get in mobile home parks
- Mobile home parks are not being built anymore because of negative stigma
- 1% are being torn down each year
- About 50,000 exist
- If he buys in a strong market, buys good quality park/community, there won’t likely be another built nearby
- Most were built in between 50s-70s
- Many have mom and pop owners aging out of the business — Some live there in a house or mobile home, families grew up there
- Knows of one park where they haven’t raised rents in 6 years
- Delinquencies/evictions are rare because people would lose their home
- People don’t leave because they have to move the home, which can cost upwards of $4,000
- Evictions are rare
Bank Financing of Mobile Home Parks
- Stigma against mobile home parks
- Most banks don’t understand the business model of a mobile home park
- Purchase price above $1 million — banks are more interested
- Must be a clean, good park
His Acquisition Criteria
- Not smaller than 40-50 spaces
- Stable, economic growth
- Below 8% unemployment rate
- Below 15% vacant housing
- Median home values – must be $100,000 and higher
- Return (most important): At least 16-17% c-o-c and move to 20% within 12 months –
- Cash-on-cash is his most important factor
- Good available bank financing
- Doesn’t look at per-door
- Ideal –“Lot rental only” – where owner only owns the land and residents own their own mobile homes
- If they buy a park with homes as part of the deal – they sometimes will sell existing manufacturing homes cheap to avoid managing “park-owned” rentals where fixing roof leaks, clogged toilets are often part of the package
- But will also keep, rent out owner-owned mobile homes – depends – take on case-by-case basis
How He Got Started
- Since he had owned and managed SFRs and multifamily properties before:
- Comfortable buying out of state, rentals, underwriting/evaluation of markets and assets
- Found an experienced “partner” early on
- Had 30 years’ experience in mobile home parks
- Finance side
- Owned communities
- There to make sure Kevin makes the right decisions
- He would get equity stake
One of His Biggest Mistakes
- Had deal under contract
- Negotiated excellent owner-financing terms
- Couldn’t get comfortable with the deal
- Passed it up
- He could have made $1,000,000
Advice for Those Who Might Want to Invest in Mobile Home Park Investing
- With many of our listeners on fixed incomes and limited reserves, how would you advise them in getting started in mobile home park investing
- Expect the worse
- Need 25% cash down
- There are seller financing deals but they are rare
- One great seller finance deal he found recently
- 41 space in PA
- Lot rent was $300 per mon
- Husband passed away
- Manages from 6 hours away with no –on-site manager
- Tenants abuse water
- 50% don’t pay rent
- What he did
- Negotiated owner-finance deal for $200K w/20% down ($20K), 30year amortization, 10 year balloon, 5% interest, 4 months deferred payments
- Sub-meter water back to tenants
- Get rid of no-pays
- $30K capital improvement
- After debt service, etc, should make $65 per year
- Should be worth $700K
What is the one thing that is really excites you about your business today?
- Have developed a fine-tuned acquisition strategy to find great off-market deals
- Comfortable with what they are doing
- Growing steadily in seller’s market
Rap-It-Up
- Favorite real estate book: Timing the Real Estate Market by Craig Hall
- Favorite business book: Think and Grow Rich by Napoleon Hill, The 10X Rule by Grant Cardone and Steal the Show by Michael Port
- Most valuable web site for success (other than your own): loopnet.com
- Favorite app: grasshopper phone tracking
- If you lost everything and had to start all over, knowing what you know now, and you only had $1,000 to start your real estate investing business: Go to local real estate clubs. Find out who the local players (owners/operators) are and tell them how I could add value you their business in exchange for helping me get started.
How You Can Reach Kevin
- mobilehomeparkacademy.com
- Get a free book only at his website: The 21 Biggest Mistakes That Investors Make When Purchasing Their First Mobile Home Park… and How to Avoid Them.
- Email: kevin@kevinbupp.com
- Website: http://www.kevinbupp.com/
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