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The tenant is the winner here because they can buy a home and then also be deferring the maintenance expenses.Of course, that boosts the NOI, which then brings up your value.Everybody wins.
Welcome to the best ever CRE show, the world's longest running daily commercial real estate podcast.
If you want real stories behind the good, the bad, and the worst ever deals, plus insights into what really goes on in commercial real estate investing, you're in the right place.
Our hosts interview commercial real estate experts every day to uncover secrets and strategies you can use to become a better, more informed investor.This is the best ever CRE show.
Hello, best ever listeners.Welcome to the best ever CRE show.I'm Amanda Cruz, joined with Ash Patel.Ash, what's up?
Hey, Amanda, and hello, best ever listeners.
and I are with Matias Grunewald.Matias is joining us from Greenville, South Carolina.
He's the owner of T2M Capital, where they acquire distressed and mismanaged mobile home parks that require renovations on both occupied and vacant park-owned homes, as well as the infrastructure repairs to stabilize these parks.
Matias' portfolio consists of 175 mobile home park lots, with more under contract, a 27-unit RV park, a 26-unit apartment building, and some small multifamily assets.Matthias, thank you for joining us.How are you doing today?
Fantastic.Thanks for having me.I appreciate you guys.Thanks for the invite.
Absolutely.Excited to jump in.And before we really get going, can you tell the Best Ever listeners a bit about your background and what you're working on these days?
Absolutely.So yeah, I moved here from Germany originally 12 years ago to the United States.I came here because I'm a W2, a chief operating officer of a global manufacturing company.
So I learned a lot about manufacturing processes and structure and so forth.So in the last couple of years, my wife and I were talking about, okay, we want to get a child and how that future is supposed to look like.
We sat down and looked at, okay, here's an empty canvas.How is our future looking like? And how do we want to build this?So we were talking about, you want to have my wife being at home and taking care of our child.
So we read the typical books, reach that, pull that and see how we can build this passive income train, right, and build an app machine.
So we started buying some real estate a couple of years ago to start with a duplex and really escalate into like multi-million dollar acquisitions in mobile home parks just recently. That's what I'm currently working on.
Amanda, you nailed it in the intro.So I'll be buying mismanaged and distressed mobile home parks.And my partners and I are really on the rocket ship of growth at the moment.So really excited about the future.
Matthias, here's what I understand.You are the COO of a large manufacturing company.So anytime there's an issue, it's amplified.And anytime there's an efficiency, there's a lot of time and money that you gain back.
How have you applied that to what you've done?And really, I'm still kind of blown away.
You got into real estate just a couple years ago, and you're buying mobile home parks, which are very, very competitive, and you're doing millions of dollars in deals.So please, help me understand all this.
Yeah, I think many times we'll be buying right with the distressed and mismanaged properties many, many times that people don't have the structure and the process in place.And me being in manufacturing companies, all our processes, right?
So I'm working for an automotive manufacturer.So everything's about processes.Everything is developed over years and years and years. So something is launched, it goes into vehicles and gets sold to consumers.
So that skill set translates pretty well into running a mobile home park or any asset really in commercial real estate, because you'll have a lot of lessons learned, you're dealing with a lot of people where people are, there's going to be mistakes and failures, nobody's perfect.
And you're learning also to get callus on your soul, basically to power through the failures that you have, and it makes you stronger.And then building that muscle and building that skill set to power through and get everything
that is really trying to beat you down and you're still standing up and coming back at it.That resilience that you're building over the many years translates really well into mobile home parks.
Like you mentioned, it's a very competitive market and a competitive asset class as well.
I think we're doing a really good job moving into a really niche within the niche and how we approach this is quite unique as well, which I'm sure we can dive into a little bit later.
I'd love to hear that now.So what is your niche within mobile home parks?
So we like to buy parks, of course, they are under market rents, like really everybody does.But also we like to look at, we want to buy a nice ratio of park-owned homes and tenant-owned homes.
So we like to convert those park-owned homes into rental-owned homes.That means we create affordable housing for people.We really enable individuals to purchase homes, which they otherwise wouldn't be able to do.
We're really filling that niche of providing affordable housing.And what we do, we go in and make those houses safe and livable, but we don't make them perfect.You don't go in and put $10,000, $15,000 in a $5,000 trailer.
You put a couple of thousand dollars in there, and then we sell it to somebody as a handyman special, and then enable somebody to really buy a home that can move in there.It has AC, it has heat, and it has a water heater.
but it's not perfectly painted.The stove is maybe not perfect, but they have a chance to buy something really cheap.And you work with them on the terms.
So if somebody can only afford a certain amount of payment per month, you can tailor it around and move the terms and move the interest rate, playing basically bank or make it a win-win for everybody.
And not only do we enable people to buy a full of a housing that way, but we also make our investors money, which is a great win-win situation.We absolutely love it.It's a great thing to do.
All right, Matias, so you just gave a 10,000-foot overview of buying park-owned homes and selling them off.So let's take one step back so people can come on board with us.Most investors would prefer these tenant-owned homes.
And you're saying you like park-owned homes.How are you valuing the assets when you get in, and are you valuing those park-owned homes?
Yeah, you do an inventory value, right?You look at how many parking homes you have, and then you look at, okay, what is the year built and what condition are they in?
That's really part of where you have to dive deeply into the diligence process and make sure what you're buying is actually what you thought you underwrote in the beginning and then matches accordingly.
As you know, mobile home parks have value basically on the real estate NOI, which means that gets a cap rate put on it.So the park on home income is kind of like fool's gold.
There's a really high expense ratio for park on homes, especially when they get older.And that's what we like to see.We don't like to see the really old park on homes.
Like the ones that you have in the 90s or 2000s, they're getting there with the age and they have their own high expense ratio selling them off, which then defers the maintenance aspect from the owner, which is us, to the new owner.
But again, win-win situation, right?It's just somebody else can move in and have a cheap affordable home while we can defer the maintenance costs and just keep rebuilding the thing and turning it around and bringing it to a new tenant.
Are you buying the 90s and 2000s homes or do you only like newer models?
We basically take them all, the newer the better.We like to see the tenant-owned homes as well.
We don't buy parks that are all park-owned homes, but a nice ratio where we have the chance to go in and turn them around, those park-owned homes, into tenant-owned homes.That's our thing.
If it's a lot newer, let's say we have a park where we have a couple 2015, 2017, 18 models in there, we keep them as rentals because they're fairly new, they don't cause many problems.
We might as well rent them out as they are, and you can also demand a higher rent in the market if the market allows.
So we keep those for longer, but the older they're getting, you have to look at them as like individual rentals, even though they're within your park.And then you can see they're problematic, have a lot of issues.
And those other ones, we're selling off to somebody who can handle the repair themselves, basically, and get a cheap home for that.
Let's talk about selling them off.How does that work?
So there's different ways you can do this.I mean, trying to be as simple as possible, go on Facebook Marketplace and really advertise.We have this handyman special for sale. This one is for $10,000.This one is $15,000 or $20,000.And it needs work.
Reach out if you're interested.And usually we get blown up by it.People are very interested of what we can offer.And then we do our typical showings.And then me and we negotiate, basically, what they can afford.
Of course, we do a typical background check, credit check, et cetera, proof of income to make sure they can afford it.We don't want to create a trap for people, right?We want to make sure it works out for everybody in the long run.
So we give the people the option to buy it.And they do an option payment, which is similar to a down payment. which is usually 10% of the home.
So if it's a $20,000 home, they make a $2,000 option payment, and then they just pay the lot rent going forward and then hold these land contract basically by the home off over time.
I'm still blown away that just a couple of years ago, you were doing single families.When did you start taking on investors?
That was end of last year, really, late 2023 when I started that.So we start with small multifamily, start with a duplex, just my wife and I refinance our house, then use that money to buy our first multifamily property, and then went to a fullplex.
And then I was thinking, well, what's the next step?Commercial, right?So I had a two-unit, four-unit, and then my logic was, okay, let's go with an eight-unit because it's nice, two, four, eight, 16.
But I jumped right into a 26-unit, and then we started pulling in investors.On that deal, it was a JV, so we had a bunch of people coming in with money, and we all operated together.
And then early this year, we started our first syndication, and then we're actually about to close on our third syndication, end of November here, next month.
So that means really from late last year when we started this up to now, we have already the third syndication about to be closed.
My guess is you're treating capital raising with the same level of putting processes in place that you do everything else.Can you talk about that?What processes have you identified for capital raising?
We have some really good partners that have a really good process in place with capital raising.They have the network, they also have experience with asset management.So we try to partner up with people.
You're more the operational team and we also raise capital.I raise capital myself, but we have partners on board that have thousands of units and they can raise capital really well and they bring also process and structure in place.
And we're deploying webinars.We always do webinars during the individual phase when we are raising capital for a deal.So we send those out to our network.
We have pitch decks or offer memorandums, which we go through in the webinar, but we all send those out via email.So that's very powerful.
And of course, posting on Facebook, LinkedIn, et cetera, and then really get that out to your network is also really powerful.
So we're all using kind of the same strategies, but the people that are more focused on the capital raising are using some other techniques and strategies as well, of course.
And I'm always telling people, even if they don't want to hear what I'm doing in mobile home parks, right?So you're always kind of capital raising.If you talk to people that might be interested, you always tell them,
Have you ever thought about investing in the real estate?And sometimes you have people that just want to invest with you.I even have my own CPA investing in our deals just because he loves what I'm doing and he sees my tax returns.
So he's got very interested in investing in our deals, which I didn't even pitch it to him, but it was one of those things which was really interesting how it came together.
That's always a good sign because the CPA see a variety of deals.So it's a great test when they invest in your deals.What's your next move in terms of scaling?
Our next move in terms of scaling, so my partner and I have a vision.We want to be in the top 50 mobile home park operators in the next five years, which means we have to get to about 6,800 lots in the next five years.
So in order to do that, of course, we need to scale and build those processes.So weeks we did a bunch of interviews with a lot of talented folks out there.They're great in broker outreach and great in underwriting.
So my partner is really, really strong in broker outreach.He knows how to build the relationship with brokers and wholesalers, et cetera.I'm the numbers guy.I'm the analytical guy, process guy, structure guy.
So I'm basically building an underwriting team and my partner builds like this broker outreach deal flow team.
And it's basically copy paste what we're doing right now, which was successful, which is trying to build like little mini-me's, we call them, to really accelerate that growth.
And so we have people reaching out to the various brokers and get that deal flow in and underwrite the same way.
Okay.This makes a lot of sense.Now I understand the whole COO thing.
So just like in any company, the COO is ultimately in charge of operations, but really they have to understand the numbers because you can make mistakes in a lot of things, but you cannot make mistakes with the numbers.
It's your responsibility to know that.So you focus on numbers and then in terms of operations, you put the right people in place, right?Is that essentially your model for you?
Absolutely.Like I mentioned at the beginning here in this interview, that's translated really well from my W2 debt skill set because you really have to set that foundation up properly.
You always have to look at this with a 5-10 year vision in mind where you want to go and build those processes right out of the gate the way you want them to look like when you have 6,000 lots.
You don't want to be the guy that does all the tenant communication.If you have 6,000 lots, you will never be able to serve your tenants, which are ultimately your customers in a sense, right?They're paying your rent and serve them properly.
So you need to build that team before you really need it to be successful.
Mathias, you mentioned you recently brought on somebody to do acquisitions and to call brokers.As Ash mentioned, mobile home parks are famously very competitive right now, especially when you're trying to syndicate.
Your money's more expensive than others who are entering.What is it you're looking for in your acquisitions director?
What we're looking for is somebody that can really build those relationships.We got a lot of good deals this year just because my partner has fantastic relationship with the brokers.
So often we even were lower than other offers and we got the deal because they trusted we can close on the deal.
So that one acquisition we made, we made an offer for $3.85 million, and somebody else came with $4 million, and it still went with us because I know we're going to close, and because of the relationship that was established with my partner in the past.
So we need somebody that can reach out to brokers and actually build those relationships, long-term relationships. We always emphasize out of the team, we are not here to be transactional.
We want to build those relationships with investors, with brokers, with everybody that we're working with.We want to really stand out with this.
Of course, we're all trying to build generational wealth here, of course, for our families, but also we want to make sure everybody wins in this.But this is hard to do.
And that's why we're building those strategies and processes and structures to make sure everybody can win.So far, we've been really successful.
Where are you looking for your employees?Like if you're looking for an acquisitions director, do you just post something on Indeed?
Not really.We actually look at the network we already have and we always have our eyes open.So my partner and I are in various masterminds and we see like, okay, this person has potential.He's hungry.
You know, he pays for a mastermind eight and a hundred bucks a month.He's not a tire kicker.Right?
So it's always like an entry qualification in a sense of somebody really pays for a mastermind and they are showing interest in the asset class and ask a lot of questions.
They are naturally very interested looking at those people in our current networks and I'm sure as we're getting bigger and we already thought about this to make them post like this, like on Indeed and sites like that.
But so far, we've been really satisfied with the network we already have because you're constantly networking.
In real estate, you're always networking and you always know people and you see their skill sets and they match pretty well with the team and you see the core values match.
And then if you think of somebody, you need someone for broker outreach, background or underwriting, you always think of somebody where you might think, I think this person is really good at this.
And you reach out to them and most of the time, it's a good match.
And how are you incentivizing?
It depends how much value they're bringing.So if someone is doing broker outreach and they can be part of due diligence, for example, they get equity for that.So they're basically working for equity.
So in the beginning now, we basically have people on the team that basically get paid on the value they're bringing.So we're not paying them monthly.It's based on, okay, you go out there, you eat what you hunt, in a sense.
So everyone's going to be involved in asset management, investor relations with the operations, et cetera. So that's basically how we incentivize them at the moment.
And it's mainly with the team we're building, as we are growing so fast, it's incentivizing them that you will get equity, even if it might be relatively little, but it will be little equity in a lot of deals, because we want to grow to like 6,000 lots.
Again, we want to not be transactional.Like if somebody gets a lion's share of the GP splits, it might be only like 10, 15, 20%, for example.But when you have 6,000 lots, that might be over 50 to 100 deals.That sounds a lot more
attractive, obviously.So that's our end goal.
Did I hear you right that you're giving your acquisition manager 10% of the GP for anything they find?
It depends.We have for deal finding and also business plan creation, that's 5% to 10%.If somebody gets involved with due diligence and let's say they run it, there might be another 5% to 10%.That's 20% right there.That's of GP, of course.
So there's other things that we also have.For example, if somebody, they happen to find a deal that's in their backyard, that could be on-site management as well.It doesn't mean they have to be the property manager.
But it could be the boots on the ground asset manager and I get 10-15% right there.It's very fluid.We have a very good overview of how we do equity splits and what we allocate.But some deals are very asset management heavy.
A lot of value that needs to be done.We also have a park on the contract right now.It's all tenant-owned homes.
There's not a ton of management we have to do because the deal just worked out great as is where we don't have to convert any park on homes.
That means there will be probably a lot more equity given for due diligence compared to asset management because there's not really that much to manage because you won't have those maintenance calls and stuff like that on the home.
So we keep this very flexible.So it's a deal by deal basis.
Mateus, why is it important to get 6,000 homes and be in the top 50?
Why not?That's my question for that. Yeah, that's a good point.It's not about greed.It's just about having that outreach of spreading this affordability out in the market, right?You want to really make a big difference.
I think the more people you serve, I think it makes a bigger impact to people. Really, the parks that we bought here, and there's one really in my backyard, the Portfolio we bought, it makes me genuinely happy when we can sell homes to people.
There were people hugging me.They were almost crying because they could buy a home.And for some, it's just a trailer.For them, it's a house they could not afford.
We're in a pretty expensive market here in South Carolina, so it's really hard to buy something under like $250,000, $300,000, and giving somebody the opportunity to buy something for $20,000, it generally makes the whole team happy.
And then spreading over 6,000 lots, why not?That's the way I'm thinking about it.
So why are you buying RV parks because they're not giving you hugs?
Maybe one day.Well, RV parks, they're kind of for a secondary.We do have an RV park.
We actually go in after some other RV parks, but they're also fulfilling a niche of people that are really retiring in the RV and they want to live long term in an RV park.
So we do have a park where people have been living there since the late 90s in that same park.So that's also for the long term tenants as well.So it's a similar aspect of it.And of course, we have a lot of transient people also.
Okay.So the RV parks that you're going after are not the one or two night stays.There are more longer term tenants.
Correct.So the ones we're going after, they have about 10 to 20% ratio transient and then 80, 90% long-term.So usually in strong markets where there's a lot of inflow of tenants, a lot of population growth, and that will help us sustain that.
There's a lot of construction in the areas, a lot of workers moving there.So we see that from various operators.We talked to many operators here also in my market and then also other markets. And that's usually what they're seeing, long-term tenants.
Well, we're talking about long-term tenants in RVs that might be like three to six months, but we also have some that have been there years, many years.So that can happen as well.
Matias, is it a myth that if you have your RV park, managers can basically steal money from you because you'd never know if somebody's parked there or not?
It's not a myth.I think you have to have process in place so this can't happen.Absolutely.I don't think it's a myth.It's definitely a genuine threat for sure.Many RV parks, a lot of people want to build RV parks and then accepting cash.
For various reasons, we are digital.With our property management software we're using, everything is done digitally.
We have ways that I can pay cash, but we use systems called Pay Near Me, which means I can pay cash to local retailers, and then they basically pay over that platform to us.So we don't handle any cash.
So that way we don't have any cash moving from one hand to another, which means nobody can really steal from us, obviously.And everything is tracked in the system.Nobody can hide.
And we will see who's delinquent, who's not, and the property manager can't steal anything.
Matias, you brought up an interesting thing.So you have all these different assets and you are a very top level guy, right?That is your expertise.How do you look at your total portfolio of all of these different assets on a daily or weekly basis?
So we have asset management meetings weekly.So we use an EOS system.It used to be called Traction.Now it's called Bloom Growth.And that came from the book from Gina Wickman, Traction.And I love that book.It's all about structure.
That gives you a meeting structure as well.And that's one of the first things I implemented once I started working with my partners. And we also have a scorecard there and all the KPIs are in there.
So basically from the property management software we're using, we build the OMB downloads, the financials, vet them, make sure everything looks all right and clean.And then we extract that data and put it into the EOS system.We review that weekly.
So we have weekly asset management calls per asset.And then one leadership call where all those KPIs flow into the leadership call where we all look at it at a really 30,000 per view. Which asset needs the most attention?Which one needs more work?
Where are we?Are we on track with our business plan, etc.?That's the way we've been structuring this.
Matthias, you seem so process-oriented, calm, cool, collected.When do you get pissed off?
I'm German, so when somebody's not on time, I get pissed off usually.
Well, in your business, what kind of breakdowns or what kind of things really get you mad?
What usually gets me upset, I usually don't get mad, but what gets me upset is if we take our properties and we see how people have been mistreated, that really gets us upset.Not only me, but also us upset.
So we've been taking over some properties that have been heavily mismanaged and then people are really mad as a hornet right out of the gate when we take over and we have to calm them down.
Okay, we are new management and some guys don't even know we're new management.Nobody told them the park's getting sold.
And that makes me pretty upset that people don't communicate and just being bad landlords and treating people really just like numbers instead of like humans.So that upsets me pretty badly sometimes.
On that topic, mobile home parks have been in the news.60 Minutes did a story on them where you have a captive audience.You can raise rents to whatever the market is or beyond.People don't want to move where they've been living for a number of years.
How do you handle that fine line?
That's a very good question.So what we do, we never go up in year one, more than $75.It doesn't matter if you're 200 on the market, we never go up more than 75, even year two, we never go higher than 75 per year.
We don't want to shake the system basically, that we have somebody that's just becomes delinquent and we just say, okay, well, They couldn't pay rent and you got to go and replace somebody else that can afford it.
We try to keep the same tenant base in place.So everything we underwrite, you have several metrics in place that we want to fulfill to make sure the deal makes us money, the investors money.
And also we don't go in there and just cause a ton of delinquency, have occupancy drop by really raising rents by $200.Because we took over five parks this year, all of them been under $150, $250 on the market.
And we don't raise more than $75 at a time per year.So even if you have to spread it out over several years to 75 to catch up to the market, that's how we do in this.
So that shrinks really the deals that you can buy, obviously, but we also work with banks are very relationship driven that they don't want to be in the news either.So they don't want us to be in the news.
And they say this operator with this bank, they're coming in and taking over as a full of a housing mobile home park asset class and doubling rents or whatever it is, and you know, month one, so we don't want to be
out there and for the right reasons, right?Because everybody's like humans.
Yeah.A question for both of you, cause you're both in mobile home parks.Can you vary the rent from person to person?So if Jimmy over here says, look, I can pay 500 bucks a month.If you raise it anymore, I'm out.I got to find a new place to live.
Can you just be like, all right, Jimmy, don't tell anybody you're good, man.You're good at 500 or is it uniform across the board?
Well, you have to be careful.You don't want to give anybody special treatment and create double standards.We always apply the same rule to everybody.I think you have to be careful that it's not coming over discriminating, obviously.
So people have different backgrounds and different circumstances in life.Of course, somebody can Afford it, somebody can't.But you have to be always careful not to create double standards.I think that would be unfair to the people as well.
And I think if we apply the rule that we do with the $75 or less in year one and two, I think we're already helping a lot of people out with that, really crushing someone's financials right out of the gate.
Yeah, just to add on a little bit, you might have people at different rents when you acquire, and you might be raising them at different amounts then as you move on for the first couple of years.
But you can't have market rent different for different people, because everybody talks.The other place that you can sort of switch the rents is when you're doing a park-owned home conversion, because they can tell you what they can pay per month.
So you can have somebody paying $900 and another paying $600.
Got it.Thank you.Absolutely.
Matthias, tell us about a community.So you've taken over several in the past year.Which one is giving you the hardest time?
That would be the one we just purchased and closed on in July.Right now it's going great, but the first month was definitely a roller coaster ride for sure.So it took a long time to close on it for various reasons.
The seller was selling his entire portfolio and we bought part of that portfolio here in my backyard here in Greenville, South Carolina, which is a very strong market.
And in the last couple of months, I don't think there was a lot of motivation to keep the asset running efficiently, I would say.And taken over, it was really hard to get people on the same page with everybody.
there had been communication completely breaking down with the previous property manager before we took over entirely.So people didn't get any calls returned, maintenance requests were not done properly, or not at all, actually.
And once we took over, we received almost 40 maintenance requests in week one from all the parkland homes we got.So it was definitely a nightmare in the first week or two, for sure.Right now, I think after two full months, we've been operating this.
I think we have about 77, 78 mains requests in total.So definitely slow down.And we resolve about 54 of them already with our team.But the first week or two, we're like drinking out of fire hydrants.
So we try to get a hold of everybody, get them in the system, trying to get them paid.And once they got the system, they were trying to reach out to us with that issue and that issue.
We had people that had no water heaters and their stove was not working anymore.The fridges were out of order. and they had major water leaks.I mean, there was literally a waterfall underneath somebody's trailer and nobody went out to fix it.
And of course, that water bill was like $700 a month.And there were all kinds of crazy horror stories with that one.
And then the same thing the first week when we closed on this property, it was on a Friday, and I was going out on that Saturday just to hand out welcome packets in English and in Spanish because we have Hispanic tenants as well.
And then in that first part, I got bit by a dog because I didn't see him coming.He came out of the stair under the stairs and he bit me in the leg.So that was like, that's a great start right now.So work for mobile home parks, buddy.
So that was definitely a bumpy start week one.
One thing there, so people may not think it matters when you close in the month.With mobile home parks, it actually really does because you have to get each tenant onboarded to your rent payment system.
So closing in the very middle of the month is actually super helpful.Closing, we've learned this the hard way, at the end of the month is actually quite a pain to get everybody paying and in your system.
So Mateus, you bought this park or portfolio of parks.You have 40 maintenance calls from all these park-owned homes. And you have a hundred something lot.So this is a big part of your portfolio.What do you do?Who answers those?
Well, we have a virtual assistant.That's a PMA, property management assistant.He takes the phone calls.What we failed in to prepare him of the flood of calls he's going to get.So the system was not in place.So that's where we completely failed.
Even though I'm always beating a drum of systems and structures, I was not prepared with the team to taking that on immediately. Right now, the lessons learned was we knew exactly what we were lacking, and now we're doing fantastic.
We're really great in communicating with them right now.Of course, we got caught up on the maintenance requests, but now the communication is fantastic.Everybody really has all hands on deck, picking up the phone.We're using a shared phone system.
We see who is responding to who with texts or phone calls, et cetera.So that works really well.But that was probably the biggest challenge we had at the beginning, especially since we closed also on the 27th or 28th of the month.
That was right before the first It was like the worst day ever you could close on it.So that didn't help either.So everybody, then we had a lot of people that were paying the old landlord, that paid money order, and they did a lot of cash payments.
And then I'm still hunting down money orders from like August, September right now at the moment.Literally this morning, I sent out an email to the old owner, like, can you give me this money order from this guy, from this lot?
And he sent it to you, and he gave me the receipts, and they're ghosting us right now.So there's still some aftermath, but I think we're doing much better right now.
Hey, we've made that dumb mistake too.It can be quite annoying closing around the first of the month.You said you use a virtual property manager.Can you tell us about that system?
Absolutely.So with our PMA, the property management system, we have a daily structure in place.It shows in the first hour, you're just going to go back and look how many calls we missed.They were non-urgent from last night and from yesterday.
and then also go into the emails and respond to emails, etc.Then he goes into the second time slot, he's going into the maintenance request and see if anything came through.
There might be some updates, new pictures, updates from our handyman or other contractors.So that's all in that system.And he communicates them via phone calls or text messages, etc.in our property management system.
And that goes through the entire day.But we also, he's chasing down rent collection, delinquencies and stuff like that.Make phone calls, sending out texts to people, making announcements to people.
And, you know, we have issues with people who lose dogs and stuff like that.Again, I got bit by a dog, but one of the loose ones, which was probably more my fault anyway, but it's a different story.
But he has a very structured approach, which we didn't have in week one.And then he was just like, okay, where do I even start? But now as we are catching up, I think that structure helps the PMA a lot to understand.
I'm not jumping from one thing to another.I'm working on this for an hour, stay focused, and then really heads down, all hands on deck, get that done, moving on to the next slot.And then this is very scalable.
We can hire more PMAs and do the same thing.And we just give them allotment of, okay, you're doing this same thing, but for those two parks, and you do this same thing for these five parks.And it's very scalable.
We just rinse and repeat on that front.
Very interesting setup there.Does your property manager then speak Spanish?Are they bilingual?
All right.So some of these things, you guys are kind of like speaking German to me.I'm going to ask some layman questions, and this is for both of you.
When you do due diligence on a park, are you allowed to go inside the homes of the ones that are not park owned to take a look around?
You can always ask for it, but it's probably not in your business because you don't own it really.
And I think there's no, I mean, at some point this could be your home one day if somebody is becoming delinquent, but it's not that never the business plan or the intention to do so.So you don't have to go in and you shouldn't go in.
We really just look at the park on homes.
It's not customary.Park owned homes.Do you go inside those?
I know we've made the mistake to not do it and it's a nightmare.You have to do that.
Okay.And now when you arrive on day one and you've got a flood underneath one of these individual owned homes and you have all these other maintenance items, there's no way to prepare for that, right?
Because you can have a hundred homes where the stove and hot water heaters never worked.And all of a sudden you inherit that.So that's a hell of a risk.
You have to go through the park-owned ones or the ones where it matters if the stove's working or not.And you should go through those and ask the residents if there are any issues, right?
You should be asking them when you're going through them, just like you would in an apartment complex.
Okay.I was confused.So yeah, the park-owned homes are the ones that you guys are responsible for.Correct.And those are the ones that you can go through.Okay.That's right.
And we did due diligence, like I mentioned earlier on that portfolio.It took a long time to close on that deal because there were several delays on the seller side.Due diligence was over months before we really closed on it.
And then at that point, there were no stove issues.We talked to almost all the tenants that were on site.And we asked the same question, do you have any roof leaks, any other leaks, plumbing leaks, how are your appliance working, et cetera.
And most of them were like, Oh, everything is great.Or we have like here's a soft spot on the floor and stuff like that.Nothing crazy. We had some vacant ones we walked through that really were horrific.
And I said, well, we budget for that accordingly and get them up to a safe, habitable level so we can sell them off later as a rent-to-own special, basically, or a handyman special.
But if there's months after diligence is over until you close, there's a lot of things that can happen and a lot of neglect that can happen.
And those 30 maintenance requests that came through, they're all compounded from the last couple of months from between the diligence ended up to the point we closed.So that was just a compounding effect.And I think there was just a lot of
shifting our focus on the previous owner to other things, I would say.
Yeah.I know your guys's playbook says, do not own the homes.So it seems like an almost insurmountable task at times.You have somebody living in these conditions that are not great.
You go in there and make the repairs and then you say, Hey, by the way, how about you pay a little bit more and own this?Isn't it?They can barely afford what they have now.
A less Osh.It's a little less and own it.
So if they're paying $700 a month, you can say, hey, guess what?I can charge you $350 a month for lot rent, and then you can pay me $300 a month to own your home.So you are getting a break every month.
The best benefit of that to the owner is you're setting to market lot rents day one, which would take you years otherwise.Now, you can't just do that all the time because some of these homes, their market rents are too low.
That's where you really get into a problem, but it's great if they're already paying 700 or 800 a month.
This is so counterintuitive.I did not know that.So Amanda, in our world, well, in one of your worlds, if you had a retail property and a tenant was paying $2,000 a month, let's just say single tenant building.
Are you ever going to say, how about this?You can own this building and only pay $1,800 a month, right?That's right.
It would work the same way.
Yeah.Okay.So I'm learning a lot here.So you would reduce their rent.So it's a no brainer from their perspective.
That's the ideal.Now, you will buy some communities where rents are $400 or $500 a month, and it's much harder.But then you really can't pay for those homes.So it's a bit of a trade-off.
You're doing a little bit of a numbers ninja game when you're underwriting.
And really, the goal is offload all future maintenance issues, right?
And stabilize.You sell it for a lower cap rate.It stabilizes.The expense ratio is more predictable.
Exactly.Yeah, Amanda nailed it.We try not to go any dollar over what they're already paying or even go lower.So that's the same thing that we are doing to make it affordable for sure.
I think the tenant is the winner here because they can buy a home and then also we defer in the maintenance expenses.And of course that boosts the NOI, which then brings up your value.So everybody wins.
I'm shocked.I always thought that they'd have to pay more, but that is wild.
Welcome to Mobile Home Pox.
Yeah, I don't want to compete with you guys.
This was great.Matthias, thank you for bringing your perspective.It's not often we have a COO mindset.Usually it's more of the people who are operators.So it was really insightful to have that top down mindset today.
Can you tell the Best Ever listeners how they can get a hold of you?
Yeah, absolutely.So I'm very active on Facebook, Matthias Grunewald, which is M-A-T-T-H-I-A-S.And then Grunewald is G-R-U-E-N-W-A-R-D.I'm also active on LinkedIn.And if you want to go on our website from my partners and I, it's W-C-I-N-V group.com.
Then you can go on there and actually fill out like a request form to get in contact with us.It also goes for investors if you'd like to invest in mobile home parks in the future.
Well, thank you, Matias, for joining us.And best ever listeners, thank you for listening in.Hopefully you got a lot of value from Matias today.
And if you did, please leave us a five star review and share this episode with somebody who could find it useful.As always, make sure you follow, subscribe, and have a best ever day.
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