From 40 Empty Lots to Full Occupancy | Mobile Home Community Investing Deep Dive

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Show Summary

In this conversation, Karen Petersen shares her journey in the real estate industry, focusing on her experiences with mobile home communities. She discusses the challenges and lessons learned from her investments, the importance of due diligence, and the impact of home ownership on families. Karen also explores current opportunities in the market and her future plans for expansion, emphasizing the significance of community and creative financing in her business strategy.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Crawford County Estates’ Website
    • Karen Petersen on Facebook
    • Karen Petersen’s Email Address: [email protected]
    • Karen Petersen’s Phone Number: (203) 733-8380

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Karen Petersen (00:00)
  And so when you’re looking at that, like in totality, there’s a couple of different value app plays and usually communities are a little bit of all of that mixed in, but we, like I said, this one community was really heavy with infill. We have like 40 lots to infill.

  And so we have the last house coming in today. It should be on site about five p.m. Eastern time. And that is the last home going into that community for the foreseeable future, which is amazing. It took us about two years to, well, it’s taken us just over a year to get all the homes in. I will have nine left to get tenants in. Everything else is full at this point.

  Quentin Edmonds (02:07)
  Hello everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds, and today is going to be a fantastic show. I have someone here who’s going to tell us about mobile homes, going to tell about mobile home, mobile home community, investing in mobile homes, stabilizing ⁓ mobile homes and communities. And I’m really excited because I’m telling you she’s got the plan well put together.

  She know how to deliver and I just know you’re gonna get a ton of nuggets out of this conversation. So I am so happy to introduce you all to Ms. Petersen. Ms. Karen, how you doing today, ma’am?

  Karen Petersen (02:42)
  Good things. Thank you for having me on. a great opportunity.

  Quentin Edmonds (02:45)
  Absolutely. No, thank you so much for being here. And listen, I want to dive right in. I want you to tell the people what your main focus is these days. Now, if you want to give us a little bit of an origin story of kind of how you got started, we love origin stories. So we’d love to know that. And then also what part of the world you’re in. So your main focus, your origin story and where you are. Ms. Karen, you have the floor, man.

  Karen Petersen (03:07)
  Great. So I’m Karen Petersen. I live in north central Florida in the Ocala, Gainesville area. My mobile home park communities are in Georgia currently, although would definitely be open to anything in the southeast, possibly expanding towards the Midwest. A little bit about kind of my background and how I got here. ⁓ Started with reading Rich Dad Poor Dad.

  years and years ago and I’m not going to share my age at this point, but it’s probably close to 30 years ago that I read that. And so that’s been to getting involved like a lot of folks do, right? With some multifamily one to four units because they were easy to finance. You could get traditional lending, had a bunch of those, learned kind of the landlording side of it.

  did some single family flips, did some ground up spec home construction ⁓ pre crash in 08, got tangled up in the crash in 08. That wasn’t so much fun. ⁓

  came out okay, but like a lot of folks definitely took a financial hit from that too. And then started kind of dialing into bigger pockets. I don’t really know when I became familiar that they were out there, but probably got some random email or something that came in that said, hey, you might be interested in this. And started kind of following them a bit. And one of those was discussing mobile home communities. And it’s not an asset class I’d ever really considered at all. I was always thinking I would be multifamily and probably scale to 20 plus unit apartments.

  complexes at some point or renovating, know, or changes the use rate of existing schools or nursing homes or something like that into apartments. And so, like I said, never really gave a second thought to mobile home communities. Kind of had the same, you know, stigmas and assumptions that a lot of folks have about them.

  And then, you know, read that bigger pockets article and had a little bit of an epiphany and thought, you know, hey, I need to probably be more open minded about this and started actually doing some deep research into them, ⁓ everything I could find online, just Googling them, understanding how they operated. ⁓

  finding Facebook pages, I can’t say enough about building a network in that community. Everybody helps each other out. It’s not cutthroat at all. It’s a wonderful, wonderful community of mobile home community operators and owners. There’s not that many of us.

  ⁓ And so, you know, just jumping on a lot of those Facebook pages, I started to learn a lot too about the asset class and how it operates. ⁓ The nice thing for mobile home communities is there’s a lot of variety with how you can actually structure your business in there. ⁓ You can have a traditional rental model, right, with,

  Say we’re talking 50, 50 lot community, you could have 50 just traditional rentals like you would apartments or single family homes, right? And granted, that’s 50 roofs, that’s 50 hot water years, that’s 50 everythings. You can end up doing more of a land lease mindset, which is what I try to run my communities as, which is basically they pay rent for the dirt that their house sits on. They’re paying for infrastructure that you’re responsible for maintaining. So my water lines, my sewer lines, right? Where they come in off.

  City connections, those are my responsibility. Sectics, wells, things like that, depending how that community set up, the roads potentially. ⁓ And then the tenant owns their own home and they just pay the lot lease to you every month. Kind of similar almost to how condos are set up, right? Like you own the interior walls, but then the condos are used to own the exterior and all the common elements. It’s a little bit similar in that regard, economically it’s not quite the same. So I try to run mine where their tenant owned home

  and I’m not responsible for, you hey, my toilet’s running or my hot water heater just went out or any of those kind of day-to-day trials and tribulations that we all have as landlords. ⁓ So that’s kind of how I got into it. And then ⁓ we bought our first four communities, not all together. ⁓ Two ended up across the street from each other just by chance that broker was able to put those deals together ⁓ in the Macon, Georgia area.

  And then I found a wholesaler who brought me a deal for two more communities in the Albany, Georgia area. And so those were our first four.

  And we had them for a couple of years, stabilized them somewhat. They were smaller, well, the two in Macon were smaller communities. They were like 12 and 13 lots each. So between them, we had 25 lots. Mobile home communities are considered like small size if they’re under 50 lots. And so they were good for kind of cutting our teeth on though and learning. And from there, we made some mistakes, but we also learned a lot.

  and we were able to sell those to one investor who bought all four from us and ⁓

  even some seller financing on it. The other nice thing with mobile home communities is there’s a lot of creative financing that goes on with some of these deals, especially if you’re buying non-stabilized assets with a lot of infill opportunity, and we’ll get into that in a minute. So we were able to exit those properties and kind of stepped back for a minute, took a breather, did some stuff with some single-family homes in Florida, a little bit closer to home, and some flips and things like that, and then said, you know what, I had my eye on the

  community for a few months and it was just kind of sitting and I finally said you know what I’m going to call the owner of this who was also a broker and spoke to him and we were on vacation in Vermont and suddenly putting a deal together to buy almost a 1.5 million dollar 83 lot community which I don’t think at this point you could buy 83 lots for anywhere near 1.5 million at the moment. ⁓ About half of it had homes and about half of it did not and so there’s the infill opportunity.

  And infill is very costly. It’s very nuanced and it’s ⁓ unique and it takes a lot of time.

  Not a lot of time, but you don’t want to bring 40 homes in at the same time because you have debt service to pay on those unless you’re incredibly well capitalized. And I don’t know anybody who is or want to pull that much for cash reserves outright and just sink it in a whole bunch of homes. So you stagger your homes coming in and you infill gradually. ⁓ For us to do this community effectively, we were looking a little bit at bringing used homes in. These homes are great, but you still have the transport costs. You still have the set up costs. You don’t get a warranty with them. And invariably you have just like you would have on a single family flip.

  You’ve got walls, floors, cabinets, odds and ends, lot of freshening to do. By the time you pay the contractors and the materials for all that, you’re pretty close to the price point of a new home. So we looked into getting our dealer’s license.

  Quentin Edmonds (10:27)
  Mm.

  Karen Petersen (11:06)
  And so we have our Georgia mobile home dealers license. The we is my husband. He’s my husband and also my business partner. ⁓ And so we have our Georgia dealers license and we’re able to then go to a variety of lenders and say, hey, we would like to infill. We’re looking at new homes. Can you open up a floor line for us to do so? And so we have flooring lines with a couple of different lenders that we can bring homes in with. And then.

  If they don’t sell, the ideal is always to have the end resident, right, obtain their own financing, or if they’re in a position to pay cash, just pay cash and buy the home from us. That’s not reality. ⁓ We’re this one community is in South Georgia. South Georgia can have affordability constraints. And so a lot of folks are not able to qualify for chattel loans. ⁓ Mobile homes are considered a vehicle. So they get chattel loan financing, they don’t qualify for traditional

  FHA or anything like that. Those interest rates are also at a higher interest rate and sometimes a down payment on them. They want 5 % minimum usually closer to 10 % sometimes depending on that overall individual’s risk for that lender. And so that actually hurts affordability a bit because they may actually be needing to come to the table with more than if they bought a brick and mortar and could go FHA, but they don’t have the credit score to go FHA, right? And so that’s kind of where that’s just a really high

  level overview of mobile homes and the lending and some of the difficulties with getting folks converted into actual ownership. So we do a lot of lease options. We’ll convert them into a lease. They have an option on that that they’re able to exercise at any point in time. I don’t charge prepayment penalties or anything. Like if you turn around tomorrow and say, I want to buy my house, I’m like, sure, where do I sign? Right? I that. I love that for them.

  is a stable asset, they’re actually able to invest in an asset. ⁓ For a lot of them, it’s first time home ownership opportunities for them or even going back several generations. It’s just been a renter’s mindset. And so getting folks out of that into an opportunity where they actually have an asset that they can do what they wish with later on in life, whether that be renting it out, whether that be selling it and pulling some money out of it. New mobile homes do not depreciate like the stereotypical assumption is.

  They’re very well made. A lot of them have some incredible bells and whistles built in and they’re really, really nice and they will hold their value if you maintain them. And so there’s been a lot of, you know, just opportunity there with converting those folks into renters slash hopefully in the next year or two they will then qualify for their financing. We found some really good lenders we can work with.

  that can part some of those over two loans. Worst case scenario, we have a couple lenders that will allow us to essentially backstop that loan. So we have recourse on that debt that we’re responsible for to the lender in the event that tenant defaults runs into difficulties. And so that allows a higher conversion of tenants over to owners with their own chattel financing. It’s clear some of that debt off of our balance sheet. And there’s a little bit of risk for us that we assume, but it’s okay.

  with us, just like I said, to have putting in 40 homes at an average ⁓ invoice price of

  you know, about 50,000 ish. ⁓ And then the setup costs like all in is around 70, 75,000 per home. That’s with no markups. And we don’t work our homes up when we’re looking to sell them to our residents and rather get the lot rent and get that version in there. ⁓ And so it’s you know, it’s a lot of debt on our end and a lot of setup costs with some out of pockets to make all that work. So that’s one of the biggest challenges with mobile home communities as an investor is if you’re looking at value add, which that’s

  kind of my specialty. If that value add is heavy in infill, not in management like operations, Like deferred maintenance or, you know, paving roads or something where it’s kind of one and done, or, you know, just rents that haven’t been touched in 10, 15 years. And they’re really, really like below market at this point. And you can’t turn around and just say to someone, Hey, starting, you know, in two months, your rent just went up $200 a month, right? Like that’s, that’s really unfair.

  And so you incrementally increase those and that can take three, four years to build your rents to market.

  And so when you’re looking at that, like in totality, there’s a couple of different value app plays and usually communities are a little bit of all of that mixed in, but we, like I said, this one community was really heavy with infill. We have like 40 lots to infill.

  And so we have the last house coming in today. It should be on site about five p.m. Eastern time. And that is the last home going into that community for the foreseeable future, which is amazing. It took us about two years to, well, it’s taken us just over a year to get all the homes in. I will have nine left to get tenants in. Everything else is full at this point.

  That was a lot.

  Quentin Edmonds (15:58)
  Thank

  I love it, but it was a wealth of information and knowledge. And I have, I have talked to people who had new mobile home investing and rentals, but you just gave me a really, really good overview in some things that you said that I have never really heard put in a language before. So no, I really appreciate you taking a story, walking a story. Now I want to ask you a little bit something about yourself, right? Because I had this saying where I say destiny has no wasted moments.

  Right? Meaning no matter what we go through in life, each destination has a way of teaching us something about ourselves that make us who we are today if we hold on to it. Right? And so as you was building, you know, you had, you know, six mobile homes, soul for the infield, all these different things are happening. What has these moments taught you about you? What has it revealed to you about yourself? You know, some people it revealed, man, I’m a little bit more disciplined than I thought I was.

  Well, I’m a little bit more consistency, you know, consistent than what I was. So what superpower has destiny brought out of you and made you aware of yourself?

  Karen Petersen (17:44)
  I am very much an operations person. so like I’m a planner, I’m very good at like reverse engineering and just kind of like by this date, this is the target variety of reasons, right? Sometimes there’s a refi that’s a hard stop that’s gonna force my hand to do something. Because these are commercial loans and so they’re fixed for about five years, then you got a refi out of them. And so that timeline is definitely a motivator.

  But a lot of it is also just, know, I’m operationally strong. I’m very good with like the 30,000 foot view and just stepping back and being like, okay, here’s Z. How do we get to Z and where does A start and what’s the timeline to put all that together? And that’s just children my personality. Like I’ve just I’ve always had I always been entrepreneurial, pretty organized. One thing I learned about myself in all of this is not everybody else shares that same.

  mindset or has that same sort of gift. so I sometimes play more patient than I want to be. I don’t know what my parents knew, but I am a redhead named Karen. And so we’ll just let all the names ride with that. yeah, I can, I can be tough. I held a really, really high bar for myself. And I, I project that on others. And sometimes I need to, you know, step back and realize that maybe I’m being a little harsh or a little unfair.

  again, my business partner is my husband. So I owe him a few apologies in there, but he’s equally driven and equally operationally strong. He’s actually a commercial architect by trade. so together, we’re really, really well because we can tackle the infill, we know construction inside out, we can tackle the infrastructure, things that some folks would really get, you

  taking it back by our fine really intimidating. There’s still a lot, don’t get me wrong, but ⁓ they’re manageable for us. And again, you know, it’s the proverbial like how would you eat an elephant? Well, it’s one bite at a time. And you know, there’s days where the phone goes at like seven o’clock in the morning, you’re just like, ⁓ no, you know, like got to deal with this. And it’s just divide, conquer, break it into small pieces and just go through the day and move the needle forward. And you know.

  Like I said, with the one community, there’s been a lot of inching and moving that needle forward over the past three years since you purchased it. And like we are in the home stretch and that’s very rewarding for us. It’s also nice that we can kind of see the light at the end of the tunnel. ⁓

  take a pause, take a bit of a breather with that. But it’s also really rewarding to know we just ⁓ got 40 families into homes that they can afford, that are brand new construction, that are great for them to raise their families in. And the thank yous you get for that, like you can’t put a value on that. It’s absolutely priceless.

  Quentin Edmonds (20:09)
  Yeah, I love it. And you know, I’m coming up a little bit on time, but it’s like two questions I want to ask and trying to see if can smash them into one. Because I love how you just said what made you feel really good is that you got 40 new people, 40 new families to have a home. And so I’m going go here because I would love to know your perspective on relationship building right within business because you’re helping people. I believe that

  Any at the foundation of any sustainable people any sustainable business is servitude really serving people And so I want to get your perspective on relationship building within business and you got a unique one because your business partner is your husband But then also it makes you it lights you up that you were able to do this for 40 families Tell me a little bit about relationship building from your perspective

  Karen Petersen (20:57)
  I think it’s integral. again, like, because I can be patient, sometimes can be, you know, sharp and short with communication and long-term that doesn’t really serve you well. So relationally for us on the business side, finding lenders that can be partners with us is huge. mean, like without our lenders, we wouldn’t have what we have. And I’m sure all your listeners would agree with that too. mean, without the lending piece, like,

  great, it’s an idea, there’s no way to execute on that and actually deliver. So that’s a huge piece for us. Shout out to Vanderbilt and to Triad who are kind of our two main and 21sts in there also. And Park Lane Finance, so shout out to all of them. They’re phenomenal for those that are in the mobile home community space or looking to get into it. ⁓ And then, know, just.

  forging relationships with local contractors like I was able to and forging relationships with other mobile home community operators should probably actually start there. When we purchased the community ⁓ in South Georgia.

  The operators of that had multiple communities. They were actually scaling and that was why they were selling this one so they could reinvest those proceeds into a larger community. And they still have some communities near us and they had all the contacts with the contractors. And so we’ve actually become friends with them. We met them for the first time in person in Louisville, Kentucky the other week at MHIs, that was awesome. And just being able to say, hey, who do you use for a set crew? Who do you use for this? Who do you use for that? Was absolutely invaluable.

  We then reached out to that setup crew and I mean they’ve set you know 32 homes for us in a year which is you know huge opportunity for them but we wouldn’t be able to have done what we did without them and I’m not on site. I live two hours away from that community. I live four hours away from my other community. I am not on site routinely like I may go up to them every three months or so.

  And so my onsite manager is a huge relationship win for us. ⁓ They live in the communities, they see everything day to day, but also having those relationships with contractors that you can trust or your onsite contractor get along really well. So, you know, like, I’ve got a house coming in. This is in this all need to happen. And it just seamlessly happens. Like they’re figuring out the setbacks off the roads or getting them right. They’re, you know, working together to get the plumbing lines connected underneath, like working with the city.

  times to get tie-ins into sewers and things like that. And it has been absolutely seamless. mean, there’s a little bit of like a, you know, the first time we did it, kind of like, okay, what are we doing with this? But after the first couple of houses, like it’s just plug and play. It’s like, okay, I a house coming in. Let me contact my contractors. This, this and this need to happen. They’re like, all right, I’ll be out there in a week, two weeks. We’ve got it down where we can get a house coming in and have it completely set up and ready for occupancy within two weeks. And that is all due to our contractors. It’s not due to me. All I do is send texts.

  messages and pay bills. It is due to the contractors that have a good business relationship with us, that if I’ve got someone that needs to move in quickly, they will jump. They will be out there for me when I need them to be. And I mean, I can’t say enough good things about them and how much I respect and appreciate everything they have done for us to make us successful, to help them be successful, and to get these homes occupied with new families to give folks a great start in life. mean, it’s really been very, very, like I said before, it’s really been very rewarding.

  But the relationship building, like, it’s key to just get that team that’s a really strong team in place and then just stay out of their way and let them do what they need to do.

  Quentin Edmonds (24:24)
  I love it. love it. Miss Karen, if you had to grab one or two words out the sky to describe what you and your husband do different than anyone else, what would those one or two words be?

  Karen Petersen (24:35)
  you

  I was probably like one or two phrases because I can’t think of the words I want right now when I’m on this. But basically, it’s seeing opportunity. Like it’s not taking no as an answer and it’s seeing opportunity where others may potentially just be like, that’s too difficult. ⁓ There was a Ted talk that came out a while ago and it was basically like, you know, like along the lines of like owning your heart. And so it’s, know,

  Good things don’t come easy, right? I mean, if they did, everyone would be doing it or those are the low-hanging fruit that everybody’s cherry picked over. knowing how to, know, pretty much solve problems. Like if you asked me what my title was, I would probably tell you I’m a problem solver. I’m seeing the opportunity and it’s working through it. It’s engineering it to find the solutions. It’s building realistic timelines and just, you know, getting it done at the end of the day.

  And not being intimidated by the heart. It’s, know, to me, every problem has a solution. It’s just, sometimes it’s how much money is it going to take? And you decide that’s not the solution or that’s not the problem you want to have and you pass them a deal, right? I’m not saying by everything that comes in front of you, but it’s figuring out what that solution can be. And then, you know, figuring out if it’s realistic to solve and bringing in team players when you need them.

  Quentin Edmonds (25:43)
  I love it. Miss Karen, this is so great. Listen, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, how can they get in contact with you?

  Karen Petersen (25:55)
  Well, I’m an open back on the mobile home community is great. Most of us all help each other out. I have a lot of folks that have kind of unofficially mentored me in this journey or like I said, give me contact or suggestions, things like that. And so I believe in paying it forward. ⁓ So our email address is firm like the plant [email protected]

  or you can always call my cell or text. I’m a texter, full disclosure. hate this phone, but text is great. 203-733-8280.

  Quentin Edmonds (26:27)
  I absolutely love it. Well, Miss Karen, allow me to say three things to you, right? First, thank you for your time because time is our most precious commodity. You could have been anywhere in the world. You could see it with us. So thank you for your time. Two, thank you for your story. Thank you for the gift of your transparency and your honesty. I believe that one of the most powerful things that we have is our story, is our narrative. And I believe once we tell our narrative, people can take bits and pieces from that and can really help them sometimes.

  skip mistakes, sometimes propel them into places that they really didn’t know that they could be just based on taking tidbit from other people. So thank you for your story. And lastly, thank you for your perspective, for your mindset and bringing that mindset to this platform. I greatly appreciate you being here today, man.

  Karen Petersen (27:13)
  Thank you. I had a great time and thank you to you and your team for offering to host me. great.

  Quentin Edmonds (27:18)
  Absolutely, Well, listen, y’all heard Ms. you got the value. You can’t tell me you did not get the value. You probably learned some stuff you didn’t know. So definitely check the show notes, check her out, connect with her, but definitely make sure you are subscribed here because I promise you we’re going to continue to bring up amazing people just like Ms. Karen. So thank you again, ma’am. And to everyone else, y’all have a fantastic day.