From Automotive Executive to a $55M Mobile Home Park Portfolio

Matthias Gruenwald (00:00)

One case sample, case study I have, the first syndication we ever did, my partners and I, we bought a park, it was heavily POH ratio, so it’s like out of a hundred units was fifty-nine was park owned, the rest was tenant owned. And the expense ratio was at 78%.

because the previous owner just completely, just had a revolving door on all these park owned homes and every time somebody went out he he put two or three thousand dollars in or more and then, had a revolving door and constantly in and out with tenants turnover. What we did, we just did what I just described with doing rent to owns and sell the homes to people and we went from seventy seven percent, seventy eight percent almost expense ratio down to thirty nine.

Freddie Steen (02:13)

Hey everyone. Welcome to the Investor Fuel Podcast brought to you by Real Estate Pros. I’m your host, Freddie. And today I’m joined by someone I was looking forward to chatting with. Matthias Gruenwald who, along with his partners at WCG Investments, are gobbling up a great asset class in mobile parks. Matthias, I’m glad to have you here.

And I know that you’re making serious moves in an asset class that our listeners don’t know a lot about. And they’re really going to take something away from how you’re approaching this with a team that is spanning not just real estate, but also has engineering backgrounds and tier one, tier two supplier logistic experience as well. So for you, real estate is more than just a passing fancy.

For you, you’re in it for the long haul. That’s why we’re glad to speak with you today. So, Matthias, I’m glad to have you here. And I think our listeners are really going to take something away from how you’re approaching mobile home parks and how you have great, great, great aspirations and a path to scale this across the country. But let’s dive in. First off, for people who may not be familiar with your world, give us the short version.

What’s your main focus these days and what markets are you operating in?

Matthias Gruenwald (03:34)

Absolutely. Thanks, Freddie. Great intro and great to be here. so what what we are doing is we buy manufacturing housing communities, mobile home parks, trailer parks. they have different names, but it’s the same the same thing with different names. and we buy them in the southeast, mainly in the Carolinas, Georgia, Alabama. We own a park in Mississippi, we own even a park in Oklahoma City as well. all great performing parks. and we expanding it from there, we’re building our clusters.

in our different regions and to kind of scale with our economi economy of scale. and also trying to dip into Florida where I’m based out of I’ll base out of Tampa, Florida. And what we’re mainly mainly doing is we get you raise investor capital to fund these deals along with bank financing as well and then create tax benefits for our investors and also cash flow. and then as we’re driving the value up of these properties, we are creating a lot of appreciation at the same time. So

It’s a it’s a combination of tax benefits for our investors, cash flow and also an appreciation all at the same time.

Freddie Steen (04:33)

Matthias, we had time to spend time before the podcast. It’s almost my favorite moment with all of my guests. And what we talked about was the corporate to real estate investor framework that you followed, and many of our real estate pros that are listening are clamoring to figure out the manufacturing blueprint. Matthias, you spent nearly two decades running complex automotive manufacturing operations. We’re talking tier one, tier two suppliers. When you transitioned full time.

And as you say cut the golden handcuffs from your W-2 to mobile home parks, what was the exact manufacturing framework you deployed to optimize fragmented, messy properties into assembly line assets?

Matthias Gruenwald (05:17)

I love that. That’s a good transition. It’s basically the same thing. I mean if I run a supply chain at a global automotive company, I’m running a business. And if I’m buying a mobile home park, I’m buying a business as well. both

businesses have a have a P and L, they have a balance sheet, they have income, they have expenses, they have a net operating income, they have, tax liabilities, etcetera. So you kinda run it the same way as you run an automotive company. And in if you run an automotive company with hundreds of people and very complex supply chains, actually running a mobile home park is almost boring compared to this because there’s not that much going on compared to an automotive company.

but it gives you like the tools and the skill set to be very successful of that and identify the issues and see where the problems are. And we’re very KPI driven. We drive KPIs daily. So we have a a vertically integrated property management company that my partner and I founded and they run all of our properties in our portfolio and we get from our back office twice a day a pulse of every property. Like first thing in the morning, nine o’clock, and at the end of the day we get KPIs or where we are in collections, delinquencies and

Any other issues we might encounter during operations and that’s the same thing we did in automotive. when you ever an automotive facility like even at the OEM level or you go to Tier 1, Tier Two, the suppliers for OEMs, they usually have like this, like in this mission center dashboard thing where you I know when I was dealing with like Daimler, for example, Daimler trucks and you walked in their facility, they have this like this mission room with all the KPIs on T. And it’s the same thing that GM does, Ford does, etc.

And then we deploying the same thing. Like we want to have full visibility on every single park and what’s performing, what is not performing. And where are we compared to our pro forma? When we say to our investors, hey, we’re gonna have this cash flow coming in, that means we have to have this NOI, and then we have this debt service, which is gonna be, basically permanent, and then we have this net income. And from that net income, we will pay investors’ preferred returns. So we know exactly what we have to solve for.

as we are operating the property. And if you fall below the threshold to make full investor distributions, we we look at where’s the problem, where’s the disease? Is it income? Is it maybe maybe we’re so too slow on leasing, maybe expense are too high. We can see exactly where the problem is. If it’s an income issue, expense issue. and then basically go from there and reverse engineer it and attack the problem at the at the root cause.

Freddie Steen (07:35)

Interesting. Matthias, let’s get into the park-owned home debate. The general rule of thumb in mobile home park investing is to avoid park-owned homes like the plague. Only look for tenant-owned homes. You manage a portfolio of over eleven hundred units. I want to say it again, folks. Matthias and his team manage a portfolio of over eleven hundred units.

What is your opposing view on managing park-owned homes or POHs? And how do you make them profitable without draining your maintenance teams?

Matthias Gruenwald (09:02)

Very good question. So we are not opposed to POH park owned homes, we call them POHs, compared to TOH. So what we’re seeing a lot, the holy grail in mobile park investing is all TOH parks. And we buy these two and that great. you buy them, it’s very quiet because everybody takes care of their home, they own their homes, they pay their lot rent, almost no delinquency. Great. The issue with that is everybody wants those. There’s more competition getting these parks. what you can do.

Is what we like to do often is we buy parks that have a lot of park owned homes or POHs and we convert them to tenant owned homes by either selling them cash, we selling them over long term rent to own lease with an option agreement. So we say, Hey, you want to buy this home? Keep making the same rent payment you’re making right now, but now we have a a lease with an option and then after five years, ten years, depending on how new the home is and what the value is, it’s yours and then it’s a tenant owned home.

In the meantime, you’re not gonna increase your rent, but you have to take care of your own repair maintenance. So immediately what happens then is the income stays flat, but the expenses get completely reduced by a significant amount. One case sample, case study I have, the first syndication we ever did, my partners and I, we bought a park, it was heavily POH ratio, so it’s like out of a hundred units was fifty-nine was park owned, the rest was tenant owned. And the expense ratio was at 78%.

because the previous owner just completely, just had a revolving door on all these park owned homes and every time somebody went out he he put two or three thousand dollars in or more and then, had a revolving door and constantly in and out with tenants turnover. What we did, we just did what I just described with doing rent to owns and sell the homes to people and we went from seventy seven percent, seventy eight percent almost expense ratio down to thirty nine. So we basically cut it in half in year one. I thank you. Congrats.

Because we sold like thirty-four homes out of fifty nine in year one. And people love that stuff. Think about the contractors, the general contractors out there, handyman, they just they get a cheap home. Some homes if they’re really distressed, we sell for like five grand. Or we have homes we sell for free and we just say, Hey, just pay us lot rent. basically. or give even like three months of free lot rent for three months, so they have time to repair their home to move in after a couple of months. You can make deals, you kinda play bank in a sense, and you have total flexibility.

And with this, you can you have that higher income because if you think about it, if you have a a mobile home park with tenant-owned homes only, they usually pay like the four or five hundred lot rent, depending on market. If you go to Florida, it might be seven, eight hundred, and the northwest I’m even higher, they over a thousand lot rents, depending on markets, obviously. but like in the Carolinas it’s like four fifty to five hundred to six hundred in strong markets. And then if you have a rental, like a park owned home, you might like eleven, twelve hundred, but now think about I have twice the income on the POH side.

But I’m reducing the expenses and you your income stays flat. you have a lot of cash flow coming through. So that unlocks a lot of cash flow we can bring to our investors for for cash flow. and also the NOI is exploding, which means the value goes up, so we can refinance pretty quickly, get all the investors’ capital back, and they all stay in the deal and keep getting cash flow. So that’s how we run our business. So we don’t shy away from them, they’re a great opportunity. They’re harder to manage for sure, because you’re gonna you’re gonna just go in and just kick every tenant out that’s in there. They have they have active leases.

some are paying tenants and they’re doing great, we’re not gonna touch those. They’re paying rents and they’re they’re in rentals, it works, we leave in there. but if you have natural turnover or organic turnover, we use the opportunity to sell the homes via rent to own contracts. So and that works really well for us.

Freddie Steen (12:33)

Matthias, WCG Investments does an incredible amount of work in the Southeast, particularly around the Carolinas and Upstate South Carolina. what localized regulatory shifts or demographic trends are you noticing in the Southeast right now that other long distance investors could be missing?

Matthias Gruenwald (12:54)

Yeah, that’s good. so the Upstate of South Carolina is very, very hot still. It’s a little bit softening, but it’s still a very hot market. There’s still a lot of people moving there, so population growth definitely gives you a lot of tailwind. and I follow the housing gets harder and harder as well. I lived in Greenville, South Carolina for the first fourteen years when I moved here from Germany.

And I just recently, last year, moved to Tampa, Florida, because with W-2 not being in the picture anymore and now running my own investment firm with my partners, I have total flexibility. So it chose the Tampa area. But before I was in Greenville because the BMW facility was there. It was my customer. and I knew the market in and out after fourteen years, right? So I know exactly what BMW is gonna build the next facility and the next plant and stuff like that. And I have know insight, we know exactly where we wanna position some of these investments, where we wanna buy parks, where we don’t want to buy parks.

So I think the Southeast is still growing a lot, but I would say to the audience, like just be cautious because trees don’t grow to the sky. At some point the music’s gonna slow down a little bit. and then things getting really, really expensive and maybe even more expensive than it should be in certain markets. and then you just have to be careful if the numbers don’t work because the rent growth’s not gonna be forever that high. Right? So

We like to buy parks, they’re under market rents. So we if if we just go to market rents and do nothing else, we make great returns, if that makes sense. so you think about mom and pop operated mobile home parks, for example. if you buy those, they’re usually under market rents because I don’t want to deal with rent increases, don’t want to do anything deal anything with turnover and then maybe hold these things for twenty, thirty years and then they wanna retire and then they sell these parks and then they’re never kept up with market rents, especially in hot markets like the Upstate or South Carolina. so we go in and go to market rents and immediately

Create millions of value, with especially on bigger portfolios. So I see those trends. And then also with the new housing bill that just got passed here recently, there was actually a nice shift on the manufactured housing requirements, which is very interesting. I don’t think many many don’t know that because I think you have to be in a mobile home park space like us to actually really notice it because it’s such a little paragraph, like one little change, but it makes a big difference. So manufactured.

Homes manufactured in in the facility, and they have changed the requirements about the the chassis how it’s been manufactured, the requirements have been dropped significantly. How that has to look like, which means the average manufacturing cost would drop five to ten thousand dollars per mobile home. So if a mobile home entry level 3×2 is like $45,000, $50,000 for Clayton Homes, it might go down to like mid 30s, low 40s. So for affordable housing, that’s why they did it. the homes are a lot cheaper.

Which means we can buy more homes for the same amount of capital and we can sell for cheaper. So that housing that part of the housing bill works really well for us. and then especially in like more expensive markets where like the average home is three fifty, four hundred thousand plus or more, you come in and you can bring a double wide mobile home in. They don’t have to be on those, on those steel chassis necessarily and you can sell them for like three hundred thousand dollars or two fifty, you’re serving a niche of people

that they cannot afford a four hundred thousand dollars, although maybe they don’t want to because they don’t want to have, like a two or three thousand dollar mortgage every month. So they can buy these homes for a lot cheaper and have a much lower payment. So we are fulfilling that niche in that market. And and it’s really market dependent, every market behaves a little bit differently, but especially in expensive markets, this housing bill that they’ve passed, this paragraph right there, will help our business tremendously and the tenants that can buy these homes.

Freddie Steen (16:19)

Love it. What caught my attention about you, Matthias, was the way you’ve been able to build a brain trust from engineering to your corporate. all three of you bring such a vast wealth of knowledge into this WCG Investment community that you’re building. And you’ve done it managing multiple markets throughout the Southeast while still keeping these margins strong on your 1100 units.

That’s not easy, especially in this climate. Matthias, what’s been the key to keeping that machine running smoothly?

Matthias Gruenwald (17:37)

The key is a great team and you’re not gonna build that overnight. So my main partners, Tim and Vinnie, we have a we have we always joke about it, or we not really joking, but we mean it really strongly, like we build something special. because we mesh together really well, like we have all different backgrounds. We come from different areas. I come from Germany, for example. if you look at us individually, we couldn’t be much more different from each other, but it works so well.

Because we have the same core values. We always go family first. We stepping in for each other. We everything goes into the business and nobody’s greedy. if we need to bring another partner in, we give up our equity for it just because we want to make the deal work and serve the investors. we have a very long like horizon we’re looking at. Like we have a really strong big mission. we wanna get to two hundred and fifty million of asset management in the next three years. We have fifty five million right now, so we wanna get to a quarter billion.

And then we’ll also get to the thank you. And our ultimate goal is to get to a billion with a B of asset under management in the next 10 years. So big goals and big goals require you to look far ahead in the future. So you cannot just like look at one deal and that deal is gonna, change your life or whatever, like because of the cash flow you’re getting. We do it for like build building the relationship with the investors, and we all have the investor and the tenant base focus in mind. So we don’t want to come in and just like increase rents like crazy.

and crush the tenant base. Even if we way below on the market, for example, we do it ethically. Which means if let’s say for easy numbers, lot rents are five hundred in the market and we buy it at like two fifty a lot rent because the previous owner never kept up with market rents, we don’t go straight to five hundred. Some operators do because yeah you’re unlocking your value really quickly. But what that does, the bad players out there in my opinion, they crush the tenant base. People cannot afford it because of the paycheck to paycheck and then

They evict them out their homes, they sell their homes, you stand up to their opportunity and made somebody homeless. We are in this business to get people in houses. So what we’re doing is we stair step in, we go fifty dollars more in year one, maybe sixty dollars in year two. We’re inching up over like a three to five year business plan to market rents. And I think that’s made us stand out too because this is a relationship game. We have seen deals coming across our desk because we’re doing that, because somebody

owned and operated a mobile home park for 20 years and they love their tenants. They don’t want anybody to come in and crush their friends or the people they have relationships with. They want to make sure it’s in good hands. So that’s really important to us. That we’re maintaining that that brand and that attitude that we always do like tenants and investors first and we come third. And we always have a guarantee to our investors. We won’t get paid until they get paid. So if they don’t get cash out, we get nothing. We work for free. So it’s kind of like this 30 minutes or less pizza delivery guarantee in a sense.

we’re always joking, like if we don’t if if the investors don’t get cash flow, we don’t get cash flow. They get paid first and we are we are next. and then every time we go into a community, we always have hundreds of thousands of dollars we invest into the parks, like paving roads, fixing infrastructure, we build a new bridge in one of the mobile home parks because the bridge was getting flooded during storms and stuff and people got trapped in the park, like we had major infrastructure issues we fixed. I think that’s the secret, like the team that has the same vision and actually going in and make these in the communities better

is the big one that makes us stand out because we’re not doing it just for the money. Of course that’s great. That’s why you did real estate. It’s it’s from my opinion or our opinion, the best asset class out there to to build wealth. But if you do that in combination with running a business with a long horizon with like a very like long forward thinking runway, I think that’s our secret, to be quite honest.

Freddie Steen (21:16)

Matthias one thing that is very clear to our audience, I’m sure, and to me, is that you’re you’re very great at embracing technology, KPIs, and automation to manage multiple communities. That’s work for you at WCG Investments. you’re a strong advocate for scaling via virtual assistants and AI technology.

Can you walk us through the tech stack WCG Investments uses? I mean, how are you using AI dynamically today to manage tenant communication or utility billing?

Matthias Gruenwald (21:49)

Fantastic question. So we use we use we have a back office. Let me just back up a little bit. We have a back office which is actually people like VAs. They are basically playing dispatch and managing our AI. so the AI is the one that does all the pre filtering of all maintenance requests, phone calls, emails, and we have a dashboard that our VAs are managing. We have one VA is co he’s completely responsible for collections and he’s crushing it.

then we have somebody for leasing only, they have somebody for maintenance only and they’re monitoring the entire AI of requests coming in. So what we doing is we have an AI phone number for all the residents that can call that phone number. The AI can speak any language you can think of. Like I speak German, I tested it, and I was, trying to be rude to it and speaking German, switching to English, and it’s the same it sounds fantastic. If you don’t know it’s AI, you don’t know it’s AI. It’s really good. It’s not cheap, but it’s working really well.

If it doesn’t know how to answer the question, because somebody might call like, Hey, I want to get a dog, what’s the process? It has all the leasing knowledge, the knowledge base in in our in in the AI system and it says, yeah, you have to do this, send us an email there and then you get an approval, whatever, or go to this website to do the pet screening, whatever. It does all that. So all the mundane work, like people call, what’s my balance? or Hey, can I pay rent next Friday? They whatever it is.

It gets pre-filtered by AI because if you had like right now we just close another three hundred units, we had fourteen hundred right now. The more you’re adding, the more volume and noise you’re getting. So we need something that pre filters place a firewall. So our humans can jump in and be the sniper rifle, not a shotgun. meaning the AI will escalate if it whatever it can’t answer. And as a dashboard we can see, if it’s a phone call, we’ll escalate the phone call to that leasing person, maintenance person, and so forth.

and then if it can answer it, great. And then you see a resolution, whatever. it does collections calls too. If somebody’s behind on the sixth, they will get a very friendly phone call reminder that they’re behind on the rent. It will follow up with an email on the eighth, and then on the tenth they will get another phone call, a little more firm, that they’re gonna be on the eviction list on the eleven. and then you’ll people respond on those phone calls, maybe they don’t, and they the AI can leave a voicemail as well. And

It will say when somebody picks up the phone and yeah, I’m know one behind, I’m gonna pay next Friday, we get a report on the collections day call and it says, John Smith, just making up a name, said he will pay this much on Friday. And then our collections agent, our actual VA, would then make sure we follow up on that person with a human and say, Hey, we know you wanna do a payment plan?

we can get this all set up in in paperwork to make and commit to it and so forth and be the sniper rifle and call these 10, 15, 20 people instead of calling a thousand people. Not all of them are behind obviously. But it’s just making sure that we don’t have to make phone calls like on such a high volume that you’re never gonna be able to keep up with the volume as we scale because we’re looking at when I build a system, I wanted the system to work at 5,000 units, not only at a 1400 or 10,000 units. So the AI

pre-screening everything is extremely important. And over all of that, we have an asset manager, which that person has to keep the eyes in front of them the entire time. And anything that needs escalating from the back office or the AI that they none of them can answer. The asset manager calls a shot. If they can answer it or there’s something severely happening, somebody got shot, somebody got killed, whatever on the property, and trust me, we had all of this, they could escalate to us, the owners, me and Tim usually.

And then we would deal with it with insurance, with police, whatever, if if needed. Usually the community managers can take off the police thing, for example, but depending on severity, it might escalate to us. And it’s the same thing in automotive. When I run an automotive company, there’s an escalation schedule basically. Like if you have a bad part, who you gonna escalate to? Not the CEO, you go to the quality tech. Yeah, the quality tech doesn’t know what to with it, it goes to the quality manager and it goes to the next person, next person. at some point the decision maker should be able to make a decision what happens from here.

And I built same thing in in our property management company with our operations and so. And this is connected to our property management system and everything that AI does gets noted in the history and notes on every tenant’s profile. So we see every communication that’s been made, and it’s a transcript in there from the phone call, the text, the email, etcetera. Everything’s automated. There’s no way human can work faster than this, especially this high volume. and it then makes us stand out too. We have lower overhead, which then means

We can compete with a lot of people on, making offers on these properties because we have a really low overhead considering we’re running fourteen hundred units. So very powerful. Is it perfect? Not quite. I think it will never be perfect because there’s always room for improvement. But we’re pretty happy what we built so far. So so let’s see how it works at two thousand units or three thousand units.

Freddie Steen (26:34)

Absolutely. Matthias, when your acquisitions team is analyzing off market deals, what is the ultimate deal killer? Red flag during due diligence that forces you to walk away, no matter how cheap the park is?

Matthias Gruenwald (26:50)

The big one is always infrastructure, especially mobile home parks. So we buy parks with septic, that’s no problem. there’s wastewater treatment plants, which we have one out of the thirty parks we own that has wastewater treatment, and it’s been a little bit of a headache. We got it fixed now and it’s good, but it’s all it can always be a ticking time bomb. And what we completely avoid is lagoons. If you think about they call lagoons, sewage ponds, and it’s really what it is. It’s just like, a poop pond. It’s just sewage in a pond. And it’s

It can it there’s regulatory issues attached to it, obviously. I know people that are crushing it in that field, they’re just buy parks lagoons because many won’t touch them. And you can make a if how to manage them, you can do good money. We don’t want to touch it. you have to choose your own hard. what the hard thing we like to choose is buying park owned homes but not dealing with lagoons. So infrastructure, if we seed lagoons, we always always pass. usually that’s why the park is cheap because it’s

Bad infrastructure and maybe even like private well water as well, which we we buy that too, but the combination of those two is a definite no. If you have all private utilities and and stuff like that. you me you mentioned earlier too with utility bill back, that’s also an opportunity we like to see on properties where we can just like attach meters in individual units. It’s maybe master meter, but we get like Metron meters or Guardian meters.

on these units and then it gets it’s automated in Rent Manager. it sends a signal to the Metron WaterScope and then it gets into the property management software. It knows what the the charges per thousand gallons and it just pop puts up the charge on the on the tenant’s ledger. So stuff like that is a huge opportunity when we see those deals, but we won’t bend over backwards for a lagoon deal or a wastewater treatment deal. So that’s definitely always a big red flag and we pass on those.

Freddie Steen (28:29)

Matthias, that’s the kind of stuff that people don’t talk about enough. The walkaway. And honestly, it’s what separates the folks who just dabble from the ones who stay in the game long term, like you. Let me ask you this: what are you most focused on solving or scaling next? I mean, what’s the next real goal for you and WCG Investments?

Matthias Gruenwald (28:52)

that question. So for us, the next step is we definitely got more selective. As you’re when you’re starting early, like in your real estate career, and I start with a duplex, you finally have someone on the contract, you fall in love with the deal, and because it’s your first one and you want to make it work, once you have 30 communities and 1400 units, you couldn’t care less to close another deal. Of course I care, don’t get me wrong, but I don’t get I don’t fall in love with a deal anymore. The numbers have to work.

so what I’m focusing on buying high quality parks or with high upside, asymmetric risk, meaning, okay, what’s the worst case that can happen and what’s the best case? so if the worst case I wanna make sure if everything fails, like we cannot get to market rents for some odd reason, we cannot do infill and bring in new no new no new homes in, we cannot fix park owned homes up or nothing, at least I get the investors’ capital back. So that maybe had

hundred thousand dollars invested with us and we get all that money back at least. So that lasts nothing. That’s really important to me. Asymmetric risk. If everything goes base case scenario, base case, and they get a pretty good return, like eighteen, nineteen to twenty percent IRR, great. if it’s twenty five if everything goes well, it might be twenty five plus percent IRR, that’s fantastic. So it’s asymmetric. So backstop is they get all the capital back or it’s anything in between so to speak. And buying these parks is really our high focus right now. We can

provide that asymmetric risk to our investors where the downside is a lot lower than the upside. and then you have to just be very selective. You be you become very selective on the markets, on the type of assets that you’re getting we pass on deals that would be great for other buyers. And the more longer you do this, you really realize that sometimes you ask them those questions like why would they buy for this price when you get outbid, for example. And the longer you do this, you’re realizing they were just a different buyer profile.

This guy might have like a made gigantic 1031 that wanna just shelter taxes and buy this thing and they good they just wanna have a minimum cash flow and don’t pay the two hundred thousand dollar tax bill. Everybody has a different motive of why they’re buying a property and we are not a debt buyer. We wanna we need a park where we have to add value and need to provide value so we get that that gain that value add to our investors. So that’s what we’re focusing on in the future. And again

The tech stack that we have, it’s built for two thousand plus units. and we can keep the overhead really, really lean with all the AI interactions that we have and integrations. and that makes us very competitive because we have a very small overhead w compared to other firms that have a lot of humans to work in on the back office and stuff. And let me tell you this too, like the the tenants love it too, because our AI picks up the phone 2:00 AM on Sunday. If you have a person working, they’re not gonna pick up the phone at 9:00 AM on a Monday. Our AI picks up the phone, you can

And you can use it as a therapy hotline or something, they’re gonna talk to you 24/7. So for the small question, if they just need a quick, question answered, it’s fantastic for everybody involved.

Freddie Steen (31:43)

Love it. Matthias, as an engineer and operations guy, I have to ask you this question. I mean, your instinct is probably to control every variable, but to scale past 50 million, which you’ve mentioned, you have to delegate. What was the hardest mental hurdle you faced when passing the keys of your vision over to your team or your property managers?

Matthias Gruenwald (32:07)

Fantastic question. yeah, for me the big one was as I’m scaling that firm, with an engineering background and being in an automotive world, you realize with the engineering background you want to control everything and no you you wanna know what’s happening. So I still got that a little bit in me. But that’s my biggest weakness probably still to this day, where I wanna know everything what’s gonna happen next. Like what what happens if plan H goes into effect, right? it doesn’t work that way though. because

imperfect action is so much better than perfect action that’s never executed, right? so I I learned that a lot, when I started my entrepreneurial journey. And I give that to our VAs and our team on the road too. Like if you guys fail, I’m gonna pick you guys up and you fail off that fall off that limb. I gotcha. Because we’re all failing forward, because the only difference between the loser and the winner is the w the winner tried one more time while they were failing, right?

And it’s so cliché, but it’s so true. That’s a mindset shift you have to deploy and also live that culture within the team. Like we have our team, we try to teach them to like if there’s a problem they cannot solve, you the subject matter expert, tell us three options you think we should do here to fix this problem. Don’t just drop off the monkey on my desk and say, this is a problem. great, but I don’t have the entire context because you probably have like five phone calls already with this tenant or emails, whatever you have, and I just get like a little transcript of it and the problem statement.

I need solutions and you recommended option out of the three. and sometimes it’s like, I agree with you, do option three, do it. And it empowers them to do the right decision. And what that does, it teaches them their mindset of thinking about solutions, being solutions-oriented with their thinking. And many times they don’t even present an issue to you anymore, which helps you to buy back your time, because they’re already like, What would Matthias say right now? And then he needs three options and once one recommendation. Let me write that down. And as they’re doing that

They realize I already got the solution, I don’t have to ask Matthias. And then so it becomes very scalable, right, at the same time. So that’s very powerful. and I think empowering your team to go out there and feel empowered, even if they do mistakes, we got them. I think that’s huge because I see so many people in automotive business or whatever business they’re running, like people have the iron fist management, like somebody screws up, fire them, the next one is waiting, and that turnover, you never build a culture that way.

Because every new person you introduce they’re technically a danger to your culture because you don’t know if they really fit until you try this out. So be really quick to fire and slow to hire. It’s super critical, right? so that’s where we that’s why why why I like to keep the overhead so low that I don’t have to hire new people all the time because we really slow on hiring, because we’re really critical of who we let into our culture.

Freddie Steen (34:47)

Perfect. Matthias, mobile home park investing is highly competitive right now. A lot of operators operate from a scarcity mindset, right? Hiding their secrets and fearing competitors. You actively share your insights. Matthias, Matthias, why do you believe an abundance mindset is actually a competitive advantage in this niche?

Matthias Gruenwald (35:11)

It is, absolutely. So when you look at the larger operators, especially in our field, I have a friend he has, four and a half thousand units and they’re he’s passing opportunities to us all the time. he’s like, Hey, this broker sent me this off market deal, but I don’t do anything in Oklahoma. You you guys have a park in OKC, talk to Tim and Matthias, these two they will take care of you. And they have abundance mindset. They could grab that deal up and they were like, what, I’m not interested in Oklahoma, but these guys have something there already.

So with economy of scale, like that could be beneficial for them. So and even the same person he pitches deals to us and he is like, Hey, I’m selling eight hundred units on my portfolio, like ten he has eighty-six mobile home parks and he wants to sell ten of them. And he was like, Hey, you guys wanna have first dips on it? And that’s if you’re not out there greedy and try to screw people over, and I say this all the time and I mean it, it sounds like a joke, but people don’t want to work with jerks. they usually say something more harsher than this, but if you don’t

Don’t try to be a jerk and just like help people have the abundance mindset and help each other. It will go such a long way that deals and opportunities will come to you automatically. It w that they do for me. Like we we don’t know which deal we want to do next because there’s opportunity. We just really select on which ones we really select to do next. is there competition out there? Absolutely. There is, there always is, and there should be. I mean the in the capitalist world is kind of what you want because that drives us for efficiency.

Right? If you all slightly like, nah, whatever, we don’t need AI, we we get it done somehow with, twenty people working on one property, whatever. It’s it it doesn’t drive innovation, Many things got invented in this world because of capitalism and of fault of driving efficiency, etc etcetera. So competition’s good. I see competition as good. If somebody outbid if somebody outbids us, we have friends outbidding us. We’re like, Cool man, I wish you all the best luck. really do. I don’t mean this as like a sarcastic comment. It’s like, dude, crush it please. I would love to see you succeed. we do that.

And they do the same for us. They see like Tim Matthias, they were not they were not like, grudging about it, they were not grudgingly like just saying that. they really mean it, and then they have a deal and they think of us because they’re like, hey they I like these guys. And one last thing I want to say, like, we do deals with brokers and they have years of relationships they’re building with owners of mobile home parks. And I we just did our last deal in that we closed in Alabama and I got a phone call from the broker the next morning, still remember. I was like, Okay, cool.

Was out on the road with my family. I always take first days off because just because I can. And we take it off. My family and I go to the beach. And then I got the call from the broker the day after we closed, because we closed on Wednesday. And he was like, Hey Matthias, congratulations, big dog. He says to remember his words. And I just wanna say you guys be the easiest client I ever worked with to get a closing done. And it means so much for us. If there’s anything coming across our pipeline, you gotta be the first ones we call. And that’s exactly what I mean. Other people are gonna be like, I’m the buyer.

and I’m I make the rules, I bring the money and they’re gonna be jerks to the broker, whatever. We always like, hey, let’s figure this out together because there were bumps in the road for this closing. But we were easy to deal with, we were solution oriented, we talked to everybody like they’re humans, not like, scum. that goes a long way. And these brokers they’re gonna call us first if they have a deal because they’re like, Hey, these guys closed sometime, they raised the capital, they were awesome to deal with. There was a problem, and that usually shows people’s real face if there was a problem and they realize

these guys were so professional in in a s in a tough situation. Like the deal almost went south and they nailed it. So they’re they’re the first one to thinking of is WCG and that’s what we’re building. And I think that’s the that’s the the key for the future for us.

Freddie Steen (38:33)

Matthias, that’s big. I mean, especially when you’ve already got your foothold with 1100 units under property in place. I mean, the next move could really compound things for you and let you take off. Now I know a lot of people listening are either earlier in their journey or looking to level up just like you. And I think they would benefit from hearing this.

Can you give us an example of a time every operator I know has a moment where things got real? Maybe a deal that went sideways or a time they had to pivot fast. You mind sharing one of those moments for you?

Matthias Gruenwald (39:10)

Yes,

I got many. Let me pick one. So first syndication, we’re buying one hundred units, mobile park portfolio, four parks in Spartanburg, South Carolina. Seller is the one that I mentioned earlier on this podcast that had a 78% expense ratio. And he decided, I still remember we closed in July 2024. he decided to not do any maintenance and not respond to any maintenance requests for the last couple months, I think since April. So once we closed

We were actually there were three months of maintenance issues backlogged and none answered. This the tenant base thought they knew it was getting sold. The tenant base thought we already closed in April and we are the we are the ones ignoring, but we weren’t. We closed like July twenty-seventh, I believe. July I think it was right before August. We get a call from the local news outlet that they want to interview us and was What’s going on? Apparently a bunch of tenants went to the news like during July of the month of July

And basically was saying like the new owners completely the the it’s said all kinds of awful stuff, international owners, slumlords and whatever name it. And then we were at first we didn’t say anything, we just didn’t know what’s going on, but we saw a news article, somebody sent it to us via text. And yeah, we g we got like thirty four maintenance requests in week one. it was really bad, so we had to really pivot. and then we talked to the guy that wrote the article and we like, Hey, we wanna just set something straight here, like

We just closed this like one business day ago. I was like the next Monday or so. We had a call with him. It was like, everybody’s thinking that you guys are, the owners already since months ago. I was No, we just closed this. Here’s a settlement statement, look at the date. And then he’s actually sent another article out and in our favor and kind of correcting the record in a nice way. We really appreciate that. He did that. But that was a moment where I was like, What did I get myself into?

because that was totally not what we’re expecting. I mean, first of all, the thirty-four maintenance requests are overwhelming in at first. Then you get media attention because it’s mobile home parks, affordable housing, they were neglected for years and then have been completely ignored for three months before closing, which we didn’t know. When I when I talked to the property manager that was on site after closing, she she said, Yeah, yeah, they told me to tell to turn my phone off. not to take any phone calls anymore. So

Really bad operations. and cleaning that house up was a bear for first couple of months and then we just had to, take all the maintenance requests in and work off priority. Any safety, health related issues first and then all the smaller stuff after. And we got through it pretty quickly. I think we were done after like two or three months like having zero maintenance maintenance requests because they kept coming in after the thirty four. But that was that was a little bit nerve-racking, for sure.

You will discover those all the time. It’s I mean a second one, literally, I got a text on 4:00 PM last week, Friday. Of course, that’s where bad news are buried. Community manager texts us, they said, they found a dead body in the lake. And that park is called I’m not gonna say the name, but it’s around the lake. and they found a dead body in it. So of course, police attention, everything. And yeah, we just still know what happened, but you get those phone calls and those texts, and this if you really get into this business, I don’t want to scare anybody.

But I I can tell you from all the people that I just mentioned earlier, they have 4,000, 5,000 lots, they all had these situations happen themselves. Being in the news, people getting shot and killed. If you have fourteen hundred tenants, there will be somebody getting hurt. There will be somebody tripping down the patio stairs or whatever, or steps, whatever, deck steps. There will be issues. and it is what it is. You have to power through it one problem at a time, solve that one, the next one will come.

And if you have that mindset, nothing can stop you.

Freddie Steen (42:40)

Perfect. Matthias, what is the biggest difference in the way you think today, managing over 1,100 units, compared to how you thought when you were scraping to get your first park under contract? What belief did you have to drop?

Matthias Gruenwald (42:57)

That I have to control everything. I think if you do your first property, you try to do everything, you go out there and if there’s a small maintenance request and then I can fix it myself. And my first rental property was in my backyard, like a couple of miles away, so you always feel inclined, like save some money, right? Protect the cash flow and I will put my time into this and change the light bulb or whatever and check what’s going on with the AC unit. And quickly realize this is not scalable. Because my goal was to get, up to my first goal was to get the thousand units and scale and

raising capital, in order to do that, I cannot fix AC units and I’m pretty handy. I work on cars myself. It’s my hobby, with cars and stuff, but that doesn’t mean I can fix a thousand units by myself. I have to build a team around this. And I knew this from automotive. there’s I cannot run a supply chain myself and build these products myself. So the belief I had to drop is to buy back my time, protect my time and see where the value at can happen and where are the needle moving actions I can take.

There’s literally we have a call every day between Tim and I, my partner, at 4:00 PM every day, where we say, What were the needle move if you worked on today? That keeps us accountable and honest of did we really waste the time today working on a small problem or do we really work on the needle moving side? on the needle moving business opportunities, meaning acquisitions, maybe another deal that it’s gone sideways a little bit and you’re kinda protecting it or saving it, whatever.

Those things are extremely important to identify. And if you don’t protect your time, you never have the bandwidth to look at that. The bigger you go, the more you have to detach yourself from the day-to-day. you have to ascend from like five thousand foot to ten thousand foot, thirty thousand feet, and then really just run that battleground yourself. like not yourself, but with your team, and then don’t parachute in there all the time. And that still sometimes happens to me, like I get dragged into a situation because somebody texts me

And I’m like, I’m a problem solver, and like, okay, let me figure this out. And then I don’t have all the context and I realize an hour later, I wasted so much time. And then, there’s this great book out there, Who Not How? And it’s super super powerful. Sometimes you have to just before you solve a problem and you get dragged into this, who can solve this? Not how can I solve this? And many times there’s somebody out there you can text, like, Hey, what should I do here? Or like, tell this person to contact that person and they can figure it out for you or with you or whatever. So

I think that’s that’s the biggest one. You have to let go, otherwise we’d never be able to scale.

Freddie Steen (45:16)

Now, as I said earlier, Matthias, I know a lot of people, a lot of our real estate pros that are listening right now are either earlier in their journey or looking to level up like you in WCG Investments. I think they benefit from hearing this, Matthias. When it comes to building relationships, growing your network, what’s made the biggest difference for you?

Matthias Gruenwald (45:37)

lead with providing value first with nothing in return.

That’s a big one. It that’s just all about how can I help that person? it’s I technically how I started with partnering with my partner Tim, because he did mobile home parks two years before I got involved and I found a deal and I knew he doesn’t have time to underwrite, he doesn’t like underwriting. I’m like, you what, I’m not underwrite it for you and send it to you with nothing in expectation in return. I was of course hoping we’re gonna make a deal together. but and it worked out that way. You build an empire out of this after, but I was like, if it doesn’t work, it doesn’t work, but lead with value.

A lot of people they wanna, find their mentor and basically asking like how can I help you? How can I help you? And if somebody does that to to me, I always feel like now I have to figure out how they can help me. If somebody just comes into my world and then realizes where we could need help and then leads with value, providing the value there, that that’s where I’m saying like it’s take guy under the wing or girl under the wing.

and you build something together obviously. So and I can tell you all these big players out there they think the same way. They are such busy lives, they’re family life, they have their own hobbies, they’re running big portfolios. The last thing they need is like another to-do to figure out how to help how they can help themselves, right? So they want to, see somebody that has the ambition of, be self-driving, independent and providing providing value. So when I build relationships, I’m

I it doesn’t matter if it’s an insurance broker, if it’s a loan broker, an SEC attorney for like, doing all the SEC paperwork and stuff. To all these people I just mentioned, I send each one of them at least five to ten clients because I was at the conference, they’re like, I wanna do this, I don’t know I don’t know I don’t know how to figure out insurance. I was like, Hey, call Dylan at Heart Insurance, the guy’s a killer, he figured this out. I get a text a couple days later, Dylan, hey, thank you so much for this client, and that’s how it works. And then

Dylan is like, I talked to this other guy, he wants to sell his park in South Carolina. I get you guys connected. Boom. It’s reciprocating. that’s how it works. I just I love to help people that way, and just referring people is a joy to me. if you do that stuff and you just have to network the crap out of this and go into conferences and meetups or whatever, you can connect with different people. And I I provide value to other people and sometimes many times provide value to me, right? Like I mentioned earlier.

it can just say like, Hey, I need this. How did you figure this out? And he is like, I don’t know, but I know the guy that did it for me and he passed me to the next guy and we can help each other. it’s it’s super powerful and actually really beautiful to look back and zoom out and see how that actually works. and how people love to help each other and have an abundance mindset and it it’s a beautiful thing.

Freddie Steen (48:07)

Relationships are everything in this space. And when you talk about helping, Matthias, yeah, you cannot fake help. All right, before we wrap, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Matthias Gruenwald (48:27)

Yes, so I’m very active on Facebook with my name. I’m sure it’s gonna get posted here on the on the on this podcast. And the same with LinkedIn, this is Matthias Gruenwald with my name. if you wanna go on our website, wcginvestments.com there’s a a very short form, first last name and email address where you can sign up and you can book a discovery call, which I’m gonna be on it as well. So you can just discover what we do as WCG Investments and learn more about our opportunities. But I’m more than happy to help.

people out there you just need some word of advice of where they are. it brings me a lot of great joy if somebody is like where I was before and try to unlock the next level for them. Because I still remember vividly when I bought my first duplex. I was scared, it was scared people are not gonna pay rent. How can I pay this extra mortgage now? I gonna be broke. My family’s gonna land on the street, all these crazy thoughts. And then later as you’re like scaling, you start to learn that things were gonna they’re gonna work out and you build trust in yourself. So I’m happy to

help those people if they reach out for those channels and then get on the call and try to try to help them out and we we never forget where we’re coming from. We all start small at some point and it always brings me a lot of joy to see people buying their first property or their tenth or their hundredth property. So feel free to reach out. So shoot me a message on Facebook Messenger or on LinkedIn and happy to connect.

Freddie Steen (49:43)

Perfect. Well listen, Matthias, I appreciate your time, your story, and your perspective. We need more people in this space who are doing it the right way. Thanks again for being here.

Matthias Gruenwald (49:54)

Thanks, Freddie. Thanks for having me. That was a blast.

Freddie Steen (49:56)

It absolutely was. And because this was a blast and the rest of our podcast, thank you all for tuning in. And if you got value from this, you have to subscribe because we’ve got more conversations coming with operators just like Matthias Gruenwald who are out there building real businesses just like you. We’ll see you on the next episode. Thank you, Matthias.

Matthias Gruenwald (50:21)

Thank you, Freddie.