How to Avoid Costly Real Estate Mistakes (Mobile Home Investing Strategy)

Ali Nasir (00:00)
one of the biggest things to watch out for that’s baked oftentimes in the O.M.s or the information that you first receive about an opportunity is the income received from the home.

The mobile home or manufactured home that’s on the property, that is considered personal property when it’s placed in the community. It is not real property. And when that income or that asset value or that value is included in the asset valuation, that’s a big flaw, a big red flag that you should watch out for. And so I think a lot of people may not be aware of that and they take an OM or they take that information and they think, gosh,

This looks great. And the reason that doesn’t work is because you’re stealing the income from personal property. That mobile home is considered personal property, much like your car that depreciates. And you’re mixing it with real property income, your dirt. ⁓ And when you start doing that, historically, you would become unbankable.

Scott Bursey (02:31)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we are strapping in for some high octane growth because we have a titan of strategic investment in the house. Our guest is Ali of RISE 360 Ventures who sees the entire landscape in 360 degree fashion and he finds opportunity in every corner.

Ali is bringing the fuel today on how to structure a venture of maximum scale and resilience. Ali, welcome to the show.

Ali Nasir (03:05)
Thank you very much for having me Scott, I’m so excited to be with you.

Scott Bursey (03:08)
This is just simply outstanding. And Ali, what really caught my attention about you was the way that you’ve been able to pivot strategically across different market cycles and build out a truly 360 degree approach to real estate investment, capturing value where others only see risk.

Ali Nasir (03:26)
Thank you. Thank you, Scott.

Scott Bursey (03:28)
And for our listeners who may not be familiar with your journey, please tell us, how did your career begin and where are you now?

Ali Nasir (03:34)
You know, I’m so blessed to have been…

born in a family that thinks generational, Scott. I’m eighth generation in commercial real estate. I’ve traced it back to essentially land and bartering land back in India where my family originally comes from. And I’m second generation in the mobile home park business because my father is just this one in a billion. And not because we’re from India, the sheer size of the population, but one in a billion because of his entrepreneurial

knack and tenacity and I got to grow up being a sponge around a mentor like him. So, ⁓ you know, I think you mentioned the cycles. We’ve seen cycles from the original Iran war at least through, he’s seen more of course, but I’ve seen cycles from the original Iran war crisis back in the late 70s and early 80s and how that impacted us up until today’s Iran war crisis and everything in between from the savings and loan as you recall savings and loan crisis, the dot com.

burst the 2008 and the 2020 so it’s been a journey and all through those we’ve which we’ll probably talk about later but all through those down cycles I have to highlight that our asset class the reason I’m in this by choice is even through you know in a good economy our business is good ⁓ in a bad economy our business is so so I don’t wish ill on anyone else but in terms of as an investment standpoint in a down economy I’m so happy we’re in

business.

Scott Bursey (05:53)
What is the core investment strength that Rise 360 Ventures relies on above anything else in your view?

Ali Nasir (06:00)
I think it’s the operating experience that I bring to the table frankly from 45 years of being in this business. know, ⁓ all of sudden, with all due respect, everyone’s become an expert, everyone’s come in the asset class, but unless you’ve been in the trenches, unless you’ve dealt with a lot of the fires, whether it comes to, this asset class is a heavy lift up front. And so, ⁓ if you haven’t been through the challenges of dealing with, for example, private utilities, getting homes

somehow on your lots within a community and increasing the occupancy. If you haven’t dealt with some of those challenges and don’t exactly understand the nuances of the goals and the structure, finding the resources, having the systems in place, you know, those are the biggest challenges and I think the fact that we have our experience in-house to build on is key.

Scott Bursey (06:57)
That focus, Ali, is crucial. You have to know your strength when the market gets shaky.

Ali Nasir (07:03)
Absolutely, especially then.

Scott Bursey (07:05)
Ali,

please take us underneath the hood on this. What is the single biggest blind spot risk you actively work to overcome in your current investment strategy?

Ali Nasir (07:15)
You know, think there’s a couple of things that come to mind. I’ll give you two. One from an acquisition standpoint that is probably best serving your audience, And then I’ll tell you something that we are actually struggling with ourselves as well. For the audience, I would say

one of the biggest things to watch out for that’s baked oftentimes in the O.M.s or the information that you first receive about an opportunity is the income received from the home.

The mobile home or manufactured home that’s on the property, that is considered personal property when it’s placed in the community. It is not real property. And when that income or that asset value or that value is included in the asset valuation, that’s a big flaw, a big red flag that you should watch out for. And so I think a lot of people may not be aware of that and they take an OM or they take that information and they think, gosh,

This looks great. And the reason that doesn’t work is because you’re stealing the income from personal property. That mobile home is considered personal property, much like your car that depreciates. And you’re mixing it with real property income, your dirt. ⁓ And when you start doing that, historically, you would become unbankable.

Now, agency loans and lenders, they think they allow up to 20 % of that income. But I would still caution you when you’re acquiring a community to make sure you carve that out and treat it independent.

Do not include it in your valuation.

Scott Bursey (08:45)
That right there is a huge piece of advice. Acknowledging and mitigating risk is what separates long-term players, Ali, from short-term speculators.

Ali Nasir (08:56)
That’s exactly right. It’s unsustainable frankly if you fall into that trap. that’s a big one.

Scott Bursey (09:02)
One thing that I know our listeners are gonna wanna hear from you, Ollie, outside of the obvious, where is the most underserved niche or market you are currently excited about?

Ali Nasir (09:13)
Well, of course, as we’ve, you know, ⁓ I think many people understand, there’s a huge monumental housing crisis. And, you know, the stigma that comes with…

mobile homes or trailers and the lower income for municipalities in terms of property tax revenue that comes from mobile home parks versus a high-rise or a mid-rise multifamily unit has always been the barriers. Despite this being such a compelling solution, and not to mention the whole NIMBY aspect, right? Not in my backyard. And so those barriers are

have been there for decades and I think we’re slowly starting to as an industry as a whole and I credit the associations by the way like ⁓ &I who lobby at the federal level and all of us who are working at the state and local levels to fight that stigma, to present our case. So the opportunity to answer your question I think lies in understanding that we are the solution. We should be proud of the fact that we are at least a large part of the solution. Let me correct that.

⁓

And we can expand on being helping with this crisis by expanding into…

other markets like below secondary and certainly tertiary markets but even the smaller sub markets within secondary markets. Something that, excuse me, REITs, private equity groups, family offices like mine have shied away from historically but now to really provide a solution and take advantage of the opportunities at hand, I think we need to look into tertiary markets very seriously as well as RV parks, not for their traditional model but more importantly to serve in this crisis because

more and more people are now open to living in ADUs and tiny homes and these sorts of things, especially the new generations. So that’s where our focus should be.

Scott Bursey (11:03)
It’s all about finding the edge, isn’t it, Awee?

Ali Nasir (11:42)
It always is. Thank you for bringing that up. if you’re, and I want to say, you know, I’m so honored and I’m so lucky that I was part of the pioneer class, if you would, for the existing playbooks. People like my father, I think, developed them. And we actively developed it together. I mean, as a typical immigrant family or business, know, I was involved in running the business from age 12. And so,

I think we developed this existing playbook, but to your point, you know, what happens when the playbook is no longer relevant? What happens when, it’s like musical chairs, right? What happens when the music stops and you need a chair? Can you pivot? Can you come up with a new playbook? Are you entrepreneurial or business oriented to do that? And I think that’s where people need to really stop and think because now everybody, a lot of us, the majority, we’re following the playbook.

and it’s not going to work perpetually or indefinitely. At some point you have to pivot.

Scott Bursey (12:42)
Absolutely. Couldn’t agree with you anymore. I know our listeners are also going to want to hear this from you. Beyond interest rates, what economic shift poses the greatest threat to real estate venture capital right now in your view?

Ali Nasir (12:56)
Scott.

You have touched a subject that I get passionate about and I can talk about, you know, much longer than you want me to. The interest rates are obviously a category, so I won’t go, but I do want to touch even on that, if you would allow me to. Things that people don’t talk about that directly impact our interest rates. So obviously, the current war is a big issue and something everyone’s talking about. For example, the yen. I don’t think it’s talked about enough how historically,

the yen has impacted our rates to be artificially lower. ⁓ I think the yen essentially around the world people could go borrow, could go invest in the yen and borrow against it at essentially 0 % and then invest that in our treasury bonds and our opportunities here in the States which then made more loans available at our banks. And now that trend that you know they’re getting better returns

It’s actually costing them more to borrow in Japan. The bonds there are giving higher returns, which means our bonds are selling at a higher premium, which reduces…

the ability for banks to, you know, to loan in dollars. So that directly impacts commercial real estate and directly impacts our asset class. The defaults that we’re expecting in the next six to 18 months on commercial real estate loans, even though it’s not in our asset class, you know, for expecting, I think the minimum number that I’ve heard is half a billion and I’ve heard all kinds of numbers up to over, you know, several trillion dollars if you count the indirect impacts.

So,

but that even at a half a billion dollars, that means you might see a crisis of some, not just what we saw in 23 with a couple of banks, a few banks folding, but you might see a crisis of several, you know, tens if not, you know, dare I say over a hundred small banks or regional banks impacted by this in the next six to 18 months, which it directly impacts our ability to borrow and rates and whatnot. So, the list is endless. just, I’ll just…

Maybe give you a couple of other examples, but we don’t have to, we won’t have time to go through it all today. Maybe I can come back and talk more about them if you wish. for example, weaponizing the dollar is impacting, via sanctions or tariffs, is impacting our ability to borrow. Weaponizing, I think what some of the other nations are doing in terms of weaponizing rare earth minerals and the production of those, refinery of those, is a challenge.

So these are just additional examples that I think people don’t, we may not talk about enough, but they’re having a direct impact on our ability to do business in these deals.

Scott Bursey (16:19)
That insight is gold for our pros, Ali.

Ali Nasir (16:23)
Thank you.

Scott Bursey (16:24)
And we

gotta know this, if you could instantly hire one expert tech accelerate your current growth, what specific skill set would they bring?

Ali Nasir (16:33)
that is a… You might have me on a curveball here. I think it’s…

For us as a fund, ⁓ we have a great investor relations team, have a great marketing team, acquisitions team. I think what we’re, maybe for us would be to build more strength in the due diligence inspections, due diligence phases. Because I think buying right is one of your other recent guests have said, buying right is almost everything. ⁓ You don’t want to overpay and you don’t want to be surprised by

things like flood zones or earthquakes or fire hazards, whatever the issue is as an example. doing those inspections, doing the due diligence properly is key and we could probably use some additional strength there to make sure. Right now, of course, we do find we outsource a lot of it, but I’d like to bring some of that in-house.

Scott Bursey (17:26)
⁓ Now it’s time to unlock the high octane fuel for our listeners. This is the money question. Considering the current climate, if a pro has successfully raised their first fund and is looking to scale from 20 million to 200 million in AUM, what is the one counterintuitive piece of advice that you would give them on shifting their mindset and their strategy for the huge leap?

Ali Nasir (17:52)
You know,

For us, historically, I need to share with you, Scott, that I’ve been, for decades, been involved in a family office structure. And I’ll speak to how we increased our AUM in our family office strategy. As for a fund, I think we’re probably essentially going to repeat that, but there’s additional options, of course, of scaling with additional investors. So let me say this, because there’s a lot of your audience

members I’m sure who are private operators or family offices individuals and maybe even for these funds this would be relevant. We scaled

with 1031 exchange all the way through. So we’ve scaled largely with private funds, debt, and private capital by investing, reinvesting over and over and over and over again. So over the decades, we may have started originally with smaller parts, not exactly tertiary, but yes, smaller markets.

like San Diego with a five-star community. And that’s only been because of this strategy of being able to roll up to your point in question. So I think that should not be discounted. But of course, that now as a fund, as Rise 360 Ventures, we can also scale with so many people coming to us that we could try to qualify and approve who want to essentially invest passively. And I think that’s, of course, the strategy. It seemed like it was difficult for

for lot of syndications and funds for several years after the last wave. getting into this cycle like we were talking about earlier, the next six to 18 months, if we are seeing a down cycle, I think there’s actually going to be an opportunity in that for investors and particularly for funds who are prepared, who are ready for investors who are liquid and want to participate. This is the time to scale.

Scott Bursey (19:46)
Ali with your four plus decades of experience. What sort of advice Golden Nugget could you leave with our listeners here today?

Ali Nasir (19:56)
I think at least in our experience, it’s important to keep a pulse on the day-to-day operations, on the process of how you’re adding value to your asset. at the end of the day, at least in this space, the way we’re vertically integrated, and I would suggest the same for others, is to be able to essentially control all of those processes. Because if you’re buying a value add play, if you’re

buying a value-add asset and you can’t control the supply chain so to speak, the process ⁓ to make sure that that value is added, you’re at great risk. it’s one thing to find a great, you know, it’s one thing to find value-add opportunities but if you haven’t slowed down to really oil the machines and make sure the systems and processes are in place to be able to execute that strategy to add the value, then you’re

you won’t be as content. I think it’s almost, I’d like to humble myself and everybody else in real estate by reminding us that you don’t have to be a genius to make money in real estate. I’m not a genius. You can screw things up to a certain degree and still almost come out, essentially come out unscathed at the end if you have sustainability. Because the laws of compounding, as we understand it, are working in your

So you’ll still be okay if you don’t listen to this advice, for the most part I should hope that you’d be fine. But I think if you really want to excel, if you really want to reach the higher levels of upside that you’re you’re originally getting in for, then it’s important to pay attention to these details.

Scott Bursey (21:45)
Ali, this has been an absolute master class. And for our listeners who want to follow your journey or collaborate with you, what’s the best way for them to reach you?

Ali Nasir (21:56)
I would say just reach out on our website, especially if you’d like a free report on the current market conditions of what we think is happening in the market, where the opportunities lie. We have a full detailed 80 page report that our team has put together. So go to rise360ventures.com or you can also find me on LinkedIn and reach out if you’d like.

Scott Bursey (22:13)
Ali, thank you so much for joining us today.

Ali Nasir (22:16)
Thank you, Scott. It’s really been a pleasure to be with you.

Scott Bursey (22:18)
And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We have a lineup of exceptional guests, just like Ali, who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.