Mario Dattilo: Mobile Home Parks, Cash Flow, and Off-Market Real Estate Deals

Mario Dattilo (00:00)
100 % off market, 13 years, haven’t bought anything through brokers. We’ve built a team that focuses on building relationships with the owners over a long period of time. I think if you can do that, takes, don’t get me wrong, it’s harder, it takes more capital and more management intents. But if you can do that and really patiently build relationships with owners.

the timing will become right where they all of sudden need to sell. There’s a motivation that pops up and you’re the first person that they’re talking to because they know you and they like you.

Scott Bursey (02:05)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey And today we are bringing in a true architect of wealth, Mario Dattilo of Equity Growth Inc. If you’re looking to scale your portfolio and find a repeatable system for passive income, this is the episode you’ve been waiting for. Mario is here to supply the high octane fuel of strategic capital and massive deal execution. Pros get ready to rev up your engines because we’re diving deep.

in what it takes to achieve true equity growth. Mario, welcome to the show.

Mario Dattilo (02:39)
Hey Scott, thanks for having me on. I appreciate it. Looking forward to hanging out with you here for a bit. Talking some shop.

Scott Bursey (02:46)
Absolutely. Yes. It’s awesome to have you here. And what really caught my attention about you, Mario, was the way you’ve been able to craft a robots passive investment platform that delivers consistent, predictable returns for your partners.

Mario Dattilo (03:00)
Yeah, I mean, we’ve been doing this for quite a while. We started our firm originally back in around 2008 in the single family investment world and transitioned into commercial real estate in 2013. so definitely not new at it and been buying multiple asset classes and really focused on building an investment fund and platform where investors could.

have the fun of participating in deals with us without the headache of actually managing them, and it’s worked out really well. We’ve got a great team of people that ⁓ I work alongside and have a ton of experience in it. So it’s worked really well,

Scott Bursey (03:34)
Awesome and for our listeners who may not be familiar with your journey, please tell us how did your career begin and what’s your main focus now?

Mario Dattilo (03:41)
Yeah, I mean started out in business when I was 18, still in high school. Started a business, did really well with it actually for about three years and then my main client that I was contracted by, that I was marketing for filed bankruptcy and completely wiped me out financially, which is great lesson to learn at 18 to 21 years old. And so I had to start all over at that point.

and started a real estate brokerage with a partner of mine and we started just brokering single-family homes. 2008 came around and it was kind of a great learning lesson to be able to see these other investors that I was helping go out and buy these distressed single-family homes. They’d flip them, then I’d help them sell them on the back end and my dad had a ton of construction background and I went to him and I said, know, helping these clients buy these homes.

They fix them up and then I’m helping them sell them. We should just do this ourselves. And so we did. We partnered up and he managed all the construction part aspects of it. And I handled the acquisitions, dispositions and capital ⁓ in the business. And for several years, we bought ⁓ single family homes in Florida until the market kind of started to dry up. And we realized, you know, this is kind of a job. We got to keep finding deals to find.

know, widgets essentially to flip, right? You’re in a trading business, really not investing. And ⁓ so we started looking at apartments because it was the next closest thing to ⁓ single families. We knew the tenant, you we understood the client, I guess you could say. We struggled to find good deals at the time. So I started ⁓ talking to friends of mine and just telling them what I was doing and a commercial banker friend of mine called me up and he goes, hey, look, I got this…

Commercial deal, but it’s not an apartment building. It’s actually a mobile home park and it’s in your backyard You got to take a look at this because it looks like a good deal and I honestly kind of laughed at it because I was thinking I want to buy a trailer park, right? I’m buying B and C class apartment buildings and in my head a trailer park was kind of a downgrade I looked at the deal. I realized how much cash flow this thing would kick off if I bought it and ⁓ I ended up putting the deal together. We ended up buying it

And after that, I realized this was a real strong cash flowing asset class that nobody wanted to touch because it was ugly. So we went hardcore into that for, since, call it, end of 2012. We also started buying self storage, RV parks, and light industrial buildings. And it just really built this cash flow portfolio for us and our investors. And it’s been great. it took a little bit of a pivot and a little bit of humbling myself to.

go a different direction.

Scott Bursey (06:25)
What a journey. Wow. And being in business with your father. That’s ⁓ special.

Mario Dattilo (07:18)
It is. It’s been a blessing being able to work hand in hand with him. He retired in 20, 2023 after a long career working with me and I think I burned him out a little bit honestly, but he, no, my brother stepped in and took over his construction role in the company and it’s been great. And so yeah, it, I would say a lot of people say that they have a hard time working with family. The trick to it has been

My dad’s expertise was not the same as mine. We kind of covered different roles all the time, so we didn’t step on each other’s toes. He handled the construction. I handled kind of the acquisitions and capital side of things, and it’s worked well.

Scott Bursey (07:58)
And Mario, speaking of those deals, what is your biggest advantage in sourcing quality deals in this competitive market?

Mario Dattilo (08:05)
100 % off market, 13 years, haven’t bought anything through brokers. We’ve built a team that focuses on building relationships with the owners over a long period of time. I think if you can do that, takes, don’t get me wrong, it’s harder, it takes more capital and more management intents. But if you can do that and really patiently build relationships with owners.

the timing will become right where they all of sudden need to sell. There’s a motivation that pops up and you’re the first person that they’re talking to because they know you and they like you.

And that’s what we’ve been able to do ⁓ this entire time. And that’s kind of the difference. So I said that I was looking for apartments and the reason I wasn’t having any success with that is because I was working with brokers. The brokers would, I thought I need to network with brokers and build pocket listings. And sure that works, but it’s hard to find deals that pencil.

using that strategy because those brokers have 10, 15, 50 other people that are trying to take them out for a coffee and network with them and do the exact same thing. And ultimately, lot of those brokers just take those properties to market, which means you’ve got a lot of competition. And competition is the enemy of good deals. I hate competition. I avoid it at every possible opportunity. I want to be the only person at the table. I want to have a good relationship with that seller because that allows me to build

really well-structured deals that make it a win-win for the seller and I. And at the same time, I’m not having to compete with three other guys that maybe have cheaper capital than me or potentially have more money than me, whatever it is. I just want to be the only guy at the table. And that’s worked well for us.

Scott Bursey (09:44)
That laser focus is exactly what separates the pros from the amateurs.

Mario Dattilo (09:49)
For sure. Yeah, I mean, I think if you listen to most people out there on social media or wherever, coaches, whatever, they’re going to tell you to just go build relationships with brokers. Look on Crexie, Loopnet, all these listing platforms. But to get any sort of good return, it’s going to be very difficult to find them in those places.

Scott Bursey (10:08)
Mario if you could walk us through what is the hardest part about maintaining high touch investor communication in today’s challenging market.

Mario Dattilo (10:17)
Consistency. mean, what most people do is they go out, they call a list of sellers, a list of property owners one time. They get through that 150, 200, 1,000, whatever it is, and then they don’t follow up. And when someone says, I’m not interested in selling, they say, OK, sorry, thanks, have a good day. And they don’t call that owner back. That’s the biggest mistake you can make.

Timing is everything. And so if you aren’t following up consistently and waiting for the timing to be right, somebody else is going to buy it off them. They’re going to go talk to a broker. They’re going to take it to market. Or someone like me or someone like you are going to call that owner and build the real relationship. The initial conversation with a seller is just that. You’re just establishing a friendship or relationship and

You can’t expect an owner to be ready to sell on the spot when you randomly call. It’s kind of like, I would say it’s kind of like this. If I called everybody who owned a car and I said, will you sell me your car? How many people are going to be like, yeah, I’m ready to sell right now. Most people are going to be like, no, I like my car. I’ve had it for a year. It works great for me. It gets me from where I am to where I want to go. Everything is perfect.

There’s yeah, there is going to be a small percentage of people that will say sure I’ve thought about selling it But that’s a very small percentage And then when you break it down to how many of those people are ready to sell then and at a price you’re willing to pay It’s even smaller. I might say yeah, I’ve been thinking about selling my car I’m gonna sell it in the next few months and then someone makes an offer chances are my Expectations are very high why because I haven’t done the research I haven’t ⁓

I haven’t been turned down yet. It hasn’t sat on the market yet. Nobody has told me that I’m crazy yet. So therefore, the likelihood of that first conversation being a solid discussion and negotiation that turns into a deal is super slim. You have to look at it the same way with real estate. They’re happy with an asset that’s paying them. You have to follow up until something changes in their life. Once something changes,

Then they start talking seriously and they’re not just curious and now they need to sell. And there’s a big difference between wanting to sell and needing to sell. And if you can be around when they need to sell, that’s how you make a deal work.

Scott Bursey (12:41)
100 % pipeline management is everything.

Mario Dattilo (12:45)
For sure, the follow-up is where the money’s at. But most people won’t do that. They’ll call once or twice and get discouraged and quit and look for the next marketing strategy and do the same thing with that and then do the same thing with the next one and the next one. And that’s why people don’t get deals, because they don’t do it high enough volume consistently. I have a coaching and education program where I coach people on how to buy and invest in mobile home parks. And one of the things that I repeat to my clients constantly is volume times consistency.

equals results without both of those you can do high volume one time not gonna get results you can do consistency calling three owners every single day you’re not gonna get results you’ve got to have that combination

Scott Bursey (13:25)
That is absolute rocket fuel right there, listeners. Mario, where do you see the biggest untapped growth potential in the real estate niche over the next 12 months?

Mario Dattilo (14:09)
Yeah, I think it’s in things that are number one, going to perform well as the economy struggles. You know, there’s going be a lot of people that lose their jobs from AI. A of people who lose their jobs just potentially in a tougher economy. And so being in high priced housing, like class A apartments, high end luxury, I would even say, I’d correct myself in that, I’d probably say the middle level luxury, the high end luxury.

is probably not going to change. If you’re super wealthy, you’re not going to be affected. If you are middle class, are likely, the odds are that you are going to become poorer. Therefore, you’re going to be looking for more affordable housing options. And the poor, they’re going to stay poor, right? Unfortunately. And that sounds like kind of doom and gloom, but statistically, that’s what’s happening. The middle class is phasing out, and most of them are going to the poorer end of things. So if you want,

to ⁓ if you want to have an investment that’s going to perform well for the future, I would be looking at a property type that’s going to do well even with AI. ⁓ There are certain asset classes in real estate that are going to struggle because of it, but also ⁓ where people can afford it. I ⁓ would want to be at the lower end of the spectrum where everybody can afford my product because

People are moving down into that. People aren’t upgrading their homes like they were historically. So that’s why we’ve been investing in mobile home parks. They tend to do well in up markets because people have money. ⁓ They tend to do well in down markets because people don’t have money. And it just seems like a ⁓ weird combination. would think that…

They would struggle when people have money, but financing is strong at that time. People want to upgrade from renting into ownership, but they don’t want to make that jump into the higher price single family home. So that’s why we like mobile home parks. But even if it’s not mobile home parks for you, think about where the economy is going, how it’s going to perform with AI against it, and try and get ahead of it and find asset classes that are going to perform well. Not just

make it, but actually benefit from it.

Scott Bursey (16:27)
It sounds like timing and selection are everything.

Mario Dattilo (16:31)
Yeah, I I would say without without you can pick the right asset class at the wrong time and get crushed you can you can ⁓ you can pick the wrong asset class at the right time and It the market will carry you right we’ve seen that over the last several years especially like multifamily there were people who sucked at operating they were horrible They didn’t know what they were doing, but they had cheap money behind them and whatever they bought appreciated

and they were able to exit in cash flow ⁓ because of cheap money. And then when the market fell out, interest rates went up, they got wiped out because they weren’t able to operate. they were, you know, I think the market can save you, but you shouldn’t rely on the market to save you. You should buy the right asset class at the right time.

Scott Bursey (17:19)
Great point. Mario, if you could take us under the hood on this one. What is the single biggest external threat to capital raising right now?

Mario Dattilo (17:28)
Yeah, I would say higher interest rates do make it harder to raise equity because investors can look around and they can see higher interest options that have less risk. For example, CDs, some bonds, things like that. mean, CDs paying 4 % interest with what most people would consider very low risk is hard to turn down.

when you get a 7 % or 8 % return with a lot of risk, right? So I would say there’s always going to be an investor who’s looking to outperform the market, but a lot of investors are just looking to park cash and get a sure thing investment. as, since interest rates were really low for so long, they were looking at equity as an opportunity because they couldn’t earn anything in, you know, fixed income, things like CDs or bonds.

where now you have something to compete with. And I would say that your investment…

matters. What you’re offering needs to be a solid, predictable investment that produces a higher return than the low risk alternatives. But there’s got to be a pretty good spread there. If you offer someone a stabilized commercial real estate investment at 5 and 1 percent, why would someone do that when they can earn 4 % with almost no risk?

have to give that outsized return and still be a relatively predictable investment. if you’re hospita- and I’m not picking on these asset classes, I’m just kind of going stereotypically. If you go buy hospitality or you go buy even some operating businesses and you’re getting a slightly higher return,

on that CD, it just doesn’t make sense. You’ve got to buy stable, either stable or assets that can be predictably stabilized pretty quick.

Scott Bursey (19:36)
curve

is key it sounds like.

Mario Dattilo (20:19)
Yeah, I think it’s really looking around corners figuring out ⁓ where’s the market going? What is going to be performing well in the future? But also looking at your competitors. I mean, I think most people look at real when you’re raising capital for real estate. I know in my case, I used to just look at what other real estate types I’m competing with, but it’s actually not that anymore. It’s everything else, even crypto.

So there’s a lot of alternatives that people are looking at.

Scott Bursey (20:49)
Mario, interested to know what new skills that go to ball from real estate syndicator.

Mario Dattilo (20:56)
You said what skills are… Can you say that again?

Scott Bursey (20:59)
Yes, what skillset would be non-negotiable for a modern syndicator right now in today’s market? What skill would get them to that pro level rather than being in the amateur status?

Mario Dattilo (21:14)
I would say persistence, also the ability to build relationships, build trust, and prove out a track record. I think that’s the biggest challenge for sponsors or, you know, syndicators, fundraisers, whatever you want to call them, is they’ve got a lot of competition out there of guys and girls who have track records. And if you’re getting into the space, you don’t have a track record.

And that’s hard to get over. We’ve all done it because we’ve all had a first deal. So it’s not, I’m not trying to discourage you, but what I am going to say is that your investors are looking at you and asking the question in the back of their mind, can this guy pull it off? Can he do it? Does he have the skills? Does he have the knowledge? Does he have the fortitude to go through some struggles to pull it off?

Because I’m not going to put my money, even if it’s an asset class I want to be in, I’m not going to give my money to someone who I can’t trust and I don’t think they can pull it off. So one way that I’ve recommended newer sponsors to get into the syndication fundraising world is bring on a partner. Bring on somebody who has a track record that can say, look, this girl’s been doing it for 10 years.

They have $100 million in assets, or they have $50 million in assets already. I’m partnering with him or her, and we’re doing this deal together. And borrow that credibility. And most investors will look and go, yeah, I get it, Mario. You’re a newbie. But you’ve picked a really good partner to go down the road on. And I believe in this asset class. Therefore, I can kind of see and bridge the risk, because that guy over there has got a lot more to lose.

because he’s got a track record and a portfolio already. So that’s a really good way to bridge it. And in order to do that, not only do you have to build relationships with investors, but you’ve got to build relationships with other experienced operators that are willing to let you bolt onto their platform to build that track record yourself.

Scott Bursey (23:14)
Relationships are everything in this business. Track records, trust. What a great breakdown. Mario, if you could take us back to that first deal, what did you learn most about it? What were some highlights? Maybe some lowlights, that sort of thing.

Mario Dattilo (23:30)
Yeah, I ego had to get out of the way a little bit because I was looking for a specific thing. And when something that looked a little bit different, a little bit grittier, crossed my path, I was almost not even a look at it. ⁓ And it’s just because I thought that I had to be in a certain box. So put it this way. It’s easy to…

have kind of a grasses greener on the other side or you know chasing shiny object syndrome in the beginning you have to you have to be a little bit flexible okay before you’ve done your first deal looking in different corners looking at slightly different opportunities is okay once you’ve figured out your strategy the asset class that you’re gonna buy and you you know maybe bought your first deal

That’s when you need to really hone in and focus. But getting too cornered into one thing before you’ve closed on that first deal can hold you back because you think that you need to be doing something that maybe isn’t exactly, but it might be close. So that’s one thing. I forgot the question. Honestly, what was the question again?

Scott Bursey (24:47)
Well, we’re talking about you.

Mario Dattilo (24:51)
⁓

the lessons learned on on the first deal right? Yeah, that was kind of one of them ⁓ the first deal that I bought was an absolute home run and this is maybe where You can learn After you’ve done your first deal or after you do a really good deal Not every deal is gonna be a home run ⁓ the first deal I bought I bought for six hundred and twenty five thousand dollars I sold it for six and a half million five years later. We all know that every deal is not like that

You’re not going to sell, you’re not going to do a 10x deal every deal. And I think ⁓ maybe a lesson that was learned, I learned from watching my partner, my investor on that first deal, is once he saw the taste of those kind of returns, it was very difficult for him to get excited about anything else. Because he set his expectations way up here and thought that every deal was going to look like that. So I think

Base hits are good. Set your target returns of where you need to be to make it an attractive return based on the risk that you’re taking. And then if a deal fits in that box, do it. If it doesn’t, don’t. But be careful not to expect home runs on every deal. And everybody’s first deal is not typically a home run, right? You’re kind of getting into it. You’re going to make some mistakes. And that’s OK. We made a lot of mistakes on our first deal.

I completely under budgeted on our CapEx improvements because I expected that we were going to, or I should say we went into it with a very little CapEx budget because we saw the potential cash flow and we just said, yeah, we’ll just take the cash flow from that property and keep reinvesting into the deal to make those improvements. Now, thankfully the deal panned out and we had very good cash flow, but it could have went.

very very bad and we could have owned an asset that we were under capitalized on and not been able to get those improvements done so the lesson in that in hindsight was Make sure that we set all the capital aside to do the improvements before we ever close on it Do not buy things based on ⁓ with the expectation that you’re gonna be able to do the work from cash flow We just I don’t want to say luck, but we it turned out okay on that deal But it may not have if we if we you know

Things didn’t go our way.

Scott Bursey (27:12)
Mario, the big takeaway I’m getting from that is that it’s nothing wrong with those slap hit ⁓ opposite field singles.

Mario Dattilo (27:19)
That’s right. Find your buy box. Look for deals that fit. Don’t be over-aggressive on your underwriting to try and make deals work. If you catch yourself modifying and tweaking your model, your underwriting, to make the deal work, you’re probably looking at a bad deal, right? If anything, you should be able to stress test it, and the numbers should still pencil out. If they don’t, as is, you’re probably overpaying for it.

And so, just be conservative, you know? Figure out your box and stick to it.

Scott Bursey (27:51)
Mario you’ve already given us so much fuel but could you leave our listeners with some golden nuggets or some advice?

Mario Dattilo (27:59)
Yeah. don’t buy things just to buy them. It’s easy to get in the hype of social media or other types of content, YouTube podcasts, whatever. hear somebody talking about how they bought all this real estate and they’re having massive growth or whatever. mean, we hear it all the time, right? Nobody ever talks about where they’re struggling or what challenges they’re having. We all have them, but we just don’t typically talk about them. Right? So it’s easy to think.

that you’re the only one that hasn’t figured it out and get over ambitious to buy things, right? Or the competitive spirit. You see other guys or girls doing it at a faster pace and you just start buying things to buy them. If it doesn’t pay you to own it, you shouldn’t want to buy it. Real estate is not about ego. Real estate is not about ⁓ counting how many doors you have. Real estate is an investment.

that should pay you to own it. Not only on the back end when you sell it, but it should, if you’re buying cash flowing real estate or real estate that’s supposed to cash flow, that’s the point of it, right? It should carry itself plus a return. focus on cash flow results, not just buying things to own them and being able to say you own them. ⁓ Secondly, figure out where the market is going. I kind of talked about this before, but figure out where the market is going.

buy assets that are going to perform well in the future economy. And then also, ⁓ get with other people who are already doing it. And instead of just calling them and saying, hey, can we grab coffee or can we grab lunch? I need to pick your brain. That’s like the worst thing you can say, right? Because by saying that, you’re basically saying, I want to take some value. I want to take some of your time, which is probably the most valuable thing that someone who is successfully

building their portfolio or whatever is successful has is their time. So going to them and saying, I need some of your time, but there’s no return on that time is not the way to handle it. Find a few people that are doing really well in what you want to do well at, and then figure out how to add value to them. Find them deals. Find them capital. Find them whatever it is. Get them on podcasts. Be an

asset to them and they will take you under their wing or they’ll partner with you ⁓ because they see you as an asset in their life, right? So don’t ask for favors. Ask how you can add value to them and then go do it and then watch what they do. That’s the best way you’re ever going to learn. Bring somebody a deal. Tell them, hey, look, I don’t even want a fee. I just want a little piece of the deal. Give me a little bit of ownership and let me watch what you’re doing, right? Or I just want to bring you in as a partner.

I can go find the money, I just need to see how you do this and I know you’re great at it. Here’s a great deal. That’s, you know, would you look over this deal with me? I want to partner with you on it or I want to sell you the contract. Whatever it is, make sure it adds value to them and they will invest heavily into you.

Scott Bursey (31:00)
Mario this has been incredible and for our listeners that want to follow your journey or collaborate with you What’s the best way for them to reach you?

Mario Dattilo (31:09)
Yeah, someone who wants to invest passively with us in our deals, go to equitygrowth.net and somebody wants to go out and buy mobile home parks as like an active operator wants to do what I’m doing. Go to get real cashflow.com. I’d love to help you in either, either route. And, ⁓ I’m confident that we have something that can benefit most real estate investors. So thank you, Scott, for having me on this. It’s been fun and, hopefully your listeners got a ton of value on

Scott Bursey (31:37)
Mario, this has been a pleasure. Thank you.

And to our listeners, we appreciate each and every one of you. If you did get value out of this episode, which I’m sure you did, please subscribe. We’ve got a lineup of exceptional guests, just like Mario, 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.