Mobile Home Park Investing Explained: Lot Rent, Value-Add, and Recession-Resistant Returns

Brett Bowman (00:00)
So if you think about like from our economics, most of our areas are about $400 to $500 a month people will pay for lot rents. So just for easy numbers, if you’re getting $6,000 lot rent on a park, and even if I lose $15,000 selling a home, know, let’s say buy it, it’s cost me 35,000 to move it into the park and I only sell it for 20,000. I’m losing 15,000, right? That’s still a 40 % return on investment every year.

Scott Bursey (00:49)
Welcome back to the Real Estate Pros Podcast. I’m your host, Scott Bursey. And today we’re joined by Brett Bowman, managing partner of Suncrest Capital. Brett is renowned, not just as a financial strategist, but as a leader deeply passionate about building scalable operational systems, driving housing affordability and fundamentally transforming properties into communities residents are proud to call home. Brett, thank you for being here.

Brett Bowman (01:03)
Absolutely, Scott. for having me.

Scott Bursey (01:03)
It is going to be a wonderful discussion. For those of our listeners who may not be familiar with your world, please fill us in. How did your career start and where are you now? Yeah, no, great question. I, gosh, I started getting into real estate 20 years ago or so, doing single family, you know, kind of buy, fix, rehab.

Brett Bowman (01:17)
Yeah, no, great question. I, gosh, I started getting into real estate 20 years ago or so, I don’t single family, you know, kind of buy, fix rehab,

refinance repeat kind of thing. What is it? BRRRR strategy. I think I missed an R in there, but I was doing that for a bit. And then I was just about ready to start buying four plexes because I was kind of building up to that and randomly met somebody. I was in an ultimate frisbee league.

Brett Bowman (01:46)
And they’re like, have you ever thought about buying a mobile home park instead? And I just thought the person was crazy. I’m like, who would want to buy a trailer park? Come on. So we had lunch. He had never bought a mobile park himself, but kind of got me excited about it, even though I felt like it was a little weird. ⁓

Brett Bowman (02:00)
And then ⁓ in our network, he actually ended up meeting somebody else, serendipitously, that already owned a small RV park, or I’m sorry, mobile home parking was looking to buy a second mobile home park, but needed capital. And so the three of us bought it.

And that was kind of, it’s been history since then. What I love about mobile home parks is there’s just so much diversity and variety in what you can do and ways you can generate income and ways you can make them a little bit less risky, more resilient to economic downturns, all sorts of cool things like that.

Brett Bowman (02:14)
And that was kind of, it’s been history since then. What I love about mobile home parks is there’s just so much diversity and variety in what you can do and ways you can generate income and ways you can make them a little bit less risky, more resilient to economic downturns, all sorts of cool things like that. So that

first RV, gosh, I keep saying RV, because we actually do buy RV parks now as well. But that first mobile home park was late 2019. And since then,

we’ve worked with our investor group and we bought 27 between mobile home parks and RV parks. now have 27 properties that we bought in that time, mostly in the Midwest, which has been exciting. First of all, Scott, I’m not sure if you’re asking geographically or not, but I’m based out of Boise, Idaho.

Scott Bursey (03:03)
That is exciting. The path that you’re on is exciting. Brett, you’ve moved from single-family homes to building a 50 million dollar portfolio in mobile home parks and RV communities, an asset class many investors overlook. What did you see in the dirt, so to speak, in these parks that the rest of the marketing was missing?

Brett Bowman (03:36)
Yeah, that’s a great question. I’m going to start by maybe adding answering an adjacent question. You’re not asking but What what I found? Early on was when you’re jumping from like let’s say you go from single families. It’s really hard to jump into a 20 unit Multi-family complex because you’re typically talking several million dollars. My first mobile home park was 22 lots $200,000

Brett Bowman (04:04)
I mean, that’s less than most single family homes where I live. So, but I’m buying 20 units for that, right? ⁓ So the economics are just very different, especially depending where you’re buying. And so that was pretty appealing for me because, you know, when you have one single family home, if it’s vacant, you’re making no money. If you’ve got 20 lots, you know, even just eight of them, you’re making money occupied. And we only paid 200K for that. So that’s a big deal. The economics work there.

Brett Bowman (04:21)
As far as like, what did we see in the dirt that maybe other people are missing? There’s the general economics part

of that is where we’re buying, know, buying and parts of the Midwest can be better economically from a cost per unit versus the income in the area. Meaning what we found is the people like in the areas we’re buying, people generally make more money and rent than people in other parts of the country might be more apt to buy. So the economics work out pretty well for us that way. ⁓

Brett Bowman (04:50)
There’s lot of other really cool benefits of mobile home parks. So one thing that many people don’t don’t know is they actually have some of the best depreciation schedules in real estate because so much of the percentage of the purchase can actually be depreciated upfront just with the depreciation schedule. This is even obviously this is partially with bonus depreciation, but even aside from bonus depreciation, it’s a much more favorable ⁓ depreciation schedule than you would get from like a mobile home. I’m sorry, a single family home or

Brett Bowman (05:18)
multifamily or even storage. So that’s really great. And then there’s just a lot more resilience to it, just that the nature of the asset class, meaning if you have a downturn in the economic environment, typically you’re gonna see that problem hit the class A apartments because those are the ones people are gonna press out of first and they’re be done maybe class B apartments, then class C. And so I don’t like to say.

Mobile home parks are the bottom run, because they really aren’t. A lot of them are nicer than your apartment complexes and people will choose them because they have space, they can park right next to their home, they’re not sharing walls with people. There’s a lot of really cool benefits. They actually own their home, they’re building equity. ⁓ But it just has that extra resilience because

Brett Bowman (06:00)
it is sort of underneath some of the class A, class B options that people might go for. So it just kind of naturally has a little bit more built-in resilience.

Scott Bursey (06:29)
Brett, what did you see that others missed given the rapid changes in interest rates and capital availability over the last year or so? Where is Suncrest Capital currently seeing the best risk adjusted opportunities right now? And which asset classes are you avoiding right now?

Brett Bowman (06:30)
Yeah.

Brett Bowman (06:51)
Yeah, good question as well.

So one of the things that we’ve been successful in doing is, and you kind of touched on this a little bit too, is buying multiple mobile home parks in one city. What that helps us do, so again, the economics are a little different because a mobile home park, know, 100 units in a mobile home park is going to be a lot less money than buying 100 apartments, apartment units, right? But your cap rate, the multiplier you value real estate on can be

be just as good. You can see four or five cap rates in mobile home parks, just like you would see in a multifamily. So you can still see really amazing multiples in this space. And so what we found is that it can be really helpful to buy multiple smaller mobile home parks in an area and so maybe cluster up

to seven, 800 units in a city. So we have Springfield, Missouri, for example, we’ve bought 10 mobile home parks over the last over years there. And so we’re the biggest mobile home park operator in that city.

And we’ve had a lot of success there because, you know, I think the major metric we look for is how easily we can sell mobile homes. Because again, you don’t want to own these mobile homes. You just want to the land. You want reliable homeowners that come in, they buy the mobile home from you and they just pay you lot rent to be there.

Brett Bowman (08:03)
And we’ve had a lot of success there because, you know, I think the major metric we look for is how easily we can sell mobile homes. Because again, you don’t want to own these mobile homes. You just want to the land. You want reliable homeowners that come in, they buy the mobile home from you and they just pay you lot rent to be there.

And Springfield’s ended up being perfect demographic for us where pretty much every time we have a home ready to sell, it sells within a couple of weeks, ⁓ which is great. So we almost can’t keep up with the demand there.

So as far as kind of opportunities, what we’re looking for, mostly it’s reinvesting in our own assets that we already have, because there’s a lot of opportunity to continue to improve the infrastructure there, improve the value. We generally over the last five or six years, we’ve changed our strategy a bit, but when we first got started, we were buying a lot of things that were, 50, 60 % occupied. So we still have a fair amount that we can.

we can continue info and operate in. But then we over the last few, like three, four years, we’ve shifted more to, you we want a little bit more stabilized with some light value at like 80 to 90 % occupied. So still plenty of runway and opportunity to focus there where we’re reinvesting. ⁓ We are very interested in continued buy by parks, we have an RV park right now that we’re buying in Tennessee. ⁓ So continue to do that.

As far as we’re asked, we’re avoiding it’s not so much.

Brett Bowman (09:13)
We’re very specific on we only buy mobile home parks and RV parks. just, that’s what we know. We’re good at it. We know the ins and outs. So I wouldn’t say necessarily that multifamily is a bad thing to invest in, but for us, it’s not the right asset. What I

will say is there’s markets I don’t want to invest in. ⁓ For us, we found the Midwest works really well for us. We’ve got some really great friends that have partnered with us and invested with us that love California. And California is just a whole different.

Brett Bowman (09:41)
ball game, know, the cap rates are different, your occupancies are different, ⁓ the rents are different. So you have to operate very differently

than what we do in the Midwest. And so for us, that’s really what’s played well for us.

Scott Bursey (09:54)
That level of detail is exactly what our listeners are looking for. It’s clear you’re taking a strategic approach to risk in this evolving landscape.

Help me bridge the gap here with many commercial real estate loans maturing over the next 18 months. What is Suncrest Capital’s strategy for navigating the ongoing debt market dislocation, particularly concerning sources, new financing, or finding opportunities in special situations?

Brett Bowman (10:45)
Yeah, you know, we bought quite a bit of our assets in 2020 and 2021. And so we I understand that five year of maturity. We have a couple of things coming up this year, like in the next 12 to 18 months as well. Fortunately, one of my early mentors talked us into doing some seven year fixed rate loans. So we still have a couple of years on our bigger assets, which is nice. And they’re locked at like four point oh five percent, which is insane. So that’s nice. We’re not in a hurry to refinance those ones.
But, you know, I do to

Brett Bowman (11:00)
But you know, I do to your point, I think

that this is going to be a really good opportunity in the next 12 to 18 months to find some assets that are hopefully maybe a little bit distressed. People need to take a haircut, tough load them because they’re not quite able to get the value that they need on a refinance. I don’t want to buy heavy value out like I mentioned before. We like to see some things that are relatively stabilized, lower risk, but still have some opportunity, know, stand on the bone that we can come in and add some value there. So yeah, there’s a lot.

Scott Bursey (11:29)
I think there’s a lot of opportunity coming up though. That’s a masterful way to navigate the current debt volatility. Strong lender relationships and quick execution are clearly your competitive advantage right now. This has been on my mind since we booked you. For your value added projects.

Brett Bowman (11:43)
I think there’s a lot of opportunity coming up though.

Yeah, absolutely.

Scott Bursey (11:52)
Or are you currently balancing the rising cost of construction and labor with the potential upside on rent growth? And what metrics do you use to greenlight a value-added deal?

Brett Bowman (12:05)
Good question. on, no, let me ask you this, Scott, just to clarify, when you say on a value added dealer, are you talking about buying a brand new park or just investing when we invest in our current assets?

Brett Bowman (12:16)
A brand new park if you could elaborate on that and then if you wanted to go in detail on the other as well.

Brett Bowman (12:18)
Okay, sure.

Brett Bowman (12:22)
Yeah. So when you’re buying a new park that has any kind of value add, whether you’re buying something that’s 90 % occupied or 50 % occupied, you’re going to have some investment to come bring some homes in.

Brett Bowman (12:35)
we used to, we used to, you know, early on, honestly, we made some mistakes with our assumptions because we used to assume, you can buy a home for $15,000. So let’s just budget $20,000 per home and we’re good. That’ll be really conservative. Well, what you learn when you’ve been in the space for a minute and you’ve been in multiple markets,

Brett Bowman (12:52)
Every state, county, and city, at each level, there’s different rules for mobile home parks. And so some of them have some standardizations, but others, it just depends. So at the strictest level,

Brett Bowman (13:05)
you have to do four foot deep concrete piers for a home, and it has to match the the manufacturer’s specifications. And so the concrete alone is usually $4,000 $5,000 for a lot. And that’s after you’ve already

Scott Bursey (13:19)
you have to do four foot deep concrete piers for a home and it has to match the home of the manufacturer’s specifications. And so the concrete alone is usually four to $5,000 for a lot.

I’ve done some earth work to level the lot. You’ve brought water, sewer, electric to the lot. So just before you even talk about buying a home, you’re typically investing almost 10K per lot just to get the lot ready. And then let’s say you find a home, a used home that’s in good condition, doesn’t need any work, but it’s not new. You pay 20,000, you’re going to be spending another 5,000 to move it to your lot. So at that point, you’re 35,000 in to get a used home into your property. ⁓

Brett Bowman (13:48)
And then you may not be able to sell it for much more than that. Typically, you can sell those kind of homes for 40, maybe even 50,000 on East Home. But frankly, you don’t care about that. The ROI isn’t about how much you’re selling the home for. It’s about the lot rent, to your point.

Brett Bowman (14:03)
So if you think about like from our economics, most of our areas are about $400 to $500 a month people will pay for lot rents. So just for easy numbers, if you’re getting $6,000 lot rent on a park,

Brett Bowman (14:16)
And even if I lose $15,000 selling a home, know, let’s say buy it, it’s cost me 35,000 to move it into the park and I only sell it for 20,000. I’m losing 15,000, right? That’s still a 40 % return on investment every year.

Brett Bowman (14:30)
So the economics work all day long to make that kind of investment. But it can be capital intensive because it takes you a while to get back the 15K to then go and redo it all over

again. ⁓ So that’s kind of the trick where when we’re doing these projects, we have to estimate and really forecast, okay, how many homes do we need to do per year? And then when do we get the return on investments to recycle it? And then sometimes we just have to raise enough capital so we can do a full two or even maybe three years worth of homes.

Brett Bowman (15:01)
so that we’re not having to sit and wait for capital to get back so that we can go make the investments and continue to do it. Because those numbers, again, they make sense all day long.

Scott Bursey (15:10)
Point well taken that operational discipline is so key it takes serious systems to execute value add effectively especially when construction labor costs are a moving target and Brett

In a competitive capital raising landscape, what unique steps is Suncrest Capital taking to attract and retain institutional investors? And what do those investors value most from your communication and reporting?

Brett Bowman (15:44)
You know, I’ll be honest, we haven’t been particularly successful with attracting new institutional investors. We have about 150 investors and most of them have done two or three investments with us. So we get a lot of repeat. Our average investment is about 100,000. And so in that, we do have some institutional, we have some family offices. So we’ve had some people, you know, we’ve had probably biggest checks. We’ve had a few write over $2 million checks.

many write 500 to a million checks. we have some institutional, but by and large, it’s mostly people like you and me. They are just, you looking for good investments,
people they can trust. They want to learn as well. A lot of our investors really like to see our newsletters and our webinars and our updates because they also like to learn how is it going or how does it work? You know, I don’t know that they necessarily want to do it on their own, but they like understanding kind of the steps behind and kind of trusting the process a little bit more.

Brett Bowman (16:41)
So what we do as far as like retaining and keeping people excited and understandings, we’re very transparent. We have at least quarterly updates. Everybody has my cell phone, so I get texts or emails.

Brett Bowman (16:52)
People are welcome to call and text me anytime they want. And so my whole team is available the same way. We have a really strong team. By the way, we’ve got a nice central team with bookkeeping, accounting. My CFO is very strong analysis.

And that’s not even mentioning my operations team that’s solid with homes and project management, everything. So a lot of really good things there that think that our investors appreciate seeing the depth and the expertise, but definitely the communications and

Brett Bowman (17:38)
being proactive. Like if we see something, hey, you we love saying, Hey, look, we’re a year ahead of schedule on this. This is pretty awesome. Our valuation is up. But if something’s going behind, we get ahead of that, make sure we say, Hey, this, this thing is a little unforeseen. We’re going to take a pivot here, but we’re

And we overcome it within a couple of months and we’re back on track and it’s fine. people just like seeing both ways, they wanna hear all the full story, transparency and everything that’s going on.

Scott Bursey (17:52)
Transparency and alignment indeed.

Those are the cornerstones of trust in this business. It sounds like you’re going above and beyond to keep your institutional partners fully informed and confident.

Brentt, last question. Looking ahead three to five years, what is the single biggest technological or demographic shift you see impacting the real estate industry? And how is Suncrest Capital positioning itself to capitalize on that trend?

Brett Bowman (18:41)
Yeah, I would love to fast forward three to five years to see what actually ends up being. ⁓ just everything I think everything we’re all seeing every day. There’s a lot going on with the eye. So I think most people are going to say AI is going to be transforming some aspect of just about everything we’re seeing. I looking at it from from my lens where I can see some enhancements from AI coming, I can see a lot more help and maybe optimization from sourcing new deals.

But I also think that’s going to make it more accessible for people. So right now, we’re able to find some deals because it’s a lot of work to find deals right now. You I have to do a lot of work just to find a list of parks, and then their supposed donors and then the real owners and the phone numbers and then get the person answer the phone. There’s a lot of work where I can see AI streaming a ton, which will be better for me, but it’s also gonna be better for everybody else. So it’s just gonna I think it’s gonna make access to deals, you know, a little trickier from that perspective.

Brett Bowman (19:37)
But.

I think there’s

a lot of operational things that will be enhanced from AI as well from mobile home parks. ⁓ You know, one of the shockers I had coming into the mobile home workspace was how much work it is to manage mobile homes. So this isn’t the parks, it’s the homes. ⁓ We have 1600 lots across our portfolio for their mobile home parks lots specifically, and we own somewhere around 150 homes. We don’t want to own homes. I don’t know if I’ve said that enough. We don’t like owning homes.

Brett Bowman (19:50)
But naturally you do have to own homes, at least at some level,

Brett Bowman (19:52)
because you’ll buy a park and the last owner owned homes and you just inherit them, or you’re moving them into your park to get them sold. And there’s so much work to managing them. You’re managing where they’re moving, the rehab state, the sales state, where the title is, if there’s a loan on it, all that kind of stuff. Every loan or every home has all the stuff. So I could see AI optimizing that and making it a lot easier to forecast budgets and.

Brett Bowman (20:17)
decide where to make those investments on the homes and where the tracking is going and all that kind of stuff. And I also think there’s some potential disruption for investor management, relations management stuff to come. So I think it’ll be an exciting three to five years in this space.

Scott Bursey (20:27)
Now, that’s a fantastic long term view. Brett?

Thank you for sharing Suncrest Capital’s outlook and giving us this deep dive into how you’re managing capital and creating value today. Brett, if our listeners would like to follow your journey. yeah, absolutely. And I could go on for hours speaking with you. We’d certainly love to have you back at any time. Let me ask you this. If our listeners would like to follow your journey or partner with

Suncrest Capital. What’s the best way for them to reach you?

Brett Bowman (21:28)
Yeah, my email is probably the best way to get in touch with me. It’s Brett, B-R-E-T-T at Suncrest Cap, short for capital. So suncrestcap.com. I’m also very active on LinkedIn. So Brett, Brett Bowman on LinkedIn.

I think if you just search Brett Bowman at Suncrest Capital, you’ll see me on LinkedIn. I post pretty regularly just thoughts and ⁓ suggestions or learning experiences. You know, we pretty active posting there. So definitely find me one of those two ways.

Scott Bursey (21:42)
Everyone Brett Bowman of Suncrest Capital. Thanks for joining us today, course, thanks again, Scott. And thank you to our listeners. We appreciate you for tuning in. If you got value from this episode, please subscribe.

Brett Bowman (22:05)
course, thanks again, Scott.

Scott Bursey (22:14)
We have more conversations coming up with operators just like Brett. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.