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Show Summary
In this episode, Dylan Silver interviews John Evans, an Alabama-based investor specializing in mobile home parks. John discusses the growing interest in mobile home parks, attributing it to increased visibility through social media and educational resources that have emerged over the past decade. He explains the challenges of finding viable deals, emphasizing the importance of building relationships with property owners, particularly those who have owned their parks for many years. John also addresses the negative stigma surrounding mobile home parks and the reasons behind the lack of new developments, including zoning issues and financial considerations for municipalities.
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Investor Fuel Show Transcript:
John Evans (00:00)
No, there’s, I mean, I think the latest rate is like, I’m trying to think, they have, there’s a ratio, there’s like a hundred a year that are redeveloped or just torn down or just closed. And I think there’s 10 that are built. That may be skewed a little bit over the last few years, but the last time I looked, was 10 across the country that are built. So it’s really not, you know, it’s shrinking.Dylan Silver (02:00)
Hey, folks, welcome back to the show. Today’s guest, John Evans, is an Alabama based investor who operates in the southeast United States, investing in mobile home parks. You can find him across social media on LinkedIn or on his website, sixrockprop.com. John, thank you for taking the time today.John Evans (02:19)
I appreciate you having me. Thank you.Dylan Silver (02:21)
When we talkabout the mobile home park space, I want to dive in here because this is a segment that we’re seeing increased interest from. I would say it’s almost in vogue right now. You’re seeing people migrate from other segments into mobile home. As someone who’s been in the space, what is the cause of this and what do you attribute to mobile home being so attractive?
John Evans (02:43)
⁓ Well, I mean, as far as the cause, I guess it’s just being popularized through social media, possibly. mean, because before that, there was no podcast, you know, there was no education, there was no groups, there was no meetups, there was none of that, you know. When I started 10 years ago, you know, and now it’s like there’s mentorship programs, there’s podcasts, there’s YouTube, there’s all kinds of stuff, you know. So I thinkJust that alone has really reached the masses to introduce it to just your normal people. you know
Dylan Silver (03:21)
Now,when we talk specifically about mobile home park strategy, if we can dive into this here on a granular level, are most mobile home park deals being found like on some type of listing service like a Crexie, a Loopnet, or are these, you know, folks where you have to have some type of relationship there or it’s a long term follow up and you know the seller and you’re developing rapport and then when they’re ready to sell, you know, you’ve already planted the seed in their mind, how it alone.
John Evans (03:51)
Yeah, mean, CREXI has deals listed. It’s just really hard to find a deal, you know, that actually works. know, CREXI, you could find properties on there that are not listed, you know. ⁓ As far as trading the masses, that’s a heavily ⁓ relationship-based business, you know, where people know how to close deals and people know how to find deals, you know, and they work together.If you’re trying to get into the space, I wouldn’t even suggest reaching out to brokers right off the bat. But you can find, we call them mom and pop. They’re like the original owner of the property. They’ve owned it for 30 years. They’re baby boomers. They’re older. They’re ready to retire. You can find them and build some trust and buy their property. You know that?
Dylan Silver (04:45)
Oneof the interesting things that I’ve noticed, and I believe this is pretty much true in every state, correct me if I’m wrong here, John, is they’re not really making any new mobile home.
John Evans (04:56)
No, there’s, I mean, I think the latest rate is like, I’m trying to think, they have, there’s a ratio, there’s like a hundred a year that are redeveloped or just torn down or just closed. And I think there’s 10 that are built. That may be skewed a little bit over the last few years, but the last time I looked, was 10 across the country that are built. So it’s really not, you know, it’s shrinking.Dylan Silver (06:12)
When we we talk specifically about the reason for that, right? Like when I think about the number of investors that are interested in mobile homes, I would immediately think, well, they got to be making new ones, but it’s counterintuitive. I’ve heard that, you know, they’re not great source of tax revenue for the localities that they’re placed in. And I’ve also heard that there’s a little bit of a still lingering negative stigma to the idea of a mobile home park being put in some areas so that you have, you know, municipalities that arebasically opposed to creating new mobile home parks.
John Evans (06:44)
Yeah, I mean basically the mobile home park cost the city money, know, because basically just because of, I mean, one taxes and to school, you know, all those kids go into school, there’s not enough tax revenue to support them. So the city has to basically pay for the, you know, the educational aspect, but yeah, nobody, nobody wants to live beside a mobile home park. I mean, it’s like I said, the negative stigma, you know, I think that’s slowly changing, but I don’t know if it’ll ever go away.Dylan Silver (07:15)
One of the things that’s interesting when we talk about that stigma is I do see it changing right now. And I’ll tell you how, because the on ramp to home ownership right now, pretty much anywhere in the country, is a daunting climb for most people, especially most young people. people are looking at, what do I do? Do I rent indefinitely? Do I rent a home? Do I move out of state? What are my options?you know, part of that is you’re seeing some people who are looking at mobile homes or they don’t fit maybe the demographic of what you thought. And also, too, it does give you that kind of on-ramp to home ownership. I don’t know how often this happens, but as someone from the outside looking in, I could see the idea of, I’m going to finance this mobile home. I’ll live over here. It’ll give me this semblance of stability. I don’t have, you know, ⁓ like
John Evans (08:12)
Okay.Dylan Silver (08:13)
rent increases every year without me owning the spot in a sense, although they don’t own the land. And I use this as a bridge to eventually get into maybe something more traditional, like a single family home. On the flip side of that, have the people saying, well, you don’t own the underlying land underneath the home. So you’re building up some level of equity or something like this in the mobile home. those tend to to lose value from what I understand.John Evans (08:19)
Yeah.Dylan Silver (08:42)
What’s your perspective in general on the avatar of the person who moves into a mobile?John Evans (08:49)
Well, I mean, as far as the touch on the equity part you was talking about, we have people that buy homes in our communities like cheap, you know, maybe $5,000. And sometimes they sell those for 30, 40, $50,000. You know, and they sell quickly. If you’re in the right market, they sell quickly. So, I mean, I wouldn’t say they, you know, don’t have equity. It’s just, it’s a little bit different. But yeah, I mean, you can technically be a homeowner.they own their homes, you we rent the land, but you have a yard, you know, so yeah, I guess some people kind of come in, live here a few years and then move.
This is still their home.
Dylan Silver (09:32)
When people talk specifically about, ⁓ and I don’t want to say this is like the whole industry, right? But when people talk about mobile homes, manufactured homes, right? The idea kind of like meshes the two, but they’re totally different, right? So when you have a manufactured home or a modular home, right? That’s entirely different than a mobile home. Are you seeing that people are putting modular homes ontoJohn Evans (09:53)
Yeah.Dylan Silver (10:02)
you know, sites that were traditionally for mobile homes. Is that something that does happen? Because I know that a modular home would retain its value more than a mobile home.John Evans (10:10)
Yeah,it does. We don’t really see that where we are. We’re more in the, we just call it like the working class, you know, people that work in nine to five, you know, roofers and plumbers and people come here. So they really just need the affordability, you know. So I feel like the modular home kind of takes away from what they really want, you know. So where we are, don’t see.
Dylan Silver (10:36)
Yeah.Super, super basic question again, because I’m not inside inside the space right now. But in Alabama, of course, you’re going to have ranges. But what what might be the predicted range for a lot rent for a mobile home?
John Evans (11:29)
I mean, if it’s like a mom and pop where, you know, they typically haven’t raised the rent in years. I mean, some of those you could find those as cheap as $100 a month. Yeah, that’s and then on the high end, you know, probably 500. If you’re in a major city, know, Tuscaloosa, Birmingham, Huntsville, you know, it could be up to 500, which is still extremely affordable.Where can you live for $500 a month and have a yard?
Dylan Silver (12:02)
That’s a great point. Again, this is of course, there’s going to be a huge range here. But when folks are buying a new mobile home, I’m thinking because these are mobile homes, these are basically like car notes. Their monthly payment has got to be pretty substantial. And in most cases, do you see that being the case or because you’re focused on the rents, is that somewhat foreign to investors?John Evans (12:30)
We generally, I mean we sell new homes. Sometimes we bring new homes in. We haven’t done it in a little while so I can’t give you exact data but back a few years ago we were selling homes for like, and these were brand new, Clayton and Fleetwood and they were selling for like $45,000. know and basically, so basically we were just selling them at cost because we get aDylan Silver (12:57)
Yeah.John Evans (12:58)
You know, we get occupied a lot. We have a resident for life, you you could say. So we really didn’t focus on making money on homes. We just wanted to build a community of homeowners, you know, that are going to take care of the property like it’s theirs. You know, that was our focus. That still is.Dylan Silver (13:18)
Now, one of the things, as you mentioned, this idea of, you know, selling at cost, right, people would say, well, why would someone do that? These are sticky tenants, right? These are people who are going to stay for a long time.John Evans (13:31)
Yeah, well, yeah, they they the latest ⁓ data, I think, is 15 years. Your average, I mean, your average home moves one time, you know, from the dealership to the lot that it goes on. You know, in general, they don’t move once they’re set. You know, that person will sell the home and somebody else will buy it. And so we just want to be in the land business renting land. So when somebody wants to sell their home, we generally don’tget involved. might help them market it, but we don’t want
Dylan Silver (14:06)
Now, unrelated to this, and I know this is a little bit out of left field here, but for folks who are looking at ⁓ mobile homes and not necessarily living in a place where ⁓ they’re in a park, but where they own the land, does this have to be zoned differently than like for residential single family? Or can you put a mobile home in a residential neighborhood?John Evans (14:31)
⁓ I guess it varies per municipality. It’s really frowned upon now, but as far as a mobile home park, it has to be zoned mobile.That’s one of the main reasons why they’re just not being developed is because zoning, know, they would much rather have some type of manufacturing facility, apartments, know, commercial or something that brings in all this tax revenue, you know, the city doesn’t want to hold.
Dylan Silver (15:46)
want to pivot a bit here and ask you about the acquisition side of this, ⁓ because there’s a lot of people I know our listeners want to know, you know, what’s the fastest way, you know, without shaving any corners to acquire a mobile home park, a lot of people are interested in seller financing. Is that a reasonable way to to acquire, you know, your first deal or really, because these are folks who’ve beenyou owners for decades potentially that they’re really looking to cash out and would not be considering seller financing. What’s your perspective on seller financing here?
John Evans (16:20)
It’s really about trust and a bond, you know, that owner that’s going to finance it, they need to believe in you. You know, you’re not going to be able to just call somebody, hey, can I buy your property and you finance it to me? It really doesn’t work that way. have to first, you have to build a list of the communities that you would want to acquire in a range, you know, and then you have to reach out to all those people and kind of build a relationship with them. You know, it can be done becauseThe first two properties I bought were owner finance. And actually the last property that I just bought that I’m in right now was the same, it was owner finance. So it’s a great tool to get in, you know? And the first two properties I bought that were owner finance, they did like zero background checks on me, you know? They didn’t run my credit, they didn’t do any of that. know, was just, we went to, my neighbor lived across the street and he was a lawyer.
So he wrote up all the documents I needed to finance this property. So it’s really, if you can build that relationship with mom and pop, you can kind of hash out the terms that you want to agree on. So yeah, it’s a great tool to get it in space.
Dylan Silver (17:37)
Now, specifically for folks who may not have experience in ⁓ managing these deals, what comes up? I’m thinking, know, my thousand foot view looking in like septic would be the biggest issue because it can cost, you know, an arm and a leg to fix septic and then there tends to be problems, especially with aging.I can’t imagine that there’s too many evictions that happen because the cost of where it’s at and these people probably don’t want to have to deal with that. But what are the main issues that come up in ownership of a mobile home?
John Evans (18:12)
Well, it’s a very people driven, hands on type business where people want to know who you are, you know, as opposed to an apartment complex. They don’t know who the owner is. They don’t even care. There’s maybe a leasing agent in the office, but they don’t need to know who the owner is. As a mobile home park, it’s like, it’s more of a community and people want to know who is who. So it’s kind of the same whereneed to be trusted and professional. You have to kind of remove yourself emotionally though, you know? Because when the first day, all these people are your friends, you know? And they need all these favors, you know? So you have to kind of remove that portion of yourself, you know? Your feelings in your heart, it’s business. You have to do what’s necessary. But yeah, on the septic, that could be one of the biggest
issues is water and sewer. If there’s a well and there’s one well…
Rude.
poison.
Yeah, there’s a lot of things that you need to watch out for. I would say before those people want to buy a community, then you need to get some form of basic education.
Dylan Silver (19:42)
You know, when we talk specifically about a septic, I have experience on my own level, having, you know, lived on a ranch and seen how ⁓ septic can be finicky, right? And, you know, when that breaks, it’s not a pleasant thing, right? So I can imagine, you know, especially if you’re buying an aging mobile home park community, when you’re thinking, well, there’s no issues right now. Well, if the septic breaks,you know, that’s, $40,000 or however much you have to spend now to fix that. And now you have frustrated tenants, right? So when you’re coming into one of these deals, of course, that can be a huge thing that people need to be wary of. We are coming up on time here, though, John, any new projects that you’re working on that you’d like to get out to our audience as well. What’s the best way for folks who are listening to reach out to you or your team?
John Evans (20:35)
You could email me [email protected] We’ve got several things we’re working on right now. I’m actually as I mentioned on site today ⁓ We’ve got a lot of homes coming in septic issues like you talked about and just constantly improving the property But ⁓ and yeah, and so we’re just growing they’re just constantly kind of reaching out to owners to acquire the community and just continue to growDylan Silver (21:03)
John, thank you so much for taking the time today. Thank you for coming on the show and teaching us a little bit about the mobile home park space.John Evans (21:09)
Yeah, I appreciate it. Thanks for having me.
