Steve Johnson’s Inspiring Investment Journey

Dylan Silver (01:32)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. Today on the show I have Steve Johnson in beautiful Miami, Florida. Steve is a real estate investor and founder of JS Summit Global, where he specializes in mortgage note investing and building passive income through performing and non-performing debt. Steve, welcome to the show.

Steve Johnson (01:55)
Hey, thanks Dylan. I’m really happy to be on this call and I’ve been checking out the podcast for a little while now and just really kind of catching in some of the other folks that I’m in some masterminds with and some mentors, they’ve been on this show. So it’s pretty cool to be jumping in. I hadn’t realized they were on there until I started looking through all the different episodes you guys have. I’m very excited to be here.

Dylan Silver (02:18)
Any names off the top of my head? Off the top of your head?

Steve Johnson (02:20)
⁓ Mark

Monroe, he’s on here. I was just talking to him last week. had ⁓ Patrick Frans I saw was on there as well. He’s one of the mentors that I’ve used a lot here through the note investing world.

Dylan Silver (02:33)
Very cool, very cool. No investing, there’s a lot to unpack there. But before we jump into that, how did you get into the real estate space?

Steve Johnson (02:41)
So I actually came from the world of theater. I was a technical director ⁓ working backstage designing shows and building shows and from there I got burned out. It was a lot of long hours, it was very hard but I had the summers off because I was working at a college at the time so I would take the summer off and I would flip mobile homes because I could afford mobile homes in that market and so thus began my real estate investing. What attracted me there was

I bought the homes, I fixed them up, and I would sell them on payments. So there I am right away getting into the note space, not recognizing and realizing I’m actually in the note space already. So I’ve started buying these mobile homes, I’m shocking myself, I’m getting in for a few thousand dollars, flipping for a few thousand dollars, and then selling for tens of thousands on payments for a couple of years, and I’m not the landlord. And that was what I wanted, I did not want to be doing that. Well, lo and behold,

I get into property management with a local mom and pop operation. become the landlord. ⁓ After I’ve transitioned out of theater, I actually continue doing more and more property management for smaller mom and pop shops. I’ve done larger corporate places. I was working for an independent senior living facility for a while and really learned. It was very valuable there because I was learning how to build the small things on the small scale for the little operations.

and then scale them to the larger corporate world, which was fantastic. So I’m in Illinois now at this point, and I found, I had realized very early on with the mobile homes, I wanted to be the mobile home park owner and operator. And so I was on the hunt to find my own park. And I was hunting, I was working really hard, I had it in my head. I was gonna get this 30, 40 lot park, I would manage it, I had the property management skills.

I had the repair skills, I knew how to do everything, wasn’t a big issue. Thank goodness I never got into that because I ended up finding a couple of partners. They had some parks in Illinois and they needed an operations guy. So that is where I jumped in. I jumped in as a COO with these guys. We ended up ⁓ very quickly purchasing a bunch of mobile home parks in the Midwest, mainly in Illinois. These are heavy turn parks.

really ugly, really poorly run, rather rural in a lot of the areas that we were in. so we built our team. We grew it up to about 16 parks by the time that I left at around end of last year or so. And I was with those guys for a handful of years. Great partnership, great team I was working with.

But I had a competitive edge because I had gotten into some mortgage notes with someone else. We had bought a couple of really cheap mortgage notes. We worked minimally on them and I was making almost the same money as I was on this mobile home park that was eating up all my time and headache and chaos and drama because it was the tenant base. was very difficult and it was very heavy turn parks.

And so here I am, I’m way in the office, it’s like, okay, man, do I stick with this really hard, difficult asset class and it’s not turning into the cashflow cow that I had thought it would be, because they’re heavy turnparks, or do I go with mortgage notes, which require a lot less effort to really kind of keep the machine going. It’s a lot slower, it’s unsexy, it’s less dramatic, and so.

⁓ Also to help my wife out with her business. I left the team with the mobile home parks I’m helping her with her business and then I’m growing my own note investing with JS Summit global as well And and now my focus has been mainly non-performing debt because there’s more you can do to manipulate the The mortgage note or the deal that you have with the borrower It’s a it’s very advantageous space to be because there is a lot of outcomes you can

start to throw towards the borrower, know, are you gonna come back and start paying things? Do we want to cash for keys? know, worst case scenario, do we foreclose what’s gonna happen? So there’s really a lot of options there with the non-performing side.

Dylan Silver (07:53)
Are you currently in Illinois?

Steve Johnson (07:55)
No, right now. Yeah.

Dylan Silver (07:57)
Okay, okay. Let’s talk about that, because I love ⁓ Florida, South Florida. That’s definitely considered South Florida, right? Okay. So how did the transition, Illinois to Miami, two different worlds, two different worlds. How did that happen?

Steve Johnson (08:05)
yeah, definitely.

Two very different worlds. So I was in Illinois, was working mainly property management at that point. ⁓ Actually no, that’s when I got into the mobile home parks and I was there for working with those guys and my partner at the time, she had taken a job down here in Florida and I remember going, Florida, man. I was not at all excited for Florida. I didn’t think it was my vibe and now I’ve totally embraced the floral. ⁓

the floral shirts of Miami Vice and everything. I love it here, the weather’s fantastic. So came down here, I’m running, you know, I’m COO of the Mobile Home Park Company, I’m running things remotely. We have a team of virtual assistants who do a lot of the day-to-day property management and admin work. ⁓ And then I’m also doing the notes, which is a completely remote world as well. You know, I can do that at any time, anywhere, as long as I’ve got internet.

You know, it’s really computer work. It’s sitting and doing some research and jotting down numbers and doing some calculations and seeing what you can do and sending a bunch of emails to lawyers or servicers and maybe the borrowers if you’re directly contacting them.

Dylan Silver (09:22)
You know Steve, I had a life changing deal that didn’t end up going down because I was so green. got my, this was my first deal under contract for my own ⁓ company. This was, ⁓ I want to say almost a year ago at this time, was like August, well not a year, was August of last year. This is San Antonio, Texas. I got a mobile home and an acre and a half of land just outside of San Antonio. I had a couple partners, two partners.

And I had no idea what even note buying was, but we had people who had 20, $30,000 down, multiple of them, and we were going to sell a contract that we had for like $100,000. And we had it under contract for about 80. So I was like, this is a good deal for me and my partners. Let’s, make this work. And I didn’t know that it was going to be hard to finance it. I figured 25, $30,000 would be enough. So it ended up happening was one of the partners.

Steve Johnson (10:17)
Mm.

Dylan Silver (10:22)
said well we can hold the note you can hold the note and so I didn’t realize this then I had no idea what that even meant but I like did this was I think maybe this was chat GPT was there but I wasn’t really ⁓ all over chat GPT then so I didn’t really know what that meant I did some type of preliminary search and I realized I would have to pay if something were to happen and this person didn’t pay what if they move the mobile home off what if X Y & Z so I was so green into this that deal ended up falling through

Steve Johnson (10:31)
I’m

Dylan Silver (10:51)
But now that I’m in the note buying awareness, I’m like, man, that deal really fell through my fingertips there.

Steve Johnson (11:33)
man, I love the awareness. I’m going this weekend to a diversified mortgage expo. here in Nashville. And I remember the first year I went, was speaker after speaker after speaker. I was up on the stage and they’re saying, I don’t want to own real estate anymore. And I was going, what? That does not make sense. That’s not what all of the books say. That’s not what all the gurus do. And now I get it. Now I don’t really want to own real estate anymore. Now it’s about controlling that debt against that real

just like the banks are doing. know the banks when you when you go look at banks yeah they have a portfolio of homes and properties because they kind of got stuck with it or it’s a weird it’s a unique advantage play but their main business is not property management acquisition of homes whatever you know it’s not that it is lending and so that’s where I’m putting myself in that same position as banks and in fact as a note buyer

I step into the shoes of the bank, exactly the same shoes, same set of sneakers. It’s no different. I have the same paperwork in place. I have the same rights. I have the same obligations. it is just like you might get in the mail that letter that says, hey, congratulations. You need to now make your mortgage payment from this bank over to this bank. I’m that second bank at this point. You just don’t realize I’m not a big giant bank. It can happen. It happens all the time. It happens with students.

loans, it happens with credit card debt, it happens with car loans, a lot of the time you know people don’t realize it but their mortgage the day that they get their mortgage assigned and they close that day or maybe the next day their mortgage has already traded hands on the secondary market to another note-buying bank or firm or something. It’s a very fascinating unique world a lot of people are not aware of.

Dylan Silver (13:25)
Yeah, these small banks, learned about this when I got my real estate license, know, Fannie Mae and Freddie Mac, these small banks can’t ⁓ hold on to these notes forever, otherwise they’re gonna run out of money super fast, right? And so I believe that’s the secondary market is how that works. talking about going from mobile homes to note buying, I wanna do a deep dive into this if it’s okay with you here. So the mobile home space, very unique. ⁓

Steve Johnson (13:35)
Yeah.

Dylan Silver (13:54)
you do have to have some some level of savvy to even understand how this works because in many cases it’s not real property unless it’s a fix to the land banks like I experienced have difficult time loaning on it or don’t want to loan on it. So when you were getting into that space you mentioned fixing and flipping was was was this all brand new to you.

Steve Johnson (14:18)
As I got into the mobile homes…

themselves it was new. That was my first venture. But into the parks, I had partners. So we had the acquisition partner and we had the partner who knew all of the big infrastructure. And then I was the property management operations guy. As I like to put it, they were the guys with their foot on the gas, my foot was on the brake. Or they were shooting from the hips, I was taking my time to aim. It was a very good balance that we struck with each other. ⁓

in terms of pulling the trigger on acquisitions and not necessarily being confident in the due diligence of purchasing an entire park, I made up for in running the park, in the property management. know, those guys, they didn’t have the same experience that I had, so I was really able to tap into the systems that I knew, the documents, the legal side of things in terms of tenant-landlord relationship and really look at that. because I had done my own flipping and rehab work in the past,

really knew how to oversee a lot of the internal repairs. So we kind of had it that ⁓ myself, one of the things we would tell our teams is if it’s a repair issue on the inside of the house, come to Steve. He can take care of it. He can probably walk you through it. If it’s a repair issue outside of the house, such as plumbing underground, roads, trees, utility infrastructure, that goes to the other partner who handles that side of the equation. And it was just that really fantastic balance. So I am super

super pro partnership because when you get to a scale, especially the scale that I like to work at, ⁓ you need to have partners who can pick up where you’re weak, who can step in where you don’t know. They’ve got the connections, they’ve got the network, they have the know-how and that’s hugely beneficial rather than just trying to do it alone for years and years and years and banging your head against the wall.

Dylan Silver (16:14)
Have you sold off any of these mobile home parks?

Steve Johnson (16:58)
Yes, so I sold off my position actually with the the partners and I left the company At the end of q3 last year and you know was it was a really nice It was I was very fortunate that it was a good clean ⁓

break from the partners, you we’re still on good terms and everything. It was not a messy divorce as many people go through. And I think that’s probably a good part because we were on the up and it was before things got messy and I was just seeing like, wow, you know, the amount of work I’m putting in over here on the mobile home parks.

It’s a full-time job and I got into the mobile home park space for passive income. So it was defeating the purpose. Whereas the note investing, I can turn that into a full-time job if I’d like to, but you know really I can, right now I’m at a scale where things are going really slow, I’m putting in minimal time, I need to grow and continue just building that business and that machine so I can grow to the scale that I want to be at in the next couple of years.

Dylan Silver (17:59)
You

know, talking about the life cycle of a mobile home park deal from searching for the deal, acquiring the deal, getting it under contract, fixing and flipping or fixing and holding to then selling or selling your position in it. Can you guide us through ⁓ some of the niche work or some of the process there that is maybe different or challenging versus single family residential?

Steve Johnson (18:27)
⁓ boy, there is so much. With just the mobile homes themselves, they are assets that depreciate. They do not gain value unless you’re in a really unique market, but that’s not gonna happen for 90 % of the people who have parks or want to get into that space. ⁓ So you have an asset that depreciates. You also have an asset that is not bankable. ⁓

meaning banks do not like to lend against mobile homes in parks. You have a better shot if your home is out on land and considered real estate. It’s still not as attractive to a bank as single family home. But when you’ve got a home, a mobile home in a park where there’s lot rent, there’s still the owner of the park has definite final say over things. ⁓

the banks really struggle with that. that’s also typically you’re dealing with a lower quality borrower too. People who are going to mobile home parks, their lower income, oftentimes will have poor credit scores and banks just don’t find that attractive. And the lower price point as well hurts. Banks are gonna spend the same amount of time underwriting a $600,000 home as they are on a $80,000 mobile home. And they are not gonna get the same amount of money.

So it doesn’t make sense for them scale-wise. They just don’t want to touch that. So you have to really understand that you’re going into a space where you might have to be the lender. And as the park owner, you end up creating a lot of notes yourself on the mobile homes in order to sell them to your tenant base.

Dylan Silver (19:49)
That’s what I ran into.

Is there a difference?

Is

there a difference between mobile versus manufactured as far as getting ⁓ financing or are banks adverse to both?

Steve Johnson (20:15)
they’re… That’s a really, that’s a really good question and a very tough question to answer because a lot of people have those two words mixed in the wrong ways and in the wrong…

It’s a really unique fine line there. Manufactured can mean mobile home and it can also mean like modular. Modular is gonna be more attractive to a bank because they’re more traditionally built. ⁓ Unfortunately, I think in my opinion, banks really have it wrong because today’s mobile homes.

are built at better construction standards than most local single-family homes. And that’s because every mobile home coming out of the factory anywhere in the country needs to meet HUD guidelines.

And to meet HUD guidelines, they’re typically above or a lot of time because the factories don’t know where the home’s going to end up, they’re going to build them above HUD guidelines. Whereas when you go to, you know, the homes that are built in Arizona with, you know, no sheathing on the outside, they just have the paper and then they do the siding, you know, they’re doing the minimum. But you can’t do that with a mobile home because it could end up in Arizona. It could end up in Texas. It could end up in Colorado. So you build it to a higher quality.

Dylan Silver (21:03)
Hmm. It’s hard.

Steve Johnson (21:33)
And unfortunately, mobile homes still carry this negative connotation with them.

Dylan Silver (21:41)
Yeah, mean, you know, talking about the real estate space as a whole for consumers, for people that are looking to buy a home, and then interfacing that with the mobile home space, we’re seeing more and more of creative, I would say, situations. I’ve heard the term ADU thrown around a lot.

I’ve now seen you can, I don’t know if you still can, but a couple months ago you could buy Amazon homes and so on and so forth. And so you have a very unique perspective being in that space. Obviously no one has a crystal ball for the future, but I feel like there’s a huge amount of growth opportunity there and it’s ripe for innovation.

Steve Johnson (22:27)
It is, I think there’s a lot of really interesting innovation coming out, but I believe that most of that innovation is only gonna work in the hottest, most attractive markets, because in the rural markets where we operated the most…

Dylan Silver (22:37)
Mm.

Steve Johnson (22:41)
you have the same price for minimum pricing for labor and minimum price for lumber for example. A 2×4 whether you’re in Florida or Minnesota or Illinois or California they’re gonna cost approximately the same per stick.

Now if you have a rental, if you have a property in Illinois where lot rent is $350, that’s only going to buy you so many 2x4s. Whereas here in South Miami, a mobile home park, they’re going to start at $1,500 a month in lot rent. That’s going to buy you a lot more 2x4s. Same goes with contractors. When you call a plumber or an HVAC guy, they typically charge a flat fee just to come look, right?

Exactly. I mean that that’s pretty standard across the country and if their fee is a hundred dollars and your lot rent is 350 you just lost a third of your monthly income on that unit and that’s that’s just a come look you know that’s before they did anything so it’s it’s a really tough it’s really tough to make a lot of this affordable housing work even in these rural markets just because of the cost of labor and materials.

Dylan Silver (23:40)
Yeah. As an investment play, yeah.

pivoting a bit here, Steve, I saw that in your bio, you are the CEO of a skincare company. That is awesome. How did you get involved in that?

Steve Johnson (23:57)
Yes.

⁓ That would be with my wife. ⁓ So she saw my operational skill set. She wanted, she was dying to steal me in and help me run her business. She’s had that for a handful of years here in South Miami and so she does facials and she’s very much the technician. If anyone’s ever read the book, The E-Myth, she is the perfect example of the technician who becomes the business owner and you know…

doesn’t have the operational ⁓ skill set quite yet. So I’ve come in and I’m really helping build that out and grow the team, grow the business, make it more ⁓ efficient so it can run by itself. We can take our month off and go vacation somewhere wonderful and the business will still continue making some income while we’re away.

Dylan Silver (24:47)
When you were studying theater in school, did you know that this would be the end game for you?

Steve Johnson (24:51)
⁓

man, no, no. thought for life long I thought I was gonna be in theater and designing shows. I was gonna be working on Broadway or in Hollywood and I mean I have completely gone away from that entire industry. It just has no attraction to me anymore because I just got burned out with all the long hours.

and the stress I put myself under that first mobile home that I flipped on my own with my own money it was running over budget it was running over schedule and it was so much less stressful than working on the shows and I was like yeah yeah this is I need a change so made that change and you know if the contractors running late and he gets delayed a week all right so what you know not a not a big deal

Dylan Silver (25:39)
It’s not something that you were uncomfortable dealing with on a day to day. Steve, we are coming up on time here. Where can folks go to get a hold of you?

Steve Johnson (25:44)
It was.

So I’m very active on LinkedIn and Facebook and Instagram and all of my handles, whatever platform it is. can find me at Connect with Steve Johnson. ⁓

LinkedIn, Facebook or Instagram. You can also go to my website JS Summit Global. I’ve recently written a book on there for download which is all about note investing and how that works and I’m happy to discuss with anybody. know they want to set up a Calendly appointment with me. We can talk about mortgage notes, mobile home notes, mobile home parks, whatever it might be or just something else. I love to have these networking conversations and get out there and meet more people.

Dylan Silver (26:30)
Steve, thank you so much for coming on, for educating us about the mobile home park space, ⁓ note buying space, and for giving us some great value here. Thanks for hopping on here, Steve.

Steve Johnson (26:40)
Yeah,

thank you very much, Dylan. Appreciate it.