The Affordable Housing Investment Strategy Behind Mobile Home Parks

Ryan Groene (00:00)
Mobile home parks solves the affordable housing crisis that America is kind of still having and will continue to have as inflation and housing prices continue to kind of stay flat or even come down a little bit. But they went up so high in 2020 after covid that mobile home parks are still kind of the most affordable option for a lot of families because wages just have not kept up.

So that’s been our, that’s been the biggest thing that we’re trying to solve, which is basically buying mobile home parks, keeping them open, taking care of them and then providing safe, clean up affordable housing for our residents.

Michelle Kesil (02:10)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil and today I’m joined by someone I’m looking forward to chatting with, Ryan Groene who is a mobile home park investor. Really excited to have you here today, Ryan.

Ryan Groene (02:27)
Thanks for having me on Michelle, I’m glad to be here.

Michelle Kesil (02:30)
Perfect, let’s dive in. So first off, for those not yet familiar with you and your work, can you share what your main focus is?

Ryan Groene (02:39)
Yeah, so our main focus and my main focus over the last probably 10 years has been the mobile home park space or manufactured housing or in other terms trailer parks. They’re not really that anymore. So we’ve been in the mobile home park space for going on about 10 years. We own, acquire, raise money and operate those all in house and we continue to do so. That’s been our main focus. The last few years we have purchased some other assets related to the space, but we are

since kind of doubling down on the mobile home park space over the next five years.

Michelle Kesil (03:13)
And which markets do you invest in?

Ryan Groene (03:17)
We focus primarily on the Midwest and the Southeast ⁓ with favorable ⁓ landlord friendly states is kind of where our focus has been. Ohio down to South and North Carolina, if you draw like an L shape from those states, that’s currently where we are and ⁓ where we’re currently focusing. But we’re open to other Midwestern and Southeastern states as well.

Michelle Kesil (03:40)
Awesome. And how did you get into investing and into mobile home parks?

Ryan Groene (03:47)
Yeah, so I’m not unique in any way. I read Rich Chadport Ed in college, like everybody pretty much at one point in their life. ⁓ After college, I was working in finance, realized I wanted to like be in some type of business, whether it was laundromats, car washes, ⁓ small multi. I looked at all those. looked at, I actually stumbled on kind of flipping a mobile home. I went down that rabbit hole of who owns mobile home parks.

That was like 2014, 2015 went to a few boot camps, got educated, went to work for a few guys as well that happened kind of organically and then started buying my own parks in like 2017, 2018 is when I bought my first park. So the reason I like mobile home parks is because it’s the limited supply, high demand. It’s got good economics, good tax advantages, and then they’re not making any more of them kind of like the low supply, high demand type thing.

That’s why we enjoy parks and that’s why we continue to invest in them.

you

Michelle Kesil (04:48)
And

what do you feel have been some of the main keys that have allowed your business to grow and run successfully?

Ryan Groene (04:56)
The main keys on why we’ve been able to kind of grow to a rapid pace or even just grow into the future has been our ability to find deals direct to owner or even one off like from a wholesaler, but basically direct to owner. Staying in the business long term, we’re not in it to just kind of, you know, ready to make money and make a profit, but like we’re not in it to just get in and out within five years. And then also we manage everything in house.

Meaning we touch, we see, we go over on a weekly basis the performance of the asset. So our ability to kind of stay in the business and then ⁓ manage the parks has definitely been our ⁓ strength. Just because we touch our, we manage our parks in-house, like I said. So that’s been kind of the keys to kind of grow our business.

Michelle Kesil (05:52)
Awesome, in what have been some of the biggest obstacles and challenges that you’ve had to face and overcome in this role.

Ryan Groene (06:50)
⁓ So the biggest obstacles we’ve I’ve faced personally is not having a lot of my own capital. So my first deal I ever did, I emptied my 401k, bought into that. We sold it a few years later and I took that money and bought a couple other parks. I’ve always been the operator in the parks, meaning that’s been my key role with ⁓ finding and operating the deals. ⁓ Obstacles, other than just lack of capital, has been the industry itself. So prior to 2020 mobile home parks weren’t super popular.

They were starting to gain a little bit of popularity as far as like on a national level, a lot more people chasing them. ⁓ So you’re always, the business has got its own headwinds to begin with anyways, with kind of the, you know, the viewpoints on mobile home parks overall, ⁓ overall just operating, ⁓ operating them in certain towns, certain cities to have different viewpoints. ⁓ And then the financing was a challenge for a long period of time, but that’s gotten a lot better. Number one for us has always been, ⁓

Throughout the ebbs and flows, kind of goes with deal flow or it could be financing or it just could be raising capital and raising capital. Those type three kind of obstacles kind of jump up and down just depending on where you are and kind of the deal cycle. Like right now we’re at high interest rates. rates are still relatively at or below the interest rates on mobile home parks, believe it or not.

So that’s a challenge, right? I mean, you have expensive deals and expensive loans. So it’s like, there’s just not a lot of deals getting done. So that’s kind of where we are right now. And then raising capital has been a little bit tougher because people are actually earning money on their cash versus in the past, they were earning close to zero, right? So that’s why, you know, real estate was kind of 2020 to 2022 was booming. And then now it’s kind of been more of a down cycle with some industries still still kind of booming. But

Yeah, that’s been the obstacles we’ve faced and they kind of jump up and down.

Michelle Kesil (08:50)
Yeah, absolutely. And so how are you finding the deals for what like mobile home parks and what’s the best to invest in?

Ryan Groene (09:05)
So we find deals like any other asset class, right? There’s no secret. You build a database, you find the owner, you find their information, and you get in front of them. And it’s consistency over time, getting in front of owners, whether it be through mailers, text messages, calls, ⁓ meeting them on site at the property, if they manage the property or live close by, you can just show up and say, hey, I’m another park owner, blah, blah, blah. ⁓ Those are the ways to get in front of owners. It’s just consistency over time.

is the best way to kind of ⁓ find deals. And then if you don’t have the time to do that, I would meet with other wholesalers, network with an industry with brokers because brokers are good at their job. They’ll find you a deal. And then there are wholesalers within the mobile home park space. You just got to go out and find those. So that’s been the best way that we found deals as direct to owner or actually through wholesalers. And that’s just networking with other investors.

Michelle Kesil (10:01)
Yeah. And when you were just starting out, what was like the biggest learning curve that you had to overcome?

Ryan Groene (10:12)
The biggest learning curve for me was learning real estate as a business, operationally managing it ⁓ as a whole. That was the biggest ⁓ learning curve for me personally, because I had never flipped the house or owned any other piece of real estate or owned a business prior to buying a park. So that was my first form of real estate and kind of management as a whole. So that was the biggest learning curve for me was actually hands on learning the ins and outs of the business. ⁓

Learning the numbers, learning financing, yes, that was a learning curve, but given my kind of financial and investment background, understanding analysis of deals was a little bit easier just because of my background, but the actual operational piece was the biggest learning curve and it still continues to be. ⁓ The biggest issue we’ve always had is staffing, ⁓ like internally as far as management, is finding the right people for the right seats in our kind of organization.

Michelle Kesil (11:41)
Yeah, how did you learn the operations side of the business and do you operate each mobile park individually?

Ryan Groene (11:50)
Yes, we’re vertically integrated, meaning we manage every asset we own ⁓ with our own management team, right? So we might have an on-site staff member, ⁓ maintenance management. Within the mobile home park space, there’s not a ton of rentals. They’re just, we just own the dirt a lot of times and we don’t necessarily have a ton of rentals that you would have in like an apartment. So we don’t have a huge member, you know, a huge number of management on site. We may have one or two people depending on the size of the park.

⁓ And the way that ⁓ I learned operations was by working for somebody else. I kind of helped them run their portfolio and helped them run their parks that they had. And then when I bought my first park, I was there quite frequently. So learning that side of the business. And then when the manager quit, I actually became the manager. So that helped just like on a short term basis. So learning that side of the business definitely helped me along the way. ⁓

You just got to, mean, if you want to learn operations, you’ve got to get on the front lines and kind of understand the ins and outs of whatever business you’re doing.

Michelle Kesil (12:57)
Yeah, absolutely. And how was your team structured?

Ryan Groene (13:03)
So right now our current team is onsite staff, management, maintenance. ⁓ That’s at every property. They may not live there, but they live close by. And then for our back office, we have a collections kind of leasing person that oversees all of those ⁓ collections and leasing related items. We have a bookkeeper, ⁓ part-time CFO, and then our COO oversees everything. And then it’s me and Miles where the two.

two partners. I’m still involved, ⁓ pretty significant with the operation, so I’m in the day to day. And then my business partner mainly focuses on kind of acquisitions and investor relations.

Michelle Kesil (13:45)
Awesome. And what are you most focused on solving or scaling to next?

Ryan Groene (13:55)
So we’re always trying to solve the like

Mobile home parks solves the affordable housing crisis that America is kind of still having and will continue to have as inflation and housing prices continue to kind of stay flat or even come down a little bit. But they went up so high in 2020 after covid that mobile home parks are still kind of the most affordable option for a lot of families because wages just have not kept up.

So that’s been our, that’s been the biggest thing that we’re trying to solve, which is basically buying mobile home parks, keeping them open, taking care of them and then providing safe, clean up affordable housing for our residents.

And that doesn’t mean raising rent to market day one. Yes, you have to raise rent just to keep up with inflation and to take care of the property. But that means fixing utilities, taking care of the property, getting rid of tenants that don’t pay and don’t follow the rules.

And then raising rent slowly over time and that’s kind of how you take care and keep mobile home parks open, whether then, you know, versus them getting destroyed and demolished by developers or the city or whatever have you, which is, which happens ⁓ more than people would think because people don’t really build mobile home parks anymore. And it’s, it’s really tough to get land approval and get any development going in the space, which would definitely, ⁓ you know, in the next five to 10 years, you may see that.

It just depends on kind of where you are locally, where people are moving. ⁓ I wish that was the next kind of wave. ⁓ I think it has some opportunity. It just depends on kind of where the housing market goes as a whole in the next kind of three to five years.

Michelle Kesil (16:17)
Yeah, definitely. And what, like, as the market shifts, do you think that more people will be joining mobile home parks? And is there like room for expansion? Or yeah, how do you see the market shifting?

Ryan Groene (16:38)
Um, I think it’s going to continue to consolidate. So prior to 2020, there was not, when we looked back at our list, we just rebuilt our list, like of, of owners, um, from 2020 to now it’s consolidated even more, meaning a lot of larger owners have gotten into the business, which means basically a lot of wall street backed money or private equity firms that, know, are buying thousands of thousands of lots versus like just one or two parks, right? Like a traditional mom and pop. Um,

And you have a lot of people that developed parks that are in their 70s 80s and 90s their kids don’t want it and now it’s being sold to a develop to a Potentially development group to kind of to build something else or it’s being sold to some type of private equity group or an investment group that Is that’s what they do right they buy they buy parks So I would say it’s gonna continue to consolidate cap rates are probably gonna stay roughly where they are and the industry average right now for like

per unit basis, not including the mobile home itself, because a lot of times you don’t own those assets, is well over 60,000 a unit, which you’re seeing some markets pushed 100,000 a unit, which is realistically, ⁓ is potentially sustainable. It just depends on kind of where you are in the United States. I don’t see that super sustainable. I don’t know how you really make any money paying that. ⁓ So we’ll see where the industry goes. I think it’s consolidation is gonna continue to.

⁓ buy up as much as they can because ⁓ it’s a covered land play and then it’s also a really good form of a cash flowing asset that has depreciation benefits as well.

Michelle Kesil (18:17)
Yeah. And what would you suggest to a newer investor that’s wanting to get started with mobile home parks?

Ryan Groene (18:27)
I would say one, find somebody that owns parks that’s that you can get hang out with or network with or talk to on a relatively frequent basis. And that could just mean simple by getting educated, which means learning, you know, listening to podcasts, YouTube, reading books, going to networking events. And then it could even mean paying for something or paying for some type of consulting or coaching program.

⁓ If you’ve chosen that this is the asset class you want to move into I would not advise buying a mobile home park without knowing the asset or doing some type of ⁓ coaching program or some type of ⁓ You know due diligence ⁓ Package or something because this is a definitely different asset class than like multifamily single-family And it’s and it and it should be treated as such there are a few nuances within the business that ⁓ multifamily doesn’t have

And then I would not expect a to be able to buy it and then hand it off to a third party management company and expect like great returns. Right. There’s only a handful of mobile mobile home park third party management companies that do parks and they typically are doing like a hundred units or more, not necessarily like a 50 unit park or anything. So I would say understand the business, understand your role within the, ⁓ you know, the, deal, whether you’re the money, the operator or, or you’re, you’re both right.

⁓ And then, you know, it’s okay to mess up, ⁓ but you know, get educated first and then go find the kind of asset class that you want to buy.

Michelle Kesil (20:07)
Yeah, definitely. Thank you for sharing.

Are there any goals or opportunities that you’re looking forward to for the rest of the year?

Ryan Groene (20:19)
⁓ yeah, goals we are currently looking to acquire, ⁓ three to five parks by the year end, which would roughly equate to about 500 units is what we’re looking for. we’re also in the process of selling a few assets. mainly we’re, ⁓ just assets that have reached its port in time in terms of our investment, ⁓ kind of timeline. We’ve owned them for like five plus years. ⁓ we also may refinance a few assets this year, depending on where rates go.

⁓ And then we’re kind of transitioning out of ⁓ the RV business. Eventually, we bought a handful of RV parks in 21 into 22. We’ve slowly been selling those over time. That was kind of always the goal there. ⁓ And then once we reach, you know, the five year to seven year timeline, we typically sell or refinance. ⁓ And then, yeah, that’s kind of what we’re looking forward to on like a professional level. We’re slow grow. We’re not looking to kind of buy like

20 parks or anything this year. We’re just kind of looking to add like three to five parks, close to 500 units. It could be more than that. That’s just kind of generalized per unit count. then, ⁓ you know, personally looking forward to kind of just, I know it sounds lame, but some like vacations that we have, and then I’m in the process of ⁓ potentially looking for a house. ⁓ And then yeah, other than that, personally, that’s kind of where we are. ⁓

But yes, if anybody’s interested in mobile home parks, I’m always happy to chat. ⁓ And that’s kind of, I enjoy doing that as well.

Michelle Kesil (21:57)
Thank you for sharing. Well, before we begin to wrap up here, if someone wants to reach out, connect, and learn more, where can people find you?

Ryan Groene (22:07)
I’m on all the social medias just under my name. You can just message me and I’m typically fairly responsive.

Hmm

Michelle Kesil (22:16)
Perfect.

Well, appreciate your time and your story. Thank you so much for being here.

Ryan Groene (22:22)
Of course.

Michelle Kesil (22:25)
Okay, and for those tuning in to the show, you got value, make sure you have subscribed. We’ve got more conversations with operators like Ryan who are building real businesses. We’ll see you on our next episode.

Ryan Groene (22:25)
Thank you.