Why Mobile Home Parks Create Stronger Cash Flow Than Single Family Rentals

Kenneth BARLEY (00:00)
Most of the time you didn’t own the homes, or if you did, you would resell them, which I strongly encourage anyone who ever decides to buy a park, avoid the park-owned homes. And if you get a few, when you buy a small park or a medium park, sell them even if you have to give them away. They’re what we call fool’s gold. The—the expenses and the turnover and the headaches and the people that park-owned homes attract—

Q Edmonds (01:55)
Hello, everyone. Welcome to the Real Estate Pros Podcast. I am your host, Q Edmonds, and I am excited to be here today. I have a fantastic guest, and I cannot wait for us to just peek through his lens, get a little bit about his journey, his experience, and pick out some nuggets that we can go ahead and apply to our life, right? Apply to our business. And I know this gentleman’s gonna talk about mobile homes. That’s the one thing I know we definitely gonna talk about. Probably get into some other stuff too. But I’m so elated to introduce you all to Mr. Kenneth Barley. Mr. Kenneth, how you doing today, sir?

Kenneth BARLEY (02:30)
I’m doing well, sir, and how about you?

Q Edmonds (02:32)
Man, I’m doing great. Doing great. Again, so glad to have you on, sir. Yeah, well, listen, I appreciate your time. Time is our most precious commodity. I think you kind of hinted to that as well. And so I appreciate you being here. And so I am the type, sir, I like to dive right in. So I would love for you to tell the people what’s your main focus these days. If you don’t mind, give us a little bit of an origin story, kind of how you got into the space that you’re in.

Kenneth BARLEY (02:34)
Thank you for having me, by the way. I appreciate the opportunity. That it is.

Q Edmonds (03:00)
And then tell them what part of the world you’re in, sir. People love to know where people are geographically. And so Mr. Kenneth, you have the floor, sir.

Kenneth BARLEY (03:06)
Okay. I was born and raised in a small farming town in Northern California. You know, moved to the Bay Area in high school, went to Cal Poly in San Luis Obispo for a couple of years, you know, dropped out and went into the trucking business. And at twenty-eight, I—I just decided I did not want to be an old trucker, so I got into real estate. Something I always wanted to do. I saw my dad succeed late in life buying a house and a duplex to create income for him and my—my mother. But, you know, and I did real well at that. I was—sheesh, got into it in ’83, been a broker ever since. You know, and bought a lot of—bought a lot of real estate and made—made money on most of them, but never could get the cash flow that I was looking for.

So around two thousand and five, you know, the market was exploding, and we all know what came after that, but a lot of my friends and I were looking around going like, “This—this market didn’t make sense to us.” You know, we couldn’t understand why, you know, houses were selling for what they were. It just—we’d been at it long enough to go like, “Something’s wrong.” We knew there’d be a correction, but didn’t know it was gonna be as bad as it was. So I started looking around at different types of commercial property that could create cash flow. I’d, you know, just a couple of very large deals. I had about a quarter-million in my pocket, and I just, you know, “How—how can I create some cash flows for this new downturn that we all knew was coming?” We didn’t know it was gonna be a, you know, plummeted over the—the cliff. But I—I really researched and spent a year traveling across the country looking at different asset classes. I looked at retail, office, and that—that was both of those were a quick no. Looked at industrial, that had some interest. But then I kind of—I discovered mobile home parks and I thought, “Hmm.”

And—and I just really—I liked the basics of the industry where you—you owned the land and the infrastructure, but most of the time you didn’t own the homes, or if you did, you would resell them, which I strongly encourage anyone who ever decides to buy a park, avoid the park-owned homes. And if you get a few, when you buy a small park or a medium park, sell them even if you have to give them away. They’re what we call fool’s gold. The—the expenses and the turnover and the headaches and the people that park-owned homes attract—unless you really like, you know, beating your head against the wall and—and bleeding in public, avoid them. And I do now, because I got bit. I learned the hard way. I, in the ’08 crash, had too many park-owned homes and I was exposed. Lost 30% of my tenants in 70 days, and we all know what 2008, 2009, 2010 was like. It was rough. But the beauty of parks for me—

Q Edmonds (06:36)
Yeah.

Kenneth BARLEY (06:58)
Yeah, even after that, I knew I still wanted to stay in the space, but I—I decided, okay, I’m gonna do a little different. I—and I came back, no partners, less risk, less leverage, very few park-owned homes. And then I went out and bought another park, a small one, filled it up again. Like I mentioned to you earlier in our prep, that you know there—there’s really three ways to increase value. And one is to raise lot rents. You know, and my—my approach is I when I look at underwriting a park, I want city water, city sewer. But I—I want to be able to raise lot rents at least a hundred dollars in two and a half years. You come in, do some cleanup, fix some problems, get—get rid of some idiots, and there’s always those, improve the park, raise it fifty bucks, and then do it another twenty-five for the next two years. Fill up empty spaces by buying good used single-wides, but don’t get a park that’s, you know, thirty, forty percent empty. Usually those parks are empty for a reason. There’s no market. But find something twenty, thirty, forty percent empty and—and fill it up over a three, three, four-year period, if you have the time. And—and then shift water and sewer expenses—either metering to reduce costs, improve operations, whatever infrastructure. And, you know, you can take a park—I mean, one of my parks I bought for 260, I put 150,000 into it. It’s—it’s pushing a million dollars and—and it’s just pumping out cash flow. But again, low debt.

But again, that’s me. I mean, but I’m older, I’ll be 71 this summer. So for me, risk is a bigger deal. But for those of you who are listening, you know, small parks if you have the time and the willingness to learn and—and get your hands dirty, small parks can basic—you can retire within a couple of years by—by these steps. And there’s no other asset class you can do that. They’re very recession-resistant. I mean, there—there’s nothing below us. They’re not making any more parks.

Q Edmonds (09:01)
Hmm. Yeah. Mm-hmm.

Kenneth BARLEY (09:15)
In fact, parks disappear all the time. They become Home Depots and apartment complexes and, you know, they just, you know—cities don’t approve new ones anymore. Okay? Because they—they, most cities, hate you if you own a park because of the tax base. They spend, you know, their viewpoint is they spend more money on the park than what they receive in—in revenue from the taxes. And they’re—and they’re sort of right, you know. But—

Q Edmonds (09:29)
Hmm. Yeah.

Kenneth BARLEY (09:43)
But it’s still there, you know, if you’re looking for an asset class that you can, you know, do well in a short amount of time, you know, tell you, take a look at it. But also understand that most of you should not own a park—certainly not by yourself. You can invest in parks with—in funds.

Q Edmonds (10:02)
Yeah.

Kenneth BARLEY (10:06)
There’s a lot of funds out there that put out eight, nine percent. Be very careful about that. But look at the operators. There’s a lot of guys out there that put everything together on with three per—three to four percent interest rates. Well, that’s—that’s done. That’s over. Okay, we’re not gonna see that again. Nor should we, because it’s inflationary. We all saw—we’ve all seen what’s happened in the markets, and people, it’s not good. But what else can I tell you? You know, I’m kind of covering a lot of ground fast over—over—over my experiences of the last 20 years. But if you have the time and if you are interested in something like this, I’ll also tell you, take the mobile home university course. It’s put out by Frank Rolfe. They’re the fifth largest park owner, and he does these—I’ve done it. It’s a three-day course. It’s—you’ll—you’ll get up to speed real quick.

Q Edmonds (11:13)
Yes, sir. No, I love it.

Kenneth BARLEY (11:36)
It’s also great networking. I met my—buddy of mine, Jimmy Johnson, who’s a wholesaler, and that’s where I found my parks. And I—but I met him at—at—at the—at one of these boot—boot camps back when they did them in person.

Q Edmonds (11:50)
Sure. Thank you for taking us through the journey. Thank you for letting us know where you are, what you do, what you’re proficient at, and just some of the resources and strategies that you’ve used. Really, really appreciate it. And so you mentioned it. You said you’re 71, about to be 71 this summer. You know, you’re in a great, great spot and season of your life. But I would love to know, Mr. Kenneth, is what’s next for you, sir? What’s the next goal? What are you looking to solve or scale next? Like, what’s the next innovation thought? Like, what’s next for you, sir?

Kenneth BARLEY (12:22)
Well, you know, for me cash flow is the most important thing. And that’s something I never could get out of any of the, you know, single-family or condo rentals that I’d owned. You know, my—when I first got into the real estate business back in the early eighties, I wanted to own ten condos. I was gonna make—charge six hundred a month for rent. Expenses, everything was gonna be 300 bucks. I was gonna—I was gonna have three grand a month. Man, I—you know, I—I thought—I thought, man, I was gonna—it’d be hot stuff. But I—I could—I could, you know, if it wasn’t turnover or not being able to collect the rents, I always made money, you know, on the buy and the sell. Okay. I mean, I think there was one time I broke even. But that doesn’t equate to cash flow. Okay.

And we’re certainly not in a market, at least most markets, where, you know, single-family are going up. And if you don’t have any debt, yeah, you can create cash flow. But again with expenses, you know, single-family, I always call them—I’ve always basically used the term that they’re inefficient. Because you’ve only got one source of income paying for the roof, the—you know, paint, sewers, whatever it is, damage, you know, storm damage, any kind of stuff like that—one source of income. And if—and if they stop paying the rent or they move out, you’ve lost all your income. So then I—and I actually got into apartment buildings back in the early nineties and—and did okay with that. But again, the upside wasn’t there. A lot of headaches, you know, a lot of tenants coming and going, and—and for me, I—I don’t want to answer the phone for that kind of stuff.

Q Edmonds (14:02)
Yeah. Yeah.

Kenneth BARLEY (14:10)
You know, it’s—it’s—it’s a lot of work and a lot of competition. There’s a lot of—a lot of apartments out there. There are a lot fewer mobile home parks. And the beauty with parks, you know, again, they’re all different, they all have personalities. But if you buy right and you don’t own the homes, you—the risk is low or lower.

Q Edmonds (14:32)
Yeah.

Kenneth BARLEY (15:15)
Okay. But—but understand, all these things have risk.

Q Edmonds (15:15)
Yeah.

Kenneth BARLEY (15:18)
And one of the things that I always look— when I was young, I—I would always bet on everything going right. But I was young enough, I did, I did. I, you know. And then I’d—then—then I’d run into a buzzsaw once in a while and either have to write a lot of checks or—or work—work my way out of it. And I was able to do that. But until you run into a problem like ’08, there was no working your way out of that one for most of us.

Q Edmonds (15:25)
Yeah. Yes, sir.

Kenneth BARLEY (15:47)
But look at the risk. If it can go wrong, expect it to. Expect it to do that. And if you can look for like, “Okay, where can I get hurt?” Okay, and then compensate for that. And you learn these things as you get older. And if you’re—if you’re wise, you’ll learn younger. I mean, I’m—I’m—I’m no genius, okay. But common sense, and you know, life’s good. It’s a lot better when you got cash flow.

Q Edmonds (16:19)
Yes, sir. Yes, sir. Life is good and it’s a life a lot better when you have cash flow. Could put that on a T-shirt or something. I love that. Absolutely.

Kenneth BARLEY (16:26)
It is. Yeah. They—there’s, who’s the guy on Shark Tank? Mr. Wonderful. That—yeah, that’s his mantra. You know, I—he loves cash flow. Yeah, no, yeah, yeah. That’s what, if you—if you watch him, he focuses on that—that royalty. Okay? He always likes to make—get a royalty component into the deals that he does.

Q Edmonds (16:35)
Huh. Yeah. Okay, gotcha. Makes sense to me. Makes total sense to me. Yeah. Yep. Yes, sir. Yes, sir. You—you ain’t lying about it. Yeah.

Kenneth BARLEY (16:55)
‘Cause—’cause it—it’s—it’s—it’s coming. It—it’s always coming. Howard Hughes, his parents in the tool and die business, same thing. They got royalties and that’s how—they didn’t just sell the tool. You had to give them a royalty because they had a very specific tool that nobody else had. They had the patent. And that’s how they made billions of dollars, and it kept coming. Because he—he wasn’t exactly a—a thrifty man.

Q Edmonds (17:03)
Wow. Absolutely. Keep coming. Yeah, yeah.

Q Edmonds (17:15)
But I love it, sir. I love it. So, I, you know, I love how you talk, you know, you talk about tenants, you know, filling in these—these RVs, these mobile homes. I do want to get your perspective. Everybody comes on, I love to get their perspective on this word. So I’m gonna get your unique perspective on the word relationship. When you hear the word relationship within business, within what you do, what comes to mind to you when you hear the word relationship?

Kenneth BARLEY (17:45)
Well, I’m gonna steal a quote from an old broker that I used to work for, Richard Clancy. May—may he rest in peace. Brilliant businessman. He—he was one of those guys that had the golden touch. But—but Dick basically said, well, besides not doing cash deals, I—I learned real early that real—

Q Edmonds (18:01)
Yeah.

Kenneth BARLEY (18:12)
Real estate is an excuse—excuse for us to do business with each other. Okay? It’s—it is a—it’s all about the relationships, whether it’s a bad partner, bad girlfriend, bad wife, okay? If you—if you don’t have the right people in your life, in your circle—your vendors, your managers, the—the guys that come out and clean your—your sewer pipes, you know, whatever it is. Look for good people, look for people you can trust. Look for people you can get along with. Okay? They can have all these qualities, but if you can’t get along with them, God, you, you know, the phone rings you and—and it’s them, you look at it, sometimes you just don’t want to answer the damn phone. Because—’cause you know you just gonna hear it and it’s like—

Q Edmonds (19:00)
Sure.

Kenneth BARLEY (19:04)
Yeah, when you’re younger, yeah, you do that kind of stuff. But as you get older, you—you don’t have to. You don’t want to, and you learn that it’s—you—you’re better off, okay? Choose wisely, you know, in all these aspects. It’s—I mean, relationships are just—it’s so important. Good ones, okay? And—and—and ’cause there’s a lot of good people out there to do business with. But—

Q Edmonds (19:17)
Yes, sir. Yes, sir. Yes, sir.

Kenneth BARLEY (19:31)
But there’s some people, even if they—they’re good and they’re honest, they’re—they’re—they’re just difficult. Okay. And I think I was probably a—a little difficult when I was young. Okay. Hard-headed, you know, wouldn’t give ground. But again, you learn because I, you know, I had—I had a little brain damage too, just like anybody. So, you know, but back to your point. Yeah. You know, don’t do bad deals, and do—do deals with good people, okay? Even if you don’t always agree, okay? But if you can talk, you can have a conversation.

I had a conversation this afternoon with a buyer, very tough deal. We’ve been pounding each other for five months. You know, difficult seller. But the buyer is very agreeable. And I think we’re gonna get it over the finish line, okay? And all parties walked away a couple of times. Okay, but they both, even though they’re difficult, they’re good people. Okay. Yeah.

Q Edmonds (20:29)
Yes, sir. Yes, sir. Yes, sir. Well, Mr. Kenneth, sir, man, I—I thank you, sir. I thank you for coming on. I thank you for sharing your experience, your—some of your systems, the way you think, your philosophies. And so, listen, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, how can they get in contact with you, sir?

Kenneth BARLEY (20:49)
I can give you my email. That’s [email protected], p a o l a m h p k e n at gmail.com. I will talk on the phone: 925-285-5741. If you want to talk about parks. You know, I—I don’t charge. I like to talk about parks. If I can help you, I will. Not necessarily looking for partners. Okay. I would consider JV with somebody, but we’d have to really be able to get—to get along and get to know each other. I’ve had partners, you know, don’t need them right now. But like anybody, I—you—we all like more money, and I’m—I live in Florida now, right on the Intracoastal, and I have a terrible boat habit. So, you know, and but anyway.

Q Edmonds (21:39)
Ha ha ha.

Kenneth BARLEY (21:44)
Whatever you do, you know, there—there’s opportunities out there. Go find them. You know, we—we—we’re blessed, we live in a great place, a country that lets us do business, okay? And you know, if you’re willing to work hard and—and use your wits, you can have a good life.

Q Edmonds (22:10)
Yes, sir. Yes, sir. Well, there it is. Yeah. Well, there it is. Thank you, Mr. Kenneth. Listen, let me say three things to you, sir. Definitely thank you for your time. I think time is our most precious commodity, so thank you for giving us some of your time today. Thank you for your story, for your gift of authenticity. I believe stories plant seeds in people. We may never see the growth, but the seed is there. So I think you sharing today has planted seeds in people.

Kenneth BARLEY (22:11)
Good luck to you.

Q Edmonds (22:35)
And we know well—who knows? It may literally cause-correct their life. So thank you for planting seeds. Lastly, sir, thank you for your mindset. Thank you for the way you think and bringing that mindset to this platform. I truly appreciate you coming on today, Mr. Kenneth.

Kenneth BARLEY (22:47)
It’s been my pleasure. Thank you for the opportunity.

Q Edmonds (22:50)
Absolutely. Well listen, y’all heard Mr. Kenneth. His information is in the show notes. If you want to reach out to him, he’ll love to talk about—he’s love to talk about the parks. So reach out to him if you have some questions. There you go. See? So reach out to him. The information is in the show notes. Definitely make sure you’re subscribed here. I promise you we’ll continue to bring up amazing people just like Mr. Kenneth. So sir, I say thank you again. Absolutely. And the rest of you, y’all have a great day, all right?