About Steve Case. About Corey Donaldson

Transcription

1 About Steve Case Steve Case started real estate investing in After a successful period of investing in single family homes, he turned his focus to mobile home parks and has purchased six parks since over 580 total lots. Steve is co-author of Huge Profits in Mobile Homes and Mobile Home Parks and author of Tax Free Real Estate Investing. He routinely speaks at real estate clubs and national seminars on the profit potential in mobile homes and parks. Steve, along with Corey Donaldson, conducts an intensive 3-day mobile home training program several times each year. This training, called the Mobile Home Bootcamp is the most extensive, hands-on training available in the small niche of mobile home investing. You can reach Steve at Steve@MobilehomeUniversity.com or by phone at (858) About Corey Donaldson Corey Donaldson started his real estate investing career in 1993 by selling his jet ski to raise enough money for a down payment on his first deal. Since then, Corey has acquired a sizable portfolio of real estate, including apartments, single family homes, self storage facilities, and mobile home parks. He now owns 4 mobile home parks with over 600 total lots. Corey speaks regularly at real estate clubs, national seminars, and universities about mobile home park investing. Corey, along with Steve Case, conducts an intensive 3-day mobile home training program several times each year. This training, called the Mobile Home Bootcamp is the most extensive, hands-on training available in the small niche of mobile home investing. You can read more about Corey at the OC Metro. You can reach Corey at Corey@MobileHomeUniversity.com or by phone at (858)

2 INTRODUCTION [Stacy] All right welcome ladies and gentleman. My name is Stacy Kellams and I m the founder of realestatecoursereviews.com and reimillionairesclub. And I ll be your host tonight. Tonight I m lucky enough to have two guest joining me. Tonight on the line with me we have Steve Case and Corey Donaldson of mobilehomeuniversity.com. Steve and Corey are the nation s foremost experts on mobile home parks, self storage units and using your IRA to create massive wealth by investing it in real estate. Steve and Corey thank you so much for joining me tonight. You guys there? [Steve] Yeah I m here. I really appreciate it. This is Steve, it s good to be on tonight. [Corey] Thank you Stacy. [Stacy] All right. Great. Corey you there? [Corey] Yeah I m here Stacy. [Stacy] Steve, why don t we start with you tonight and why don t you go ahead and tell us a little bit about yourself and how you got started in real estate. [Steve] Sure Stacy. Well I started really actually buying some rental houses back in the late 80s. Did a couple deals back then and kind of got out of real estate investing up until about Then I picked up a little book which maybe a lot of people on tonight have read called Deals on Wheels by Lonnie Scruggs. Kind of intrigued me so I went out and did my first real estate deal here in Macon, Georgia where I live at now. It was a little small lot with a 1985 two bedroom 1 bath mobile home. And it wasn t anything really creative, I just went out and paid cash for this property and after reading his book, I decided instead of renting or selling the whole property I decided that I would sell the mobile home on the note and keep the dirt so I could get a perpetual income out of it. That property worked out real well. As a matter of fact, I still own the land today. [Steve] I ended up selling the mobile home for what I had in the entire deal on terms. [Stacy] Awesome. [Steve] So it worked out really well. As a matter of fact I still got that piece of property today and it s bringing $170 a month in passive income. I thought about staying in the mobile homes but I got excited about some single family homes about that time. So the first year I went out and just did a lot of subject to deals on single family homes and it really got trying, trying to go around and take care of all those different properties. So I decided to jump back in the mobile home business. And after meeting a gentleman by the name of Earnest Tew at a seminar and he told me all the great things about mobile home parks, so I decided to get into that business. And it s probably the best thing I ve ever done. In 2000 I ended up buying the first park, a little 69 unit deal. So it worked out great and I ve been doing parks and self storage and commercial stuff just about ever since. [Stacy] Awesome. All right well Corey why don t you go ahead and tell us a little bit about how you got started in real estate and give us a little bit about your background. [Corey] Thank you Stacy, actually I m originally from Connecticut and I graduated from the University of Connecticut and this is back probably about 1991 or 1992 and I thought what do I do at this point. I have a piece of paper that says I graduated, I have my 4 year degree but it doesn t mean a whole lot in the real world out there. So what I did was I drove cross country to California. And started working for a company, for a big healthcare company 2

3 and realized very quickly that I did not want to be an indentured servant at all and have my life pretty much ruled and dictated by people that sometimes aren t always the most authoritarian with regards to corporate America. So what I did was I realized that real estate was going to be my vehicle in order to become independently wealthy. And when I was younger, probably about the high school age, one of my girlfriends during high school, her father came over from Italy and basically had six daughters at the time, his wife, he had a 6th grade education, no money in his pocket. [Corey] Didn t know a word of English. And basically started buying duplexes back in the state of Connecticut. And 30 years later, he s probably worth probably about $20 or $30 million. But it s not even so much the money, what he s done with the money it s not so much the money itself it s what he s been able to do with the money. He s provided college education for all his kids, a down payment for all his daughters to live right next to him, and all of that. So basically I knew is that here for me is that I have a college education. I speak the language well. I ve grown up - [Corey] Being with regards to just with regards to real estate, my parents invested in real estate. So I knew that was my vehicle with regards to becoming independently wealth. So I actually started out with a duplex. Scraped enough, scraped about a $23,000 payment for a duplex. Sold my jet skis. Sold everything I possibly could at that point in order to go ahead and leverage into a duplex - put $23,000 down on a $230,000 purchase pack I think it was about So really real estate was a leap of faith back then in California because it was pretty much in the doldrums. And then what I did was every year I bought another property and moved into it, fixed it up and just kept going from there. And over - really over the last 10 years have amassed a real estate portfolio that includes apartments, single family homes, a motel, a restaurant, industrial, and also self storage and mobile home parks. And really over the last couple of years, really my focus is more self storage and mobile home parks at this point. Just really for the cash flow and also for really the minimal maintenance and management comparably to the other asset classes I ve invested in the past. [Stacy] Awesome. I can t wait to dig into more of that story here in just a little while. But first let me let me get back to Steve. Now Steve, you said the first park, mobile home park deal that you did was a 69 unit deal. Is that right? [Steve] That s right, Stacy. Yes, it was 69 units. It kind of an interesting story. When I drove back from that seminar I remembered that I started seeing all these mobile home parks that I never saw on the drive up. Which is kind of interesting when you get involved and you want to do something. But I came back and found this park that s about three miles from where I live. I never knew it was for sale. Of course, most mobile home park owners don t put a for sale by owner sign out front. [Steve] But I ended up taking that deal down. Earnest helped me in the beginning as far as the structure and the set up. We set that one up very uniquely which will kind of lead into what we ll talk about a little later with the IRA stuff. But it was a 69 unit park. We ended up getting that park for $275,000. There was about 32 units in the park at the time. So that left about 37 vacant. 3

4 [Steve] Lots - if you want to call that. So I just started using his system that he had in place. And using the Lonnie strategy that we talked about before, just taking homes and selling homes and keeping the land. [Stacy] Uh huh. [Steve] And went at it basically. I mean, one of the things I haven t told you about which you already know, which your listeners probably don t know is that I was doing this all part time. As a matter of fact, just getting ready to retire from the Air Force after 20 years. All of the things that I have done which have included six mobile home parks, soon to be five self storage projects total, 40 houses and umpteen amount of mobile homes have all been done part time [Steve] So I ve been pretty busy. But that first park was a lot of work. It was a turn around project, but those seem to offer the biggest upside as well as cash flow that Corey talked about earlier. To make a long story short, on that park we ended up selling that within 23 months after ownership for $635,000. And you paid how much for it? [Steve] $275,000. [Stacy] Wow, in 23 months? [Steve] In 23 months. So that also included 17 mobile home notes that we created in the park. But I just looked at the numbers the other day and the total profit on that deal was just under $250,000 of which the majority of that was tax free using the Roth IRA. [Stacy] That makes it even better. I know I want to get into that a little bit later. And that was your very first mobile home park? [Steve] That was the very first deal that I did. Brand new in the business, the mobile home park investing. About two months after getting that deal, I went onto buy another 66 unit project here locally in Macon. That one went real well. The numbers weren t as high as the one I just told you, but I m working on 185 space park right now that we ll get into a little bit later. But there s going to be at least about $1.8 million equity increase in the park once we get finished with it. We re talking about some big numbers. That s awesome. [Steve] You know, it s funny, until you realize the profits that you can make on the equity side and also the cash flow once you get these things churning really well, you often wonder why you never got into - or why I never got into it earlier. [Steve] Some fantastic deals you can make in mobile home parks. [Stacy] All right well Corey, you said your first deal was a duplex, right? In 1994? [Corey] Correct. [Stacy] And you re a young guy, I ve met you. You re a young guy so you were really young in 94. You must have been what? About 24 years old? [Corey] About 24, actually I turn 35 tomorrow. So yeah, 11 years I started ago. [Steve] Yes, he s an old man. [Stacy]Yes. 4

5 [Steve] He s got me by about 10 years. [Corey] Yeah. [Stacy] All right why don t you tell me about that very first duplex deal and how you conquered the fear at 24 years old to - and I think you said you put down $20 something thousand dollars? [Corey] Yeah. [Stacy] How d you manage that? [Corey] Yes, Stacy, actually I put down, I scraped together $23,000 for that purchase. Probably was my scariest purchase by far. It s amazing I think I probably had a lot of sleepless nights the first couple of months. [Stacy] A lot of money for anybody, especially a 24 year old. [Corey] Yeah, definitely just amazing. But what I did was - which really gave me a lot of confidence in doing properties now is that was a complete turnaround project. It needed a lot of TLC. The owner was an out of state owner on that property and so just went in there and I put in - I had two roommates and then downstairs rented out to another couple. And basically just spent three or fourth months just rehabbing the inside of it. And then what happened was over the next six or seven years, the California market really, the appreciation took hold and the rents increased and most of the equity increased. And out of that property, in California numbers which are pretty off the chart, but I ended up selling that one for about $800,000. [Corey] And then what I did was I leapfrogged that into a self storage facility in Florida. [Stacy] And you bought it for how much? [Corey] $230,000. [Stacy] And you sold it for $800,000? [Corey] $800,000. And then I 1031 d that one into actually a self storage facility that I bought from Steve. [Corey] Steve gave me a great deal on it. And so now at this point that $23,000 investment now produces probably about $20,000 worth of cash flow a month from the self storage facility. [Stacy] That s just awesome. I m wishing that I lived in California right now with those kinds of numbers. That s unbelievable. [Corey] I think over the next three or four years it s going to go the other way. It s going to go the opposite way, but it s been a good ride out here in California. But now it s really looking at other parts of the country for more value investing and placing money. That s really what I ve been doing is moving money out of California into more stable markets. [Stacy] Great. Awesome. That sounds like a great plan. Well guys, the question I want to ask you is it seems like everybody is investing in single family houses these days. You can t drive down the street without seeing 20 bandit signs plastered on the side of a telephone pole. We buy houses, you know, we take over payments, that sort of thing. So that s what I love about what you guys are doing. You re off on your own trail. You re kind of - you ve broken off from the herd. You re not doing what everyone else is doing. And you re making phenomenal amounts of money. Why don t we talk about that for just a little bit. And why - what made you decide to get out of the single family house rat race and start looking 5

6 for these alternate - I guess you could call them alternative investments? [Steve] Okay. I guess I ll start it out. You know Stacy, for me, it was a matter of like I said before, this is part time investing for me, because I had a full time job. [Steve] But for me it was a matter of focusing all my efforts on one project. And once I got inside and realized that there are four profit centers to a mobile home park that you don t have - a total of four anyway in a single family house investment. You ve got the additional lot rent that you get when you rent a vacated a spot. You re making money when you take a used mobile home and buy it for wholesale and sell it for retail. You re financing these homes for your tenants, so you re making a spread between, if you are borrowing money for the mobile home purchase, and what you re selling it for. And even above all, it really makes a great investment the equity increases every time you take that vacant piece of property and that lot and get some income coming in. So I could really maximize my efforts in one locality. Almost my own community. I was my own mayor, that sort of thing, inside the mobile home park. [Stacy] Yes. [Steve] It s just amazing every time I remember Earnest told me when I first started. Every time you put a mobile home in there, get somebody in and sell you re going to increase the back end by $12,000. And it s funny, it s pretty close to about what happened in that particular park. [Steve] As we added those lots, and added the homes and so forth. And like you said before, there s not too many people out looking for mobile home parks. It s not an asset class that comes to the front of your mind. [Steve] No. It s a funny thing, I always tell people this when you re buying it s a trailer park. And when you sell it s a mobile home park. That s how a lot of people view these things. And a lot of them are, they re beaten down, raggedy old trailer parks. [Steve] And we ve been able to take not the worst class of those types of parks. [Steve] But the median level. Where the owners haven t cared. They don t understand how to build those parks up and take those pieces of property and really make them into income producing and value equity place. Like Corey said, he s moving his money. He s done great with out of California and put it into a more valued place where it s not appreciation based, it s going up in value but he s creating that himself by using the systems that he s put into place with the mobile home parks. And Corey, I d like for you to touch on that a little bit. What made you decide to go from investing in duplexes in California into - and going from that to mobile home parks and self storage units? [Corey] Well I think Stacy, I think that certainly for myself cause I didn t start out, I really didn t have any money when first started out. So I sort of home groomed with regards to my management. And so in California, California is a very tenant friendly state. 6

7 [Corey] And so the tenants have all the rights here in California. And so really with it is that there s a lot of management and maintenance issues with apartments and single families. And more so on apartments. But more importantly, is that if someone didn t want to pay, it s very difficult to evict them. They can say file bankruptcy and do a number of different things in order to forestall it. Where with mobile home parks, it s amazing, is that you really are the sheriff, the president, I mean you re the whole enchilada. [Corey] It s definitely - it s great because is that the tenant, they can t move their mobile home out of the park unless they have all the lot rent paid up. So you really don t have to worry about with regards to significant delinquencies, because really these people have to pay. And so then in addition with the management and maintenance issues there is very little if there s no park owned home which is the model that Steve and I certainly like and endorse and that we use in our own personal portfolios. There really is very little maintenance and management issues once the park is completely full and it s really a turnkey park at that point. So that s really been the biggest thing for myself. Also that I ve always looked at with regards to trying to get the expenses down as much as possible and also increase the income, really single families or apartments, you can increase the income just by increasing the revenue or doing rent increases. [Corey] Or trying to minimize expenses. But with mobile home parks like Steve had mentioned, you have multiple profit centers. [Corey] So multiple ways in order to be able to really increase the value of the park. And what I liked is that certainly the way I made the money in California with property is that I went into a property that was underperforming and just did a lot of TLC, and a lot of sweat labor and just increased the equity in mobile home parks. You can do that. I mean it s amazing what you can do with regards to just increasing equity. [Stacy] So in effect, you guys, you both started out like me, like everyone starts out. I don t think anybody just wakes up one day and jumps into the big deals. Maybe Donald Trump. But most everybody starts out in single family houses, duplexes, four-plexes, that sort of thing. And then if you like it or have success with it, you move on up into the larger investments. So basically you re doing the same thing with the large properties that you were doing with the little properties. Is that what I m hearing you say? You re just taking a larger property and you re turning it around with - as you call it Corey, TLC? [Steve] Yes, Stacy, you re exactly right. And I wanted to add something just came to my mind while Corey was talking. You know if you really wanted to compare mobile home parks as far as what type of asset investment you ve got here. Probably the nearest comparison is apartments. [Stacy] Okay. [Steve] And being a gluten for punishment myself, I decided I wanted to see and make sure that apartments weren t as good or better investments than mobile home parks. So I went out and got a 34 unit apartment complex about a year and a half ago. [Steve] And I can attest to you as an apartment owner that mobile home parks are better. And there 7

8 are several reasons. One is when we do a rent increase, people can just pack up on the weekend and leave. They can t do that in a mobile home park. They have to get permission to move their home. Like Corey said, we don t have that case doing rental parks, where we rent the units themselves out. We sell them to the people, so they re home owners. [Steve] Also I can tell you this. The expenses are higher. It s constantly clean up, clean the carpets, fix up on an apartment and the turnover is higher. [Steve] I m averaging about four months turnover in my apartments. That first park that I told you about, I had one tenant in the two years that I was there, 23 months, move out and that was because they had to move back with her mother. So the turnover is really, really low, the expenses are lower. It s just as soon as I can sell my apartment complex which it s on the market now, I ve already told Corey I won t go back into that business. It s going to end up being good for me. [Stacy] Yes. [Steve] But it s more work involved in it. But I want to add this. You talked about people that are out there doing small deals now. [Stacy] Uh huh. [Steve] There s two things. One is you make more money in the bigger deals and you can minimize the risks. I tell people this all the time, in my opinion, it s less risk if you buy it right and you have a plan for what you re going to do with a mobile home park than it is even for a rental house if you are going to lease option because it will be sitting there empty. That one house sits there empty, guess what. You make the whole payment. [Stacy] Zero income. [Steve] Yeah, zero income. But if you ve got a park that you ve been able to do the things right. If you ve got one or two, or even like I did, 37 vacant units, you re still not going in the hole. [Steve] So it can be - the risk is not there. And I can tell you this too. I didn t have a whole lot of money like Corey did when I started the business. [Steve] I was very creative and I know you ve asked me before about how to put together these types of deals. And I m sure you re going to get into it a little bit later about joint venturing and using other people s money. [Stacy] Absolutely. [Steve] That s what I had to do. Now I m fortunate enough now to have a pretty good size portfolio that I can move monies around. But I still do joint venture deals today with other people. [Stacy] Well let s talk about that a little bit. How does a newbie who s just now getting started or maybe he s done a couple single family house deals. Or maybe a duplex here or there - doesn t have a whole lot of experience. How does someone like that transition from doing the small deals into doing these larger deals. Cause there definitely are a lot more zeros on these bigger deals. Let s talk a little bit about that. 8

9 [Steve] Okay. Corey do you want - why don t you answer that one. [Corey] I think that certainly what happened for myself Stacy, is that I knew that I wanted to get into the mobile home parks and larger facilities. And so I - being a student of business is how I really have created the wealth that I ve been able to enjoy. I searched out, I searched out on the internet and basically everything came up with one name. And this is the next thing. This company that Steve and I have is that the name is Earnest Tew. He was sort of Godfather almost of mobile home parks. And so with it is that I spent a lot of time with Earnest just shadowing and learning everything he knew. In fact, I spent about a week with him zig zagging all over Florida looking at properties. And he taught me a lot. I ve also learned a lot along the way. In fact my first property that I bought, I thought since I had been in single families and apartments and industrial, a motel, and restaurant and all of that all those asset classes. That I thought how hard can a mobile home park be. It s basically just a plot of dirt and some utilities and that s it. [Corey] And what I didn t realize was and it was roughly about $250,000 worth of mistakes is that a lot is not a lot. And utilities is not utilities. You have to understand the condition and all of that. So subsequently Steve and I have partnered on a lot of deals and really how we met was because of Earnest Tew. That really Earnest was working with Steve on the east coast where how he was working with me on the west coast teaching us all about mobile home parks and mobile homes as well. So I would say the education is going to be huge. So whether somebody has $5,000 or $500,000 or even $5 million, education is going to be enormous. Because in this business, there s a huge profit margin and huge cash flow and equity opportunity, but you want to make sure that you protect yourself in knowing all about mobile home parks. And really there s a lack of knowledge out there because not a whole lot of people know about them because they fly really under the radar screen where everybody s chasing apartments and single families. I find that everybody thinks that sometimes mobile home parks as wobbly boxes. I see it as a big ATM machine myself. It s amazing that there s not as much competition for these mobile home parks. The stability is I think a lot more stable than say like apartment complex. And the other thing that I was going to mention off what Steve was talking about before is that the law of numbers. Say I have an 8 unit building out here or a 16 unit building, I do a rent increase of say $10 or $20, I go up not a whole lot. But say for example I just did a rent increase down at one of my parks in Texas and it was 160 units and I went up $20, that s $3,200 a month in increased revenue. [Corey] And there s no additional expenses off that. It s a net $3,200. [Corey] Those are some pretty big numbers. And then you times that by 12, you roughly have say about $36,000 or $37,000 if you re going to sell it at a 10% cap, you just created about $400,000 of equity. [Stacy] Wow, that is - [Corey] So it s some pretty big numbers. So the law of numbers is just amazing when it comes to mobile home parks. [Stacy] I would say that fits my definition of an ATM machine as well. 9

10 [Corey] Yeah, it s amazing. Once you get going with the mobile home parks it just becomes almost like a big printing press. [Corey] And it s just, you can t get the money you can t collect it fast enough sometimes. [Steve] Now Stacy you asked about - [Stacy] Yeah, I ll get you to throw in on that too please. [Steve] Yeah, about starting with little money. That first park I did, I was able to scrape up 10 grand to get into that deal. Now of course I had Earnest behind me at that time teaching me the system that he uses. We actually took a private lender that bought that park. A private lender that he had cultivated and used over the years that bought the park and we lease optioned it back from him. That s how we were able to get the IRAs involved. But I will add this, it s amazing right now how many people out there have cash. I see this every time I go to an event. I get s just about everyday from somebody saying Steve I ve got X amount of dollars to invest, is there any way I can joint venture with you or do some deals or you can help me out? For a new person starting, I would say the first source of financing you re going to find on these parks is from the seller s themselves. A lot of the turnaround projects, the sellers understand they can t - whoever s buying it can t get traditional bank financing on the properties, it s just too hard. Banks, unfortunately, local banks don t like these types of property classes and will stay away from them. I remember a comment, I actually went to a banker to get the loan on that first deal and the banker told me, he said Steve, there s three things we don t loan on. And he said that one of them is a liquor store and the other one is a topless bar and the third one is a mobile home park. [Stacy] Oh no. [Steve] So they were kind of putting them in that asset class. [Steve] So the first source I would tell people that are just getting started is go to the owners themselves or the sellers. They are a lot of times willing to carry a huge percentage of the sales price. And you can usually work out good terms on them. And that s all part of negotiating. And then whatever additional money that you may need, that s when I would go tap your private lender. And that can be anybody. I ve used people that I ve worked with. I ve used people that a majority of them aren t even involved in real estate investing, they re just looking for a safe, dependable place to put their money. [Steve] And I ve been able to do that. I ve been able to take some real estate investors money, and invest it in some deals that I ve done. So the money s out there. I mean I think if the deal s good enough and you present it to people and if you put them in a safe position, most people that I ve found when they really look hard, have been able to find the money to get in. [Stacy] Like the old saying goes, if it s a good enough deal, the money will find you. [Steve] Exactly. [Corey] Definitely. Stacy, I m actually doing a deal now where it s actually in Texas as well where somebody - where the investor brought in all the money to buy the park. And then basically what we re doing is we re going 50/50 on the upside and also 50/50 on the cash flow. 10

11 [Stacy] And the investor put up all the money? You didn t you re not having to put in anything? [Corey] You know I put in a little bit just because I want to have some skin in the game. [Corey] But certainly this investor would not have required it. [Corey] So I put in, the purchase price is just north of a million and I put about $50,000 in. But again it s just because that s how I always want to have skin in the game. I always want to eat my own cookie. [Stacy] Sure. [Corey] But you know there s a lot of opportunity out there in order to go to some of these owners. I think that s also probably one of the benefits of mobile home parks is that apartments is such a demand. When they go ahead, and it s on the market, you have ten offers on a lot of these things, especially out here in California. Whereas mobile home parks there s not as much exposure, so you can go to the owner like what Steve has said and you can do some creative terms, you can work out some creative terms, maybe a lease option or something along those lines. And then you can go out and you can find investors, maybe it s your brother, maybe it s your colleague or whatever it is, in order to get some money, in order to buy homes. They can buy repossessed homes, you can buy them for cents on the dollar at this point in some parts of the country. In some parts of the country, those repos now have evaporated but you can get into some of these mobile home parks pretty creatively and really just create just an enormous equity. [Stacy] Wow, that s awesome. [Steve] That s what I do just about on every deal now Stacy. I did a 185 space park I just told you about. [Stacy] Uh huh. [Steve] The owner carried back roughly 85% of the financing on that. [Steve] And so I just brought in 15% from a private investor. Actually, I m sorry, it was 80% he carried back and we brought in 20%. So I brought all of the money in, it was a no money down deal for me. However, one of the things that I teach and I tell folks, you need to put something in it so the investor knows you ve got something in it. [Steve] A lot of these folks are putting up anywhere from couple thousand to upwards of a million dollars in Corey s case well over a million dollars in that one deal he s doing. Want something in the game on your part. Which is fine. [Steve] It could be a token amount. Could be 5 grand or 10 grand, comparable to a $1.5 million deal. [Stacy] I agree with that. Well let s switch gears just for a second and let s talk about how do you find these deals. Because I guess the common thinking would say there aren t that many - or are there really that many good deals on mobile home parks to be had out there. And if so, how do you go about finding them? [Steve] Well you know there s a variety of ways. I 11

12 found the first park that I bought on the internet using a website called loopnet.com. And then there s mobilehomeparksstore.com. There s a lot of different sources you can use on the web. [Stacy] Okay. [Steve] There s also, you can use some local brokers that have some experience in commercial properties and mobile home parks. But by far, the best way that I ve been able to find deals is actually get out in the streets and knock on the doors. Along with that, if you wanted to not take the time to do that, even though a lot of us have spare time, we can go out and find these types of deals. You see a park, you just go up and talk to the manager try to get to the owner. [Steve] Corey has been successful and he s done some direct mail campaigns. And that s the whole key, there are a few people out looking for parks. The ones that are going to be lazy are just going to look at the easiest sources. [Steve] So actually going to the parks or doing some sort of direct mail is probably going to be the easiest way to find the best deals and birddogs. I ve had two deals brought to me by other investors. [Stacy] Really? [Steve] Think about it. In your real estate club which a lot of us I know I m a member of my local club and you are too. [Stacy] Yes. [Steve] Corey as well. And a lot of those folks listening. How many of those folks in your club are in the mobile home park investing? [Stacy] None. [Steve] I mean there s only two in our club. Myself and another couple. So I just tell people hey you find a deal for me and I ll give you a finder s fee. That s worked well. [Corey] And Steve said, I think that in a very similar as well that in our real estate club I think I was the only one or one of few people but that has changed pretty significantly over the last six months or the last year or so. Now people are seeing such equity - how much they increase equity wise and also cash flow that it seems like everybody I talk to now wants to get into mobile home parks. [Corey] So it s pretty amazing that way to do that. [Corey] And I think also, the other way historically in the California market has been so hot out here. Even in Texas and a lot of the markets I m looking at is that for things like loopnet and mobilehomeparkstore I m always continuing to look at those, but where I find the most success is doing the direct mail like Steve said. And I ve got some phenomenal deals that way, but more importantly has been networking. In fact, last year at the Mobile Home Millions Conference back in Atlanta and also Gainesville, I actually bought, I probably bought about $3 million worth of properties. [Corey] Just from networking, got some really incredible deals. I also found the investor that I just had referred to about that deal that I had in Texas. I 12

13 found that investor through just networking at one of those conferences. So I think that s really where I find a lot of great deals. Because for example here in California, there s a lot money because a lot of people are selling their properties, selling their duplex and make some incredible money that way. But there s a lack of product out here. [Corey] So I really like the national conferences. Or really networking nationally because there s a lot of places, a lot of areas around the country that people maybe don t have as much money, but they have a lot of great deals. So when I m at those kind of national events, I try to connect with everybody to see what kind of deals are out there. Also have some good support network out there as well. [Stacy] Okay. Well you touched on something I wanted to get - or talk about next Corey, and that was your decision to start pulling your money out of California. [Corey] Okay. [Stacy] I know California is one of the hottest markets in the country along with Vegas and Florida and some other places. So talk a little bit about that and your decision to - I guess time the market if you will and start pulling some of your money out of the California market. [Corey] Okay. You know Stacy I think that certainly California market has gone up tremendously. Since 2000 the California market has doubled, since 1996 it has tripled. [Corey] So just - it s just like everybody is drinking kool aid out here. It s just amazing. It s just going crazy. And I think what happens is the California market has really has enjoyed a lot of success because certainly the government, the federal government has tried to really jumpstart the economy over the last four or five, six years and California economy has done very, very well. And so that has even made things even more euphoric for us out here. Certainly looking at I ve always looked at history, cause I like looking at history and sort of a history buff a little bit and if you look over the California market over the last 40, 50 or 60 years. Everything is cycled and everything s come up and down and certainly back in the early 90s it s similar to what it is today, with regards to it s just euphoric. Things have just gone crazy. But then from like it d come down 30-40%. So for me, I - even though at this point I ve bought all the properties I ve done all that. I don t want to go ahead and I don t want to lose that equity that I ve built so I ve looked at a lot of contrary markets out there. I ve found a couple in Texas that I really like and then also some within the middle United States. Because really the two coasts really usually do the opposite of what the middle of the country does. And so for example with California, when California is at its height, there s markets like Austin that is at its low. Austin is a very good contrary market for the California market. So what I ve done is that I ve kept a couple of my really good properties. My eight properties, really battened down the hatches at this point and put long term financing on them and know I m going to go long. And sold a lot of my other properties and moved that out of California in order to protect that money and then over the next three or four years I ll let that grow up and then bring that back to California when there s absolutely blood in the street. It s going to be amazing. Because really the market right now. For example, where I live, I live in Orange County, the affordability index in Orange County is at 11%. So only 11% of the population can buy the average priced home. So only if 11% is buying the average priced home, who s buying them? 13

14 [Corey] And really it s the speculators. Speculators basically think - everybody thinks even some of the people I ve sold properties over the last year or so. They think they bought like a fourplex for $800,000 which is just crazy money even California s crazy money. They think it s going to go up $100,000 so everybody s speculating out here. [Corey] Or everybody s living for today. [Stacy] Yes. [Corey] And where the scary thing is going to be is that I think we all agree that the interest rates have no where to go except to go up. [Stacy] Yes. [Corey] So in the first time in the last 30 or 40 years, in California and all the rest of the markets is that with the mortgages at variable rate loans. Right now, probably about 70-80% of all loans out there are variable rate loans. What happens when and those loans start resetting. When they start a year or two years from now set up at 8-9% where people are sitting at 3% they ll never going to be able to catch up. [Corey] And so people are just going to get hurt very badly. There s also a lot of people investing for the first time that have never endured a bad cycle. [Corey] It s easy to manage property in a good cycle, but in a bad cycle it s very difficult to. [Corey] So I think there s going to be a lot of opportunity here in California in the next four to five years from now in which I m trying to position myself in order to do in order to take advantage of that. [Stacy] Awesome. All right, we ll go ahead and wrap it up then. I think it s been a great call. I hope everyone agrees with that. I m sure you have. I hope everyone took as many notes as I took. I took four or five pages of notes here tonight. [Steve] Stacy, can I add one thing? [Stacy] Absolutely. [Steve] I encourage all your listeners too while they re poking around on mobilehomeuniversity.com. One of the key aspects we have on the site is our forum or newsgroup. If you re really wanting to ask questions. Go in there and read the posts, there s a lot of experienced investors in there now answering questions. Telling them about deals. We ve got a couple blogs that are coming up soon. We ve got a gentleman that I m doing a joint venture with by the name of Fred that s down in that 185 space park I talked to you about. Brand new to the mobile home park business and I m working together with him. He s got a lot of lessons to learn. And he s going to start posting. So we re going to get some valuable information out there to folks in the mobile home park investing arena. [Stacy] Great. [Steve] Stop by there and sign up for the forum, there s no charge. Just make sure you visit every once in awhile and see what s going on and you ll learn a lot just from that forum. 14

15 [Stacy] Yeah, it s a great website. And I encourage everybody again that website url is mobilehomeuniversity.com - mobilehomeuniversity.com. All right guys. Well I want to thank both of you for taking time out of your busy schedules. I know you re both extremely busy putting together multi million dollar deals all over the place and I really want to thank you on behalf of my listeners tonight for taking this time out of your busy schedules and talking to us. [Corey] Sounds great, well thank you so much Stacy. [Steve] We re just passing on what folks have taught us. I mean Earnest taught us so much, and Lonnie s taught us so much. We just take it to a different level, doing different things. Excited to be able to meet some of your listeners. I hope they say hey I heard you on Stacy s call. [Corey] Yeah, that sounds great. [Stacy] Well I m sure they will. And I m sure if they could, they d thank you tonight for all the great information you ve given them. Well again, thanks guys, and I look forward to talking to you both again very soon. [Steve] Okay. [Corey] Thanks Stacy. [Stacy] Good night guys. 15