Interview with Corey Woodruff of CMH Capital

Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/interview-with-corey-woodruff-of-cmh-capital/id1520681893?i=1000523757471

SHOW NOTES

Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. On this episode of the Passive Mobile Home Park Investing Podcast, Andrew talks with Corey Woodruff of CMH Capital. Corey shares how his background in vacation timeshare sales gave him a unique perspective and edge when paired with his knowledge of manufactured housing. Andrew and Corey also talk about what they think the future of the manufactured housing industry will look like. In addition to sharing some insight on CMH Capital and what makes them different, Corey also talks about his perfect mobile home park and the toughest hurdle he had to face when getting into mobile home park investing. Corey shares some common mistakes he sees by other operators and he also shares his advice for passive investors who want to jump into the lucrative world of mobile home parks.

CMH Capital owns 1,600 lots with another 1,200 set to close over the next 60 days! Corey used to work as the President of Sales in the RV/ travel world before leaving his full-time, six-figure paying job in August of 2020 to go into mobile home park investing full time. Corey has 3 kids, and is getting married in August 2021.

***Andrew Keel and Keel Team Real Estate Investments (Keel Team, LLC) do not endorse any interviewee. This interview is for informational purposes only and should not be depended upon for investment purposes. ***

Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 1,600 lots under management. His team currently manages over 20 manufactured housing communities across ten states – AR, GA, IA, IL, IN, MN, NE, OH, PA and TN. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities.

Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews: https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at AndrewKeel.com.

Would you like to see mobile home park value-add projects in progress? If so, follow us on Instagram: @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions!

Talking Points:

00:21 – Welcome to the Passive Mobile Home Park Investing Podcast

01:33 – How Corey got into manufactured housing community ownership

04:00 – The toughest hurdle in the business for Corey

05:29 – The management of parks and Corey’s 1,600 lots

07:26 – Deals and sales

10:56 – The most important things LP’s need to look out for when investing in mobile home parks

12:21 – CMH Capital deal criteria

13:32 – Corey’s perfect mobile home park

13:55 – Common mistakes new operators make when owning mobile home parks

16:00 – The future of the manufactured housing industry and a $15 minimum wage

19:29 – Value proposition at CMH Capital and what makes them different

21:31 – Getting a hold of Corey

22:21 – Conclusion

SUBSCRIBE TO PASSIVE MOBILE HOME PARK INVESTING PODCAST YOUTUBE CHANNEL https://www.youtube.com/channel/UCy9uI3KGQmFgABsr9lUtRTQ

Links & Mentions from This Episode:

Corey Woodruff Email: corey@cmhcapitalinc.com

Corey Woodruff LinkedIn: https://www.linkedin.com/in/corey-w-5187ab126/

Keel Team’s Official Website: https://www.keelteam.com/

Andrew Keel’s Official Website: https://www.andrewkeel.com/

Andrew Keel LinkedIn: https://www.linkedin.com/in/andrewkeel

Andrew Keel Facebook Page: https://www.facebook.com/PassiveMHPin…

Andrew Keel Instagram Page: https://www.instagram.com/passivemhpi…

Twitter: @MHPinvestors

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TRANSCRIPT

Andrew: Welcome to The Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have an amazing guest in one of my friends, Mr. Corey Woodruff of CMH Capital.

Before we dive in, I want to ask you all a real quick favor. Would you mind taking an extra 30 seconds and head in over to iTunes to rate this podcast with five stars? This helps us get more listeners and it means the absolute world to me. Thank you for making my day with that review of the show.

All right, let’s dive in. Corey currently owns and operates 1600 lots, with another 1200 set to close over the next 60 days. Corey used to work as a president of sales in the RV/travel world before leaving his full-time six-figure paying job in August of 2020 to go into mobile home parks full-time. Corey has a large mobile home park wholesaling business in addition to his current holdings. He also has three kids, three dogs, and is getting married in August of 2021. Corey, welcome to the show.

Corey: Hey man. Thanks for having me. I appreciate it.

Andrew: Let’s dive right into the questions here. Can you tell us about your story and how you got into manufactured housing?

Corey: Yes. Long story short, I grew up in an extremely poor family, not just parents. Uncles, aunts, cousins, everybody just seem to struggle. Obviously, I was told the same thing that everybody else was told, which was you go to college and you’re going to be a millionaire. I did that, quickly realized that that was not the case, but I finished. I wrestled so I finished, I got my degree, and when I came home I realized very fast that having a college degree does not mean you are going to be a millionaire.

I got my job in sales, technically not using my degree, and I did really well. I saved up some money and I wanted to flip houses; that was my vision. I quickly realized with a 400 credit score and $20,000 in cash you were not going to be flipping houses. I had a terrible credit score, I only had $20,000, and like I said, I didn’t know private money existed.

I went to this mobile home park and said, hey, I have $20,000. I picked the crappiest mobile home park in town. I said, hey, I want to fix up these abandoned homes. You have about 20 of them and I was like, I’ll give you $100 each and I’ll fix them up. He didn’t want to do it.

I went back about two months later and I had $50,000 at that time. He said, keep $10,000 in your pocket. Give me $40,000, I’ll finance the rest. I didn’t know anything about mobile home parks, but I knew that real estate people always have money. I said, all right, I’m just going to buy this thing and see what happens.

Once I purchased it, I found Frank and Dave’s course. I took the course and we bought it at $250,000. We sold 50% of it for $750,000 last year. I still own 50% of it and we sold it for $750,000, so I did good at it.

Andrew: That’s the very first one. Was that in Michigan?

Corey: Yup, that was in Michigan. Still own it today. It’s a great park. That was in Michigan and last I […] should have bought that five years ago, and now I’m here.

Andrew: Awesome. Corey, what has been the toughest hurdle for you in the business?

Corey: The toughest hurdle, I would say, has really been the attention to detail. I’m not an ‘attention to detail’ kind of guy. I’m a ‘go out and buy 20 homes in 3 days, and work it out later’ kind of guy. If you were to speak to all my investors, they’ll say Corey’s trustworthy, Corey will do anything we ask him to do, he works really hard, he makes us money. But if we graded Corey on organization and attention to detail, I’d say a C-. Naturally, I spend money to surround myself with people that do have attention to detail or don’t want me to yell at them, so they pay good attention to detail.

It’s gotten much better over time, but it was extremely stressful. I feel like I was letting people down by not paying attention to detail. That’s been my biggest hurdle because the details matter. The one permit you miss in my Mansfield, Ohio park, we were hauling in homes and little did we know we were missing a permit. It was a nightmare dealing with it. We’re still dealing with it today trying to get out of this fix.

That was something I let my investor down outside of it. That wasn’t any enjoyable experience. But if […] say details are important, it’s just not my strength, so we do what guys like us do, is to surround ourselves with people that have attention to detail.

Andrew: Totally. How do you handle the management of your parks and your current 1600 lots?

Corey: We have on-site managers for each. Those on-site managers are dealing with the smaller stuff, making sure the home […], making sure the electricians are doing what they’re supposed to be doing. We have three people in office that just this week we separated into regions now. We own enough now to where one person just deals with Illinois and Iowa, one person deals with Michigan and Ohio, and so on and so forth. We kind of split them up into regions now.

Andrew: Awesome. And how often do you or someone from your team visit those parks?

Corey: I actually don’t necessarily like to travel, but it gives me time to game plan, so I really enjoy driving. I’ve been out to my Iowa and Illinois ones twice in two weeks, and buying homes but still stopping […]. Usually, it’s me doing that on-site stuff just because I feel like if I’m managing it at a thousand-foot view with the three people that are managing the managers, if I’m not on-site to see what’s going on and really doing, I don’t really know a lot of what’s going on. That’s just how I do it. I’m not saying other people that do it differently are wrong. It’s just that I’m the one who’s usually doing the on-site stuff.

Andrew: For sure. Owners always want to clarify. You have 1600 lots with 1200 closing in the next 60 days. You got a three-person team and yourself managing it. You got to be on the hiring frenzy to account for 1200 more lots, right?

Corey: Yeah. It’s going to get a little crazy here in the next 60 days, for sure.

Andrew: Tell us. How do you get 1200 lots closing at one time? How do you find all these deals? I think that’s probably the number one question you probably get asked by people in the Facebook groups and things that we’re a part of. You seem to have a never-ending supply of deal flow. What’s your secret?

Corey: The timeshare sales world is a very quick and go-hard sales process. I watched a lot of people fail because they overcomplicate the process. We would have guys that would take a sales presentation and take four hours. I’ve got mine done in 45 minutes, and I sold way more than them.

Anyway, my point is as I learned there, simple is better. Basically, when you break down how to get more deals, it’s just simplify it. The more hours you call equals the more calls you make, which equals to more people you’re going to talk to, which means the more people that you’re going to find to sell. But finding the people that wanted to sell in the cold call game, a lot of people think that’s where the process stops and it isn’t.

Sometimes, it is literally simple. Last week, we had a guy that said he wasn’t going to sell for the next two years. We scheduled him for three months later. We called him three months later and he had just broken his leg. That was an unfortunate event for him. But it was enough to set him off and he was like, hey I just broke my leg. I’m going to be in a cast for the next six months or whatever, I’m 75 years old, I’m done. We had a signed contract today for seller financing, so I’m out here in Illinois and we’re signing a contract for seller financing and deal for Virginia.

It’s the follow-up that’s the most crucial part. It’s like I was telling somebody the other day. I’m sure you ran into, too, where you talk to somebody over the course of the year five or six times, they’ve been good conversations, you’ve been emailing them and all that, and these old mom and pop owners are not always necessarily looking for the highest bid. They’re looking for a fair price and they’re also looking for someone that’s going to take care of their baby for the next 30 years.

When you portray yourself as that—and we are, I mean we’re not not going to take care of the property—you become more of a grandson or a child to them, they’re more likely to want to deal with you. When you relate to these people just as in timeshare sales, my goal was always to become their grandkid or their child while I’m there, and that seems to have worked. So build a relationship, making sure you follow-up, and just hitting the dialer.

Andrew: That’s awesome. What other similarities have you seen carry over from your time in the timeshare sales world that maybe you used today?

Corey: Rejection. In the timeshare world, you are lights out. You are considered amazing if you’re getting told ‘no’ 7 of 10 times. If you’re getting told ‘no’ 7 of 10 times, you’re a legend in that business. We call 100 people and 80 or 90 of them tell us ‘no.’ That just does not faze me these days. I’m used to it. That’s just the world I’ve lived in for the last seven years.

Andrew: That’s a very good point. Corey, what are the most important things that passive investors, limited partners need to look out for when investing into mobile home parks?

Corey: I would say the hit in infrastructure cost. Is that what you’re referring to, like when people are putting money in with guys like myself, what do they have to look for?

Andrew: Yeah, just what things on the surface level would they not know if they’re coming from a different asset class and they’re chasing yields, they found mobile home parks, they heard that the returns are great. On the surface level, what they might not see some of the items like your talking about, infrastructure?

Corey: The infrastructure, the tenant base is much different. Also, I always tell every investor that ever invested in me, hey, here are the returns that we’re targeting, but these projects will always give you heartburn a lot more than cash flow for the first six months. I always tell them that. It’s always, we can almost make any part look great when looking at a pro forma. You get into them and there’s just multiple other things. I always just let everybody know that not every deal is perfect, the pro forma shows 100% collections, that kind of stuff. You have to deal with the good and the bad in it.

Andrew: Totally. What is the CMH Capital deal criteria and why?

Corey: We like to see a 20% cash-on-cash return on it. We like to see majority tenant-owned homes. We like to see paved roads, city water, and city sewer. And we like to be in major metros. It seems like these cities in Minnesota—I’m sure you’re familiar with your own parks in Minnesota—don’t have metros, but they have a great growing population. They have a great median home price, they have good incomes, and it seems like some of those cities with metros work just fine as well.

The city and the metro doesn’t mean as much to me as the statistics that come with it. But after these 1200 close, I think we’re going to be looking for the big boys now. That’s where we’re going to be.

Andrew: Very nice. I guess I’ll follow it up with this one then. What does the perfect mobile home park look like in your eyes and why?

Corey: Hundred spaces and above, all tenant-owned homes, 100% full, and $150 below lot rent.

Andrew: If you find any of those, you better speak to me first.

Corey: Yeah.

Andrew: Corey, what common mistakes do new operators make?

Corey: They expect perfection but don’t plan for the imperfections of mobile home parks. I think that’s the big one. I also think the space is so high that people just want to buy their first deal. They’ll buy anyway they can, and some of these deals that people are buying are not going to go well because they’re just trying to get in the space to say they’re in the space. I know that because I used to play like that.

When I was just getting started I just wanted more, and there were five deals that fell apart on me in year two that just devastated me. I always like to go back to the deals that I used to look at when I was (I say) younger in the business. I’ve been in the business five years and I’m still not an expert—not even close—and I like to look back at those deals and evaluate the deals that I wanted to do really badly. I just look at them and I think, oh my gosh, I’m so happy those didn’t go through because we’d be struggling with them.

I think that’s the main thing. I like doing that because it also shows my growth. My investors really like the fact that when we pitch them a deal and they say, hey I want to do the deal, and then I dig into a little bit more, I’m like, no, we’re not doing that. We’re going to move on. And they like that because, obviously, guys like us get paid an acquisition fee so we’re motivated to close deals. We get paid management fees and that kind of stuff. They obviously like that, that we turn deals away just as you do, I’m sure.

Andrew: Yes, some can be more of a headache than you expect. Making sure that due diligence is done is of a huge importance, most definitely. Corey, what hurdles does the manufactured housing industry face, moving forward?

Corey: I don’t know. That’s a tough question.

Andrew: With inflation or maybe a $15 minimum wage. How do you think those things would affect your day-to-day life?

Corey: I don’t know. Honestly, I worry about inflation, but as stuff gets more expensive it seems affordable housing is something that’s going to be even more of a hot commodity to have. Watching how well mobile home parks compare to other commercial real estate during COVID, I guess I’m maybe a little bit too optimistic about mobile home parks. I think the challenges are what they are.

Obviously, when the economy gets bad, everybody suffers. But even then, affordable housing becomes more of a hot commodity when things are bad. I’m not really sure how to answer that. What would you say to that? I guess let me learn from you a little bit.

Andrew: You turn the tables, I like it. I think you have some good insights there. As recession-resistant the asset class is—we saw that during COVID when people were out of work and laid off—people go down a level. The Class A moves into Class B, Class B to C, Class C to mobile home parks, and our occupancy levels stayed high. I think kind of what you said, affordable housing is always in need, whether it’s a recession or in time, when people are moving down. And also in times that are good. Home prices right now are through the roof. People can’t afford a new house. This is a good option for them.

Corey: I think I actually have a good answer for this one. It’s a tough question, though. It’s not something that I do, and I don’t think it’s something I see you doing, but some of these guys that are buying at market, rents at a 5 cap but planning on steadily increasing over 10 years, I think some of those purchases […] on getting in trouble if the economy crashes and their appraisals aren’t coming in as aggressive on cap rate. Their balloons pop, and they can’t get their money out because their appraised value isn’t coming in. They also can’t hold it because their balloons come and due, and nobody would do the financing on it because the appraisals don’t match it.

I think that could be an issue later on down the road. The strategy is great and a great economy buy the 5, you do your market research and you see the comms all selling it 4½s and 5s, and you raise rents on 200 tenants $10 every year for 10 years, and then […] at a 5, you win. You get good returns like that. But if they wait too long and in year 10 they go to refinance and the market crashes, you’re screwed. You’re not getting the appraisal that you’re hoping for, maybe they appraise at a seven or an eight, and you’re breaking even or you’re losing money. I think that’s a danger.

Andrew: Totally, yeah. Corey, what’s the value proposition at CMH Capital and what makes you guys different?

Corey: I don’t know about different but what makes us special. There are plenty of people out there that are just like us. What makes us special (I think) is we go above and beyond to find deals. We call nonstop. I think of myself as the CEO. I spent four days out of seven in Iowa last week, and we did really well buying homes. On Monday, I’ll leave again and I’ll be gone another five days to buy a home. We filled 25% of our vacant lots in our three-part portfolio we just bought in one week. That’s 70 lots that we have to fill. We’re hoping to fill another 25% this time.

I just think the work ethic. My refusal to grow up and to live how I’ve grown up and make money, I think that helps, and we’re trustworthy. If we see something on a deal and we realize that us taking 30% ownership isn’t going to get the investors the return they want, then we go a bit lower to make sure it works for them. I would say that. Like I said, I don’t think it makes us different but I think it makes us special.

Andrew: I think one thing about you, Corey, and your company is just you are a hustler. I always see you out on the road, getting deals out there through your wholesaling. We just closed on one that you assigned to us. That was a good deal. Keep it up. You’re doing a good job and it’s awesome just to see, and see as you mature in the business and continue to acquire, it’s pretty great.

Corey: Cool, I appreciate it. I was just trying to catch you.

Andrew: You caught me. You got me now. You got more lots than I do. Corey, tell me this. How can listeners get a hold of you if they would like to do so?

Corey: Facebook, my email is corey@cmhcapitalinc.com. Those are usually my best. I had a couple of people get a little bit upset. They emailed me, they didn’t get a response for a week, but we’re trying our best to keep up with everything. Sometimes when it’s an email that doesn’t involve the fire exit, it does get pushed out a little bit, so I apologize for anyone that emails that doesn’t get a response right away. It’s the way it is right now.

Andrew: You got to prioritize the deals, right? I totally get that. Well, thank you so much, Corey, for coming on the show. It’s a pleasure having you. That’s it for today, folks. Thank you all so much for tuning in.