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  • Andrew Keel

Interview with Dylan Stewart and Alex Donnolo of Mavdon Investments




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 Dylan Stewart and Alex Donnolo of Mavdon Investments. Dylan and Alex bring their youthful enthusiasm and excitement to this week’s episode as they talk about their first mobile home park deal, the future of Mavdon Investments, their due diligence process, and their journey into the manufactured housing industry. Don’t let their youth fool you, Dylan and Alex are very knowledgable on the mobile home park business. They share what they’ve learned and how they continue to learn about this evolving industry. Don’t miss all of the golden nuggets this episode has to offer!

Dylan and Alex have always had entrepreneurship in their blood. Separately, they were both in the single-family home investing business before partnering and forming Mavdon investments.

Their first mobile home park deal came about at the end of 2018 just outside of St. Louis, Missouri. They’ve gone on to close on six more parks. They currently own 117 lots and are closing on another 176 this month! They have created and maintained a fantastic team and their goal is to help educate others in the business.

Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 2,000 lots under management. His team currently manages over 30 manufactured housing communities across more than ten states. 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.

Are you getting value out of this show? If so, please head over to iTunes and leave the show a quick five-star review. I have a goal of hitting over 100 total 5-star reviews by the end of 2021, and it would mean the absolute world to me if you could help contribute to that. Thanks ahead of time for making my day with your five-star review of the show.

Talking Points:

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

01:55 - Dylan and Alex’s story and journey into the mobile home park space

05:20 - Their toughest hurdle in the business this far

08:00 - How Dylan and Alex learned the operations side of the business

11:44 - The future of Mavdon investments as they continue to grow

13:54 - Sourcing deals and how they do it

16:40 - Criteria for mobile home parks and ne

w deals

21:00 - Mistakes and how Dylan and Alex recovered from them

25:40 - The most important things passive investors need to look out for when investing into trailer parks

29:42 - Questions from investors

41:00 - The value proposition at Mavdon and what makes them different

44:45 - Getting a hold of Dylan and Alex- their contact info

46:00 - Number one tip for passive investors 00:00 - Conclusion



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Links & Mentions from This Episode:

The Elite MHP Investing Facebook Group: https://www.facebook.com/groups/thinkbiggermultifamily/about/

Mavdon’s official website: https://mavdon.com/

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


TRANSCRIPT


Andrew: Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today, we have a couple of owner-operators in the mobile home park space on the show in Mr. Dylan Stewart and Alex Donnolo of Mavdon Investments.

Dylan and Alex have always had entrepreneurship in their blood. Both individually were in the single-family business and partnered up on the single-family side to form Mavdon. As they continued with their nationwide single-family flipping, it wasn't until the end of 2018 when they closed on their first mobile home park outside of St. Louis, Missouri.

Since then, they have closed on six more mobile home parks with several more in escrow. They currently own 117 lots and are closing on another 176 in June here in 2021, so next month. They have been able to build a rock-star team around them to find, purchase, and turn around value-add mobile home parks.

In addition, they love to give value to other investors through their Facebook and YouTube channel. The Facebook Group is called the Elite MHP Investing group.

Dylan and Alex, welcome to the show.


Dylan: Thank you, Andrew. Definitely excited to be here with you and your listeners.


Alex: It's an absolute pleasure to be on and I look forward to diving in here. Hopefully, it's not too bad.


Andrew: Definitely not. Maybe you guys can start out by telling us your story and how you got into manufactured housing.


Dylan: For me, it was this serendipitous thing. We were actually trying to sell a single-family property. At the end of 2019, we bought our first mobile home park, so it was even less time under our belt. We feel like we're doing well.

We're trying to sell a single-family deal [...] and this buyer was like, hey, I'm not looking to buy but I'm looking to sell a mobile home park. Us as investors, we look for opportunities no matter where that is. We knew that we wanted to get into larger deals. We just didn't know when that opportunity would arise.

We found this park just right outside of St. Louis, not far from your Edwardsville property too. We ended up buying it and then bought a few more around there. As we went through 2019 stabling and figuring out how to do this mobile home park investing thing, we're really ramping things up at the end of this past year and we're continuing to. We love it.

Like we said, we got a team around us that continues to fill in the position so Alex and I can focus on running the business, working in the business, and working on the business.


Andrew: I love that. Literally, you guys just threw your single-family wholesaling business and sourced a mobile home park seller.


Alex: Yeah. I will say, mobile home parks have been on the horizon, that was the angle. Everybody else was like we want to get into mobile home parks, self-storage, but it was more like a five-year goal at the time. We had really just started getting the systems in place for our single-family to where we can actually consider ourselves as successful wholesalers. It was really just to that point.

We were building momentum. We had a team in place. Even though the team was like, really, now we're buying mobile home parks, we just got all this in place. For Dylan and I, we just knew we couldn't really pass down that opportunity. We had a mobile home park seller, a great price, it was 12 lots, $150,000, and lot rents were $150. We just saw dollar signs and all public utilities.

We went for it and quickly realized if we're going to scale it, it was going to require our full attention. It was just through the osmosis of our single-family that that first deal came into place, but it was on the horizon. That was what made us quickly pull the trigger.


Dylan: It was interesting because, for us, we had to take some steps back because when you're flipping single-family properties, it's a transactional lucrative business. Now, we're saying, hey, we're sacrificing it in the short-term of maybe our income to focus on the long-term of owning these properties, having legacy and wealth.

Just as you mentioned, we can take our portfolio from 117 lots to over 300 in such a short time just by buying the right properties. It's super exciting, it gets us fired up, our team fired up, and just the impact we can make.


Andrew: That is so amazing. A lot of people have been hearing about mobile home parks and it's this buzz asset class right now—this buzz word. From bigger pockets and other avenues, people are flooding to this, but you guys stumble upon it on somewhat of an accident. It's very serendipitous. That's pretty neat. What has been the toughest hurdle for you guys in the business?


Dylan: For us, if I'll hit on that first week coming from the single-family space and running an acquisition-based business, we've always understood that. Finding the deals, and then of course if you had the right deal, getting the money in place has been simple because money flocks to a good deal.

As you mentioned, another people talk about is a bad operator can take a good deal to bad, but a good operator can take a bad deal to excellent. For us, we know in this industry being younger entrepreneurs, we want to master that operational side of things.

You can find a deal, but how are you going to actually be able to refinance out? Are you going to be able to exit at the cap rate that you're looking for? Are you getting your expenses to where they need to be? Are you still operating way too high?

I think the operational side has been something that we've really, really been overcoming and getting a bit more systems in place, keeping it replicable because as we're buying new deals, we want to have clockwork. We have our checklist. We have our systems and management in place.

Managing construction has always been something that we're constantly learning. We have a team member that's solely focused on managing construction. We're bringing in a team member to do infilling and stuff like that. The operation side has been fun.


Alex: For us, the biggest thing I would say to sum that up is what a lot of people touch on—the paradox of trying to scale a team. How quickly do you scale? How quickly do you hire? Is it too early? Is it too soon?

For us, the biggest thing has been if we're going to scale, we have to let go of more parts of the business and focus on the bigger picture. We were managing the first couple of parks ourselves pretty much. It was me, Dylan, and then our site manager. We had no management team in place. That's just been an evolution of how do we go to the drawing board, step back away from the business, and delegate?

We just finally made a decision and said, all right, we're going to hire every position that needs to be hired. If there's a hat that needs to be filled, we're just going to hire and make it work. We trusted that process. Now, we have this great team around us. We never had to turn the lights off or anything like that.


Andrew: It's great. I know from experience that that is very tough to do for new operators. You come into the business and what you end up doing is sacrificing cash flow to invest in your management company. Maybe you can touch on that. How did you guys learn the operation side? Was it just trial by fire, you just jumped in? Did you go to the Frank and Dave Bootcamp? What did you guys do to learn?


Alex: Just to preface real quick too, our jump into mobile home parks, really all we knew going in was that it was just plain cash flow. That's what we liked about it. It's better than rentals. The basic fundamental benefit of mobile home park investing is what we knew. We were comparing it to single-family, but we didn't know the whole bigger picture of the demand and the affordable housing prices. We just hadn't gone so deep into how hot this was going to be. We just knew, hey, this is way better than single-family. We went in and we were like, we'll just hire a site manager. They'll run it.

To us, it was a big win just to have 12 units and to be collecting $1800 or $2000 in rent each month, that was a big jump on one property. We hired a site manager, quickly ran into all the issues we could. We were getting personal calls on our cell phones from the police and calls from residents that the manager was showing up drunk. It was a mess.

Then, we went third-party and we had all the war stories. Fortunately, we got to flush out all the war stories early on with some small parks. We really did.

Our third-party manager was horrible. They didn't get anything done. We ended up filling in all the cracks, all that Dylan touched in because he really heads up a lot of the asset management and stuff. Now, our management system is really the key to our success like Dylan touched in the evolution of that.


Dylan: A good question for any investors to ask the operators that they're looking to invest with is how do you guys manage your properties? Do you guys outsource entirely to someone else, or do you guys do it all in-house? Get to understand how they do that because for us like Alex said, we try to outsource quickly.

There was a local management company, they were in single-family, and they've done some multi-family. We're like, hey, we might want to trust these guys since they can grow with us. We shared a vision that was aligned. We just realized no one else cares about your property as much as you do. We had to take that back into our court.

I think God has a way and a plan bigger than ours, so the same thing, literally a serendipitous thing that we met another individual who was on Facebook. I'd seen that she was starting to manage and operate some parks. She had done it for over a decade. I made contact with her. I said, hey, here's who we are, here's what we're doing, and here's where we're going.

Over six months, we've built a relationship and now she's with us full-time. She still does a little bit of trailer parks. Now, as we're continuing to grow, she's riding alongside us. It's like an umbrella under an umbrella. She is exclusively with us, but she has some team members in place to help with working with the residents, dealing with the small repairs, and everything. That's how we drew our management.

Fortunately, she's done it for a decade and she's continuing to do it. She does all of our collections. She's very, very diligent in giving us our reports and everything. We watch over us like a hawk because now, there's someone else involved. We want to make sure that nothing's getting dropped.

It was exciting, this park that we just closed last Friday, this was the first time where she was actually out on-site meeting with the residents. We weren't even there. She was doing face to face saying, hey, new ownership, new management, contact me directly.

In the closing part of that, I was the one doing that. Even though she was still doing the operations, I was the one actually meeting the residents. It was an exciting milestone for us to fully disconnect from the residents.


Andrew: That's really great. As you guys grow, do you plan to grow the management company in-house or is it this umbrella under your umbrella that's going to help build her business? How does that work?


Dylan: We're going to grow with her. I know it's confusing because everybody does it differently. I think that's one thing that's so crucial about this industry, find what works for you. Not everybody wants to go to 5000 lots, 50,000 lots, 500 lots, whatever it is. For us, this structure, she's going to grow her team and we're going to be very involved in having our metrics and KPIs. She's a team member. Her team members are our team members.


Alex: The truth is so far we want to branch out but we're trying to keep burning out. We want to keep her in-house because she's really good at what she does, she's specific to mobile home parks, and she saw a demand in the industry for good in-house management that could be systemized. She's great.

Right now, she manages our whole portfolio and will continue to do so. Hopefully, it'll stay that way. That was the goal in the beginning. We're like, all right, the only way to make this work is to go in-house. It's just a matter of when you find the right person.

Fortunately, like Dylan said, she solicited her services and it's been absolutely great. She helps with our investors, sending out reports, and doing project updates. It's like a three-tier system between Dylan, her, and the site manager. She's really working very smoothly so far. It's giving us that confidence going into these bigger parks, first closing on 124 units. Couldn't imagine trying to do that the old way with us managing these.


Dylan: Yeah. Just to touch on that even more, we still have a virtual assistant exclusively that does our unit marketing, screening, and then seeing if they're qualified to move in. We still manage that 100% because we don't want someone else to slow down—not to say that this individual would—how quickly we can fill quality residents into the park. We still control that.


Andrew: How do you guys source your deals?


Dylan: Every way we can, honestly. We use primarily cold-calling. Honestly, one thing that's worked really well for us—our acquisition guy knows that if he's having a phone call with a seller—to look on Google and hop out in Street View. As weird as it sounds, it’s old-fashioned, and it's slow. You can hire a virtual assistant to do this. We've done that.

They might not be on Google, but they have an assignment from their park going down to Google Street. We have him constantly building a database [...] that way, and then online—Craigslist, Facebook Marketplace.

One tip for your listeners—we'll give out some nuggets—is even when you see people selling mobile homes, contact them, say, hey, I saw you're selling a few mobile homes. Do you want to sell the park? If we have a mobile home up for sale and someone contacts us, we're owners, we’re operators. We will open up to an offer. Other people might do the same.


Alex: It’s really more targeted marketing to this day [...] approach or anything like that. We pull a list but there's so much bycatch. Our cold-callers end up complaining that this list is trash or whatever. You have the best luck really if you keep going and doing targeted marketing.

Craigslist works great. People who are selling mobile homes and you can get in touch with the actual owner of the park. You're just listing or renting a home. That's been a great fruitful source.

Now that we're in the heavy acquisition, we have bought a couple of wholesale deals just because the right deal comes our way and we enjoy working with wholesalers. There are lots of deals to be had. For us, we find that some of the best deals that work for our model don't end up on the list even. We find them on Google. Don't deny that approach by any means.


Andrew: Maybe you could tell us a little bit about your deal criteria. What is that model? What is the park that Mavdon Investments goes after?

Dylan: If I can backtrack on one thing—and hopefully, this is applicable to your listeners, Andrew—whether you're an investor passively or actively, always respond to your emails with a wholesaler or a broker. If they're sending you a deal, we are on a VIP list because we've executed deals with some wholesalers. Now, we see those first. Even if I see a deal or our acquisition guy sees the deal and it doesn’t meet our criteria, we will still email an offer. We've had offers coming at $200,000 less and we've literally got a reduction over an email without even talking and saying, hey, it's probably not going to work. Here's where we're at. We're $500,000. Remember to always give people your feedback. Don't say, hey, it's not going to work, say why—location, size, the quality of the asset, price. Give people feedback so that they can find better deals for you in the future. Our criteria primarily is we prefer to have 30 homes. Everybody says lots but we look at homes because you can have a 100-lot park, but if there are 5 homes, for us, we don't want to do that massive infill right now. We at least want 30 homes but preferably over 50 lots and public utilities—everything that everybody else has. We just bought a treatment plant in Ohio. The only reason we did that is because we can hook into public utilities there.

Andrew: Very nice. That'll be a huge project. Is that going to happen? Are you guys planning to do it?

Alex: That's underway. It was a fun project. We worked with a wholesaler out there in Ohio, did a lot of due diligence on this deal, spoke with a lot of mentors and consultants just about the packaging plants, and how that was going to go. That was just the light bulb that went off. We're like, all right, if we can get approval to tap into the sewer before we close, it's a golden nugget. The packaging plant is really in good condition. We met with the servicing company. We sold the backlogs. It was something we felt pretty confident in. We just worked really hard and got approval before we even closed. We had the city willing to give us a grant. Fortunately, they're very adamant on getting everyone off those packaging plants out in this particular area. That's underway right now. We actually just finalized a refinance on that. We're getting the funds for that and that'll finish up the project. The engineers are finalizing plans and stuff. We'll definitely keep you apprised on how our first convergence goes because lots of people want to know updates on that. We're definitely feeling good about it.

Andrew: That's great. That's value-add right there the hard way.

Alex: Like Dylan said, we're doing heavy cold-calling and stuff so we can be picky with our utilities and stuff. We're pretty much buying all public utilities, tenant-owned homes, and then the biggest thing is just running it through our proformas and making sure it's going to hit. Since we're working with outside capital, we're making sure it's going to hit refinance, profits, cash-on-cash, and everything. That's the main thing. Other than that, we can get creative. If there are park-owned homes, we'll play around with that. If we've got to do infill, we'll play around. We're getting 21st approved right now and actually just brought in an infill specialist who's going to strictly handle that for all of our parks, so it's going to help us.

Andrew: I think that's huge, man. A lot of operators shy away from big infill projects because it is a lot of work. There's no doubt about it. It's tough with transporters and installers with third parties to get them to abide by your schedule. I think that's huge that you're going to have someone just dedicated to that because you can really double your money. What's your budget to fill in unoccupied lots with a used home?

Dylan: We always factor at least $20,000–$25,000. If we do less, great. If we do more, hopefully not.

Andrew: Which is good. In Ohio and Indiana, we've been able to do it for about $15,000 to fill a vacant lot with a used home. Maybe it's metal on metal. You fill that lot, lot rent is $350, you just added about $30,000+ to the value of the asset by filling that one lot and spending that $15,000. That's a huge value to this business. That's a huge value to this business.

Dylan: Another thing I will say—because I know a lot of your listeners are more of the passive ones—when you're looking to see if this deal makes sense for you to invest, make sure it's not hinging just on one thing that's going to make or break the deal. In this situation, us doing this treatment plant conversion of hooking up to public utilities, we made sure the deal still would work even if that fell through. That's a big thing. I see some operators out there who are like, oh, man, we're going to be able to do this, this, and this. What happens in the worst-case scenario? Does the deal still work? For us, fortunately, we can say it does.

Andrew: That's great. That's huge. What mistakes have you guys made and how did you recover from them?

Dylan: So many go through my head.

Alex: One big one for me is really verifying collections to a tee. We're really thorough with DD in general. I would say that was the lesson there in the beginning. We're just being more nonchalant with DD. In your first deal, you're ambitious, you want to get a close, and you got earnest in. Our first couple of deals we closed in-house, so we were pretty ambitious to get closed, but then things came out like collections, not having titles to homes, and there are small things that we didn't verify. It's like, all right, be more tight with DD. Specifically, I would say that's one thing that's really hard. You don't really get to meet every tenant face to face before closing on a deal. You got to look at financials. You got to look at pieces. You got to feel for the demographic and everything, but really, you don't know if on day one, you're just going to have no rents show up. It really takes that on-site verification. I think that's been the biggest thing is not being afraid to ask the site manager more questions, be more invasive, or say no, I want to get in and see all the homes. Just making sure you're super tight with DD and being extra conservative on your performance. What can go wrong if you do that? That's one of the things we do. Anytime I do a lot of underwriting, the financial models, proformas, and then Dylan will review it and the whole team will review it and be like, all right, how can we be more conservative? How can we account for more? That's what we do. If it still meets, we're closing. That's our model. That's one thing that still, to this day, there's really no system around how do you just verify that every tenant is actually paying rent just going off with some pieces of paper? Good, strong DD, and just getting to meet the site manager is important as well

Andrew: A couple of ways would be bank statements, but if a lot of these mom-and-pops are still collecting cash and they might not make it to the bank statement, that's an issue which we run across a lot. Then, there are estoppel certificates, which have saved us a couple of times where the seller didn't have the security deposits correct and things like that, but yeah, due diligence is so important. Every deal we buy, we learn something new and we add to our DD checklist. It just gets better and better as you go on.

Alex: It's just the crevice. If you've got tax returns and bank statements, we’re closing on a lot of those smaller mom-and-pop deals where there is some trust going into it. That's why as you scale into the bigger deals and you let the banks do a lot of the work for you, it's nice to really make sure everything's in place and have your agency banks going to close with you, you know you got a good deal in place as well.

Dylan: I think you hit on a really good point, Andrew, that we've been discovering that and expected it. Each deal you're going to learn something new. A big difference between just an investor and an operator—someone who's a business owner—is when you learn things, you put it into a system and a process and make it duplicate well. That's one thing that we've been learning constantly. If something comes up, immediately make it duplicable for the next closing. Another mistake that we made before is we're so excited to close on a deal, but sometimes, things go amiss. As simple as it sounds that everything is ready for closing, are the residents going to pay online? Who are they calling? We use CallRail for a number flow. Can they see the site managers, general managers? How are they getting a hold of you? So many small things and just making sure you're ready for that transition. Secondly is construction. Making sure when you're working with contractors that you have an agreement in place—when you're starting, when you finished, and how much are you going to pay me if you don't finish work on time? What are those expectations? Having it clear with them throughout the project.

Andrew: One thing we ran into just dealing with a lot of these like more handy-man types instead of full-on general contractors is making sure that they'll guarantee their work. You sell a home, someone moves in, we make sure it's in our contracts that, hey, if something happens, they're going to come back and they're going to guarantee that job. That's been huge because the last thing you want to do is have to chase people down. Let me ask you guys this, this is a big one. What are the most important things that passive investors—we're talking of limited partners—need to look out for when investing in mobile home parks?

Alex: Great question. The first is obviously the operator I would say. If you're going to be investing passively like we've already discussed, the operator comes first. Finding, verifying, and speaking with an operator that's finding good deals, understanding what criteria make for a good deal, and making sure that they understand your goals. Are you looking to be into the parks long-term? Are you looking to turn your money around short-term? What structure are you looking for? To be honest with you, a lot of our structures have been more joint ventures and investors that are like, look, I took Frank and Dave. I want to be a part of this. I want to learn. I may have a long-term mobile home park someday. How can I bring a little more to the table and do more joint-venture structure? Unfortunately, with us doing some smaller parks, up to this point we've been able to do that and get some wind in our sails working under joint ventures. Also, that's how we built our network and expanded our network. As far as the parks specifically, again, what's the exit strategy? What's the backup plan if the exit strategy doesn't work? How many people are in place? If you're an LP, is there a sponsor in place? What's the structure for the sponsor? How many GPs are in place? I think just getting to verify the operational system, the management system, to me, those are the first things that come to mind. I've never obviously invested passively in a deal, but if I was, knowing what I know, that’s the first thing I would look at. What’s the management system? Who are the operators? Then, I would go into the logistics of the deal and really just make sure that there's a backup plan when things go wrong—one, two, or three exit strategies which we make sure to have on all our products.

Dylan: Asking those tough questions too. If something happens with the operator, who's managing the deal? If something were to happen to the property, who's responsible for that? If the LP [...], they need to get their money out. How is the GP working with them on that? Different things. We're not attorneys. Like I said, we still haven’t had full syndication, but we're constantly educating because we're still working with investors on a partnership basis at this moment, so we want to be able to answer those. Another thing is the GP in this situation should know the deal. As an LP, you should be able to ask any questions. We had the same conversation yesterday, Alex. We exactly ask about collections, delinquencies, how's the bill back's going? Because I noticed on the spreadsheet it said this. You should be able to ask and answer those pretty quickly because you know the deal well.

Andrew: Yeah, that's a good point.

Alex: Last thing is I think we gave good insight into the raw transparency of what a good investor should ask. Any team, no matter how well-structured, no matter how well the systems are in place, things get missed. Any deal, things get missed. It's your job as an investor to go through, verify the documents. While you want to know and trust your operator. You also want to go through and see if there's anything they missed. That’s one thing. When an investor brings something up and they're like, hey, I went through the proforma and I saw this, we don't try to argue or let cry get in the way. We go back and work on it. We see it as another eye on the deal. Don't be afraid to pick the part of the deal and ask the hard questions.

Andrew: I've been curious to know, what is one of the best questions you've been asked by an investor?

Dylan: That would be more for Alex I think on the conversations you've had.

Alex: The best question we've been asked by an investor.

Andrew: I think I want to add this to my regular roll-call questions because this conversation brought that up. That's good to ask operators. One of the better questions I got—and I get it consistently—is what is the worst-case scenario? Like you mentioned, Dylan, what happens? They always ask about the tornado situation where the tornado comes through and rips up half the trailers in the park. What does that look like? We have a loss of income insurance that would help with that, and that's a big safe fail there. Also, it's pretty unlikely—knock on wood here—that the whole park would be mixed to capture data where usually, a couple of homes would be affected but not the whole park. That's probably why we don't buy in hurricane zones.

Dylan: To be honest with you, nothing comes up top of my head because Alex did more investors' calls than I have. We did a call yesterday actually because we're working with a heavy investor and we wanted to both be on there. A question that was asked is, hey, if there are high-rent homes in this park, what happens in the event of a lot of them defaulting? They decided to move out. Same thing, how do you evict someone with a tenant-owned home? Do they have to move to their home? Even though they are not hard questions—they're simple questions, but a good operator should know how to answer that.

Alex: Before you brought up the loss of income, it was an investor—I think they got it from one of your podcasts—who brought up the loss of income to us and then we engaged in loss of income. That's how you grow. We were three parks deep at the time, four parks deep. We hadn’t been doing loss of income, we're working with mobile insurance, and we would try to get it on our parks. Then when we wouldn't get it the first go around, which is all right, and then we learned later on the importance of it. It was one of our investors who was like, hey, do you have a loss of income on the parks? None of our parks were in, at the time, any major concern zones or anything like that, but it is a huge fail-safe like you said to have in place. Of course, I get that question too all the time. What's the worst-case scenario? What if you die? What if the tornado comes through. The Matt Faircloth answer to that is investing is risky. You're asking me, could the absolute worst-case scenario happen? I guess on a very rare day, but from our track record and from the way we analyze deals, most likely that's not going to happen. That's typically just my response to that.

Andrew: It's nice there are two of you. You got a backup, not that we would want anything to happen either.

Alex: Yeah, exactly.

Andrew: It is a question I've gotten before and they want investors to ask about, hey, do you have an insurance policy, life insurance? I forget the name of it, but the important person insurance or something like that.

Alex: Yeah, we did that. We went and did that because it's another great thing an investor brought up. Investors will make sure to bring it out all, make sure you're doing everything properly. That’s what a good investor should be doing is helping your operator. Not that you should be doing their job for them, but it's a team effort in the end. As far as with us, with these joint ventures and everything, it's been great. Some of our heavy investors and partners, they’ve got roles and responsibilities where they can help us verify invoices and contractor bids. That really helps keep us in line like, all right, we're working with partners on this deal.

Andrew: That's great. For those passive investors listening, if you can bring more than just money, if you have that knowledge of the business, and you can contribute, that's huge, especially for new operators who are just getting started. Those are really good insights you're getting from your limited partners.

Alex: I'll plug Ferd Niemann here obviously. He does all our legal work and structures everything. We will be moving into more LP situations now as we get into these bigger deals with his help. We're no professionals in that arena but excited to be doing some syndications as well.

Andrew: Awesome. I love Ferd. He's been on the show, a wealth of information.

Dylan: My mind's blown every time I have a phone call with him, like, oh, wow. The reason we pay the big bucks.

Alex: The amount of value we get.

Dylan: That's another thing for an investor who's looking to invest in a project. You're investing in a project, but you're investing more in the operator. It's just the little things. Alex and I are very relational and personal people. Are they responding to your emails in a timely manner? Do they answer your text? Do they answer your phone calls? I think there's of course a boundary. No one wants an investor who's just hitting them up every single 2 hours, 10 days a week, whatever it is. You got to be able to communicate as simply as it is, but then also be willing to learn. Some people just can't take feedback, so when an investor challenges your model, your structure, is that person cocky or are they confident? Can they take feedback?

Andrew: That's a very good point. Let me ask you guys this. What hurdles does the manufactured housing industry face in the future, say in the next 5–10 years?

Dylan: I would almost say supply. I think the demand is there but is the supply there? I know Ryan Gibson, I think is his name, a gentleman who's developing up here in Washington—207+ communities. Listening to his interview he did with Ryan [...]—I can't remember who it was—talking about how difficult it really is to build a mobile home park, and there might be about 6–10 going on across the country right now. Even though a politician says that we want affordable housing, we want this, and that, okay, well, then why don't you want us to develop? Why don't you want us to expand? Why aren't you working with us? That’s one thing as we're continuing to grow is recognizing that it's going to be hard if you have to expand your park or make that business model work because not every city or state wants to work with you in that sense.

Andrew: I can see that as a good thing because for people that own mobile home parks if you can't build anymore, that limited supply really safeguards your asset and safeguards your investment.

Alex: I'll touch on that too because I know Frank touches on that a lot—both those paradoxes. One being that the fixed supply obviously is driving the demand and the value of these parks up, and protecting that asset long-term. He also talks about how municipalities hate him. They don't want him coming in. They lose money, so new parks are out of the question. My biggest fear is obviously, buy all the parks up, you're fine, and just hold them, but it's the age of the homes. All of these pre-HUD homes that we're seeing. Some parks are filled with hundreds of them. If operators aren't coming in and infilling new homes, that's my fear because we're demolishing these parks [...] and we’rebuilding. Is that rate going to increase as we're not doing infill with new homes? That's where I'm a huge advocate for Frank for 21st and what they're doing. We want to combat some of the stigmas with new or nicer homes. You can do it. You got to go the extra mile. Maybe some insight on that, but that's my biggest fear. What happens when 50% of these homes aren't even habitable anymore?

Andrew: That is a really good point. I think for younger operators like us, that'll be a challenge ongoing. It's the hidden cap-ex cost as Ryan Norris refers to it. You have a tenant-owned home, you buy it, you don't consider that home turning over, but then eventually, a tenant just moves out and they just leave the home. They say, here's the title, you guys take it. Then, you take it over and it's a 10-foot-wide tiny home. It needs $12,000 worth of work and you're like, jeez, that's not even worth it. I'm not going to be able to make that happen. I think one point you brought up is the 21st Mortgage. I think that's great. It helps the cash program, but I think it would be nice if there was a government program for the financing of these homes direct to the purchaser of the manufactured homes to help them purchase homes and have better debt on these things where the park owners don't have to necessarily get involved. Because on the cash program, the park owner is guaranteeing the loan with the resident. There is some collateral and benefit, but I think that's a good point. We need that fresh home supply to filter out these older homes most definitely.

Alex: That same thing we’re going to know.

Dylan: I'll say this too, I know I'm backtracking. Alex knows I'm all over the place all the time. When an investor is looking at an operator's deal and they're saying, oh, we're going to use 21st Mortgage, we're going to use [...], we're going to use legacy, we're going to use this and that. Are they approved? Do they have a dealer license in those states? Because that's what we're going through right now. Getting approved through the 21st and getting the dealer's license in these states is a lot of work. Fortunately, our underwriting doesn't rely on that, but I think if someone's never really actually been in those shoes, it might overestimate how easy it's going to be when it's a lot of work—something to keep in mind.

Andrew: Yeah. It could take six months to get approved for the cash program and then you got to order your homes. This is just from my experience. We got a $150,000 line of credit through the cash program. Maybe three homes. You wait six months and then you're only able to infill three homes. If those sell well, then they'll now increase your line of credit to more. But to order the homes and get them delivered right now is taking a year. You really have to

change your proforma of when you're thinking you're going to have an occupied lot.

Dylan: You don't know this unless you're in the trenches because you talk to the 21st guys, you talk to Clayton or whoever. Three or six months back up, but it's really a year, so it's the same thing. You have to be realistic thinking about it.

Alex: It is where we operators have to come together. It sounds cheesy but it is a competitive, hot industry right now. It's a hot sector but the more we can come together and let the entities see this demand—again, it sounds cheesy and ambitious but I have this vision of making mobile home parks cool again. Just like a lot of us operators do is get some of the younger crowd in there, getting some better-directed consumer loan products like you were talking about, and us operators are going to keep doing our thing. We're going to keep bringing in homes. The more we can work with the municipality instead of against them, the better. Definitely hopeful and will add value to that movement as we see an opportunity for sure.

Andrew: Yeah, most definitely. Let me ask you this. What is the value proposition at Mavdon Investments? What makes you guys different from other operators out there? Dylan: It's a good question. That's a big question a lot of investors have to look at because there are some amazing operators and there are some amazing deals. For us, what sets us aside is we built really good relationships with our investors. They like, know, and trust us. They're confident in our ability to fulfill what we promised them. We can get nitty-gritty with, oh, we got our systems, we do great at marketing, we're trying to better infill, whatever. That’s one thing that's helped us grow is our relationship with our investors. They know we're going to do whatever it takes to protect their money to protect their legacy. That's a big thing. They're putting a lot of trust in us. They need to know that we're going to do whatever it takes—work until 2:00 in the morning, get up at 4:00 in the morning to take care of the capital preservation. That's one thing that comes to my mind.

Alex: I'll touch on that. Our motto on our website is, "Improving communities and providing quality affordable housing." That comes first. That's our business model. We aren't slum lords. We're good operators. We're coming in and we're improving these communities. We're making them nicer. We're helping the tenants. We get gratifications from that, and we do have a spot in our heart for the affordable housing crisis and helping these communities. That comes first. How we fund these deals is with investor capital, so that is very crucial. First and foremost, before providing any sort of return, is to protect your investor's capital. That comes number one. We make sure that we do everything we need to be doing. We're buying quality parks and doing quality-management sector capital. Then, the cherry on top is them getting a return on their investments. If you sum that up, we improve communities and provide investors a return on their capital. The way we do that and grow our network is just through transparency and honesty. I think that's the biggest thing. It's on our website—our ideal flow—because we don't have that huge reputation. We've been in the industry for two years. It’s the fact that when people talk to us, they feel like we're honest, we're open, and we're not trying to hide anything. For active operators out there, the biggest advice I can give is not to flaunt but just have that growth mindset, that people mindset of asking questions, grow, and be honest. We've lost deals because of it, but we are where we are because of it too.

Andrew: That's huge. I appreciate you guys sharing that. Wow, Dylan, Alex, this has been an absolutely amazing show. I really appreciate you both coming on. If our listeners would like to get a hold of you guys, what's the best way for them to do so?

Alex: Definitely join our Facebook Group. Andrew is there. A lot of guys are there. We're just another group amongst many trying to add value to operators and share deals. It's Elite MHP Investing. Then, our website, mavdon.com. You can contact us through there. Email us and get on our email list. Absolute pleasure being on here. Hopefully we added value to you guys. I love learning from you, Andrew. You've been a big catalyst for our growth too, just watching and learning from you and your guests.

Dylan: I'll second that.

Andrew: Thank you, guys. I'm learning as well on these episodes. That's been the biggest takeaway for me as I'm interviewing all of these awesome operators in different stages—from huge funds, all the way down to buying their first park. I'm just learning from their experiences. It's been a lot of fun, it really has. Let me ask you guys this. One final tip to investors interested in getting into the space, what would be your number one tip that you would give them?

Alex: For active investors or passive investors?

Andrew: I would say passive investors. Just interested in the space. If they're going to do one thing, what's the most important?

Dylan: I would say being educated. I think it's very important for investors to be educated. If you're a doctor and a lawyer, you run a tech company, or whatever it is, focus on your craft but it's your responsibility and your due diligence to know what you're investing in. Understand the space a little bit. When your operator is talking or sharing what's going on in the operation, you should be like, okay, I understand that because I've gone to this bootcamp. I've watched these videos. That's important. It's important that operators are educating their investors, but I think investors should already know a lot of this stuff. I think that's really important for them. Listening to Andrew's podcast. Listening to other podcasts out there and just learning is important.

Alex: I think the biggest thing is knowing your goals going in, whether you're investing in mobile home parks, stock market, or any other exchange for that matter. If you don't know your goals going in, you might just lose money or you might miss opportunities. If you're like, oh, it sounds good, but it could be better, what are your cash-on-cash goals? What kind of returns are you looking to get? Are you looking to own long-term? Again, those fundamental questions. Then, find an operator that's going to help align with that. Look at a lot of deals, be on a lot of lists, see what everyone's offering, and get on the calls with these operators. We love talking to investors and telling them how we work. It doesn't always pan out, but we know maybe down the road, it will. Also, don't be afraid to execute. If you know your goal in mind, the returns you want to make, and what you're looking to accomplish, then when the right deal comes, all you got to do is verify the operator and execute.

Andrew: Yeah, that's great advice.

Alex: Obviously, anyone listening is already listening to the best podcast, the Passive Mobile Home Park Investing. They're already way ahead in that sense, but keep educating and reading. I love what Frank and Dave offer. I love his story and approach on the importance of mobile home parks and why you should own a piece of the mobile home park. The better you can understand that, the more you'll be ready to move on some deals.

Andrew: I agree totally. That was great advice, guys. Thank you so much again for coming on the show. That is going to do it for today, folks. Thank you all so much for tuning in.



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