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Interview with Gabriel Hamel of Hamel 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 Gabriel Hamel of Hamel Investments. Gabriel brings his enthusiasm and energy into answering Andrew’s toughest questions about mobile home parks including: his current acquisition criteria, what to look for in mobile home park utility infrastructure, the toughest hurdle he has faced through mobile home park ownership, and what passive investors need to look for when investing into mobile home park deals. Gabriel’s passion for mobile home parks is apparent when he talks about the future of the manufactured housing space along with the future of Hamel Investments and what makes them different.


Gabriel Hamel is a real estate investor with a passion for mobile home parks. Financial freedom has allowed him to amass a multi-million dollar real estate portfolio consisting of single-family homes, multifamily apartments, and our favorite: cash-flowing mobile home parks. Currently, he owns four mobile home parks and has three under contract right now.


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.


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

01:21 - Gabriel Hamel’s real estate journey and transition into mobile home parks

02:31 - How Gabriel manages his four mobile home parks

06:09 - The toughest hurdle in mobile home park ownership

07:25 - What Gabriel did to educate himself before buying his first mobile home park 08:22 - Utility infrastructure and utilities in Gabriel’s trailer park portfolio

11:19 - Finding deals when you’re looking to grow

14:32 - What passive investors need to look for before investing in a mobile home park deal

16:15 - Gabriel’s acquisition criteria when looking at a mobile home park deal

17:23 - Mistakes to avoid when you’re first starting out

20:26 - The future of the MHP space

21:50 - Hamel Investments and what makes them different

23:40 - Getting in contact with Gabriel and Hamel Investments

24:09 - Last bit of advice

24:57 - Conclusion



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Links & Mentions from This Episode:

Hamel Investments: https://hamelinvestments.com/

Gabriel’s Instagram: https://www.instagram.com/gabrielrhamel/?hl=en

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

All right, let's dive in. Gabriel is a real estate investor whose passion for real estate business and financial freedom has helped him amass a multi-million dollar real estate portfolio consisting of single-family homes, multifamily apartments, and our favorite—mobile home parks. Currently, he owns four mobile home parks and has three under contract right now. Gabriel, welcome to the show.


Gabriel: Hey, Andrew. Thanks for having me on.


Andrew: Yeah, dude. Excited to learn about your journey. Maybe you can start there and tell us how you got into manufactured housing?


Gabriel: Manufactured housing—I was buying smaller multifamily-type properties. But the majority of my portfolio was seller financing and I really wanted to move into apartments. The more apartments I looked at, I felt it was a very crowded space. A lot of people are jumping in there. I felt like the cap rates for being condensed down to nothing and I wanted more of a return. I gravitated towards the mobile home park space.

I bought a park. I had a property manager that was managing a small apartment for me in town. She had no mobile home park experience. I put her in this park and she did a phenomenal job. All the things that I wanted out of a park, this park fit. The park was poorly managed, under rented, had some deferred maintenance, and had all the things that I'd look for in smaller multifamily stuff. That was my proof of concept and really just fell in love with the mobile home park space after that.


Andrew: That's fantastic. That's a rare story I would say because most third-party managers that come from single-family, rentals, and multifamily have a tough time coming over to mobile home parks because it's definitely a different animal. Maybe you can shed some more light on that. How big of a park was that? Does she still manage the four parks that you have now that you have expanded?


Gabriel: It's a good question. I wasn't sure how it was going to look. When I bought that first park, there's an on-site manager that essentially got free rent but didn't do anything. In fact, all the parks that I had bought and have had on-site managers really didn't do a lot, and some ways probably scared some potential tenants off. With this property manager, she was managing that 21-unit apartment building for me in that town about an hour south of me. I said, hey, do you have any interest in managing a park? I got very fortunate. She grew up in that area, she actually had a nephew that lived in my park. It was a 43-unit park.

The 2 parks that I bought after that, one was 30 minutes south and one was 30 minutes north of that. She actually found me one of those parks. I really just leveraged her ability to manage three out of four of the parks. She's been phenomenal. She's learned a lot, but more than anything, she's good with people. She understands the tenant base and she's a kind and thoughtful person that can also be tough when she needs to be. More than anything, she knows how to deal with people well.


Andrew: From my experience, that's a rare find. Congrats on that, man. That's wonderful. I was lucky enough in my first on-site manager when I bought my first community. She still works with us to this day. She spoiled me into thinking that, man, mobile home parks, this is easy. What do you mean? This is so much different. They're not all like that, unfortunately, but we're really happy with our team now. It's tough to keep everybody up to date on what's going on.

Maybe you can shed some more light on your management and how you manage that. Is it her company that manages your current four parks, or do you manage some of it in-house?


Gabriel: She works for a property management company. All of the properties I owned are managed by third-party management. I don't own a property management company, I don't have employees. I've set everything up that way. Even before I got the mobile home park space, once I hit that 17-unit mark, this was years ago. I was doing everything and it was 10:00 PM and I'm fixing the toilet, had to call a plumber anyway because I wasn't that handy. I had turned everything over to property management back when I had just those 17 units. What it allowed me to do is focus on what I was better at and what I enjoyed doing—that was putting deals together.

I'm in direct communication with my property manager. She manages three of the four parks. When I bought my fourth park that's in a different direction, it's 1 ½ hour northeast of me, I had to go on a hunt for a new manager. Again, I ended up with a residential property manager that has some apartment experience. I've vetted and called a lot of managers, and this has also turned out to be a good fit so far. It's a learning curve, but he understood. With my experience with other managers, I was able to explain what I needed, what I was looking for. He understood, and again, it's been phenomenal. But it’s all third-party property management right now.


Andrew: Wow, Gabriel. I will say, there have been a couple of operators we've had on the show that have used third-party managers. It's rare to find property management companies that transfer over. Kudos to you for interviewing and finding the right one. What would you say has been the toughest hurdle for you in mobile home park ownership?


Gabriel: Specifically, in a mobile home park ownership, there was a lot that I didn't know going in. That's fine. It didn't scare me. But I think the biggest hurdle really is initially it'd be yes, finding a property manager but I got fortunate with that.

Also just changing the culture of a park can be tricky. The most recent park I bought wasn't managed well previously. There's dog shit everywhere, there's garbage everywhere. The tenants had just accepted that for the most part. Having a manager to commit and make those changes can be challenging if the tenant base is used to it be in a certain way. But I've also found with any challenge in life, I feel like it’s an opportunity.

With this last part, yeah, it was pretty rough but the tenants really appreciated someone coming in there and putting a small fencer on a dog park area, putting poop bags up, and changing the way that garbage was collected. Just these minor changes, even though there can be challenges overall, it'll improve the park and tenants seem to respond well.


Andrew: Great. Gabriel, maybe you could tell us what are some of the things you did to educate yourself before buying your first park?


Gabriel: Not a whole lot. I just naturally gravitated toward that space. I shouldn't say not a lot because I had years of experience in the multifamily space. I felt like they operated very similarly in a lot of ways.

The aspect that I liked really about the mobile home park space is for the most part I don't own the homes. I do end up with some of them, but for the most part, I don't. That's something I really enjoyed that there's not a lot of maintenance and repair calls on the homes themselves. Even though it can be front-heavy with initially buying the park, analyzing, and getting the park up to par, once it's running smoothly, it seems to run pretty smooth and actually less headache for my managers.


Andrew: Great, yeah. What do you look at in terms of utility infrastructure? Maybe you could tell us about utilities in your current portfolio?


Gabriel: Yeah. My first park, I also got fortunate, it was all city utilities. One big advantage, a big value add there too, part of it was dealing back utilities. The other part was the property had been grossly under-rented. This is something I liked a lot about the mobile home park space—a small increase in rent utility bill back improved the NOI of the property greatly without me having to expend a bunch of capital. I thought, gosh, unlike an apartment where I have to go in and maybe rehab 43 units, my property manager sent out the notice to know about utilities, sent out a notice for a small rent increase, it's still below market and no tenants move because of it.

That's city utilities. My second park was a well. I knew nothing about wells. I had reviewed the reports, got it tested, it was great water. The next part was city utilities and then the third park had a septic system I knew nothing about. I like city utilities, but the well has been fine and the septic, I literally knew nothing. I decided to talk to people that knew about it and just ask the questions. With this particular park, they were using a lot of water and a lot of it was kids are home from school because of COVID, some of these homes were multi-generational families living there. We just had to get some of that stuff under control. I just didn't know what I didn't know until I learned enough to...


Andrew: You're brave, man, I'll give you that. Diving in headfirst, that definitely takes some courage, especially with the private utilities. Because I've just heard horror stories about just not doing the proper due diligence and stuff falling through. That's good that you got your arms around it and understood the risks.


Gabriel: I've been on that one long enough. Maybe I'll change my mind if you ask me here from now. That being said, I've never bought a property I regret buying. I could probably have found a reason to not buy any property I’ve ever bought. I keep that in the back of my mind.

Yes, I don't try to buy stupid deals and I do try to make educated decisions, but I do think again, there are solutions to problems. On these parks I'm buying where they're cash flow positive, yes, there’s an upside, but I'm not relying on that upside. That's how I hedge my risk there. If something goes wrong, things are going to go wrong. It's real estate, things happen. Giving myself a little bit of that safety net of whether it's having reserves or capital, or just knowing that things are going to come up.


Andrew: One of my mentors told me once, he's like, everything makes sense at a certain price. If you get it at a good enough price and the market is good, everything is worth it. That's awesome that yours are performing well. How do you find your deals when you're looking to grow? You have three under contract right now. Looks like you're looking to grow pretty quickly.


Gabriel: Every deal—mobile home park or otherwise—I can trace every deal back to a conversational relationship. I think I've mentioned that when we are offline talking a while back. I've never done any kind of marketing, advertising, any kind of mass mailers. I think there's a lot of ways to be successful in real estate and a lot of ways to find deals and market yourself. For me, it's just been building genuine relationships and talking with people, and that’s not just in the mobile home park space.

The first park I bought was a broker that was just sending me all of A-class stuff in Portland, Oregon—very expensive, very low cap stuff. I said, hey, I'm really looking for something that cash flows. What I'm really looking for is a value-added mobile home park. I just kept telling them that because they kept sending me stuff that wasn't that. When they got an in-house listing of a mobile home park because I told them enough times, hey, what I'm really looking for is this, they knew to call me.

I had looked at, analyzed enough of them online that I felt very comfortable when they presented me with the numbers. I felt very comfortable reading through that and going, hey, here's an actual opportunity. That's how I bought my first one.

My second one, a little more interesting of a story because my second one, I share the story a lot because I think it illustrates the importance of building relationships but also seller financing, which is how I've purchased the majority of my real estate.

This was a guy who I had reached out to 10 years before, he was a developer in town. Mobile home park—far on my radar, I was just getting started. But he was a developer, he's built these amazing buildings down on campus where I live. I’m going, who's this guy? What's the story? I just want to know who this guy is because he's building all these things that didn't exist before, tearing down this small multifamily and building these big apartments.

I reached out to him and he graciously invited me in and told me his story. Hey, I was buying these multifamily homes in the '70s while I was going to law school, and then by 2010, there was an opportunity to develop and I became a developer. We stayed in contact. It's not like we became best friends, we just kept in touch with each other with what we're doing.

Almost a decade later he called and said hey, a buddy of mine is selling a single-family home in a town over, are you interested? I said, I'm really not. What I'm really looking for and I'm really focused on right now is mobile home parks. He said, I own five of them. He said, one of them I would consider selling. I said, oh my gosh, that's great. Would you seller finance it? He said, yeah, I would.

That ended up being a 2% down deal. It was a 200% cash-on-cash return. The financing was phenomenal and finding that deal was a very natural flow of that relationship. But it's also why the terms are great. That wasn't his focus. His focus wasn't the mobile home park space, it was developing. Even as the seller being a sophisticated investor, it was still an opportunity for him to sell and for me to buy. Again, every deal I can trace back to a relationship. Third property was my property manager brought it to me.

Andrew: That's super cool, man. Let me ask you this, what are the most important things that passive investors—we're talking limited partners here—what do they need to look out for before investing in a mobile home park deal for the first time?


Gabriel: I don't know if I'm the best to answer only because I've never raised capital, I've never brought in a partner, and I've never put money into another person's deal. I think the biggest thing though, just from what I've seen, is just knowing the operator and their track record. I'm not against doing that. I think there's a lot of ways to invest, but being able to know, like, trust, and have that open communication with the operator or someone on their team is important.

The three parks that I'm in contract on now, I'm going to have two partners on those. Part of that, again, going back to that relationship and conversation, two guys that are partners and friends of mine. They're partners with each other on some single-family stuff. They had a mobile home park opportunity. They said, hey, Gabe's in the mobile home park world, let's bring him in. Tha will be a new experience for me having a partner figuring out what our role in that is.

But again, it's an off market deal. I know, like, and trust those guys and they know, like, and trust me. There's different aspects that we bring to the table. One of those being they brought me the deal through [...] over there. That's a lot of it. Just knowing the operator and a proven track record.


Andrew: Totally. That's what a lot of people have said when I've asked them that question is, hey, know the operator, do you believe in their model. That's where a lot of the risk lies is in the jockey. Tell me Gabriel, what is your acquisition criteria when you're looking at a mobile home park deal and why?


Gabriel: A lot of it I like to value add. I like the parks that are poorly managed and under rented. They have some value add, but they're not relying on that. I really try to look at every property very individualized. How am I going to finance this? What is this property kicking off? What will this property do for me? I know some people are very systematic, but it has to meet this rule, this criteria. I take a little more of a holistic approach if I'm going to look at it.

Right now, what we're looking for is anything below 30 units. I like city utilities, but it's a not requirement. But I like the part that works the way it sits, but that still has an upside of poorly managed, under rented, and a lot of that is going to come down to how I finance the property. If I did nothing today when I close on this, is it going to produce income? Am I happy with the return? If I'm putting money down, am I happy with the cash-on-cash return I'm getting? That's how I get it.


Andrew: What mistakes have you made when you were just starting out that maybe you would've done differently looking back?


Gabriel: Not sewer scoping. The first park I bought, I didn't scope the sewer. It sounds minor. No major issues there. I knew it was old, but I've had to have some of that rebuilt. Not costed than what I was anticipating, but I’d still buy that park.


Andrew: What is it made of? What are the sewer lines made of?


Gabriel: My gosh. It's mixed.


Andrew: [...]


Gabriel: Some of that. They dug it up and it's been mismatched. I wanted to pave the park and we had some sewer issues. I'm like I can't pave this until I get that sewer taken care of. Thankfully, the neighboring unit park has an estimation and gravel company. He knows that park. He's dug it up, it's all pieced together. I don't know if it would've really made a difference like I still would've bought the park. There were just some things that needed to get taken care of that I would've liked to have known upfront and probably taken care of them prior to sewer issues literally coming up to the ground.


Andrew: Yup, that sounds familiar. I've dealt with those issues as well, unfortunately.

Gabriel: These three parks in San Antonio that I'm in contract on, the other guys were like, hey, what are some due diligence items? I'm like, let's get the sewer scoped. It's a no-brainer now.

Andrew: Definitely, yeah. One of the things I made a mistake on in the third park that I bought is I didn't meet with the power company engineer. I met with the electrical contractor, had him come out, do a whole report on all the pedestals and all the park-owned electrical, but I didn't meet with the power company engineer. The park was only 75% occupied when we bought it. We planned on filling it up.

When we filled it up, we realized that the juice, there is enough pedestals there, but there wasn't enough juice getting to each of those pedestals because there weren't enough transformers. Some power companies provide the transformers up to the pedestal, but some don't. This one did not. We were three transformers short, which was a $60,000 bill. All those little things that you learn, your due diligence list gets longer and longer the more you're in the game.


Gabriel: Yeah. That's actually good to know and very interesting because the parks that I'm in contract on are similar. It's 60% occupied. The parks are actually operating really well at 60%, but we don't want to keep them at 60%, we want to get them up to 80%, 90%. That's something we're looking at too. There are pedestals there, but we want to make sure that we're going to be able to fill this up and it's not going to be something costly. We want them to plug them in and go.


Andrew: Plug and play. Yeah, totally. Have you done any looking into the MHC industry? Have you looked into the toughest times the industry has faced, and do you have any feedback on what the future may look like for MHPs?


Gabriel: It's part of why I like the space. I feel like intuitively just the affordability of the mobile home park space. There's a huge gap. I know what a one-bedroom apartment might cost in my town and it's a lot more expensive than a mobile home park space for rent 30 minutes away. It's very rare that almost [...] is allowing new parks to come in. I've heard of it. I know some people that are doing it and are trying to do it. But for the most part, they're disappearing. I've been told 1% a year, they're disappearing.

I think in a lot of ways, it is the solution to affordable housing. Most of my tenants, even though I don't know them intimately, but by talking to my property manager, a lot of them are fixed income tenants, they just want a safe, affordable place to live, either retire or raise their family, if that's the case. I think that this allows that. I think properties are only going to get more expensive over the long haul and this is one of the solutions.


Andrew: Totally agree with you on that. Maybe you can tell us a little bit about your investment firm, Hamel Investments, and what makes you guys different?


Gabriel: Yeah. There's not too much value. It's new, I said I don't have any employees. I honestly spend the majority of my time hanging out with my family and traveling. A lot of my business has been set up around the idea of just having as much time freedom as possible. It's why I've chosen not to start a property management company or manage my own properties. It's why I've chosen not to raise money. I'm very interested in future partnerships on parks, but I don't personally want the responsibility or create a job for myself. For the most part, it's a lifestyle choice more than anything.

Hamel Investments, I'm just trying to buy more mobile home parks.


Andrew: You and everybody else right now, right?


Gabriel: It's getting pretty frothy. Someone sent me this morning a list in all these off-market mobile home park deals. It's like three caps. I said one cap, no occupancy. There is some crazy stuff out there. There are always opportunities in real estate and in any asset class in real estate, including mobile home parks. But I'm seeing a lot of opportunities for sellers, and I've seen properties selling that I wouldn't have interest in buying anywhere near the price point that they’re selling force. It's frothy, but you got to stick to what works for you.


Andrew: There's always deals out there. You just keep your ear to the pavement and find deals. If any of our listeners would like to get a hold of you, do you have a website they could check out or any contact information?


Gabriel: Yeah. My website is hamelinvestments.com. There are links to some different podcasts and such I've been on. I'm most active on Instagram. Just find me, Gabriel Hamel. My handle's actually @gabrielrhamel. But you'll find me on there. I'm fairly active with those and stuff. I'll put this episode on my website and a link on Instagram and Facebook as well.


Andrew: Awesome, man. I really appreciate you doing that. What would be your last bit of advice? Your one thing you would want someone to know before they invested in mobile home parks.


Gabriel: Whether it's mobile home parks or just life in general, if you want something bad enough, if mobile home parks are something that you want to buy or anything else in life that you want, if you want it bad enough, you'll find a way to make it happen. There are people that are just kicking ass in any area of life. If that's important to you and it's something you want, go for it.


Andrew: It seems like that's one thing that resonates with you. When you told us about that developer friend. You're like hey, this guy is doing something, I don't know how to do that, but I want to talk to this guy because there's something about it. I applaud you for your massive action and I'm sure there's a bright future ahead for you, Gabriel.


Gabriel: I appreciate it, Andrew. Thank you.


Andrew: Awesome, man. Thank you for coming on the show. It was a pleasure having you. That's it for today folks, thank you for tuning in.


Gabriel: All right. Thanks for having me on.



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