Interview with Jeffrey Cook of Cook Properties
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 Jeff Cook, the CEO and CFO of Cook Properties NY. Today Andrew and Jeff talk about what it's like to own real estate in the state of New York and what it's like to own affordable housing in the state given the current landlord-tenant laws. Jeff talks about how COVID-19 has impacted his business and he also discusses the up's and down's he has faced in the manufactured housing community business. Jeff gives his advice to passive mobile home park investors and talks about mobile home park financing options as well as his opinion on the current state of the mobile home park asset class.
Cook Properties NY is a top 50 owner of Mobile Home Parks in the United States. Cook Properties recently launched a $20 million dollar mobile home park and self storage investment fund focused on acquiring mobile homes communities and self storage facilities in Massachusetts, New York, Ohio, and Pennsylvania. Cook Properties NY was formed in 1997 and they currently own and operate 26 mobile home communities with over 2,000 lots, primarily across the state of New York.
Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 1,400 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.
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00:21 - Welcome to the Passive Mobile Home Park Investing Podcast
01:44 - Jeff's background and history in manufactured housing
03:18 - The recessionary environment in 2008
04:38 - Important things passive investors should look out for when investing in mobile
05:29 - Rent control and landlord-tenant laws in New York
07:02 - Purchasing properties and park owned homes
09:00 - Trends in the competition
10:43 - Toughest hurdle in the mobile home park business
11:59 - The current state of the manufactured housing industry
13:01 - Retailing homes, buying trends
14:00 - Jeff's perfect mobile home park
14:50 - Jeff's community's performance during COVID
17:03 - Financing in order to secure communities
19:08 - Cook Properties: value proposition, and what makes them different
20:36 - Getting ahold of Jeff
21:07 - Conclusion
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Links & Mentions from This Episode:
Jeff cell number: 585-233-4699
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...
Andrew: Welcome to The Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel and today we have an amazing guest, Mr. Jeff Cook.
Before we dive in, I wanted to ask you a quick favor, would you mind taking an extra 30 seconds and heading over to iTunes to rate this podcast with five stars. This helps us get more listeners and it also encourages me to know that people are tuning in. Thanks for taking the time to do that. Alright, let's dive in.
Jeff Cook is the CEO and CFO of Cook Properties NY, a top 50 owner of Mobile Homeparks in the US. Cook Properties recently launched a $20 million mobile home park and self storage fund focused on acquiring multiple homes community and self storage facilities in Massachusetts, New York, Ohio, and Pennsylvania. Cook Properties was formed in 1997 and they currently own and operate 26 mobile home communities with over 2000 lots primarily across the state of New York. Jeff, welcome to the show.
Jeff: Thanks, Andrew. It's great to be here. I appreciate it.
Andrew: Would you mind starting us off and telling us about your story and how you got into manufactured housing?
Jeff: Sure. I started off with apartments in the city of Rochester. I bought my first house in the late 90s, 1997. I ended up getting to 100 units in the city. I was doing pretty much everything myself, the maintenance, the management, all the bookkeeping.
Our father, mine and Brian's father, he was also very helpful with maintenance. He's a retired engineer from Kodak. He taught me alot on the maintenance for the apartments. I sold some of them and ended up selling the rest of them.
In about 2007, 2008 we ended up selling about 65 units to close off the apartments. After that I started buying more commercial and mobile home parks. I bought my first mobile home park right around 2008. It was a very nice park, I still own it. It's up in Sandy Creek, New York just west of the Tug Hill Plateau. A great park, primarily seniors mostly double wides and newer single wides.
From there I fell in love with the business model and just continued to aggressively buy mobile home parks over the past 10-12 years.
Andrew: That's fantastic, that's an amazing story. I noticed you sold your apartments 2007, 2008, would you mind maybe sharing a little bit about 2008 and the recessionary environment and how that was?
Jeff: We actually sold them right before the bubble popped so I was fortunate. It was a good time to sell and then going in, before I bought my first mobile home park, I bought an office building and right before everything crashed.
It was an office building that needed a lot of work and I had a lot of vacancy. I did all the work. I think I put about $200,000 into the property and no one was showing up to rent the spaces. I learned some lessons. I ended up filling the building but not at the rents we were hoping too. That kind of soured me a little bit on the office commercial properties, but at the same time we bought the mobile home park which had no problems and really was unaffected by the recession. That led me to buy more mobile home parks.
Andrew: That's fantastic. What are the most important things that passive investors, LPs, need to look out for when investing into mobile home parks?
Jeff: I think to have the best operator is the good indication of success for a mobile home park investment. I think you need a good operator to have a good investment. Yeah, definitely a good operator.
Andrew: Totally. Maybe you could elaborate a little bit on the type of mobile home parks you guys pursue and acquire. I know that the State of New York has some interesting landlords, tenant laws, and some operators won't even touch the state. They're in California they stay far away from so maybe you can discuss that along with the rent control laws and how you guys deal with those.
Jeff: Sure. They passed Rent control back in the summer of 2019 so we’re almost two years in. I don't want to say it hasn't been overly difficult. Fortunately before rent control went into effect, pretty much all of our parks were closed to market rent or at market rent. With Rent control right now we can only raise rent 3%. If you're significantly undermarket for your lot rent, that can cause a big problem for you.
Beyond the rent control issue, there's been a lot of stuff that they also passed. One of the things we can't do anymore is your traditional rent to own or lease option for the mobile homes. To get it on that, for the new owners that we bring in we're mostly doing rentals. It’s not our preferred avenue to fill lots but again, we don't mind doing it. We do get the lot rent on top of the home rent. Last year we ordered 50 homes and this year we have 110 orders for our parks.
Andrew: Wow, that's interesting. When you look at purchasing properties, do the park owned homes scare you? Do you stay away from those that have park owned homes? Maybe you can elaborate on that at all.
Jeff: We don't mind park owned homes. We still have to stay under 20%-25% of the total number of lots. Age of the homes is also a very big factor in our decision to buy a park. We certainly prefer not to have a large amount of park owned homes that are really aged.
We just bought a big portfolio in Rochester. It was just under 500 pads and there's about 125 park owned homes but 100 of them were five years old or less. That lines up with our model of bringing in brand new homes and renting them. It's not something that we're scared off.
Along the same lines with the Rent control, me and Brian we've been doing real estate here in New York State for over 20 years. We're familiar and used to the unfriendly business environment that comes with being in New York State, the laws, and just how to deal with the processes that occur throughout the state. Again, it's something we're familiar with and we've been able to be successful despite it.
Andrew: That's really fantastic because as I talk to a lot of community owners, like I said they're staying away from the State of New York which makes investing in New York a moted investment because you now have less competition.
I heard recently that there's a fund that's starting up to buy mobile home parks only with private utilities because a lot of people don't want parks that have wastewater treatment plans, lagoons, well water, which is an interesting way of doing business. Have you guys noticed an increase in competition or has that remained steady the last few years?
Jeff: I think it actually declined a little bit. The large portfolio that I just mentioned that we purchased was from a larger operator that didn't want to scale in New York State anymore so they wanted to get out.
Like I said, a lot of people do not want to come to New York or they want to go out in New York. We're comfortable here. We've been successful here. We're going to continue to do business here. With me and Brian growing up here in New York State, they've been saying that New York State has been falling off the cliff ever since I can remember. I'm almost 50 so for the past 40 years it seems like New York State was doomed to failure and bankruptcy. We haven't gotten there yet, I don't think we're going to get there. There's still a lot of good things happening out in New York.
One of the things that we like about New York State is we don't have the explosive downs a lot of other parts of the country too. It's extremely extremely steady and stable. When we look at our properties we are looking primarily at cashflow, not so much at appreciation on the asset that we're buying.
Given that, there might not be strict depreciation in the asset but we're certainly going to drive NOI to increase the value of the property. We do that by filling the vacant pads.
Andrew: That's great. What has been the toughest hurdle for you in the mobile home park business to date?
Jeff: Toughest hurdle, we certainly didn't like going from not being able to do rent to own to just rentals. Unfortunately that's something that the New York State Legislator put into effect that they thought would help the residents. But I really think it harms them because there's no option for a lower income resident who has marginal or poor credit to buy a home. That's a bit of a challenge because we would like to offer some type of a program like that to the residents that want it.
Just doing strictly rentals hasn't been a challenge, it's just an opportunity that we're moving that at some point we want to figure out. We're working on it. I've been looking into possibly becoming an MLO, Mortgage Loan Originator, doing our own mortgage originations, but then again it's a whole process and a large debt and costly too.
Andrew: Definitely. What can you tell us about the current state of the manufactured housing industry and where do you see it going in the foreseeable future?
Jeff: We love manufactured housing. I think the demand is going to continue to increase not just on our side as far as purchasers, but the resource of affordable housing, the demand, is going to continue to increase.
We're actually looking into starting another fund that would only invest in new mobile home park development. It's great. Where else can you go? You can't. There's nowhere else you can go and buy a brand new home, two beds and two baths, setup and ready to go turnkey for $50,000. We really see it as an attractive product for a lot of people out there.
Andrew: Do you guys retail any of your homes that you bring in? How was your experience with selling homes? What's the retention rate?
Jeff: We're retailers in our own communities. We do try to sell homes, but again with not being able to offer the rent to own, uptake is not too well, not too good. Generally, we're renting somewhere between 8 or 9 homes out of 10.
Andrew: You're renting 8 or 9 out of 10?
Jeff: Yep. The other one we're selling.
Andrew: The other one you're selling. Got ya. Do you find that the people that are buying those homes, are they getting financing or are they cash buyers?
Jeff: Mostly cash. Older residents that are selling their homes and are looking to downsize into something smaller and newer.
Andrew: Very interesting. This is a question I ask all the operators, what does the perfect mobile home park look like in your eyes?
Jeff: At least 100 pads. Public utilities, public water, public sewer, paved roads, no delinquency, no parked owned homes, all double wides. I guess eutopia from an investment standpoint. One more to add to it, Andrew, would be 20-30 vacant pads.
Andrew: There you go, a little bit of the value add.
Jeff: Right, but with the utilities and the pads all done.
Andrew: Now we're talking. How has your community fared with COVID and what did you guys do during that time period to be proactive? Maybe you can share some insights on collections and occupancy, things like that.
Jeff: It hasn't been too bad. Our occupancy has been fine. Our collections have come down a little bit by two or three points from March until now so the collection hasn't been bad. We've been happy with them.
When COVID first started in late March and everything kind of hit the fan, it was a scary time because we didn't know what's going to happen. We were able to work with the banks for all of our properties not only on the mobile home parks but for our commercial properties to defer some mortgage payments. That helped us give a little cushion and pull over the money on the savings because we, like everyone else, didn't really know what was going to happen.
As far as our residents, we're trying to work with them as best as we can. We encourage them to make as many and as much payments as they can and just continue to remind them that eventually, as you know right now, we can't evict them. There will come a time when evictions can occur again, probably sometime in the summer if not sooner and also trying to point them in directions where they can get some help from some of the social service agencies. The last thing we want is delinquencies.
Andrew: Definitely. That was one of the things we did, point them in the direction of the rental assistance programs, and that has just been huge for us. Even to date, we were able to get several months of rent even in advance to pay for some of our tenants that have been furloughed, things like that. Lots of assistance out there right now.
Jeff: There is, yup. Definitely there's no reason for any significant delinquencies.
Andrew: Definitely. Tell us about the financing that you're able to secure on the communities you're purchasing and a little bit about what that looks like.
Jeff: Most of the financing we're doing these days is through agency debt, through Fannie and Freddie. Generally getting 30-year amortizations, 10-year terms. Some are 70%-75% LTV. The rates have ticked up a little bit in the past three months. We just closed on a couple of properties.
We're in application state back in October and we're in the low 3's, and the treasury ticked up a little bit now we're looking at 3.4, 3.5 on some of our deals. Historically still really, really great interest rates, but obviously 3.1, 3.2 sounds better than 3.4 or 3.5.
We've enjoyed working with Fannie and Freddie, we really have. For some deals that aren't ready for Fannnie or Freddie, we have one deal right now that we're working on that's about 10 minutes from our office. It has a delinquency rate, not because they can't pay but because it's just poor management.
That one's not ready for Fannie or Freddie so we're just going to do an interest only loan with a local bank for a couple of years. Get that delinquency taken care of and then go to Fannie. Hopefully the rates will still be lower. With rates being so low, it makes a lot of things very attractive.
Andrew: Definitely, 3.4, 3.5, that's still really good.
Jeff: It's still great. We had a lot of debt that we had taken on even just two years ago when we were in the low fives.
Andrew: Yeah, crazy.
Jeff: Even that wasn't a bad rate.
Andrew: Totally. Maybe you can tell us a little bit about Cook Properties, what the value proposition is and what makes your operations and funds different.
Jeff: Sure. I guess for one, with us being in New York, we're trying and we're proving ourselves to be the NewYork guys that people want to sell their parks in New York State, we’re one of the people that they’re going to come to.
We're certainly getting first look at brokered properties. In addition we also do our own cold calling and sourcing of deals. Cook Properties is fun. Me and Brian started the fund, we've both been in real estate. I’ve been in real estate for about 20 years and Brian has been in it for 10 years. We're both very involved in all the processes that happen here at the office.
I feel like we have proven in the past and we'll continue to be good stewards of our investors' money. I almost feel like I'm more careful and more prudent with invested money than I am with my own just because I feel that significant responsibility to safeguard their money.
Andrew: Definitely. That was a lot of golden nuggets that you brought there, I appreciate you sharing that. If our listeners would like to get a hold of you, what would be the best way for them to do so?
Jeff: They can reach me at my cell number, 585-233-4699, and also my email is firstname.lastname@example.org.
Andrew: Awesome and what is your website, Jeff?
Jeff: It's cookpropertiesny.com.
Andrew: Awesome. We'll put all that on the show notes. That's it for today, folks. I really appreciate you all tuning in. Enjoy the rest of your day.
Jeff: Thanks, Andrew. Have a good day.
Andrew: Thanks for coming on.