Search
  • Andrew Keel

Interview with Jimmy Johnson of Sanddollar Communities




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 Jimmy Johnson of Sanddollar Communities. Jimmy shares his story about his unique entry into the manufactured housing industry. He also gives his advice for new passive mobile home park investors and active trailer park operators. Jimmy offers his expertise on a few items including: the future of the mobile home park industry and his process for hiring and employing great on-site managers. He also shares his insights on working with significant others.


Jimmy Johnson is the founder of Sanddollar Communities, which focuses on the sourcing of off market, direct to seller, mobile home parks. He has closed 34 mobile home parks in 14 different states. Jimmy also has founded Sanddollar Communities Management, a mobile home park property management firm that manages a growing portfolio of over 1,300 sites across the country. Jimmy lives in Tampa, Florida and is an avid boater & fisherman.


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

01:26 - Jimmy Johnson’s story and journey into manufactured housing

05:28 - Jimmy’s first mobile home park

07:09 - What does it mean to assign a deal?

09:00 - The toughest part of the process for Jimmy

11:00 - Jimmy’s MHP management process

14:00 - Jimmy’s key performance indicators (KPI’s)

16:00 - How Jimmy finds deals

18:26 - Advice for new LP’s (limited partners) investing in their first mobile home park 23:23 - Jimmy’s deal criteria

26:38 - Working with loved ones

28:49 - Jimmy’s perfect mobile home park

31:00 - Common operator mistakes

34:40 - The future of the manufactured housing industry

37:56 - Sanddollar Communities

40:58 - Getting in contact with Jimmy

41:42 - Conclusion


👇 SUBSCRIBE TO PASSIVE MOBILE HOME PARK INVESTING PODCAST YOUTUBE CHANNEL 👇

https://www.youtube.com/channel/UCy9uI3KGQmFgABsr9lUtRTQ



Links & Mentions from This Episode:

Sanddollar Communities: https://sanddollarcommunities.com/

Jimmy Johnson email: jimmy@jimmyjohnson.co

Jimmy Johnson Instagram: https://www.instagram.com/floridajimmy/

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. Jimmy Johnson of Sanddollar Communities. Before we dive in, I wanted to ask you a real 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 means the absolute world to me. Thanks for making my day with that review of the show.

All right, let's dive in. Jimmy Johnson is the founder of Sanddollar Communities, which focuses on the sourcing of off-market direct to seller mobile home parks. He has closed 34 mobile home parks in 14 different states. Jimmy also has founded Sanddollar Communities Management, a mobile home park management firm that currently manages a growing portfolio of over 1300 sites across the country. Jimmy lives in Tampa, Florida, and is an avid boater and fisherman. Jimmy, welcome to the show.


Jimmy: Thank you, Andrew. Excited to be here.


Andrew: Awesome, dude. Let's jump right in. Can you tell us about your story and how you got into manufactured housing?


Jimmy: Yep, definitely. I got into real estate at first when I was in college. I was playing soccer and was busy being a student-athlete and I wanted to make some money. I wanted to do it on the side, do it easy compared to clocking into an actual job that you didn't have the time for. I saw this ad on Craigslist for, just take pictures of houses that are in foreclosure. It was like $20 a house or something.

This is like a dream come true. Do it at 6:00 AM, do it at 10:00 PM. I ended up applying for that and got the job, which I think anybody who applied probably got it. I started taking pictures of these foreclosures all around Florida. It's like waking up in the morning, driving all-around from down in the Everglades all the way up north, and planning it all out, trying to map the route.

Anybody in foreclosure didn't want a picture taken. I learned some of the pros and cons of real estate. I often did mobile homes when I was doing that. That was the first time I was in parks and saying, hey, these are pretty nice. I'm not doing money with these, it's mostly single families. That was the first time I saw and dabbled with a mobile home park.

I ended up moving on past that and got a job in the multifamily industry. From there, I realized that tenants, toilets, turnover, and maintenance, it was just going to eat me alive. I felt like there were a lot of constant issues. I wanted to be in something more passive. I started doing the research and all the other asset classes. I knew a couple of guys doing a mobile home park. I started to listen to podcasts like yours and some of the other ones out there.

I realized, hey, these guys were doing parks, they're doing what I want to do. I weighed all the pros and cons and decided to jump right on. I wanted to provide as much value as I could. I'm like, what does everybody want? Everybody wants a deal. That's how we got started in wholesaling and assigning parks.


Andrew: That is amazing. I want to go back to you taking pictures of the foreclosed houses. Was that in property preservation? Were you doing that for asset managers or was that for an investor that was trying to bid on those?


Jimmy: For asset managers. It was the banks and there was some middleman company. I think she was probably making $200 a picture and I'm at $20. At the time, I thought it was the best gig in the world. I’m like, I'm going to do this forever. I'm going to continue to grow my little market, sure. I'll get better at it. I'm going to get a better camera that I could just stick out the window. I had this whole day planning to just take these foreclosure pictures and then play it.

It was good if they were all next to each other, but then I would start getting like one house in Orlando, one in Jacksonville, two down in Fort Myers, she’s like, I can give you $50 for those. My car was probably going to blow up if I did work for her for a couple of months. It had to throw in the towel.


Andrew: That's crazy because I actually was in property preservation back in 2010, 2011 and did something very similar. Around Florida, it was like a hotbed. There were a ton of foreclosures. We actually did property maintenance and inspections. It's very, very interesting that we have that little connection there way back in the early days. There were a lot more foreclosures back in 2010, 2011 compared to how many are out there today, which is a big difference.

Jimmy, when did you buy your first mobile home park? I know you started out with assigning deals. When did that all happen? I know you did some pretty cool assignment deals. Maybe you can share that with the listeners?


Jimmy: Yeah, definitely. I started with parks in late 2018, early 2019, so not too long ago. Obviously, it took a couple of months before I closed my first deal. The first one that I took [...] and owned a piece of it happened in the third quarter of 2019. I believe it was my fifth or sixth assignment deal.

I knew the park while I was already talking to the seller for a year. Of course, no documents, no record, super mom-and-pop, $80 lot runs, I'm sure. I just remember it was a super mom-and-pop deal. The guys who were going to take it down and buy it, they said, well, we know we're going to pay you this fee, but it seems like you know this park like the back of your hand. You've just talked to the seller for hours and hours and hours. Would you want to stay involved long-term?

Then I ended up doing that half equity, half fee. Since then I've done that about 10 more times taking equity in lieu of the assignment fee. That was my first ownership piece in a deal. It was about probably nine months and after I first got in the first sale.


Andrew: That is absolutely fantastic. Maybe we can tell the listeners a little bit about what assigning a deal is if they're not familiar with it. Basically, long story short, you get a property under contract, and in the contract, you have an assignability clause where you're able to then assign it to a new buyer for a higher price and take a spread.


Jimmy: Yeah, definitely.


Andrew: It's a great way to start out. You're building rapport. You're doing the hard work, the grunt work. You're making the calls. It takes time because I've done it too. I know that it's a numbers game in any sales gig. That's impressive, man. How many calls would you say you would have to make before you would get a motivated seller on the line?


Jimmy: It varies as with anything with a numbers game. Some days it feels like it's the first call. It's like, thank God, done for the day, I got one. Other days, it can go weeks at a time. It's more so turned in like a numbers game in terms of time. A lot of the ones from 2019, 2020, those seeds done are sprouting now. It's a lot easier now than it was when I first got started. As with most things, once you do it once, then it becomes easier.

I think with any type of real estate, the first deal is definitely the hardest. Getting that first one was really tough. Now, not a lot is inbound, but I do have some inbound. A lot of it is just following up with, hey, you said to call you in six months, call you in a year, call you next month. More warm leads now. If I was to average it out, it has to be at least a couple of 100 phone calls from a well-motivated seller.


Andrew: Kudos to you, man, for putting in that work. That's awesome. Jimmy, what has been the toughest hurdle for you thus far in the business?


Jimmy: Definitely keep and try to do [...] money and the volume. A lot of people who are looking to buy a couple of parks retire from their job, have the passive income—you don't really need that money. You could go out and find two, three good deals, or one bigger deal and you could definitely have some good semi-passive, active income. Come in, manage your park, maybe hire a third-party manager, and you could work on that for a couple of years, get some deals, or invest with some operators like yourself.

It doesn't take much, but for us—because we're doing more of the transactional business—every day it's waking up, chasing more deals. Getting the 34 has not been easy. Just trying to stay active, I think it’s getting more competitive. A ton of demand and dwindling supply. It's been a hurdle every month trying to meet the goals and keep doing it. Fortunately, we have and are working hard and building the business to grow.

It's been a big hurdle trying to do that while also balancing the management business and operating the portfolio there. Always trying to prioritize. The deals, they go quick if you don't jump on them. The management issues, if you don't jump on those quick, little issues turn into big emergencies.


Andrew: All too well. I can relate to you there. Frank Roth, on one of his podcasts and at his seminars says, time kills deals. I wrote that out and I put it above my desk back in my office because it's so true. I can relate to that as well. Maybe share a little bit about the management, how your management team is set up, and how's that going with your current portfolio?


Jimmy: Starting from the bottom up, each park has a manager, typically someone who lives in the park. They handle the day-to-day, all the little stuff that pops up—violation notices, they're doing lot inspections, passing out the invoices, putting up late notices, basically anything that we can do because we're not physically right there. They're the backbone of a good deal and a good successful long-term park because of all that little day-to-day stuff.

We have really good managers who run a tight shift and the tenants see them. They're saluting the manager when they walk by. There are other managers who kick their feet up, and hey, everybody, do as you please, it's a party. We got to let go of those and get the good ones and train them. That's definitely one of the most crucial parts of the business.

We even have some smaller parks that we manage, the 10, 20 site range. We have really good managers there. They're getting $100 bucks off lot runs, they care, they like the job. Most of them are doing it because they want a good community. They want to be the one who has some quality control over that. Definitely, that's the foundation, the backbone of a good long term park

Then above the manager is us, we asset manage all these parks. We're the liaison basically between the owner and the day-to-day manager because the owners oftentimes are working their W-2 or they're invested in another real estate. A lot of them don't want to do the day-to-day (and I don't blame them) because a lot of it is not fun. We're the middleman between them.

We have weekly calls with each one of the park managers where we go through everything, go through a lot of the KPIs and the metrics. This is who is late, what's the story, how are these violations coming along when you're doing inspections? We've really tried to systemize it and make it a machine to grow it at scale.

Then either partner with us or above us is the owner-operator. Some of them we're talking to daily, others weekly or monthly. At Sanddollar, it’s myself and I have two employees who help with the thousands of little nuances that pop up every day. Running a pretty lean operation, but it's working well.


Andrew: That's fantastic, man. Maybe you could share some of those KPIs with us. What are the key performance indicators that you guys look at on a weekly and monthly basis?


Jimmy: One of the most important ones is definitely collections because if people aren't paying, you can't pay the bills and can't make money, which is why we're doing this. That's the number one thing because we also think that when the residents are paying their rent and they're paying their utilities, they care more. People who are not paying typically don't care about much, let alone the community. We're looking at that hardcore on the fifth and the sixth.

When we're doing late notices, we're looking again on the 10th and the 11th. Some of the states that we operate on do the stair-step, late fees, where you can do $12 bucks a day, $10 a day. Really very busy in between the first through the 12th. Then we'll typically look again by the 20th and that's one role being deciding, hey, what do we have to escalate to eviction or non-renewal?

The collections primarily, we really look a lot at the inspections and the violations. Depending on the size of the park and the type of park, if it's like a turnaround or stabilized, we either do them weekly or monthly. We obviously don't want the number of violations growing. We want to see that dwindling each month, keep an eye on that.

Another thing is vacant homes, vacant lots, how long it's taken to sell a home? How many people are delinquent on utilities? How many people are delinquent on other violation notices and stuff like that? Primarily, we're looking for good collections. We don't want any vacant homes because leasing solves all the problems and vacant homes are a little hotspot for crime, as you know.


Andrew: Most definitely. Thanks for sharing those with us. Jimmy, what's the number one way that you find your deals?


Jimmy: Just relationships as a whole. How that relationship starts is typically with a cold call, direct mail, door knock, or getting introduced. Everything that we do, we try to have the best relationship possible. We close a deal with one seller and all these guys talk typically, and they're saying, hey, you should call Jimmy. We closed, it was smooth, it was an easy, great transaction.

Really, it's just relationships and trying to build those genuinely. We don't do mass market mailers. We don't do texting, voicemail campaigns, or robocalling. All the calls come straight from my cell phone. I know a lot of people disagree with them. They're like, no, you have to have a dialer. The sellers know. It's coming from a different area code. There's that little one-, two-second delay.

We’re really trying to be so genuine even when we're sending direct mail. A lot of people use the metered mail and they're like, oh, well, I'm paying an extra 10¢ and a computer signing it, but it looks like my signature. These sellers know. They're like hawks looking at all those little things. I've met with a lot of these guys. They have a garbage bag full or a shoebox full of mailers.

We hand write the return address and the seller’s address on the envelope. We put a real stamp there. These things take four or five minutes a piece so we hand write the letters too. That's what's genuine. Every part of it we're doing. I haven't really outsourced any of the marketing. It's something that I really love to do.

As you said, time kills deals and if that seller is calling back, that can't go into a funnel. That's got to come right to me. I've got to pick up that call, return that text. It's very typical for a date night out. I'm running out of the restaurant talking to some seller at 9:00 PM on Friday.


Andrew: That's awesome. That's dedication right there.


Jimmy: It has to, time kills them.


Andrew: There you go, man. Jimmy, for the passive investors out there, the LPs like you mentioned earlier would like to put their money to work but they don't want to be involved in the day-to-day management. If this was going to be their first mobile home park investment, what would you say that they need to look out for before investing in their first mobile home park?


Jimmy: Definitely, just track record of who they're going to be investing with. Especially, if you're someone who maybe is dabbling in some other types of real estate, you've invested in some syndications, and you want to get into mobile home parks. Unless you're ready to jump in and be available 24/7, I would invest with an operator who has done multiple deals and who you can hop on the phone with.

Even if you're investing $2550, no matter how much, I think that person should definitely want to have a call with you, whether it's a Zoom call, phone call, walk through what they're doing, the types of deals that they're buying. I think that you should be able to see, hey, where is the portfolio?

I know you just sent out your quarterly newsletter, I love reading that. You have in there where all your deals are at, different CapEx projects, all that stuff. That really shows that you're somebody who cares about these, you're super involved. That's what a passive investor should be looking for. Just 100% transparency. You live in South Carolina or you live in Pennsylvania, here is a park that we own and operate there. Feel free to take a drive-thru, here's the address, just being very open.

Any sense of beating around the bush or not being open is a big red flag. Somebody who's very vocal and open with, here's what we're doing, here's where the money is going, and that quarterly newsletter that you sent out, that hit the nail on the head for transparency. We try to be super transparent with all of our deals.

From an investor looking, it's just important to be able to see the parks, see the improvements that have been made, see that positive momentum is happening, maybe some successful exits, and refer to other investors. Basically, almost doing a background check like on a tenant but doing a background check on the guy that you're about to invest some serious cash with.


Andrew: I love that. I do get your newsletter as well. I read that and I see the same thing. Thanks for the nice comments. I like yours as well. You did say something that really strung a chord with me. You said, go find a park and drive through it, that this operator is operating. I think that's huge. What better way could you get a testimonial on this operator's management and success or failure than driving through one of their communities? If that's a possibility, if you live nearby, that's a great way to gauge an operator's talent and abilities.


Jimmy: Definitely. Even with the assignments, there's a park that we assigned and we manage that's in the town that I live in, outside of Tampa. A lot of times, we tell people if they're on vacation down here in Florida, hey, we manage a couple of parks in Florida, here's the address. Or if they come into town to visit and we're grabbing dinner or something, I'll drive them through. It's only 20 sites, but I'd still drive them through so they can see concrete. This is what our typical deal looks like.

It's helpful that all the tenants know me there. They're waving, they're smiling. I always try to be super open. Here's the address. Especially the bigger the portfolio, if you have stuff all over the country, you can always float it by and people can swing by when they’re in town.


Andrew: That's huge. What would it cost to pay someone to do a drive-thru of one of these communities, even if it is multiple states away? They could put a little gig up on Craigslist. I'm sure they can hire someone for $100 to go do a drive-thru. It will be such valuable information before you outlay six figures worth of cash.


Jimmy: Definitely. That and especially seeing a before and after video. We always try to do a video the day of closing. Then, we could say, 90 days in a year, maybe at the exit, hey, look at the difference between day one and then the next time period. Especially if you're in-filling or doing stuff like that, we could really see a concrete big difference in that video. I think that's worth its weight in gold too.


Andrew: That's huge. Jimmy, what is your deal criteria and why?


Jimmy: Yes, it's a good question. Ours is a lot different than I think most people's. We're going into these deals knowing that we're going to assign them. We have some people who will only buy 100 signed-up parks. We have another guy, for example, he'll buy anything in North Carolina that we have under 10 sites. We're trying every deal criteria possible because we're trying to meet everybody else's criteria.

What we focus on, specialize in, and look for are 20–70 site parks that are mom-and-pop. The less documents the better. Typically in a second-tier market so we're not really chasing stuff in the big top 10 metros. We're doing smaller stuff or like an hour outside of the bigger cities that's just mom-and-pop, no docks.

Typically, there's something that looks really hairy on the surface that oftentimes, once you dig in due diligence, it's not that bad. Or going into deals that do have more of a heavy value add component. Maybe it's on septics that need to be converted to city sewer, maybe there are 20 vacant homes. Something that a lot of other people have heard and they hung up the phone. Some private utilities scare a lot of other people away. We get those at really rock bottom wholesale prices.

We did a deal last year that was on a treatment plant. This guy's like, yeah, everybody calls and they're like, oh, it's 75 sites and all tenant-owned homes, we're so happy. Then they hear it’s on a treatment plant and they hang up. We're like, no, no. It sounds like you're taking care of that. We're definitely open to that. We got less than 50% of the market value and everybody's happy.

The seller hadn't seen it for 10 years. He was out in San Francisco. The park was out here on the east coast. He's like, I haven't seen the thing. He's like, I know the manager is just stealing money. We look for those, the guys who want to sell who they don't really care about the price more that they care who it's going to. We spend a lot of time hopping on the plane, flying up, meeting with sellers, talking about hunting and fishing, just different random local stuff.

It's very typical, the same thing happens. I often bring my girlfriend with me. The husband's like, everything is so good, we might keep it forever. Then, he and I will go take a walk and the wife is telling my girlfriend, oh my God, this thing's a train rack. It's all he does. They're all pretty much the same. I joke that if every of the 34 sellers that we've worked with got together in a room, it would be the same 34 people. It's like a mirror image because they're all [...].


Andrew: That is hilarious. You include your girlfriend, I love that. What does she think of the business, of the industry you chose to get into?


Jimmy: Definitely very highs and lows. A lot of it's one-day trips. We'll leave the first flight out. We typically have to fly out of Orlando being it’s a bigger airport. We have a lot of four or five in the morning, leaving the house in Tampa, driving to Orlando, flying connecting through Charlotte or Atlanta, landing, meeting the seller for five, six hours, coming back to Orlando, driving home. We have a ton of 20–24 hour days. Those are always fun.


Andrew: That'd be worth it. It's just part of the business.


Jimmy: That and vacant park-owned homes, we walk through a lot of those together. I think it's actually been helpful because the guy seller—typically, the wife, she'll be like, I'm not even going in there. Then the guy will bring us in. The floors are soft and there's, of course, still food in the fridge. Yeah, they took off last night, but you can totally tell they were gone a month ago. Then she'll like, put her shirt over. It smells and the guy's like, yeah, I guess it is.

It is worse than I thought and maybe these aren't worth as much. We have a really good time doing it. We always try to incorporate something fun if we're staying overnight. We'll go out in the town and try. We were up in West Virginia recently so we went to some of the state parks. If it was just strictly parks, it would be pretty rough. So we try to incorporate at least one fun thing per site visit.


Andrew: That sounds familiar, walking through those vacant homes with the sellers though. I have quite a few stories as well. I'm sure you have some good ones. Jimmy, what does the perfect mobile home park look like in your eyes and why?


Jimmy: It's another good question. There are two of them. Of course, the perfect park for everybody is all tenant-owned homes, stabilized, 100% occupied, directly billed city water, city sewer. The city owns and maintains the lines, great metro. Of course, wholesale price, big upside. That's the perfect deal, a dream come true. For us, a perfect deal looks like somebody who's owned it for 20, 30 years. They've really cared, they often built the park.

There are maybe half-parked owned homes, half tenant-owned townhomes. Lot rent, they don't really like tenant-owned. Oh no, why would you want tenant-owned? Park-owned homes make more money. We love hearing that because that typically means the lot rent’s like $100. Typically utilities that they're still paying for but could and should be, some metered or draft build.

I wish every park met the first one, but a lot of them are hairier deals. Mom-and-pop, who really loves the park and who really cares. We've had a lot of sellers who were literally nine to five every day. That's their job, they have one park and they know every tenant. We drive through and they're with their notebook, writing down, okay, this person pays this much, this person not much.

That's our perfect park is somebody who, we're lucky if we get a rent roll. They love the park so much and they never really thought they're going to sell, but they got tired and they want to start cruising, going on vacation, and they're ready to pass it on to somebody who cares.


Andrew: Pass it on to the next generation. That sounds familiar as well. Jimmy, what common mistakes do you feel new operators and operators, in general, can make. What mistakes maybe are easy to make that might get overlooked?


Jimmy: Just not really being 100% prepared. I think you definitely want to not have analysis paralysis, but definitely spend some time listening to podcasts, talk with other operators, and make sure you have a good foundation of information before you step in. On day one, especially if you're buying it yourself, being just 100% ready that you got to be there the first day. You have to have some sort of transition water with, this is how you're going to pay and walk through all the scenarios of a resident.

That's a mistake that I see made a lot is people don't predict all the scenarios. They'll say, oh, I'm only going to have my residents pay online. No money orders, no checks, nothing. Then they tell them that and then they'll realize maybe the closest cash pay option is 45 minutes away, and a lot of the residents are older. Maybe some of them don't have cars and now you're scrambling.

Setting a good foundation and being ready for the dozens of little management problems that you have to solve on a daily basis. If you're not ready for that, you should invest with somebody like yourself, who has a team who's going to do that. I just think it’s that.

If you're buying a deal, not feeling like you're forced into it. I always tell people what the assignments are. We never do hard money deposits, we never force anybody in. We try to give as much time as possible and get all the red flags out of the way in the beginning because we want someone to be so excited for closing and never having any second thoughts or second guesses.

There's always unknown with these because the due diligence process is so tough, but we try and make sure that, hey, you 100% want to do this? Because I think people are often forced into deals because they have to buy their first deal or they really want to buy their second. They're just, hey, it doesn't meet my criteria. I don't really know how I'm going to operate this one. It's a turnaround, and I'm going to buy it anyway though because I need to buy a deal. Just making sure you're 100% comfortable.


Andrew: I agree. The due diligence process is often overlooked by new operators that maybe haven't gone to Frank and Dave's Boot Camp. It's a very involved process and literally can save you thousands of dollars in catching things upfront. You're going to have to kill deals because of what you find. We kill deals all the time. It's not fun to have to do it, especially when you got a bunch of cash out on the table for assessments and inspection reports, but you just got to do it. That's a big part of it.


Jimmy: Frank and Dave's event, sure, it must be a prerequisite to go and see. Frank is such a great guy. I've been on his show a couple of times. Just go in and see him pointing out the stuff in the park when they do that park site visit. Then at least I think you know before going into your first deal, this is what skirting is. This is what an ‘80s with a ‘90s home is. Just having that base level foundation of info is really important.


Andrew: Very, very important. Specifically, the utility infrastructure too is very important to get an understanding of that. Jimmy, what do you think about the manufactured housing industry as we move forward into the next 5–10 years? What hurdles do you think the industry will face?


Jimmy: Various hurdles. It’s a crazy hot market right now. I think we're going to see some deals that are being bought coming back up for sale in fire sale scenarios in the next 12–36 months. I think people are buying at super low cap rates and buying stuff that they maybe shouldn't be or they're kind of hoping for appreciation. It's going to be tough to make money on those, tough to add value and do the CapEx that's needed. I think some of those are going to come back in the near future at pretty much what they paid, even after they've maybe raised the runs and added some upside. That's one of them.

Another one is with everything that's going on right now—with minimum wage, the economy, where our rents are going up, single family, multifamily, and everything—it's all one big thing. There's going to be a lot more demand for the product that we have. It's going to be easier to sell and lease up homes because more people are going to be getting priced out of single family. They're going to want affordable housing.

Just go to operators that are going to do well. That'll be a big thing is just operating well with the current climate. It's a little bit tougher to evict right now, and just making sure you're doing good screening, good background checks. You're not going to be stuck with professional tenants.

That and then, just as all the mom-and-pop deals get bought up—it's never going to run out, but a lot of these sellers know what we're both talking to. They are 80, 90 years old. They built the park 30, 40 years ago, and they're going to sell now. Whoever buys it is not going to sell for pennies on the dollar with a ton of upside. I feel like the window of opportunity is definitely dwindling. As that window dwindles, the deals that are left are going to be more reserved for the more savvy operators.

That's going to be hairier stuff or good for people building a portfolio. It's a lot easier if you have 10 parks in Illinois, and then there's a super hurry deal that pops up in Illinois with vacant park owned-homes. Maybe some utility infrastructure needs to be upgraded. It'll be easier for you to take that on because you already have the team and the systems, everything in place there compared to somebody who that would be their first deal in the area.

I think there's going to be a bigger delta between the really good savvy operators and people who are just trying to make a quick buck in us and who don't really care.


Andrew: You bring about some really good points there. Tell us about Sanddollar Communities. What's your value proposition? What makes you guys different?


Jimmy: Great question. Our informal slogan at Sanddollar is we do what other people don't. Other people don't want to call all day, other people don't want to fly across the country to meet with a mom-and-pop that we haven't even discussed the price with yet. Other people don't want to do the 24-hour long trips there and back on the same day. Our value proposition is just that we're always going to take that extra mile and not throw in the towel when other people might.

It's that, and then it's so relationship-based on both the seller and the buyer side. There are other people out there—especially people who are coming in the parks—who may be wholesale single family or multifamily, and they think, hey, this is just a transactional machine business where it's just motivated sellers. A lot of it, these sellers aren't really motivated. They really are building that rapport in that relationship with them.

Our relationships pay off in the pricing that we got because three are deals that we've had. I had one in South Carolina where the guy wanted to talk every Friday. I think it was at 8:00 PM for over a year until he was ready. Every Friday, we were calling this guy. Hey, what's up? How's the park going? Oh, a house burned down, this, that. Just letting him vent, letting him talk.

We have a lot of recurring weekly or monthly calls that most other people are like, hey, this is my offer, do you want it, yes or no? I've got other parks to buy. Of course, it doesn't always work out, but we're building those relationships that are so good. So then when it's time to buy that park and we've got it for such an attractive price, I think that's our value proposition is the relationships and the fact that when others are going right, we're going left with our marketing.

Even how we assign the deals to the buyers, it's not whoever's going to pay the most. It's who is confident, who's going to close, even if it's a lot less of a fee. We've done a lot of first-time buyer deals where, oh, brokers don't even pick up my phone calls. I'm too busy working a day job to get a hold of the sellers. I really want to buy a park. I'm going to come down, I'm going to meet you. I want exactly this, and when you get it, I really would like it if that can just come first to me. We've done a lot of the relationships on both sides of the transaction.


Andrew: That's huge. Jimmy, how can our listeners get a hold of you if they'd like to do so?


Jimmy: The best would be, just shoot me an email. It's jimmy@jimmyjohnson.co. That'd be the best way. I'm also on Instagram, @floridajimmy. You could try searching for me on Facebook, Jimmy Johnson, but there are probably a million other Jimmy Johnsons. Maybe type in Jimmy Johnson Mobile Home Parks and it will show up or something. Best would be just shoot me an email and then we can hop on a call and take it from there.


Andrew: Awesome. Thank you so much for coming on the show, Jimmy. It was a pleasure having you.


Jimmy: Thank you so much for having me. I really appreciate the time.


Andrew: Awesome. That's it for today, folks. Thank you so much for tuning in.

32 views0 comments