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Interview with MHP Operator Ian Tudor of the Archimedes Group




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 mobile home park owner/ operator Ian Tudor of the Archimedes Group. Ian is apart of the younger, next generation of mobile home park owner/ operators. He brings his unique experiences, background, and perspective when talking with Andrew on this episode about topics including: what his perfect mobile home park looks like, common mistakes made by new operators, and hurdles the manufactured housing industry faces moving forward. Ian offers new enlightening ideas and standpoints when giving tips to passive investors on today’s episode.


Virginia Tech graduate, Ian Tudor started his career in the financial world. He joined Parkway Properties, a class A office REIT, as a member of their investments analyst team. During his tenure at Parkway, Ian underwrote over $1B in acquisitions and dispositions as a senior investment analyst. Currently Ian works full-time on operating and growing the Archimedes Group manufactured housing community portfolio. He is the co-founder of both the Archimedes Group and Mobile Home Park Mentors, where he and previous podcast guest Ryan Narus team up to coach new mobile home park investors towards buying and operating their first mobile home park.


Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 1,500 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.


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

02:06 - Ian’s story and journey into manufactured housing community ownership

06:26 - The toughest hurdle for Ian Tudor in the mobile home park business

08:24 - What passive investors need to look out for when investing in mobile home parks

11:46 - Ian’s perfect mobile home park

14:45 - Common mistakes Ian sees by new operators

18:54 - The hurdles that the industry may face in the future

23:11 - The Archimedes Group

26:33 - The Mobile Home Park Mentors

28:18 - Contacting Ian Tudor

30:03 - Conclusion



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



Links & Mentions from This Episode:

Ian Tudor’s LinkedIn: https://www.linkedin.com/in/iantudor/

MHP Mastermind Facebook Group: https://www.facebook.com/groups/MHPMastermind/

Archimedes Group official website: http://www.archimedesgrp.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 an amazing guest in Mr. Ian Tudor of the Archimedes Group. Before we dive in, I want to ask you a real quick favor. Would you mind please 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. Ian graduated from Virginia Tech with a major in finance. He began his career in the financial development program at Genworth Financial. He then joined Parkway Properties, a Class A office REIT, as a member of the Investments Division. During his tenure at Parkway, Ian underwrote over $1 billion in acquisitions and dispositions.

Ian left to start Archimedes Group with Ryan Norris who was in a previous interview. They're based out of Charlotte, North Carolina. They have sourced, participated, and closed over $20 million in deals since 2016. Currently, Ian focuses on growing and operating a portfolio. Ian, welcome to the show.


Ian: Thanks for having me, Andrew. I'm a huge fan of the work that you do and what you've been able to build over the past few years yourself. It's always great to catch up.


Andrew: Thank you, brother. I appreciate that. It's fun to communicate and stay up to date with you guys as well. We’re the young group in this mom-and-pop industry. It's fun to bring that new life.


Ian: Absolutely.


Andrew: Well, let's jump right into the questions. Can you tell us your story and how you got into manufactured housing? I think everyone has a unique path in it. It seems like, just based off of your bio, you have some pretty cool stepping stones.

Ian: Yeah. I got into real estate at 23. I had a mentor when I was at Genworth who showed me the world. He saw the world a little bit different than other middle managers. I remember he was the first time—2013 or 2014—I saw a million dollars on the screen. He had a million plus dollars in a stock trading account that he had, and I was like, this is so crazy. He saw the world a little bit differently. He was really interested in investments. He had some real estate that he owned in the northeast, and then bought a house in Hawaii that he was Airbnb-ing several years back.

It spurred my interest. I was like, oh, this is kind of interesting. I went on this deep dive of real estate, starting to meet with a lot of people. I was in Richmond at the time and just found that real estate was something that I was interested in. I bought a house at 23 and started house hacking, I guess is the term they do now. I had roommates and lived basically rent free.

I just realized that real estate was more of an interest for me than corporate finance. I started to look for opportunities and landed in Orlando working with a great company in Parkway. I was really immersed into how commercial real estate and institutional real estate played out.

I did a lot of models. I worked on $500 million portfolio deals and did some really cool acquisitions to dispositions. As an analyst, the Excel monkey behind things and just coordination of a lot of large transactions, which was pretty cool. But I always had this interest of wanting to build my own thing and just have not been relying on anyone out on a path to wealth.

I started to look for single family homes within Orlando. At the time, it just felt like things were priced. I looked at flipping houses.Then I looked at actually buying individual mobile homes because I said this sounds fascinating. It's lower capital requirements and pretty reasonable returns.

But the guy who was living with, at the time who worked with me at Parkway was like, why don't you buy the entire park? It put off a light bulb. At that time, I purchased a Frank and Dave informational packet. That was in 2014. I was looking to start a company so I was trying to start a company with him and it just didn't really go where I expected.

I still played with the idea. I started looking for other investment opportunities and Ryan I reconnected in 2015. I pitched him the idea in the middle of 2015 after he suggested maybe we're going to do business together and it's stuck.

That’s really where that grew. It was a lot of circumstance and just investigation, and I didn't really (I would say) seek it out. I just stumbled upon it and then that idea we just watered it and it continued to grow into what we have today.


Andrew: That is so awesome. I love the fact that you were in Orlando here. I'm in Oviedo which is a suburb of Orlando. Around that same time is when I was looking into mobile homes. I was doing Lonnie Deals, buying individual trailers. In another life, we could've met in 2015 and done some deals together or something. That would've been crazy.


Ian: Yes, it’s funny. There are actually a lot of players out of Orlando now that I've spent some more time there. When I did, my investment partner who’s down there now and I told my buddy about mobile home parks—I'll connect you with them—now has 300–400 lots in the past two years that he's been able to put together in central Florida. Then there were several other operators that spun out of that. I never really realized how many players actually came out of Orlando. I don't know what you guys are doing down there, but something’s working.


Andrew: Yeah. I think there's a lot of really nice parks, the 55 and older, amenity-rich parks, and maybe that just attracts people to the asset class or something. Ian, tell us what has been the toughest hurdle for you in the business?


Ian: I think there are a couple. One is Ryan and I very early on were very hands-on in a lot of ways. I think the struggle for us was just always determining when to hire someone, when to do it yourself. Delegation has been a little bit harder. I think, in some ways, that might have capped our growth to some extent just because we always felt that we wanted to have a handle on a lot of things. But there are levels of growth as you're going through this business as I'm sure you've experienced as well. You're growing quite rapidly.

Just shedding your old ideas to embrace new ideas of what things need to happen, and at different stages certain mindsets are more important than others. It's taking us some time to embrace those. Now that I'm sitting where I am today, I start to see that as just vital to make sure that you're going up the staircase the right way and getting to that next level of growth. Because the things you do at 100 lots and even 200 lots are way different than 500, 1000, 2000 as you continue to scale.


Andrew: I totally agree with you. Back when it was just a 300-lot portfolio you wear many hats. You're doing a lot of the things yourself from taking the trash out here in the office to climbing under homes and changing out water valves, which I've done a few times. At this stage, though, when you get above, over around 1000 lots, it's a completely different animal. It's all about delegation and systems. That's been a hurdle for us as well, so I'm with you there.

What do you think are the most important things that passive investors—we're talking limited partners here—need to look out for when investing into mobile home parks? The most important.


Ian: Obviously, there are a lot of things to consider, but the biggest thing I see is the ability to raise capital from someone and operate. Those aren't necessarily the same skillsets. You can be a great capital raiser, a great brand, but the person who's actually doing the work on the operations isn't necessarily the same person and requires a wildly different personality at times.

I see a lot of these larger funds. After speaking with some of the LPs, I realize the story and the narrative doesn't necessarily equal the results of what they're actually seeing within community progress and just making sure that they have systems and people in place.

It's usually not them doing and making sure that those deals are getting turned around the way that they should be. It has to be relatively strong or at least it should have some track record of having several successful turns, just because buying a deal is one thing but as you know turning around or bringing in 30 homes is a monumental task. The person raising the capital usually isn’t the person doing all that as well. They're checking in, but you probably want dedicated people to do that because people underestimate how much work it actually takes to run mobile home parks.


Andrew: That is an amazing point and I can't believe that that hasn't come up on our show yet. The fact that raising capital in its own sense is a very interesting task. It's more marketing and talking and more of a sales role. Then the operations side of things is you need to be very organized and system oriented, people oriented and hiring. You're exactly right, to make that all work is very difficult.

I agree with you. It takes a team. It takes the right talents from different people and we use a personality assessment. You guys probably use something similar and it just helps us identify from a high level what is this person going to be good at? Is this the right role for them? One that we use is called the predictive index. I don’t know if you ever heard of that.


Ian: We personally don't do personality assessments, but it's actually not a bad idea because through hiring several people now, several things we find six months later of strengths and weaknesses that we didn’t necessarily see at the front end, just gives you a broader understanding of where they might be stronger than last.

We have one manager. She's great for a lot of things but one thing she doesn't like is confrontation. Keeping yards clean is just a little bit more of a struggle because it incites a lot of anxiety to actually go confront something about someone. Having that information is super useful because otherwise you're going to be stepping in to fill those gaps.


Andrew: Yeah. That's a very good point. What does the perfect mobile home park look like in your eyes and why?


Ian: One thing that Ryan and I have found just through the spaces, we found a niche within the space that (I would say) a lot of people probably maybe haven't considered. The thing that we like is we like larger metros. We've done some experiments in some more rural markets and we like strong metros. We're really invested in Charlotte, Greenville and Knoxville. Those are the markets that we play in.

We find that when you have large amounts of park-owned homes, usually the nicer the better. The park with a reasonable size between 30 and 70 units. Obviously, if we could have 100 we would love that, too. But we find between the 30 and 70 units within a strong MSA reasonable home quality, those are our favorite parks.

People don’t understand why. It's because it allows us to dictate where lot rent goes. For us, if someone's $200 below market rent, Ryan and I don't really subscribe to the idea of jacking someone’s rent $200 a year. It's really hard for us from an empathetic standpoint. We've never done that. It's just something we don't really subscribe to.

People obviously are more than willing to do that, run your business how you please. But what we find in mobile home parks with all park-owned homes is you can set the lot rent at market much quicker than moving someone over a three- or four-year time frame, $50 a year to get to that $200 when that markets might have moved again, than for us to sell off park-owned homes and basically hit our mark in year one or two, then we can refinance much quicker. It allows us to multiply our capital faster when we buy parks that are mostly park-owned homes.

That works well, though, because we're relatively tight geographically. If you had 10 of those parks in 10 different states, it's really hard to manage, obviously. Again, our strategy is very dialed-in. It just allows us to operate on those where we can turn a park like that around in a year and pull out a ton of equity relatively quickly.


Andrew: That's big. There's only been a couple of other investors that we've spoken with that like the park-owned home model. I think you bring a really good point. You're in top metros and they're close together, so you probably can use the same contractors over and over again and build those relationships.

When we buy a park that's outside of our current footprint, we have to rebuild relationships from scratch. You're taking more risk when you get a bunch of park-owned homes. But if you got the same guys, that makes a lot of sense. That's really interesting.

What common mistakes do operators make that you see through your coaching, speaking with newer operators, and so forth?


Ian: Ryan and I started a mentorship program about a year ago. We had about 30 students go through it, give or take, working with quite a few iterations of people coming into the space. I think several people don't necessarily dig deep enough on where they fit in the space. They’re like, I want mobile home parks, and they list all the reasons why people love mobile home parks.

But that doesn't really get you to the core reason for why you're buying mobile home parks. I see a lot of people buy it for the same reason that everyone else is and that's okay, but I think it's more important to have a personal strategy and start to reverse engineer what you're trying to get to.

What I find is a lot of people just mirror other people like yourself. You are unique in a way that you have the work ethic, the personality traits as well as just overall vision to do a massive company. I actually don't think a lot of people have that nice combination of all those things. They say they want to but their work doesn't match that or they don't have the willingness to go through the things that you've gone through to get that.

What I find is most people actually need a lot less units to actually find their happy place, which is fascinating because most people I find actually could be perfectly happy with a few partners that only own 150 lots instead of trying to go to the moon with 10,000. That actually makes the goal much more achievable and they actually find more happiness and fulfillment with doing that because they actually don't love the business. They just love the idea of what the business can give them, which is usually time and financial freedom.


Andrew: I think that's huge. A lot of people that I speak with that are newer operators, it's like, what would just $3000 of extra cash flow do for you? It doesn't have to be $30,000 a month. What would just $3000 a month do for you? Would that change your life? Most of them are like, yeah, that would do quite a bit. If you reverse engineer that down to the number of lots you would need, it's actually not as many as most think.

That is a very good point for all new operators out there that are thinking of getting into the space. I think that is really important to look at upfront for sure because not all people are willing to sacrifice cash flow for the sake of growing your property management company, which has been an ongoing thing since day one for me. I just listened to Ryan's podcast recently about what they don't tell you about a thousand lots. He brings a lot of good points to the surface there. That was awesome.


Ian: As you've witnessed yourself—you have further along the journey than we are in terms of scale of company—the thing that we find just fascinating is people want the end result but the work to get there is actually a lot. You can't even think through all the things that go wrong. Last year, we had four homes got burnt down. Three of them were arsons that the residents were mad at us. That's a small issue compared to some of the things you’ve gone through. I'm sure once a week you have something, you're just like, man, I did not expect that to happen.

You always have to be on. I don't think everyone needs that. I don't think everyone needs that and having that self-awareness is so important. I think that also makes better owners too because I've seen a lot of larger operators that went big but are no longer here with us. Their partnerships fractured because I think they're chasing the wrong thing.


Andrew: That's a very important part. Let me ask you this, Ian. What does the business look like as we thrust forward through 2021 and into the future? What are the major hurdles that the industry could face?


Ian: Yeah. I don't see the industry going back. I think some of the old guys are, there's this time frame wherein parks are going to come back when there's 10 caps. I think they have this notion that the world's going to come back to the way that it used to be. I just don't see that. I think the capital, the world knows about it. The secret's out in a lot of ways. The idea that deals are going to be wildly cheaper in the future, I think that's a false belief. I really do.

The hurdles, if you're coming into the space, I think it's important to work with the environment that you're going through. Certain states are obviously going to get more restrictive. Mobile home parks might make it more difficult from a rank control standpoint, especially certain governments are more likely to put protections in for tenants than others. I don't see how that would slow down. It seems like one party in particular isn’t just going to advance at all a little bit more than others. I'd be definitely hesitant in certain states to necessarily grow large, but I'm sure there's a niche there that people can figure out and be relatively successful.

I think you've mentioned the $15-an-hour minimum wage. I think that could have an effect, too, because as you know, mobile home parks can only support a certain amount of employment given the size of these parks. If you have a much higher cost burden, it's just going to be harder to get into parks because your expense ratio is higher. It's just going to require probably less hiring in some regards and maybe just pulling resources to spread over more parks because you can't afford to hire enough people to actually manage the properties that you have.

Those are just a few of them. I hope long-term, that owners in general—I’ve put out our LinkedIn post today—start working much heavier with city officials and maybe there is some lobbying to allow some more mobile home development because this is a real last affordable solution for people throughout the United States that's not government-subsidized.

People seem not to remember that. A brand new park today is obviously going to be a gorgeous asset. They're not going to be bringing in a one-star asset and to development, it's just like apartments today. They come at the top end so you're going to have great developments coming in. I would love to see more of that, but we'll see.


Andrew: I agree. I think that would be a great next step. If we can get into some new development again. I think it was one of Frank Rolfe's podcasts I was listening to and he said that back in the 70s there was a really attractive financing where you could build a mobile home park for 3% down, an FHA loan type of deal. Imagine if there was something like that available, what that could do?

I think you brought some good points to light there. Inflation, obviously. I'm not sure if you guys see it but we see it every day with the cost of lumber. The cost of everything is going up right now. It's happening in markets where there's no rent control. We're able to more easily pass that inflation through to the residents, through rent increases and so forth.


Ian: That's a good point.


Andrew: But like you said, in markets that have rent control, you're not going to be able to do that. You'll be capped at what you can do. I agree with you. That is one facet of the business to keep an eye out for, for sure.

Ian, tell me about the Archimedes Group. What is your value proposition and what makes you guys different? Maybe you can also touch a little bit more on your mentorship program.


Ian: I'd say we're pretty laser-focused on what we want and don't want. We haven't raised a fund so we don't have any deadlines to put out a lot of capital, which I think is to our benefit. It's the reason why we've grown the way that we have. We focus on location first and the reason why is we feel rent growth is going to be highest there in markets where, again, we’re allowed to raise rents to that rent growth will be. Second, the thing that Ryan and I have done as you have as well is we've just been in a lot of different scenarios with mobile home parks. I feel like we've gone to a lot of different experiences.

We lived in a mobile home park. We've moved into homes. We've had some RV components. We've done deals, a small 25 units up to several 100 units in quite a few different states in rural markets and urban markets. It gives us a lot of perspective in terms of the types of deals that we feel we can operate and execute relatively quickly in terms of finding those opportunities. I guess we have a little bit higher degree of certainty in terms of our ability to execute on those deals just because we've seen quite a few iterations in 20 markets or something like that.


Andrew: Totally. That's huge being laser-focused with what your niche is and where you've seen the opportunity in the market. There's so many different niches like you've mentioned earlier in real estate as a whole, but then just in mobile home parks, there's a niche. Like I saw that there's a new fund for mobile home parks that only have private utilities. Who would have thought, right?


Ian: Yeah.


Andrew: A lot of people at first glance are passing on those opportunities because they don't want to deal with those private utilities, but if you only buy parks with private utilities, you'll know them and you could probably afford someone that's an expert in those functioning of private utilities. I love that you guys are laser-focused like that. That's huge.


Ian: We don't do a lot of infill either. You do a lot more infill than we do. Some guys are really good at infill. That's a huge advantage if you have the ability to bring in say 50 homes in two years or whatever that number is and have a whole leasing platform to make sure that those get purchased.

Ryan and I, that's not our game plan. We're not well suited for that. We don't have the systems for that. The people who can do that make really good money but it's a wildly different cost of capital and a wildly different business model to make that work. I've seen quite a few people that have been wildly successful doing that and can turn parks around in three years.


Andrew: Yeah. What you focus on, you get better at and it seems like you and Ryan have done a good job of that and with myself. Infilling homes and starting a transport company was part of that. We've gotten better at it. I totally agree with you, dude.

Ian, if our listeners would like to get a hold of you and maybe get more information about your mentorship program, or the Archimedes Group in general, what is the best way for them to do so?


Ian: Just a quick second on our mentorship program. Ryan and I, what we really do is we have a several month mentorship program for people who are interested in getting in the space. People looking to acquire their mobile home parks. Several people in our mentorship program already have parks looking to buy another one or help with the operations of the park that they're in. The whole goal of that is to start with a strategy and work their way towards closing a mobile home park. It's all geared towards specific advice to keep people accountable to purchase their mobile home park.

We have several people still currently in it, with all the 30 of the past year that have gone through it. Between 10 and 15 of them have put a park under contract and/or closed. It's a pretty high success rate of people actually putting forth offers, getting things under contract, and several of them have closed which we're really excited about.

At the end of the day, as you know mobile home parks in general, the actual business is where the money is made. This is something that we just really enjoy helping other people get into the business. It's really fulfilling to actually help people make that mental leap to actually get into ownership.

In terms of getting in touch with us, Ryan obviously has a podcast, everyone feel free to listen to. It's called MHPIRL. Ryan puts a lot of work into that. It has been going on for about three years. That's really his passion project and he's on a great job of cultivating that. I'm on LinkedIn.

You can find me on LinkedIn as well as we have a Facebook group. It's MHP Mastermind, about 2000 members in it. Feel free to jump in there as well. A lot of people sharing deals and just their thoughts on the industry and helping each other out. It's a free group. We have no real intention with that other than to allow people to discuss. It's a watering hole for mobile home park owners. I'm on Facebook as well, or you could reach out to us on our website which is www.archimedesgrp.com.


Andrew: Awesome, man. Your mentorship program, I just love that. I wish that was around when I was getting started. A lot of people don't know that I started trying to buy a mobile home park in 2015. But it actually took me two years to buy my first deal. I wasn't ready. It was two years and I wasn't ready until 2017 to buy that park. If you guys could speed that up with that hand-holding and providing that community of people to reach out to.

Whatever the cost is, just think about the resources that you guys could give to a mentee, like who to go to for lenders? Due diligence help, management scenarios, valuation help. I just love that. I think that you guys have a great thing going and then I love the Facebook group. I'm sure a lot of our listeners are already members there. Ian, it was a pleasure having you. Thank you so much for coming on today.


Ian: Absolutely. Thanks for the invite. It's always great to catch up.


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

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