Other Passive Investing Options in Mobile Home Parks
Updated: Nov 29, 2022
Listen on Apple Podcast here: https://podcasts.apple.com/us/podcast/other-passive-investing-options-in-mobile-home-parks/id1520681893?i=1000494548810
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 about other miscellaneous ways you can passively invest in mobile home parks. Today Andrew talks specifically about investing in mobile homes themselves, crowdfunding websites, and becoming a debt lender, or a balance sheet partner.
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.
Would you like to see mobile home park projects in progress? If so, follow us on Instagram: @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions.
00:19 - Welcome
00:37 - Option #1: Crowdfunding websites
02:27 - Option #2: Investing in mobile homes themselves
04:39 - Option #3: Becoming a balance sheet partner
05:37 - Option #4: Becoming a debt lender
06:33 - Option #5: Self-directed IRAs
08:00 - Thanks and see you next week
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Links & Mentions from This Episode:
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...
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Welcome to the Passive Mobile Home Park Investing Podcast with your host Andrew Keel. This is the podcast where you can get the education you need to invest 100% passively in the highly profitable niche of mobile home parks.
Andrew: Hello, and welcome to this episode of The Passive Mobile Home Park Investing Podcast. This is your host, Andrew Keel. Today we are going to discuss other miscellaneous ways you can passively invest in mobile home parks.
Option number one is a popular one. This is through crowdfunding websites. These are all the rave right now, and I think it's important to mention that these were only available for the most affluent and accredited investors at one time. However, many crowdfunding platforms have recently significantly reduced their barriers to entry so more people can enjoy the benefits of real-estate private equity investing. With an investment amount of only $500, you can now invest and diversify in large real-estate projects from many different asset classes, including mobile home parks.
Simple fee structures and clean user interfaces on these crowdfunding websites make this investment option attractive to many Wall Street investors that are used to being able to simply log in online to their Charles Schwab accounts and view how their stocks and mutual fund investments are performing. Without endorsing these in any capacity, a few real-estate crowdfunding websites are fundrise.com, crowdstreet.com, and realtymogul.com.
Some crowdfunding websites require you to be accredited and others do not. Some have investment offerings with an investment amount as low as $500, and others require $100,000 or more. There may be additional fees when investing through a crowdfunding platform versus investing directly with an operator, but most crowdfunding investors don't mind these, primarily, because of the access to high-profile deals and operators that they otherwise wouldn't have known about.
Option number two is through investing in mobile homes themselves. Lonnie Deals is another name for these types of investments named after the mailbox money king, Mr. Lonnie Scruggs, who coined the business model in his book, Deals on Wheels. Some operators will raise money to buy, fix, and then sell individual mobile homes on contract. This can offer great returns.
However, the bottleneck to these investments are, number one, finding a good professional operator, and number two, being able to deploy enough capital in one shot to move the needle for investors. These types of investments may only require $5,000-$10,000 per mobile home deal. The returns can be great if managed well. But investing a bulk $100,000 into individual mobile homes can require the operator to buy and then subsequently sell 10-20 mobile homes.
Most mobile home operators do everything themselves with no team behind them, so this may take over a year for them to completely deploy that $100,000. Another issue with this model is ensuring that your operating partner remains SAFE Act-compliant as a mortgage loan originator. Also, they may be required to become a mobile home dealer in the state where they are practicing.
Turnover, which is never the goal of these types of investments, can be a profit center, however, due to the large down payments received upfront from new buyers that can help offset some of the turnover costs. Finding operators for these types of investments can be difficult. The best ways that I've found are through mobile home investing Facebook groups and through YouTube channels like John Fedro’s of mobilehomeinvesting.net. It's important to note that I'm not investing in his group in any way.
Another option, number three of how you can passively invest in mobile home parks, is through being a balance-sheet partner in syndications or fund acquisitions. Some operators will offer additional equity to investors that are willing to bring their balance sheet and sign recourse on the deal’s financing. This does add significantly more downside risk for the balance-sheet partner. However, if you believe in the operator and the deal itself, this can be another way to increase your returns and equity stake with less cash out of pocket.
You will usually need significant cash reserves and a very strong balance sheet behind you in order to be able to qualify for this type of debt position. A strong credit score is a must as well. The exact amounts of liquidity in the balance sheet will all depend on the size of the deal’s financing.
Option number four is through being a debt lender, offering basically hard money loans to active operators in need of cash for projects in their mobile home communities, including infilling on vacant lots.
This may be a good way to get your money working for you. Some operators will offer 12% to 15% interest on invested funds that they can then take to use and infill homes into the parks that they own and operate. The downside risk here is that the collateral for this loan may end up being older, used mobile homes that you wouldn't want to take back if they defaulted. Another option is that you could hold a second mortgage on the real estate itself. This is probably a little safer and more optimal based on the equity available in the asset.
Moving on from that, the fifth option for investing passively in mobile home parks is through self-directed IRAs. These are huge and a self-directed individual retirement account allows the account owner to direct the account trustee to make a broader range of investments beyond just stocks and bonds. These can include real estate, franchises, precious metals, and mobile home park private equity.
Like a traditional IRA account, the self-directed IRA allows owners to defer taxes until retirement age, regardless of the level of returns. A self-directed Roth IRA can potentially allow you to defer taxes and gains entirely with some caveats. But the funds going into these Roth accounts are after tax dollars, and there are also limits on the amount of money you can put into these accounts annually.
I recommend that you contact your investment advisor, 401(k) administrator, or a self-directed IRA custodian for more information on how you can leverage your retirement accounts to invest in mobile home park private equity. It's important to note that I'm not a CPA, attorney, or a licensed, certified financial planner and that these explanations are subject to change.
Anyways, that does it for this episode on other miscellaneous ways you can invest passively into mobile home parks. And this concludes our series on how you can invest passively in mobile home parks.
Please join me next week on Tuesday for an interview with mobile home park owner, operator, and coach, Mr. Ryan Narus. Thank you so much for tuning in.
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. Once again, that's @passivemhpinvesting on Instagram. See you there.