Podcast Episode 132 Transcript

Episode 132: How To Build Wealth In Mobile Home Parks With Jefferson Lilly

Folks. If you're interested in mobile home park investing, we're joined this week on the Prereal Podcast by Jefferson Lilly. He's the founding and managing partner of Park Avenue Partners. Since 2007, they put together a portfolio of over 31 mobile home parks across 15 states and a value of over $75 million. They're averaging between ten and 15% IRR are to their LPs. Jefferson is an absolute wealth of knowledge. If you have any interest in mobile home park investing, this is an episode you can't miss. Check it out. Are you ready to bring your real estate game to the next level? My name is James Prendamano. I'm the CEO and founder of Prereal. Over the past 25 years, I've closed over a billion dollars in transactional real estate. Each week, a meeting with outstanding investors, high performing individuals, and visionaries operating in the real estate space. These are the people that are actually out there in the real estate game right now getting it done. This podcast aims at bringing anyone's game to the next level. This is the prereal podcast. Welcome, everyone, to the prereal Podcast. Treat for you this week, folks, we're joined by Jefferson Lilly. He's the founding and managing partner at Park Avenue Partners. The reason I was excited to connect with Jefferson, he is best in class in a niche that I have almost no experience in at all. So a little bit by way of background, jefferson and his team have acquired over 30 mobile home parks in 15 states. They have just exceeded about $75 million in portfolio value, and they're delivering, on average, ten to 15% IRR to their LPs. This is something that I'm very passionate about learning, because there's a vertical integration opportunity for what we currently do, Jefferson, and it's always a treat and an honor to have an expert on, such as yourself. So with that, thank you for taking the time to join us today, James. It's great to be with you today. Thanks for having me. Oh, my absolute pleasure. So let's jump right in here. Jefferson, you didn't wake up one day and decide, hey, I'm going to go and be a mobile home park investor. Or perhaps you did. Was this a family business? Were there mentors or folks along the lines here that put you in this track? Well, James, as I say, when I woke up from the concussion, it just seemed like a good idea to buy a Mobile home park. Those of us in the business know what that means, folks, but go ahead, but a little more seriously. So basically, we'll just take my time from business school. Back in 1998, I graduated from the very fancy Wharton School of Business. I got into high tech. I came out here to San Francisco, worked in a number of.com and software related startups, and over about roughly ten years, I did that. And frankly, I got tired of seeing the value of my stock options swing up and also way down. So I thought, hey, why don't I get some passive income? Real estate seemed like an obvious way to deliver passive income. I am a big fan of Warren Buffett. I'm not at all in his league as an investor, but I aspire to be. He always says, stay within your circle of competence. And I figured even though I had never owned real estate, well, I had lived in homes and apartment buildings, and therefore apartment buildings must be my circle of competence. So I went to sites like LoopNet and filtered the leads for multi family, and I was already pretty certain I was not going to find good cash flowing real estate here in the San Francisco Bay Area. So I was already looking, you know, in Lubbock, Texas, and Peoria, Illinois, and the great Midwest, and the search results would show, like, 99 apartment buildings, and this is roughly 2005 pricing, but at an eight cap and one random mobile home park at a ten cap. And I thought, that's absurd. I'm not buying a friggin trailer park. And I delete the search result and do it again in Madison, Wisconsin, or Ames, Iowa, and on and on. And so I got hit over the head, I don't know, five or ten times with these mobile home parks that all seem to have a higher cap rate. And then I finally thought, well, I guess it's multifamily. Why don't I look into it? So I then pretty quickly figured out a couple of key things. I'm sure we'll get into it on the show about why this is such a better niche than, for instance, investing in apartments or seniors housing or shopping malls or hotel or what have you. And then I put together an unofficial advisory group, mostly from networking online, also just from reaching out to folks that I knew, put together an unofficial advisory board of about ten guys, all of whom were already in the business, and they were kind enough to give me a little bit of time, give me some insights. I would source deals, so I'm still working my day job, but over a period of about 18 months, I would again find deals, run them by this advisory board, and get their thoughts thumbs up, thumbs down, or like, hey, Jefferson, I don't know. The key issue is x. You haven't figured out X with this deal. Go figure out that issue, and then you're going to know if you should buy this part. So that advisory board of guys was enormously helpful. I did also go to seminars and bought books and maybe even back then there were tapes or CDs or something. So I spent a lot of time getting educated. And from the time I got really turned onto the space, which was late 2005, it took until early 2007, about a year and a half later, for me to buy my first deal. I was still working my day job and I wasn't looking full time. We find deals more quickly than that now, but that was the transition. I actually kept my day job for about a year while I still had my first park in its income. And I realized that last startup wasn't doing real well and my mobile home park seemed to be doing reasonably well and I was putting basically no time or money into it. So I switched and started again running and investing time and money in that first park. That led to a second park that led to doing a bit of consulting for some other high net worth families that had interests in manufactured housing. Then I started raising funds deal by deal and now on the fund level basis. So here I am now, just coming up on 16 years later, obviously not looking back, not going back into high tech. So a couple of things I want to touch on there and thanks for sharing the history. The advisory board jumped out to me today. We have the ability to really attain a fair level of sophistication from an education perspective via these online sources and masterminds and groups. The advisory board that you pulled together, was there an inducement for them to be on the board? Was this just contacts and folks that you had worked with through other areas? How did you pull that together? Some of the folks I found online, one of the folks I met, at least one or two of the folks I met at a conference, I was also, again, just putting it out there and I would just mention in a lot of conversation like, hey, I'm thinking of buying a mobile home park. And one guy at my church said, oh, that's great. My dad used to own a park and that was what sent our whole family to Europe every summer for a great vacation. Here's my dad's number calling. Believe me, out here in San Francisco, I also got a lot of weird looks. People here are used to paying 1000 $2,000 per foot for housing. Most mobile homes brand new are $40, $50 per square foot and used mobile homes might be $5 or $10 per foot. So mobile home parks are the opposite end of the bookshelf, the opposite end of the spectrum from San Francisco real estate to mobile home parks. And of course there really aren't any mobile home parks in San Francisco. A couple that are maybe miles away. But anyway, so I suffered the weird look. I suffered a lot of people that just sort of said, oh, that's great, good luck and we're of no use, but perfectly polite. And then again, I had a few of these hits where somebody said, that's interesting, and call my dad, or hey, my college buddy does that. Here's his number. I also had a couple of folks saying like, hey, I don't know anything about that. If it looks like a good investment. Here's my card and call me, I might have 100 grand for you, that kind of thing. So that was how I built the advisory board again, part art, part science. And it came together and it was very helpful. I'm still in touch with probably three or four of those guys anyway, so that's how it came together. There are some of these like core tenants and business that we all seem to come back to and I'm not sure if we're all quite aware of the level of intentionality in the moment, but surrounding yourself with the experts, it's just so important in everything that we do. So I think that it was a brilliant idea, a great way to kind of hack the system and trade off of others time and experience. And I understand what you're saying. We're in the New York market where they're accustomed to a certain type of housing and certain price points. And even when we started investing out in the sunbelt, we got some of those looks like they just didn't quite understand what an opportunity that exists out there. I want to make sure that the audience is clear. If you could take a minute or two and give us the difference. Manufactured home, mobile home, modular home. Sometimes they get lumped together and from what I understand, they're quite different. They are different. I would say the biggest difference is not specifically like, oh, these homes have this kind of carpet or window or roofing and the other ones are completely different. The differences principally are legally do they attach to the land or not? And also transportation, although that's similar. So what we call a modular home is one that is designed to click together at the site. It's designed to be placed on a permanent foundation, obviously something concrete or brick or cinder block. And you might have modular homes, might even go double decker and click together this way and or at least side by side. So modular homes become part of the real estate, which means banks are willing to finance those homes just as if they were a site built home. They're transported on trucks. The parts of the home, the big, like Lego bricks that you click together, so to speak, are transported on a truck, picked up with a crane, placed on that permanent foundation, clicked together and then you have your home, what we call colloquially a mobile home, but the sort of legal term from HUD Housing and Urban Development is manufactured home. But these are also colloquially called trailers. But all that's kind of the same, a trailer, a mobile home, a manufactured home are often single wides, some double wides, which means they click together sideways, but they're never really stacked on top. They have their own wheels and axles underneath and they are towed on the highway and wheeled and backed into a parking space. The pad at the mobile home park and they're then set up with piers, typically wooden or cinder block piers. And they are strapped down to the land with some big, thick, almost ribbon like steel straps. So they're not going to blow away in a tornado. We're really not typically any more than a site belt house would. And tornadoes do damage to everything, but they are strapped down to the ground, but they do not become an improvement. They're not on a permanent foundation. So the implication there is that a mobile home park owner can sell that house and the house alone to the resident, and you can remain a landowner and collect rent for the land. But you help somebody become a homeowner for a lot less money than buying either that modular house or a regular site built or call it stick built house that's built the traditional way. So those are the differences. But if you're inside a mobile home or a modular home, you might well have a difficult time telling if you were just placed inside one that you're in a mobile or a modular home. Obviously my end of the business are the mobile homes. Not modular, we always retain ownership of the land. But new modern mobile homes they built roughly since the turn of the century, since the year 2000, will have two x six walls, high quality insulation, double pane windows. They might come now often with nice black GE appliances. You can get them upgraded. We don't typically come up with homes at quite this high end of the market, but you can get mobile homes made with marble countertops in the kitchen. They're made with high quality flooring, be it carpet or vinyl plank. Basically they build mobile homes out of all the same stuff that they are building site built houses out of. They're just built on sort of a rigid metal floor, so to speak, under there with joists. And they can be transported, but the material and the workmanship is really excellent and really on par with traditional site built houses. So your model is centered around owning the land and selling off the units or are you keeping it entirely? Is that part of how you're recapitalizing? So our business model is to sell any mobile homes, say, that might come with the park. We will make those available. Those would typically be used mobile homes and we might make those available for folks to buy for as little as $2,000 down and maybe $200 a month in addition to lot rent, but maybe $200 payment for 24 to 36 months at the low end. And then they're a homeowner. We do also then a typical park for us might be say, roughly 100 pads and let's say roughly ten of those pads or 15 would be vacant. And then there might be, say, another ten homes that the previous owner has been renting and then call it 75 homes that tenants own. So those homes that come with the park will always encourage folks to buy them from us. Typically no rent increase. It's just like, hey, you've got to now maintain the home you're renting to own, but do that for some number of single digit years and we'll sign over the title to you. And then you don't pay anything more for the house. Still pay the lot rent, but you don't pay anything for the house. And then again, those roughly ten, maybe 15 vacant pads, we're buying brand new homes from the factory. Typically those are certainly much more expensive and typically a bit larger. But those homes, we just sold one in our Roswell, New Mexico park last week for right at about $70,000. We took 7000 down 10%. And that person is going to be paying a little less than $800 a month for ten years to buy that house. That's a lot less down in that market, say. I think the average house price in Roswell, for instance, is closer to $150,000. So most folks would need to come up with 20% down, that would be 30,000 down and have a better credit score. So again, we help folks, even with a brand new house we help them get into that's going to be about a 1200, some odd square foot, three bedroom, two bath house, good starter house for $70,000, $7,000 down, and no 30 year mortgage, no 30 year indebtedness for a traditional site built house. That person is going to be out of debt in 120 months. In ten years, they will be a homeowner. So that's how we infill our parks, is typically we're upgrading the park. We're bringing in almost always brand new houses and selling those to tenants on very reasonable terms. But long story short, we view this business more like being a parking lot business than the apartment business. We don't want to deal with renters and people that have a renters mentality. We want somebody putting down more money, having skin in the game. And really we filter wheat from chaff. We just want the wheat, as it were, coming into our park. People with an ownership mentality, people that want to own a home and they'll care for it. And naturally that means we have more stable tenants. And when we do get homes back, they're typically damaged less. These are people that care for their homes because they're buying their homes. So I'm curious, is it a function of your opportunity to disrupt traditional CapStack or is it that there is no institutional debt available for these types of acquisitions? Is a homeowner able to go get 20 or 25 or 30 year loan on these deals? There are some specialty finance companies with names like 21st Mortgage and Triad and Credit Human and others that specialize in helping people buy mobile homes. They don't typically go out to 30 years. The longest that I'm aware of is a 23 year amortization schedule. Anyway, there are a few specialty finance companies that help finance this. Mobile homes are chattel. They are real estate as we call it. Not real estate. The financing is a little different. It's a little more like getting a loan on a car. And mobile homes literally have a Vin number, just like a car. And Title trades through the DMV just like cars. In fact, I have a title right here for a mobile home for a tenant that's just bought a home from us and going to be mailing that off today to the happy new homeowner. But they'll process that through their local DMV. So titling process obviously again is different. These don't attach to the land. So this is fascinating to me. When you're structuring these deals, essentially these are contract for deed arrangements. So we do this quite a bit on acquire a big piece of land, do subdivision, do some entitlements and then we sell them off and we do contract for deed. Is there any higher level of protection or are you still able to if a tenant that is in the process, if they're in year two of their arrangement? Now, your individual business model as a human and working with people aside, just the legal side of it, is there that expedited pathway to an eviction where you're circumventing a traditional foreclosure process? Does that stand true here? Yes. When you're renting to own, title has not transferred. Title is still in our name and we are actually paying both the taxes on that house to the DMV and we're paying the insurance on that house. So the house is very much still ours, of course, subject to that rent to own agreement, if somebody makes, say on a brand new house, 120 payments roughly on time, then we sign over title, they're a homeowner, we're out of it. They still pay the lot rent, but they own it. Now if they default at any point along the way, and that unfortunately does happen occasionally, we have to evict folks. You'd be surprised how many folks just up and disappear in the middle of the night. There's no eviction, they just leave voluntarily, no notice. They probably don't pay that last month's rent, they just disappear. But again, we then discover, oh, we were renting this house all the way along. We didn't know that at the time. We were hoping we were renting to own but they just disappeared after 18 months or five years or what have you. So when that happens again, we still have the title. It's in our name. When we do unfortunately have to evict folks, that's rare. But it does happen when folks aren't paying from us. We can't allow somebody to steal the house from us then, yes, it's a straight up eviction, it's not a foreclosure. Title is in our name. We paid the taxes all the way along, we paid the insurance all the way along and we now need to remove a renter and take possession of that rental unit. So I want to give potential investors that may be listening a sense of security. So I understand you're in 15 states and each state probably has their own process for an eviction. Can you give me a general rule? Is it a 45 day, a 60 day, 90 day? What is the typical recapture where you're comfortable putting a new tenant in after someone is defaulted? So that varies by state and works. We then are covered with just the same eviction law that landlords that own apartment buildings are covered by, or landlords that own single family houses. And we're buying typically again in the greater Midwest where real estate prices tend to be more affordable than say, trying to buy out here in California where I live, or a sexy market like New York or Florida. So anyway, in the Midwest what's typical is you can serve your late notice after a five day grace period, so that would be on the 6th. You then typically have to wait about ten days before you can file an eviction. So that gets us depending on where the weekend falls, but roughly the 16th of the month. We then typically in the Midwest are in court within another week. So call that now we're at something like the 25th, around the 25th of the month, and then typically varies a bit state to state. The judges say usually they hear cases on like a Thursday, sometimes a Friday, and they say you've got 48 hours to get out. Of course then the 48 hours falls on the weekend. Nothing happens on the weekend, so it gives the tenants an extra day or two. But then the following Monday, which still is typically before the month is over, we call the sheriff, we get the writ, and they will enforce the actual physical eviction. I can almost count on one hand the number of times it's ever gone that far. Once you pull them into court, more than half of them miraculously come up with the money and pay all the court costs and the late fees and everything and they stay or they again just disappear in these last four or five days before the sheriff shows up. So it's extremely rare that it goes that far with the tenant, but again, a handful of times it has. So we get possession of the house back and then it's just a matter of probably taking a week or two to get a bid to rehab it another couple of weeks to get it rehabbed. Probably the house. We've missed a month's rent while it was occupied, we probably miss another month's rent while we're getting it rehabbed and then it will typically occupy go back out on a rent to own agreement pretty quickly once it's ready. Wow. So for those of us investing in some of the more traditional markets, what an absolute departure this is from what has become for us about four or five years ago, legislative risk just became the number one thing on our slot analysis. I own in New York State, so that's a very different place, trying to get somebody out in order to get them to just pay their rent. So I do own still two properties in New York State I have owned in Washington State, I have owned down in Florida. Florida is reasonably pro business, but I won't likely be buying any more in New York State. I've never owned here in California. I prefer the greater Midwest. So most of our parks are in places like the Dakota, Ohio, Nebraska, down into Texas. The one I mentioned over in New Mexico, we've got one in Idaho. These are all much more sane pro business states. So you don't have things like I've seen in New York State where, like during COVID it was just not possible to evict a tenant, no matter what. If they were doing drugs, they had weapons, if they were threatening other tenants, nothing mattered in New York, you simply could not evict the tenant, no matter how dangerous they were, for like a year and a half. It was really crazy. But we did not see that in places like Oklahoma and Texas and Idaho.

I would imagine that this has become one of the guiding factors and where you're choosing to do business, along with, I'm sure, a myriad of other factors. But for us, it has gotten to a point where we had made a commitment to divest from the overwhelming majority of the holdings we had in what was home for decades because it just best intended protections when implemented through governing bodies that have limited experience and expertise in the discipline has resulted in catastrophic business practices, including these scenarios. And my next question, which is a bit off track, but relevant for that reason new York decoupled from the Qos qualified Opportunity Zone businesses and Qualified Opportunity Zone Fund regulations. They just are not honoring the state benefit in a federal law. So we started to shift a lot of assets out to New Mexico in particular, where there's a number of QOZB to operate within, because you have the contract for deed and it can go ten years in opportunity zones if you hold it for ten years, the sale on the back end is tax free. Has Opportunity zones or Qzb's or Qozfs entered into the business model for you at all? Generally? No. There are certainly five other things far more important to me and to generating good returns, at least five other things far more important than whether it's in an opportunity zone. So we in no way focus on opportunity zones. That said, out of the now roughly 41 parks cumulatively that we bought, I think either two or three are in opportunity zones. So obviously that's icing on the cake. We'll have a little better tax treatment when the time comes to sell, but that's just not there's so many other ways in this business to move the needle and make money other than just saving on taxes. They're proactive things that we're doing, like bringing in brand new mobile homes to increase the occupancy, or we'll bill for water, and we'll find and fix water leaks and will significantly improve the utility, infrastructure and profitability for a park. Those just dwarf the yes, tax benefits of it being in an opportunity zone. So we're happy to have it, but we don't target opportunity zones. Okay, the last question before I move out of the tax treatment stuff are these eligible for depreciation? Yes. Great question. So again, when we purchase a park, we're buying the land, and there may be some mobile homes that come with it, but that's a separate transaction and that's chattel. And again, it's just like buying some extra cars or a pickup truck or a plow truck or a mower that comes with the park. So that's almost always incidental. It's a rounding error, typically in the value of the park. There was one park that was a notable exception, but for basically everything we do, we're buying the land. This is a common misconception among investors. I've had some investors say things like, hey, great business model, Jefferson, but too bad, you're just buying raw land with these mobile home parks and you get no depreciation. That's simply not true. If it were raw land, there'd be no roads for a tenant to drive on to get to their house. Their house would have no water, no sewer, no electric. There wouldn't be a sign out front, there wouldn't be fencing and perhaps a retaining wall and other landscaping around the park. So there is depreciation. I would say it's really right on par with apartments. We get, for instance, of every dollar that we put into the purchase price, about twenty five cents. Twenty five percent is the non depreciable land. The remaining seventy five cents of that dollar is our depreciable improvements. And of that typically somewhere around for us, on average, about sixty four cents or sixty four percent of the purchase price has been eligible for bonus depreciation. I know the tax law is beginning to change, but we've been able to write off immediately 64% of our purchase price because it's been improvements that are 20 years or less. So the roads are 20 years. We can depreciate all of that. The pipes in the ground are 27 and a half. Most of the other landscaping and signage and stuff. I think signage and fencing might be five year property, but we hire various outside cost segregation firms to come on site and measure the width and the depth of the pavement and the size of the clubhouse, if any, and what the roofing material is made of and the carpeting and how much useful life the carpeting has. Very detailed studies. So, long story short, we've averaged being able to write off immediately about 64% of our. Purchase price. The remaining 11% to get us up to that 75%. The remaining 11% is typically the pipes in the ground depreciated over 27 and a half years, but it is not raw land. The depreciation works out to be almost exactly on par with apartment buildings. Wow, that is outstanding. So let's get out of tax treatment for a bit and talk about the elements that are relevant for you when you're identifying a deal. Could you talk about the importance of community amenities? At what number do you start to hit efficiencies and scale within an individual park? Can we talk a little bit in the weeds there? Yeah. So a typical acquisition for us, again, is around 100 pads. Let's say the lot rents are 325. So that would give us upwards of 30,000 a month. Maybe there's a bit of vacancy, maybe it's ten vacant pads. Maybe we're clocking in at 26, 726, 7000 a month in rents. So that enables us to pay out a couple thousand, 1500 to 2000 a month to manage that park. That would not be a full time job, by the way. So this is a perfect job for a stay at home mom or somebody who's retired or somebody who's got some other part time job. Keep in mind, typically the tenants will own, say, 75 of those homes. So this is nothing like managing a hundred unit apartment complex where you have renters people with a renters mentality and you own all the improvements. Right? When you're in the apartment building, you, the landlord, own all those proverbial leaky toilets and leaky roofs. We don't those leaky toilets and leaky roofs are on the tenants. The tenants have an ownership mentality. The tenants are taking care of their homes to a far better degree, on average, than apartment renters. So, again, it's just not anywhere near the workload for a manager to manage a 100 space park where nearly everybody owns their home and may only have to pay $325 a month in rents. It's a lot easier for folks to come up with 325 versus, say, it was 100 unit apartment complex, and they might need to come up with $1,325 every month for their rent. So you're collecting a far lower amount of money from tenants that are far more responsible. And again, we're basically looking to keep the management costs towards 5% of rents. Could be a bit higher, but again, if we've got a high 20 something thousand dollars per month rent roll, we can do that. And from an inflation perspective, I'm trying to get a handle on how long or what does a lot rental agreement look like? So if I'm going to come in and buy this home for you, am I fixed for a week, a day, a month, a year, a decade? How often are you able to play with the numbers or adjust for CPI, whatever other factors you account for? So the overwhelming majority of our tenants came with the part. So whatever was their lease with the previous owner has long since expired and has gone month to month. So we're able to raise rents, you know, with 30 days notice. Some of the states are 60. Florida, I believe, is 90. But we typically do that not at Christmas time, not at the holidays, but basically first half of the year after the holidays. Call it later. January through the spring is typically when we put in the rent increases as needed. It's just once a year. And as we're selling new houses, those folks are, of course, signing a new lease with us. That would be and it varies. The state regulations, they're often month to month. Sometimes they are six months, and then they go month to month. So I don't think we've ever raised rents more than once a year, but theoretically we could be doing that every month, but that wouldn't be treating the residents right. So we tend to just bump rents once a year in the spring. So for some of the newer investors that may be listening, it's a wonderful example of why sitting in a cash position is an absolute loser in the climate that we're in now. You have someone like Jefferson that's running obviously a hell of an operation here. You're able to adjust your rents based on the market factors, inflation being one of the driving ones now, and how you're able to take that investment that you've made. And Jefferson can then leverage what's happening in real time to drive better returns. And that's how you end up with an average of ten to 15%. Average IRR for your LPs here is from let's go up to 30,000ft. When you're identifying the states or the cities or towns to invest in, what are some of the metrics that you're looking at? Are they the traditional ones that an apartment investor is looking in? Job growth and new rents and all of those things? What are you guys looking at? What's important to us is to buy typically in a metro area of roughly 50,000 people, and up generally, the larger the better, but let's just say 50,000, where the average house price, the average site built house is $100,000 or more, and where the average household income is $40,000 or more. So we are weeding out with that criteria. We are weeding out places like Detroit where the average house price, at least in metro Detroit, I believe, is $60,000. Again, that's not going to be a house in great shape, but it is still a house for $60,000. In most of our markets, we can't get a house from the factory with the way lumber prices have run up with COVID we can't get a house in our part delivered and set up for less than about $65,000. We sell our houses at cost. We don't make money on them, but it's difficult to compete at a $60,000 price point with site built houses, even though they'd be rougher condition that come with land, folks would typically go and buy that house that comes with land if they can do it at 60 grand. That said, some of the suburbs like Pontiac are quite healthy. We'd love to own in Pontiac. We'd love to own in Gross Point, Michigan. Another suburb of Detroit. So you need to look specifically kind of at the towns, so to speak. But anyway, so we're also weeding out really small towns of 5000 people. Might not even have a stop light. Those really small towns tend to not have great housing demand and tend to not have people with good jobs. So again, anything 50,000 and up and we bought in places like the Oklahoma City Metro where I got my start. And that's something like 2 million people. 50,000 and up is great. 100,000 house price or higher and 40,000 income or higher. That's what we look for. We certainly run test ads and do other things. It's not that we just make a purchase decision just based on those numbers, but that's a good and quick way to weed something out when somebody brings us a deal. And it's in Mud Pit, Alabama, a town of 3100 people where the average house price is 60 grand and average income is 30 grand. That's not going to work for us. That wouldn't work, frankly, for most kinds of real estate. It doesn't work for mobile home parks. So we got to have that reasonable size and economic activity. I would think, and tell me if I'm being too optimistic here, but considering, depending on what study you read there's anywhere from four and a half to a 6 million unit housing shortage in the country. Yeah, in good markets and bad markets, this level of housing, I would think is in high demand. You're not renting, you're targeting people who want to rent to own. And folks do not look past the difference. When someone is pushing a stroller and they're a renter and they see the coffee cup on the ground, they're probably going to walk past it. Now, this is a real simple example, but it matters. And when they're renting to own or they own, those are the folks that are picking the garbage up and they're putting it in the trash can and that trickles down across the whole portfolio. Is this a fairly recession proof model? Yes. I went back and looked at, for instance, the three publicly traded REITs. There are three companies that just specialize in mobile home parks. The largest is equity lifestyle run by Sam Zell, the billionaire out of Chicago. There's also Sun Communities and UMH, which I believe is for United Mobile Homes. There are three publicly traded REITs. I went back and looked at what happened to both their stock price and their actual cash dividends throughout the eight nine housing crisis. That housing crisis, that housing recession was obviously not like the.com boom and bust, which I also went through, but that was kind of an unrelated part of the economy. Unrelated, not directly related to housing. So in 809, we had an implosion in housing, in jobs, and it rippled through the economy. What I saw, and this is in our corporate presentation, was that those publicly traded REITs had their best ever quarters of cash flow in that recession. The business did better than ever before. I would say not because of the recession. It's just that this is demand for affordable housing is very resilient. And so they did better than ever because they pretty much always do better every year. Over year growth did slow a bit when the recession ended, they really did better than ever. But those big publicly traded REITs had their best financial performance to date during the Eight Nine housing recession. Now shareholders ran for the hills. The stock price declined 45%. So there was a buy signal. You've got an industry that's having its best ever cash flow, and shareholders are willing to part with their shares at about half price. So that's what happened to stock price took a dip, but not the actual underlying financial performance. I had just bought my first part in 2007, about 18 months prior to the housing recession hitting. Basically call it summertime or something of eight, and I saw, of course, I don't have a stock price, but I do have cash flow. From my first investment out in Oklahoma City, I saw basically the same thing. It was just a small 66 space park. We bumped rents a bit. We stayed full. Our cash flow improved right through the recession. So it was interesting to see that back then, that was that first year I was still working my day job in high tech. But it was interesting to see that me with my dinky little 66 Path mobile home park in Oklahoma City, I had the same experience as the big boys that own like tens and even hundreds of thousands of pads. We all just basically sailed right through the housing recession of 809 just fine. Frankly, we've had somewhat more problems in certain states like New York with judges that do not enforce. They over enforce the law. They make up their own laws. They ban evictions. So that's been a bigger concern than the broader economy. But this is a very recession resistant business. It's still a pretty judge resistant business. A lot of those Eviction bans are now ending in New York State, and we're returning to some level of normalcy. But yeah, this is a very durable antifragile business. I got to tell you. It's like you've found the model here that takes some of the best elements of different aspects right across the typology spectrum of real estate. And it's almost like they're rolled into one here in this asset class. I'm curious, where are you sourcing your deals? Is it broker dependent, relationship dependent, so we have a number of irons in the fire. We do absolutely deal with brokers. We just closed a deal two weeks ago that came from a broker. That was a deal that the broker did not stop. The broker brought that deal directly to us. We were a logical buyer. We already owned parks in that market. The broker just said, hey, do you want this? So we were able to enter into a direct conversation with the seller, negotiate price down a bit, negotiate the seller carry, which is what they wanted. It was a win win. So we do deal with brokers. Absolutely. That said, we have sourced almost all of our last 17 deals, I think off market. So we both have somebody on staff who just cold calls for us to owners. We also deal with bird doggers. There are other people out there that just full or part time are just calling park owners and sending out mailers and stuff, all the obvious stuff. Sometimes I drive through parks and I'll just try and find an owner myself and put my hand out, shake their hand and see if they're at all interested in selling. That very first park I bought on the south side of Oklahoma City, the 66 pad park I found on ebay. So we will buy from anywhere. There's no single panacea, there's no one right way to do it. You really have to have a lot of irons in the fire. So across 15 states, what role has technology played in developing and refining the model? Great question and the answer is huge. I wouldn't be where I was if this was the days of telephones and faxes. So yeah, I obviously live out here in San Francisco and I own parks as far away right now as Ohio. So how do I do that? So, a couple of things as regards technology, all of our properties are managed on a rent collection software program called Rent Manager and there are many others that are also good. I don't mean to be an ad for rent manager, but we're obviously happy with what they do. So what that means is that any of us can just log on and see, oh, for the property in Ohio, it's now the 6th of the month, exactly where our collections who's not paid, and we can reach out to the manager. Really? I have some regional managers that manage the onsite managers, but they'll tag team and again say like, hey, have you given a late notice to this person? To that person? So we can monitor all the rent and Rent Manager, for instance, enables us to collect the rent. Tenants can set up their own account, put in their bank account number and pay their rent electronically. They can also use a credit card. They can also use a money order. They can even use cash. Now, how do they pay? With cash? With the computer? Well, they get a number, a cash pay number. They go to Walmart, they give their tenant number, that cash pay number to Walmart, and Walmart effectively charge, then has their rent as a product, so to speak, on their screen. And Walmart will say, oh, you want to buy your rent? Okay, it's $325, and somebody can pay 325 in cash. And Walmart keeps, I think, $2 of it and remits to us electronically. What would that be? $323. So using technology enables our tenants to pay any way they want, even in cash, not at our office, but over at Walmart. But tenants can pay. And then again, it both updates our rent role, so we see who's paid and who's not. And again, it actually not only does the accounting, it deposits the money into our bank account. So just to call it out, we don't allow community managers to be collecting a bunch of cash and a bunch of checks and them having to write it down on a notebook or put it into an Excel spreadsheet, and then they got to get all the money safely to the bank. It's like, time out. No. We use technology to get all the rents in and do the accounting. We also then pay our bills electronically. That'll just pop up. We've got rules set up. So if it's under $500, the regional manager can approve it. If it's up to $5,000, our VP of Ops can approve it. If it's over 5000, it comes to me for approval. And then again, we pay our vendors, usually electronically. ACH. Sometimes it goes by check. Some vendors are still in the Stone Age and they want to receive a check, but we'll pay vendors promptly that way. We, of course, also market the homes online. Facebook is the 800 pound gorilla. There's also a specialty website called MHVillage. As in Mobile home village. It's just for folks looking to buy mobile homes in mobile home parks. It's a very specialized website. Probably you've never heard of it. I'm sure you've heard of Facebook, but we do online marketing as well. So that's an overview of tech. There's some other technology that we use, but having those kinds of standardized rent collections, accounting bill pay that work across all our properties, again, enable us to manage at scale and do so remotely. Just to be clear, I'm the only one here in San Francisco. We're all work from home here, and we've all been worked from home since long before COVID This was before it was cool. So again, we're all remote. Our employees are spread across all those different states, and we're all able to get at the data that we need to do our jobs well. Or at least we then know who's not doing their job well, because we're watching the numbers pretty much in real time and seeing who's performing and who's not. I have to say, Jefferson, I'm blown away. You've put together one heck of an operation. Here. What is the best way for folks to learn about potential investment opportunities? I know you have some syndications. You've even done crowdfunding. Where can we point folks to to learn more about the operation? Sure. So our website is simply Park Avenuepartners.com. And they'll see at the top center of the website a button that says join our mailing list. So just click there, give me your name and an email. I don't sell my mailing list. Honestly, I don't do as good of a job of mailing as I should. You probably won't even hear from me, but every other month but join our mailing list at ParkAvenuepartners.com. Folks that want to learn more about the business or may consider buying their own park can go to MobileHomeParkinvestors.com. That website will link them directly into my group on LinkedIn. I run the biggest group on LinkedIn. Simply called Mobile Home Park Investors. We've got about 6500 people in that group. They can ask questions, they can read through postings, they can get a sense of the business there. MobileHomeParkinvestors.com will also link them to our podcast. I started the industry's first mobile home park podcast five years ago or so. It's simply called mobile home park investors. But that's how folks can learn more about the business. And again, ParkAvenuepartners.com to be on the list and be notified about the deals that we're doing. And probably later this year, we're here in early 2023, but probably by late this year, we'll be launching our next fund. And that would be a chance for folks to co own parks with us. We've actually trademarked that phrase, co own mobile home parks. We take no fees, we just split profits. We're very investor friendly and investor aligned. Jefferson, I can't thank you enough for taking the time. You're clearly very busy and have a lot happening here. This was absolutely tremendous value. Thank you very much, james, it was great to be with you today. Thanks as always, everyone. All the links and information will be below. And please everyone, stay safe. Jefferson, thanks so much.