Real Estate Investing School Podcast

Episode 194: REAL DEAL – Tackling an Out of State Mobile Home Park

Host: Joe Jensen
Date: September 19, 2024

Episode Overview

In this solo “Real Deal” episode, Joe Jensen breaks down the acquisition, funding, and management of his Kentucky-based mobile home park – “Freedom Park Number One.” He offers a candid look at buying and operating an out-of-state, small-town asset, including the unique challenges and unexpected lessons learned. The episode serves as a practical case study for investors interested in mobile home parks, working with wholesalers, remote deals, and creative problem-solving.

Key Discussion Points & Insights

Vision-Driven Investing

• Joe shares his method of goal-setting and visualizing real estate ambitions through a vision board.
  • Quote: “I really don’t think it would have happened if I hadn’t had it sitting there on my vision board. Every day in my office, I look at it.” (01:26)
• He underscores the importance of putting intentions into the universe and staying open to opportunities.
  • This mobile home park was specifically on his "bucket list" for the year.

Sourcing the Deal

• The deal came through a random wholesaler in a Facebook group, underscoring the importance of joining lists and staying active.
  • Quote: “This wasn’t like a wholesaler that I had an in with, that I was his buddy... It was just straight up random shot.” (04:22)
• After a similar opportunity fell through, Joe decided to “pull the trigger” when a smaller, more affordable park became available.

Deal Details (08:30–10:45)

• Purchase Price: $127,500 for an 8-lot park (7 occupied homes)
• Down Payment: 25% (~$32,000)
• Interest Rate: 4.5% on a 15-year, 5/5 ARM (adjusts every 5 years)
• Asset required “bank financing” rather than the cash most wholesalers expect.

Funding Hurdles & Lending Lessons

• Multiple lenders, both big and small, refused to fund a mobile home park of this size/condition.
  • Quote: “I was getting nowhere. I mean, I called lender after lender... It was just, no, no, no, we’re not going to lend on that.” (08:00)
• Emphasizes persistence: “If one lender says no, just keep, go ask the next one. Go ask the next one.” (15:00)
• Ultimately found success with a small, local bank that knew the area and property type.
• Remote closing: Utilized a Zoom notary, never visiting Kentucky in person and handling the transaction entirely online. (16:35)

Initial Operations & Surprises

• Management: Inherited tenants—many elderly and cash-paying.
• Due Diligence: Discovered only 4 units officially belonged to the park; others were on a separate lot.
• Joe worked with local authorities to consolidate and officially register all units, which increased long-term value and sellability.

Value Add & Rehab (22:20–29:10)

• Improvements: $12,000 invested (including $8,000 unexpected repair to water/sewer lines).
• Enhanced lot: Electrified and prepared the vacant lot to install an 8th home, boosting income potential.
• Prepped property to be “turnkey” and attractive for resale or refinance to mitigate ARM risks.

Numbers Breakdown (29:15–33:00)

• Mortgage payment: ~$750/month
• Taxes & insurance: $67 + $65/month
• Maintenance, capex reserve, permit, management, vacancy: Total expenses ~$1,500/month
• Gross rents: $2,900/month if fully occupied
• Net cash flow: $1,400/month
• Cash-on-cash return: 38.31% (after repairs; could have been ~46% without the big sewer expense)
  • Still achieved 20% returns even in worst months with vacancies or nonpayment.

Notable Operations Challenges

• Rent Collection: Elderly tenants unwilling/unable to use digital payments.
  • Quote: “These are like old people. Some of these people are like 70, 80 years old, and they just can’t... They just can’t figure out technology.” (36:05)
• Local Solution: Partnered with Roger at the general store who collects rent, issues receipts, and deposits funds for a fee—fulfilling unique small town needs.
• Handling vacancy, tenant death, and gradual rent increases with sensitivity.

Key Takeaways & Lessons

• Persistence: Overcoming lending roadblocks by asking “the next lender.”
• Creativity: Adapting to unconventional tenant needs and operational quirks.
• Vision & Action: “Have a vision board, put things on it, and you’ll get them done... My theme of the year has been ‘action leads to opportunity.’” (50:26)
• Multiple Exit Strategies: Preparing for future rate changes (ARM) by adding value and ensuring the asset could be easily sold or refinanced.
• Embrace Imperfection: “There’s power in just getting things done that you say you want to do. Even if it’s not perfect... There’s a solution to make it work.” (46:20)

Memorable Quotes (with Timestamps)

• On Vision and Action:
  “I really don’t think it would have happened if I hadn’t had it sitting there on my vision board. Every day in my office, I look at it.” (01:26)
• On Lending Challenges:
  “If one lender says no, just keep, go ask the next one. Go ask the next one.” (15:00)
• On Remote Closing:
  “We did a remote close with a remote notary over Zoom... I never even had to go out to Kentucky.” (16:40)
• On Adaptability:
  “Anything is figureoutable. There’s a solution to make it work. Sometimes if we want everything to be perfect beforehand, we just won’t even pull the trigger.” (46:14)
• On Small-Town Operations:
  “After talking to some of the tenants, they didn’t know [about self-maintaining the units]... They were like, No, you got to maintain this.” (26:20) “I end up actually asking the previous owner... Is there anybody that can help me? ... ‘Check with Roger down at the general store.’” (38:30)
• On Returns:
  “Still a huge win, right? Still cash flowing $1,400. A great story.” (32:45)
• On Success Themes:
  “My theme of the year has been action leads to opportunity. And so because I was taking action, I was able to get this opportunity and turn it into this.” (51:10)

Important Segments & Timestamps

• Vision Board & Goal Setting: 01:00–03:00
• Finding the Deal (Wholesaler, Facebook groups): 03:15–05:00
• Funding and Lending Stories: 08:00–16:45
• Closing Process (Remote Notary/Zoom): 16:30–18:00
• Transition, Onboarding & Discovery: 18:40–22:15
• Adding Value & Handling Issues: 22:20–29:10
• Financial Breakdown: 29:15–33:00
• Rent Collection Adventures: 35:15–41:00
• Lessons, Mindset, and Closing Thoughts: 45:00–end

Summary

Joe Jensen’s “Freedom Park Number One” case study provides a step-by-step look into sourcing, funding, and managing a small mobile home park across state lines. Through transparency—the real headaches (tenant tech, rural logistics), the numbers (nearly 40% cash-on-cash returns), and the wins—Joe illustrates the value in persistence, vision-driven action, and creative problem-solving. His journey is both a how-to and a motivational push for investors to seek opportunity, overcome obstacles, and trust that “anything is figureoutable.”