The School Of Cash Flow

Mobile home parks attract many investors because of their beautiful aesthetic, minimal maintenance costs, and low competition. When Jefferson Lilly decided to give this type of property a try, he bought his first-ever deal off eBay, of all places. Sitting down with Dale Corpus, the Founding Partner of Park Avenue Partners and host of the Mobile Home Park Investors Podcast shares how he secured this transaction successfully. Jefferson breaks down the strategies that made him one of America’s largest mobile home park owner-operators. He explains how he encourages site managers to utilize technology when working remotely, why average household income is the most important factor, and why they are always looking for a Super Walmart within five miles of a property.

—

Watch the episode here

Listen to the podcast here

The Secrets Of Mastering Mobile Home Parks With Jefferson Lilly

First off, Happy New Year. It is Friday, January 7th, 2022. We did a road trip to Southern California to get my kids off their iPads and video games. I love the relationships and the people I get to meet because I happen to be in real estate investing and real estate sales. One of the cool things about this vacation is we got to hang out with some of my real estate investing friends from one of the masterminds I’m in called GoBundance.

One of my buddies, I got to hang out in his ranch over in Ohio. We stayed at a studio. He and his family were so hospitable. They even prepared a home-cooked meal of seafood pie for us. It was amazing. The day after that, I got to even see his Airbnb beach house properties in Ventura. He taught me a few things about his real estate niche about the renovations he was doing and what he looks for when he buys an Airbnb.

It’s funny. I was laughing with my kids because I told them our vacations would revolve around meeting my real estate friends and hanging out with their families. My kids had a blast with them but I was kidding about that. I was trying to show them the value of networking, being inquisitive and learning about how money works at an early age because they’re important life skills. I’m teaching them to be interested in other people and themselves.

I’m still in Ventura and always constantly networking both in-person and online, which leads me to my show guest. I’m excited about this episode because my guest is Jefferson Lilly. He was introduced to me by my friend, Todd Sulzinger, who was a past guest of mine. Jefferson is an expert in the mobile home space. He is also an educator in this space as well. He is the founder of Park Avenue Partners, a private equity real estate fund that acquires and operates mobile home parks nationwide.

His investment funds are returning 10% to 15% IRR to his limited partners. Both personally and through his partnerships, Jefferson has acquired 31 mobile home parks in 15 states since 2007, totaling over $71 million in value. He is one of America’s largest mobile home park owner-operators. He started the industry’s first podcast and largest group on LinkedIn dedicated to investing in mobile home parks.

Prior to beginning to manage investors’ money in 2014, he spent seven years investing his capital in mobile home parks and consulting to high net worth families with interests in the manufactured housing industries. He has been featured in The New York Times, Bloomberg magazine and Real Money television. He holds a BA from the University of Pennsylvania and an MBA from the Wharton School of Business. That was a mouthful. Let’s dive right into this.

—

Jefferson, what a bio you have. How are you?

I’m well, Dale. Happy New Year. I’ve got 3 of my 5 New Year’s resolutions done. They are, unfortunately, the ones from 2017. I haven’t made any new ones to the list in the last years but there we go.

For our readers that don’t know you yet, where are you based out of geographically?

In the Bay Area, our office is in the Embarcadero Center in San Francisco. We do not own any real estate in California due to pricing and regulatory reasons mostly but we’re officially here in San Francisco. I bought in about fifteen other states, almost entirely in the Midwest.

Tell me a little bit more about yourself. Maybe you could go with this wherever you want. How did you get into mobile home park investing? How did that all happen? I know you didn’t start there.

When I woke up from the concussion, it seemed like a good idea to buy a mobile home park. I’m here in the Bay Area because I came out years ago to work in high-tech after business school. I went through the dot-com boom and bust and semi resurgence. The stock market and my stock options gyrate wildly. I thought initially like, “I should have some passive side income. I’m going to buy an apartment building.” I’m looking on websites like LoopNet, a commercial MLS website. I knew I wasn’t going to find good cashflow in the Bay Area, so I was already looking in NLP in Lubbock, Texas, Iowa and other such places.

Looking under multifamily, I would see 99 apartment buildings at an 8 cap rate. This was about 2005 pricing. There’d be 1 mobile home park at a 10 or 12 cap rate. I probably didn’t quite know at the time that would often include some of the income from the mobile homes. I’d see these things and I would say like, “That’s crazy. I’m not buying a mobile home park.” I’ll do the next search in Omaha, Nebraska or Green Bay, Wisconsin. These 1 in 100 mobile home parks or multifamily properties kept popping up with better cashflow and higher cap rate.

Finally, I thought, “They’re multifamily. Why don’t I look into this?” I started doing some research, attending some seminars and reading every book that I could get my hands on. It clicked pretty quickly why this, in my view, is such a compelling niche so much better than apartments, self-storage, hotel, office or any other niche, principally that it’s illegal to build mobile home parks anymore. Our friends from the government have either outlawed it or made it not economic for various zoning reasons.

The way we invest, most of our tenants own their own homes. The implication is that, unlike apartments, we don’t have to maintain those proverbial leaky toilets and roofs. We’ve got a lot of the benefits of other niches of real estate. We can buy with leverage if you run it right. With leverage, you’re likely to do well over time but we also have very limited competition, certainly not any new competition. We have relatively low repair and maintenance costs.

That got me turned on to it. I started looking around. It took a little over a year but I bought my first mobile home park off eBay of all places. That got me started in the business years ago that way. I still had my day job working in high-tech for about a year and then gave up my regular day job to invest in real estate full-time after about a year.

I wouldn’t have thought to look at eBay for anything real estate. I’m not a big eBay user. I’m assuming that you were at the time and maybe you still are. Are you still looking for properties on eBay?

There have never been too many of these properties then. I was looking at more normal websites as well. It’s an interesting point that I did find that first one on eBay.

What year was it at the time when you bought that very first mobile home park?

It’s March 2nd, 2007. I’d gotten it under contract late the year before and then it was a bit lazy closing process.

Knowing that it was right before the crash happened, which happened later on, tell me more about that. You’re still here and we’re talking. You started investing at that time. Was it a good or bad time in that space? I want to explore that.

I was worried about that. Roughly a year later, going into ‘08, the wheels started coming off the residential market with all the mortgage meltdowns. I was certainly concerned. I was afraid my manager was going to call some day and say, “30%, 40% of the tenants didn’t pay rent.” Unfortunately, that did not happen. First, this is a fairly stable business. There is always a demand for affordable housing.

Mobile Home Parks: Unlike apartments, mobile home parks don’t have to maintain leaky toilets and roofs. It also has very limited and certainly not any new competition.

What happened, generally, was that in certain markets, Phoenix, Vegas, LA and Miami were hotspots for that but certain markets got overheated but those tended to be folks at higher income levels. I heard somewhere, maybe it’s hyperbole, that something 80% of all of the mortgage failures were in about 20 ZIP codes. It was quite concentrated. I bought my first park on the Southside of Oklahoma City. There was no housing problem in Oklahoma. Housing prices continued to move up.

One of the years might’ve only been about a 1% increase, so less than usual. Oklahoma and certainly a lot of the Midwest was relatively unscathed by the housing collapse of ’08 and ‘09. We kept running our property. We cleaned it up and kept it clean. There was a lot of work to be done, from hauling out a couple of abandoned trailers to hauling out tires, refrigerators, old decks, getting trees trimmed and getting some trees cut down. We made a continuous improvement to the park. We made it a better place to live.

The occupancy improved. We bumped rents. They had been well below market, $110 a month at the time I bought it. We bumped it about $45 up to somewhere around $155 by about 2010, which is still probably below market. We were running the park well. Occupancy was improving and our tenants were relatively stable. They were homeowners. They may not live in a house as nice as you and I do but these are folks that by and large have come up and out of apartment buildings. They own that house. They show pride in ownership.

They’re able to pay a lot less than if they were still in an apartment, which means when times get tough, it’s a lot easier to pay $155 lot rent than if they were still in that market at that time, it would have been probably an $800 or $900 apartment. We’re the affordable housing solution and we deal with better quality tenants that by and large own their homes. We got through that pretty well. I went back and looked at how the public companies behave and how they performed their three publicly traded REITs that specialize in manufactured housing.

I’ve got this up on our Park Avenue website but those large publicly-traded REITs did better in the ’08, ‘09 recession than they did before. They have constantly been growing. Their growth rate did slow but they still earned more money on average per quarter, more funds from operation FFO during the recession than before. Once the recession ended, their burnings kicked up more rapidly. It was interesting that with my first small little 66 space park, I had the same experience as these billion-dollar publicly-traded REITs. Growth might’ve slowed a bit but we still grew and did better during the recession than before.

Do you still own that first mobile home park?

I still own it.

There are two different types of mobile home parks. There are ones that are mainly tenant-owned and there are ones that are park-owned. Do you have a mixture of both of them? Are there even many park-owned homes still?

There are. It does vary by market. We tend to see more park-owned homes in the Southeast. The Southeast seems to be poor or part of the country than New England or the West Coast. It is much more common, especially in small 5,000 and 15,000 people, small towns in the Southeast to see parks where, unfortunately, the tenant base has not earned enough money to own their mobile homes. The landlord, the park owner, does still own a much larger percentage of those homes than you would find in a place like Denver, Pocatello or Spokane.

There are certain markets. There are a few operators that like the additional income from renting those mobile homes. I refer to those as horizontal apartment buildings. I would rather buy a home over 5 to 10 years and not have the maintenance on the home. After 5 to 10 years, the income from the home goes away. The way I run my business, I’d rather have less maintenance and frankly, a higher quality tenant base. Even if you take a renter that’s been mediocre and you give that person a shot at owning their home, they tend to straighten up, fly right, take care of the house and pay their rent more on time.

I’d rather build communities of owners rather than renters. We placed another order for nineteen homes but as we bring in brand new homes to upgrade our community, only offer those on a rent-to-own basis or sometimes with a financing partner, we’ll structure a proper mortgage on those. Either way, we’re looking for owners. We don’t rent those homes. We’re a for-profit entity but our social mission is to expand the supply of affordable housing.

We do that specifically for homeowners. We help people buy a 3-bedroom, 2-bath, 1,200 square foot house, typically for around $1,000 a month and maybe anywhere between $3,000 and $6,000 down. That’s dramatically more affordable than average homes and apartments in the Midwest, where you’d probably need $30,000 down to buy even a modest $150,000 house where we’re helping people homes for far less money and they will become a homeowner.

What’s interesting about your space is that somebody lives in a mobile home park, has cheaper rent than what they could get for an apartment, own the actual local home and build the equity. That’s excellent. You talked about rent-to-own. I’ve never seen what that entails in your space. How is that structured? Do they rent for a certain period and some of the rent goes toward the down payment or something?

We’ll still typically look for a down payment and then their rents for the home, not the lot rent but their home rent payment, per-purchase the house. If they’re paying $350 in the lot rent and $500 for the house, that’s $850 a month all in. The $500 a month will go towards purchasing the house. That’s $6,000 a year.

Brand new houses would be about $60,000. Roughly ten years later, if they make all those payments, affordable older houses could go for $6,000 or $12,000. Occasionally folks will be able to buy a house. We’d probably put those out for $300 or $400 a month but folks would probably own even a more modest house but still own it in maybe 2 or 4 years. Once they make those rental payments, we sign over the title and they become a homeowner.

You’ve seen a lot of different types of mobile home parks throughout the United States. Those that are not familiar with mobile home parks probably have a negative connotation to how not glamorous they are. What is it like in this space? Are there nice mobile home parks? The second question is, what parks do you go for, from the ones that might be a lower end to ones that might even look a lot nicer?

There are some very nice parks, those would be in more coastal areas like California and Florida. They would generally be retirement communities, 55 and up. That is more the lifestyle segment of the market. That might be 5% of all the mobile home parks that are very nice that would be coastal or at least someplace warm and nice. They would have a pool, clubhouse or tennis courts. Some of them may be on a golf course but that’s a relatively small percentage of the whole market. As you might imagine, parks that are that nice tend to be quite expensive.

They also tend to be quite full. There is no way for us to expand the supply of affordable housing if the property is already full. What we tend to specialize in are more affordably priced parks, both affordable for our tenants and us. Those parks tend to be generally in the Midwest. I have one owned in Florida. It was on the beach. It was in Lakeland, Florida about an hour away from Tampa inland. I have one owned in Spokane, Washington, not coastal Washington but a couple of hours inland from the coast.

Occasionally, I will buy parks if I can get them at good prices that are more, at least in coastal states. Our real bread and butter are all-ages parks that serve families. Sioux City, Iowa is the second-largest mobile home park owner. We’ve also got a big presence in Roswell, New Mexico and Brownsville, Texas. We’ve got a smaller park in the Omaha, Nebraska Metro and several others. We’re able to find parks at better pricing for us and, therefore, better pricing for the tenants in the Midwest.

We tend, therefore to serve families, especially families with younger kids that are starting. That’s more our bread and butter target rather than going after frankly more well-to-do retirees that want to be in no coastal Florida and have the big, fancy swimming pool. We tend to be a little more basic. That’s the way we play this game.

Something that jumps out at me as I find it very interesting is that many of these humble mobile home parks are scattered throughout different cities. How did you find team self-managers? How are you managing it since you’re in the Bay Area?

All of our properties have an onsite manager. Many of those are managers that do live onsite on the property. Otherwise, the parks will have a manager that lives in that town. All of the properties have somebody local who’s answering the phone and scheduling lawnmowing, tree trimming and finding out that there is a water break and then calling the plumber and scheduling that person. We’ve got onsite people for all our properties. We have a couple of asset managers that, in turn, oversee those community managers. It’s those asset managers that then report to me.

Mobile Home Parks: 5% of mobile parks widely considered nice would be coastal ones or those located in warm regions. However, they are typically expensive or already full.

We’ve got three layers of people in our company. We think a pretty good use of technology. For instance, our company is standardized on a rent accounting software platform called Rent Manager. There are many others but that’s the one we happen to use. That means all of our managers and on up to me, we can all see things like occupancy and delinquency in real-time. Tenants pay their rent online or we give them a special cash pay card if they want to pay cash and they can go into a Walmart or any other check cashing and other grocery store type locations.

We don’t allow our managers to accept payments, cash or otherwise. We get our tenants using technology themselves to either pay online or take that card, go into a Walmart and pay their rent there. That’s standardized across all of our properties. That’s one example of what we do to control properties remotely. Our asset managers are onsite at least twice a year, generally more like once a quarter, ensuring the curb appeal is being enforced. The trees are trimmed and the lawns are mowed of our properties in the North.

We do have a property up in Fairbanks, Alaska. I got to shovel some snowplows and snow there. You got to make sure that the parts are in relatively good condition. Our asset managers visit more frequently. I try to get out to the properties about once a year. We also make use of video. Our managers all have to have their cell phones and be able to be tech-savvy enough that they can take that cell phone and walk or drive through the park. Take a video and upload it to us.

That’s another way to have us in the park as needed, even if one of us isn’t physically going there. We can have the manager take the video and show us. Are they getting the park cleaned up? Are the non-running cars removed? Are the tenants keeping toys and lawnmowers and other junk off their front yard? The picture is worth 1,000 words. You can imagine how many words a video is worth. We make use of technology to manage remotely and we do still get onsite pretty frequently to inspect with our own eyes.

I’m going to go back to that first deal again that you did, the first mobile home park. I’m assuming that since it was your first deal, it wasn’t 100% smooth. What do you remember from that first deal? Any problems that came up? How did you resolve it? What did you learn from it?

This will be a piece of advice for your readers that might want to own a park. For your first park, do not buy a park on private utilities. This park that I bought was well and a sewage lagoon. Despite having it in writing from a local department of environmental quality in Oklahoma that it had been built to code, it was not. It costs me about $500,000 to fix that sewage lagoon that the government had told me was built to code. I only paid about $450,000 for the property. I had to pay every bit as much and then some to fix it. That was several years later.

Fortunately, I had bumped rents. I had bought and brought in some homes, occupancy was higher and the property appraised for more than twice what I paid for it. That lesson learned for me is that you cannot trust the government, even when they’re putting things in writing. Things like sewage, lagoons and wells are probably to give a risk for a first-time buyer. If you want to buy a park, buy a park on all city utilities, city water and city sewer. That was the biggest lesson that I had from that.

The rest of the business went substantially as planned. I had done diligence. I knew the Oklahoma City Metro was generally pretty good and stable. We had no problems filling homes, improving the occupancy and bumping rents. Pretty much, everything else went according to plan but that was a pretty big whoopsie that the government showed up one day. Whatever they had put in writing and the sewage lagoon was not built to code.

Minimize your risk-buy. Pay a little more if you have to. Buy a park on all city utilities. Don’t worry if it won’t double in value in a couple of years. I pushed mine and then I was able to do that because I bought it right. If I hadn’t bought that park right, I would have been in trouble but at least I bought it right, improved it and worked through that $500,000 whoopsie from the government. Do your diligence. Stay away from private utilities. Make sure you’re buying in strong metros and then you’ll almost certainly come out smelling like a rose if you stay away from private utilities and buy in a strong market. I did that latter part well.

Along the same lines as we’re talking about it is almost like a checklist of things that you should and shouldn’t do. What are metrics do you focus on to determine if something’s going to be a good investment or not when you’re looking at opportunities? Do you look for population growth? I’m trying to see what you look at.

We have several metrics. One of the most important is that the average household income should be $40,000 or more. Another is that we look for the average house price to be $100,000 or more. If you don’t have $40,000 household income and/or $100,000 house prices, those are markets that are too poor to do well at most any real estate. That weeds out places like Detroit, not the suburbs, Pontiac, Grosse Pointe or lots of the other suburbs of Detroit but Detroit proper.

That would be a tough place to buy. You’re weeding out a lot of these small towns in the Southeast. It’s too hard to compete in a market. We don’t add value in a market where for instance, one of our brand new homes is $60,000 if the average site-built house with land is $60,000 or $80,000. We’re not providing enough value. If the average house price is $100,000 and some of our market’s upwards of $250,000, then we’re able to add value by providing brand new houses for $60,000 versus $150,000 or even $250,000 site houses.

We also look to be within 5 miles of a super Walmart. Walmart has done its economic research pretty well. If they’ve invested in building a super Walmart somewhere in that town within about 5 miles of it, there is no guarantee but that gives us a lot of confidence that’s a strong market. We also run test ads and see how many people call in. We talked to the local police department. We go through competing parts. We talked to those tenants or owners if we can. That’s not all of it but that’s a good chunk of our diligence. The income, housing price and Walmart metrics are probably the big three for us.

After your 1st mobile home park, when did you get your 2nd one? I want to understand that timeframe.

That was 4 or 5 years later that I bought my second park.

You initially were using your funds. At what point did you switch from using your fund to using other people’s money and starting your syndication? How did that evolve?

I started raising money in 2014. That was about seven years into me doing it on my own. I had a more established track record by that point. I had also done some consulting with a couple of high-net-worth folks in California with interests in mobile home parks. I ended up partnering with a guy and we raised money initially deal by deal. We did deals raising money that way in 2014. In 2015, we raised a fund. We raised a second in 2016 and 2017. We’re doing separate businesses. I’m continuing doing the same mobile home park business under the Park Avenue branding.

I raised my first fund here, my third in 2019 and then working on my fourth fund, which will be open until July 2022. It’s been an evolution. We’ve had a lot of investors that have reinvested with us. We’ve also had some new investors. I’ve done most of that fundraising from initially online blogging. I also started our industry’s podcast called Mobile Home Park Investors.

Having that podcast helps establish credibility and bring in new clients. I have gotten a couple of deals from the podcast but at least for me, by and large, the podcast brings in other interested and accredited investors. It came together, part play on and part dumb luck, but it all seems to work. Cumulatively, we’re closing in on about $40 million. I had another investor come in for $250,000.

If you were to start all over again, would you think you would be raising money sooner rather than later? I know you started with investments but knowing what you know now, what would you have done?

I certainly could have gotten into this business sooner than I did. I got into it at 39. If I had known about it more in my twenties, maybe I would’ve gotten in then. Probably years earlier, I would’ve gotten into this business. I still probably bought 1 park or 2 with my own money to establish the track record but I probably then would not have consulted because that certainly pays the bills. Some owning real estate is the better path than being an hourly or per diem consultant. I probably would have skipped and not done consulting entirely. I’ve moved to raise outside capital sooner. I made a lot of mistakes.

For folks that investing in mobile home parks is expensive, then you have to have a lot of money, what’s your opinion on that? With the idea of a mobile home park, they’re thinking you to have a lot of cash on hand to do that. This is something that you know well and you help a lot of investors get started in this but what’s your take on that?

Mobile Home Parks: You cannot trust the government, even when they’re putting things in writing. Moreover, sewages, lagoons, and wells probably only exist just to give a risk for a first-time buyer.

You don’t need a lot of money to be in this business or at least to get into it. I know somebody who started initially buying the mobile homes and he found a couple of park owners to deal with. He would either buy a mobile home for $1,000 or a couple of thousand. For a few of the rougher homes, I believe he got for free. He would then put his labor and money into fixing up the homes, selling those and creating a note of rent-to-own agreement.

Pretty soon, he had dozens of these producing cashflow. I suspect he got started with under $5,000. The money is in the land, not in the structures. He bought a park that was something smaller. It might’ve been a 20 or 30 space park depending on where you’re buying. This certainly was years ago but he got that first park for under $500,000 as I did. Some mobile home parks are five tabs and they need a bit more work. Maybe you’re paying $20,000 a pad for those. Maybe you’re getting five-pad parks for $100,000, depending on if they come with homes.

You can structure a note or maybe come up with $10,000 down or $20,000. The seller carries the rest on that $100,000 park and you get started with 5 pads. If that goes well, it takes a lot of time and energy but if that’s what you want to do, then you can probably spend money on that, fixing up a park over 2 or 3 years, maybe you refi or sell it out and then you buy $500,000 park. A couple of years later, you’re buying $1 million or $1.5 million parks. You can compound your earnings that way.

This is not a passive business. There are a lot of things that are great about this business but it is not like a set it and forget it. I’ve got a friend who buys Walgreens. The building in Walgreens then pays him 4% or 5% a year on his money. They take care of all the taxes and maintenance. Everything is triple net. This is not that.

You’re dealing with tenants, homes that are damaged and water breaks. This is not a passive business but if you’re willing to work it, you can make good money and get started with 4 or 5 figures for home renovations or down payment. Maybe a couple of years later, you’ve got a six-figure nest egg to put down on a seven-figure park. You can get started with almost no money down.

Financing for parks, you’re working out sometimes seller financing for these deals. Outside of seller financing, is there much financing available for it?

There is. I’ve done seller financing. Those first couple of deals that I did on my own were bank financing. If you’re buying smaller parks, you only have two options. One is seller financing and the second is a local bank. For instance, the bank that lent on those first two parks is located within about 35 miles of where both of those parks are. The banks found it here, there is one here and one there. It’s their backyard and that bank who’s those towns, the VP’s wife is from one of the towns where one of those two parks says, that’s the way you’re going to find financing on most deals that are under a $2 million purchase price. Both of my first parks were under $500,000.

Long story short, the CMBS market, which is where I borrow almost all my money, that’s the fancy Wall Street debt, collateralized mortgage-backed securities. That’s where they pool all my mortgage on my mobile home park with somebody’s hotel deal mortgage from a different state, somebody else’s amusement park mortgage and somebody else’s office mortgage in these Wall Street types pool. Hundreds of millions of dollars’ worth of mortgages and sell them off as a pool is with CMBS but you need to be borrowing pretty much about $1.5 million or more a debt to qualify for CIS debt.

I buy larger deals. Most of my deals are around a $3 million purchase price. It’s ranged of late from about $1.5 to a little over $10 million but probably $3 is about average. I’ll have a $2 million piece of debt with that. If you’re doing a larger deal, the CMBS money is pricing several hundred basis points cheaper than bank debt. Most banks will only land for five years fixed. We’re borrowing for less and getting it fixed for ten years and the CMBS debt, generally, is non-recourse to my limited partners or me.

We pay less. It’s non-recourse and fixed for ten years, which is the life of our funds. The duration tends to match the duration of our funds nicely. It’s a long-winded way of saying that I’m a bit bigger using outside capital and buying bigger deals. I tend to borrow almost exclusively from the CMBS market. Also, the agencies, Fannie Mae and Freddie Mac, will land on particularly good quality mobile home parks, some of those senior parks, sexy coastal markets and other better markets. We tend to buy less sexy parks, and oftentimes with 20% or even 40% vacancy that gives us a lot of upsides, but the agencies tend to not like those kinds of deals. It’s been several years since I’ve done anything agency-related. CMBS, at least for me, seems to be my sweet spot for financing.

I have a question as it relates to you as an entrepreneur and you’re being able to scale up. My first question is, who is your first hire? The second question is, who is on your team? What do they do?

I’ve made many mistakes. One of the mistakes that I did make and I don’t want to be guilty of making it twice, was that when I started at Park Avenue, I hired both an accountant and asset manager before I did my first deal. We didn’t have very many books. Before we had a deal, we had some fundraising but the minimal amount of books that we had was pretty perfect. We were ready to rock and roll when we bought that first park.

That was key to having both my finance and operations base covered with the accountant and first asset manager, who then in turn, for instance, hired the manager to work in that first property and the next dozen properties. We’ve grown from 1 to 2 asset managers. That’s the level below me. I’m talking here about our funds. We have 13 properties and 8 managers. Some of them are clustered. Some managers oversee more than one park but all the parts do have a manager.

That’s another eight employees. I’ve got an executive system. That gets us to about twelve people. That bookkeeper is outsourced. He is not a full-time employee. We’re not yet big enough to need a full-time bookkeeper. We keep him pretty busy but he runs his bookkeeping and accounting service. We’re one of his larger clients but he is outside. We work with a couple of different attorneys for most of our transactions.

When we’re buying properties, we work with a third different attorney for our fund documents. We’re preparing our private placement memorandums. We’re not big enough to have attorneys on staff but we’ve got those three very trusted partners, also outside on the legal side of things. We’ve got a very large accounting firm doing all of our K-1s for our investors, some of the more complex depreciation calculations and pushing all that out to our investors. We’ve got a very large accounting firm that does, not bookkeeping but high-level K-1 and depreciation accounting.

It’s great that you’re able to scale up and bring all these people on. Even with my own business, I wish I let go more. It was hard for me to delegate.

This was a huge mental shift for me because before this business, I had been working in high tech during the boom and bust of the dot-com and I wanted to hold onto my job. I was working extremely hard. I was taking on additional responsibilities and striving to make myself invaluable to my employer. I survived the round of layoffs that cut people above and beside me but I had to shift from the mindset of being invaluable to my company to being irrelevant.

I’ve got to hire people to do everything for me. All the bookkeeping, phone answering and projects bids for the concrete guy or the labor guy. My business has to run without me. I’m not there yet but my mindset is I, Jefferson needs to become irrelevant. When my business runs itself without me, then I’m successful. I’m still doing too much in my business. I do a lot on the business but still shifting from trying to be invaluable to trying to be irrelevant is the only way to grow as an entrepreneur, whatever your business is.

Final questions for you. What are you excited about in your business?

Getting even more systems in place. We still need to make another couple of key hires. I’m excited about the year 2022. We got some big goals both for fundraising and investing, acquiring properties but that’s going to be more employees and some additional systems. Slowly maybe but constantly getting better at this. We’re going to do some things differently around acquisitions, budgeting and make even better use of some technology. I’m excited about that. 2022 will have it in store for us.

What has real estate investing done for you in your life? Hopefully, it’s made it a lot better.

I’ve been blessed to afford a bigger home than the old, smaller rent-controlled condo that we were living in in San Francisco. I’ve become a homeowner. I’ve got the flexibility. There is more time with my lovely wife and our three great kids. The kids have come along coincidentally as a lot of this fundraising and acquisitions have taken off. We homeschool. My wife does most of the homeschooling. I help a very little bit. I work from home.

I certainly work hard but at the same time, if it’s like, “It’s a Tuesday and sunny. Maybe I should take my son for a father and son lunch. Maybe we should go ride bikes around the block and get out in the sun for a couple of hours.” I’ve got the flexibility to do that. I spent twenty-ish years working for the man. Some of those men were women but the man. That was generally a good experience because I don’t know that the right path, at least for everybody like, “Come out of college and immediately work for yourself. Learn nothing working at a big company or in a medium-sized company.”

I worked at companies for twenty years and learned a lot there. I would not have had anywhere near the flexibility that I have where they hit the road. We’ve got some properties down in Texas that are near the beach there in Brownsville. We often go in an RV there. We’ll homeschool the kids near South Padre Island for a couple of weeks. The kids love being in the RV. We’re onsite at a couple of our properties that are RV and mobile home parks. We’re close to the beach. The water’s warm. To do that thing when you work for somebody else, you don’t have that level of flexibility when you’re your boss, whatever your business is.

What does success mean to you?

Mobile Home Parks: Super Walmart has done its economic research pretty well. If one is present somewhere in that town or within five miles, you can be confident that you are looking at a strong market.

It’s mostly that flexibility. I certainly do earn more money than when I was working a day job. For me, it’s the flexibility of being able to spend more time with my family. That’s what feels most like success or what I cherish most. It’s not specifically having a couple of extra dollars in the bank, although that’s nice too.

What’s your superpower that has contributed to your success of being a successful real estate entrepreneur?

I’m too dumb to stay down when life knocks me down with $500,000 sewage lagoon debacle. I persevere. Somebody said that perseverance is not specifically intelligence. There are plenty of very intelligent derelicts out there. The people that do well in life are those that persevere, stick with the goal and make it happen even after they get knocked down. I am nothing, if not one who perseveres.

Last question, how can somebody get ahold of you?

The best way is probably through our website. That’s simply ParkAvenuePartners.com. There is an intake form at the bottom of that page. There is also a way to click at the top of the page and join our mailing list. We don’t mail out. I don’t even think honestly once a month but that keeps folks abreast of our deal flow and what we’re doing. If they’re interested in our podcast or LinkedIn group, where we also publish the industry’s calendar of events, all of that is at MobileHomeParkInvestors.com.

Thanks, Jefferson for joining me on this episode. I loved how you shared your experience with me, how you started up the mobile home space, how you grew up and scaled from there. I admire your focus and the perseverance you have. To my readers, feel free to reach out to Jefferson directly if you have any questions for him. Thank you for checking out this episode. Remember to leave a review on iTunes, as it helps me attract even more great guests like Jefferson. Until next time. Live life abundantly.

Important Links

• GoBundance
• Todd Sulzinger – Previous episode
• Park Avenue Partners
• LoopNet
• Rent Manager
• Mobile Home Park Investors
• iTunes – The School of Cash Flow

About Jefferson Lilly