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E52: Mobile Home Park Investing Secrets: Success Tips from Steve Johnson
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Discover the secrets of mobile home park investing as we sit down with Steve Johnson, owner of 14 mobile home parks and expert note investor. Steve shares his journey from theater to real estate, offering valuable insights into the world of mobile home park investments, passive income strategies, and the power of leveraging virtual assistants for business growth.
Whether you're looking to diversify your portfolio or learn about unconventional real estate opportunities, this episode is a must-listen. Tune in now and expand your investment horizons!
Here are some power takeaways from today’s conversation:
02:16 - Steve's transition from theater to real estate investing
07:46 - The advantages of mobile home park investments
11:08 - Risks and red flags in mobile home park investing
23:47 - Passive income through note investing
45:01 - Leveraging virtual assistants for business growth
48:53 - The importance of finding the right partners in real estate
Episode Highlights:
[07:46] The Advantages of Mobile Home Park Investments
Mobile home parks have a recession-resistant nature and role in providing affordable housing without government subsidies. Steve emphasizes the potential for value-add projects in older parks and the benefits of economies of scale when investing in larger parks with 70+ lots. He also points out the dual income streams from lot rent and home payments, as well as the reduced competition in certain markets, particularly in the Midwest. Steve discusses the opportunity to improve parks and increase value through infrastructure upgrades, ultimately leading to the potential for higher returns compared to traditional real estate investments.
[11:08] Risks and Red Flags in Mobile Home Park Investing
Steve emphasizes the challenges posed by aging infrastructure in older parks, particularly underground utilities and the impact of harsh climates in northern regions. He warns about the significant costs associated with major upgrades, such as replumbing entire parks. He also highlights the importance of understanding local market dynamics and the potential difficulties in implementing new policies with existing tenants. Steve stresses the critical need for thorough due diligence to identify these issues before investing in a mobile home park.
[23:47] Passive Income Through Note Investing
Steve describes how investors can purchase notes on mobile homes within parks, typically starting at around $25,000. These investments offer returns between 8-12% over a 7-year term. Steve highlights that this method allows passive investors to benefit from the mobile home park's income stream without direct involvement in park operations. These are secure investments as they're backed by both the mobile home payments and the park itself, providing a safety net for investors even in worst-case scenarios.
[48:53] Finding the Right Partners in Real Estate
Steve emphasizes how having the right partners allows for complementary skills and knowledge, especially when dealing with the many moving parts of commercial real estate. He describes how he found his current partners through networking and building relationships over time. Going through challenges together reveals each partner's character and ability to handle crises.
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