EP 118 | Interview With Nick Najjar Lessons Learned In A Competitive Market

On this episode of The Mobile Home Park Lawyer Podcast, our special guest Nick Najjar who is an Entrepreneur, business owner, and real estate investor focusing on acquisitions and operations of mobile home parks in the midwest. 

Nick Najjar works with the top Realtors in St Louis to host their events and produce their monthly trade publication, Real Producers.

In this episode, you will learn Branding, Strategic Appreciation, Marketing, Consulting, and Relationship Action Planning

Highlights

[00:00:00] Episode Introduction
[00:00:33] Introduction of the guest
[00:01:05] How to get started in the Mobile Home Parks business
[00:02:22] Getting the first deal on the market
[00:04:08] The special sauce for uncovered gems
[00:05:23] The Millionaire Park Opportunity
[00:08:13] Professional operators learning from old park owners
[00:09:31] How to look at broker deals and stay competitive
[00:10:24] Finding Better Buyers in a Microeconomic market
[00:11:39] Beating the offer of a competitor with a 500 million dollar line of credit
[00:13:58] Premium pricing through a valuation perspective
[00:19:36] Mistakes that park operators can make
[00:23:20] What is HUD and why it's important
[00:28:00] Finalizing the Contract
[00:32:08] The Challenge of Repairing a Park Water System
[00:37:51] Why Plumbers Don't Have To Go Through a Contractor

Notable Quotes

8:13 “I like to call professional operators like guys like you and me, we run it like a business or at least try to and all that. And then you got the guys that built the mobile home park that owned the park for twenty years. And they're just such a unique type of individual that we learn so much from.” - Nick Najjar

 

11:39 “There's some brinkmanship and negotiation with I'm trying to buy your can of coke with a couple dance for 80 cents and you're trying to sell it for a dollar and a call for offers somebody so thirsty they're going to pay $2 for that can of Coke, even if it doesn't make any economic sense. - Nick Najjar

 

19:36 “There are some big, skilled operators that operate portfolios in all parts of the country. I just think that's a lot harder. And you're going to need a lot more and a lot better staff and it's going to reduce your margins. But if you can scale, maybe it's okay.” - Nick Najjar

 

Connecting with the Guest

Website: https://stlrealproducers.com/

Facebook: https://www.facebook.com/STLRealProducers/

LinkedIn: https://www.linkedin.com/in/nicknajjar/

 

Connecting with MHP Law:

Website: https://themobilehomelawyer.com/

Facebook: https://www.facebook.com/The-Mobile-Home-Park-Lawyer-103814958118069

LinkedIn: https://www.linkedin.com/in/themhplawyer-ferdniemann6923147/

Instagram: https://www.instagram.com/themhplawyer/

 

#HUD #PremiumPricing #MicroEconomicMarket

Transcript

Intro: This is the Mobile Home Park Lawyer podcast with Ferd Neimann. If you're looking to generate wealth and passive income in the lucrative world of mobile home parks, you're in the right place. You'll discover solutions to the common legal and operational pitfalls and how to optimize parks to maximize income. Your host is in the trenches. He's a real estate attorney, financial analyst and mobile home park investor and operator. Now, let's turn it over to Fern Neiman.

 

Welcome back Mobile Home Park Nation Ferd Neimann here again today. Another episode my guest today Nick Najjar. Nick's in the mobile home park business. Just like me, he's in Missouri as well. Owns Parks, Buys sells, owns parks in the Midwest. Please help me welcome my guest. Nick, thanks for coming on, man.

 

Thanks for having me. Excited and honored to be with you today.

 

Great. I know, I know you from the past and we worked on some deals together as well. But for our guests that don't know you. Maybe give us a little more of your background and how you got into this asset class. Uh, yeah, so

 

I have a couple of friends that have been in the business for probably over a decade now. Actually, both of my fingers, 15 years, maybe ten or fifteen years. So they were in it. Like most people that are intrigued by the mobile home park business, I've been intrigued in the business for over a decade. About five six years ago, I went to the first, you know, my first Frank Ralph, Dave Reynolds Mobile Home University Boot Camp. Then I actually ended up starting a business around that same time, so I kind of put my buying mobile home parks on hold for a minute. Then I picked up the activity again, but our first park in 2018 and then the year of COVID, we actually bought three parks and like an 18 month cycle and got one set to close here, plus close the day. But that's not happening, so we'll see what happens. But yeah, just for parks. Just just cranking away, man.

 

No, that's great, man. Now I know you find somebody deals off market or they've all been off market or have you bought anything on market?

 

It's a good question. So the first deal was A Market Sunstone listing that was on the market for a while. Fairly rough area up in the south side of Chicago. And  I just want to get my feet wet. Got a pretty good deal. Seller Kerry terms are actually in the middle of refinancing that right now, like waiting on the appraisal to come in so that that should work out really well for us. And then the second one was an off market cold call to an owner. And then the third one was wholesaler, one of our mutual friends, Corey Woodruff, thinks thanks to props to him for Hook Me Up with a deal after we bought that one, I started looking again and he's like, hey, we got the seal. It was a very rough bark. 81 sites. 29 occupied homes. 15 abandoned homes. Very rundown. Out-of-state owners. Just a project, but we got a really good deal. Corey took care of us and we took care of him, and we're still in the middle of that project because it's hard to get people to show up to anything. And then the third one was another off market. I'm sorry. Wait, I'm getting confused. Oh, fourth one was an off market as well. So two off market, one wholesaler and one broker. So good. Good little mix of everything.

 

Yeah, that's good. Cool. Now how many? Give me some tips on how you find an off market in today's market because today's market is pretty competitive. There's a lot of guys out there, buyers tie up, tie it up or sinus wholesalers call it, and it seems like a feeding frenzy at times. I get calls and postcards all the time, but there are still uncovered gems out there. Do you have any special sauce you can share with our listeners?

 

Oh man, I actually don't really think there's a special sauce. Kind of like most things, like just we just kind of put our head down and go, we do use an auto dialer mojo. We actually just kind of scaling up right now. We have two full time VAs that are combing through our lists and really just trying to update our owner records is as good as possible. But the biggest thing and I've been talking to my partner Jason about this, actually, I had a conversation this morning, just the daily weekly disciplines of prospecting. I fortunately have it in my background of sales like, you know, just sitting down for sometimes two to four hours a day, just literally like prospecting email and brokers calling owners, tapping into relationships, reaching out. Ironically, post on the Facebook mastermind group today probably won't get a ton of traction, but I see people like, Oh, you know, I'm looking to buy parks just like, isn't every single person in this group looking to buy? But, you know, just kind of throwing everything on the wall. See what sticks. So yeah, I guess the short answer is no secret sauce, just a working man, working hard to try and find deals. So I will say one tip and this kind of funny story that you kind of.

 

So I called the owner of one of the parks that you own. I can share it if you want. It's in the St. Louis metro area. I think you closed in February, March. I called the owner, talked to him in October of last year. Typical owner call and I'm interested in selling. I got I got some information out of him. He's like, Yeah, you know, I've got this many sites. I just threw out a cold off. Or maybe it was like two million bucks. I don't know exactly. He's like, No, I'm just not interested in selling. Three months later, I see your Facebook post just excited. We close this great deal with six of the seven cats, a great market like probably one of the best markets in all Missouri. It really was just like, Wait a second, I know that park. I looked it up. Talk to the owner. I had to talk to him the same week. I'm sure I warmed him up. Like he probably went home to his wife. Hey, got an offer to Millionaire Park and she's like, Oh, did you take it? And he's like, No, and she's like, Why didn't you take it? And then, you know, and you probably called in the next day and oh, you know what's funny?

 

That's what this guy is. We really tried. We really didn't reiterate anything on that contract. We really tried to be really nice. The guy, because he owned another park, was five hundred and thirty five pads in the same trade area. And we're like, We want to get that one. This one was sixty eight and you're right, the great submarket direct bill water sewer .0 park owned homes. Ninety five percent occupied, nice looking park. It was pretty much a dream, and he told us he gets called every day and on the day of closing my business partner, I went down there to shake his hand and, you know, butter him up to try to get the big park. And while he was there, three people called him and he said, I told you, I'm getting another offer. And at the last minute, there was a little bit of a closing statement issue that got me pretty riled up. And he's standing there and he said, hold on, They say they're closing today, but call me tomorrow it looks like they're threatening to walk and Andy was there with him.

 

He's like, He's not bluffing. These calls are happening. So we're like, all right, close the deck thing and we got it closed. But yeah, that was funny. Yeah, I think that just proves you mean what you're doing is right. You're trying all the angles, letters, cold calls, brokers knocking on doors, personal relationships. And then sometimes it's just timing. It's just this guy. He had no debt on the park. He had his little man cave in the shop there and he went there every day and tinkered around. He was cash flowing hundreds of thousands a year. Just tinkering around, didn't need the money, didn't do a ten thirty one, just took the money. He knew all the residents by name, and I asked him later I go, was he a nice guy? He'd like him to like, He was a wonderful man and everybody loved him like, you know? So yeah, it was. We got a little lucky, I guess, on timing.

 

But yeah, I just mean, that's it's one of the every single you get a lot of what I like to call professional operators like guys like you and me, we run it like a business or at least try to and all that. And then you got the guys that built the mobile home park that owned the park for twenty years. And they're just such a unique type of individual that we learn so much from, right? And they're just such good down to earth people that it's just one of the things I love about this business. And I think the lesson learned is like, we just have to follow up every month or two. I mean, you can't let two months go by because they get that. That's a perfect example. Hot markets like that. He literally does get one hundred phone calls a week. And why these guys lost all these people. Who knows? I don't know

 

Why they don't take it to market. I mean, we probably bought that deal for like two point seven million. It was worth every bit of three million on the day we closed and then it was below market rents. We raised rents, 20 bucks and they were like 385 to four, oh, five. Well, now it's like a seven point seventy five cap on direct bill water sewer. 90 days in, you know, and and zero park on homes and zero vacancy and, you know, like somebody would have paid him, somebody would have paid him a five cap on that.

 

Oh, easily, maybe even more. I mean, just because it's like such a great, great market. So. And yeah, it's just you get a lot of since COVID to I think more than anything, there's just so much money floating in the space and you see these deals and you talk to the broker like there's no way it's going to trade at that. And sure enough, it does. And it's just wild. So actually. So that was one of my questions for you kind of leads into that. So I actually was talking to a broker and you said something to the broker. I don't know how it came up, but basically you're like, Oh, I don't I don't negotiate with like and maybe I'm wrong. It was something the effect of like, you just don't you don't compete on like it was a call to offer. So how do you handle oh, okay. So the broker in general, like, what do you do for underwriting to stay competitive, right? Like how do you even look at broker deals? You just focus off the market? What are your tips and how do you compete in this crazy competitive environment?

 

You know, it's a call for offers. I rarely put the energy into them because in order to be competitive, you got in order for me to put my best offer forward. I need to kick the tires on that deal. I need to really underwrite the financials. I need to underwrite the property tax projections. I need to visit the park. I need to look at the infrastructure. I'll make the preliminary assumption that the survey is good. The title is good, phase one is good. I'll have to understand the microeconomic market of that particular geographic location. And then I got to run a number of iterations. From a financial performance, this kind of cash flow analysis, including depending on the deal, let's say the deal was eight million dollars and I'm going to need two and a half three million dollars. Cash is getting the deal. I also need it if I don't have two and a half three million dollars laying around. I also need to underwrite or make an estimation of. How well I'll be able to raise that kind of capital in this kind of time because I'm going have to recognize there'll be somebody else, you know, at this, at this dance, it's going to be a pretty girl, right? They're going to have 25 million in checking and they're going to show their sticky statement. So that person is going to be able to pay less than me because they're quote better buyer.

 

So they're going to pay. So I've got to beat their offer. And chances are the guy of 25 million and checking is has got some serious cash dragons looking for a lower yield just to put his money in the game. So he's going to make it a strong offer anyway. May have already raised. I was competing one day against somebody that $500 million line of credit with JPMorgan. Mean so on a call for offers in order to put my best foot forward. There's a lot of work and I've been on them and I've been off by half. And I'm sitting like. I mean, Sam Zell says this in his book. When they say this is back in mostly multifamily, but they were missing deals and all these new guys are coming in, all these, all this new money, all these new projects. And he wasn't buying. They were bidding and he said, we're cursed because we know the numbers. And that's my problem on some of these call for offers like I know what I can afford to pay. And it's not like it's off market. There's some brinksmanship and negotiation with I'm trying to buy your can of coke with a couple of dance for 80 cents and you're trying to sell it for a dollar and a call for offers somebody so thirsty they're going to pay $2 for that can of Coke, even if it doesn't make any economic sense.

 

But then also there are people who have a different cost of capital. When I used to work at a big law firm and we represented one of the 10 or 15 wealthiest families in the world, and they had a cost to capital and both debt and equity. It was cheaper than ours, cheaper than the average bear because they had so much money to place. They had major borrowing power. But they also look, we're sitting on two billion right now. We'll put some in a three percent, four percent yield because what we want to diversify against the stock market, we already got enough Treasury stuff. You know, when we're losing how much in interest, you know, potential interest. So it's hard to know who you're competing with on any on market deal on a call for offers. A lot of times I had, I had a broker on my show. I don't think he told me this on on the air. But what he told me is he had a listing and it was it was a substantial listing, he, his client, said. We'll give you a commission, but normally your commission statement agreement will say if you get 10 million, you get paid your five percent his case, it said. Market price Subject to our review, he brought an offer that was like a four cap premium as a Denver, Colorado, deal.

 

Premium pricing brought it to the client, the client said. I'm really looking for like a three and a half cap. He's like, I put hundreds of hours into this project and your expectations are unreasonable in the marketplace. I'll just hold it then. So that's kind of like call for offers for me. So what I've done is I've really kind of shied away from him. If it was like in my lap, like in a priority on the park, I'd probably do it. But I've looked at some that are call for offers and five or six portfolio in Iowa. And I'm like free to go look at five or six parks and do all this work, spend the time and money to be off it. It just became kind, disheartening. So that's kind of how I approach those from a valuation perspective. You've got to look at your yield profile and then I've had one deal where I really pursued it hard. I basically was willing to pay a little premium and take less of a piece for myself and syndication, and it still made sense for me. But you know, I know you and Jason, your big fans of Tony Robbins. And at his conference, I listened to Keith Cunningham, the original rich dad, and I sat there and talked to Keith in the lobby and in my company is growing.

 

And he said, Let's say your company makes a million dollars and you got four people. Let's say your company makes a million dollars and you've got four hundred people. Which company would you rather run the company going for people is considerably less stressful. Maybe you want to feed more families and some other alternative motives, but his point was you only got so much energy, so much time to chase so many dollars and. I can't chase every single off market deal or on market call for offers deal because you might be, you know, picking up pennies and stepping over dollars. And so we've really focused on off market and it's worked out pretty well for us. I mean, in this market, we've been buying deals and I'm under contract right now on a deal that's a thirteen point five cap. Forty minutes where I want another park in a good trade area that's off market. Eighty nine year old lady is selling it right, so I can't get that on a call for offers. So in the last couple of years, cap rate compression is covered up a lot of sins of the past. Conservative off market pricing covers up a lot of sins of future operations or missed assumptions. So there's a long, long answer to your question, Nic, but that's how we look at them. Open to, you know, do you have any better ideas on how missing there?

 

Well, I don't you even look at broker listings like, do you?

 

Take a look at it? I look at them, but not very hard, be honest. Yeah, I have. I have not looked at any one of them for more than about a half an hour in the last six months. Yes, I'm mostly Muslim. There are some brokers. That I delete them as soon as they come in because I've I've chased their deals and there and they're so unreasonable on their price expectations and on their getting you to pay for vacant lots and you pay for for future market rent growth that I don't even. I'm like, I'm not going to waste my time and then they'll sit there. They'll sit there for a year in the hottest economic climate for this industry, and it's like you've been on the market for a year. I'm not so so I've and I've made reasonable offers on them, and they don't even it's not made sense. So there's some brokers that I don't even I'm not going to say who, but there are some brokers that I don't. Even if the deal was next door, I wouldn't even look at their listing.

 

Yeah, no, I hear you. I think I think that's a challenge for us is sometimes these owners, park owners are pretty unrealistic. And then you also have brokers that are telling them, Oh, we'll sell this and it's it's crazy times, but you know, we just do what we can.

 

So and the brokers don't even agree with it always. I have a broker who I've bought from before, and he told me about a deal in my trade area and he started calling me pocket listing. It's coming online soon. All right, it's here. I know that. Here's something 140 lots he's not yet submitted below market rents. I'm like, okay, and I'm like, Get on my jacket. I'm like leaving my desk. And then he says he goes, It's only a five point two million and I go, Wait a second, I do the math. Five point two million. How many do it again? I go, it's supposed to be like two point six million. And he said, well, let's just say that the. The value it took to get the listing is much higher than the value we proposed in our first listing proposal. So if he goes by the way, would you help me out? Would you make a lowball offer to get this guy sensible so we can sell this deal? I was just like, so I took my jacket back off, went back to my desk and I was just like. Call me when it sat there for like eight or nine months. And then I sold the deal and I'm going to do it. Ten thirty one, maybe I can pay a little premium. I got 10 thirty one and I called him and it got tied up that day and it dropped like two point seven million. I mean, but he got his commission, you know, so that's.

 

Is the world seem to work? Yeah. I've got another question for you. Just curious. So I know I think about lessons learned and mistakes a lot. And I think everybody, when their new first or second part, they make mistakes, but any lessons learned or mistakes you see people make when they get that like, say, two hundred to a thousand lot range. Like, I think there's a difference between somebody new. They're always going to fumble, right? But do you see any common things that happen when you're when somebody kind of scaling and growing that you might caution against or anything along those lines?

 

That's a good question. I mean, I see this mistake and I made a mistake. There are some big, skilled operators that operate portfolios in all parts of the country. I just think that's a lot harder. And you're going to need a lot more and a lot better staff and it's going to reduce your margins. But if you can scale, maybe it's OK. But but I see you guys doing this once you get outside your get, you're at two parks or three or four or five, well, then you've kind of tapped your current markets in a lot of cases. And then you say, Oh, I'll just stretch and I'll go six hours away. I'll just stretch and I'll go five hours away their direction. I'll just stretch and I'll go to this tertiary market that doesn't have any. I can't get to very easily. And and then the things that we'll start to come off because it's it's not twice as hard, it's five times as hard and you only get twice as much top line revenue. Yeah. And then incrementally, you know, you add 50 pads, you can't hire a regional manager. Right. So you've got to make the decision or you're going to hire.

 

Before you need it or after you need it. And and I've done both and I've seen both, and I come back to you at this point in my life. Noah didn't build the ark when it started raining. He built it in preparation for the flood. So I kind of just budget like I got another attorney position posted, Right now I'm going. I'm anticipating more legal work coming in. I need an attorney. I'm going to hire that person now if I can't keep them busy eight, 10 hours a day. Well, and I'll find something else to work on in house if I. But I don't want to have five hours, six hours, eight hours, 10 hours. Additional legal work come in every day. And then I got to just me and the other guys got to just absorb that. So that's kind of how we look at it. I love it. Yeah. What are your what are you've grown considerably the last two or three years? What are some lessons you've learned or some maybe some growing pains or some, you know, tactics that you implemented that are not that you avoided potential pain?

 

Yeah, yeah. Well, I made a list, so I'll just run through the list and then you can pick, maybe pick one to dive into. Zoning, always zoning. You probably deal with that almost every week. I would assume it's not just getting the zoning letter, though. It would be my suggestion, but actually like looking into like permitting and like talking to the fire department. Make sure there's no fire hazard. So you had my good friend Steve at due diligence partners on and I've learned so much from them and hiring them like just the little things that other people have run into that they now ask for can really help you hear crazy things about, you know, just cities being crazy, fire departments being crazy, and that they can always pull that health and safety trump card. So you got to just double check on that and your due diligence. Park owned homes, old parkland homes are terrible. I told somebody last week, I'm like, I'm just so burnt out on park on homes right now because some of these parks we bought last year, like 60 70, so we're trying to get rid of them and just they just don't look crush your bottom line, five, seven.

 

Increase your reserves and they're not a short term fun project. I mean, I've done it where I was telling somebody earlier, like I've spent $20000 on a $10000 mobile home, and that is not fun. So I would rather spend, you know, I'd rather give it away for free, give away a $10000 loan for free, then spend twenty thousand to make it worth 10, you know. And I've done it 10 times in one park and you're like, Why am I? Why am I in for $200000 on ten nineteen seventy five trailers? Because you want to save them. You want the occupancy.

 

Yeah, it's a tough one. So that's that's a brutal night. We pay attention to that now. Like track every, every home in our, you know, I think we're at 12 to 15 on a couple and you can learn a lot just by looking at the numbers. So that's a big thing. That's a huge focus for for me, it's just operating procedures, traction, knowing your numbers, look in your reports every month. I've just learned that's just critical for any business owner. But in our business, it's very management intense and you have to be focused and disciplined and hold people accountable and that type of thing. A couple of other random lessons learned. We can elaborate if you want so HUD, even know what HUD was, what part you go, boot camp and a lot of it goes over your head like, Oh, you've got to prep this. I still remember like, Oh, we got these two lots and we want to move new homes in, and I talk to the installer. He's like, Oh man, that's not going to pass. So I don't like what's hot. And so the cost of a new home or crazy, especially now with COVID. So just understanding the actual costs of to bring in a home, it's not just the home, it's prepping the pad with the six inch Frost Free Foundation and all that fun stuff.

 

Let me touch on that more because I got a fun story on that. And just for our listeners that don't know HUD. I mean, everybody knows the department, but there are some states that are HUD states like I'm sitting in Missouri right now. Missouri's a HUD state, Kansas, two miles away, not a HUD state. It's a HUD state. You have to install the homes to their guidelines. And then the Missouri depends on where the frost line is. So where I'm sitting in central Missouri, it's 36 inches. So I have to put in thirty six inches deep of concrete and then appear and then then two feet wide by two feet wide by thirty six inches deep and then on a single wide. You've got to do those. About every eight feet typically get ninety foot centered in your eye underneath the home. And then you probably have like an extra big concrete anchor on one in the middle. On the back, you're talking twenty one, piers, you're talking three thousand six hundred dollars in concrete and then you had to hire a licensed installer and then you have you have certain requirements for skirting with some baseboard underneath and you've got you've got to have a vapor barrier. It's got to be level and which makes sense, right? But you add that all up, you're talking a good time to put an air conditioner in there to deck.

 

You're talking good 13 to 16 thousand. It conservatively on site prep per home, and I owned a park since sold it in Taylorville, Illinois, which is 20 miles south of Springfield. And when I was doing my due diligence, I was looking for comps in Springfield and Big National Operator came into Springfield, Illinois, and put in. They literally told all the old homes to move out, which is crazy. They weren't that old. They moved to the park next door, so I heard a story from the guy next door. He's like, I got like 60 organic MoveOn's overnight. The new guys with all their money came in. They put in all brand new houses like a hundred of them at once, and they were all the same like, same model, same color. He's like, It looks stupid. It looks super cookie-cutter. Came back couple weeks later. All of them are sitting on the street, double stacked and triple stacked and parked elsewhere. And what happened, he said the state came by and said he didn't do HUD sets, and they said, What are HUD sets? And they had to move every one of those houses that had uninstalled, move them, put in concrete, reinstall them again. I mean, it was a substantial, substantial expense and it set them back months. But so you definitely don't want to get on the wrong side of the law with that stuff.

 

Yeah. That's uh, that's crazy. Yeah, I just started budgeting 15 to 20 grand just to prep, you know, like you said, everything install pad prep. It just makes sense to budget and end, you know, estimate higher. And then, you know, if you save some money, that works great. So yeah, HUD is a crazy, crazy little thing we deal with in our business. Let's see what's my other lessons learned. You just got to get creative and be real with sellers. You know, we have a motto in our company, tie it up and figure it out later. So you know, we you know, there's a lot of times you're like, yeah, not really sure. But the money will come for the right deals, whether you're going to raise money or there's a lot of guys that are hungry to get in the space. And we partner with a lot of folks currently, guys like you, you know, that do a lot of deals. And if it ever doesn't work out for me personally or for my company, like there's always a buyer for for the park so we can save somebody so much time to get get a deal. A lot of times people know the deal and it's just like, Oh yeah, I know the deal.

 

You're under contract. All right, let's do it. We had a little one right now. We're doing like Guy was under contract two years ago, couldn't come to terms and we get on a contract. We're like, This is too small for us. It's not a fit. And he's like, Yeah, I'll take it new everything, new park, better than we did. So just tie it up. Figure it out later. Just good professionals. I mean, I just, you know, I've enjoyed working with you. I haven't, Adam. I just decide we're going to use you as our attorney moving forward for your mobile home park stuff. But I've learned a ton in the few deals that we've done together and good attorneys, hire professionals. Frank, we're all talks about pros vs. Joes. Like just looked at a couple mistakes that I made last year and trying to save a couple of bucks. It's never, ever worth it. So good professionals, high standards is really important. So in the last thing is, winter's coming up winter eyes. We got hit hard. You know, it's funny. We had one of our guys, it took him forever, but he went in, he went. It was a new park, right? We we bought it in February.

 

Covid happened in March, so just nothing we can do to change change that. But come wintertime, we're like, we're winterizing all these towns. And he spent a long time and he buttoned everything up. And then we close on a property February of this year and the owner just he would like, you know, a typical owner. Oh, just we just tell everybody to keep their water on a slow drip because, you know, that's the best way to do it. And those work, it's like, Well, if you have good heat trace, it should work. It's sweat and St. Louis, right? It's not like we're up in Minnesota, but the one park that we spent a ton of money and a ton of time on and make sure everything is buttoned up, literally zero issues of lines, freezing or anything. And then all kinds of issues at the one that just just by spend a little money taking the time to inspect each unit is huge, especially this time of year. So I remember I think you talked about your podcast, I felt bad for you. You had he had some issues. You're getting out there, getting after it with those guys, too. So yeah, I

 

Mean, we got bad timing. We have one. It felt it was a mistake. On her run on due diligence, we didn't check the tenant own homes to see if they had heat tape because it's in Kansas City market, it's cold. They've been here every year. Presumably they have heat tape. So we didn't worry about it, own homes. And then we end up getting a prolonged dated closing. And we closed late January and then it got crazy cold for like two weeks. Here in Missouri, it was minus 10 degrees or whatever, and every one of those homes froze and then they had sewer clogs and the sewers. They weren't clogged enough normally to like because we didn't have complaints from them. They weren't clogged to keep the toilet from flushing until the the water and the pipe was frozen was cold. So basically the sewer lines were all like half clogged. We never knew. And then once it slow drip, it became ice and then they had ice coming up their toilets. It was all their crap in it and it was a huge mess and you couldn't even put heat tape. You couldn't put a heat tape on the plastic sewer pipes, really? Anyway, so it was it was a big problem. Yeah, we were out there. We had guys out there. They were taking shifts in the truck. We were out there from dark till dark for days and days. You know, he then it got so cold or they ran out of kerosene in the market, so we had to use diesel fuel. I don't even know this diesel fuel freezes if it gets so cold. So then you had to put thinner in there. So then because then your propane or your kerosene heater wouldn't work because you had jelly in there for diesel. So yeah, man, the polar vortex made us really that one bark. But it was it was brutal. So yeah,

 

We when I got friends down in Texas, Austin, Texas, they're like no power for three, three weeks. I mean, it's just crazy. That is the same time of year, I think. So you just, you know, got to do your best and prepare. But, you know, can't change things like global pandemics or natural disasters and just got to deal with these first world problems that we we deal with. So yeah,

 

We actually got lucky on that. I thought my whole water system maybe was going to blow at that park because the clogs were so bad and and we ended up losing. We had leaks and we end up losing, I don't know, a couple. The water bill was something like 10000 a month before we bought the park and it was just consistent and then we got a leak and jumped like 15000 in the next month. So it was a mainline leak. We wouldn't found it. We fixed it and do the process. We found two. Well, it turns out one of them had been there forever and we didn't know it. So our next water bill was five thousand a month, so we fixed the problem without even. We never would have found out if it wasn't for the freeze, causing the second one on the same line. So for a while there, I was really stressed I was going to have a half a million dollar water issue. Instead, I started saving five grand a month.

 

So there is always a. Oh, that's great. Yeah, we had an issue with metro meters like just haven't been able to recapture like what the heck is going on have leaked out. It's like no leaks. I talked to Bill Baird at Metro. You had them on recently and he's like, Oh, well, we pulled up the water scope and I'm like, What's water scope? My assistant was always in there, like, didn't pay attention to it, right? Just so, such a that's a huge lesson learned like like thousands of dollars we lost by me, neglecting to pay attention to something like that. But the meters just weren't getting a proper read. He's like, Oh, you just got to take them off, clean them out. They're probably, you know, dirt debris stuck in there. You've had them for a couple of years. These parts of the old infrastructure, you know this part, very old infrastructure, one of the when we were infill and Helmsley put in, you know, four new sites and brought in three homes and like the plumber was like this. They they had the waterline was actually like a refrigerator line, like not even like copper or anything like the line for that you would use for like a residential refrigerator. That's what was running the water to one of the homes. Just you can't make it up, right? So just dealing with the infrastructure is tough, and I think that's the biggest thing that everybody harps on. You just got to be very thorough with your due diligence. And yeah, so anyway, I love it. Yeah, man, what do you got any other questions for me?

 

No, I mean, just in general, any other tips you got or any other fun stories from your experience?

 

Oh man, I could share stories all day. I trying to think of fun stories. Yeah, I don't. Nothing comes to mind. Maybe on another episode or so.

 

Who's the craziest? Who's the craziest show or what's the craziest cell response you've ever got or dealt with? Anybody pull a gun on you or anything like that?

 

Yeah. No, we're dealing with the most challenging deal right now, so you're familiar with the deal. We're under contract and I'm going to say where or anything, but my buddy Adam and I are partnering on it and we talk to you about it and seller finance really good terms. Last week, we call the the title company calls the seller to work the loan payoff, right? He owes the bank some money and it's like, Hey, got to coordinate the loan pay off. He's like, What do you mean? I'm not paying off the loan, but we're talking about so. So then that immediately obviously triggers the call to our attorney. And he explains and like, what do you mean? Like, he didn't know. And it's like kind of a rookie mistake for my my buddy Adam. Like to not ask the seller, Hey, how much money do you owe? We just like he's own parks. He's the old school, he's a maintenance guy. He built a park. This is another park like his old school maintenance is just he's in his eighties. And yeah, just, I don't know. We're still kind of confused like he didn't know or didn't think about it or what. So what was he?

 

Did he think he was going to just, you guys won't accept him as a second? Or was he planning on just taking your your down payment and be like sweet, I'm floating on. These guys are screwed.

 

We think that he thought that he could take our down payment of two hundred and fifty three grand and keep his note. He I think he owes like three hundred and seventy grand. So basically, yeah, he thought he wouldn't need to come up with 120 grand. So we're just we're still dealing with it, man. It's just crazy and it's just very difficult right now. So I mean, think we've done I think we have like 11 under contract right now and hands down the hardest deal this year, actually. Ever, I think he's all over the place. He's like, What do you mean? He's like changing his mind and like, we think that he just doesn't want to sell our finance anymore, didn't fully think through it. Probably had bad legal counsel, but we'll see. I'll let you know on that one. I'm hoping and praying we get that close. That's like crazy, difficult seller's story.

 

So yeah, there's lots of those. Those guys can be obstinate. We had one client deal where the guy didn't realize you had a prepayment penalty on his CMBS loan. It was like $300000, and he only had $100000 equity. Yeah, like. And he's filing bankruptcy, I just got the mail right here. We dropped the deal, but you know, our firm was in the case and he became non-responsive. We sued him for specific performance. He never showed  up in court. No, we're going to get default judgment. We'll then find out the debts more than we knew because he had a different loan that wasn't there, wasn't shown up in title and all this. So it was a prepayment. Was a big headache. But yeah, crazy sellers did decide not to sell or decide to change the terms.

 

I got another funny story. I just thought this is like get a new manager and her husband just for some reason thinks that he's taking over. So we got to have a riser issue. Plumbers out there, he's out there talking to the contractor. We're like, Literally, why even talk to the contractor? But plumbers are like, Oh yeah, I'll you know, I can fix it. It'll be 300 bucks. I'll get it done today. He's like, No, I got this, I got this. I'll do it for 50. Goes talk to another resident, gets a resident. Dig the hole first or second. Dig with the shovel. Bust the waterline. We've got a main line break. We got like, we don't even know how. Like, where does this resident even think that he has a right to dig on our property? It's just the craziest thing ever. So we're like, you know, thirteen hundred dollar mistake that was totally just a resident being silly, but that's kind of stuff happens all day, every day. It's just part of part of our tenant base and you got to do your best. So, yeah,

 

There's lots of crazy stories like that. That's yeah, they're not going to end with you or me. Unfortunately, no part of the game.

 

Definitely part of the game, that's for sure.

 

Lara Nick. Well, man, I appreciate you spending time today. I appreciate you giving us some stories and some tips. Where can people reach you if they want to reach out?

 

I think our website, our new website, elephants keep our company's Elephant Capital Partners, so it's elephant.

 

There's got to be a story behind Elephant. What is that about?

 

Yeah, it's so funny. I hate to say this, but you have to ask Jason. So Jason is the creative marketing guru of our company, and he came up with it one night because they're were looking for something catchy. And I think there's a lot of, yeah, you have to ask Jason, we'll put it on the web. It's actually not on the brand new website, so it's not on there yet. But we'll put it up on the website and you can you can email us and we'll tell you the story behind it because there is a story. I just I'm going to not do it justice. So, all right,

 

The suspense continues the cliffhanger.

 

Go check it out. Yeah, check out the new website. Yeah, but context time, that's the easiest way to reach us and happy to help. Love partnering deals. We we do a bit of I don't like to use the word wholesaling, but but we definitely partner with other guys like you that are, you know, serious buyers that deals that don't fit too small, too big, just don't really fit our criteria. We've been doing quite a bit more of that. So happy to connect, build relationships, help however we can. So yeah, yeah, just reach out to us any time.

 

All right. Sounds good. Thanks, Nick.

 

Thanks for having me on. It's been fun. Fun. Take it easy.

 

You've been listening to the Mobile Home Park Lawyer podcast with Ferd Neimann. Ready to learn more, go to www.themobilehomelawyer.com for free resources and materials to help you succeed. If you love the podcast, go to Apple Podcasts, give us your review and subscribe today. Thank you for listening! Neither the Supreme Court of Missouri nor the Missouri bar reviews nor approves certifying organizations or specialist designations. The choice of a lawyer is an important decision and should not be based solely upon advertisements.