[INTRODUCTION]

Josh Cantwell: So, hey there. Welcome back. Today is going to be– oh, my gosh. I’m so excited to share this interview with you. Today, on Accelerated Investor, I’m interviewing Charlotte Dunford. She is the managing partner of Johns Creek Capital with a focus and a very unique perspective on mobile home park investing. She now owns 27 mobile home parks and has recruited and is managing over $6 million in investor subscriptions through her mobile home parks.

And we have a great, great time today. She is an amazing success story. She immigrated to the United States from China when she was 16 years old with nothing but the belongings in her backpack. She did not know the language. She was able to get herself into college, graduate from college. And today, she’s one of the founders and partners at Johns Creek Capital, which is a private equity fund focused on mobile home parks.

And today, number one, we’re going to talk about affordability and the major home affordability problem that we have in the United States and why mobile home parks fit that solution. Number two, we’re going to talk about why she picked mobile home parks and why she considers that an ignored, colder market. Number three, why mobile home parks are basically like investing in land. And number four, why the cap rates and rate of returns on mobile home parks well outperform many other niches.

And we’re going to talk a little bit about some of the advice that Charlotte would give our audience and why when you have nothing, when you have nothing going on, when survival is the only thing you’re worried about, why that’s a recipe for major long-term success. You’re going to love this interview. I loved it, on Accelerated Investor podcast with me and Charlotte Dunford. Here we go.

[INTERVIEW]

Josh Cantwell: So, hey, Charlotte. Hey, welcome to Accelerated Investor. Thanks for joining me on the show today.

Charlotte Dunford: Thank you so much for having me.

Josh Cantwell: I am excited to have you on the show. I am really excited to see what’s going on in the mobile home park space right now. I personally have a camper that we stay on in a permanent site on an RV camp park. And I’m very interested to see what’s going on with mobile homes and diversifying my own portfolio. So, I’m going to pick your brain a little bit about mobile homes. But as we get into it, why don’t you just, so our audience can get a little bit more foundation of who you are, what you’re up to, tell us a little bit more about what you’re up to right now, something that you’re really excited about that you’re maybe working on like next week, what’s going on in your world that you’re fired up about?

Charlotte Dunford: Sounds good. So, my name is Charlotte Dunford. I am a partner at Johns Creek Capital. So, we focus on small to medium-level mobile home park investing. So, as far as what we’re doing this week and next week, we’re always closing deals, looking for new deals, and talking to different investors about our deals, and just busy operating our current portfolio.

Josh Cantwell: That’s great. So, do you have something that you’re cooking up right now, like a property that you’re looking to buy in the next month or two?

Charlotte Dunford: Right. We have several properties in the pipeline. We have a very active pipeline. So, we usually have two to three deals running at all times. However, I can’t talk about them because of SEC regulations, but we do have a very active pipeline.

Josh Cantwell: That’s great. Now, you guys own over 20 mobile home parks right now.

Charlotte Dunford: 27.

Josh Cantwell: 27?

Charlotte Dunford: Right.

Josh Cantwell: Fantastic. And what is it about mobile home parks that our audience should know? Let’s say one of our audience members is a limited partner, and they’re looking at mobile home parks, they’re looking at self-storage, they’re looking at– I just interviewed a guy and we had a great conversation around passive investing in car washes. Obviously, we’re an expert in multifamily. But what was it about mobile homes for you out of all the different niches that you could have chosen, what attracted you to it? And what are some of the features of it that attract limited partners?

Charlotte Dunford: Right. So, what attracted me to mobile home parks, so there’s actually a big difference between mobile homes and mobile home parks, they’re totally two different asset classes. So, what we do is mobile home parks, it is a land business. The closest thing to mobile home parks would be a parking lot business. So, what attracted me to it initially was when I got in in late 2019, it was really a blue ocean. So, because mobile home parks have been a long-ignored sector, I like multifamily, I like commercial real estate or single-family homes, people have been at this game for decades, but for mobile home parks, it’s really been kind of an ignored little niche. So, that really attracted me in a way that I was able to get in and it was kind of a colder market at the time and it still is a little niche.

And instead of competing with a thousand different other players in a market and putting 1,000 bids on one property and not able to get into it. Mobile home park really offered me and a lot of investors a great way to get started, and also, at a really attractive cap rate. And fast forward to today, mobile home parks are going up from a market perspective, the market’s definitely getting more heated due to the ever-growing affordable housing crisis that our nation faces. And as we go into a recession, our economy gets into the kind of position that it is in right now. Mobile home parks actually become more popular as people are looking for less expensive housing options. So, that’s what is attractive to me.

And I think what’s attractive about mobile home parks particularly is so in the year one to year two of the entire real estate cycle. So, we all know real estate has a cycle. It goes up. Now, usually, it averages seven years. And mobile home parks is at the beginning of the curve, still, meaning that it’s still early to get in. So, buy and selling real estate a lot of time is about the wave, right? So if you want to ride the wave, you want to get in at a good time. And I would say right now, and definitely, when I started, it was very early in the cycle.

Josh Cantwell: Yeah. Wow, that’s fantastic. So, help me understand the comparison then when you say early in the cycle versus the economy as a whole, we’re talking about the end of a cycle and we’re talking about the end of this whole 10-year boom that we’ve had. And now, the Fed’s raising rates left and right. And inflation just came out this morning, highest ever in 40 years, 9.1%. A lot of people would say, “Charlotte, I don’t get that. What do you mean when the economy feels like it’s on the back end of a boom? But mobile home parks is in the early phase.” Help our audience understand the difference and what you mean by that.

Charlotte Dunford: Right. So, the correlation between mobile home parks market and the overall market is actually much smaller. The correlation is much smaller than most other asset classes. The reason being, most of the mobile home park residents are not as affected by the economy as much as many of the other asset classes because the residents, they tend to be– sometimes, a lot of them are Social Security. So, their Social Security income is not affected by losing a job because that’s something that’s very stable and because the lot rents are incredibly low to start with, the economy going down. And I agree with you that we’re in a recession and we’re at the end of the economic boom, and the economy going down does not really trigger the losses in mobile home parks as they would in other asset classes because the lot rents are incredibly low.

So, it starts at $200 to $150 in the southeast and sometimes lower and then a little bit higher in the Midwest and the higher definitely in the Western regions. Given that they’re so low, they’re still the best affordable housing option in the market. And people still need a place to live and it’s still the most affordable place in the market. So, even the economy goes down, the mobile home park overall market, even though it is affected by the overall economic situation but does not have as much correlation. So, that’s why I’m saying– yeah, go ahead.

Josh Cantwell: It makes a lot of sense because you’re dealing with people who are looking at an affordable house, their mobile home, they want to put on your park. They’re essentially renting the lot or tying into the water, the sewer, the electric. And then they’re paying for that over and above their lot rent.

And somebody that might be making on that lower income scale, they’re going to continue to make some of that lower income. Maybe they have a job, but it’s a lower income job or a fixed income Social Security type of situation, not going to be overall affected, versus a highly compensated salesperson who works at a major medical device place or pharmaceutical place, and that whole company decides to cut 30% of their workforce and they just chop everybody off.

And on Friday, you’re employed, Friday afternoon, you’re not. And all of a sudden, those people’s incomes go from $350,000 a year to zero. Those are greatly affected by a recession that we might be experiencing versus the client that you have. So, my understanding when you say this is so close to the land business is because you’re just, again, renting the lot, renting the land, the pad, and essentially then charging them for water, sewer, gas, electric, whatever those amenities are, whatever the utilities are.

And so, what’s an ideal park for you? Like, if you could describe the ideal park to invest in for you as an operator and for a limited partner to take a look at partnering on, what does that look like? Like, if I had an extra whatever amount of dollars that I wanted to invest as an LP or I was looking to be a general partner operator, help me understand the ideal park in your eyes.

Charlotte Dunford: So, the ideal park would be anywhere around 20 to 30 lots. Sometimes it can be a little higher, but 20 to 30 lots, 100% tenant owned and over 90% occupied and public city, public water and sewer paid by the tenants already submetered. So, those are some of the most critical things that I look at because all of those said to me that they’re paying for the utilities, that means it really. So, the more it looks like land business, the better the model is. So, would the criteria that I just listed, the parameters that I just listed are very much supporting the land model?

Josh Cantwell: Got it. I love it. Now, I’ve got a buddy of mine who’s a limited partner of ours, and he tells me he’s looking at his first mobile home park deal. And as multifamily and a lot of the competition in multifamily has been going on, as you’re aware of, the preferred returns on those types of deals have kind of gotten compressed and gone down. Cap rates have gone down.

But with mobile home parks, he tells me, look, I can still get like a 9 or a 10 pref on my limited partner investment. The cap rates are still really high. So, help our audience understand the difference or some of the comparable numbers, like interest rate comparison, cap rate comparison, preferred return comparison because like you said, mobile home parks are still at that early stage of growth, which typically allows for higher returns, higher cap rates.

So, help me understand the comparison because you’ve looked at multifamily a lot. That’s almost a sector that you went into. I’m sure you’re very schooled on what’s going on there. Help us understand the comparable difference in what kind of returns somebody could get, both as an operator or as a limited partner when comparing the two.

Charlotte Dunford: Right. So, I think the best thing to do is give an example of a deal that we actually recently sold. So, we purchased the deal in June of 2020 for $325,000, and it was in the Midwest market, Iowa market, and it was approximately 20 lots. And we sold it in May of 2022 and we sold it for $495,000. And the overall preferred rate of return to our limited partner investors is a cumulative 10% cash on cash pref.

Josh Cantwell: Okay.

Charlotte Dunford: And then after that, it triggers a waterfall, but those are very, very attractive numbers. And at the end of the day, we were able to achieve over 18% internal rate of return within 22 months of holding time and also over 19% of an annualized return after we sold the property. So, that’s just an example of what actually happened or actually delivered.

Josh Cantwell: Got it. I love it. That’s fantastic. And you’re bullish on that market. I’m bullish on it, even though I don’t even own any mobile home parks because affordable housing, right?

Charlotte Dunford: That’s right.

Josh Cantwell: Like literally, there isn’t any affordable housing being built. It’s like everything that goes up is $400,000 or more, and the average American is getting boxed out. And a friend of mine is the chief economist. Actually, the vice president of market economics is his official title, but he’s the economist for Auction.com. And he was on the show the other day. And he’s like, “Look, Josh, the appreciation in single-family homes has been slowing down, but it’s still appreciating. It used to be 15 last year, it was 25% year over year. Now, it’s about 12.2%. So, you have an appreciating single-family home market. You have increasing costs of debt. You have your 30-year fixed mortgage, which was previously at 3% or 3.5%. Now, it’s 5.5% to almost 6%. So, the cost of the assets going up, the cost of the debt is going up, and the actual rise in the mortgage payment is up 51%.”

Charlotte Dunford: Crazy.

Josh Cantwell: What most people live on is their mortgage payment, right?

Charlotte Dunford: Right.

Josh Cantwell: How much is the payment? How much is my car payment? How much is my house payments?

Charlotte Dunford: That’s right.

Josh Cantwell: So, what we’re paying, two grand a year ago for their house payment. Now, it’s three grand. It’s $1,000 difference in less than a year. Affordable housing now becomes a major issue. Mobile home parks are obviously very affordable, but I’ve also heard, Charlotte, that a lot of municipalities, cities are not super– they don’t really want a lot of mobile home parks necessarily. So, how can mobile home parks continue to be developed, built to solve more of this affordable housing issue? Help me understand, where do mobile home parks fit in there? And how can it be part of the long-term solution?

Charlotte Dunford: So, you’re exactly right. And that cities and counties, the government, local governments usually are not really fond of home parks because of the stigma, because they think it’s an eyesore, because the residents in the cities don’t like it and they just don’t think it provides any value. So, you’re right in that. They really, really do not like this as a class. A lot of them do not like it unless they realize that it is actually adding value to the city, it’s actually providing a solution to the affordable housing crisis in the city, and they understand that.

So, some of them actually work with us to help us fill the lots, but most of them, mobile home parks are not being developed nationwide. They’re extremely difficult to be developed because of the zoning and permitting process. And it’s expensive. It is really, really excruciating. So, that actually plays in the favor of mobile home park investors because basic economics tell us that if the affordable housing crisis, the demand for affordable housing keeps growing, and the supply is limited. It is limited because people do not allow them to be built.

So, this ever-growing demand and this steady supply kicks up the price. So, unfortunately, given the way it is and the situation we’re in right now, mobile home parks are being built but very, very, very slowly and not nearly enough to catch up with the demand. So, that is actually good news for investors because that means the rarer something is, the more precious it is, the more valuable something is. So, that keeps the rent high and that keeps our mobile home park housing products valuable and keeps investments valuable.

Josh Cantwell: Keeps your parks full and your cash flow coming.

Charlotte Dunford: That’s right. And you won’t have to worry about oversupply issue. So, the problem is there, and we’re here to solve it, but it’s a booming business, it really is a business.

Josh Cantwell: I love it. So, it’s not necessarily going to be a long-term solution by building more because there’s not really a lot of new development happening. However, if you’re in to buy an existing park, do some kind of value add than that park because the park itself is a current solution to the home affordability issue that allows you to charge more, which is going to give you more cash and a better rate of return to both the operator and the limited partner. I love it. I don’t know how we’re going to solve this, Charlotte, this affordable housing issue, because everywhere you turn, it’s like there really isn’t a solution to it.

Charlotte Dunford: It’s always an issue and it always has been an issue and it will be an issue for the foreseeable future. And for mobile home park investors, really, right now is a great time to invest because there are still a lot of mom-and-pop mobile home park owners out there. And what that tells me is that usually, mom-and-pop mobile home park owners, they keep their lot rents pretty low, and there’s a lot more meat on the bone and there’s a lot more room to raise the rent and bring it to market.

Even if you raise it around by $50, it’s still way below market as far as the mobile home park lot rent versus apartment rent. So, it’s not even comparable. There’s a huge, huge gap. So, as long as the gap is there, the value of mobile home park is there, and the demand will be there because you are the most affordable money-for-value housing product in the market.

Josh Cantwell: I love it. Charlotte, let’s switch gears a little bit and talk about your entrepreneurial journey. You left China at basically 16 years old with just your basic belongings, immigrated, first-generation American citizen, and a college graduate. Very much in many ways, you’re kind of achieving the American dream, if you will, that people talk about. And I’m sure that wasn’t without its challenges. So, it would be remiss of me not to ask you about that process and what it was like for you, and also, to kind of tell your story because there are so many people if somebody can immigrate from a long way away to a new place with a new language and get a college education and become successful investor, everybody should be able to do that, right? Everybody should be able to do that.

Charlotte Dunford: Very much so. Everybody should be able to do that. I always believe that if I could do that, everybody should be able to do that. And I think, maybe it is, for me, the challenges turn into an advantage because I was not born in the United States, I was not given the resources that many of my fellow Americans were born with. So, I think that if you are born with something, you don’t appreciate something as much as you would if you had to fight for something, right? So, growing up, if you keep asking your parents for money and it was given to you, you probably don’t care how much you spend because you didn’t work hard for it. You don’t understand.

So, for me, really, the challenges, every single step was a challenge. I really got on that plane at 16 years old. I did not speak English, very little. I had to learn everything from scratch. Everything was new to me. It was challenging, at the same time, exciting. Every single day was a challenge. But again, I took the challenge as an opportunity to grow everything. But I think the biggest thing is that you have to have that drive, you have to have that desire to succeed, you have to have a goal. You may not know what to do exactly. I did not know what to do exactly at 16 years old. I did not know exactly as this short 16-year-old little girl getting on the plane, barely speaking any English, knowing exactly how to be a founder at a private equity firm, doing mobile home parks. So, that was 11 years ago.

But you figure things out as you go, but the most important thing is you have to take action to really apply yourself, really, really apply yourself, taking actions and really try every single option that you can have and really force yourself sometimes to be tough a little bit. Give yourself a little bit tough love. An example would be the first day I arrived at my host family. Again, I did not know those host family people and they could literally be anything and I could have been kidnaped.

But I met my host family, and they were very, very kind and they got me a Chinese cookbook and they were saying that, “Oh, if you want Chinese food, I can cook for you.” And I pretty much told her that I do not want anything Chinese. I’m here in America. I travel a thousand miles over here not to have Chinese food. So, I told her that I’m here for the long haul and I have to get used to everything here. And getting used to the food is the first step to being successful and to really integrate and…

Josh Cantwell: Early on, what was your favorite American food that you had? What did you have? Was it cheeseburgers and hotdogs?

Charlotte Dunford: I actually did not like cheeseburgers at all. Part of it is because my host family is in the northeast and the flavors are pretty bland. But my favorite food, I think– that’s a really good question. I think maybe like American breakfast, I would say, that’s very different, and I really think is good. I really like American Breakfast. And now, if I go abroad for a period of time, I think American Breakfast is something that I definitely miss.

Josh Cantwell: You mean like eggs and bacon and toast?

Charlotte Dunford: That’s right, yeah. Oh, it’s good.

Josh Cantwell: What does breakfast like in China? Like why was it so different?

Charlotte Dunford: Breakfast in China is usually salty and just some congee with an egg, maybe, and maybe just a little bit of meat, but it’s not bacon. It’s not really strong flavored or anything, but American Breakfast has more sweets to it. Obviously, you’ve got pancake syrup. That’s breakfast for champions, right? So, you have sweet stuff and you have bacon, you have all the good greasy goodness. So, I love it. That’s definitely different.

Josh Cantwell: That’s fantastic. So, somebody that comes over and starts from scratch, 16, gets this host family takes care of you. They were sweet, they were great, very supportive. How does that translate into a college education? And then what happens from college to starting a private equity fund and figuring out mobile home parks? I agree with you that the lack of– whether it’s education, language, resources, money can be a major driver to say, like, well, look at all this opportunity around me, I can go make of whatever I want out of this, versus other people. And I do agree, I have three young kids, 14, 12, and 10. And right now, I’m having this constant conversation in my own mind about not spoiling them.

Charlotte Dunford: That’s right, yeah.

Josh Cantwell: My success is the fact that my father filed for bankruptcy when I was in sixth grade. I grew up in a 1,200-square-foot ranch with an unfinished basement. I got the brown bomber, it was my grandmother’s car, when I turned 16. That was barely running.

Charlotte Dunford: Right.

Josh Cantwell: Yet any of these things that my kids can now afford and I can afford to give them 10 times over. So, not having is the motivation to have. Sounds like that’s where they came from for you.

Charlotte Dunford: That’s right, exactly. Not having is the motivation to have it. And it’s interesting because I work extremely hard. You got to work extremely hard. So, I didn’t speak English. So, you have to force yourself to speak to Americans, really. I mean, I am one now, but at the time, I really forced myself to speak to everybody that I could just to practice. They may laugh at you, but whatever. So, you have to apply yourself and you have to work hard. You have to really, really, really study hard if you want to get into an American college, and the whole process, no one figured out it for me because usually, American kids, if you’re applying for college, their parents usually coach them a little bit. Okay, here is what we need to do. I had none of that. So, I figured out everything by myself, and everything was researched.

I really, really understood from a young age that not only do I need to work hard, but I also need to leverage people. So, that’s one thing I learned very, very important. So, if you’re on your own, you don’t want to do things alone, even though you are alone, technically, but there are people around you that you can work with, partner with, be friends with, ask for advice for. I would go into our principal’s office and straight up ask him to tutor my SATs, English.

Josh Cantwell: Okay.

Charlotte Dunford: Yeah. So, you just have to be not afraid to ask for that. And my principal was extremely kind and really just tutor me for a week, and then that really, really helps. And when you have no partners, I had no one to move into meets into college. So, you really have to turn someone into your partner and you really have to leverage. You don’t have your parents here. Like your kids, they probably have you to help them when they go through the college phase and move into college and drive them to college. I had none of that.

So, as a child who has nothing to protect you, you have to protect yourself and you have to seek help in a way that you make yourself valuable to people. And in turn, people will want to partner with you and help you as well. So, you have to, I guess, as young age, learn how to provide value, make myself useful because, yeah.

Josh Cantwell: I was going to ask you about advice, but you really just kind of gave it right there, right? Seeking other people to partner with, making friends and building relationships, and then leveraging those relationships, asking questions, seeking advice, not being afraid to stumble or to not know the language or not be afraid to walk into that principal’s office and ask for help on the SATs. And again, I think the more in our American culture that we baby our kids, the less they’re capable of going and seeking advice, the less they’re capable of going and asking for help because they’re afraid to be embarrassed.

Or my friend already has the answer, or this is already done for them and I don’t have it done for me and I’m afraid to stick out. And you, knowing nobody, like one of the things that resonates with me is you were not afraid to ask for help and be embarrassed. It sounds so basic, but so many kids today, including some of my own kids, they’re afraid to go do something for the fear of being laughed at or embarrassed.

And I think a lot of adults, Charlotte, carry that same insecurity that I’m not going to go ask about mobile home park investing because I’m afraid of what somebody might say. I’m not going to invest or I’m not going to go pick up a book or I’m not going to go to a seminar. I’m not going to listen to a podcast. I’m not going to make an offer. I’m not going to go recruit capital because it’s going to make me feel bad.

Charlotte Dunford: Exactly. And to your point, I think, again, challenges is what can drive people, and when you have that many challenges, I was pretty much in survival mode. And when you’re in survival mode, being embarrassed is the last thing that I worry about, that worries you, that worries me. If you’re about to die and you have to survive, being embarrassed is the least of your worries. So, of course, I had to do that. If I was very well pampered and protected, maybe I wouldn’t do that.

But the thing is, if I was in survival mode, and being embarrassed didn’t even come across my mind, it’s just something I had to do. So, I think you have to push yourself over the cliff and just make yourself jump. That’s really it. And not everybody is, I think, fit to do that because everybody has different personalities, but I think for me, at least, that’s what happened.

Josh Cantwell: Oh, my God, Charlotte, I want to end on that because I think that’s such a powerful message for our audience, no matter what they’re doing, whether it’s investing in as a general partner, limited partner, whether they’re not investing yet but just learning about it. That message that you just conveyed is so critical on a personal level, not necessarily a business level, but a personal level to just make that happen. And when you’re in survival mode, man, I could tell you the times in business when I probably accomplished the most is what I was most desperate. When something went wrong, some deal was going sideways or backwards, or I have been in a fight with my wife about something that was money related, and all of a sudden, I had to get really creative to course correct whatever that problem was. I accomplished the most, again, because I was in some cases, in survival mode.

Charlotte Dunford: That’s right. You put yourself into overdrive and you just have to. If you know you cannot fail, you cannot fail. There’s no turning back. There’s no, you cannot fail. So, that really puts you in a position to really work the hardest.

Josh Cantwell: Yeah. Well, I love this interview, Charlotte. Thank you so much for sharing your personal journey. I’m sure our team can go connect with you on social media, become an investor with you, learn more about you. Where can they do that?

Charlotte Dunford: Yeah. So, the best way to reach out to me is to go to our website at JohnsCreekCapital.com. And yep, there you can contact, and we usually reach out within the same business day. And of course, you can also find myself and Johns Creek Capital on LinkedIn.

Josh Cantwell: Okay, LinkedIn and the website JohnsCreekCapital.com. Charlotte, listen, I had a blast getting to know you today. Thank you so much for joining me.

Charlotte Dunford: Thank you so much for having me.

[CLOSING]

Josh Cantwell: Well, guys, there you have it. I hope you enjoyed that interview with Charlotte. If you did, please push down, hit the Subscribe button on the Accelerated Investor podcast, whether it’s on iTunes, Spotify, YouTube, wherever you find it. Share this interview all over social media. And if you or your parents are immigrants and this resonated with you, please leave us a review, a rating. Let us know how we did.

So many of us, and the United States is just such a melting pot for all these people coming in with nothing that have become major success stories, just like Charlotte. I really think it’s important to recognize what an amazing world we live in, but specifically, what an amazing country we live in in the United States that would allow my immigrant grandparents to immigrate, my wife’s immigrant parents come in from Italy, Charlotte, immigrant from China. And what an amazing place the United States is for entrepreneurship. If you agree with that, leave us a rating, leave us a review, give us some feedback, let us know. Share this episode all over social media. I would be so grateful. Thank you so much for joining me today on Accelerated Investor, and we’ll see you next time.

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