The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE!
In my latest podcast interview, I’m speaking with Jonathan Tuttle—a real estate investor and coach who is here to talk all about flipping mobile homes for passive income.
Despite the stigma associated with mobile homes, there’s no question that they’re an incredible investment vehicle. Not only that, but they create a much needed solution to the affordable housing crisis in America.
And hey, I totally get that buying a mobile home park may be a little intimidating, especially to a first time real estate investor, but you don’t have to start there. Simply buying and flipping a single mobile home is an easy way to get your foot in the door, and offers some incredible benefits; low barrier to entry, low competition, little skill required, massive demand, and if that’s not enough, the BEST returns in the business!
If you’re looking for a low-risk, high-reward, real estate opportunity that delivers the best bang for your buck with great returns on your time and investment, don’t miss my interview with Jonathan Tuttle!
Key Takeaways with Jonathan Tuttle
- Getting started with mobile home park investing
- Profitably flipping mobile homes—and the value-add improvements you can make to get 10x returns.
- The ONLY mobile home investing course you’ll EVER need!
- Who is mobile home investing best suited for?
- The major benefits of mobile home park investing—and what makes it the highest performing real estate money can buy.
- The steps involved from buying to profit. Don’t forget to do your due diligence!
- The easiest way to get financing for a mobile home park.
- What are the risks of mobile home park investing?
- Why you want to own the land and not the actual mobile homes.
- How to use Facebook to attract and screen for high quality tenants.
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Josh Cantwell: So, you guys, welcome back to Accelerated Real Estate Investor. Hey, it’s Josh. Today, I’m excited to be interviewing Jonathan Tuttle. Jonathan has an extensive real estate background and experience. He grew up very early in the business and very young in his teenage years, watching his father as a general contractor building over 80 custom homes. Jonathan was previously the Vice President at Miller Chicago Real Estate, which is a leading commercial brokerage firm in the Chicagoland area, and also served as the President of Midwest for Yale Realty and Capital Advisors.
Recently, Jonathan has been selected by Forbes magazine to be a contributor to the Forbes Real Estate Council. He’s also been featured on 35 National Real Estate Investing Podcast. He’s also been selected by the prestigious Crain’s Chicago Business as one of the best-dressed Chicagoans. He is laser-focused on the mobile home park industry and the manufactured home industry. He’s been selected to speak on the main stage at the 2020 Manufactured Housing Institute National Congress & Expo. He’s one of the leading authorities on manufactured and mobile home park investing. I hope you love this interview with Jonathan Tuttle. Here we go.
Josh Cantwell: So, hey, Jonathan, thank you so much for joining us today on Accelerated Real Estate Investor. I know you’re a busy man with lots of deals. Thanks for jumping on.
Jonathan Tuttle: Thanks, man. I’m excited to be here.
Josh Cantwell: Absolutely. So, Jonathan, I’m always curious when I kind of meet a new friend to have somebody on the podcast that I don’t know that well, first, kind of an opportunity for you and I to have kind of a deep dive discussion. I’m always curious to see what they’re up to today, what is something that they’re working on right now that they’re really excited about. So, tell us a little bit more about what you have going on.
Jonathan Tuttle: Yeah, well, I think I got the hat to match, but I’m working on recording concept for my Mobile Home Wealth Academy, which is basically a step-by-step course, teaching people how to flip mobile homes. And then we have a bonus section where we’re actually teaching people how to get there, acquire their first mobile home park. So, I’m pretty excited, recording even on the holiday weekend.
Josh Cantwell: Alright. Good deal. So, I’m curious, you caught my attention already about flipping mobile homes, right? I have had a few other guys on the podcast talk about buying and holding and owning mobile home parks, but not too many guys mentioned flipping mobile homes. So, just give us a little more insight into that.
Jonathan Tuttle: Yeah, well, I do have a real estate fund that buys and acquires mobile home parks, but it’s for investors, which is only about 12% of the population. So, I’m like, well, doing this podcast, and my name’s out there, what can be a solution for people that want to first get involved in the business and kind of teach them the ropes of this kind of weird niche? And like, now, it’s becoming more mainstream, but the reason I got into is like I just want to have another avenue for people, the 88% of people that can get involved in mobile home parks.
And so, the cool thing about it is like it’s for anybody, it’s first who wants to get involved with the easiest form of real estate because like the 70s, 80s mobile home, you get for a few grand, if not, less than that, if somebody hands it to you, and you give them a dollar for the title. So, it’s just an avenue for people that are just first starting it out to get involved like a really, really simple real estate. It’s basically like flipping cars, these titles. There are some things you didn’t know, that’s with the course, you could do it yourself, but they kind of really fast track it because the biggest challenge basically is finding the homes and then also how to market it and then also just the small improvements, not over-improving it.
So, a lot of people think like single-family houses, this is a TV show as well. Everyone is doing that, and it takes a lot more capital, it takes a higher credit. If you just have a few grand, you might be a college student, or if you’re about to retire, you want an avenue to do something really easy, it’s mobile home flipping. And like I said, really, not a lot of people do it. So, it’s kind of a blue ocean.
Josh Cantwell: Yeah, I’ve done hundreds and hundreds and hundreds of deals with 3,700 units of apartments. We’ve had 100 guests on this podcast. Nobody’s ever mentioned flipping mobile homes. So, that’s a pretty one. Dude, I like it. I like it, but I also like the idea that you’re wanting more to buy a park, right? And nobody’s really building mobile home parks. I was just in Florida. Mobile home parks are everywhere in Florida, but the reason we talk about, well, here’s your on track, here’s your way to kind of get into mobile home park investing by just doing a small deal, really small, flipping a mobile home house for a couple of thousand bucks, pretty cool idea. What are some of the minor improvements that somebody can make in order to increase the value and make a profit from a mobile home flip?
Jonathan Tuttle: Yeah, and a great segue too, but exactly, that was the whole premise. And the concept was to kind of get people start smaller and they get into a park and then they start getting into a lot bigger stuff, but the small stuff is better. Less is more. Usually, it’s minimal, have ability, so floors, new carpet, power wash the outside pane if you need to replace the windows. The cool thing for a mobile home, for example, the outside structure, you can’t make improvements to the outside structure, besides the pane, improving the windows. You can’t say, oh, I want to make a new sliding door. I want to put in twice as big as windows because that will actually make the home collapse.
Josh Cantwell: Yeah, right.
Jonathan Tuttle: It’s mostly, in the inside, you can move walls and stuff, but it’s minimal. Minimal is better. So, a lot of times, going like Home Depot, Lowe’s, and Menards, whatever’s by you, replacing the fixtures, cleaning up the interior, fixing up floors, painting the interior walls, and just if needed, place the appliances. It’s literally that simple. And I guess the best analogy of it’s like arbitrage, so like nowadays, everyone has the e-Con stores, which is a big trend thing where it’s like hey you see the Facebook feed and it’s like some couple of years ago it was the fidget spinners. Well, the same premise is like, well, people get that stuff from China and ship it over and it’s marketed but are online. It’s the same thing. It’s not like officially a price here. Most people go to Google and find out like wholesale Cost Mart. It’s the same thing with mobile home parks or mobile homes, as you said because real estate brokers don’t really want to deal with them because of the size of it. They’re not going to go, I’m selling a $500,000 house or do I want to sell $15,000 mobile homes.
Josh Cantwell: Yeah, right.
Jonathan Tuttle: So, what’s the commission? They work on commission, so they don’t want to deal with that, they don’t have to price it. And the data in our industry is kind of more like 10 to 15 years behind. So, even the data aggregators, there’s a couple of sources that keep track of prices, but it’s not even relevant. It’s not really accurate. So, it’s like arbitrages. It’s the same analogy like I was saying to the Shopify story where you put in front of people online, it’s the same thing on mobile homes. So, it should be like $5,000 or $10,000 on a very, very small investment by just making small improvements. Now, that home is going to be viable, it’s nicer, newer, and cleaner. We get for another 20, 30 years.
Josh Cantwell: Right. I love it. And it’s something that almost anybody can do. The palatable price point is right, cheap and easy and inexpensive. That’s great. So, when it comes to your course, your training that you’re putting together, help me understand what’s going to be in the training, and probably, what we’ve already talked about, flipping mobile homes and then investing in mobile home parks, I imagine is the two parts, but what do people need to know? Give us like if I enrolled in your course, what are some of the initial foundational things that I would learn from you about investing in mobile homes and mobile home parks? Give our audience, let’s assume somebody is like, what’s a mobile home park? Like how do I make money with that, right? A lot of our audience is fairly seasoned. They kind of know, but the stuff, there’s going to be some new people on. Where do they start? What do you teach them out of the gate?
Jonathan Tuttle: Yeah, so great question. So, we have a foundation. It’s pretty all-encompassing. I brought even the competitors, of course, to see an idea, gauge what they were doing exactly. Like just, for example, the bonus content is like seven or eight hours, which is longer than the other courses. I mean, to everyone, we even have like a health component, so like in your mind, your physiology and your biology are correct. And we have a high level of attorneys that focus on parks. We have CPAs and their partners with park managers and park investors. And then we also have mobile home guys that are flipping. So, we have all this full-encompassing perspective, but it really comes down to, just like we set the foundation. Who is the customer? How does the industry work? What’s the history? I have background history of the mobile home parks in the 40s, talking about, even the– have you seen the movie, All the Money in the World?
Josh Cantwell: Yeah.
Jonathan Tuttle: Yeah, Mark Wahlberg. Well, that was about J. Paul Getty. J. Paul Getty was a billionaire. And what is one of the main industries he made a lot of money in?
Josh Cantwell: Yeah, mobile homes.
Jonathan Tuttle: So, I talk about like some people are fascinated about that because back in the day, he was the first billionaire they make movies on today with Mark Wahlberg talking about him. Well, it has been a long time, but his home is sold. So, I talk about kind of the history of mobile homes to how it got to where it is today, how the stigma is. And it has different avenues to make money with mobile homes, whether it be wholesale flipping, buy and rent, different strategies, and then I have all the contracts. And it’s very systematic. It’s doing like a good job in the course. It’s like here’s the section, it’s really easy to navigate. Some of the guests have five or ten minutes, some of them being like 30 or 40 minutes.
Another really cool thing I incorporate in there, just because I have my fun and my other businesses, I have a lot of high end attorneys and CPAs I work with. So, I have a section to teaching people how to structure like special purpose vehicles. People unfamiliar with that, that’s like a very high-level way of how Wall Street buys and acquires businesses and also mitigates your risks. So, I have a whole like 20 minutes on that. Visible LLC, Sacramento, New Mexico, Visible LLC structure, just really advanced stuff, stuffs people want to go. Even though it’s like a simple course teaching people how to flip and acquire mobile homes, I was like, why don’t I just build this in here? So, people do advance or something is more seasoned. They’re getting some stuff that will cost you a couple of thousand dollars just to talk to an attorney about it. I’m just like, can I even have the attorneys on there to talk about it, too, on top of that?
So, just one of the ways to provide high value and the whole premise was that in the bonus section of like how to acquire the first park. Everyone else charges a couple of grand for that alone. Like, well, I could do as an upsell, but I’d rather just be like this all-encompassing course and really build rapport and maybe bring value to people that need it because at the end of the day, our biggest challenge, especially on the bank side, is the stigma in getting people wrapped around, especially with our marketing lot, they will come in and they’re like, oh yeah, I heard they’re good investments, but they need to understand the dynamic. It’s a short run. We’re not going to be able to do mobile home funds in like 10, 15 years. It’s supply and demand economics. So, kind of get this done, kind of putting the good energy back out there, teach me about the business. And also, what that also does too, is the local government is also one of the biggest challenges, too. So, we’re kind of like getting a settlement. This is a great investment. Not only that, but it also provides affordable housing, which is a huge crisis in America. And so, everyone wins.
Josh Cantwell: No doubt. So, for you, Jonathan, help me understand, help our audience understand. Why would somebody or why should somebody look at mobile homes versus other niches, whether it be single-family home flips or apartments or self-storage or retail and office? Help our audience understand the economics around mobile home parks, some of the reasons, the financial reasons why, and then the supply and demand, we know they’re not building any more mobile home parks, and so supply and demand, that’s why it has a short-run rate like you mentioned. So, just talk to that about why you chose the industry? Or why do other people choose the industry over other niches?
Jonathan Tuttle: Yeah, great question. So, it has two sides to it. So, like I said, what makes it really positive is also makes it the hardest to scale.
Josh Cantwell: Yeah.
Jonathan Tuttle: So, the things that make it really attractive also make it like works against you once you want to drill. So, on the mobile home side, this is basically a natural transition. So, I think the reason I have the course is like I said, they can help people who need to learn about it, and it’s a way for anybody to get involved, like competitively to single-family, a single-family chase, you can get them like a 700 credit, get at least 5% or 10% down, maybe 20%, depending on your investments. And so, like that amount down, you can have two or three mobile homes and then five, depending on your area. So, I mean, just really a low very entry and really easy.
And the park side, which you kind of segue into is, the reason I got into it, my dad got in the space about 15 years ago. And he was a real estate developer, built 75 custom homes. When I was a kid, I used to work in the job sites, and when I was a teenager, I filled the dumpsters up with like the footboards and all that stuff, which is what I worked with dad during the summer. And he also had apartment buildings and other niches. It was like I saw all the different top niches. We had office buildings and obviously, some retail. We had a bowling alley, a golf course, a really small town, but I saw all the different things.
And when he got into that, he’s like I should have gotten this like 20 years ago. And like right after that was the downturn, last Great Recession, 2008, 2010, 2011. And basically, it was the highest performing real estate. Even Wall Street Journal like last year came out about January, February last year and said, hey, the highest performing real estate was mobile home parks and had talked like returns in the last decade or plus. And that is one of the stocks or one of the reasons, a 4100%. We have had a 2800% return in the last decade. And then also, Blackstone, all these are pretty private equity in the last five years discovered as well. So, once the private equity and smart money start borrowing, that’s where you know it’s in a good market.
But the main thing, really attractive to me was like at that time was, like I said, for the home, same thing, blue ocean, good returns, and just the fact that you’re also serving affordable housing, it takes less capital, but now that’s all kind of changing. So, we can’t allude to something else because now it’s like all the Wall Street guys are coming in, there’s only about 44,000 parks in America. You can’t really develop new ones. And it goes back to this thing, while the cities lose money when they have a mobile home. So, if you are a mobile home tenant, which again is what really benefits you guys are remodeling these mobile homes. For example, in Illinois, the typical mobile home is probably 5, 10, up to 50 bucks, 1% to 3% of the value of the mobile home. And so, the mobile home, they don’t have a value to them.
So, your real estate taxes are like 100 bucks a year, 200 bucks a year, but across the street, you’re going to be three or four, five, ten-grand, depending on the size of your house, but at least three-grand, like a $100,000 tiny house, like a luxury house. The average house in America is over $300,000. So, a $100,000 house, single-family, is one-third of that, it’s $3,000 approximately real estate tax, depending on the county, I don’t know, it’s really high, but they have the same school, same fire, same police. So, that’s why they said they don’t like it because they’re losing thousands of dollars to have that tenant get the same benefits of living in that town.
Josh Cantwell: Yeah. And the mobile home park owner because the stuff on it is not structure, it’s not a permanent structure, they’re probably just also paying tax on the land, right? So, you have, let’s say, a 10-acre park, massive amounts of land, or a two-acre park or a six-acre park, whatever, and the owner of the park is paying very little in real estate tax because it’s all land. Then you have the mobile home itself, which is valuable, like a car, they’re paying very little tax. And then, across the street, there’s a development with $500,000 homes or $800,000 homes, they are paying $20,000 in taxes per house. Now, I get it. I’ve got a lot of mobile home guys on this podcast. Never thought about that. That’s why. Right there, that’s a big deal. That’s why these cities and municipalities don’t want any more mobile home parks. That’s why 100%.
Jonathan Tuttle: Exactly.
Josh Cantwell: Got it. Wow, that’s great. Now, let me go circle back to the Wall Street Journal article and your own investments and Sam Zell and a lot of these other guys that have invested in mobile homes. Why is it the highest performing and best return? What do you think causes that? Is it just the entry point versus the rent? Is it the entry point versus the lot rent? What makes it the highest performing? It definitely is, I know it is, but in your opinion, what do you think makes it the highest performing of them all?
Jonathan Tuttle: It comes down to supply and demand. It’s kind of like there are about 60 million Americans who need affordable housing. We know that even with automation, even with the $15 an hour, it actually helps benefit us because the average American makes $133,000 a year. Half the new jobs created in the last decade are minimum wage. And like if you look at the national apartment rent, it’s about $1,200, $1,300 approximately for a two-bedroom. And if the national decides a coastal city, like you mentioned and alluded to, Florida or California, some of those $400 to $500, $500 to $800, depending on if it’s like a senior. California, obviously, has astronomical rent prices, but typically, it’s like $350, $400 for a lot rent for a mobile home.
And there was a Duke study from a professor of economics there, and he was talking like the rents should be at least $500, $550 for mobile home parks if it weren’t based on inflation from when they’re first evolved in the 60s, 70s, and 80s, they were 50 bucks or 75 bucks. And a lot of mom and pops, you got to think about this, small-time farmer Joe, I was using the analogy for a free joke, because a lot of times, they’re in second-generation markets, and if they have this thing they developed, this park they developed, it’s been cash flowing without even using technology very early, records on a piece of paper, nothing is optimized, not even a website. And it’s just like resilience just because of the supply and demand. And that’s what makes it so attractive is when you come in as an investor like that’s the big thing like private equity is really like, and right now, it’s because they can roll them up. They can bring in technology efficiencies. They can bring in the quick bucks, the right managers. They can put up a website. I mean, this is basic stuff with like we’re the only industry like apartment buildings have a website. The mobile home parks, they don’t. So, just even having that, it makes a big difference when you’re searching, like, oh, my $1,200 a month apartment or $400, and I own it.
Josh Cantwell: Right. Nice. I like it. So, Jonathan, when somebody gets into buying mobile home parks and follows your system, help me understand, what is that system like? Give me the high level– is it like a three-step process, a five-step process? What goes into somebody starting from kind of scratch? Let’s say me, I own a bunch of apartments, but once I want to buy my first mobile home park following your system, where do I start? What are the steps? Get high level. We don’t have all the time to get through everything that’s in your course, obviously, hours and hours and hours of training, but what are the kind of steps that I need to be aware of to take apart from end to end and go from inception, buying it all the way to profit at the end?
Jonathan Tuttle: Yeah, great question. So, the first premise is one, the reason I can’t include that, like, it’s not fully, fully encompassing. It’s probably like four or four and a half hours total for that part buying side, but it’s enough steps, enough information to get people the first break. And that’s because like I said, I kind of made it like a 20-hour course, and maybe I’ll have that, but I just want to have it. The reason why is because if you’re doing boots on the ground, you’re flipping four or five different small mom and pop parks and you’re the one fixing up these units and making them more equity and making them do less work and putting your own CapEx into it, well, now, you have the relationship.
And we also know, so how this business does. And by relationships, in the smaller parks, the brokers I know in the gold rush right now because everyone in the private equity, our going cap rates are getting compressed, which means the prices are going up, and they’re focusing on bigger deals. If you’re a smaller park and you’re flipping like a 30- to 100-unit park, or 30 to 75 is probably the sweet spot for your first park, what’s worth a drive? Depending on the proximity to where you live and how much work needs, but that’s going to be the deal that a lot of brokers, like the bigger brokers probably want you to take that listing on because it’s not worth their commission because they’re just so busy right now. And there’s only a handful of really good mobile home park brokers, like everything else, mobile home park, people neglected it.
So, the local brokers don’t know how to do it. And they’d rather say, hey, you’d been fixing, flipping all these units for the last three years, I know I can trust you. And I was just like you 30 years ago and just want to get involved. Now, you have that relationship. You have a first access deal. We even have a contract that teaches to do like a seller finance that deal. Then we have a private Facebook group. And we use some strategies how to like network with other people because a lot of times, too, what I noticed too, especially the park space lot, people don’t want to do the work. So, the investor has the cash, hey, I’ve been flipping mobile homes for the last two years. I have a relationship with a seller where he gets the stock market and basically, you scoop up this deal. This gold mine is really hard to acquire. You provide the cash, I run it, and we could have the legal structure and everything else.
And then, the main thing with mobile home parks is due diligence. So, I have a 45-minute video on due diligence, everything you need step-by-step. And then I even have like a mobile home park lawyer, and there, we talk about that too. So, due diligence is the biggest thing because our stuff is less stuff is not seen. Like I give you an example, I saw somebody, I love social media because I have a digital marketing agency, but like some of the stuff you see on there, people trying to sell investments, somebody put like a TikTok video, like don’t be afraid to go buy a mobile home park without seeing it. I’m like, that is the worst advice, the worst. And the mobile home park, it could be the entire, like the due diligence is where the money is made and where it’s not made or you get a nightmare, that they want to sell it to you if you don’t look at it.
Josh Cantwell: Right.
Jonathan Tuttle: The infrastructure, like you don’t see the piping. The water lines and sewage lines are all cracked and broken, and you have $400,000 in repairs, but, hey, I didn’t see it. I made a phone call and I bought it online. Well, that’s where you need to go. So, due diligence is the biggest process. So, we have a 45-minute length. Really, like the main thing is the water line and sewage lines, making sure the local government, the zoning grandfathers because a lot of these things are kind of legally nonconforming because they didn’t know what to do with them. And the local municipality might like the old farmer because they grew up with them, but you come in, especially you’re like some new investor from another city, don’t pull up, and like what I said, dress down, don’t pull up an electric car. You want to look normal, just like them. You don’t want to be drawing attention in a bad way, and especially to a park owner, you look like you have more money, they’re charging more for it. So, don’t do that.
So, basically, do the due diligence as a key, borrowing sewage lines, municipality to make sure that the license will transfer over as a mobile home park as like you mentioned, they’d rather have the $20,000 single-family real estate tax, not a mobile home park that’s getting less. And this is making sure to set back. So, if you want to buy newer homes, making sure that it can actually still fit in. Like you mentioned, Florida, they’re getting a lot of those parks that are developed like the 60s, the mobile homes were smaller back then, it’s a foot wide. And so, those are kind of obsolete. The 50s, 60s homes were a lot smaller. Nowadays, even though there’s a tiny-house movement, people still won’t like a nice size of that. They don’t want to have couches like that.
So, those are kind of things you have to look out for, but due diligence is the main thing, getting the right financing. The cool thing is the easiest way to get financing for parks, usually, if it’s a smaller park, is that wherever there– well, it’s probably paid off, but whoever the park owner originally worked within the local town, local credit union, or local bank in a small town, they will usually work with you the best. The rate’s a little higher, obviously, and once you get bigger deals and you go to Fannie and Freddie, which is huge now. Fannie and Freddie love our space because of the Duty to Serve Act, which is about 37% of Fannie and Freddie has to allocate to affordable housing and farmland, and we’re the biggest recipient of that. So, we’re seeing rates the same as multifamily, if not lower right now.
Josh Cantwell: That is fantastic.
Jonathan Tuttle: For bigger deals, a million above.
Josh Cantwell: That’s fantastic. So, I know with mobile home parks, some of the ones that I’ve looked at, I don’t own any, but I’ve looked at a few to possibly buy with brokers and I know banks love the parks where you don’t own any of the actual units, you just own the land, leased out the lot. So, just talk to us for a second to our audience about what’s the ideal structure of a park and not really owning any of the actual mobile homes, right? And if you do, I believe, I’ve been told, again, I’ve never done a deal, but I’ve been told the best way to do it is to have the actual mobile home parks owned by a separate LLC and get separate financing for that. So, the park is truly just the land, and you’re leasing out the lots and you have a lot of income with very little overhead. So, just talk to that for a minute, and we’re just not going to see and not seeing it, going and buying on-site unseen, you could be buying something where you have a lot of actual units, the actual mobile homes we’d actually be buying with that. It’s included in the purchase price, it has to be separate. That’s a big risk with mobile home parks a lot of people don’t talk about. Just talk to that for a minute, Jonathan.
Jonathan Tuttle: Yeah, every business and every real estate has a risk. And like, our industry gets a lot of credit for doing a lot of it, but there’s still a risk. And like you mentioned, like going back to what I said, if there are park-owned homes, you want to go through them. And we always recommend, like I said, when you pull up, drive through, say, hey, my grandma is moving in, my mom’s moving in. How’s the park? Let’s go to the local police departments. Hey, is there crime going on there? What’s the type of tenants there? Like our parks, if the police come to, they love our parks because we have rules, regs, it’s meticulously maintained, and like we’re an asset to the city, but we also have, like, some owners that kind of run into the ground.
So, you walk into each unit, you can walk. There is one unit. It’s not on my course. Still, we never went in this unit until we bought it from the tenant. It’s like a little episode of waters. And she was like, any cost, who go into it, what happens is if you’re buying that park, it was going to cost you like $500, $600 to get a couple of guys to fill up some dumpsters, put on it, and get it out of there. So, if there’s like five of those, that’s actually $2,500. It’s not a substantial amount of money, but $2,500, I say, if there’s like five units that you need substantially clean or they need repairs. And that’s another reason why park owners are like, even though we’re high cash and cash business if they’re older, they don’t want to do like a lot of us work anymore. A lot of times, like I said, that’s why fixing repairs is such a key acquisition to help these owners.
Josh Cantwell: Love it. Love it. Jonathan, I’m interested to hear more about how you got started. I know you said your dad was in the business, built some custom homes, specifically into mobile homes. Obviously, you could have gone into building and being a general contractor like your dad, building custom homes like your dad, but what truly was it like at the very beginning with your first park, your first investment? And what were some early challenges that you faced?
Jonathan Tuttle: So, it was around 2006, I got involved and my dad the first one. And I used to tell my friends like at that point, I was in the suburbs outside of Chicago, and my friends are like, there was even a parking area, so like mobile home parks like that, so we are.
Josh Cantwell: It sounds gross.
Jonathan Tuttle: Yeah, and like there, I think was a trailer park. What’s it called? Trailer Park Boys, I think that came out a couple of years after…
Josh Cantwell: Yeah, for sure.
Jonathan Tuttle: And then, the movie, 8 Mile, but like I said, my dad said that was the best, and we noticed from the last downturn. So, for example, I saw in person, throughout my lifetime, but like literally, we didn’t have any problems. We actually were raising rents during the last time. Like when everyone else is scrambling, the single-family is crashing, and what happened was the single-family people, they were coming, they’re begging to come in because they lost their house. They had these houses they couldn’t afford, but they made 10 bucks. Now, if you make 10 bucks an hour, minimum wage, you can live in most mobile home parks at that time, especially.
So, those were the only places that are the homeless. And it’s way cheaper than the hotel. So, we always have that dynamic. And I just saw that. And that’s what really drove me into it. So, we actually doubled the value of the park during the last downturn. I’m like, this is golden like this is great. And then, there’s another big park owner that was in the area. He owned everything. He owned like an apartment building. I think he owned a car dealership, a Cadillac dealership, and he owned a 600-unit park. And the next 20 minutes, we’re in the next town over. And he was like, hey, just pick up. You transport them out. Here’s like five units for free.
Josh Cantwell: Wow.
Jonathan Tuttle: So, he got five units for free, which brought the value of our park up, $40,000 per home. And that’s why I’ve got to mention what you said in the last, I thought I was going to catch my breath to tell you, I got to say, but banks prefer, like I said, the units going back to that, the more you want to own the land and not actually own the actual homes. And so, for Fannie and Freddie, they want about less than 20, 25 five units. And if you have more than that, they want to see a game plan. And usually, what it comes down to is like Facebook marketing. The marketplace is huge. That’s your demographics on there. You’d be surprised, people like even the senior citizens like I saw all the time, and they’re like, oh, I saw you, because they use Facebook. That’s the biggest and growing demographic is the seniors. So, like, you put a marketplace near their home all day, you fly out like that. And then so, going back to the question because I had to fully answer it. In regards to like financing, yeah, Fannie and Freddie, they are really big into like the land. This is called like a land-lease community, so that’s…
Josh Cantwell: Yeah, I love it. Yeah, I look at a park, and it was kind of a mixture of park-owned homes and resident-owned homes. And we ended up passing on that one because there were way too many park-owned homes. And the park-owned homes, the ones that I went through, you could tell they hadn’t got to them in a long time, and those cans just needed to be basically thrown out and then just wipe the lot clean and basically bring in a new mobile home on that spot, but to me, like that particular deal, I remember we walked because the percentage of park-owned homes was way too high. And again, I don’t know anything about the mobile home park business compared to what you know, but that to me stood out.
Jonathan, I’m curious. Now, that you’ve had success with this business that now, you’re an educator in the business and you’re an expert at it as far as buying them, how to buy them, you put your course together, what kind of advice would you give your kind of younger former self? Or what kind of advice would you give one of our subscribers or listeners who are interested in mobile home parks? What are some things that you’ve learned along the way, good, bad, or ugly, that you’d like to pass along to them?
Jonathan Tuttle: Yeah, the main thing is just to do your research. It’s got a lot of more hair in the deals, like you mentioned always if you find a park that has park-owned homes, it’s going to be what’s your plan and what to do to kind of test this out before you buy a park. It goes back to that Facebook marketplace. Like I just said, do a test of that, like, don’t give the exact location, but use the area, do a test and see how many people. You get 20, 30 people responding and then see of those people responding, do you need finance? Are they saying they need financing or they’re cash buyers? And you can find out what your market is. So, that was on a couple of things.
That’s how to see if the people in the area could be a cash buyer or they need any bank or especially like savings and loans, and the big thing with that challenges and savings loans, a lot of people would be dealing with different demographics. So, people like compared to apartments, if were four times cheaper than apartments, people tend to forget these certain people. Some of these people don’t have bank accounts or they get nervous and they want to have good credit. And so, they won’t even take the steps necessary to go get the financing.
So, we can test the market to see who is on top of 10 in the market, and which you mentioned, the new homes are 80,000 new homes. So, if you have to replace a lot in your homes, remember, most of the parks in the 60s, 70s, 80s, you want to see the immaturity of the stock and see what the quality of it is or partnered up with somebody from the academy. I’ll fix those up because that could be your biggest liability. Your cash flow could be going out, yeah, you have a great cash flow on this, but then you have to refix 20 units where you’re not going to be cash-flow positive for two years or whatever comes out to be depending on the size of the park.
And so, knowing those pitfalls is really like the home is the biggest advantage, but also the disadvantage. The biggest advantage is once it’s off the park, and then the tenant owns it, yeah, that’s why the typical expense ratio for apartments is like 50%, 55%, 60%, and the typical mobile home parks is 35% and 40%, and like 42.4% for institutional. So, the reason is when I’m replacing every AC unit, when I’m replacing a roof because the tenant does it. So, the advantage of that’s the good and the bad. The good is, I guess, what’s off your plate? So, you have to have a plan, a way to do that, test the market, kind of I won’t listen to anybody else, but do your own research, do your own task. Facebook is the easiest way for five bucks, and like add 10 bucks, and then you see if you get 20 responses on Facebook, just for example, on social media, half the people, it’s like a salesman. The salesman was big. Now, it kind of knows what they are. The top people don’t know who you are, but they are inquiring. They’re kind of moving down the funnel. They’re kind of in the decision mode.
So, you want to have like other 20 people, maybe three or five will be the tenants, and those three or five people do that, what’s the background? What kind of job? So, make sure you have a stable job. We met someone recently. He just got out of prison. I’m not joking. He’s on Facebook and he’s like, yeah, I’ll pay you $25,000 cash and like, would you go to prison for all those drugs? Well, then, that’s obviously drug money. I don’t really…
Josh Cantwell: Nice.
Jonathan Tuttle: I don’t want them to come back, and I don’t know if the laws are that, but obviously, he’s been in prison for seven years. I’ll send you $25,000 cash. Okay, so you want to prequalify the people. And then the tenants, the neighbors aren’t going to want that, like your tenants are senior citizens, 50% approximately of mobile home park tenants are senior citizens because they want something that’s quiet and safe. They want to feel– and that’s another good thing too. The value for seniors is because, compared to like a classy apartment, well, they get to pull the car out front, they have their own little yard, they have some stuff to do, but they have enough privacy. So, they don’t have people, neighbors, above and below them, kids running down the hall. And then on top of that, they really like, it becomes like kind of private sense community, so some communities have like bingo nights and things of that nature if they have a clubhouse, but also those tenants are the best because you always have some guys, like a former military or a former police guy. And so, they basically have free security and free watchdogs because it’s their pride of ownership that comes with the park if you have senior citizens. It’s awesome.
Josh Cantwell: Citizens out on patrol, I like it.
Jonathan Tuttle: Something like security, like even when I drive through parks, you could tell who they are because they kind of like looking that’s the one that’s doing the security, like unofficially.
Josh Cantwell: Yeah, I like it. I like it. That’s awesome. Jonathan. Why don’t we finish up with our final five, very quick answers, very quick questions? Are you ready?
Jonathan Tuttle: Shoot.
Josh Cantwell: Alright. What’s your favorite way to find mobile home parks and acquire new deals?
Jonathan Tuttle: Boots on the ground drive. You got to drive. You got to do. That’s where the money value is created is rent a car, basic Toyota, luxury car or anything like that, dress down, drive through parks, have your research ready, and just have it like a map because you’re like efficient with time.
Josh Cantwell: Nice. I love it. How about your favorite way to find capital to fill up your capital stack to get your deals funded.
Jonathan Tuttle: Facebook ads, Facebook and Google ads specifically.
Josh Cantwell: Nice. Love it. How about, Jonathan, for you, like your favorite piece of advice that you’ve ever been given or favorite book that you’ve ever read.
Jonathan Tuttle: That’s a tough one. When I give you context, I read about 125 books, and people can’t believe it, but I’m like, well, every time I work out five or six days a week and about an hour and a half, that’s an average audiobook because I do a lot, like Scribd is a great app, by the way. It’s eight bucks, unlimited, but they actually start throttling you. You have a list. I’m like, can I just pay like 30 bucks a month? But it’s like, you literally got like six, eight bucks a month off them for eight bucks, and that’s one book a week. And so, I would just do that. And I go to sleep with the book. And that’s how, I mean, you get 52 books right off the bat that just by working out. If you do yoga, it’s different, but if you’re doing cardio and weights or whatever, that’s one book a week. My favorite book, I think, if we’re going to keep it real estate, we can do Sam Zell.. It might be interesting. That was really good because that correlates to what we’re talking about.
Josh Cantwell: Nice. Love it. How about, Jonathan, we’re all busy entrepreneurs, had a lot to deal with these past 18 months with COVID, everybody needs a place to decompress, get away from their business, and think, what’s your process to think about your business, get outside your business? And where do you go to kind of take care of that, look around the corner, look for blind spots?
Jonathan Tuttle: Yeah, that’s a great question. Like, normally, I mean, it’s kind of double-edged because normally, I would use to be going to sporting events, taking vacations, going to like spas, whatever, anything to relax like that. All that was banned for the last years pretty much everywhere, or taking a vacation, but that’s usually what I do. Now, that everything’s going back up, I like going to Florida, I like to just take on vacations, and like, usually, when I work out in the morning, that kind of closes my mind, too.
Josh Cantwell: Yeah, absolutely. Yeah, I love the gym. I was in the gym this morning. I get my best ideas when I’m in the gym, my mind’s full, and not really thinking about work. And then all of a sudden, my best ideas related to work just kind of pop right in there. Jonathan, I know you said your dad was an early mentor of yours. I wanted to ask you, who was the biggest mentor that you’ve ever had in your life? What kind of impact did they have? And why were they so important?
Jonathan Tuttle: Yes, so like I think life’s a series. I think Daymond John quotes as a series of mentors because we get to different levels, and you’re always constantly evolving and growing. Hopefully, you are. I would say for this business would be James Cook who is my former business partner before I started the fund. And he’s a mobile home park broker out of Florida and he’s one of the biggest guys in the country. And at that time, he was so much far header, like I’d just never seen something so technology and like so efficient, like had systems and process, SOPs, and just way and meetings with like someone else of people I’d never thought I’d be able to meet for investments and just learning how to like talk to people, very, very high level and very affluent people, and then also learning technology and utilization for technology for business growth. I’m like, I never see anybody at that age. And he kills that. He does really, really well, but he was probably my biggest mentor in the last 10 years.
Josh Cantwell: Nice. I love it. That’s fantastic stuff. Jonathan, listen, thank you so much for joining us today on Accelerated Real Estate Investor. I know our audience would love to learn more about you, kind of follow up, maybe enroll in your course, invest in your deals. Where can they go to get more information?
Jonathan Tuttle: Yeah, so two different businesses, the Mobile Home Wealth Academy, that’s not the cell phone. That would be the login page, but you could go on there. There’s like a sign-in form for first access. By the time this airs, I’m assuming it should be done. The main thing is video editing. So, it’s not my room. I have to hire somebody for that. I thought it’d be easier just doing screen recording, but Camtasia has issues. So, hopefully, it will be out pretty soon, Mobile Home Wealth Academy in July, and then, Midwest Park Capital, and that’s kind of like a general overview of the fun in the industry. And then MidwestParkCapitalFund.com, that’s where you could access. If you’re kind of an investor, you could request more information. So, those are three websites.
Josh Cantwell: Fantastic stuff. Jonathan, listen, I appreciate all of your background and all of your insight today. Thank you so much for joining us.
Jonathan Tuttle: Yeah, thanks for having me. It was fun.
Josh Cantwell: So, hey, guys, listen, I hope you’d love that interview with Jonathan. I had a great time interviewing him, learning more about mobile home parks, his mobile home park investing course. Make sure you check that out. And, of course, just kind of talking to somebody that’s just very candid, that tells it exactly how it is. I found Jonathan to be super transparent and honest about his business and about the mobile home park investing opportunity, as well as flipping mobile home parks. I hope you enjoyed that piece of the interview as well.
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