John Fedro is someone I've followed since 2013. John is a mobile home and manufactured home investing aficionado who has been running mobilehomeinvesting.net for many years now.
I discovered John through BiggerPockets and I’ve followed his YouTube channel for a long time. He’s got some fascinating content about this niche of real estate and if you have ANY interest in this space, you really ought to be subscribed and following this guy, because he’s got some incredible content.
Mobile home investing is one of those specialties that can go hand-in-hand with the land investing business, and John has a lot of good things we can think about whether we want to dabble in this kind of investing strategy or jump in with both feet.
Links and Resources
- John Fedro's YouTube Channel
- Mobile Home Investing Lessons Podcast
- What Is a “Perc Test” (And How Much Does It Really Matter)?
- DataTree (REtipster Affiliate Link)
- Simple Real Estate Postcard Templates That Work
- PropStream (REtipster Affiliate Link)
- TenantCloud Review: Is This the Best Property Management Software for Landlords?
- TenantCloud (REtipster Affiliate Link)
- Avail (REtipster Affiliate Link)
- The Quick & Each Guide to Tenant and Borrower Screening
Seth: Hey, everybody. How's it going? This is Seth and Jaren, and you're listening to the REtipster podcast. Today we've got the privilege of talking with somebody who I have followed since way back in, I think it was about 2013. His name is John Fedro, and he is a mobile home and manufactured home investing aficionado who has been running mobilehomeinvesting.net for many years now.
I discovered John through Bigger Pockets and I've followed his YouTube channel for a long time. He got some fascinating content about this niche of real estate. And if you have any interest in this space, you really ought to be subscribed to or following this guy, because he's got some incredible content.
And in terms of why we're having John on the show today, well, one reason is that I've never had a chance to actually sit down and talk to this guy face-to-face through a computer. And this podcast is a great excuse to get on a call together.
But more importantly, for you listeners out there, I think Mobile Home Investing is one of those specialties that can go hand in hand with the land investing business. And John has a lot of good things we can think about whether we want to dabble in this kind of investing strategy or jump in with both feet. And even if you're not into land, it's still a great strategy to explore and learn more about. So, John, welcome to the podcast. How are you doing?
John Fedro: Hey, I'm doing great. This one you can have all the audience applauses kind of edited. Insert that for me. This is so cool. Thank you for letting me be on this podcast. All of your videos are robust, thorough, and huge. That's what I loved about your channel, non-hypey. If you can actually get away with that on this day. Anyway, that's what I want to deliver today and to your folks.
Seth: Thanks, man. I appreciate that. I appreciate you following the channel and what we've been doing. Yeah, just kick this off. For those who may not know who you are, maybe you can tell us who John Fedro is, what does your Mobile Home Investing career look like? Just tell us your story in a couple of minutes.
John Fedro: I was thinking, I do most things mobile home now. And when I first got started, I was anything but bragging or loud about this mobile home industry. Although I'd say now in 2021, 2022, it is more popular than ever. It's cooler now to invest in mobile homes or factory-built housing. I'm wondering how cool mobile homes or factory-built housing will be in the future. But for the past 20 years now, that shows how old I am, I've been investing in mobile homes inside of parks.
There are so many different things you can do with mobile homes. It's not like just houses. You can buy them in the parks, you can buy them and then move them somewhere else. Because they are mobile. You can buy them and put them on your land or have multiple homes on your land or buy the entire mobile home parks one day. And so, I'm doing all of those things that I just mentioned. In addition to helping people across the country, that's been huge. I mean, I knew I could do this because I was doing it. But then to help people literally in all 49 out of 50 states has been crazy.
Seth: What's the one state where you refuse to help people?
John Fedro: Those Hawaiians can suck it.
Seth: That makes sense.
John Fedro: But it's only because there's no mobile homes over there. I love Hawaii.
Jaren: That's awesome.
John Fedro: But that'd be cool, to ring the first mobile home park there to Hawaii.
Seth: Yeah. Wait, is it illegal there or something? Or why not in Hawaii?
John Fedro: There's just no builders in there, in Hawaii. I imagine to get the homes over there, you would take a lot of money. And then they maybe serve less of a purpose over there because they're mobile and you don't need them to be, it's only on an island. So, where you're going to go. Maybe shipping containers, they're more popular over there, the shipping container homes, but that's why, because it's an island.
Jaren: Well, hey, talking about shipping containers, that actually is a good segue for a question that I just added to our outline of questions that we want to ask you that is shared between me and Seth secretly. I just exposed all of our secrets, Seth, to our audience there. But what has the rise of tiny houses and 3D printed houses and shipping container houses, all that kind of alternative housing, has that impacted the mobile home industry, or has it made an impact at all?
Seth: It seems like kind of a different thing, is it? Or is there overlap?
John Fedro: Those are quite different things. Legally they're very different. People's perceptions. People, I'd say still out of everything you mentioned, everything is trendy except mobile homes. Those shipping container homes. Oh, sure, put them in my city. I'll have a next-door neighbor that has a shipping container structure. Or tiny homes. Oh, sure, people will spend $80,000, $150,000 on those tiny homes that are 400 square feet or less that you can't even park… Well, you can park them in a park nowadays, but they're difficult to park in places.
And I think both of those have a much more trendy, sexy appeal versus mobile homes. So, I don't know if that specifically has done anything for mobile homes. Mobile homes are still the ugly stepchild.
Jaren: Which is fascinating to me because that's just marketing or positioning. They're literally almost the same thing. There are some really nice mobile homes. They don't have to be an ISO or like no mold in the kitchen or whatever. They don't have to be that way.
Seth: It is a requirement. They have to be horrible to live in.
John Fedro: Well, the term mobile home is extinct from 1976 forward. There's been not one mobile home created. They've all been manufactured homes. It's just the name thing.
Jaren: That's very interesting.
John Fedro: Technically there's been no mobile homes built.
Seth: Yeah. I mean, I get it. Is a mobile home like an RV technically, something that literally has wheels built on it and it's mobile, or was that not what mobile homes were back then?
John Fedro: No, mobile homes, they've been the same. From the '50s, '60s, '70s, '80s, '90s, even through today, they have the, I-beam’s underneath. They're built on a chassis, very similar to an RV, but they're built on those I-beams. There are a few axles and then there's wheels underneath them and they are mobile. And when they move from one location, they sit on the wheel. Well, the wheels are lifted up a little bit on cinder blocks or some other pillars.
But a modular home, which is different. Those are taken off of those I-beams and they're placed down on a slab. The term modular manufactured, manufactured and mobiles they're identical. But modular, there's no wheels. There are no I-beams underneath.
But yeah, Seth, when you're thinking about a mobile home or manufactured home, if you see a park, if you see a manufactured home, there are going to be I-beams underneath it, there'll be axles. The tires might be all jacked up and messed up, but it's mobile and it's supposed to retain that mobility. A modular home will not retain the ability to be moved. You'll need a house mover. But yeah, for mobile homes and manufactured homes, those can be moved anytime. They got the tongue, they got the hitch.
Seth: Yeah. I saw this thing in the news probably about a year ago now. The affordable housing shortage has been an issue in many markets for a while now. But this thing I saw on the news was talking about in Silicon Valley, how it's such a problem that companies like Apple and I think Google and probably others, they're buying land and building these big apartment complexes, but the apartment complexes are basically just single wide mobile homes stacked on top of each other, like five stories tall.
So, they manufacture, prefabricate, whatever the word is, in some factory. And they bring them on-site and stack them on, and it looks like an apartment building when it's all done. But it's apparently just very effective at giving people much cheaper housing. That's still pretty good. And it's just kind of that apartment-type feel. But I wonder if that's the way of the future.
Jaren: If it's next to Facebook and Apple, I guarantee, it is pretty good like $1.2 million. For a shoebox.
John Fedro: Now, these apartments where, I've seen companies that will take your unit out of Silicon Valley, move it to Austin, Texas, and put it in that other building that they're building. Or is this the one what you’re thinking of, Seth, that's it's there to stay?
Seth: I guess I'm not totally sure. I assumed it was there to stay, but it didn't really get into the specifics of that.John Fedro: The future is going to be, and then with the 3D printing, I know you mentioned that Jaren, I have no idea. I know there's a whole development going up here in Austin for 3D printing or they're making things with hemp now.
Seth: It's getting nuts. Yeah.
John Fedro: I mean, that's kind of cool. Yeah. The future's going to be pretty wild. I'm like, what factory did you have your home built in? What natural material is your home built? I don't know.
Jaren: Yeah, man. And even from a show standpoint, I love watching, that's like the only kind of television that I can actually stand these days is watching this alternative living stuff. Houseboats. My wife is from Kazakhstan and when we got married, we actually met in the UK. And when we got married, I tried my best to convince her to live in a houseboat. I was like, listen, we could spend $850 a month for a docking fee. It'll cost $150,000. We could live in San Francisco. She's like, "I did not come to America to live in a boat. We are not going to live in a boat, end of the discussion." So that was the end of my dreams. There are so many alternatives out there that I just find them absolutely fascinating.
Kind of to land the plane, circling back to mobile homes. John, why did you choose Mobile Home Investing over what people do like a duplex or like a single-family rental or whatnot? Why specifically mobile homes? Because that's very niche, it seems like. And like you said, it's kind of the ugly stepchild in real estate.
John Fedro: If you would have started with your fiancé living in a mobile home, maybe that houseboat would look a lot better.
Jaren: I could have convinced her, that's how I messed up. I just started the negotiations with like, “Okay, we'll start with a box and mobile home.”
John Fedro: That mold-filled single wide that Seth was talking about. I failed at mobile homes. I wanted single-family homes. I wanted the prestige that comes along with that. I read a three-ring binder that was these pie-in-the-sky deals back in 2001 that I could do. And I fell in love with it. This is crazy. Me, being in my super early 20s. I can do this. I want to do this. I've never thought of having real estate as a vehicle to make me wealthy. So, I tried to do what I could do and I spent my small life savings, marketing knocking on doors, very small life savings, like $3,000.
The first person that I set a really good appointment with was this lady whose home she was selling it for $8,000. And I was so new at the time, I didn't even think to ask if this is a mobile home. I was like “$8,000? Are you kidding me? I better go.” So, I get in my car, I go there, I pull in the park, because it's in a park. I'm like, “Oh, it's a mobile home.” Well, this was not in any of the training that I had.
So, I went there and I knew which one it was. I turned the corner and I instantly got this wave of nausea. And I remember pulling over, I opened the door, I got sick on the side of the road and I can still remember closing the door and putting down the little visor and wiping my mouth off and making a decision like, “Oh, it'd be so easy to go home. I would rather just not be doing this. I'd rather be doing anything else and just be comfortable.”
And I went to the appointment, I talked to the lady. She was like double or triple my age, this woman that needed help. And I'm like, "How am I going to help this person? I'm still living with my mother." We ended up talking and negotiating, and like I said, my whole life savings, I was down to just a few hundred dollars working paycheck to paycheck. So I made a deal with her. I'll give you $3,000, $300 a month for 10 months. That was my first mobile home.
Payments were always more attractive to me. I had to flip homes to bring in cash, but I always wanted that long-term cash flow. I knew that from the beginning, that that was my way out. And so, I sold that first home. I bought it for $3,000, sold it for $27,000 with I think $1,500 down and monthly payments of something. I got it back because I had no idea how to screen people. Got it back in less than a year. Sold it again. Got it back. I don't know, a couple years later, I sold it again.
It took me, I want to say 18 years to finally sell that property. I just sold it a few years ago, the first one that I ever got because people would default after so long and I would resell the home again.
Seth: Wait, you bought a mobile home for $3,000 and sold for $27,000 with seller financing. Am I catching that right?
John Fedro: You are correct. You are saying that right. And at the time I remember thinking, yeah, I become really jaded in my career. You saying those numbers sounds really good and it is good, but it's also, that's just what we've come to expect. And I realize that now as I'm analyzing deals, I'm like, I can only make like $250 a month cash flow or I'm not making my money back in a year. I don't know if I really want to do that. I've become kind of spoiled.
Seth: Did you change anything about the mobile home before you sold it, or, well, what happened there? How did it go from $3,000 to $27,000?
John Fedro: It was three. Well, I say it was, it probably still is. It's double-wide. It's a little bit like a pond, like a mosquito pond in the back. It had this Lanai deck that was really nice. I had to spend $300 or $400 getting Roto-Rooter out there and I might have vacuumed the carpet. Man, I realized then on that first deal that my repair skills were just nothing. They were terrible. And this was before YouTube. So it was just like nobody was leading the blind. And so, I remember trying to turn this pantry into this cabinet and it just looked terrible. I just made it look as good as I could, which was terrible.
And then I sold it as is, but everything worked. It had HVAC, central A/C, and air. The appliances were still there. I talked her into that. I don't think there were any off spots on the floor, which is surprising in a mobile home, but this was like a three two double-wide with a den. So, I called it a four, two and sold it for $27,000.
Now on payments, if I were selling this for cash, I maybe could have got $9,000 or $10,000. Maybe. But payments are really the key because I was willing to hold payments. And I got that home back because I didn't screen the people well. I mean, anybody can say, “John, I'll pay you a million dollars for your home.” And if they stay six months, what does it really mean?
They really didn't pay me the $27,000 but when I got it back, I cleaned it up a little bit more because they did leave it a little messy. I cleaned it up more. I sold it the next time for thirty-something thousand. And I remember getting it back another time and selling it for the high 30s.
So, each time I bumped it up, I did not put in that much effort. And it was because I was knowing my prices. I was feeling out my market. I was understanding what people were happy with paying, not paying, who would laugh at me, who was out there. And I still was poor.
It took me years to actually get better at screening people. For my first three or four years in this business, I had a 100% default rate. 100%. Nobody stayed in my home. It took them months or years to decide that they wanted to move out for whatever reason. And I worked with people, but just to give an example that I was not an amazing screener of people in the beginning.
Jaren: When it comes to figuring out what you can sell it on terms, is that kind of just based on your gut? Because when you sell something to seller financing, you can kind of just arbitrarily pick a number, or was it actually based on, hey, did you call up other people who are selling their mobile homes on terms like, "Hey, what are you selling yours for?" Or how did you figure that out?
John Fedro: Geez. Was there anybody selling on terms? That's such a needle in a haystack. I might have been like back then one or two of the only investors. I remember there was this really, really old gentleman who was doing it for years and I'm pretty sure he is probably not alive now, but super old at the time. And I think it was just me and him investing for mobile homes. There were not many people doing mobile homes. I definitely didn't call around.
What I've learned is that there's definitely a spectrum. If you're going to gouge somebody on prices, you can take advantage of people. In this business as a mobile home investor, we can take advantage of people and sell a home for way more than it's worth. Even on owner financing, way more than it's worth. And you can also sell a home for cash price on owner financing. This is the cash price, but sure, I'll give it to you on payments.
In that spectrum, you can find people, but if you go towards gouging people, you're going to have a lot more people by default. You're going to deal with people that don't put everything together because they're not doing the math to say, “Oh, you want me to pay $80,000 for this home that is only worth maybe half of that on payments?”
You can definitely take advantage of people and you can get them in your home for a little bit of time, and there's some investors over the years that I've met that do that, on single-family homes. They purposefully try to take advantage of people, gouge them for a price, wait for them to default once and then kick them out and you can be really unethical in this business.Back then, I think I was just shooting a random number and seeing what people would pay. Obviously, people can only pay so much down. You can only get so much from folks. And that's another thing. If people pay you a ton of money as a down payment, they know, “Hey, Seth, I'm giving you $10,000 of $20,000. I want a better deal. I'm not going to pay a stupid price because I'm giving you so much money.”
On the flip side, if you talk to somebody with nothing down, well, that's not necessarily good for you as an investor, because there's a lot of risk. But if you talk to someone with a few grand down, there's a ton of those people and they will pay a significantly higher price.
So, definitely on that graph, where I'm selling for cash prices or gouging people. I definitely want to be toward this area where I'm closer to selling it toward a high, high retail for payments, but I don't want to gouge people. I want to work with people. I want people to jump through my background, all my background hoops know they're getting a good deal. This needle in a haystack opportunity of selling a home on payments to someone that could not afford it otherwise.
I do have some rules. If I'm selling on payments, I want to get my money back within six months or a year. All the money I have out, I want to get that back in 12 months or less. Sometimes it goes over that. But anyway, I'm not sure if that completely answered the question.
Seth: Yeah. Now, I'm actually wondering, this first deal, for example, that you did. Did you pay $3,000 for the mobile home and the land or was it like a home in a park? So, you didn't own the land. You were just talking about the home itself. How does that work?
John Fedro: On this one, just the home. Not the land at all. No
Seth: Okay. So, this person was renting the land from the park. Is that what was happening?
John Fedro: Correct. I think back then it was maybe three something a month for just the land. Yeah. I just bought the home for $3,000 on payments and I still had to pay monthly. And I want to say this seller, this lady that I bought from, she was one or two months behind on payments. She was feeling the pressure from the park. The park was definitely putting some pressure on her to pay or get out.
Seth: When I used to work in commercial financing, we didn't ever deal with mobile home parks or anything. But I remember hearing the bankers that I would work with talk about how when you're talking about mobile homes or manufactured homes, whenever they would take a security interest against that home, that's actually considered equipment in terms of how it's financed, like how long that's determined the loan is because it's not a fixed to the ground. Is that true? Or am I missing something with that?
John Fedro: I hate banks. When I sell a mobile home, I really aim that that buyer is not going to go with bank financing. However, nowadays, there are more loan products. For a mobile home in a park, you can get 20-year financing, 25-year financing. For a mobile home in a park, even going back to the '70s.
Seth: Why does that make such a big difference if it's in a park versus just like on some random lot somewhere?
John Fedro: Well, for the bank, it would.
Seth: You know why?
John Fedro: Oh, because it's personal property and you don't own the land. And I suppose the bank has their algorithm. They've lent on enough of these to say either they're risky. The people inside are a bit riskier. The fact it's on wheels and it's constructed in a factory and we don't get paid back nearly as much.
On a mobile home, the percentage rates when you borrow are going to be noticeably higher, if it's attached to your own land versus in a park, if it's personal property versus real property. But I don't know about the equipment, if it's actually called that. How funny? I bet it would.
Seth: Yeah. I don't know that technically it is that, but maybe somehow it represents a higher risk because it's easier for a person to remove it and bring it who knows where, and then the bank's collateral is at risk. So, they just call it equipment to try to safeguard. I don't know, who knows? But I remember that being just a weird quirk about mobile homes. I didn't know if that was accurate.
John Fedro: There's plenty of weird quirks. I'm sure it's accurate.
Jaren: I got to be honest. I'm loving this conversation because I feel like you guys keep throwing softballs to me with really easy segues for my questions. I don't know. We're just on a really good wavelength. I love this interview so far. But what I wanted to ask is a follow-up to what Seth was just mentioning. Is there any advantage as a mobile home investor to buying a mobile home that's maybe on a one-acre lot or more like in the country versus in a mobile home park? Or I guess there might even be a third option of just like going hardcore after mobile home parks in general and buying that as your end game. Out of those three scenarios, which one is the most advantageous?
John Fedro: I wanted to be like, “All right, shh, get really close. I'll tell you.” I think my unique perspective, helping a number of folks around the country, depends on your goals because the individual tiny mobile homes, some people just want to use those as a stepping stone to get to the parks. Some people know from the very beginning that they want parks. And clearly, with parks, you're talking bigger money. You're talking management, you're talking bigger paydays, more cash flow, more hard lift or heavy lifting. And then even with parks, do you want to deal with something with a lower cap rate that's ready, easy to move in and you don't have to do anything? Or do you want something with a lot of heavy lifting?
The individual mobile homes in parks, you can get into those for a few grand in every state across the country, not in every park across the country, but in every state, if you're willing to drive a little bit, there are motivated sellers.Most of the folks we deal with individual mobile homes are paycheck to paycheck. They get into trouble, they lose their job, they can't pay all the bills. There's deferred maintenance. If you're starting with $5,000 or $10,000 or $15,000, getting into individual mobile homes really is a valid way to build cash flow, stacking $5,000, $10,000, $15,000 of cash, different deals we do.
On land though, if you're going to buy the land and buy a home or buy the land and add a home or two or three, more capital-intensive, you're spending a lot of more money before you even make money. If you do, put in a bunch of money and do a land home package deal.
Now in 2021, 2022, there's never been a better time to sell for all cash or to sell. If you do that, I mean, don't hold it for payments. Get out of it, unless that is your longer-term strategy.
I think it's having goals. And then no one getting into mobile homes understands this business. We all have to be taught one way or the other. I think knowing your goals and then also the capital you have, how much you want to learn, how confident you are, what you want to do, all of those are possible. It's just your goals.
Seth: John, what is your experience with either building a new park from scratch and/or buying an existing park, going after an entire park like that? Have you done that a lot, one or the other?
John Fedro: I've done one much more than the other. I've interviewed a few people that I've yet to put on a podcast. I've interviewed two people that have built their own mobile home parks. And in addition to all the other training I've gotten, don't build your own park. Or if you're going to, know what you're doing, because the red tape is involved, the bureaucracy, the cost. It's just so much of a pain in the butt. At least from these interviews I've done.
I can't attest to building a legitimate park. I have land that I've added a hodgepodge of mobile homes to, but that's not a park. That's some dude adding a couple of mobile homes to land until the city tells me to get rid of it. But a park is a legitimate park that the city can't screw with you.
Me, you asked that question about building one or finding a poorly run business. Yeah, I want to find that poorly run business. There's over 44, give or take, thousand parks across the country. I can find a couple that are very poorly run and they're already permitted and I don't have to deal with any of that stuff.
Seth: Yeah, that makes sense.
John Fedro: That's what I am doing.
Seth: This might be kind of obvious answer, but if you were on the lookout right now, if you're just going to pick a random market and say, “I want to find a poorly run mobile home park.” What's the most efficient way to find those? Is there something you're looking for, certain zoning or just signs from the road that's like, “Wow, that place looks terrible.” How do you know where those are and how to find them?
John Fedro: You think I would tell you my good secrets like that? If anyone has any good secrets, let me know. I guess the advice I have and I only have three parks myself that I currently own, but looking for more every day. Once you know the few locations that you want to be in, then personally, I would take a shotgun approach to targeting parks.
Seth: You're going to take a shotgun to a park. That's horrible. That's terrible advice.
John Fedro: I'm ready to negotiate. When it comes to buying parks, you can buy them for the quick flip and turnaround. You can buy them if you want to hold them forever and maybe refinance them. But going back to your park question, how do you know a park will be motivated or not, or whatever, you can take some guesses that it's poorly run, or a lot of the homes are missing, a lot of the homes are empty, or there's no online footprint.
Mom-and-pop owners. We're usually after the mom-and-pop people, I don't want to buy my mobile home parks typically from a second or third investor. I don't want to buy from someone like me. I want to buy from mom-and-pop. Well, those mom-and-pops don't have an online presence a lot. So, if you find a park that doesn't have an online presence, that might be kind of a mom-and-pop type of park.
But I want us to take a shotgun approach and market to everybody. I've helped just over a dozen people, and that's not a lot, but a dozen people that are mobile home investors buy their first parks. And the reason I'm telling you this is because all but two of those people we've found our parks by doing the normal stuff we do as investors.
As a mobile home investor, we're going to every park around us. Like 20-, 30-, 40-, 50-mile radius. Every single park. If you're a mobile home investor, you should go to that park to do a number of things. One of those things, talk to the manager, find the owner, and ask them questions. One of the questions could be, “Hey, would you ever consider selling all this?” And so, the people I've helped now, that's just one way. I mean, it's pretty basic to talk to people, rubbing shoulders.
The other way that's pretty basic but it's effective, postcards. There are a lot of other ways like ringless voicemails. But I hate when people call me up and ask me those questions. Anyway, knock on doors, postcards, boots on the ground and take a shotgun approach, and market to every park.
Because you don't know, with these parks, it takes time. It's not like a mobile home deal where we find it, we close on it. With a park deal, it seems to be, and again, I'm on the newer side of parks, but from what I've learned and what I've been taught, it takes months or even years to develop a relationship that these park owners like you, they want to deal with you. Not this flashy person from another state. They like you, they know about you, especially if you're already investing in this park.
I spent, I don't know, maybe it was six or seven years after I got started Mobile Home Investing. Two different park owners came to me. This was in Florida. And they came to me, it was a husband and wife, they said “I know that you're investing in our parks. You're paying us thousands of dollars a month in lot rent because you have a few homes here. We're getting older. We want to sell our park to you with owner financing.” I had two parks that I could have bought back before 2010 and I waited. My first park I got was in 2013 because I had my blinders on. I was just too stupid or not stupid, but I was like, “I'm making money. I'm doing fine. I've got no management. I'm loving life. Woo. I don't want to park, that seems like too much of a headache.”
In hindsight, having boots on the ground, being in parks, it sort of opens you up to these opportunities that you might not have found otherwise, but you got to have your eyes open.
Seth: And when you're buying these parks, are you buying the land and all of the mobile homes on it? And then you're finding somebody to manage all that for you. Or are you just buying the land and everybody has their own home and they just pay you a lot of rent? How does that work when you've been doing this?
John Fedro: Every park is a bit different for sure. And depending on what's included, how many mobile homes are park-owned versus tenant-owned. If there're too many park-owned homes, banks don't want to touch that. The bank says, “Oh, the park owns 75% of the homes. We don't want that. We want homeowners in those homes going to work, paying their bills.”
John Fedro: Going back to your question, you can have park-owned homes, you can have tenant-owned homes. Maybe there's a fourplex there. Maybe there's a couple houses in the park as well, or it's got storage units or this barn area. And so, all of that stuff you have to take into account. Do you want to keep it as a rental? Do you want to sell those mobile homes on payments? Do you want to rip down the park and make condos? All of them are quite different.
And the sellers of these parks, let's say, it's your goal Seth, to just own the dirt. That's my goal. I just want to own the dirt. But you buy a park with, let's say, all of the places are park-owned. That means if they're park-owned, that park is renting those homes, the park owns them. So, they must be renting them. Well, with that rental income you're going to make way more money if you rent a mobile home in a park, if you're the park owner, versus just collecting on the land. The lot wrenches for the land are $300 bucks. But to rent the home and the land, that's $1,000.
Park owners, they will jack up their asking price. Because Seth, I'm going to sell you my park. It's got 30 homes there. They're all park-owned. They're all being rented out for $1,000 each. It's bringing in $30,000 a month. Can you believe it? And so, I'm going to sell you my park based on that $30,000. It's a business after all. My business is bringing in $30,000. So now, I'm going to sucker you into paying me what it's worth for $30,000.
Meanwhile, that's not your goal. Your goal is to sell these on payments. And then after you just own the dirt, your cash flow went from $30,000 now to $9,000. If everyone's paying you $300 times 30. So, you have to take all of that into account, and it just doesn't match up. A lot of park owners want way too much because it just doesn't make sense.
Seth: So, your main strategy, regardless of how many homes the park currently owns is to sell off whatever that is so that you only own the dirt. So, you collect the cash and then collect the payments on renting the land. Is that accurate?
John Fedro: Correct. I dislike renting mobile homes. I love renting land, but I love selling mobile homes on payments. I want to find a buyer that is in love with that home. That takes care of that home like a baby.
Seth: And on that, if the park doesn't own the home, you sort of lose control over how well people maintain these things. If somebody trashes their home and you don't really own it, do you have any leverage you can pull to say, "Hey, fix your place up so it looks better." Or is it kind of just out of your hands at that point?
John Fedro: No, you hold the cards as the landowner. You can certainly put pressure on people. To be fair, what's happening inside of their home, if their outside looks beautiful, the inside could be, they are cooking meth in there, who knows? But to be fair, we got more control on the outside.
Now, I was laughing when you asked that question because I've seen parks around the country who grossly overstep, and these are parks we don't want to get into as a mobile home investor, like buying the individual trailers. By the way, the word “trailer” is like a swear word mobile home. But if you're buying these trailers, you don't want to get into a park where they have a big overreach. Most parks, they say, “Listen, make the outside look good. And you're fine. All right, we don't care about what's happening on the inside. Don't get the police called on you, but you can do whatever you want.”
Seth: If you're making meth and we get a cut of that, that's the one stipulation. Profit-sharing agreement itself.
John Fedro: There are some parks that grossly overstep, and they say, “We want to do a walkthrough inside the home before you resell it. We want you to fix X, Y, and Z inside the home before you sell it.” Which is crazy. And that is 99%, 98% of the time most parks will just care about the outside of the trailer. Some parks will put pressure on the people to make the inside look great. And the reason that's a problem is yes, if it's a terrible home, they should fix the inside somewhat.
But I've seen a lot of parks screw with their residents, purposefully making it impossible. They move the goal post. You got to fix this soft spot. Oh, now that that's fixed, we want you to paint the walls before we're going to approve anybody. Then they move it again. Oh, we want you to do this.They make it virtually impossible for that person to sell. Their goal is for the person to get fed up, leave the park and abandon their home. And parks get homes like that time and time again, they take advantage of people. They are strong-arm people. They make it difficult for people to sell.
And sometimes you can move a home. You're like “The park is being difficult? Screw you, I'll just move it.” But some homes are too old or the people just don't know or they don't speak the language. I can think of parks that are purposefully trying to screw with their people and overreaching. But I guess to answer your question, we don't really care what happens on the inside. Granted, if they abandon it, the park is stuck with it. If you own the park, now you're stuck with this home. Do you fix it up? Do you sell it as is? Do you pull it out and bring in another one?
Jaren: I wanted to circle back really quick before we jump on a different topic. You mentioned that your kind of go-to strategy is to sell these on seller financing. You love seller financing the mobile homes, right? Correct?
John Fedro: If I'm going to keep it for long term, if I'm going to sell it on payments, I dislike renting strongly and I love selling on payments. But there are certain mobile homes, the age, the park, you don't want to keep for payments, or you get made a really good offer that you can't refuse for cash or you're wholesaling it from the beginning and you never intend to sell it on payments. But yeah, if I have to keep it long term, I don't want to rent it. I want to sell it on payments.
Jaren: What do you do in terms of managing your notes? That's something that a lot of land investors run into, because there's a lot of terms deals in the land space as well. There's different software out there. There are note-servicing companies. Obviously, since you have been in this game forever and a day, you probably have a good solution there, hopefully. So yeah, I'd love to hear your insights.
John Fedro: I've been doing it myself for a long time and learned the ins and outs. Partly because I had trouble micromanaging everything or wanting to know how to do it. Partly, part of my portfolio, I still service myself and send out 1098s at the end of the year and keep in touch with people. I also have trustees that help out. A lot of my properties are in trusts. I do use a note servicer occasionally, and there's not much upkeep when you get the right people in these homes. So, it's a combination of myself, trustees that I pay and also, a note servicer, if I need to.
Jaren: It seems like from a software standpoint or even a service standpoint, that's one of those weird opportunities where there's a need to have like the go-to, the Zillow or the Amazon of note servicing. It doesn't seem to exist. I have a friend who's a note broker. I was asking him, “Hey, what software do you use?” He's like, “We have one that we custom-built for ourselves, but it's kind of janky and da, da, da, da, da. It's all internal.” And it's interesting.
Seth: Jaren, on that piece there, I talked with a guy. His name is Robert Hytha in episode 121. And he's like a note guy, similar to Justin Bogart in episode 78. But he rattled off a list of… It must have been like at least 8 or 10 note servicers around the country that can be used for that kind of thing. If people are listening to this, go check out episode 121. In the show notes, I got links to all these different note servicing companies out there, if anybody's interested in that kind of thing.
I know we've covered a number of different approaches or plays on how to do this. In your mind, you wake up tomorrow morning, you're looking for a deal. What is your ideal deal? Are you trying to find a mobile home you can flip? Are you looking for a park? Are you looking for something you can sell at finance? Do you want to buy something and rent it out? Will you just take literally anything that makes sense? Is there a specific objective you have in mind when you're trying to do this?
John Fedro: My career now is different from when I first started. My personal day is spent helping folks that I work with and I partner with folks that I work with. I'm invested in deals around the country. I am still helping parks and these park managers. Remember I said as a mobile home investor we're talking to almost every manager close to us or not that close to us.
Well, we build relationships. And even though I am scaling back on individual mobile homes, I'm buying more parks, I'm doing more things with land. I don't want to burn those relationships with managers. So yeah, you kind of said, do you consider everything? And kind of yeah. I mean, maybe I shouldn't. Maybe I'm picking up pennies and I'm skipping over nickels as they say, or I butcher that. But no, I suppose I am looking for any individual homes on land parks.
But when it comes to the best deals, if I'm selling them for cash, I want to double my money, at least. If I'm selling on payments, I want to get all my money back. If I invest X number of dollars, if I sell it on payments, I want to get all that back in six months or a year less. If it fits those criteria for an individual home, or if I'm going to wholesale it, I want to make at least a few grand minimum, and deal with easy people.
But no, I spend a lot of time advertising and marketing and getting my name out there. And yeah, everything that comes through, I process it through a filter of whether it's a home, it's on land, it's an entire park. I want all of those and they just have to be good deals. They have to be profitable. I'd rather have more advertising out there and I can choose which deals versus obviously having fewer things to choose from and having to just be bored. Beggars can't be choosers. So, I guess I got to do this one.
Jaren: It really feels strangely close to the land space. If we talk about just types of real estate investing that you could get into, most people don't throw around numbers, like doubling your money. Or even the deal that you gave of buying a property for $3,000 and selling it in on terms for $27,000 and then $30,000,and then high 30s. And it's like, huh, it seems like this might be one of those. There's real motivation, untapped potential here. Maybe we should pay attention. I'm digging it, man.
John Fedro: I've had my head in the mobile home sand for now 20 years. And there is so little I know about, there's so many things to do. So that's one thing I love about your channel, is you touch on so many different things and really dive deep into it. The way that you're talking to people, you have a knowledge of all of these things. I'm like, how can Seth be so knowledgeable? It’s like an encyclopedia.
Seth: Thank you. I appreciate that.
John Fedro: At least that's what it seems like to the audience.
Seth: Yeah. I think when you've talked to enough people, you are able to sort of understand at least a few feet deep on everything, but not super deep. Ultimately you have to pick like a thing or two, and that's what you're really going to understand.
Jaren: Well, one of the things that I wanted to circle back to about was when Seth asked you about some due diligence stuff. I guess not due diligence, but what you look for in a particular deal, what's an ideal deal, it was a great way to phrase that.
What do you do if you're out of state? Because one, I guess, maybe we should dive into some of the high-level due diligence stuff. And I'm sure depending on what strategy you're doing, if you're going to buy the land versus just the actual mobile home itself, it's all going to be a little bit different. But more so than anything, I'm curious how you would handle that due diligence if you bought a mobile home out of state. Because it sounds like you buy nationwide with any kind of structure, especially if there's moldy dilapidated soft spots in mobile homes, you probably need to have somebody walk through the property and give you the lay of the land. Or do you just buy it and be like, “Yeah, whatever.”
John Fedro: Roll the dice, see what happens. Purchasing mobile homes virtually. I have the luxury of having boots on the ground in these areas. I'm working with the people that are in these areas. If somebody is watching this, you're in Detroit and you have family somewhere else. I don't know, Duluth, Minnesota. You can have family or good friends that are invested in the deal. Yes, I want to split this with you and we're invested together. You can do it virtually because you have boots on the ground and someone that you trust.
If you don't know anybody in the area and it's a completely random area, well, my first question for you is A, how did you find the deal or how did they come across your desk? And if you're investing out of state, if you can get there two hours away or three hours away, then that's not virtual and you should go there yourself. But if it's more than that, then if you don't have anybody's boots on the ground, there are Facebook groups where you can maybe find somebody that has boots on the grounds and you could partner with that person.I say that because it's pretty obvious that you could partner with someone. But if you partner with somebody ethical and trustworthy, that will eliminate so much of your headaches, because they will take the reins and run with it. They will be a trusted person. And you don't have to worry about it as much because you're now partnering with somebody local.
If you don't know anybody local, which I think was more where you were getting to, Jaren, how are you going to do this on your own? And my advice for people, and I work with people that invest virtually, if there's too many headaches, we don't do the deal. If it's being advertised well on Facebook, we usually don't do the deal.
We're usually finding things virtually and remotely with online advertising. I want people to call me. If I'm investing somewhere foreign states away, I'm going to do some advertising in marketing. And I want people to call me before they call anybody else. Now I can talk to them. I'm not rushed because they have 50 other people coming to look at their home. So, they're talking to me, I'm figuring out what they have.
Now, who do I send out there? Well, you're going to have to have a local assistant. You're going to have to hire that local assistant or use some sort of person that you know. But there are ways. There are one or two companies or there's ads that you can place out, looking for an assistant or you can talk to a mobile notary. Sometimes they'll want to make extra money for you, be your kind of gopher. Or handy people sometimes want to do this for you, but they may or may not be trustworthy.
So, you want to get somebody to go through the home, take pictures. You should have an inspection checklist that they can fill out. They should take pictures of the home, of the neighborhood, of the city. Remember this is the city you don't even know existed a couple days ago. Now you have to figure out the demand which you can sell it for. And then if it is farther away, do you sell it? Just flip it for cash? Is that possible? Or do you keep it for payments? And if so, that's riskier.
So, buying things virtually is a big nut to talk about, but you don't want to go in blind. You don't want to go in blind. And I will say that if there's 10 deals that you can do in your home turf because they're local and you can be the detective, you can get your hands dirty helping and figuring things out. You can do those 10 deals locally. But if there are 10 deals from, let's say states away, I say 10 deals because they're not all streamlined deals. There are hiccups, there are hurdles, there are challenges. If it's states away, you don't want to deal with those challenges.
I suggest the people listening, if you're going to invest virtually, market the heck out of that local area and then just work with the easy people, the path of least resistance, because otherwise, it's going to be a headache. You're going to have bad things happen to you. You're going to trust people that you shouldn't. So, if you're doing things virtually, you have to have a team set up, only go after the easiest deals.
Jaren: That's awesome. Yeah. I really appreciate the insight there because that's where my brain went as a land investor. I live in Indiana, but primarily do stuff in Florida and I'm doing a little bit of stuff in Tennessee and some other places. And I'm like, “Well, that's where I'd want to get mobile homes.” But the reality it sounds like, especially when you're first getting started, it's better to look in your backyard and look local than go on virtual.
John Fedro: Well, because I've worked with people in all 49 states and people that have to drive, they're in the middle of a downtown New York City area.
Jaren: Hawaii's not a state anymore, guys.
Seth: Those people don't matter, right?
John Fedro: That’s not true. I guess when you're doing things local, you have to learn your state's rules and regulations, unless somebody tells you or you're being educated. But you're investing now in different states. States have different rules, they have different procedures, they have different timelines.
And not only are you learning the technical aspects of it, but then the construction aspect of a mobile home and just the people aspect. This mobile home business is a people business. We haven't even barely talked about the people and this is all people. So, it's just doing things local, cutting your teeth locally, and then doing things further away.
Seth: Yeah. When you were talking earlier, John, about the difficulty and hassle of creating a new park from scratch. It sounds like in the experience of the people you've talked to, it's just hard. It's a big, difficult thing to maneuver through. That makes sense to me. And I think a lot of that probably varies a bit depending on the city or township or county that you're in, because I know I've heard and maybe you can confirm or deny this, but I've heard in general, a lot of municipalities don't really want mobile home parks. Like if anything, they're trying to get rid of them.
Trying to start a new one is a difficult thing to do. But maybe it just depends on the people who have the say, the people who are going to vote to approve or disapprove your plan. In the township I'm working in right now for self-storage, it's been surprisingly easy. They just are okay with it. But I've heard totally different stories in other parts of the country. It is very hard and very time-consuming to get this kind of stuff approved.
John Fedro: With self-storage?
Seth: Yeah. I'm sorry. I switched gears talking about self-storage, but probably it is a similar thing in mobile homes. It might be a huge hassle, but maybe not if you get lucky, depending on the people that are there.
John Fedro: I got to get with these guys, but I think there's a 500-space park, new park being built just north of me here in Austin. And so, I got to figure out what they're doing, because they might have cracked the nut of this. But that would be interesting to stack an entire city council in your favor or something or pay them off. With mobile home parks, we have a lot of kids in these parks. Each one of these kids go to school. They take public dollars that the school system charts for every student it costs, the school how much money. The school buses that come out there, the water, the people reading the water meters.
A mobile home park costs the city tens of thousands of dollars in revenue where the taxes of a mobile home park is a few hundred dollars. So just numbers-wise, it's a losing business. The cities lose money with parks.
Seth: I didn't realize that. The property taxes are cheap?
John Fedro: For the land, yes. And then for the actual structures of the mobile home, it's a few hundred bucks, if that.
Seth: I didn't realize that.
John Fedro: As a park owner though, I would be happy to pay more taxes. Obviously, it's got to make sense for the city. If they're losing money, they're not going to want to do it. And then the mobile homes just have a terrible stigma. Some cities are really railing against parks. They will try to buy the park or strong-arm them or use eminent domain to just get them out or buy it and just demo it. They seemingly don't care that much about the people or the residents. I'm dealing with something like that right now with the park. But the ego in some of these towns is real.
Jaren: Yeah. I've run in my fair share of that as well.
John Fedro: We'll talk about that off the video.
Seth: Do you ever buy new mobile homes for any reason or are you strictly just looking for deals on existing stuff?
John Fedro: I work with folks that are getting parcels of land on the outskirt of metro markets and bringing in new manufactured homes to sell them FHA or conventional. If you're going to buy a new manufactured home $40,000 to $80,000 or more, my opinion is, get it, put it somewhere, and sell the thing and get out of it. Don't be in it for that much.
In the last 12 months since recording this, in one of my parks, I filled up 27 mobile home spaces. None of those were new homes, not even close to being new. And I did, I looked into all the new aspects, like the Clayton cash program, the 21st mortgage program. They are all like “This day and age, there's a lot of money floating around and companies will lend you money if you're a park to fill up your community.”
I don't want to buy brand new homes, and to be fair, my parks aren't the greatest parks. So maybe new homes don't really fit. One of them could. But anyway, I know I'm all about pre-owned. There are enough pre-owned homes out there that I don't want to deal with new, unless I have a bigger payday in mind where I'm just getting rid of it and cashing out.
Jaren: To piggyback off of that, for those that are just getting started, what's the bare minimum capital that they have to have available in order to do a deal? Maybe we're not even talking about mobile home parks, or even the land, we're just saying, like you, you started off with $3,000. What's kind of typical for somebody to expect, to want to get started?
John Fedro: The average person I work with that gets started with just the individual trailers has between $5,000 and $15,000 to get started with. But just because you have $15,000 or $100,000 doesn't necessarily mean you should do different deals. Just because you have the money, it doesn't mean you have to spend it. You can still be frugal with $100,000. You can still be very patient and cautious. And with $5,000, you can go through that in a heartbeat. So, you have to be super cautious and strategic.
When somebody I work with has $5,000 to $10,000 to $15,000 to get started, a certain percentage of our deals in the beginning are wholesales. And it's different when you wholesale a mobile home versus a house, but it's similar. We're talking to sellers that don't want their mobile homes, or they want them moved off their land or they want them demoed.And we can come in and not just give them what they want. Actually, give them a little bit more. As a mobile home investor, we're oftentimes the authority. There's not that much knowledge out there. And surprisingly, even if you're brand new in this business, when you go to a mobile home seller's home, you are kind of an authority figure.
When I work with folks, a percentage of our deals are wholesale and you don't need money to do those. Sometimes you do, if it's different creative things. But technically you don't need any money, but I feel like that's setting people up for like, “Woohoo, I can do this with nothing.” So having a few grands set aside is more realistic.
But even with a few grand or more than that, be cautious, know what you're buying. You have to know the entrance strategy, exit, holding time, labor, material. Parks are different from park to park. If it has to be moved, what does that mean? What do you do? Do you move it? Do you sell it to someone that wants to move it?
Jaren: It feels like this space would be really easy to get into. There's all these like creative terms for it, but where you buy a property on terms and then turn it around and sell it on terms. There's a special word for that type of investing, but it sounds like there's opportunity for a lot of that creative stuff.
John Fedro: There is. You could be maybe some kind of wrapped note or a sandwich lease or something like that. I'm a big believer in structuring. If I can buy a home on payments and pay a seller a little bit more, I'm all about that. I want to keep money in my pocket and I will pay a little bit extra to a seller if I can give them payments to buy the trailer, and then I'll sell it on payments or I'll sell it on cash. And just either keep paying this person I bought it from, or cash them out.
Anyway, the problem with that is that the people we help, the mobile home sellers that we help, are oftentimes paycheck to paycheck folks, like I was saying. Meaning if they sell a home for $10,000, they usually need that $10,000 to get from point A to point B. Now, if someone's selling a home and they're already out of the state or they know they've moved already to their new place, well, then yeah, 20% of people can take payments, but no one wants to. Everyone still wants the cash. So, you have to make it attractive for the people that can take payment and then you can get into. But I love those deals, Jaren, when it kind of pays for itself. Like I shuffle some paperwork around. I'm out a couple hundred bucks or a thousand bucks for a nice home. And then the person inside is paying for it. I love those. They're just not as frequent as I would like them to be.
Seth: Now you had mentioned earlier, John, that one way to find deals is with postcards or just direct mail in general. And this makes me think of the land investors out there, because we're no strangers to direct mail. I mean, that's how everything works. If somebody is a land investor and they're trying to specifically target deals where they could either put a mobile home or maybe find an existing mobile home just to get into this business. What would be an appropriate way to filter that kind of list? Say if they're using a ListSource or DataTree or something like that, where you can filter the recipients.
And what I mean by that is, I assume you would want to target residential lots that are zoned from mobile homes, like mobile home lots. Is there an ideal acreage size? Is there a minimum acre? Like don't buy anything below 0.2 acres or whatever, because that doesn't make sense for a mobile home. Do you have any insights on how people should search for this kind of thing if they want to have the most efficient way to find those deals?
John Fedro: Yeah, of course.
Jaren: He's like, you're asking me all my secrets, bro.
Seth: That's the idea.
Jaren: Why did I agree to this podcast?
John Fedro: You have me thinking because I know people that buy big tracts of land, subdivide it for the point of selling the parcels and then doing some of their own. Making some mobile homes themselves, keeping some, selling some. And if you want to get into that thing, that bigger, huge tract of land you can.
To me personally, if I'm going to have a lot and then put a mobile home on it, or if I'm going to buy a mobile home with a lot already there, I want the smallest lot I can possibly find because that's where your money is. You're paying for the land. The home is a little bit of money, but I don't want to pay if there's a three-bedroom home on two acres of land. I can rent that home or sell it on payments for about the same prices I could get for that same home on a little neighborhood little lot. And there's probably more buyers for that small lot.
Then again, if I was building something in the country, I might talk to my local municipality to find out that, well, if I'm going to dig a well, I have to have one acre of land per home. And if I'm using a septic tank then I need at least half of an acre to have a septic tank, even if I'm tied into the local water for the municipality. So, setbacks are important, what kind of utilities that you're going to have and the space you need for those utilities. That changes whether you're in the city, whether you're in the county.
Going back to your question, I do have a specific answer to this. I would say to not niche down. If you're going to do a postcard campaign, if you're going to do a ringless voicemail campaign, I'm big on those getting addresses, skip tracing them. Sending folks like a ringless voicemail. It's about half the price of a postcard. You can hit twice as many people.
I want to send postcards to everyone. If the numbers make sense, I'm open for many of these deals. And so, if I don't want to be in a certain area, I will exclude that. But as far as the sizes of the land goes, or what's on top of the land, “Oh, it can't have a mortgage or it can't be refinanced in the past 10 years, or it's got to have this size of home or at least a two-bedroom.” No, none of that. If it's zoned mobile home, I'm going to send them something.
I think being specific is not a good thing. At least for me, because I'm willing to do all those different things if it's a good deal and talk to people and negotiate. Or if I don't want to do it, I'll wholesale it or bring in someone that wants to.
Seth: But you did mention a couple of things just in talking there. For a mobile home lot, it does need to pass a perk test because you can't put a septic tank there or tie into an existing sewer system. You got to think about utilities. Basically, anything you would normally need for residents to be there. Access to water, wells, that kind of thing. Even once you do find the lots, there's other due diligence you would've to do to make sure the land is going to actually suit that purpose, right?
John Fedro: Yes. And the local government, going back to the city council. It's weird, like cities are these ships. And I guess it kind of makes sense. The city wants to grow. It's kind of a business and you have these people in charge that are steering the ship of the city. They can be just sort of lackadaisical. They can rail against mobile homes. They can be just, “Hey, I used to grow up in a mobile home. I'm fine with them.”
Knowing where you're investing, you probably won't be the only one that knows this. You just want to do some research because some municipalities are, “You don't want to be there for mobile homes. They're not going to be friendly towards you.” Even if they say they're friendly, even if it's like, “Sure, you're zoned to do whatever you want to do.” They're going to just make up things along the way.
I'd say, if anything, that's more of the gray area. Because all the other stuff you can find out an answer to, but that gray area, especially if you're building something new, you want to look three times, talk to the city planner, talk to the city manager, talk to the water person. Really get a vibe and an understanding. Do some Google searches. Talk to any other big fish in the area. Talk to me, maybe, if I know of anything, if that's a good area or not to build. But I'm just saying, if you did have the land and you were going to add something brand new, a mobile home, that would be where to make sure you're in a friendly area.
Seth: Yeah, sure. And if you are just going to own land, whether it's in a park scenario or just own a random lot that you rent to, like I'm a homeowner. How much property management is involved in that at all? Is it anything? Because it's just the land. Or is it your job as the landowner to make sure the utilities are functioning properly, for example? Or is that on the mobile homeowner to figure that out?
John Fedro: I suppose it's all sort of negotiable, but underground is what I cover and to the meter, if there's a water going up or gas going up to the meter. I cover everything from the meter and beyond. And then the homeowner covers everything. The home, the pipes above the ground. I take care of the power pole. As the landowner, you take care of the utilities underground and the electric. But as far as the grass goes or the maintenance of the land or the home itself, no, that's on them.
And you want to get good people inside your home. You want to get a good down payment. Anyway, I guess I'm going off on a tangent there, but I'm just imagining putting bad people into a home. And you're like, “Okay, I sold it. My job is done.” Well, it's like, no, you put terrible people in there. Then you're going to have a ton more headache.
But assuming you get good people in there that want a baby in this home and treat it well, then yeah, you're just doing the land stuff. And I love those residents. It's always like the 80/20 rule or the 90/10 rule, where 90% of those problems are coming from just a few people. Everyone else I forget about. But it's just those problem people that keep talking to.
Seth: And on that, I know you've mentioned this a few times, the importance of getting good people that are going to pay and that kind of thing. How do you do that? Is it just a standard background credit check like you would do for a tenant? Or are you going beyond that to verify anything?
John Fedro: In my opinion, it's not one test that you'd do. It's the multiple tests that we do, which we can talk about. And then also, silly enough, like a gut feeling, talking to these people multiple times, having them show up on time, making them jump through multiple hoops. Making it a little bit difficult for them so that you can make sure that they're on their best behavior.
The person buying your home on payments is getting this needle in a haystack opportunity. They should be on their best behavior, we want somebody humble. We want somebody sincere. The one thing that all my people have now, my tenant buyers have now. Whether they've put nothing down or a lot of money down on the home, whether they have a job or don't, usually they definitely do, but they're humble. Everyone I put in my homes now, they're humble, they're sincere, they're appreciative. They know this needle in a haystack opportunity that I'm giving them. And from the very beginning, they were that way. They jump through all my hoops to show up on time to bring me all the paperwork I need.
Yes, we're doing background checks. And the background checks will speak for themselves to some extent. And it's up to you what credit you're looking for, what kind of collections you'll take, or evictions, or past criminal history, or if people are being a victim, or if they're making excuses.
I will say Seth, that if you put out an ad and it says, “No banks needed, rent to own, buy with payments.” This is a made-up number, 97% are people that I'm sure are cool people. You want to go have a drink with them or whatever. They're good people. But you do not want to get into a five or more-year relationship where they're paying you money every single month.
We want to be that restrictive. I would rather have an empty home than putting somebody into my home that doesn't need to be there. So, I'm a big goalie. I block out most people that want to get into my homes, not to mention the down payment. That will help reduce risks. Are people putting down $1,000 or are they putting down nothing? Are they putting down a lot more than that? And then the home. Is the home of a handyman special? Is it a beautiful home that I just put a lot of money into?
So, it's all of that, plus even some more. Plus, sometimes I'll make the person go and pull their own credit checks and send them to me. References, calling back employers, looking for pay stubs, looking for taxes. Why do I have to give you all this? I shouldn't have to give you all this. Nobody asks me for this. That's not who I want to deal with. If you're giving me any kind of lip, that was a test and you failed.
Anyway, it's that whole process. I'll say one last thing about it. If you were selling these for stupid prices and you wanted to get just a fat amount down, a huge down payment, you're going to talk to, I don't know, a couple people a week and you're going to have a few people to choose from. Granted I guess if you're going to a huge down payment, then that sort of eliminates a lot of risk.
But the point I'm making is when I sell on payment, I know that I don't have to sacrifice the total price. The total price, I'll be able to get. What I might have to sacrifice and work with people on is the down payment. Because I'm willing to meet people in the middle. If you're a good person and you pass these tests, I guess what I'm saying is I sell them for an affordable amount down and a very affordable amount monthly. People can't rent what they can buy my homes for. I want more people interested so that way I can pick the right person for my home. I want to give them a break moving in and monthly, but I'm definitely going to charge them the heck out of the entire price.
So that's been my formula. There are a few other things I do. Like I said, I like selling handyman specials because people actually put the work in themselves. They bond themselves to the home. Plus, you're dealing with the mobile home so you want to put handy people in there because the home does not fall apart as time goes by, but it's going to get older and there's going to be more wear and tear needed to be fixed. So that was my very long answer. I'm pretty sure I went off on a few tangents there, but I hope that helped.
Seth: No, that is really helpful. So, you're not saying, if you have $20 and a job, you are approved. That's not the message.
John Fedro: 20 years ago, I’d had the home just for you. But no, not anymore.
Seth: Well, I think that's actually really good. Everything you say there, it's just helpful for land investors who are doing seller financing to hear that because I know the advice has been out there for years with land anyway. No credit checks. Whoever doesn't matter, just sell it with seller financing, because it's super easy to take it back. But it's not always that easy to take it back. And even if it is easy, it's a pain. It's better to just know what's going to happen and be confident that your borrower is going to pay you.
There are some very basic common rules of thumb that people can go through, but you just covered a lot of good things that people can look into if they're concerned about that and make us sure they got a good borrower.
John Fedro: This was cool.
Seth: Yeah, it was awesome, man.
John Fedro: This went by so fast. Seriously. You guys are easy to talk to.
Seth: I’m really glad you could come on the podcast so we could explore this stuff. I wanted to talk to you forever and I've had these questions forever. So, I'm glad we could hash it out. But if people want to find out more about you, I know there's obviously mobilehomeinvesting.net and you're on YouTube as well. I'm going to include links to both of those platforms in the show notes at retipster.com/123. But are there any other places people should be following you, John?
John Fedro: No, that's enough. You can check me out there. I've got nothing going on.
Seth: I don't want to hear from you, I don't want emails.
John Fedro: Yeah, mobilehomeinvesting.net is great. From there you'll see various programs and then the YouTube channel, like you said, Seth. A lot of the free videos go on there.
Jaren: And in terms of you running a podcast, man, your voice is made for radio.
Seth: Yeah, seriously.
Jaren: I'm glad that you have a podcast.
John Fedro: It's the microphone. It changes it up.
Jaren: I'm very jealous.
Seth: Have you thought about doing voiceover work or anything like that?
John Fedro: No, I have not. That'd be cool though to see, that'd be kind of weird.
Seth: I bet you'd do it.
John Fedro: Yeah, that'd be fun.
Jaren: You totally can do it. Yeah.
John Fedro: Do some animated duck or something.
Jaren: Or even reading books, man. You got a voice radio for sure.
Seth: What's your podcast called?
John Fedro: Mobile Home Investing Lessons. I said, if I was going to do a podcast, I don't want to do it myself. I talk to people that I work with. Each one of these is a different student. We're talking about something funny or something that is troublesome, just like some topic about mobile homes. And we just talk about different lessons that are good Mobile Home Investing lessons. So that was the name. It was not very creative.
Seth: It's kind of like the REtipster Podcast. It's super original. I spent just so many sleepless nights trying to think of the best possible name ever, something that would just really get people and make people think like, “Oh my word, that's amazing.” And that's what I came up with.
John Fedro: Like how many toddlers did you test that on?
Seth: Cool, man. Well, thanks again, John. It was a pleasure to talk to you and hopefully, we can talk again soon.
John Fedro: Thank you so much. This has been awesome. Thank you, everyone.
Seth: All righty, folks. So that was our conversation with John. I really enjoyed that. It was great to talk to him finally, after all these years.
Jaren: I think we had really good chemistry, man. That was just a really great interview.
Seth: Some people are just really easy to talk to. I think he's one of those people. It's very effortless to just have the conversation go and good stuff comes out.
Jaren: I wasn't kidding, man. His voice, my goodness. Honestly, if I could pay money to have a voice like that, I totally would. That's in my head, the goal in life or if you're going to have a male voice, that's the kind of voice that you want. It's epic. And I have this squeaky little voice, like “Yeah bro.” It's terrible.
Seth: Well, I do know a lot of the best singers in the world have higher pitch voices. They're like tenors and they can sing really high.
Jaren: Like Michael Jackson.
Seth: I guess that's one example.
Jaren: Mike Tyson also has a high-pitched voice and nobody messes with him.
Seth: That's true. Yeah. Weird. Did you have any key takeaways from the conversation that are worth hashing out here?
Jaren: Nothing super life-changing, but I will say my little antenna is definitely going up related to the opportunity in mobile homes because it just feels so similar to land and the opportunities that we see in the land space. It’s definitely from this interview that piqued my interest because it just makes a lot of sense. People aren't going to be as attached to their mobile homes as a single-family house. Inherently by the nature of what it is, there's going to be a lot of motivated sellers.
I think especially in the climate like today in the real estate space where it's super competitive, I totally get it now. I get why Brandon Turner, previously, I guess now over at Bigger Pockets, why he started getting into it. The biggest appeal is the fact that there's clear potential for motivated sellers. So, I really enjoyed this interview. It's good.
Seth: Yeah. I think there's definitely similarities in the opportunity to get a whole lot of equity for a pretty low price. The margins are there, but it's probably less similar in that. There's more hands-on stuff you have to do in terms of dealing with actual physical problems and people.
Jaren: Doing it out of state is not really ideal, it sounds like. When he said that during the interview, I went “Score for land. 10 points for the land flipping business.”
Seth: Yeah. If I have to choose between one or the other, I'm still sticking with land.
Seth: There is stuff that mobile homes have to offer. If you did want to own a park long term and get permanent cash flow, that kind of thing, that might be something that land by itself, unless you rent the land to a mobile home. As soon as you get the mobile home stuff involved, that's when the opportunities seem to be more plentiful in terms of permanent sources of cash flow. If you decide to go that way.
Jaren: Yeah. It's very interesting, man. There are so many ways to make money in real estate. I'm approaching, I think, close to a decade on and off of being exposed to real estate in some capacity and I'm still learning stuff every day. It's really insane.
Seth: Yeah. It's a cool space to be in just in terms of content creation because you'll never run out of things to talk about. There are so many interesting ways to get involved and improve things and make money and that kind of stuff. So, it's fun what we get to do.
Jaren: Yeah, man.
Seth: Well, I know this interview's already been longer than normal, so probably we will just wrap this up right now. But again, if you guys want to check out the show notes, retipster.com/123. You can also text the word “FREE” to the number 33777 to stay up to date on all this stuff going on in the world of REtipster. So, thanks again everybody for listening and we will talk to you again next time.
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