Seth Williams: Hey everybody, welcome to the REtipster podcast. I'm Seth Williams and today I'm talking with Jeremiah Boucher, the founder and CEO of Patriot Holdings. So Jeremiah and I first connected a couple years ago when he scheduled a consulting call with me. And at the time he was asking me some questions about YouTube and creating real estate content and a documentary I had made about my first self-storage facility. But somewhere in that conversation, the tables apparently turned because I realized Jeremiah was working on some projects that I had a lot of questions about, doing some really cool things. And Jeremiah has spent more than two decades now investing in commercial real estate assets. And his company owns and develops and operates alternative real estate assets with a major focus on self-storage, manufactured housing communities, and small bay industrial properties. We're going to unpack a lot of the stuff that Jeremiah is doing today. We're also going to talk about how Jeremiah decides which alternative asset classes deserve his attention and how his investment strategy has evolved and what he's learned from building a vertically integrated commercial real estate company. So, Jeremiah, welcome to the show. How you doing?

Jeremiah Boucher: Yeah, good to be here. We got a lot to talk about.

Seth Williams: Yeah, we do. Before we get into these individual property types, what business are you actually in today? Like, what do you tell people when they ask you what you do?

Jeremiah Boucher: I keep it simple. I'm a commercial real estate investor, and then I'll take it a step further. When you say private equity, right, everybody's eyes glass over. But essentially, I raise money. I buy alternative assets, boring assets, like most of your audience knows about storage, small bay industrial, also called flex industrial now, that's a trendy word, and manufactured housing communities, which in the old days were trailer parks or mobile home parks. And I provide investors tax benefits, cashflow, long-term appreciation. We hold the assets for five or 10 years and sell them and do it again.

Seth Williams: So you kind of develop it from the ground up with the intention of selling, but not right away after you've owned it for five or 10 years?

Jeremiah Boucher: We're value-add. So we buy assets and make them better. So if it's developing land or acquiring, we run it and then we end up selling them in the future. That's the cycle.

Seth Williams: How do you decide how much better to make it? Do you ever do it where you'll like buy a existing mobile home park, fix a few units and sell it? Or is it like, no, you want to make it a lot better. Like you want to start from nothing and actually build something that wasn't there before.

Jeremiah Boucher: Yeah, it's been an evolution. I wrote a book, Seth. It's called Finding Your Edge, how to win at the game of commercial real estate. And it's not a plug for my book, but it just reminded me of, like I'd look at it like four quarters of investing. So in that first quarter, you don't even know what you don't know. You're just getting a handle of the rules of the game. Once you figure out the actual game you wanna be playing, That second quarter, you start to win, you start to figure out a few things. And in that quarter of my career, I would say the first 10 years, I didn't have a big staff. I didn't have a lot of resources with raising money. And the information was very fragmented out there. And what that meant for me was buying and selling and getting a win. And I think looking back, knowing what I know now, there's a lot more meat on the bone. So sometimes it was just fixing up five units. Sometimes it was raising rents 10 or 20%. Sometimes it was getting occupancy from 60 to 90%. And because I didn't have a track record, I didn't have any money, I lost everything in 2008. I needed to build capital up to be able to build a company. So it depends. I think the number one rule for me and maybe the audience is... If there was a better opportunity that I could take that capital and move it towards, I knew it was time to sell. Even if I was leaving money on the table, I had to have a compelling opportunity to go into and then I didn't have any regrets.

Seth Williams: This term alternative assets. So what makes an asset alternative exactly versus just a normal asset?

Jeremiah Boucher: Yeah. In the real estate industry, anyone that's in the conventional, traditional commercial real estate, you got the core four, right? You got apartments, you got industrial, which is big warehouses, you got retail, you got office, and then you have apartments. So those are the basics. Anything outside of that in the past traditionally has been called alternative. So, I mean, car washes, gas stations, those also qualify, cell phone towers. But these three assets are the primary, I would say, alternative commercial assets.

Seth Williams: You know, is land considered alternative? Because that seems pretty basic. It's like the ultimate thing everybody needs, right? But if that doesn't fit into that four categories, is that an alternative one?

Jeremiah Boucher: No, that would be core. That would definitely be a core asset. It's just not bundled into commercial real estate until it's typically monetized, like there's a building or something's on it. But yeah, land is traditional.

Seth Williams: Okay, gotcha. So you invest in self-storage, manufactured housing, small bay industrial or flex space. What do these seemingly different asset classes have in common?

Jeremiah Boucher: Multi-tenants. So diversified streams of income. And I think that's a powerful term that investors are gravitating more and more to. I sat down with the bank when I started out and that's what the banker told me. He's like, I love alternative streams of income. So he meant not one tenant is typically more than 15 to 20 percent of your rent roll. So that whatever happens, if you have a product, a productive real estate asset that people want to use and there's multiple tenants, Even if there's a downturn, even if I have to lower rents, I'm going to be able to sustain the cash flows to cover my debt, and then eventually work my way out of it and be able to provide cash flow.

Seth Williams: So is it also a big deal because it makes it easier to find tenants? Because like there's just a lot of different uses, for example, for self-storage or small bay industrial. Like, is that part of the benefit?

Jeremiah Boucher: For sure. You're targeting a large area of working class, middle income demographics. So you're going to have the biggest tenant pool out of any other commercial real estate asset. That's the blessing. That's the opportunity. The curse is that you're dealing with a lot of tenants at every location. So there's a management component that many times gets missed by larger investors or small investors, too, that don't want to focus on the amount of management it takes to be successful in these categories.

Seth Williams: Do you manage these properties yourself after you build them?

Jeremiah Boucher: Yeah, it's been an evolution in my career. I've hired property managers and I do manage myself. One of the conscious decisions I made was to reinvest into my management company because it's basically that it's the lesser of all evils. Management companies and these alternative assets –, traditionally aren't that effective. They're not as focused as you're going to be on the asset. And because the assets aren't institutional in a, big market like New York or LA, or they're not a size where the revenues they generate are going to generate enough fees for these management companies, you're getting the bottom of the barrel when it comes to management firms. And you may luck out and find a local one that does a good job. But if you're going to do it at scale, For myself, I chose to take hands of the control and run them in a way that I knew I could maximize value.

Seth Williams: When I think about management for self-storage and then the flex-based properties, it seems pretty easy. Maybe I'm wrong. I know self-storage is pretty straightforward. I don't know much about the small bay industrial. It seems simple, but I might be wrong about that. But then the mobile home thing, that sounds much more complex. Am I right or am I misguided on that?

Jeremiah Boucher: No, it's a good question, Seth. And I think it's all relative to how much you want to take on. Right. I think all three categories, if you have one, two, three assets, your wife or partner supports you in what you're doing, then that's easy. Like that, I think anyone can focus on them. They're simple, boring businesses. It doesn't take a lot of brainpower to actually run them. But where it gets out of control is when you start getting to five or 10 assets and they're starting to get spread out around the country, that's when things can get complicated, especially when you're dealing with different rent rules, you're dealing with different permitting and fire codes, you're dealing with different demographics and different types of people and what their preferences are. It can get out of control pretty fast.

Seth Williams: How many properties do you have right now in your portfolio?

Jeremiah Boucher: It's always revolving around 100.

Seth Williams: Yeah. Of these hundred different properties, like what does the pie chart look like? Like what percentage of these are self-storage? What percentage is flex space? What percentage is mobile home parks?

Jeremiah Boucher: Yeah. Yeah. And just to give the audience context. So I started out buying, well, actually I helped someone, basically I lost everything in 2008. So that was the first thing I bought a bunch of houses in Las Vegas in 2005, six, seven did well. And then until I did it, that forced me to want to find another asset class, a category in real estate that I felt I had a better chance at succeeding. I realized buying and selling a single family house in a very hot market has no competitive edge. So I had to go reinvent what I was going to do. I found mobile home park investing through some commercial real estate education and online and figured out that that was a really valuable asset class because it provided affordable housing. There's actually a large segment. I think it's up to 10 to 20% of the population has some form. I think it's closer to 10% has enough of some type of affordable housing with manufactured housing. And the business made sense. So I didn't have credit. I didn't have cash. I was wiped out. I found someone that was running these things, buying these things online. I reached out to him. I said, hey, I want to get in this business. What can I do to help or what can I do to learn or work for you? He said, go find these deals. Here's a list and then go out and go source deals. So I did that for seven, eight years. I helped source 90 or so mobile home communities that we ended up buying through his funds. And I learned the business along the way, all the different things. But this is a long answer, Seth, but I would like to give everyone context how to grow is I learned from a partner first. And then along the way, I started buying a few communities on my own. And because my credit was wiped out, I mean, this was over 15 years ago, I was securing owner financing. And these were typically smaller assets under a million or $2 million. And I would get owner financing, but they were rough. I had to really work them. I mean, there was a lot of trash and crime and sex offenders. And it was older communities and they were in rough areas, but no one else was willing to manage them. They couldn't sell them. I would be able to buy them at a good cap rate because no one would buy them and no one could get a loan. But I had to take on the challenges of learning the business and running them. But luckily through a bunch of different horror stories, I was able to sell a lot of those assets, start to build up my own capital. And where I was going with this in terms of the how I evolved, I started noticing that mobile home parks over that decade started to get really expensive and institutions came into the category. And I couldn't compete as aggressively as I did before. And even today, we're seeing that where they're selling at four and five and sub six caps. And these aren't the most desirable areas to live. So I started to actually buy storage facilities from some of these mobile home park owners that had storage near their parks. And my partners at the time didn't have any interest in storage. And started to see that there was value in these assets where they were mismanaged, there was no software. And I'm sure you know it with some of the stuff that you've seen out there. And there was just no systems whatsoever. And these were in secondary or tertiary markets that people didn't really want to be in at the time. And aggregating those helped me grow a portfolio. And that's when I started to actually raise funds. So I started out with friends and family, Just going to conferences. Similar to the networks that you have, Seth, and just getting a few people together that need some tax benefits or they like the story of the deal. They understand what I'm doing. And then just a handful of people at $50,000 a piece. We put together a partnership. I run it and it was basically a 50-50 split, but they get all the money until they're paid back. And when I sell the asset, we split the profits and I do all the work. And that worked for a long time. I worked for six, seven years, but I hit a phase where there was so many syndications and so many K-1s and different investor reports that I decided this is the business I'm going to be in and started to aggregate investors in a fund. And I did that in 2019, started the first fund, which launched the January of 2020 fund. And that allowed me to start buying these assets at scale. So I'm blabbing on. But then the last point of this is that after the storage started to get more mature, and as probably your audience has seen, those values went through the roof and those cap rates were really hard to get cash flow. I started noticing demand from my tenants and storage that needed commercial space, but not large commercial space, smaller bay, bathroom, warehouse, office, little setup. And that drove me to that category where right now I feel like there's a lot of opportunity in that space. Not that it's outstanding, but it has a lot of fundamentals that are good and it's early on in the cycle. So that's how I got to the point of roughly I'm at 60 percent storage, about 25, 30 percent small bay and then 10 to 15 percent in mobile home parks.

Seth Williams: You mentioned this incident where you were wiped out in 2008. How did that happen, first of all? And you certainly were not allowed. It feels like most people were wiped out in 2008. But I'm just wondering, going through that process, is there anything that you do fundamentally different now as a result of what you went through then? Is there a way that you've set up your business or life to make sure that can't happen again? Or could it happen again, based on how your business works right now?

Jeremiah Boucher: It's a good question. Well, one, I was 26 years old. So the youth really was a factor. I didn't know what I didn't know. But I think the fundamental thing, I think when it comes down to the core is greed. So looking around and seeing everyone in Las Vegas in 2003 and 2004, early 2005, buying homes, selling them, making 20, 30, 50, $100,000. And then me wanting to be in the industry, being in the industry, being a realtor, being, being an investor, and chasing this appreciation game that was built on a house of cards when anyone that's watched The Big Short knows that the funny money was everywhere. So I learned that I disregarded fundamentals. I was chasing what everyone else was doing. And I didn't really look at the supply and demand of how many homes are out here and what can people really afford. I just was chasing the desire of everyone else, of what they were doing so I could keep up and try to be successful. And now I'm not chasing the crowd or the herd. I'm looking at the fundamentals of the investment. We can dig into what those things are, but that essentially is the discipline to don't worry about what other people doing, like learn from what they're doing, but understand what I want to do, have a thesis and then stay focused and disciplined on my thing, not everyone else.

Seth Williams: You just named greed as the root of the problem. When you're chasing a deal today, how do you actually know if it's fundamentals talking or if that same greed is wearing a nicer suit? Isn't it all kind of greed

Jeremiah Boucher: When you're looking for a.

Seth Williams: Profit marginless there? Like what makes it foolish versus nope, now it's wise when it's really kind of just the market happening that you can't really control and you don't know what it's going to turn.

Jeremiah Boucher: Yeah, I think the differentiator with the word greed is, is that even though you know something is dangerous and risky, you're going to avoid it or you're not going to acknowledge it because you're only going to focus on the opportunity and not the risk. So I think that's where that emotion fundamentally changes your decisions because you're so focused on, one, the fear of missing out, and two, what this opportunity is going to give you. it's going to fix your life in all these amazing ways. And you're not actually looking at the investment subjectively, objectively, like this asset has this risk. It has this opportunity. Am I willing to take on this risk? And is the reward worth it?

Seth Williams: You mentioned you've got about a hundred properties right now. So where are these things? Are they all in the same state or are they spread out all over the place?

Jeremiah Boucher: The majority of them are in the East Coast. I live in Las Vegas, but I grew up as a kid in New Hampshire. I found more cashflow on the East Coast. Some of the assets are in the Midwest. I also think those are better cashflow markets, maybe less appreciation. And then I've been recently buying in Texas and Dallas.

Seth Williams: You mentioned this idea of having properties all over sort of adds a lot of complexity to the management aspect of it. So how are you able to manage this when they're, they kind of are all over the place? If you got Texas and New England and that kind of thing.

Jeremiah Boucher: It takes a big team. Yeah. It takes roughly between 80 and a hundred people, depending on employees and contractors that help support each department. It took a long time to build it up and a lot of trial and error. I would say for someone starting out, pick five core markets and try to stick to those because you're going to have to reinvest. And I reinvest a lot of the profits back into the management so that the standards are held high.

Seth Williams: So the way that you're financing a lot of these deals, is it from your fund? Or do you ever use banks or where does all the money they come from to do all these properties?

Jeremiah Boucher: Yeah, it's traditional, just like an investor would go out and buy their own asset. I get customary 50% to 70% loan-to-value financing, and we'll go to local banks, credit unions, life insurance companies, or even CMBS. So we'll get traditional debt financing, and then the equity comes from the fund. So I'm an investor in the fund, and so are my partners, and that's what we use to capitalize the deal.

Seth Williams: Before we start a recording, we were talking a little bit about the different types of projects that you do. Originally i was coming to this interview wanting to talk about flex space but then you mentioned how you do a lot of these mobile home parks everything from you know as you mentioned buying existing ones with full of sex offenders all the way to developing them from the ground up let's talk about this a little bit so this is a very popular thing right now in the land space particularly doing these land home packages where people will buy like one parcel of land putting one mobile home on it and then selling it uh sounds like you've done some of that but also like the the park version of it where you're doing a lot of these things. So how do one of these deals look like? Are you looking specifically for vacant land to then chop up and subdivide and sell them off with mobile harm parks on them? Or is these like parks that you hold them all and you rent them out or tell me how that works?

Jeremiah Boucher: Yeah, good questions. So I'll leave that to you, your audience in terms of land home packages of buying land, carving off the land pieces and selling them as a land home package. That is a great strategy. It's just one that I'm not focused on because there is a level of complexity to it. The focus that I have is the traditional land lease community model where it's somewhat institutional now where we're buying mobile home communities, typically over 80 to 100 units. And if there's a value add opportunity to, get the approvals on the additional land or buy additional land and develop those lots, I'll do that. But it has to be a sizable community in order to maximize the opportunity for where I'm at in the stage of investing. But if you're starting out, buying a piece of land and then monetizing it by putting a manufactured home on it is a great way to provide affordable housing and make a great profit.

Seth Williams: So when you're doing these things, the idea is to put the houses on them and just lease them out to tenants individually and then manage the whole park for years in the future? Is that the idea?

Jeremiah Boucher: Yeah. Yeah. There's a lot of value to those. The investment world really loves these stabilized land lease communities where you don't own the home. Typically, the best communities have city utilities and you are incrementally just year over year raising the lot rents and the expense ratio is very low. So they're quite valuable right now.

Seth Williams: I have heard, I'm sure you know much more about this than me, but I've heard that creating those kind of communities, it's harder to do these in the city. Like a lot of cities don't want them. They think they're an eyesore.

Jeremiah Boucher: Is that true?

Seth Williams: If so, like how do you get around that? How do you find things that you can develop when apparently nobody wants them?

Jeremiah Boucher: Well, typically anything in the city is going to be existing. So what you're doing is you're taking 50 to 60 year old infrastructure. Like I've been to Michigan, you know, where you're at Seth, but more near the Detroit area. And there's a lot of older mobile home communities in there. And investors will come in and, to rehab the park. The challenge is the lots are really small. Back in the 50s and 60s, the home was only 12 foot wide. Now anyone doesn't want to live in anything, less than 14 feet, ideally 16 feet to make it feel somewhat livable. So you're in a tough spot trying to rehab that community or it just gets torn down and it gets used for another use. I wouldn't go that direction right now. I would look at acquiring something a little farther outside of town that has larger lots that you can support double wides or larger single wides that people are going to want to live in.

Seth Williams: Is there ever a scenario where you are buying land and like developing a mobile home park from nothing? And if so, how does that work? Like where are you finding those kinds of properties?

Jeremiah Boucher: That's a tricky one. That's something that I am slowly starting to look at. But I would be honest. it's about a five-year head start. By the time you identify the land, you get the engineering to look at how many lots you can fit on it. You talk to the municipality and you discuss if it's even open to mobile home park zoning. I'm sure your audience has heard of NIMBY, not in my backyard, like not a lot of places like new home manufactured homes or mobile homes in their community. In New Hampshire, my home state, there's a workforce housing law where the municipality has to permit a certain amount of affordable housing. And there are different states that have these regulations. So I'm focusing on that state because that's what I know the best. And the economics work well, where you can build a lot for $100,000 and sell a home, for $300,000 or more, a mobile home, and you can recover your costs for the development and still be able to own the land and rent it out after you sell the mobile home on the lot. So I'm getting really technical on this, but it's a very complicated long-term project that is hard to finance, hard to raise money on. And you have to defer a lot of gratification for you to actually win. I wouldn't suggest it for anyone starting out.

Seth Williams: Is there any particular strategy in the mobile home world that you would suggest for someone starting out? Or is that not really what you do?

Jeremiah Boucher: No, no. I think someone that is developing a business around buying land, from what I've followed in the past, and I love the tools that you guys have and use, even if you can put a well and septic on the property. And you can get it approved if you have road access and you are just going to buy a piece of land and sell it. Installing a manufactured home on there is a great way to monetize that land. I know from what 20 years plus in real estate, buyers have no imagination. Like they want the turnkey final product, show me it and I'll pay for it. So I would go to a dealer that's in the region that you're in, a mobile home dealer. And I like Skyline Homes. They're manufactured by Clayton, which Warren Buffett owns. You talk to the dealer about what's a double wide home that's roughly a three or four bedroom that's 16 to 1800 square feet that would fit the market and get pricing on that. And they'll help you get a installer that they can actually, they'll move it there for you. And then they'll even refer someone that can pour the slabs or you can even convert it over to real property and they can permanently affix it to the concrete slab. And all of a sudden now that you could sell that land home package to a buyer that can get traditional HUD financing. Or you can, another strategy I really like, Seth, is you can create the, leave it as a mobile home or keep it as a land home package affixing it, but you can carry the note to the actual buyer. And then through, I'm sure some of your networks or some others, you can sell that note off and monetize both homes that you sold where otherwise you'd be stuck with a piece of land that you can't liquidate.

Seth Williams: Is that something you do very often is like doing it with selling the thing with seller financing and selling the note?

Jeremiah Boucher: Yeah, I had a storage facility in Florida that I'm doing it now. Where it was in Fort Myers. I'm actually selling a note if anyone's looking to buy a note for around 300 grand. Bought the storage facility, improved it, sold it. There was an extra acre and a half of land. We didn't want to expand anymore over there. So we sold the land to a roofer locally. He's getting his permits to build his headquarters. But in the meantime, I sold it on owner financing and he's going to be getting his building permitted. In a year, he's going to be paying off his loan and then getting his SBA loan for that parcel, which otherwise for $375, I would have never been able to sell it unless I provided owner financing on that piece.

Seth Williams: When you sell on a note like that, when you say you're trying to sell it for $300,000, what is the balance of that note? How much of a haircut do you have to take when you're selling this kind of thing?

Jeremiah Boucher: It depends. It depends on this particular note holder or the borrower. I'm the note holder. The borrower's current. So he's making his payments. So I structured a very low interest rate for the guy because he was a good business. He has a good reputation as a roofing company. So it's a 5% interest rate on there, which isn't that attractive to investors. But the note balance, I think is roughly 340. So we sold it for 375. He put 35,000 down. I'm saying I'll discount the note to 300,000. And in a year, he has to pay off the full 340. So that gives the investor the profit built in where they're going to make more money when the borrower pays it off. And they'll make a little bit of money on the interest rate along the way.

Seth Williams: Do you ever use paper stack or anything? Like when you're in a situation like this, where you have a note, you know what the balance is, you know what you want to get for it. Like, what is your first move when you want to sell this? Like, do you go to some marketplace or do you have like a Rolodex full of people to buy notes or Like, how do you find these buyers so you can actually move it quick?

Jeremiah Boucher: Yeah, that's a great question because this isn't my business normally, Seth. I don't do this all the time. This is just a unique scenario and because you're a land guy, it came up. I went to my network. I just went to people that I know that are my loan broker, people that are investors, and I just showed them the note. I want a network. So anyone in the comments or if you want to share it, if there's a network out there, I would still love to sell this note.

Seth Williams: Do you know anything about this federal legislation going on that's supposed to make mobile homes or manufactured housing cheaper, like easier to develop because you don't have to keep the metal chassis on the bottom of it anymore? Do you know anything about that?

Jeremiah Boucher: I don't. I don't. I do know, though, just for your audience context, from a price per square foot, a typical mobile home will run from a factory anywhere on the low end, $55,000 to $70,000 for a single wide. Now, this is a basic mobile home somewhere out of the Midwest or the Northeast in Pennsylvania or so. And then you're going to have about another $20,000 on top of that in transport costs, where transport, pouring the pad, the concrete pad, setting it there. And then if you want to put nice decks or garages that's on top of that, so I would say $60,000, $65,000 plus another $20,000. That'll get you a good quality single-wide mobile home on a lot. And then if you want to go a double wide, which I would suggest if you have the room, because it feels more like a nicer, newer home, a real single family home, I would say that's more in that 90 to 100,000 range. And you can get all the way up to 140,000 if you really want to make it nice. And then add on that 20 to 25,000 for the installation.

Seth Williams: When you are trying to take a piece of land, develop it, create a product, like a lot of a product, and bring it to the market when there may not be anything like it out there, how do you prove demand for something like that? Like if there's not a directly comparable property for example the the flex space thing i know in my market there's a little bit of it but there's not much at all it's not a big thing where i'm at so like You could kind of find a loosely comparable thing, but it's just it's just not the same thing. Or even in the self-storage world, you may be bringing a new type of storage like climate control or maybe that doesn't exist yet in the market. So, like, what are your ways for making the decision to spend a lot of money and take on debt to develop something and be very, very confident it's going to sell when it's ready? How do you do that?

Jeremiah Boucher: Well, I want to speak to your audience first and then segue from the mobile home piece. When we enter a market and I'm going to develop a mobile home lot, or I'm going to fill lots that are in the community that are vacant, or if someone's going to do a land home package on their piece of land, we like to look at at least half the cost of the median single family home in the market. So in New Hampshire, the median home price in the whole state is $698,000, so roughly $700,000. And certain markets closer to Boston, $750,000 are up. Now, it's not cheap to buy the land or to be able to do the improvements, but we can sell a home for $350,000, anywhere between $300,000 and $400,000. So because we put in quality, there's a market for that because there's that much of a dramatic a decrease in cost for anyone that wants to get a starter home or retirement home. When we look at even filling a lot, we want to be about a little less than half, ideally a third of apartment rents. So if we're going to rent the lot and put a home on there, I want at least a competitive advantage to be half the cost of an apartment in the area on the lot rent. So that's one of the ways to just gauge demand is that if the pricing is so much better than alternatives, that gives me the confidence that mobile homes are going to do well in this market. And certain markets, they don't. I mean, in parts of Mississippi, in parts of Ohio, I mean, even inner cities in parts of Michigan, there's no advantage. In Toledo, Ohio, you can buy a house for $150,000 and you're going to be in for close to $100,000 to $120,000 in a mobile home. So there's not enough of a delta there. So that's just a touch on that. From the standpoint of what gives me the proof of concept to develop, say, like a small bay flex property in a market where there isn't a lot of supply? That's the question, Seth?

Seth Williams: Yeah, exactly.

Jeremiah Boucher: What I would look at is, first off, we do a market study of just what commercial real estate is out there. So what are we looking at in terms of, Because when we talk about flex, let me just help clarify what that is. It's a mix. It's a flexible user with office, industrial warehouse, and retail showroom. So... Why I like that category is it's somewhat confusing to the marketplace, but we can pull from a lot of different types of businesses that can provide a gym service or can buy doggy daycare or can do like an eyelashes. Manufacturing business that we have in one of ours. We do gymnastics studios. We do martial arts. And then you also have the plumber, the flooring guy. You got the HVAC guy. And then you got welders. or we have people that do showrooms where they're just showing like the product for whatever they're selling or their service. So it's a little tricky to comp out, Seth, but what I would say is one, I'm looking at, Is there growth in the area? Is there a steady population with steady jobs? Because if there is no jobs and there is no incomes, then there probably isn't going to be a lot of good customers living in houses nearby. And we're focused on no more than 30 minutes around an area. That's why I prefer more affluent markets around 100,000 median income. And the housing costs are $400,000 or $500,000, maybe $350,000, $400,000 plus. That's going to be the customer base for your tenants. So I guess the bottom line is looking at what options are out there as a commercial tenant. And we check CoStar. So we look at leases that were signed anywhere from 1,000 to 5,000 square feet. Is there leases being signed? And what are those lease rates? And if we notice that there's very little product and there's still a very good population, in my eyes, that gives me the confidence that I can build this product and I'm going to be able to fill it up. I wish there was a better science. Seth, like in storage, it's real simple. If you have less than three, four, five square feet per capita in your trade area, then that's an indicator that there's a shortage of supply. With Flex, it's all over the place. But you can do some test ads and we use Facebook Marketplace and we use some ads on Facebook and Instagram and LoopNet to get an idea of demand. But talking to brokers ideally is the most important point of they still are the ones that control a lot of leasing. And you can get a feel of how quickly these go. If you see them, a small 1,000 to 2,000 square foot garage go quickly and you see a pattern, there's probably demand in that market. And that's something that you can fill.

Seth Williams: A while back, I was looking at the industrial outdoor storage business, in particular, parking semi-trucks in like a gravel parking lot and charging monthly, kind of like a storage facility, but for semi-trucks. I was just fascinated by this business model because I just don't hear a lot about it. And apparently there's overwhelming demand nationwide and not enough of these things to go around. After spending many, many, many, many hours on this, the thing that really tripped me up is that unlike self-storage, where it's super easy to get feasibility studies and all the data you could ever want is out there, like it's kind of down to a science now. Like you can really, truly can pretty accurately predict demand and pricing and all this stuff with the semi-truck thing. It's almost like undercover business. Like there's a few of them in the city where I live and like they don't advertise at all. Like you would never know they're there. It's almost like you got to know a guy to know where to park your truck. And it just makes it really hard to understand like what is it worth? And the kicker is like because of that, that's actually probably a strong indication that like you're going to do really well. It's almost like that lack of information and the lack of data is what makes it attractive to the right person because it's such an immature industry. Like there's there's not tons of competition. There's not enough data out there. So if you're willing to be the first mover, you're going to kill it. But even so, like, I still don't really understand with much certainty. If I spend a million bucks to develop one of these things, is it really going to lease up at the price I think it's going to? Like, I think, but like, I just don't know. And the data is not there.

Jeremiah Boucher: It's an inside club. I've looked at it and I don't want to divert my focus of what I'm doing, but I hear so many guys doing well in that iOS space. I think there's brokers in markets that control it. And it's like the traditional real estate world. You got to get in with those brokers that have the available tenants, because that is the one thing that a lot of people don't talk about is it's one single tenant. Like that is, you have one large company tenant there, which is great when it's good, when they're occupied, but it's not when you can't occupy it or when no one wants it. I did look at a truck parking club. Seth, have you looked at that as a...

Seth Williams: Yeah, I interviewed Evan Shelley. He's the founder of that.

Jeremiah Boucher: Yeah, that's worked out really well at a lot of our storage or commercial assets. A handful of them have done really well there. I think that it's a great strategy for people that want to monetize their land.

Seth Williams: You're saying you had like another building, but there were just some spare parking spots and you rented them out with Truck Parking Club? Is that what you're saying?

Jeremiah Boucher: And we have another, we have a storage facility in Syracuse, New York, and did a longer term lease, a three to five year lease with UPS and just lucked out that way where they really love the parking. And we were able to take the facility and lease out a couple acres to them. And it really helped the asset. But I have no strategy around how to attract trucking facilities.

Seth Williams: Yeah, it's weird. I feel like there's something there and to some extent, it almost seems like a good business for somebody who has like a few million bucks or more sitting around and they're just kind of looking for something to try out because they're probably going to do well. But if you don't have like a ton of liquidity, you got to weigh the risk of like, do I want to roll the dice on this? Like, even though it's probably going to be fine, it's like, I don't know. Whereas when I was doing my self-storage facility, I actually could kind of know with some certainty that it was going to be fine. Like even if everything went totally wrong, like at least I could say I didn't go into this blind. Like I paid the money for a feasibility study. Like I did the right moves. I shouldn't feel any shame about this if it doesn't work out because I was wise. It's hard when that data just isn't there. Reminds me of the land business like 15 years ago when nobody was doing it and there was just such a lack of information about it. You mentioned talking to brokers. Does it ever happen where that actually steers you the wrong way? Say if you talk to a broker who doesn't actually know what they're talking about and they just start talking about what they've heard, but it's actually misleading. Or do you know how to find the right brokers who do know what they're talking about?

Jeremiah Boucher: For sure. Yeah. I've chased, I've been down rabbit holes that I shouldn't have been down with broker's information. I think the first qualifying metric is, are they actually doing deals? So looking at, do they truly sell or lease industrial outdoor storage or whatever asset class you're in? That's going to validate it. And I don't want to focus too much on this, but I think the zoning is a big piece, Seth, where I would say, anything that I do well on parking, it's by an interstate highway and i'm talking within like five minutes very very close three minutes like right off the highway, and the second thing is not a lot of available commercial outdoor parking like if those things alone if that's something you want to do or you can monetize an asset like with a storage facility you have additional land like just check do they allow outdoor storage or outdoor parking, and where are you located near an interstate highway, I think then you're onto something to go talk to a broker that does deals in that space. I wouldn't waste time if you're in the middle of a cornfield, not saying it can, it could work, but it's just, it's the odds are against you.

Seth Williams: And even like smarter yet, buy a property that's already being used for parking trucks. Like it doesn't have to be a parking facility per se, but like an old mechanic shop with a big parking lot where they've got trucks on the lot. Like you're probably going to be okay. Versus if you buy a vacant lot in a residential neighborhood, but you want to develop into that kind of thing, so.

Jeremiah Boucher: That's right.

Seth Williams: One thing I was kind of curious about, and I'm jumping all over the place in this interview, sorry about that, but how my brain works sometimes. When you were talking about your origin story and how you kind of got wiped out in 2008, and then you started working for a guy doing the mobile home park finding and acquisition on his behalf. Tell me about the transition of when and how and why did you decide, I don't need to do this for that guy anymore, I can do this on my own. When did that switch flip? Was it because your credit score had recovered? Or like, did you build up a certain amount of capital to do it yourself? Or how did that transition work?

Jeremiah Boucher: Well, I always wanted to do it myself. But I couldn't because I didn't have the credit or any money.

Seth Williams: Was that the issue then? Like the desire was always there, but that limitation eventually went away because it recovered?

Jeremiah Boucher: Yeah. And the third piece of that, Seth, is I didn't feel confident taking other people's money when I truly didn't know what I was doing. So I wanted to learn from someone that actually is doing it, that's successful at it. And I can see I could have the confidence of taking, at that time, even $5,000 or $10,000 from someone. It was a big responsibility and I never wanted to lose anyone's money. So that gave me more confidence. Not that I've never lost investor money, I've lost my own money, but it gave me a lot more confidence to be able to go out and do it responsibly.

Seth Williams: How many of these deals did it take before you felt like you had the confidence?

Jeremiah Boucher: The nice thing was I was able to, if I could secure owner financing, I would do that every time. So essentially making 10,000 cold calls in a year, my goal was not to help my fund, this man's fund grow. My goal was get my own deals. But in the meantime, I wanted to, I needed to eat. So I would get a fee for helping him find deals. But I was always looking for how can I buy this on owner financing. So every single time I would try to do that with an owner and I started to learn a lot more about tax and how this could help benefit them and them getting a passive income. So I was able to structure a few of those owner financing deals as a partner rather than just getting a fee. So that's with that. I was partnering with that individual. And after a few of those, I felt confident when I found the next owner financing that I'm good. I'm going to do this one on my own. And then I started to raise a little bit of money from people that I knew. And that is what launched me in the business was the ability to get owner financing.

Seth Williams: When you say structuring it as a partner instead of a fee, do you mean as a partner with the seller or as a partner with this other guy you were working with?

Jeremiah Boucher: With the actual guy I was working with. The person I was signing those deals to at that point, because I got owner financing in great terms, he was open to partnering with me on those deals.

Seth Williams: Okay. So like he would cough up the cash required to do the down payment? Like, is that what role he was playing?

Jeremiah Boucher: And I would get equity for securing the deal. That was my compensation.

Seth Williams: Okay. Do you, I mean, were you ever able to negotiate seller financing deals with nothing down or is that harder to come by?

Jeremiah Boucher: A couple of times. Yeah. Yeah. They're rough parks. My first one that really got me out of the hole of the 2008 crash was $15,000 down on a deal that I went up and met the owners over a couple of different summers in New York and upstate. The seller was sick. I built trust with them. They wanted it for a higher price at $800,000. I couldn't buy it. They came back though after the husband got sick and I was able to buy it for $600,000 with 15 grand down. I actually borrowed 10 grand from my dad at the time and he never lent me money in my whole life. Then I ended up paying him back 100 grand, but I did need that money at the time. And that was my break is that gave me $3,000 a month in cashflow and that got me out of the hole so I could build my whole business.

Seth Williams: Was I hearing you right that with a lot of these earlier deals, they were like pretty nasty properties? It sounded like they were ones that had a lot of work ahead of them, right?

Jeremiah Boucher: Yeah, yeah. Well, I think that a couple of bad apples, right? It just really ruins the whole community, especially when someone's older. They can't really keep up with the management. And then there's this expectation that there's no rules. So that's what I mean, is that there's some of the crime or some of the debris all over the place and the broken down cars. It's just like a virus because some people do it and then it just attracts more of that. So that's what I mean, is getting in there and being firm and fair and setting the rules and got to get them cleaned up and get the people that don't want to follow the rules out.

Seth Williams: In those situations, like was the surrounding area bad too? Or was it like a good area, but this park is just not in good shape?

Jeremiah Boucher: I bought some where surrounding areas were a little rough and that didn't help. I would say those are my least successful of all the investments I made. I would say the other ones are pretty middle income, blue collar. I mean, if there's any Chipotle, McDonald's, any national retailer, Walmart, I mean, it's a good enough demographic in the area that people are going to want an affordable house and that you can attract the right people that are going to have a good community. They weren't great looking stuff, but they weren't bad. There was a place that a family member would be fine living in.

Seth Williams: How nasty is too nasty? Like, is there a point at which like, no, it's a lost cause. Don't even try versus like, how do you know when there's redeemable value there? And how exactly do you do that? Is there ever a situation where it's like, absolutely not. We would never do that. And why would you say that?

Jeremiah Boucher: It goes back to those four quarters of the evolution of your career. So in the first quarter of my career, I would have done any deal. If you give it to me for no money down, I'll do it because I want to learn. I don't have anything to lose. And I was too naive to know all of the issues that were going to come up. So it depends on the investor. If that investor wants to get into it and they're willing to do the work and they think there's enough potential profit, whatever that means to them, they do it. At this stage of my career, I'd say probably in the third quarter of my career, 45 years old and been in it for 20 plus years. I'm not doing anything that's a nightmare. I'm only going to buy, I would say, B plus or B class properties are up. I'll pay a little, quite a bit more for the quality and the consistency of income in the area. And I don't want to touch any of those, the really rough assets anymore.

Seth Williams: I mean, do you think if the will is there, could you redeem any property? Or are there certain ones where it's like, no, it is impossible. Like it's so bad. Nobody could do anything to fix this.

Jeremiah Boucher: Yeah, that's a good question. I just did a LinkedIn post where even when you buy at an amazing basis, you can still lose. So I always say buy at a bulletproof basis. But what does that mean? I mean, it can literally go to negative. Like on some properties, real estate investors need to know that you actually would need to get paid to take that property on because you're incurring massive issues that the seller deferred for decades. So I never want to do an older retail center in Connecticut, Hartford, Connecticut again. But I mean, I bought it $34 a square foot and this is seven, eight years ago. It was a great basis. I mean, everything, not much was under $100 a square foot. But with roof issues, with tenant issues, with the fire codes, with the area's declining population in this older downtown area, everything hurt that asset and it ended up being a loss for me personally. So I would just say to answer your question, deferred CapEx, the wrong demographics in a market definitely reinforced that you can't buy a property low enough to make it work.

Seth Williams: Yeah, it's a really important point. I don't know if you know who Kevin Bupp is, but I interviewed him a number of years ago. At the time, he was focused on parking structures, like uh you know parking ramps and that kind of thing and i had never talked to anybody about this but in that conversation i had asked him like do you think any deal is a deal at the right price because i think when you're coming from vacant land world that's largely true like if you can get something for free or darn near it like it's pretty hard to get hurt on that thing but he was like no absolutely not like like there you know there are uh parking lots that i get that you know, cost 200 grand a year just to own the thing, you know, because the deferred maintenance thing you just pointed out, like just huge expenses. So like, no, absolutely not. So I think it's just to your point, it's important to understand like the deferred maintenance piece, the cost of owning it, like how, how much better the thing can even get given the area it's in the demand for it and all this stuff. There's a lot more to think about when you're talking about much more complex, expensive assets like that.

Jeremiah Boucher: And environmental and zoning. I mean, you could be buying someone's problem.

Seth Williams: Well, I'm curious, as we kind of land the plane here, get to the end of this, is there any piece of standard real estate advice you've heard over the years that you think has caused investors more harm than good or anything that you think is kind of misguided, but people say it all the time?

Jeremiah Boucher: Yeah, I think there are a couple of things. Location, location, location, right? That is the tagline for real estate and that's purely its value. I think, though, the thing that needs to be the caveat to that, to add on to it, is timing, timing, timing. Like, it speaks to what we just talked about. You can buy the most phenomenal location in the world. And if you catch it at the wrong time, with the wrong debt, with the wrong investors, you're going to lose that piece of real estate. Real estate is capital-intensive any way you slice it. Even reading about Sam Zell, one of the godfathers of real estate investing and REITs, even him having billions in assets hit a point where he could barely make payroll. So I just want people to remember in this industry, it's very capital-intensive. So timing is critical and knowing what the cost is to endure the downside is is fundamentally important in their business plan no matter how great the location is because when a market goes bad, real estate is illiquid and you cannot get that off your balance sheet you are stuck with it until you can ride the storm so it's a very sensitive time when you start out when you have when you're undercapitalized because timing's going to play a big part, and you got to make sure to, just be able to endure the hard times with capital.

Seth Williams: Yeah, that's a really good point. It almost kind of reminds me a little bit, you know, location to your point, like it does matter, but like there's more to the story than that. I remember when I was looking at these different potential semi-truck parking properties, it's really interesting because a lot of the properties that make sense for that. A lot of other people don't want. They seem almost like maybe there's like a rundown building that is just an eyesore and nobody wants. Or maybe the building, the property itself is kind of ugly or it's surrounded by ugly properties or it's right next to the highway. So it's noisy. Just different things that a lot of normal businesses might not really want that. But it's like perfect for semi-truck parking. Or say if it's a property with like no access to water and sewer. It's like perfect. That's great for semi-truck stuff. So it's when you're saying location location like location for what like what is the use and who is that valuable for because it might not be valuable for one person but for another it could be perfect for it assuming you can get its own that way so

Jeremiah Boucher: Spot on the other advice i like to, advice that I think you should focus on is supply and demand. It's so basic, but if there's a lot of supply in an area and there's the same amount of demand, your pricing will go down. Your rents will go down. Occupancy will go down. But if there's a low supply and you can't build any more of it and there's the same amount or more demand, it will go up. So it's just common sense when people look at real estate that sometimes I see them gloss over or they don't even address it. And the other thing is replacement costs, like especially in some of the markets with land, What can you buy that same, like when you're buying an asset, what can you build it for? If you're paying, you know, 30, 40, 50% below replace, I mean, above replacement costs and someone can go build it down the road for half the value of what you have, you got to be aware of that, that that's going to be a big risk. So it took me a long time to realize those things when I look at a deal, but it's people gloss over them. And I think it's a big mistake.

Seth Williams: Yeah, it's interesting. I remember when I was in my banking career, looking at a lot of commercial real estate appraisals, you know, you got the cost approach. What does it cost to rebuild the thing? Like what we just talked about. You got the income approach, like how much money is the thing making? And then there's the sales comparison approach. What are other similar properties selling for? And many times, maybe even most of the time, a lot of these appraisals will only use two of those three approaches, sometimes even one, but usually two of the three, which makes you wonder like, well if you're not looking at the cost approach like doesn't that matter like why would you just ignore that right and i think you know you might be able to answer this better than me but i would think maybe a situation where that would be appropriate is if like you literally can't rebuild this thing because there's no land around to rebuild it like this is it and i think that's one thing that can really give you a moat if you own a property and like you literally can't get other competitors because everything else is being used so like you're sort of safe just by nature of the fact that you can't get competitors.

Jeremiah Boucher: That's it. The deal score goes up in Claude dramatically when you can't replace it in that area.

Seth Williams: Yeah. You're using Claude a lot for analyzing deals and that kind of thing?

Jeremiah Boucher: Yeah, a lot.

Seth Williams: Yeah, I got this self-storage brief sent to me from a broker in my area, and he was pretty amazing. I just threw it into Claude. I didn't train it on anything. I was just like, look at this thing. Tell me the numbers. Do you think it's a good deal or not? And he did a very impressive job at looking at this thing and evaluated it pretty quickly and said, yeah, the asking price is about two times higher than it should be based on what this is. So this is a terrible deal. Go back and tell that to your broker. But it's kind of scary how good this stuff is getting.

Jeremiah Boucher: It's outstanding. Yeah. We have a deal committee. And before we submit any of the guys, my sales guys submit, it has to go through the project for the deal analysis. And what's great is it gives us a rating on five different areas of the deal and a way to score. And that is before we even run the model. And then now, Claude, you put the OM or the offering in the rent roll in Excel, and it inputs 80%, 90% of the model for my guys. So we have a deal analysis on the score, and we also have the model, and it takes... Oh, my God, a fraction, 5% to 10% of the time of what it used to take just a year ago, a year and a half ago. And we're also, I think, the portfolio management is a big piece. This is what I've been focused on tying back from the beginning of our call. Having 100 assets with 80 to 100 employees, visibility into the performance is so important. Like big companies that do the best at what they do, especially like the extra spaces of the world, They have dashboards that show scorecards that are the critical drivers of profit, of performance. So when you can pull together the different tools from your rent roll, from your lead flow, like Go High Level and Rent Manager or, Cubby or whatever you use for your storage management, your QuickBooks, and you put it into this operating tool and clawed in your project... Now you can have visibility and even prompt it for the manager to each week or each day. What should I be focused on here based on how the asset's performing today? And I think asset management is in the middle ages. Most of them are reacting to reports that are one, two or three months old versus like what is going on right now. And then you can proactively say, hey, why aren't we tearing out those mobile homes that have been sitting there for six months? Why aren't we leasing the 10 by 10 for 30% more because we have no 10 by 10s and people keep trying to rent them? And I think there's a huge value opportunity that we're focused on in the existing portfolio. And that access to data and then that visibility for the manager, I think, is a critical piece that people need to focus on if they do their own asset management or if they invest with people that have assets. It's what needs to be done.

Seth Williams: Yeah, absolutely. Well, Jeremiah, if people want to connect with you or find out more about what you're doing and what you got going on, is there any place they should go to learn more?

Jeremiah Boucher: Yeah, patriotholdings.com. And then if I do a newsletter now, Seth, so I do, I break down a deal each week in one of these categories, a real deal that's out there. I'll tell them what I like, what I don't like, what the seller motivation is, and then what I decided to do on the deal and breaking down the P&L, the rent roll. But I keep it somewhat entertaining if people really like this stuff. So it's dealroom.patriotholdings.com and people can sign up for that newsletter and get a better understanding of what we do.

Seth Williams: Awesome. Yeah, let's check that out right after we hang up here. So cool. Well, Jeremiah, thanks again for hanging out and chatting with me. Appreciate the stuff we can learn from you. And all the listeners out there, we will talk to you next time.