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[Music] welcome to episode 2 of the mobile home park desktop where I bring you news and analysis from the world of mobile home park investing today we're gonna start by talking about deal flow I came across this interesting webinar it was put on by Ekaterina Stepanova she invited charles de hart from marcus and miller chap to discuss deal flow and what he saw in the market Oh among other insights that Charles had to offer he brought up this interesting stat that I thought I'd share with everyone 800 million closed deals in March versus 160 million new listings now these are not just mobile home park deals these are across the board all the deals that Marcus and Bill a chap deal with what you would normally expect to see is you would expect to see new listings kind of outpacing closed deals if you have a sort of a normal market because you have the deals that you've closed but you also have quite a few deals that you probably haven't closed or at least a certain number of deals that haven't closed plus you have the new listing cycling in you would expect to see new listings maybe equalling closed deals or outpacing closed deals but instead you see a 5x drop 5x drop and new listings simply put it means that there aren't as many new listings out there so what's going on here are people just not selling real estate right now more likely and this is what Charles mentioned peep the brokers are just sitting sitting on their listings right now they're waiting to see how the market plays out and they're just not they're not at any rush to to put any listings out right now of course with every crisis there is an opportunity and even though there are fewer listings out there right now what Charles mentioned the opportunity might be is this there are fewer listings so you can see on the left there are fewer listings that are going on what does that mean that means that burgers in general should have more free time that burgers in general should be able to pay more attention to the specific type of deal that you're looking for so particularly I guess if you're new to the industry and you have a very specific or niche type of mobile home park or maybe it's an area maybe it's you know you know the type of infrastructure that it has now may be a good time to bring it up and discuss it with them because as Charles pointed out brokers in general have more free time right let's turn to some more unscientific and analysis to see if we can figure out what's going on here with deal flow going forward in the mobile home park industry and I guess in general and real estate and now let's turn to a sales report and this is the sales report put out by north mark north mark is another big broker that deals in mobile home parks if you are not on their mailing list go ahead and contact them and you can sign up and you'll also be receiving these sales reports and I just want to show you their February sales report versus their March sales report so let's go ahead let's hide the sidebar and shrink that a little bit such high production value here at the mobile home park desktop huh okay so let's take a look here so you can see here in February there was a total sales volume number of sales 41 properties 4600 25 units units or lots or spaces in the property if you want to figure out the average size of those properties and just take this 4600 25 divided by 41 you get that answer average unit price thirty eight thousand six hundred and forty six but here's the beers number you can see that a total sales volume one hundred twenty seven thousand eight hundred eighty four thousand one hundred twenty seven million excuse me eight hundred and eighty four thousand in terms of total sales volume and if you scroll through the report this is for February you can see how it's broken down by the different regions so they had the Southwest the West the Midwest and Northwest and southeast northeast and I mean this I love the this isn't this fun just look at the difference in prices so you have like 55,000 per average unit in the southwest and then you have 7,000 923 in in in the West this is actually very unusual right because you would expect California especially Washington Oregon to be the most you know some of the most highest priced mobile home parks did you go over to the Midwest and you see seventeen thousand four hundred and fifty six so again these are these are wide metrics each deal has its own story but it can kind of give you point you in the right point you in a direction and help you sort of formulate what your thesis or what type of mobile home park deals you might want to be going for obviously if you're looking for a little bit more cheaper value add stuff you'd be looking in the Midwest as opposed to say the southeast or in California Forge for sure and let's take a look so let's let's look here so we want to talk about sales volume and what's going on with deals so here you could see the month of February and let's just put on top of that the month of March and you could compare so look at that so you go from 127 million in total sales volume to 50 million in total sales volume which sort of fits with what Charles was saying right this is similar it pits the same sentiment that Charles was talking about when I came when it comes to what Marcus and millet FTL flow was looking like so again you take a look here at this report you could see all the different regions let's see here 48,000 here in the southwest 66,000 per site in the West now this is probably more like what you would expect out in the West 62,000 and the southeast per unit 4,000 in the Midwest now I know the Midwest is cheaper but you have 4,000 that's don't be expecting to to buy parks at 4,000 per unit unless you're getting some extremely extremely heavy value add stuff 29,000 in the north and 45,000 in the Northwest again this is all I'm syan TIFF ik I didn't actually talk to any of the brokers from from north mark - can I ask what their sentiment is but I just look look at this to kind of get a sense for where the market is if you are on the sidelines right now and you're not thinking about buying mobile home parks or if you're actively looking and you're and you're having a hard time finding deals I mean this probably explains what's going on there's just fewer fewer deals out there at this moment as people are sort of trying to reap rice and figure out what the correct pricing is should be with with all the stuff that's going on in the world now in episode 1 and speaking of pricing in episode 1 we did go I did go over some ideals and theories in terms of how you should be pricing right now we talked about the kind of the risk premium that might be applied to mobile home parks with all the uncertainty because at the end of the day when whenever you invest in anything all you're doing is you're purchasing your pain you're paying today a dollar amount for a future cash flow and the more certain those future cash flows are gonna be the more guaranteed those future cash flows are gonna be the less risk those future cash flows are then probably the more you're gonna have to pay for them but at a time like this when we just have such high unemployment and people worried about what's going on with the economy it's harder to predict what those future cash flows might look like then you could go either go back and look at that less up so we talked a little bit about what some of the pros and cons of investing in a mobile home park industry are particularly when there's recession or when there's a economic economic uncertainty so you can go ahead look at that if you're interested some other news that I found interesting and one of the things I like about doing the mobile home park desktop is it just forces me to kind of scour the internet looking for news related to mobile home park investing and I always end up learning a bunch of new stuff myself and one thing I learned this week because they just released their earnings report most of us are familiar with some communities Els and umh and these are the 3 largest publicly traded REITs of 3 only publicly traded REITs that are focused on the mobile park manufactured housing in terms of their investment class but there is a fourth publicly traded investment firm that's focused on mobile home park investing and that is MHP c MH pc is there they're actually they're not listed on the traditional stock markets and new york stock exchange they're listed on their listing as the over-the-counter stock OTC stock also known as a pink slip or pink sheet stock I guess colloquial colloquially people might refer to these as penny stocks but they have I think they have a portfolio of about twelve hundred properties right now I think they're mostly focused from what I looked at in North Carolina yeah as you can see their current share price their training for our dollar a share and if you if you just google if you google mhm PC 10k mhm PC 10k then you can see their annual 10k report and I know just as someone interested in industry I always like seeing other data points from from other companies seeing what other companies are doing and so you can you can take a look and you can see so these this is a list of all the properties that they own as you can see mostly in North Carolina and they've been around since 2016 this is absolutely not a recommendation that you go out and buy their stock anything like that frankly I don't know anything about them other than what I just came across and what I will lean from from reading over the report but I did think it's funny if you if you ever wanted to tell people that you owned 1200 units if you have a dollar handy you can come in by one single share of em HPC mhm PC and walk around tell everyone that you now own over 1200 units you are in the mobile home park game not sure if it's if it's just a dollar or whether you have to spend 10 dollars or how it goes whether you even want to buy the stock or how easy it is to to purchase it since it's not listed on any major Stock Exchange but I just think it's funny I think I'm gonna go out and buy it and tell everyone that my uh my portfolio just increased by twelve hundred units all right another article I found interesting to me because I am assistance and automation that I love creating systems I love automating everything and I can definitely feel the pain that this mobile home park operator is going through apparently what happened is because they had all their eviction notices set up on automatically so that if you know tenant didn't pay these eviction notices would automatically get sent out you know something that most owners aspire to be automated and systemized in that way but of course with coronavirus and and all the victim moratoriums and all this other stuff it's not something that they meant to have sent out but since the systems were already set up they just automatically got generated so anyways this serves as a good reminder for people out there people who are like me who like to set up systems we like to automate everything you know make sure you adjust those systems and automations when you have unique situations such as this such as what's going on in the world happened you certainly don't want to upset all your residents and you certainly don't want this type of bad publicity going out and kind of accusing you of being that heartless mobile home park owner that the media loves to harp on and as always each week we'll take a look at what the nmh see the national multi-family housing council they're tracking their rent payments across I believe it's 16 million apartment units and so this is a good proxy and in terms of how much people are paying rents and this is a good thing for you to use to kind of use as a baseline and compare it to how you're doing are your collections better than what is happening in the apartment world at least with what and MHC is putting out are they worse as you can see I think from last week we had seen a 16% drop-off in collections it seems like that collections is still probably around 16 so it's it's not like they're they've made it up and on a year-over-year basis obviously the overall and collections number has improved because I think last week was around 69% and now they've collected about 84 percent from April in April 2020 but from a year-over-year basis in terms of what last April looked like and even what last month looked like you can still it's still trailing what was going on the last couple months this is not surprising obviously with everything going on and the huge unemployment numbers out there the good news is from the anecdotal evidence I've seen and from the people I've talked to within the mobile home park industry it does seem like park owners are doing a bit better than this of course it's only April and May is coming up that's gonna be an interesting month the stimulus checks that I'm hearing stories of people starting to receive their stimulus check in fact one one major operator was telling me that recently they had gotten a call from someone who was looking to purchase a mobile home someone getting that $1,200 stimulus check and then immediately looking to go out and purchase a mobile home park on mobile home that the fits right in line with what a lot of people within the space are hoping will happen it fits in line with the entire thesis that mobile home parks represent a great affordable option for a lot of people you can see here this is like a perfect example of someone getting a stimulus check and going out and being able to move into a mobile home park community where a lot of other avenues of homeownership are probably cut off to them so as you can see the rent collections trailing from last year overall 84 percent that's what's going on in the apartment world and as bad as that is thank God you are not a mall operator because let me bring you up something and if you are a mall operator and you're watching this video on my apologies but it seems here what they're saying where was the pullquote here according to Marcus and Millett Jeff this is in an article I found online April rent collections for malls had ranged from just 10 to five percent for mall owners with a higher concentration of non-instant with higher concentrations of non-essential tenants and fifty to sixty percent for landlords was essential tendon such as grocery stores and pharmacies so the grocery stores and pharmacies they're paying at a much higher clip than the other types of retail and these large retail tenants that have not been paying include Burlington stores Petco animal supplies LVMH Louie Vuitton Victoria's Secret's and staples it's interesting that staples isn't paying since they are considered essential and actually the stores are actually open so who knows what's going on there but it seems like it's setting up this this battle here's a quote from Vince de Beaune from Greene Street Advisors the retailer's think they have leverage here and they're trying to use it I see it potentially becoming a fight and going into litigation so the retailer's here are even if they have the means to pay you know according to this article a lot of them are opting to not pay this year is Simon Property Group this is probably the largest REIT that is focused on malls and as you can see the type of news such as the low the retailers not paying rent is definitely affecting their their stock price they've gone from what 149 down to 56 so this is one of the REITs sectors REIT sectors that has definitely been hammered pretty hard obviously hotels travel those other types of stocks and and REITs related to those have also been hammered pretty hard I thought I'd end this week's episode of the mobile home park desktop by turning to the Irish Times you might be wondering what does Ireland have to do with mobile home parks but apparently there are RV parks and mobile home parks in Ireland this is not Sun this is something I had heard of but I hadn't really thought too much about I came across this interesting article of course over there they're called Caravan parts and they're popular holiday spots and this article was just talking about the effects of whether or not people would be traveling to their caravan parks their RV parks over in Ireland and I love this quote An e Hall who runs laburnum caravan park and Gauri co wexford I don't even know how to say that said she managed 115 mobile homes between the two sites which were both empty obviously not good for and but I just love this quote we've two parts and we've not a center in either of them just funny it's funny the way the that she expressed that love that expression and that got me thinking what are some other interesting Irish expressions so of course I turned to this website I found online the 25 most common Irish slang words just scrolling through here different different expressions I thought were really fun really interesting and came across this one number seventy-three acting the maggot acting in a particularly foolish manner I thought that's a good quote to kind of end this week's episode on remember when it comes to mobile home park investing when it comes to staying safe during this unprecedented times please don't act the baguette alright guys I'll see you next time [Music]